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Does it mean "be able to make profits"? I used this link: https://www.merriam-webster.com/dictionary/compensate

They point to rising global turmoil underscored by the recent terrorist attacks in Barcelona and the racially charged violence in Charlottesville, Virginia, as well as valuations that no longer compensate for potential flareups in North Korea and Venezuela. That’s not to mention the unpredictability in the U.S., where President Donald Trump is feuding with members of Congress before a critical vote to increase the country’s debt ceiling.

Source: https://www.bloomberg.com/news/articles/2017-08-28/traders-ditch-risk-as-dalio-to-gundlach-warn-on-emerging-markets

  • It is bad writing. " Valuations" do not "compensate for" anything. What the author means to say is that the valuations do not take into account (that is, fully consider) the risk that attends such investments. – Tᴚoɯɐuo Aug 28 '17 at 12:56
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as well as valuations that no longer compensate for potential flareups in North Korea and Venezuela.

Valuations are the process of an analyst assessing what a company is worth. If they "no longer compensate for X", that means that the prices aren't adjusted up or down because of X. If you agree that X could affect the price, then you would also agree that the valuation is incorrect unless it takes into account X.

To take @Tᴚoɯɐuo's comment into account, I think there is a reading where "compensate for" is the correct way to write it. The process of valuation should take into account the risk so that the resulting valuations (the results from many analysts) will compensate for that risk. The riskier an investment is, the higher the valuation would have to be to make the investment worthwhile. In the article, "they" are saying that the valuation isn't high enough to offset the risk, and therefore these markets are overvalued.

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It means "make up for", or "justify" in this example. EXAMPLE: If an overweight person wears clothes that are too big for them, it could be said that they are compensating for their weight.

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