Coherent weekly chart pack 2023 11 28 Volatility always moves first The conundrum between falling volatility and falling bond & equity indices is resolving itself as per the volatility indication i.e. bullish. This is something well-known to option/volatility traders – volatility always moves first, then the price of the underlying assets. I was slow to...
Coherent weekly chart pack 2023 11 12 “Too many people were far too over their skis on the short side of both equities and bonds” I just loved that turn of phrase, and couldn’t resist repeating it. Balance – on skis and in portfolio management – takes years of practice and continuous hard work. It...
Coherent Weekly Chart Pack – 20231105 The New Abnormal or the Old Normal ? The chief economist from the UK hedge fund business Brevan Howard has been quoted as referring to the end of the Greenspan Put and the beginning of the “new abnormal” – an environment in which high & volatile inflation & interest...
Coherent Weekly Chart Pack – 20231022 The lowlights of the week: The financial asset classes (bonds, equities, property) look like they’re in for a rough period; the only hiding places look like crude oil, gold & bitcoin. Let’s hope the week isn’t too bad.
Managing financial risk in times of crisis: when hedging may not turn out to be a hedge at all… Andy Pfaff, The Fuel Desk [1] Events in early 2020 have led to one of the most precipitous drops in global oil prices ever. As of Tuesday, March the 10th, the price of oil had...
Andy Pfaff argues that asset allocators should consider exposure to physical commodities and not just resource stocks. For an economy built on commodities, South African investment portfolios hold surprisingly few commodities. You may see a lonely gold ETF, but the rest of the commodity allocation is generally made up of resource equities. As much as...Continue reading
Commodity futures have been easily tradeable since the 1970’s. These futures were designed for commercial use on a wholesale scale. Since 2000, listed commodity derivatives such as Exchange Traded Funds, Exchange Traded Notes & Exchange Traded Commodities have made the purchase & sale of individual commodities more easily accessible to all investors. However, these have...Continue reading
“While the current combination of fiscal & monetary stimuli might not necessarily result in rising inflation, the addition of fiscal stimulus to the monetary stimulus does provide a powerful additional tailwind for rising commodity prices.” Andy Pfaff (Coherent Capital Management, 2020) Cost-push or demand-pull? The rebound in commodity prices from the pandemic-induced lows of 2020...
“Fully-collateralized commodity futures have historically offered the same return and Sharpe ratio as equities. While the risk premium on commodity futures is essentially the same as equities, commodity futures returns are negatively correlated with equity returns and bond returns. The negative correlation between commodity futures and the other asset classes is due, in significant part,...Continue reading
Collective Insight – Diversifying a portfolio through commodities