The financial stability puzzle
Several indexes have emerged in recent months, designed to warn investors about increases in systemic risk. But these products could, in some instances, worsen the problem, argues Barry Schachter
On November 29, Bank of America Merrill Lynch announced the creation of a systemic risk index. It is meant to measure market vulnerability to shocks and possibly provide clients with some advance warning of conditions that could be associated with a crash. This index is just one of a variety of recently developed investor tools and strategies for avoiding or mitigating losses from the next market crash – State Street unveiled something similar on October 14, for example. The irony is these tools
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