Opinion
Your Stock Portfolio Soared on Cheap Market Risk — But the Easy Money Is Over.
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By Richard Berner
As seen in: Stern in the News
The Iran conflict underscores a growing risk for investors: With the end of globalization, prices for stocks, bonds and other assets will increasingly be determined by geography, security considerations and geopolitical alignment. The rules that underpinned financial-market stability in the past aren’t guaranteed anymore.
For an example, look no further than the yawning gap in the spread between Brent and West Texas Intermediate crude oil. Global oil prices even after the Iran conflict ends are likely to carry a security-risk premium now that chokepoints and fragilities — such as the Strait of Hormuz, the gateway for about a fifth of the world’s shipped oil — have been revealed. The urgency to make energy supply chains more resilient across the globe will be an overriding priority.
Read the full MarketWatch article.
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Richard Berner is Clinical Professor of Finance and Professor of Management Practice and Co-Director of The Volatility and Risk Institute.