Risk Adjusted

Financial markets have had the wind at their backs for the last few years. Historically low interest rates, the economic rise of China, India, Russia and Brazil, and consistently strong corporate earnings made for heady increases in stock and commodities markets around the world. This has created the illusion that just about any bet — even the risky ones such as sugar futures and Indian pharmaceutical companies — was bound to pay off handsomely.

Since May, that optimism has been challenged. Today asset prices are being weighed down by two powerful forces: monetary policy and geopolitical angst....