Volatility & The Alchemy of Risk

“The Global Short Volatility Trade now represents an estimated $2 trillion in financial engineering strategies and share buybacks that simultaneously exert influence over, and are influenced by, stock market volatility. Volatility is now an input for risk-taking and the source of excess returns in the absence of value. Like a snake blind to the fact it is devouring its own body, the same factors that appear stabilizing can reverse into chaos. The danger is that the multi-trillion-dollar short volatility trade, in all its forms, will contribute to a violent feedback loop of higher volatility result in a hyper crash.” – Artemis Capital Management

An outstanding white paper about volatility and how it can be the fuel that’s added to the fire.

361 Capital Weekly Research Briefing – November 3, 2014

01_jump

 

361 Capital Weekly Research Briefing – “Don’t Look Down”

With Colorado Election night tonight, I’m sure many will be very interested in the outcomes. If you live in Colorado there was no shortage of media propaganda that made it to your living room or vehicle. In all my years of living in this state I really don’t remember a time where so much money was pushed towards negative ads. Every other commercial, and at times every commercial, was a negative political ad. I take voting seriously, and even though I’m only one vote, it’s hard not to be unbiased in your decision-making when almost all political candidates are hurling shit at each other. It took me 2 hours, but I sat down at my computer and did as much research as I could on each candidate, including the judges. To be candid, the system that Colorado has in place to elect judges is preposterous, in my opinion.   In fact, unless you’re an attorney, or frequent the judicial system, there aren’t too many websites or resources that provide good reviews of judges. There aren’t too many people that take judge re-election as seriously as other positions, but they should. I argued in front of some terrible judges, but they keep getting re-elected because, who the f*ck cares. It’s an afterthought for most. Colorado needs a better way for Coloradans to make more informed decisions regarding these judges, especially when these few decide the fate of many. Now it’s time to watch Twitter and all the idiot, self-proclaimed political pundits talk about how the world is going to end because their “guy” didn’t get elected…

361 Capital Weekly Research Briefing – “Are You Not Entertained?”

01_Maximus

 

361 Capital Weekly Research Briefing – October 27, 2014

This V-Shaped rally in equities has been quite the ride. If you were involved in the equity market at all it was all but guaranteed you made money. This morning’s Consumer Confidence number blew away expectations with a consensus estimate of 87 and an actual number of 94.5, which was the highest it’s been since 2007. Additionally, durable goods orders dropped significantly from -18.3 percent to -1.3 percent. Quite a change.  Oil and precious metals are still taking a beating, while interest rates stay historically low. Both interest rates and low oil prices should give consumers some discretionary income for the holiday season. Typically, November is the start of the year end rally. After a volatile October, it will be interesting to watch how this story unfolds.

361 Weekly Capital Research Briefing – October 20, 2014

01_REDLEAVES_smaller

361 Capital Research Briefing – “Leaves Aren’t The Only Things Turning Red This October…”

The equity markets took an absolute drubbing last week. Volatility was through the roof in all markets and we saw some swings that would give anyone whiplash. The beginning of this week created V-shaped formation in the S&P 500. In addition, we have retraced back 61.8% from the October lows to the previous market highs. It’s been quite the ride. Mr. Rollins finds a great quote from Mr. Bob Farell…

“When everyone is waiting for a rally to sell into, either you don’t get a rally or, if you do, you shouldn’t sell into it.”