3. Market positioning and related risk-taking are no substitute for solid fundamentals.

Driven by risk-taking, which has repeatedly rewarded investors in recent years, prices in certain market segments have been taken to levels that have become decoupled from investment fundamentals. Lacking a sound footing, the markets become overly sensitive to unanticipated news, such as the Ebola epidemic or, with the exact opposite effect, to suggestions that the Fed could slow its exit from its third round of quantitative easing. The resulting fluctuations are then greatly amplified by patchy liquidity and crowded trades.