Updated almost 7 years ago on .
Stress testing your portfolio
When stress testing an investment (active or passive), what stress tests are people using? How far do you take it? Which variables are you changing? We could even debate 2-sigma vs some other place on the curve.
For my UK properties, the focus has been on what the Bank of England uses for stress testing the loan books of the various banks. 30% fall in house prices, a spike in unemployment, rising interest rate and some other variables. While it might be hard to imagine all of the variable turning negative at the same time, it is a stress test.
What are the USA banking or real estate stress test variables?