In the video below, Motley Fool financial analyst David Hanson takes a look at one number that stood out to him during the recent banking stress tests. He discusses the Value at Risk number, or VaR, and how to understand how much market and trading risk exposure this number shows a bank has. He also tells investors how the VaR can be misinterpreted, and why it can lead you to think that a bank has more or less market risk exposure than it actually does. 

One of the big Wall Street banks that showed some capital weakness under the recent stress tests due to its market and trading exposure is Goldman Sachs. With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or if finance stocks are a screaming buy today. The answer depends on the company, so to help figure out whether Goldman Sachs is a buy today, we invite you to read our premium research report on the company. Click here now for instant access!

 

The article How Risky Are These Wall Street Banks? originally appeared on Fool.com.

David Hanson owns shares of Goldman Sachs. The Motley Fool recommends Goldman Sachs. The Motley Fool owns shares of Bank of America, Citigroup, and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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