Stock market valuation without reference to risk is insufficient to make sound investment decisions. However, finding accurate measures of the level of risk associated with a security is not a trivial enterprise in emerging markets. First, high levels of market volatility make measures based on contemporaneous market indicators highly unstable. Second, the limited history of bond market prices in emerging markets makes it impossible to ascertain any long-term trends in risk.Wednesday, May 23, 2007
Portfolio Strategy
Stock market valuation without reference to risk is insufficient to make sound investment decisions. However, finding accurate measures of the level of risk associated with a security is not a trivial enterprise in emerging markets. First, high levels of market volatility make measures based on contemporaneous market indicators highly unstable. Second, the limited history of bond market prices in emerging markets makes it impossible to ascertain any long-term trends in risk.