The risk of cataclysm has not gone away

Even before the world’s stock markets had their latest wobble two weeks ago, an interesting debate was gaining currency at some lunch tables in the City. As always, the debate in the moneyed classes is primarily about risk. It’s only those without money who spend their time worrying about beating the market and making the most out of any investment opportunity they can find. For those who have, discretion has always been the better part of value.

The debate stems from the fact that risk, in its conventional financial sense, appears to have gone walkabout. The way most investment assets are priced these days, there appears to be barely a risk in the sky. Just about everything has been going up in price, and may well be going higher. Investors seem to have adopted the Blairite principle that, hey, things can only get better.

But in the real world, risks rarely disappear.