The Death of Risk
May 15, 2025·49 comments
The Death of Risk
The conversations happening between people and their money managers have shifted in a strange way. People aren't behaving like they normally do when uncertainty rises. They're not moving to safety or embracing risk. They're frozen, caught between distrust of growth and distrust of what they once thought was protection. The financial system doesn't have language for this state because it's never had to.
• Both Sides of the Investment Equation Have Become Suspect. Traditional safe harbors are now questioned. Growth opportunities are untrustworthy. The result is a paralysis that looks like prudence but operates differently.
• The Safe Haven Narrative Vanished From Financial Discussion. In every past crisis, investors fled to specific assets. That pattern is broken. What replaced it, and what that says about confidence, is worth examining.
• The Foundation of Modern Finance Depends on a Concept That's Breaking. All the models, all the regulations, all the strategies assume something fundamental about how risk works. If that assumption collapses, what happens to the entire system built on top of it?
• Even the Most Connected Voices Acknowledge They're Stuck. Those managing enormous amounts of capital openly say they have nowhere safe to move their money. If that's their situation, what does it mean for everyone else?
• This Creates a Kind of Paralysis That History Hasn't Seen. When both risk and safety become unreliable, the normal mechanisms for decision-making break down. What emerges from that breakdown is unpredictable.
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DISCLOSURES
This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results.
Statements in this communication are forward-looking statements. The forward-looking statements and other views expressed herein are as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and there is no guarantee that any predictions will come to pass. The views expressed herein are subject to change at any time, due to numerous market and other factors. Epsilon Theory disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein. This information is neither an offer to sell nor a solicitation of any offer to buy any securities. This commentary has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Epsilon Theory recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives.
