Visualizing Financial Crisis

How do you visualize a financial crisis?

Our Risk Monitor helps you visualize the market dynamics and gives you the insight that you can’t get from CNBC or Yahoo! Finance.

On 2018/09/15, Lehman Brothers filed for bankruptcy, the largest bankruptcy in history and a pivotal point during the 2008 financial crisis.

What would it look like?

On the risk-return chart below, each mini pie chart represents a model portfolio. The solid line, known as the efficient frontier, shows the 30-year averages of a set of models from the most conservative to the most aggressive.

However, markets often deviate from 30-year averages. The mini pie charts on the dotted line indicate the actual risks and returns (annualized) of the models for the 1-month period ending 2008/09/15. You can see that for each model, the actual risk is much higher than the 30-year averages, and the return is well into the negatives.

Two months later, at the height of the financial crisis, everything shifts much further to the lower right corner – the risk goes through the roof.

When the market starts to recover, you can see it as early as March 2009. Try it here yourself. No need to create an account.

Read this to learn how to reduce panic during zig-zags.

Visualizing Financial Crisis

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