DiscoverHow To Trade ItRisk-On, Risk-Off with Michael A Gayed, Ep #95
Risk-On, Risk-Off with Michael A Gayed, Ep #95

Risk-On, Risk-Off with Michael A Gayed, Ep #95

Update: 2022-01-13
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Michael A. Gayed is Portfolio Manager of the ATAC Fund Family at Toroso Investments, an investment management company specializing in ETF focused research, investment strategies and services designed for financial advisors, RIAs, family offices and investment managers.  He is the author of five award-winning research papers on market anomalies and investing. Michael has been interviewed on CNBC, Bloomberg, and Fox Business, as well as the Wall Street Journal Live for his unique approach to interpreting market movements.  In this episode of How To Trade It, Micahel unpacks what risk is and isn’t.  It might not be what you think. You don’t want to miss it!

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You’ll want to hear this episode if you are interested in…

  • [00:47 ] Michael’s Twitter engagements
  • [02:54 ] Having “Risk-on, Risk-Off” defined
  • [13:13 ] Going where probabilities are highest
  • [20:45 ] What Michael has to say about humility
  • [22:30 ] Discussing the Inflation/Deflation meme
  • [27:28 ] The big 3 indicators that a change is coming
  • [31:39 ] Michael’s main objective

When traditional media outlets talk about risk-on, they are generally speaking about direction.  For example, if the market is positive, they say it’s a strong risk-on day.  For Michael, RORO isn’t about direction at all. Instead, it’s about conditions that favor an “accident” in the market.  Michael believes there are certain relationships which have commonality, in terms of interest rate sensitivity, that tend to get ahead of major black swan events.

There are three indicators that Michael looks for ahead of crashes, corrections, and bear markets. First, utilities relative to the stock market.  If utilities outperform the stock market, on a short-term basis, generally you see a rise in volatility.  Next, lumber relative to gold.  When lumber is weak relative to gold, you tend to see higher volatility.  And third, long-duration treasuries relative to intermediate. Ultimately, these three indicators are all about interest rates.   

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Disclaimer: Trading carries a high level of risk, and may not be suitable for all investors. Before deciding to invest you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment. Therefore, you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. 

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Risk-On, Risk-Off with Michael A Gayed, Ep #95

Risk-On, Risk-Off with Michael A Gayed, Ep #95

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