Global risk premium: Terror overhang as an historic investment opportunity?

Wed Apr 4, 2007





Ken Grant, president, Risk Resources LLC

Due to an excessive risk premium arising from the 11 September 2001 terrorist attacks, combined with an accelerating surge in worldwide investment liquidity, global assets are significantly undervalued.

The 9/11 risk premium, like the proverbial last guest to leave the party, has been hanging around for far too long but will, within the foreseeable future, either be rudely thrown out, or become an increasingly benign part of the market décor. The reason? The world's financial wealth creation mechanisms are simply becoming too prolific to be satiated at current investment levels. This growing brood, like its predecessors, needs both a roof over its head and sustenance for its collective bellies. It will ultimately find shelter in the financial markets, feasting heartily on global assets that will become increasingly scarce in supply.

Put simply, the global economy is creating financial liquidity by the...

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