Hello from forex industry entrepreneur!

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Hi everyone, I wanted to introduce myself to this forum. My name is Debashish (I go by ‘Deb’) Shaw. I’m currently working on a news and research service relating to foreign exchange and commodities. I used to work for GAIN Capital (parent company of FOREX.com and City Index). I’ve also worked in the international payments industry. I founded FOREX.com’s money transfer business and I also spent some time at World First. Prior to working in this industry as an employee, I founded a company selling PDF software over the internet. Happy to answer any relevant questions regarding the industry if that’s helpful.

It’s nice to meet everyone. If anyone on this forum is living in Zug, Switzerland (I highly doubt it, but figured I’d ask), I’d be happy to meet up in person! Cheers!

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Hi Deb! :slight_smile: Welcome to the forum!

I see you’re not new to forex since you’ve been working for forex companies in the past. How long have you been trading? :smiley:

I hope you could share your trading journey with us! Thank you.

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Hi Ria!

Thanks for the warm welcome! I’ve been trading for the past 5-6 years. While I’ve tried short-term day trading, I’ve realized that it’s not really for me. I tend to trade a mix of stocks, bonds, commodities and currencies over longer time-frames.

In terms of my personal journey, I’m a really big fan of risk parity-style investing as well as global macro. I didn’t really know what I was doing at first and it took me a while to find a strategy I could believe in. My trading strategy can be best described as an active risk parity strategy. While I mostly adhere to a vanilla risk parity portfolio (55% bonds, 35% stocks, 15% commodities and currencies), I make adjustments when a specific asset class has moved too far in one direction. As an example, I recently reduced my allocation to oil & gas stocks given the recent run-up in crude oil prices. Later in the year, I’ll be looking to pare down my holdings of stocks.

Hope that makes sense!

Deb

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I was kinda lost here. :sweat_smile: To be perfectly honest with you, Deb, I’m still super new to the trading industry and I’m not yet very familiar with these. :sweat: I hope you could enlighten me about them. (If it’s not too much to ask)

Still, you’re very much welcome and I really do hope I get to talk to you more here! :slight_smile:

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I clearly used way too much jargon. Here’s a much easier way to think about this:

Broadly speaking, there are four big buckets of assets: stocks, bonds, commodities and gold (I realize gold is often classified as a commodity, I’ll explain this in a second). Each asset performs differently based on the underlying direction of the economy.

Looking at the economy itself, there are two big factors: growth and inflation. Both growth and inflation are either accelerating or decelerating. If you think about this visually, imagine four different quadrants:
Quadrant 1: Growth accelerating, inflation decelerating
Quadrant 2: Growth accelerating, inflation accelerating
Quadrant 3: Growth decelerating, inflation accelerating
Quadrant 4: Growth decelerating, inflation decelerating

In quadrant 1 (e.g. US in the 90s), the economy races ahead while central banks are fearful of raising rates due to low inflation. Stocks associated with high growth (e.g. technology, biotech, consumer discretionary, etc.) do really well.

In quadrant 2, the central bank is more aggressive about raising rates thanks to accelerating inflation. In this scenario, stocks associated with high growth and inflation (e.g. financial services, industrials, oil/gas, etc.) do well. We’re probably in a mild version of this quadrant today. Commodities also do very well. Gold and bonds perform very poorly in this scenario.

In quadrant 3, most stocks do poorly. As central banks are fearful of raising rates into a slowing economy, gold tends to shine in this scenario. Most types of bonds also do reasonably well.

In quadrant 4, both growth and inflation are decelerating. Bonds do the best in this scenario followed by gold. Stocks and commodities mostly underperform.

Once you get growth and inflation right, you’ll quickly understand which way the wind is blowing (which can help you invest accordingly). More importantly, you should hold a relatively smaller proportion of highly volatile assets relative to more stable assets. So in general, you should have a bias towards bonds over stocks/commodities or gold. The term ‘risk parity’ means adjusting your portfolio based on the underlying risk of what you are holding.

That turned into quite the monologue but hope it was helpful!

Deb

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It really was, Deb! I believe I understand the risk parity concept so much better now. :slight_smile:

I learned something new today, thanks to your patience! :smiley: I hope I get to talk to you often on these forums, just so that other beginners could also learn from you!

Thanks again, Deb! :smiley: