Arthur Steinmetz’s Post

💡 *How to be a Smart Investor when the Market Is Crazy?* Have you felt some weird and unexpected movements in the markets lately? Well guess what, you're not alone! 📊The market is influenced by various factors that affect the prices of stocks, such as things that happen in the world, the economy, the industry or any company. Some of these factors are common to most stocks and asset classes, while some are specific to certain stocks or groups of stocks. 🏦 The risk that affects everyone is called “systematic” risk, “Beta”. It is caused by things that are beyond the control of individual investors or companies, things that happen in the world or the economy. Systematic risk cannot be avoided or reduced simply by diversifying your portfolio. 🏭 The risk that affects only some is called “non-systematic” risk, “Alpha”. It is caused by things that are specific to the company or the industry, like things that happen in the company or the sector. Non-systematic risk can be avoided or reduced by diversifying your portfolio. You can find the full content here: https://lnkd.in/dJiaZKU2 I hope you will find it useful and interesting! I want to thank my mentor David Zimmer for giving me this opportunity. He is a great source of knowledge and inspiration, and I highly recommend you to follow his substack : " the Ticker Edu " if you haven't already. You will get access to his valuable insights and tips on how to invest, achieve your financial goals and build your wealth over time. I would love to hear your feedback and comments. Also, if you have any questions or suggestions for future topics, please let me know. I am always eager to learn more and improve my skills. Thanks for reading and happy investing! #investing #marketanalysis #globaleconomy #globalmarkets #stockmarket #alpha #wealth #trading #economics #financialanalysis #finance #financialmodeling #systematic_risk #unsystematic_risk

Investing in Currency Alpha as a source of uncorrelated returns is still a relatively new concept for many institutional investors. During my recent presentation at TexPERS 2024 in Dallas, I highlighted similarities between active currency and active equity investing. I compared the most liquid currencies, such as the US dollar, Euro, British pound, and Japanese yen, to major stocks like Apple, Microsoft, Amazon, and Tesla. Other G10 currency pairs were likened to large-cap equities, while Emerging Market currencies were analogous to small-cap equities, and Frontier Market currencies to private investments. In times of market downturns, defensive equities can be compared to safe-haven currencies like the US dollar, Swiss franc, and Japanese yen. Additionally, there are similarities between equity and currency markets in terms of risk factor investment styles, such as Value, Carry, and Momentum. However, there are also differences between these investment avenues, which ultimately provide a diverse and flexible opportunity for investors to optimize their portfolios for higher returns at the same or reduced risk levels.

📈 **Unlocking the World of Stocks, Derivatives, and Hedging 🌐** Hello, LinkedIn community! With three years of hands-on experience in trading, investment, derivative trading, and risk management through hedging, I'm thrilled to embark on a journey of sharing insights and knowledge about the fascinating world of the stock market, derivatives, and hedging strategies. 💡 **Why the Stock Market, Derivatives, and Hedging Matter:** The stock market, derivatives, and hedging play crucial roles in our economy, impacting businesses, investors, and the everyday lives of individuals. My goal is to help demystify these complex but rewarding fields, drawing from the wisdom I've gained through years of active participation. 📊 **Topics I'll Be Covering:** In the coming weeks, I'll be diving into a range of topics, including: - Stock Market Basics: What are stocks, how does trading work, and what moves the markets? - Investment Strategies: Exploring various approaches to building wealth through stocks. - Derivative Trading: Understanding the world of derivatives, including options and futures. - Hedging Strategies: Practical insights into risk management through hedging techniques. - Market Trends: Staying up-to-date with the latest market trends and opportunities. - Indian Stock Market Insights: Focusing on the nuances of the Indian stock market, where I've honed my expertise. 🤝 **Let's Connect and Learn Together:** I invite you to connect with me if you share an interest in the stock market, derivatives, hedging, or if you have questions about investments. Let's build a community of informed investors who support and learn from one another. 🚀 **Stay tuned for valuable insights!** #StockMarket #Derivatives #Hedging #Investing #FinancialEducation #trading

Global markets are dynamic, constantly adjusting to new information about earnings, income expectations, and future growth projections. If markets are dynamic, shouldn’t your equity allocations be too? The FTSE Invesco Dynamic Multifactor index series leverages Invesco’s macroeconomic regime identification model to shift allocations based on the FTSE Russell’s multifactor indices. “The right ETF starts with the right index.” Click this link to view our case study: https://lseg.group/3TfFdKR Index Series Webpage: https://lseg.group/3uM3JK6 #Multifactor #Dynamic #Factors Invesco US

I personally think that it depends on the system efficiency when it comes to quant system. Low float micro-caps , anyway don't have adherence to price/vol/time for the artificial pricing issue and impact cost to be in them is higher as compared to where the liquidity is there. In India, the quant system till now, which run in the name of quant, are very lame to say , and eventually they pack the momentum trading concepts into the gift wrapping of word "Quant", and they are the ones who invest in momentum stocks where max are microcaps hitting circuits. No Quant system should be called one, if one doesn't have risk adjusted matrix at check. Data, in dynamic markets, changes rapidly and one has to have, efficient model which knows how to handle kurtosis and make proper exposure risk check or hedges based on long only or long short fund.

Introducing our February 2024 Chartpack - an in-depth look at the latest economic and market trends! This report raises concerns that the victory over inflation may have been premature. We explore the dominance of mega-cap tech, risks of overvaluation, challenges for macro traders, potential crises in real estate and sovereign debt, China's economic tug-of-war, and elevated return expectations for hedge funds. Don't miss these vital insights into today's unique market environment. https://lnkd.in/ea8KQDyb

☃️ Here’s How “Snowball” Derivatives Could Be Fueling China’s Market Crash What's a "snowball"? Imagine a financial product promising juicy returns (we're talking 10% to 20% annually) as long as a specific stock index, typically small cap indices like the CSI 500 or CSI 10000, stays in a certain range. If the index behaves, investors pocket regular payouts, kind of like bond coupons. If the index shoots up, the party ends and you take your last earnings. But if it nosedives, payments halt and you might lose a chunk of your investment. Risky business? In theory, no. The brokers selling these products usually hedge themselves via futures, so a drop below the set level – as has been happening lately – shouldn’t really trigger a massive sell-off in the actual stock indices, but just in the futures. But if decades in the financial trenches have taught us anything, it's that real-world markets often laugh at our theories. So here’s how this may shake up the broader market: 👉 Exacerbating market volatility: Trouble in the world of snowballs adds a fresh layer of risk, leading to more unpredictable outcomes and, you guessed it, more ups and downs in the market. This risky vibe can quickly spread to the base indices. 👉 Cascading losses for investors: Facing losses, investors might start offloading other assets to cover these hits, potentially sparking a wider sell-off, more losses, and even more selling. 👉 Hedging moves by issuers: The big players who put out these products also try to balance their risks, and these maneuvers can stir up market prices, adding to the chaos. 👉 Arbitrage ripple effect: Smart traders might spot price gaps between futures and the stock indices and play them to their advantage, impacting the actual stock prices in the process. 👉 Psychological impact: If many investors incur losses due to knock-in events, it could lead to a negative sentiment that indirectly affects the stock index. 👉 Regulatory reaction: The drama around snowball derivatives might catch the eye of regulatory bigwigs, leading to possible interventions that shake things up in the stock markets. So, what's the opportunity? Chinese markets are currently caught in a whirlwind of worsening sentiment and shaky fundamentals. Trading in these conditions is tricky (ever tried catching a falling knife?). But there might be a silver lining for the long-haul players – a point where jumping in is just too good to miss. The bleaker it gets, the closer we might be to that spot. So, keep an eye out for opportunities to average down your investment cost. If you want to receive more posts like this, please give it a like and subscribe to receive all of my posts. #derivatives #china #investing #snowball

Yield pressure continues to drag on equity markets

Here is a look at the most recent technical trends in the market. There are no outright changes to support and resistance levels on benchmark equity indices this week.