Steve Sosnick

If you think portfolio risk management is just about diversification, think again. This article sheds light on some surprising strategies that challenge common perceptions. Here are some thought-provoking takeaways: - Did you know that reducing the number of investments in a portfolio can sometimes actually decrease risks? It's all about strategic selection. - Contrary to popular belief, actively managing risk doesn't necessarily mean more frequent trading. In fact, a hands-off approach can be a smart move. - One of the key points discussed is the importance of understanding the correlation between investments, a factor often overlooked in risk management strategies. - Asymmetric risk and the role it plays in portfolio management is explored, offering a fresh perspective on balancing risk and return. - Ever considered tail risk hedging? This article dives into this lesser-known strategy that can enhance risk management effectiveness. Share your thoughts and feelings on these unconventional risk management strategies. https://lnkd.in/ecgSpH93

AllianceBernstein Private Credit Outlook: Keep Calm and Diversify. Interest rates are falling but growth is holding up. Still, we see ways to proactively shore up private allocations https://lnkd.in/eAcFiiHx

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MSO earnings season starts this week, with eight of the top ten US operators reporting. Consensus analyst expectations are for the top ten MSOs to show a Q/Q 2.62% contraction in revenue and adjusted EBITDA to decline 6.18%. (1/3) The top ten MSOs' Y/Y revenue is expected to grow by 3.20%, and AEBITDA is expected to expand by 17.30%. Analysts predict the highest Y/Y revenue growth for Ascend Wellness Holdings (CSE: AAWH.U / OTCQX:AAWH) at +22.40%, and Cresco Labs is predicted to have the best Y/Y improvement in AEBITDA at +62.00%. Finally, here are some of the companies reporting this week: May 7: Ascend Wellness Holdings (CSE: AAWH.U / OTCQX:AAWH) May 8: Green Thumb Industries (GTI), Verano, MariMed, Inc. May 9: Curaleaf, Trulieve, TerrAscend, Cannabist, Jushi Holdings Inc. Source: FactSet

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Bravo, Corey Hoffstein and Steven Braun of Newfound Research for writing an excellent paper on replication of #cta #hedgefund returns. The big conclusions that build on our research: - Manager skill in managed futures exists but is evenly distributed and lacks persistence; hence, diversify. - Top down replication works as a repeatable, adaptable investment process to capture the drivers of returns of bona fide #hedgefunds. - Fee #alpha is real. Or in hedge fund language, “give me a 400 bps head start and I win 80% of the time.” The paper spends a good deal of time on tracking error. Tracking error to an uninvestable hedge fund index may not be the right question. Isn’t the right question, shouldn’t there be a practical, actionable, investable index that approximates the returns of the space? If only….

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This is a compelling piece by Jimmy Chang, analyzing the evolution of Fed policymaking over the past 45 years. With potential rate cuts and election outcomes in the mix, understanding these dynamics is crucial. https://lnkd.in/eFPaDG3U

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"It has been a blow to the European bourses as companies switch their primary listing and/or do glitzy launches on the NASDAQ and NYSE," said Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors. Thank you to Sri Hari N S for quoting us in his Reuters article, “British #commodities broker Marex‘s #Nasdaq debut.” 🪩The American exchanges have been able to one-up on pomp and circumstance—recent equity listings such as British ARM Holdings, LP, CNH Industrial, and Smurfit Kappa come to mind. 🌍European companies have been trickling over to US #exchanges lured by higher valuations, the dominance of US #equities in global indexes, faster US economic growth, abundant #tech and green investment incentives created by the US Inflation Reduction Act, simpler regulations, and the appeal of an #IPO boost to their U.S. marketing efforts. Also, the prevalence of US #privateequity and #venture investors in the capital stack of European pre-IPO companies creates a bias towards more familiar US exchanges, making it their preferred listing venue. For the London Stock Exchange (#LSE) in particular, #Brexit worsened their ability to attract and retain listings. 👩🏽‍💻Additionally, within the U.S., as the prevalence of fintech managed custom equity indices with tax-loss-harvesting grows, international stocks that have the heightened U.S. liquidity that comes with an American #listing have a better chance of being owned and traded within these custom accounts thereby further increasing demand for shares. 📈NYSE and Nasdaq have become global exchanges! For Marex Group, which is one of the largest London Metal Exchange (#LME) Dealers, they are probably looking to achieve the best long-term market acceptance of their shares. #Europe #UK #investing ~~ Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-24-68

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If you’re heading to Fixed Income Leaders Summit next week, keep an eye out for Ron Catena and Bobby Croswell from the Marex Outsourced Trading team. Find out about the evolution of fixed income outsourced trading and the rise of hybrid trading models. Learn how combining in-house capabilities with third-party expertise can unlock new opportunities and efficiencies. Worldwide Business Research (WBR) #FixedIncome#Trading #Buyside #CapitalMarkets #OutsourcedTrading

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Mustread - Bridgewater Associates - US Exceptionalism: Drivers of Equity Outperformance and What’s Needed for a Repeat Key highlights:   US equity outperformance has been driven by a combination of (a) faster revenue growth, (b) bigger margin expansion, and (c) rising P/E multiples—in roughly equal proportion.   Today, strong US EPS growth outperformance is already reflected in the prices, at a time when many of the largest drivers of backward-looking US equity outperformance cannot be counted on to repeat going forward (from globalization to tax cuts to the massive fiscal support for profits). A lot now boils down to the ability of the US tech sector to deliver and AI to unleash a broad productivity impact across sectors. The bar for continued outperformance is high—but the potential is also there.   US corporate profitability has been supported by both (a) better capital deployment choices by a more competent and better-aligned management, and (b) operating in a more pro-corporate environment, including support from fiscal.   The fact that US companies delivered superior earnings and price performance over the past decade (which was most pronounced in tech) got priced in via these higher long-term cash flow expectations. This dynamic is what sets a higher hurdle for outperformance looking ahead.   When considering the outlook for the S&P 500 from here, it is important to consider that many of the biggest drivers of the backward-looking returns discussed above (e.g., rising margins, rising P/E ratios, massive fiscal support to profits) are also what sets a high bar for outperformance looking ahead. And while the US continues to have significantly better companies, that’s also a lot more priced-in today versus a decade ago.

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Tomorrow's rate decision in Iceland is arguably the most exciting this year. Although every analyst agrees that progress on inflation justifies a cut, market opinion on the sizing runs the gamut from 25bps to 75bps. The consensus is firmly for a 50bps cut. After all, it’s likely that inflation in Iceland will continue to trend down over the next few months, and there is a risk that the Bank’s real policy stance will tighten excessively due to the long lag until its next meeting in February unless it moves proactively with a jumbo cut now. It’s a fair argument, and one that may well come out on top during the MPC’s deliberations. However, in my note to clients last week, I stuck my neck out and made the out-of-consensus case for why I think the Committee is more likely to move for a cautious 25bps cut while inflation remains above 5%. Here’s five reasons for 25bps: 1) Every comment made by committee members following the inaugural cut of the cycle in October has tilted hawkish and one member would've even preferred to keep rates unchanged. Given the signalling, I think the majority of the MPC would prefer being a couple of months behind the curve to cutting too early (this was the approach the Committee took in May, when it faced an even longer lag between meetings). 2) The Bank’s assessment of the real policy rate across a range of inflation measures probably hasn’t increased by more than 0.1% since the Committee’s last meeting. That doesn’t provide a whole lot of room to cut rates if the aim is to adjust the nominal rate without loosening the real stance. 3) If anything, the economy has perked up from the Committee’s last meeting; fewer people registered as unemployed this October than last year, consumer sentiment rallied 30 points following the Bank’s first interest rate cut and card turnover increased a *whopping 6% in real terms* in the same month. I struggle to see what necessitates a jumbo cut at this point (open to other views!) and I have a feeling the Committee will feel like it can afford to wait for more data before cutting big. 4) Next year’s central government budget slipped meaningfully between MPC meetings, with the target primary surplus deteriorating by 15bn (0.3% GDP) before being finally approved by parliament yesterday. 5) There's a backdrop of labour unrest, with some official sector workers striking to force significantly higher pay packages than Collective Labour Agreements signed by the private sector stipulated earlier this year. It's a highly uncertain decision, but I hope the contrarian case at least provides some food for thought. If I'm wrong, feel very free to rub it in in the comments tomorrow (I've made bets to buy around 13 different colleagues pints if the Committee ends up cutting by more than 25bps, so will also be accepting charitable donations 😅).

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We talked how 20% moves should be thought of as normal for GME based on June volatility and upside calls are more extreme now than they were in 2021. And lastly how market makers may be positioned going in to the important June expiration on the otherside of RK's calls.

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🔗 https://lnkd.in/eGF8CR2R To help decipher and contextualize the current #market reaction Seema Shah, and George Maris, provide some clarity into the current situation and their expectations for the remainder of 2024.

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What is Portfolio Rebalancing? Portfolio rebalancing and weighting are powerful risk management strategies and particularly relevant after large price moves in either direction.   https://lnkd.in/buihSvE

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In our latest "Top of Mind" article, Head of Multi-Asset Strategy @Adam Berger and Portfolio Manager @Peter Carpi discuss factors that could help small-cap stocks rebound and the search for winners in this inefficient segment of the market.

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Don't fight the Fed my backside - don't follow them makes much more sense A common theme of my posts over the last few years has been the fallacy.of hanging on to every word uttered by various Central Bank officials to guide investment strategy. Yet again investment managers who rely on guidance - nee direction from the Fed keep getting wrong footed or just outright wrong . the prime example has been the inverted US Tbond yield curve which has been signalling recession for the past 2years .This virtually faultless indicator needs to be analysed correctly to give an indication when the forecast recession actually kicks in.That occurs when the yield suddenly dis-inverts in what is known as "bull Steepeners " ie short rates suddenly collapse faster than long rates.That has now occured combined with.a deluge of warnings from US retailers across the board from junk food outlets to anything reliant on discretionary consumer spending that the average US punter has run out of cash to spend.Throw in soaring car repos .mortgage delinquencies etc and the conclusions are obvious and inevitable. But the Herd investor both individual and institutional prefer to ignore all this and be guided by Central Bank drivel that the economy is in great shape blah blah which is now becoming clear it is not. As a result most have missed out on a significant emerging bull market in long term.TBonds whilst getting sucked into overvalued stocks ( especially Tech ) based on the narrative of a strong economy Yet again the more investors blindly follow the Fed the more they come unstuck.Back yields were 1% Fed Governor Kashkari went on record saying rates would stay close to zero until 2025.Just lately the same individual was pronouncing rates may have to rise above the current 5.25% - needless to say Market rates are currently collapsing to below 4% as the Fed gets it wrong again and the yield curve gets it right again. Fund managers need to have the courage of their convictions and do their own analysis - don't fight the Fed my backside - far better to ignore the garbage that is spewed out and position in the opposite direction - listen to what the market is saying about itself not what Central Bankers are saying about the msrket

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I'm excited to share the first installment in our ETF Insights series: "The Importance of Knowing the Constituents of an ETF." Understanding the individual securities within an ETF is crucial for informed investing. In this post, I explore how knowing ETF constituents helps in: Evaluating risk and sector concentrations. Aligning investments with your financial goals. Achieving true diversification and balancing asset classes. Making informed adjustments in response to market changes. Read the full blog post here and stay tuned for more from this series in the coming weeks: https://lnkd.in/eE_pY7cS #ETF #Investing #Finance #InvestmentStrategy #Diversification #RiskManagement #FinancialGoals

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