Financial analysis is a rationalization. In other words, it uses ratios to derive meaningful value, applied to the futures, which is a probability to be explained now (DRU).
(See other articles by griffithlighton on the Descriptive Random Utility.)
Predictive utility is job one. It has prior existence. It exists in priority because it indicates the probable risk. (Like Kant said, it is an obligation, having an associative property. It has imperative, qauntifiable value; and like Positivists say, no matter how it is rationalized, the value is categorical, existing one way or another–on demand.) Essentially, acting in priority describes an otherwise determined (random) appearance of emergent properties. The properties that then appear are fully culpable (like Kant said), existing on demand; and so rationalizing a limited liability is quite unnatural–with predictable consequences (having the full value of the prior existence, or the categorical imperative)–naturally yielding to “adjusting for the externalities.”
The adjustments have an attribution value–a rationalization. A put-to-call, for example, is a ratio used in futures markets to determine the probable trend, and capitalists, of course, say it has a “neutral” market interpretation, which puts a lot of bull transacting in the market.
Risk, then, is a function of your interpretation, which then transacts the probable trend. There are a lot of ways to describe this TI, but “neutral” is not one of them. The risk is fully funded in priority, obligated (like Kant said) to the liability associated with it (existing in priority).
Right now, if you have an equity interest, and with the proliferation of the 401k, you likely do, the question is whether there is still a lot of bull in the market.
Adjusting for the externalities, the answer is “yes.”
Remember now, the position you take in the market will determine the position the “market makers” make. It is not neutral. The market can be easily shifted into gear and pull enough Gs to force you out at a loss. This is what “the makers” do on a daily basis–positioning you to “take” all the risk in the pursuit of yield (happiness, which is your TI). It is not anonymous, and it is not neutral.
Credit markets are still in a gamma-risk mode. The Fed is still holding interest rates at near zero to accommodate the bull in the market (adjusting for the externalities).