Asset protection

15-Extreme Risks & How You Can Navigate Them

Posted by Lance Roberts

on Tuesday, 5 November 2019 10:07

Willis Towers Watson’s Thinking Ahead Institute (TAI) recently revealed what it considers the 15-extreme risks facing investors for 2019, as well as for the years ahead. The risks run the gamut from climate change to nuclear contamination.

TAI’s research suggests, broadly, there are three hedging strategies available to institutions:

  • Hold cash. Over long historical periods cash has held its real value through both episodes of deflation and inflation but there is no guarantee that this will be the case in the future.
  • Derivatives. It is worth mentioning that cost and usefulness are often in opposition. The cost of derivatives protection can often be reduced by specifying more precise conditions – but the more precise the conditions, the greater the chance that they are not exactly met and hence the ‘insurance’ does not pay out.
  • Hold a negatively-correlated asset. There is no single asset that will work against all possible bad outcomes. Further, there is no guarantee that the expected performance of the hedge asset will actually transpire in the future event.

While we have regularly discussed the“value of holding cash,” and “hedging” within portfolios, for most investors there are only a limited number of options available. The problem becomes magnified by the lack of capital, and a disciplined investment strategy,  to delve into and manage more complex risk mitigation strategies. Therefore, investors are simply told to “buy and hold,” and hope for the best.

Since institutions are actively hedging capital risk, it should be clear “buy and hold” strategies do not. However, there are actions you can take to navigate not only short-term market risk, but also long-term fundamental, economic, and environmental risks…CLICK for complete article

Technically Speaking: 4-Risks To The Bullish View

Posted by Lance Roberts

on Tuesday, 29 October 2019 8:58

When I was growing up, my father, probably much like yours, had pearls of wisdom that he would drop along the way. It wasn’t until much later in life that I learned that such knowledge did not come from books but through experience. One of my favorite pieces of “wisdom” was:

“A sure-fire ‘no lose’ proposition is doing exactly the opposite of whatever ‘no lose’ proposition is being proposed.”

Of course, back then, he was mostly giving me “life advice” about not following along with my stupid-ass friends who were always up elbows deep in mischief.

However, that advice also holds true with the financial markets currently. As I have noted over the last couple of weeks (read this and this) the “bulls” certainly seem to regained control of the markets as new highs were reached on Monday. As I stated, between the Fed cutting rates, reigniting “not-QE,” and the President following our script of putting the “trade war” to rest, “what is there NOT to love if you are a bull.”

While we have begun to opportunistically increase our the equity exposures in our portfolios, we are cognizant there are currently several warning signs investors should consider before buying into the “bullish view.”

Here are four to consider….CLICK for complete article

Is The Internet Killing The Planet?

Posted by Alex Kimani

on Tuesday, 29 October 2019 8:47

Beyond the painfully obvious plight of a planet addicted to fossil fuels, climate change has another bogeyman that few–with the possible exception of Keanu Reeves–would be willing to give up.

Yet, it’s responsible for a huge chunk of our global greenhouse gas emissions.

In fact, by 2025, it could be responsible for a staggering 20 percent of global electricity consumption and up to 5.5 percent of all carbon emissions.

And you’re doing it right now.

That bogeyman is the Internet of Things (IoT) and the tsunami of data it must power.

Academics are challenging the notion that we can considerably reduce carbon emissions by increasing efficiency and cutting down on waste.

In fact, they warn that the internet explosion and increasing connectivity via the IoT and smart devices could increase global emissions by 3.5 percent by 2020 and up to 14 percent by 2040.

In an update to a 2016 peer-reviewed study, Swedish researcher Anders Andrae says the ICT industry’s power demand is likely to increase from 200-300 terawatt hours (TWh) of electricity a year in 2017, to 1,200-3,000TWh by 2025…CLICK for complete article

Business Investment is Down With Unexpected Drop in Durable Goods Orders

Posted by Conor Maloney

on Thursday, 24 October 2019 6:38

New orders for durable goods, designed to last more than three years, fell -1.1% in September, indicating softening business investment. This represents a big miss in orders which were forecast at a -0.2% drop. Thursday’s report from the Commerce Department indicates an ongoing trend in business spending, with the decline is likely a result of the ongoing trade war between China and the United States.

The latest Commerce Department report indicates that business investment continues to soften due to uncertainty around the trade war. Businesses are planning to spend less on equipment, indicated by a -0.5% drop in non-defense capital goods excluding aircraft (core capital goods orders).  Demand for transportation equipment, motor vehicle parts, and computer and electronic products fell last month…CLICK for complete article

Who Doesn’t See the China Threat at This Point?

Posted by Brian Cates

on Wednesday, 23 October 2019 7:56

Daryl Morey had no idea the tweet he published on Oct. 4 would ignite a firestorm that continues to rage.

But that’s exactly what happened.

Morey is the general manager of the Houston Rockets, in one of the world’s most popular sports leagues: the National Basketball Association (NBA).

The tweet that Morey sent out into the social media world was simple. It contained none of his own typed words; it merely displayed an image.

That simple image, with the words “Fight For Freedom, Stand With Hong Kong,” ignited a firestorm and called attention to a dynamic that had been working quietly beneath the surface.

And that dynamic is how China has been positioning itself for economic and cultural dominance.

China presents a vast market that has many U.S. companies wishing for unrestricted access. The NBA is hardly alone in this regard. But few Western corporations have so solidly joined themselves at the hip with China the way the NBA has.

This is why the American people were treated to the startling sight of prominent NBA players and coaches stuttering and mumbling their way through interviews when asked to comment on China’s atrocious human rights record—something that has taken center stage again recently because of the Hong Kong democracy protests, as well as a video of hundreds of blindfolded Uyghurs being shipped off to a detention facility….CLICK for complete article