Risk On / Risk Off https://blog.capitalwealthadvisors.com/risk-on-risk-off Risk On / Risk Off by Zev Abraham en Wed, 17 Aug 2022 17:53:16 GMT 2022-08-17T17:53:16Z en Animal House https://blog.capitalwealthadvisors.com/risk-on-risk-off/animal-house <p style="font-size: 24px;"><span style="color: #000000;">“Over? Did you say over? Nothing is over until we decide it is. Was it over when the Germans bombed Pearl Harbor?” </span><span style="color: #000000;">-Bluto Blutarsky, “Animal House” 1978</span></p> <p style="font-size: 24px;"><span style="color: #000000;">“Over? Did you say over? Nothing is over until we decide it is. Was it over when the Germans bombed Pearl Harbor?” </span><span style="color: #000000;">-Bluto Blutarsky, “Animal House” 1978</span></p> <img src="https://track.hubspot.com/__ptq.gif?a=4388425&amp;k=14&amp;r=https%3A%2F%2Fblog.capitalwealthadvisors.com%2Frisk-on-risk-off%2Fanimal-house&amp;bu=https%253A%252F%252Fblog.capitalwealthadvisors.com%252Frisk-on-risk-off&amp;bvt=rss" alt="" width="1" height="1" style="min-height:1px!important;width:1px!important;border-width:0!important;margin-top:0!important;margin-bottom:0!important;margin-right:0!important;margin-left:0!important;padding-top:0!important;padding-bottom:0!important;padding-right:0!important;padding-left:0!important; "> Risk On / Risk Off energy Nancy Pelosi Taiwan Wed, 17 Aug 2022 15:36:56 GMT zev@cwafgi.com (Zev Abraham) https://blog.capitalwealthadvisors.com/risk-on-risk-off/animal-house 2022-08-17T15:36:56Z Welcome to the Jubilee https://blog.capitalwealthadvisors.com/risk-on-risk-off/welcometothejubilee <p style="font-size: 24px;"><span style="color: #000000;">"You shall have the fiftieth year as a Jubilee; . . . it shall be holy to you."</span></p> <p style="font-size: 24px;"><span style="color: #000000;">-Leviticus&nbsp;25:11-12&nbsp;</span></p> <span style="color: #000000;"></span> <p style="font-size: 24px;"><span style="color: #000000;">"You shall have the fiftieth year as a Jubilee; . . . it shall be holy to you."</span></p> <p style="font-size: 24px;"><span style="color: #000000;">-Leviticus&nbsp;25:11-12&nbsp;</span></p> <span style="color: #000000;"></span> <img src="https://track.hubspot.com/__ptq.gif?a=4388425&amp;k=14&amp;r=https%3A%2F%2Fblog.capitalwealthadvisors.com%2Frisk-on-risk-off%2Fwelcometothejubilee&amp;bu=https%253A%252F%252Fblog.capitalwealthadvisors.com%252Frisk-on-risk-off&amp;bvt=rss" alt="" width="1" height="1" style="min-height:1px!important;width:1px!important;border-width:0!important;margin-top:0!important;margin-bottom:0!important;margin-right:0!important;margin-left:0!important;padding-top:0!important;padding-bottom:0!important;padding-right:0!important;padding-left:0!important; "> Risk On / Risk Off war Mon, 13 Jun 2022 20:35:41 GMT zev@cwafgi.com (Zev Abraham) https://blog.capitalwealthadvisors.com/risk-on-risk-off/welcometothejubilee 2022-06-13T20:35:41Z International Trade is Not Charity https://blog.capitalwealthadvisors.com/risk-on-risk-off/international-trade-is-not-charity <p style="font-size: 24px;">“Forward, the Light Brigade!”<br>Was there a man dismayed?<br>Not though the soldier knew<br>Someone had blundered.<br>Theirs not to make reply,<br>Theirs not to reason why,<br>Theirs but to do and die.<br>Into the valley of Death<br>Rode the six hundred.<br><br>-Alfred Lord Tennyson, The Charge of the Light Brigade, a poem about the battle of Balaclava, Crimean War, 1854</p> <p style="font-size: 24px;">“Forward, the Light Brigade!”<br>Was there a man dismayed?<br>Not though the soldier knew<br>Someone had blundered.<br>Theirs not to make reply,<br>Theirs not to reason why,<br>Theirs but to do and die.<br>Into the valley of Death<br>Rode the six hundred.<br><br>-Alfred Lord Tennyson, The Charge of the Light Brigade, a poem about the battle of Balaclava, Crimean War, 1854</p> <img src="https://track.hubspot.com/__ptq.gif?a=4388425&amp;k=14&amp;r=https%3A%2F%2Fblog.capitalwealthadvisors.com%2Frisk-on-risk-off%2Finternational-trade-is-not-charity&amp;bu=https%253A%252F%252Fblog.capitalwealthadvisors.com%252Frisk-on-risk-off&amp;bvt=rss" alt="" width="1" height="1" style="min-height:1px!important;width:1px!important;border-width:0!important;margin-top:0!important;margin-bottom:0!important;margin-right:0!important;margin-left:0!important;padding-top:0!important;padding-bottom:0!important;padding-right:0!important;padding-left:0!important; "> Risk On / Risk Off war De-Globalization Sanctions Mon, 04 Apr 2022 20:01:21 GMT zev@cwafgi.com (Zev Abraham) https://blog.capitalwealthadvisors.com/risk-on-risk-off/international-trade-is-not-charity 2022-04-04T20:01:21Z Gold, the New Bitcoin https://blog.capitalwealthadvisors.com/risk-on-risk-off/goldthenewbitcoin <p style="font-size: 24px;"><em>“Gold is Money, Everything Else is Credit” - JP Morgan in testimony before the United States Congress, 1912</em></p> <p style="font-size: 24px;"><em>“Gold is Money, Everything Else is Credit” - JP Morgan in testimony before the United States Congress, 1912</em></p> <img src="https://track.hubspot.com/__ptq.gif?a=4388425&amp;k=14&amp;r=https%3A%2F%2Fblog.capitalwealthadvisors.com%2Frisk-on-risk-off%2Fgoldthenewbitcoin&amp;bu=https%253A%252F%252Fblog.capitalwealthadvisors.com%252Frisk-on-risk-off&amp;bvt=rss" alt="" width="1" height="1" style="min-height:1px!important;width:1px!important;border-width:0!important;margin-top:0!important;margin-bottom:0!important;margin-right:0!important;margin-left:0!important;padding-top:0!important;padding-bottom:0!important;padding-right:0!important;padding-left:0!important; "> Gold Risk Risk On / Risk Off Bitcoin Fri, 25 Feb 2022 20:57:45 GMT zev@cwafgi.com (Zev Abraham) https://blog.capitalwealthadvisors.com/risk-on-risk-off/goldthenewbitcoin 2022-02-25T20:57:45Z Anti-Trend and Recency Bias https://blog.capitalwealthadvisors.com/risk-on-risk-off/anti-trend-and-recency-bias <p>Recency and trend bias are related concepts that suggest people give greater weight to recent events than older ones and therefore think current trends are likely to continue. These concepts are used extensively in the field of behavioral finance which tries to explain investment decisions and asset pricing through the interplay of psychology and emotion with traditional valuation and economic factors. These biases suggest that investors expect recent performance is likely to continue even in situations where there is no reason for that to be true. Early in my career I worked for a well-known mutual fund company that was harmed by these biases.</p> <p>Recency and trend bias are related concepts that suggest people give greater weight to recent events than older ones and therefore think current trends are likely to continue. These concepts are used extensively in the field of behavioral finance which tries to explain investment decisions and asset pricing through the interplay of psychology and emotion with traditional valuation and economic factors. These biases suggest that investors expect recent performance is likely to continue even in situations where there is no reason for that to be true. Early in my career I worked for a well-known mutual fund company that was harmed by these biases.</p> <img src="https://track.hubspot.com/__ptq.gif?a=4388425&amp;k=14&amp;r=https%3A%2F%2Fblog.capitalwealthadvisors.com%2Frisk-on-risk-off%2Fanti-trend-and-recency-bias&amp;bu=https%253A%252F%252Fblog.capitalwealthadvisors.com%252Frisk-on-risk-off&amp;bvt=rss" alt="" width="1" height="1" style="min-height:1px!important;width:1px!important;border-width:0!important;margin-top:0!important;margin-bottom:0!important;margin-right:0!important;margin-left:0!important;padding-top:0!important;padding-bottom:0!important;padding-right:0!important;padding-left:0!important; "> Risk Risk On / Risk Off trends recency Wed, 05 Jan 2022 19:20:33 GMT zev@cwafgi.com (Zev Abraham) https://blog.capitalwealthadvisors.com/risk-on-risk-off/anti-trend-and-recency-bias 2022-01-05T19:20:33Z Reality Investing https://blog.capitalwealthadvisors.com/risk-on-risk-off/reality-investing <p>Most everyone reading this article has probably heard of the SPAC boom. The bull market in SPACs has been hard to miss if you follow financial news. But what is a SPAC? A SPAC is a “Special Purpose Acquisition Company” that has no business to speak of. It is created to go out and find a real business to invest in. So, the boom in SPACs is really a boom in investing in nothing in the hopes it turns into something. This phenomenon seems to be appropriate given the state of the investing world, real economy and even the sociopolitical environment at present. These days, there appears to be a whole lot of nothing meaningful or at least worthwhile being done. At the same time, we would argue, there is substantial underinvestment in what's real. Excitement about investing in nothing is certainly not limited to SPACs. Bitcoin and perhaps Ethereum may turn out to be something, but the vast majority of crypto-currencies that have been created and are sporting substantial valuations will turn out to be nothing. A shockingly high percentage of initial public offerings this past year have no profits or even cash flow. They are, at present, seemingly investments in nothing. The list goes on. What is happening here and how should we respond as investment and risk managers?</p> <p>Most everyone reading this article has probably heard of the SPAC boom. The bull market in SPACs has been hard to miss if you follow financial news. But what is a SPAC? A SPAC is a “Special Purpose Acquisition Company” that has no business to speak of. It is created to go out and find a real business to invest in. So, the boom in SPACs is really a boom in investing in nothing in the hopes it turns into something. This phenomenon seems to be appropriate given the state of the investing world, real economy and even the sociopolitical environment at present. These days, there appears to be a whole lot of nothing meaningful or at least worthwhile being done. At the same time, we would argue, there is substantial underinvestment in what's real. Excitement about investing in nothing is certainly not limited to SPACs. Bitcoin and perhaps Ethereum may turn out to be something, but the vast majority of crypto-currencies that have been created and are sporting substantial valuations will turn out to be nothing. A shockingly high percentage of initial public offerings this past year have no profits or even cash flow. They are, at present, seemingly investments in nothing. The list goes on. What is happening here and how should we respond as investment and risk managers?</p> <img src="https://track.hubspot.com/__ptq.gif?a=4388425&amp;k=14&amp;r=https%3A%2F%2Fblog.capitalwealthadvisors.com%2Frisk-on-risk-off%2Freality-investing&amp;bu=https%253A%252F%252Fblog.capitalwealthadvisors.com%252Frisk-on-risk-off&amp;bvt=rss" alt="" width="1" height="1" style="min-height:1px!important;width:1px!important;border-width:0!important;margin-top:0!important;margin-bottom:0!important;margin-right:0!important;margin-left:0!important;padding-top:0!important;padding-bottom:0!important;padding-right:0!important;padding-left:0!important; "> Risk Risk On / Risk Off Natural Gas Wed, 17 Nov 2021 16:32:12 GMT zev@cwafgi.com (Zev Abraham) https://blog.capitalwealthadvisors.com/risk-on-risk-off/reality-investing 2021-11-17T16:32:12Z Investing is Hard https://blog.capitalwealthadvisors.com/risk-on-risk-off/investing-is-hard <p>Stamford Connecticut based Columbus Circle Investors was a very successful money manager in the 1990’s. Its small cap fund had a particularly good run during that decade. It was run by a man named Don Chibocous who was one of the firm’s founders. He hired me for my first job in the industry right out of the University of Chicago Graduate School of Business, now known as Booth. I do not recall much about my interviews with Columbus Circle other than one interaction that stood out and is embedded in my memory to this day. Mr. Chibocous asked me the following question: “if you turn out to be really good at picking stocks and become a star in the industry, what percentage of your picks do you think will be correct?” Obviously, I knew the answer he was looking for was a lot lower than a typical person would guess. Having the optimism (and perhaps arrogance) of youth my thought was I could be right 75% or more of the time. However, I knew he was looking for a more unpretentious answer so I picked 65%. He replied, “If you can do that in your first couple years you’ll own this place. If you are really good you’ll be right 55% of the time.” &nbsp;</p> <p>Stamford Connecticut based Columbus Circle Investors was a very successful money manager in the 1990’s. Its small cap fund had a particularly good run during that decade. It was run by a man named Don Chibocous who was one of the firm’s founders. He hired me for my first job in the industry right out of the University of Chicago Graduate School of Business, now known as Booth. I do not recall much about my interviews with Columbus Circle other than one interaction that stood out and is embedded in my memory to this day. Mr. Chibocous asked me the following question: “if you turn out to be really good at picking stocks and become a star in the industry, what percentage of your picks do you think will be correct?” Obviously, I knew the answer he was looking for was a lot lower than a typical person would guess. Having the optimism (and perhaps arrogance) of youth my thought was I could be right 75% or more of the time. However, I knew he was looking for a more unpretentious answer so I picked 65%. He replied, “If you can do that in your first couple years you’ll own this place. If you are really good you’ll be right 55% of the time.” &nbsp;</p> <img src="https://track.hubspot.com/__ptq.gif?a=4388425&amp;k=14&amp;r=https%3A%2F%2Fblog.capitalwealthadvisors.com%2Frisk-on-risk-off%2Finvesting-is-hard&amp;bu=https%253A%252F%252Fblog.capitalwealthadvisors.com%252Frisk-on-risk-off&amp;bvt=rss" alt="" width="1" height="1" style="min-height:1px!important;width:1px!important;border-width:0!important;margin-top:0!important;margin-bottom:0!important;margin-right:0!important;margin-left:0!important;padding-top:0!important;padding-bottom:0!important;padding-right:0!important;padding-left:0!important; "> Risk Risk On / Risk Off Natural Gas bear market Fri, 01 Oct 2021 14:59:39 GMT zev@cwafgi.com (Zev Abraham) https://blog.capitalwealthadvisors.com/risk-on-risk-off/investing-is-hard 2021-10-01T14:59:39Z Outrunning the Bear https://blog.capitalwealthadvisors.com/risk-on-risk-off/outrunning-the-bear <p>Wow the stock market has been strong! There hasn’t been a bear market in a long time. Yes, there was the very brief “technical” bear market at the onset of COVID-19 in the spring of 2020 but that lasted a nanosecond and was vanquished by massive government assistance, particularly liquidity and debt. Even the scary bear market of the Great Financial Crisis (GFC) of late 2008/2009 didn’t last very long from a historical perspective. So, are we due? The S&amp;P 500 plus dividends has returned greater than 300% since it crossed its 2007 high after the GFC! That is in an economy that has shrunk - but for the increase in <a href="https://blog.capitalwealthadvisors.com/risk-on-risk-off/dodeficitsmatter">government debt</a>. It seems a lot of people are afraid that we are long overdue for at least a slowdown and a bear market.&nbsp; &nbsp;Investors are scared of getting eaten by a bear!&nbsp;&nbsp;</p> <p>Wow the stock market has been strong! There hasn’t been a bear market in a long time. Yes, there was the very brief “technical” bear market at the onset of COVID-19 in the spring of 2020 but that lasted a nanosecond and was vanquished by massive government assistance, particularly liquidity and debt. Even the scary bear market of the Great Financial Crisis (GFC) of late 2008/2009 didn’t last very long from a historical perspective. So, are we due? The S&amp;P 500 plus dividends has returned greater than 300% since it crossed its 2007 high after the GFC! That is in an economy that has shrunk - but for the increase in <a href="https://blog.capitalwealthadvisors.com/risk-on-risk-off/dodeficitsmatter">government debt</a>. It seems a lot of people are afraid that we are long overdue for at least a slowdown and a bear market.&nbsp; &nbsp;Investors are scared of getting eaten by a bear!&nbsp;&nbsp;</p> <img src="https://track.hubspot.com/__ptq.gif?a=4388425&amp;k=14&amp;r=https%3A%2F%2Fblog.capitalwealthadvisors.com%2Frisk-on-risk-off%2Foutrunning-the-bear&amp;bu=https%253A%252F%252Fblog.capitalwealthadvisors.com%252Frisk-on-risk-off&amp;bvt=rss" alt="" width="1" height="1" style="min-height:1px!important;width:1px!important;border-width:0!important;margin-top:0!important;margin-bottom:0!important;margin-right:0!important;margin-left:0!important;padding-top:0!important;padding-bottom:0!important;padding-right:0!important;padding-left:0!important; "> Risk On / Risk Off debt bear market Mon, 30 Aug 2021 17:13:57 GMT zev@cwafgi.com (Zev Abraham) https://blog.capitalwealthadvisors.com/risk-on-risk-off/outrunning-the-bear 2021-08-30T17:13:57Z Utes Could Be Beauts https://blog.capitalwealthadvisors.com/risk-on-risk-off/utes-could-be-beauts <p>Thomas Edison is regarded as one of America’s greatest inventors. He had 1,093 United States patents to his name and many European ones as well. Amongst his many well-known inventions were the phonograph and the movie camera. However, he is arguably best known and most impactful for the invention of the light bulb and some of the technology necessary to deliver electric power to those light bulbs. He was an original founder of General Electric (which was first known as Edison Electric) and a multitude of other companies. Many electricity generation and delivery companies that would later become regulated utilities still bear his name including Con Edison (NY), Commonwealth Edison (IL) and Detroit Edison (MI) just to name a few.</p> <p>Thomas Edison is regarded as one of America’s greatest inventors. He had 1,093 United States patents to his name and many European ones as well. Amongst his many well-known inventions were the phonograph and the movie camera. However, he is arguably best known and most impactful for the invention of the light bulb and some of the technology necessary to deliver electric power to those light bulbs. He was an original founder of General Electric (which was first known as Edison Electric) and a multitude of other companies. Many electricity generation and delivery companies that would later become regulated utilities still bear his name including Con Edison (NY), Commonwealth Edison (IL) and Detroit Edison (MI) just to name a few.</p> <img src="https://track.hubspot.com/__ptq.gif?a=4388425&amp;k=14&amp;r=https%3A%2F%2Fblog.capitalwealthadvisors.com%2Frisk-on-risk-off%2Futes-could-be-beauts&amp;bu=https%253A%252F%252Fblog.capitalwealthadvisors.com%252Frisk-on-risk-off&amp;bvt=rss" alt="" width="1" height="1" style="min-height:1px!important;width:1px!important;border-width:0!important;margin-top:0!important;margin-bottom:0!important;margin-right:0!important;margin-left:0!important;padding-top:0!important;padding-bottom:0!important;padding-right:0!important;padding-left:0!important; "> Risk On / Risk Off climate change electric utilities Mon, 02 Aug 2021 15:10:31 GMT zev@cwafgi.com (Zev Abraham) https://blog.capitalwealthadvisors.com/risk-on-risk-off/utes-could-be-beauts 2021-08-02T15:10:31Z Think Things Through! https://blog.capitalwealthadvisors.com/risk-on-risk-off/think-things-through <p style="font-size: 24px;">“Five percent of the people think;<br>ten percent of the people think they think;<br>and the other eighty-five percent would rather die than think.”<br>― Thomas A. Edison, someone who knew a little bit about energy</p> <p style="font-size: 24px;">“Five percent of the people think;<br>ten percent of the people think they think;<br>and the other eighty-five percent would rather die than think.”<br>― Thomas A. Edison, someone who knew a little bit about energy</p> <img src="https://track.hubspot.com/__ptq.gif?a=4388425&amp;k=14&amp;r=https%3A%2F%2Fblog.capitalwealthadvisors.com%2Frisk-on-risk-off%2Fthink-things-through&amp;bu=https%253A%252F%252Fblog.capitalwealthadvisors.com%252Frisk-on-risk-off&amp;bvt=rss" alt="" width="1" height="1" style="min-height:1px!important;width:1px!important;border-width:0!important;margin-top:0!important;margin-bottom:0!important;margin-right:0!important;margin-left:0!important;padding-top:0!important;padding-bottom:0!important;padding-right:0!important;padding-left:0!important; "> Commodities Commodity Risk On / Risk Off climate change Thu, 10 Jun 2021 20:14:01 GMT zev@cwafgi.com (Zev Abraham) https://blog.capitalwealthadvisors.com/risk-on-risk-off/think-things-through 2021-06-10T20:14:01Z