Market Risk – Not To Be Ignored or Overlooked

 The first of a two part article…. Fund managers, whether they be equity or bond traders, know all too well that returns are not simply a result of their asset selection prowess.

The first of a two part article….

Fund managers, whether they be equity or bond traders, know all too well that returns are not simply a result of their asset selection prowess.  Many external factors come into play.  But what are the issues facing the professional money manager.

Commodity Trading Advisor, Genuine Trading Solutions of Toronto, find not all fund managers analyze their market risk.  The company explains this is often due to a lack of education and a failure to understand the mitigating solutions for off-setting risk.

Genuine Trading Solutions President, Dwayne Strocen explains market risk as “the unexpected financial loss following a market decline due to events out of your control.”  He goes on to explain that stock or bond market volatility or market reversals can be the result of global events happening in far flung corners of the globe.  Top analysts and fund managers simply do not have the resources to crystal ball gaze and predict those events.

Examples of several major unexpected events that sent shock waves throughout the financial community have been:

-         1982 Mexican Peso devaluation;

-         1987 stock market crash knows as “Black Monday”;

-         1989 USA Savings and Loan Crisis;

-         1998 Russian Ruble devaluation;

-         1998 $125 billion collapse of Hedge Fund Long Term Capital Management;

-         2006 collapse of Hedge Fund Amaranth with losses of $5.85 billion.

In 1994 Bank J.P. Morgan developed a risk metrics model known as Value-At-Risk or VaR.  While VaR is considered the industry standard of risk measurement, it has its drawbacks.  VaR can measure total dollar value of a funds risk exposure within a certain  level of confidence, usually 95% or 99%.  What it cannot do, is predict when a triggering event will occur or the magnitude of the subsequent fallout.  For some company’s and funds, a steep decline or protracted recession can be devastating.  Even forcing some un-hedged firms into bankruptcy.  A triggering event can have a ripple effect forcing people out of work and economies into recession effectively putting more people out of work.  No person and no economy is immune.

If you own a mutual fund, chances are your fund is un-hedged.  Until recently, mutual fund legislation prevented mutual funds from hedging.  Many jurisdictions have repealed this rule however mutual fund managers have been slow or decided to continue with ‘business as usual”.  The reason is that most investors of mutual funds are unsophisticated and do not understand the hedging process and may re-deem their money from an investment strategy they do not understand.

Hedge funds on the other hand do not have these restraints.  Investors are more sophisticated and are more open to the nature of hedge fund strategies.  Some of which are not disclosed due to a fear of piracy by competing hedge fund managers.

 Risk reduction solutions are not complicated but do require the services of a professional who understands the process.  This is the role of Commodity Trading Advisor firms such as Genuine Trading Solutions, also known as a CTA.  President, Dwayne Strocen states that while most CTA’s are hedge fund managers, few specialize in risk management analytics.  Our focus is on the analysis of solutions to reduce or eliminate market and / or operational risk.  No matter the role, all Commodity Trading Advisors are specialists in the derivatives market.

The first step is the value at risk calculation to determine a funds risk liability.  A risk mitigation strategy known as a hedge is then implemented.  After all, identification of one’s risk is only beneficial if a solution to off-set that risk is put into place.  Hedging requires the use of derivatives, either exchange traded or over-the-counter.  They can take many forms.  The most commonly used hedging instruments are index futures, interest rate futures, foreign exchange, exchange traded commodities such as Crude Oil, options and SWAPS.

A more detailed explanation of derivatives and hedging will be discussed in our next article.  Now that we’ve identified an easy solution for your market risk worriesFeature Articles, the implementation of the right strategy can be as easy as a call to a qualified and registered Commodity Trading Advisor.  Website: https://www.genuinecta.com/

The Role Of A CTA, Commodity Trading Advisor

 Today’s Commodity Trading Advisor is no longer to be thought of only as a Portfolio Manager.  His role has expanded considerably as investment products become more complex.

Commodity Trading Advisor, Genuine Trading Solutions, a registered CTA with the CFTC, says the role today of a CTA is constantly evolving.

Dwayne Strocen, President of Genuine Trading Solutions says once upon a time a Commodity Trading Advisor was content to be known as a Portfolio Manager trading commodities and futures for a managed futures fund.  There is no question today’s investor has become more sophisticated.  In response, today’s selection of investment products has become ever more complex and varied, the need for the CTA to understand the uses and management of these products becomes even more acute.

So what exactly is the role of today’s Commodity Trading Advisor.  Certainly trading of derivative products for a managed futures fund continues to be as important as before.  A CTA has also become more involved with derivative analytics.  This role is essentially focused upon becoming an analyst to structure and analyze the more multi-faceted requirements demanded by hedge funds, pension funds and structured products.

The use of derivative analytics to manage the adverse risk of an equity or bond portfolio brought about by adverse market conditions is critical in preserving asset growth.  The uses of hedging to prevent volatility has long been understood by the largest institutions but is now available to the smaller sized company and to the individual investor.  No doubt as products continue to evolve so too will the CTA evolve to meet the need of today’s professional money manager.

Derivative products are no longer limited to exchange traded commodities futures and options.  There continues to be an ever expanding list of over-the-counter derivative products.  These are SWAPS.  SWAPS and privately transacted products transacted without the use of a recognized exchange.  The difficulty is the buyer and seller must find each other to undertake such an arrangement, not always easy.  The second problem is no liquidity.  There is no one to sell this too should one of the parties wish to terminate the transaction prior to the agreed upon date.

A Commodity Trading Advisor’s role is no longer sufficient to be limited to trading.  It is now imperative to understand the industry in a new light so to understand the changing investment environment.  Analysis now becomes the catalyst to include a value added service to retain customers.  This includes structured productsPsychology Articles, risk management and OTC derivatives.  Continuing education has been and continues to be the hallmark of the best in the industry.

Hedging – What Is It, And It’s Uses In Risk Management

The second of a two part article…. Before I discuss the use of hedging to off-set risk, we need to understand the role and the purpose of hedging.  The history of modern futures trading begins...

The second of a two part article….

Before I discuss the use of hedging to off-set risk, we need to understand the role and the purpose of hedging.  The history of modern futures trading begins in Chicago in the early 1800’s. Chicago is located at the base of the Great Lakes, close to the farmlands and cattle country of the U.S. Midwest making it a natural center for transportation, distribution and trading of agricultural produce. Gluts and shortages of these products caused chaotic fluctuations in price. This led to the development of a market enabling grain merchants, processors, and agriculture companies to trade in contracts to insulate them from the risk of adverse price change and enable them to hedge.

The first commodity exchange was the creation of the Chicago Board of Trade, CBOT in 1848.  Since then, modern derivative products have grown to include more than the agricultural industry.  Products include Stock Indices, Interest Rates, Currency, Precious Metals, Oil and Gas, Steel and a host of others.  The origins of the commodity and futures exchange was created to support  hedging.  The role of speculators is beneficial as they add trading volume and important volatility to what would otherwise be a small and illiquid market place.  You can view a complete listing of the worlds different exchanges at: https://www.genuinecta.com/who-we-are/

A bona-fide hedger is someone with an actual product to buy or sell.  The hedger establishes an off-setting position on the futures or commodity exchange, thereby instituting a set price for his product.  Someone buying a hedge is known as being “Long” or “Taking Delivery”.  Someone selling a hedge is known as being “Short” or “Making Delivery”.  These positions known as “Contracts” are legally binding and enforced by the exchange.

Entering your trades either for speculation or hedging is done through your broker.  Commodity Trading Advisor, Genuine Trading Solutions President Dwayne Strocen, states that “Commodity and Futures exchanges are distinct from Stock Exchanges, although they operate using the same principals.  They are regulated by different agencies such as the Commodity Futures Trading Commission who are responsible for regulation of retail brokers in the USA as well as Commodity Trading Advisors such as us.”

Now let’s view some real life examples of hedging or mitigation of risk by using exchange traded derivatives.

Example 1:  A mutual fund manager has a portfolio valued at $10 million closely resembling the S&P 500 index.  The Portfolio Manager believes the economy is worsening with deteriorating corporate returns.  The next two to three weeks are reports of quarterly corporate earnings.  Until the report exposes which companies have poor earnings, he is concerned of the results from a short term general market correction.   Without the privilege of foresight, he is unsure of the magnitude the earnings figures will produce.  He now has an exposure to Market Risk.

The manager thinks of his options.  The greatest risk is to do nothing, if the market falls as expected, he risks giving up all recent gains.  If he sells his portfolio early, he also risks being wrong and missing further rally’s.  Selling also incurs substantial brokerage fees with additional fees to buy back again later.

Then he realizes a hedge is the best option to mitigate his short term risk.  He begins by calling his CTA (Commodity Trading Advisor) and after consultation places an order to sell short the equivalent of $10 million of the S&P 500 index on the Chicago Mercantile Exchange “CME”.  Now his result is when the market falls as expected, he will off-set any losses in the portfolio with gains from the Index hedge.  Should the earnings report be better than expected, and his portfolio continues upward, he will continue making profits.

Two weeks later the fund manager calls his CTA and closes the hedge by buying back the equivalent number of contracts on the CME.  Regardless of the resulting market events, the mutual fund manager was protected during the period of short term volatility.  There was no risk to the portfolio.

Example 2: An electronics firm ABC has recently signed an order to deliver $5 million in electronic components of next years model to an overseas retailer located in Europe.  These components will be built in 6 months for delivery two months after that.  ABC instantly realizes they are exposed to two risks.  1. the rising and volatile price of copper in 6 months may result in losses to the firm.     2.  the fluctuation in the currency could easily add to those losses.  ABC being a young firm cannot absorb these losses in view of the highly competitive market from others in the field.  Losses from this order would result in lay-offs and possibly plant closures.

ABC telephones their CTA and after consultation places an order for two hedges, both for an expiry in 8 months, the date of delivery.  Hedge #1 is to buy long $5 million of copper effectively locking in today’s price against further price increases.  ABC has now eliminated all price risk.  The risk of plant closures is greater  than the lure of increased profit should copper price fall.  After all, ABC is not in the business of speculating on copper prices.

Hedge #2 is to sell short the equivalent of Euro Currency vs US Dollars.  Since ABC is effectively accepting EC in payment, a rising US dollar and a weak EC would be detrimental and erode profits further.  The result of the hedge is no risk and no surprises to ABC in either copper or currency levels.  A risk free transaction and full transparency is the result. In 8 months with the order completed and the customer accepting delivery, ABC notifies the CTA to close the hedge by selling the copper and buying back the Euro Currency contacts.

Many examples exist to demonstrate the mitigation of risk to an institution or financial portfolio.  Dwayne Strocen states that new products are constantly created and available on both over-the counter and exchange traded markets.  If would be wise to consult with a qualified Commodity Trading Advisor or broker to discuss the analysis for an on-going risk management solution or a one time only hedge.  If you’re not familiar with Genuine Trading SolutionsFree Reprint Articles, you can call them at (416) 302-6282. or https://www.genuineCTA.com

Websites Do Provide Free Insurance Quotes

 Making comparison between the free insurance quotes of a very large number of various different insurance agencies, companies and providers on the net is really a very easy task. This will also save a huge amount of money and also a lot of time. One can get free insurance quotes from the insurance agent or broker of an insurance company, agency or provider. But in this case he/she has to visit the insurance agent or broker of the insurance company, agency or broker.

So money and time, both will be wasted in this. The comparison making will also be very difficult in this, as manually it is really very difficult to make comparison among a number of things. But comparing them on net is very easy and also no fee is required for that. But one must visit a reputed website in order to get the free insurance quotes of a very large number of various different insurance agencies, companies and providers.

A crucial thing that requires to be kept in mind always is that you must very well know that the insurance company, agency or provider that you are choosing is reputed and also trust worthy. This can be done if you ask your relatives and friends about which company, agency or provider they had chosen for themselves. And are they satisfied or happy with that insurance company, agency or provider that they had chosen.

You can go with an insurance company, agency or provider with which your friend or relative is very happy. As that insurance company, agency or provider will for sure be good for you also. But it may be the case that it will not be good for you. So in order to be at safe side always, do get the free insurance quotes from the websites on the net and make comparison among all of them to select the best insurance company, agency or provider.

This will be better for you and you will be safe every time. Thus before buying an insurance policy, quotes must be observed carefully and comparison must be done between them. This will be beneficial and profitable only for you. Although it takes some time and effort but it is really very helpful. So keeping above things in mind one can get free insurance quotes and can also make comparison among themPsychology Articles, to finally select the best out of them.

Take the Help of an Agent before Buying Health Insurance plans

 Agent can even examine and compare your policy which you already have to what is currently available to you according to your financial status and medical history. One important thing you need to know...

Agent can even examine and compare your policy which you already have to what is currently available to you according to your financial status and medical history. One important thing you need to know before buying health insurance in Florida is that insurance companies penalize their clients for remaining in touch with them for more than two to three years.     
Thus, you should go to have one more policy after a couple of years in order to save your health and life.    
Start the process for buying required health insurance in Florida 
Start the process by asking yourself first what are you looking for? Now make a list of exact quotes according to your financial budget and medical history. The final premium for any life insurance policy, medical insurance policy or even disability is decided by the Underwriter.  At this step, you should meet a reputed Independent Agent who can assist you. You also need to know what to expect in terms of your final premium so that you can make a healthy decision of which product to choose.       Is there any one company that has the best policy? 
In Florida market, there is a tough competition among all insurance companies. All insurance holders live by holding market share, but the others have not succeeded. Let’s see how this proceeds by taking an example of a company, let’s assume there is the NYK health insurance firm in Florida that has got an “A” rating from A.M Best and it is Fortune 500, a national company with great earnings and a long track record. Since there are a number of insurance firms in the state, therefore a leading agent assures that each company has a price benefit in some matters. In this case, the NYK health insurance firm has affordable charge if you do for your family including children. They offer so as they have minimum cost for families and that gives them profit as other insurer charge you per child.       On which points your medical insurance coverage depends? You should know the factors upon which your medical insurance coverage depends  Financial budget Height and weight issuesMedical history       How about child only coverage? Age of each member of your family These are all factors upon which the services of a reputed medical insurance agent based for all Florida people. These are not just the factors, but also some important information for those buying health insurance in Florida.     So, if you are not covered in any plan yet, then buy the best plan for yourself. And if you already haveFind Article, then now buy next health insurance product. 

Why Should I Work With An Insurance Agent?

 Benefits of working with a health insurance agent. It is always nice to have an experienced and knowledgeable professional guide you while choosing your health insurance.

The internet has made shopping for insurance easier. Instead of driving around town to meet with an agent, you can compare rates, benefits, and apply online. Some insurance companies even let you apply right from their website.

Does it still make sense to have an agent help you choose a plan? You bet.
Agents are insurance experts. It’s their job to help you shop plans from leading carriers so you can be confident you’ve found the best rates and benefits for you.

4 Reasons To Work With An Insurance Agent When you consider all the benefits, working with an agent just makes good sense.
Agents guide you through the process. Buying an insurance policy can be complicated. An agent walks you through each step of the process and helps you make sense of all the “insurance-speak”.
Agents offer you choice. Your agent has a portfolio of plans to choose from, often from multiple companies. Your agent will know which policy will protect you the best. They'll even know which company is most likely to accept your application.
Agents troubleshoot mistakes. A mistake on your application can cause a company to raise your rates or even reject your application. Your agent will help you fill out your application correctly so you get the rates you deserve.
It’s free. This is the best part about getting insurance through an agent. Agents collect payment from the companies they represent. So you get all the advice you want — absolutely free.


So, what are you waiting for? It’s really worthwhile to have an insurance package to protect youFree Articles, rather than having to rush about to get funds during times of needs. Look up and call an insurance agent today to get a free health insurance quote.

Choosing the Right Insurance Agent is Decisive

 The right insurance agent or insurance brokers, in fact plays the role of a trusted financial advisor whose timely intervention proves crucial when it comes to ensuring financial safety and security!

Choosing a right Insurance Agent who can provide commendable guidance in Insurance related matters is as important as choosing or selecting a good physician, advocate or financial advisor for your family.

So what is it that makes Insurance Agents so important in your life? The answer is rather simple! An insurance agent, also sometimes referred to as Insurance Brokers, you finally choose can probably be a deal maker or a deal breaker of your life and its savings. For the fact that Insurance is something that involves yours and your dependants' lives and assets, it has to be a decision that demands enough of your time and involvement.

Who are Insurance Agents or Brokers?

If you are not aware, there are two kinds of Insurance agents or brokers you may come across; a type of agents are professionals who work for a particular Insurance Company promoting their products and hence offers restricted choice for a prospective buyer. Whereas, the second kind of agents, often called as brokers are independent professionals who work solely for a particular insurer or group of insurers, by willingly assisting the buyer with broader and detailed outlook of a choice of insurance policies or products from various Insurance companies and then charges a nominal fee or commission for the service done. One advantage of going for an independent Insurance broker is that you are not restricted or forced to buy policies of a particular insurance company alone.

Why is it Vital to Choose the Right Agent or Broker?

Be it business or insurance, in life everyone looks for some cost-effective deal and it is only a good insurance agent who can get you competitive quotes by comparing different plans offering the same coverage. Only a good insurance agent who has ample exposure and knowledge in the insurance type of your choice can ensure that you are covered under a policy that gives you maximum protection at a premium rate that is comparatively low. However, a true and genuine person alone can convince you with the fact that the coverage level of an insurance policy that protects your life against a truly enormous sum doesn't come very cheap either.

How to Look Out for a Good Agent?

Always remember it is not the total number of policies sold by an agent that makes him/her great, butBusiness Management Articles, what matters is how well they have played their role in covering the insurance buyer under the best possible insurance plan within the set budget.