Beware of Unintended Risks

By Keith Lee - July 26, 2018

There are so many factors that should be roiling equity markets this year: a growing trade war with China; testy re-negotiations among the North American Free Trade Agreement (NAFTA) partners; ever-present geopolitical risks; rising U.S. interest rates and possible inflation.

But surprisingly, investors are seemingly taking all of those issues in stride so far. Sure, there have been patches of volatility, but when world leaders are threatening each other with thermo-nuclear war via Twitter, we’d expect far more turbulence.

So why haven’t we seen greater volatility? After all, we like to see it periodically to add to positions when some of our favorite stocks take a dip. Well, maybe the market is staying focused on earnings and the outlook for growth, hoping that the political and trade issues get worked out eventually.

Nevertheless, there is one thing that keeps me up at night as a portfolio manager. Click on the video to find out what that is, and what we need to see before investing in any company.

  • Related Articles
  • More From Author

10 Things Investors Should Know about the China A Market

A-shares are shares of mainland China-based companies that are traded the Shanghai Stock Exchange and the Shenzhen Stock Exchange in local currency. The addition of these shares to MSCI's widely followed indexes is expected to spur billions of dollars in foreign investment in the Chinese market.

Large Cap Growth: Ignoring Near-Term Impacts

Now more than ever, it is easy to get distracted by daily news flow. Between attention-grabbing headlines and the viral nature of social media, the news can be a lot to absorb. Our Premier Growth strategy team, however, remains focused on investing in competitively advantaged companies.

Tariffs and Trade Wars: How Will Emerging Markets Fare?

The recent negative equity market response—despite limited economic exposures—reflects how markets are trying to price in the risk of escalated US protectionism, rather than any specific tariff. We believe the steel and aluminum tariffs will have a limited impact on emerging markets.

    Beware of Unintended Risks

    When world leaders threaten each other with thermo-nuclear war via Twitter, we’d expect far more turbulence. So why haven’t we seen it?

      Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

      The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.