Everyone is asking the same question, “Where is the market going and what should I do?” The financial markets at home and abroad are a disaster, and the financial community says the same thing. “Diversify, buy value, buy tech, buy the dip, don’t buy the dip, go to cash, hold for the long term yada, yada, yada.” In the end, everyone has an opinion, and you know what they say
What everybody wants to know Is this a good time to buy the dip, hold your current positions, or go to cash? I’ve been in this business for over 30 years, and I have learned some tough lessons: Market timing is a fool’s game. People confuse being lucky for being good. Buying and holding for the long term is a strategy that, near retirement, can keep you working longer than
Hedging Oil Volatility November 1, 2021 Dominick Paoloni, CIMA®CIO & FounderPortfolio Manager, IPSAXAdjunct Professor, University of Denver& University of Colorado West Texas Intermediate crude is up more than 60% in 2021 recently breaking the 2014 high. Many traders are speculating that with ESG investments hitting 1.65 trillion in 2020 and the Covid-19 pandemic many companies have reduced their CAPEX. Unfortunately, these lower CAPEX levels appear to be insufficient to
What Makes a Great Financial Plan? September 1, 2021 Dominick Paoloni, CIMA®CIO & FounderPortfolio Manager, IPSAXAdjunct Professor, University of Denver& University of Colorado I have found over my 30 + years in the financial community that most financial plans are very plain vanilla templates. Yes, all financial plans contain the six tenants of Tax Planning, Insurance Planning, Retirement Planning, Estate Planning, Cash Flow Planning, and Investment Planning. Most planners
The Best Looking Horse in the Glue Factory April 1, 2021 Dominick Paoloni, CIMA®CIO & FounderPortfolio Manager, IPSAXAdjunct Professor, University of Denver& University of Colorado “The Democrats will print money wildly causing the dollar to crash, causing hyper-inflation which will put the market into a tailspin not seen since 1922”. This mantra is being spun by the mainstream media. Since the election, I have gotten a number of calls
The Perfect Income Strategy September 20, 2020 Dominick Paoloni, CIMA®CIO & FounderPortfolio Manager, IPSAXAdjunct Professor, University of Denver& University of Colorado Jay Powell, the head of the federal reserve bank who controls interest rates has said many times, “We are not thinking about, thinking about raising interest rates for a long, long time”. This means that pensions, endowments, retirees, and investment managers that rely on low-risk, safe income on
Is Herd Mentality Driving Commodity Hedging? September 18, 2020 Dominick Paoloni, CIMA®CIO & FounderPortfolio Manager, IPSAXAdjunct Professor, University of Denver& University of Colorado I recently read an article detailing how European airlines lost $4.66 Billion* last year through poorly managed fuel hedges. As a hedging practitioner who teaches commodity and financial markets hedging at the University of Colorado in Denver, I found this to be a textbook example for
How to Invest Your Portfolio in a Market Bubble February 12, 2021 Dominick Paoloni, CIMA®CIO & FounderPortfolio Manager, IPSAXAdjunct Professor, University of Denver& University of Colorado George Soros, the Portfolio Manager of the infamous Quantum Hedge Fund boasts, “When I see a bubble, I rush in to buy it.” Soros is known for his legendary market returns achieved by investing in bubbles and getting out before they burst. Soros uses
Will Diversification Survive Zero Interest Rates? July 29, 2020 Dominick Paoloni, CIMA®CIO & FounderPortfolio Manager, IPSAXAdjunct Professor, University of Denver& University of Colorado At the time of writing this article, 32% of the global government bond market and 24% of the global aggregate bond market trade at negative yields. Foreign money is pouring into US Treasuries as one of the last places on Earth offering positive yields. This huge
The Short-Volatility Trade Is Now So Big It’s Starting to Break By Luke Kawa and Yakob Peterseil – Bloomberg Markets – October 22, 2019,6:02 AM MDT – featuring Dominick Paoloni, IPS CIO & Founder, IPSAX Portfolio Manager& Patrick Hennessy, Head Trader, IPS Strategic Capital – One of the hottest strategies of the bull market for stocks may be getting too popular for its own good, placing billions of dollars and a
Dominick Paoloni, CIMA®CIO & FounderPortfolio Manager, IPSAX Oct 4, 2019 By Elinor Comlay Global risks are rising, the Cboe’s Volatility Index is whipsawing and yet selling options is still more popular than buying. For sure, buying options means managing carry costs. But as the ongoing popularity of short vol strategies and the weight of options selling contributes to compression of the volatility risk premium, it could be time to
Is Selling Options Still Worth the Risk? Dominick Paoloni, CIMA®CIO & FounderPortfolio Manager, IPSAXAdjunct Professor, University of Denver Patrick Hennessy, CMTHead Trader I learned a long time ago as a young broker on Wall Street that when looking at a potential trade if the numbers look good, buy the position. Conversely, if the numbers look bad, take the other side of the trade. The popularity of exchange-traded options has
By Joanna Ossinger – Bloomberg Markets – August 14, 2019, 7:43 AM MDT Updated on August 14, 2019, 4:45 PM MDT – featuring Patrick Hennessy, Head Trader, IPS Strategic Capital – The bad news for investors who waited this long to buy equity hedges is they’ve become eye-wateringly expensive. The good news is Wall Street thinks there are a few cheap strategies left. A gauge tracking the price of bearish
The Liquidity ‘Illusion’ Has These Funds Making Plans for a Stock Doomsday By Cecile Gutscher and Yakob Peterseil – Bloomberg Markets – April 10, 2019, 10:11 AM MDT – featuring Dominick Paoloni, IPS Strategic Capital founder, PM IPSAX – A small band of humans is taking up arms against the rise of the machines. Fund managers who ride big sell-offs in stocks are relishing fresh Wall Street warnings that robots and the like are
The Portfolio Manager’s Dilemma: Timing the Market Dominick Paoloni, CIMA®CIO & FounderPortfolio Manager, IPSAXJanuary 24, 2019 At 2:32pm on May 6, 2010, the S&P 500 careened 8% in just 36 minutes before rebounding with just as dramatic of a move. The reason for this extreme volatility, according to market pundits, is that algorithmic trading firms step away from the market when they sense instability. Paul Britton of Capstone points
by Nikolaj Gammeltoft and Cecile VannucciJanuary 10, 2018, 4:00 AM MSTClick Here to read on Bloomberg’s website. It made for quite a chart. On the morning of Dec. 20, just as billions of dollars of futures tied to the Cboe Volatility Index were set to expire, the index plunged. The result was a settlement price, a weekly value critical to holders of some the most heavily traded derivatives in the
by Cecile VannucciFebruary 8, 2017, 3:17 AM MST February 8, 2017, 6:39 AM MSTClick Here to read on Bloomberg’s website. Here’s another sign that beneath the surface of placid stock markets, investors aren’t exactly sound asleep. It’s the persistently high premium traders are paying for equity options, visible in the difference between implied and realized volatility in the S&P 500 Index. The gap, definable as the intangible cost of stock
by Dominick Paoloni, CIMA® IPS Strategic Capital published a white paper on a systematic approach to low cost tail risk hedging through the use of VIX options. This white paper was featured in the Journal of Investment Consulting magazine, Vol. 17, No. 1, 2016. Click here to read the paper.
By: Daniel O’Leary of EQDerivatives U.S.-based registered financial advisors are becoming more sophisticated with their use of options as hedging strategies, presenting an avenue of potential growth for brokers, financial boutiques and custodians. Read the full article here.
Asset allocators and portfolio managers (PM) have had many sleepless nights in 2015 with the global markets being very volatile. The S&P 500 has been essentially flat for 2015, the bond markets have been under press anticipating a rising interest rate environment, commodities have been under strong downward pressure and Europe is teetering on recession. The question is, where does a PM diversify? Read More…
By: Lori Pizzani from Structured Retail Products.com Dominick Paoloni started his career in the early 1980s as many others have in the financial services industry – working at, then running, a broker-dealer firm. But he says that he subsequently realized the fallacy of the broker-dealer model, and after starting to find good investment managers, evaluating alpha and building portfolios for clients, he started his own Registered Investment Advisory (RIA) firm in
By: Yakob Peterseil from Structured Products Magazine Like someone who believes that what he is saying should be plainly obvious to all, Dominick Paoloni rattles off the shortcomings he sees with the structured products sold by Wall Street. These firms charge excessive fees, he says, have long tenors and point-to-point payouts, and expose investors to unacceptable levels of counterparty risk. In fact, Paoloni dislikes these products so much that six
May 22, 2014 By: Yakob Peterseil Structured Products Magazine “It was too good to be true. I couldn’t sell them quick enough,” Dominick Paoloni of IPS Strategic Capital says as he remembers some of the first indexed annuities, which were rolled out by the Sun Life insurance company in 1996. The Denver-based financial adviser is now fond of saying most annuities are not worth the paper they are
By: Libby Dubick Dubick & Associates for OIC Advisor Publications “We just got audited,” said Dominick Paoloni, President of IPS Strategic Capital, in Denver, Colorado. “After determining that the vast majority of my clients were retirees, and that they were all in options-driven strategies, the auditor asked me if I thought it was prudent. “Options were originally designed as a hedge. It is true that people use them to leverage
By: Dominick Paoloni, CIMA® The popularity of structured investing is slowly moving its way through the financial community mainstream. Structured investing is a sophisticated technique that allows investors to reduce or eliminate the downside market risk, or leverage the returns, of the underlying asset class. By blending structured investments into a portfolio mix that may include traditional ETFs, or mutual funds, advisors can provide a suitable risk versus reward
By: Dominick Paoloni, CIMA® Managing money is extremely difficult and ever changing. According to AARP, the two greatest concerns of their members are outliving their income and not having enough savings to retire. During the last twelve years the capital markets have exacerbated this problem with volatile stock markets and crashing real estate values. Good money managers lost less, which gives little solace to the investors whose main concern is
Dominick Paoloni, CIMA® CIO & Founder Portfolio Manager, IPSAX Adjunct Professor, University of Denver & University of Colorado Over the years I have written many articles on the good, the bad, and the ugly of annuities. As I always point out, there are many kinds of annuities, and the terms can vary widely depending on the individual contract. In the mid-1990’s IPS Strategic Capital was one of the first financial
By: Dominick Paoloni, CIMA® The majority of US consumers list their home as their largest asset. According to The Financial Times, mortgages average approximately 50% of total home value. The average US home value has dropped 30% since 2008, wiping out approximately $9 trillion of equity (Zillow.com). Because of the leverage a mortgage affords, this means that the average homeowner equity has declined over 60%. The problem is, the
Can past market cycles help us with future investment decisions? The year is 1966: the Baltimore Orioles just won the World Series, the Houston Astro-Dome makes its debut, Star Trek airs its first season, and the stock market has been in a sixteen-year up trend. The American Dream is in full swing. Who would have predicted 1966 would mark the beginning of a sixteen-year slide in the market that would
By: Illana Polyak, Morningstar Advisor At least once a year, Dominick Paoloni flies to the British Virgin Islands, rents a 50-foot catamaran for a week, and sails the Caribbean Sea. The trips, which tend to coincide with favorable winds, take him to one or two islands a day. The rest of the time is spent watching the sailboat slice through still, glassy waters. On a few occasions, the seas have
By: Dominick Paoloni, CIMA® With the market dropping over 400 points on Friday, June 6th on the back of increasing unemployment numbers and an increasing possibility of recession, the average investor is looking for answers about what to do. All the financial pundits on television and the print media are giving opinions from selling one asset class, like financials and manufacturing, to buying another asset class, like technology and
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