Risk On vs. Risk Off: Is the Market Really That Simple? (ONN, OFF)

For well over a year the dominant strategy has been simple: Either be long assets or stay in cash. The current environment is no exception. Stocks are selling off and taking everything else with it. Tweaking a portfolio in and out of traditional “value” plays may have lessened the selling, but not by much.

According to Micheal Purves, chief global strategist at Weeden & Company there’s a “much more nuanced discussion” being drowned out by memories of last year. “It’s a very different story today than it was in 2011 when it was really red light green light,” he says.

It may feel almost exactly the same as last year and 2010. Stocks start the year strong, peak in April, then lookout below. But Purves says the European Central Bank (ECB) has now clearly demonstrated that it’s “willing and able to roll out their version of a bazooka.” In combination with the rest of the global Central Banks to do the same, Purves says the tail-risk, roughly defined as an extremely unusual and severe event, has been removed.

See the full “Breakout” interview below:


Related: UBS E-TRACS Fisher-Gartman Risk On ETN (NYSEARCA:ONN), UBS E-TRACS Fisher-Gartman Risk Off ETN (NYSEARCA:OFF)

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