You're watching...
Axioma founder Sebastian Ceria on how investors can gain from investments in Europe while minimizing the risks.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Federal Reserve Chairman Ben Bernanke is worried about Europe derailing US financials buzz about serious as the correlation between Europe and the US is -- Here what me in a Fox Business explosives about sincerity is the founder and CEO.
Of risk management firm -- what we're gonna get to -- -- firm does that basically your clients pay you.
To protect them against issues like Europe.
What do you say right now.
Yes so what we say is that when you look at risk in Europe and when you actually look at what's going on in the eurozone.
-- -- distinctive groups that are emerging there's one group which.
Probably needs a Greece and Portugal port you know completely out -- that we're -- back hoping you were.
I would wanna call it that path then there's another group which is surprisingly has Ireland -- it but certainly have Spain and Italy.
Which is a group that was you know potentially in trouble it's getting a little bit better.
Over the last few weeks and then there's the group which is the group that we all know the one bite but you know that has Germany that has the Netherlands has France Finland.
Extending your clients you're saying that that based on in your -- by some of the biggest financial firms in this country you tell them basically they've got to break this in the sub sections.
And limit the rest depending on how bad that cluster is of those three groups that you mention.
Yes so I I think what is important to understand when you talk about risk.
Is that you don't wanna get out necessarily of something because there -- risk what you wanna do is we want to trade off risk and return.
So if you think that it's worth your your money in your risk to invest in any of this owns.
Then you can do -- if you don't want to actually take for example the risk in Europe but you find some companies that you believe are gonna outperform.
Then you should invest in -- and hedge out the European risk that.
And I know this you say it's like a blood test is say that it's a blood test looking at bad and good cholesterol we all have cholesterol there's there's bad -- that you're getting the same thing when it comes to right looking at stocks over -- -- He had -- at the end of the day is really trying to understand what are the risks that are intended and one of the risks that are unintended you know -- -- we -- -- -- no return sort of when you look at the -- example I mean the cholesterol we would look at -- cholesterol and the cholesterol right now cholesterol we -- have and it's -- -- -- which is okay with us.
And back cholesterol when -- get rid of so when we talk about risk and when we talk a bit about the factors that drive risk what is important is to understand that there's some factors for example macro factors like country we just spoke about Greece and Portugal.
It could be regional it could be currency which is spoke about the Euro or -- Whether -- stock correlated to stock performs you know assuring -- -- -- some of the points of you know looking at the momentum have a stop would be at the company it's not exactly is written.
I do wanted to also -- our our viewers that see you have a it's it's basically it's Quantum software basically it's software -- you self again.
To some of the biggest financial firms in this country hedge funds.
And it helps them evaluate.
Risk explaining how the software works and explain how our viewers are retail investor viewers can potentially learn from.
Right so I think what we do I mean again bringing back the eligible blood -- we we sell software and content to risk models.
That help you analyze your portfolio and really tell how much cholesterol you have the good and the bad.
How much momentum you have the good and about how much upside bias -- you have a much large -- small cap and what are the risk of your reporters really coming from.
And essentially what this large institutions do is they see what -- the risks that they want to take where they have a view right if they have a particular view.
That Italy is actually gonna outperform the -- find a big bet on that and the risks that are unintended dog the risks that they essentially get out.
Is seems like it's a risk on environment right now if you look at mutual fund and I loans for the month of February more than 43 billion dollars flowing -- That is frankly I knew we haven't seen numbers like this at least for three to four -- so.
Do you take that -- that the average -- -- investor your clients are more willing to take risk now.
Right so we've been an environment of risk on risk off right you've heard those terms -- you know used many times before the last year was risk off.
And that's why -- looked at -- -- stocks did particularly well if you look at you know strategies that were falling -- volatility stock state -- great.
What we have this year as we have a market rally and that means that high volatility stocks are actually gonna outperform and stocks that have you know a lot of momentum or actually do an awful.
Really go I don't on our viewers -- -- you -- -- -- -- -- up three indices with the NASDAQ the -- -- commodity -- and I do -- shadows of the nearest -- -- experiencing in and probably very important.
They've got -- -- gold in an agricultural commodity.
Equity these -- indexes anyway there are -- that the names for your right there if any with us three and Franklin and look what -- commodities in the run up for them.
Our viewers complaint with Acxiom must I wanted to show those to our viewers some necessary thank you very much -- and CEO -- -- using mathematical formulas to protect.
Our portfolios that this thing has been a good president such giant.
