The term "risk" is often used in the financial media to refer to the environment when a market "looks for risk". When the market shows signs of below average volatility in price - both increase . As the economic data supports this, the outlook is seen as promising. This means that risk is "on".
Under risk conditions, investors and traders are much more optimistic about achieving higher returns. This may mean that they may sell 'safe' assets or buy 'risky assets' - which means that capital is converted into 'risky assets '.
Some of the riskiest assets are as follows:
- High-yielding currencies (two examples are: Australian dollar and Brazilian real).
- Precious metals
- commodities
- and (surprisingly) equities.
Similar to anything in life, the greater the risk you are happy to take, the higher your returns can be. Of course, this also means that you take the risk of things going the other way.
What is risk-off?
The financial media uses the term "risk-off" in reference to the environment when the market is "looking safe". When markets are highly volatile and the economic forecast appears to be negative or worsening, the risk is classified as "risk-off". This means that traders make fewer risky trades.
Major events such as the Great Financial Crisis (2008), geopolitical turmoil (Middle East conflict, ongoing) or more recently the global health crisis COVID-19 (2020) will all have an extremely negative impact on the market. Market sentiment becomes a risk-off.
Traders will sometimes become what is called 'risk-averse', when this happens they can choose between two actions to take. Traders can enter (buy) positions within 'safe haven assets' or exit (sell) positions within 'risky assets'. When the market is particularly tough, investors and traders often look for 'safe havens' that are much better protected in case the economy deteriorates.
These traders and investors might turn their capital into 'safe havens'. In other words, the lower risk assets come with lower risk, but also lower returns.This is exness download when trading risky assets. This is often seen as the best way to protect capital in times of panic or "risk aversion". Despite everything, cold hard cash is considered the best safe haven available.
If you do not want to have hard cash as a safe haven, there are some other options available.
- Swiss franc (CHF)
- US government bonds
- Gold (XAU)
- the US dollar (USD)
- Japanese yen (JPY)
While equities in the staples and utilities sectors are considered safe havens for equity traders (also known as "defensive assets"). The reason why these sectors are considered safe havens is that companies operating in these sectors provide the necessary products that people always need, regardless of the state of the economy.
This looks so fun! We don't do one-on-one activities with our kids enough, but you've definitely made me want to, even if this post is about a family walk! Now that it's cooling down we like going on walks in the evening before bed, and it has been so nice just to get out of the house! We'll have to try those Clif bars! The Oatmeal Cookie one sounds amazing!
I've missed your blog. So happy that I thought to check out your fb page and come visit. I'm never disappointed. Your free printable is the cutest thing ever. My children would love to do this daily.
How about winter walks though, you participate in those?! ? Oh wait... You're in Arizona (or somewhere) with sunshine year round. It's about to be a blizzard mess with snow to my waist in a couple months!!! =) Lol
Monica, long time no see!! I'm glad to hear you're doing well! Haha we definitely don't have to deal with blizzards but we have the opposite, 115 degree summer days, so I feel ya on certain parts of the year being near impossible to go on walks. Actually I feel like our "winter" months are coming to an end and we can finally venture outside without it feeling like an oven haha! ?
We are big on family walks. All great benefits, especially getting some of that energy out, haha!
My kids and I love going on walks! But, our neighborhood isn't really the best for it. It isn't horrible, but it's not particularly safe either. I'm hoping that by this time next year, we will be in a new house and in a new, family-friendly neighborhood. Then we will be walking all the time!
I hope you are too Marietta! I could definitely understand that situation, I've lived in some places before that were safe but were just...questionable haha.
Hi Jessica! Family walks are the best ? We have some of the best conversations with the girls when we go on walks. We definitely need to do them more often
Thanks for sharing us,