Tag Archives: Risk

When Debt Does Not Equal Leverage

Posted on April 22, 2010 by

It’s All About Liquidity The history of markets has taught us that trauma conditions which are bad enough to earn a “crisis” label share a simple characteristic: Financial assets trade routinely and at orderly prices… until they suddenly don’t. Debt = risk; risk requires management Despite the glibness in public media on the subject, “leverage” is not an appropriate synonym for debt. Debt earns the leverage moniker when the debtor has reasonably predictable cash resources that will be adequate to service the scheduled repayment. Any other debt situation is an albatross, floating on the least reliable of all debt-service tools….hope. … Continue reading →

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RISK…..a four-letter word that deserves a real-world definition

Posted on July 14, 2005 by

At FiduciaryVest, we, like our competitors are focused on helping clients manage their investment risk. But, what do we mean when we discuss the topic? After Harry Markowitz published his now 52-year-old paper, unveiling what is still called “Modern Portfolio Theory,” the investment world developed a fetish about the variability of returns earned over annual periods. One of the most important areas of Markowitz’s research was the impact of diversification (low correlation) on overall returns. But, as portfolio management grew exponentially during the past twenty years, most of the heat and light associated with the selection of managers was focused … Continue reading →

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