Relative Risk in Equities

A quick highlight/refresher — the below table is from “How to Use Value Signals for Global Equities“. It highlights how to think in 2-dimensions when it comes to stockmarket returns and valuations.

Most commentators talk about the absolute return and risk situation (is the market overvalued vs history? is the outlook for stocks to go up or down?) — but fewer speak about relative risk and return (how does this asset/sector/stock compare to that asset/market? will this one outperform vs that one? what other information can we decipher from this relative performance trend?).

When it comes to sector analysis like what we looked at today, relative valuations and relative returns can not only highlight interesting opportunities (e.g. REITs as an alternative hedge/defensive position), but also give clues to the stage of the market cycle (e.g. think about the chart above how extreme and divergent from trend it got at the peak of the dot com bubble). REITs relative returns may be giving us important clues on the stage of the market cycle right now. So a highly relevant chart + concept for today’s market.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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REITs relative returns may be giving us important clues on the stage of the market cycle right now. So a highly relevant chart + concept for today’s market.</p></body></html>","htmlText":"<html><head></head><body><p>A quick highlight/refresher — the below table is from <em>“How to Use Value Signals for Global Equities“</em>. It highlights how to think in 2-dimensions when it comes to stockmarket returns and valuations.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/c6a7fd61f47c607ee4f9c883a90e5f31\" tg-width=\"1225\" tg-height=\"1160\"></p><p style=\"text-align: start;\">Most commentators talk about the absolute return and risk situation (is the market overvalued vs history? is the outlook for stocks to go up or down?) — but fewer speak about relative risk and return (how does this asset/sector/stock compare to that asset/market? will this one outperform vs that one? what other information can we decipher from this relative performance trend?).</p><p style=\"text-align: start;\">When it comes to sector analysis like what we looked at today, relative valuations and relative returns can not only highlight interesting opportunities (e.g. REITs as an alternative hedge/defensive position), but also give clues to the stage of the market cycle (e.g. think about the chart above how extreme and divergent from trend it got at the peak of the dot com bubble). REITs relative returns may be giving us important clues on the stage of the market cycle right now. So a highly relevant chart + concept for today’s market.</p></body></html>","text":"A quick highlight/refresher — the below table is from “How to Use Value Signals for Global Equities“. It highlights how to think in 2-dimensions when it comes to stockmarket returns and valuations. Most commentators talk about the absolute return and risk situation (is the market overvalued vs history? is the outlook for stocks to go up or down?) — but fewer speak about relative risk and return (how does this asset/sector/stock compare to that asset/market? will this one outperform vs that one? what other information can we decipher from this relative performance trend?). When it comes to sector analysis like what we looked at today, relative valuations and relative returns can not only highlight interesting opportunities (e.g. REITs as an alternative hedge/defensive position), but also give clues to the stage of the market cycle (e.g. think about the chart above how extreme and divergent from trend it got at the peak of the dot com bubble). REITs relative returns may be giving us important clues on the stage of the market cycle right now. 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