Just What IS a "Risky Security?"


It is a truly bizarre world in which 40-50 analysts that we follow agree that the securities of a 1) technically insolvent company with 2) a Long Term history of poor stock performance and 3) only tenuous probability of recovery from either condition 4) rates as "low risk."

If by that they mean that the stock will reliably lose value and/or underperform the market - and is therefore predictable... Well, who could argue with that?

The analyst's consensus reflects the security's high correlation to both the general market and its sector, low volatility and low beta... So, basically the analyst's position is: The stock may be headed for Hell-in-a-Handbasket, but it won't get there very fast.

#RiskAnalysis #PortfolioTheory

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