Posts Tagged ‘Risk Strategy’

1 May 12 2011 @ 10:58am by Matt Smith in Crude Oil, Economy, Global Energy, Natural Gas, Random, Risk Strategy

Scooby, Scrappy, Velma, and Efficient Market Hypothesis

Last week’s crazy moves across Commodityland™ left me needing a stiff drink brought me back to thinking about financial market theory (apologies…despite the presence of Scooby I am going to geek out a little bit) and how sometimes it gets thrown out the window.

From a 17% sell-off in crude, to a 31% sell-off in silver last week, commodities were put through the wringer. When extremities like this happen, it makes us question the underlying assumptions that we make about markets, and whether these assumptions hold true. » read more

0 Apr 14 2011 @ 10:55am by Matt Smith in Crude Oil, Economy, energy consulting, Global Energy, Natural Gas, risk management, Risk Strategy

What The Wizard Of Oz Can Teach Us About Risk Management

I was off spinning my wheels on an idea for another post this week, when I came across the movie ‘The Wizard of Oz’, and I realized it provided some simple yet sage advice for energy hedging. Believe it or not, via Munchkins, Toto, and the Wicked Witch of the West, we can glean some useful tips to guide us through the minefield that is energy risk management: » read more

0 Mar 30 2011 @ 9:56am by Matt Smith in energy consulting, Global Energy, risk management, Risk Strategy

Chips and Salsa With Precision Castparts Corp Pro

For my latest indulgence of chips and salsa, I was fortuitous enough to grab some time with charismatic Nick Balster from Precision Castparts Corp. Nick travels the world overseeing energy for PCC, who is a worldwide manufacturer of complex metal components and products. Enjoy Nick’s entertaining responses on energy management, global challenges, and neutered pets:   » read more

0 Nov 4 2010 @ 8:20am by Matt Smith in energy consulting, Global Energy, Natural Gas, risk management

File Under: Funny / Interesting

This entertained me tremendously. Last week the below message came into the Summit Energy website on a ‘contact us’ form. I’m still not quite sure what I’d said to provoke it, but for someone to hunt me down because they felt strongly enough about a topic, I figured they must have something interesting to say. They did: » read more

2 May 20 2010 @ 10:35am by Matt Smith in Economy, energy consulting, Global Energy, risk management, Risk Strategy

Commodityspeak Through the Medium of Shakespeare.

To tie in with the shindig that is the launch party of our UK office at Shakespeare’s Globe Theatre on June 15th, I present to thee forthwith ten quotes Billy the Bard would say if he were involved in commodity risk management:

1) There is nothing either good or bad; but thinking makes it so – yes, markets are driven by various forces passing the parcel, from fundamentals to technical analysis to outside influences. But sentiment, opinion and fear/greed also play a starring role. So even if something is not in bad shape, if the consensus makes it so, then prices will reflect this.

2) Measure for Measure – a measured approach to mitigating risk is the way forward, and ties directly to my haiku on risk management: uncertainty is…..an ever-present threat so….hedge hedge hedge hedge hedge.

3) Chaos is come again – Othello knew where it was at…crude down 23% in 13 unlucky trading days, from top of the pops (high of the year $87.15 on May 3rd) to the drop of all drops ($66.91 today – May 20th).

4) Better three hours too soon than a minute too late – hedging is not about picking the bottom of the market, it is about mitigating risk.

5) Though this be madness, yet there is method in’t – why it makes sense to quantify risk in commodity markets. Although no-one can perfectly predict the future, by equipping yourself with a Batman-like utility belt of tools for assessing the potential evolution and volatility of a market – from macroeconomic or econometric models to Value-at-Risk to technical analysis – you can establish parameters to quantify present and future risk and reward.

6) Foregone conclusion – Pah! Shazbat! Unlike in Othello, there is no foregone conclusion in commodity markets. Which is probably a good thing too, as there would be no need for an energy consultant (= Unhooray!).

7) Screw your courage to the sticking-place, and we’ll not fail – having the knowledge to stand by your convictions on market opinions is key. And then develop, evolve, and expand on this opinion by using research, analysis, facts, and cement.

8) The winter of our discontent – no thank you, we have already been through this – no need for a sequel.

9) When shall we three meet again? – the witches from Macbeth are always good for a quote, even without mentioning hubbling and bubbling, toil and troubling. There’s many clichés to describe this – a rising tide lifts all boats, in times of crises all markets correlate, etc, etc, – the point is, following commodities is about monitoring all assets – be it equities, bonds or currencies, as they all influence each other, and can provide insight into the short-term movement in another.

10) By the pricking of my thumb, something wicked this way comes – two words for you – hurricane season. This year is predicted to be one of the most active seasons for years based on some key factors. That said, some say a trained chimp can predict hurricanes better than NOAA.

If you wish to attend the UK event, please click on the ‘Much Ado..’ picture at the top of the post.

I bid thee farewell.