Investors rediscover the risks to holding stocks

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Central bankers are often accused of dulling investors' sensitivity to risks with ultra-easy monetary policy. That would explain why global equities have risen despite risks facing the world economy, and why expectations of U.S. stock-price volatility recently seemed to be falling. Still, there are welcome signs that investors have rediscovered their risk radar.

The MSCI All Country World Index has risen 15 percent from its February lows while the VIX, an index measuring expectations of near-term equity volatility, has fallen to 13.84, towards the bottom of the past two years' trading range. But other market signals show money managers are far from complacent in the face of downward revisions to earnings growth forecasts and the sort of risks identified by the International Monetary Fund, such as China's slowdown and persistent weakness in developed economies.