Exogenous Threats. These types of threats or risk factors come from an external place and affect markets – unexpectedly. Already in 2020, only 38 days into the year, the US and global markets have been presented with at least three major exogenous threats:
Brexit becoming abruptly final
A US Impeachment trial
A viral epidemic, the unnamed Coronavirus in China (and now spreading to other countries too)
(Bonus 4th threat) US-China and US-World trade policy
After a year – really a decade – of excellent returns in the stock market, and for 2019 in the stock AND bond markets, it makes sense to ask, “WHAT IF?” As in, what if certain events take place in the markets or economy that could spoil the last several years of positive portfolio returns? Naturally then, there would be a handful of guesses or responses to the “what if” questions.