Risk On, Risk Off is Bull

[TheNegotiator 13]

I'd like to see what others think about the phrase which has been used more and more recently. Anyone with even a slight interest in the markets has probably heard this phrase. "Today is risk on as stocks soar" or "We're very clearly risk off as flight to quality continues". What the hell does it really mean though? Right now markets right now are highly sensitized to risk due to ongoing systematic problems throughout the world. Some specific stocks and assets are seen as more defensive than others and so when risk is off, these stocks should relatively speaking outperform more speculative investments.

 

So what is annoying me more than anything is that some guys have started using it as a replacement phrase for "stocks are up" or "stocks are down". For example, the stock indices may have moved higher yet overall it's not based on riskier stocks, yet someone might say "it's risk on today". Well that's pretty misleading imo. Anyway, does anyone else have any thoughts on that or any other phrases they'd like to complain about??

[zdo 20]

What the hell does it really mean though?

Excellent question!

Didn’t it used to be almost a purely foreign exchange concept? Generally Risk on = higher yield currencies. Risk off = lower yield currencies. Hopefully someone has a better explanation than that. Most forum talk will not get specific at all.

 

Seems to me, it’s assimilation into routine ‘wall street’ lexicon is only a recent happening. … months old? “Switching”, into more or less “beta” ,etc were the stock trading world’s words for it. But I may be wrong… the only time I see CNBC is inside the bank when doing a bankwire or something and I read no WSJ, etc. The sources that pre-inform that they are going ‘risk on’ or ‘risk off’ continue to have some value. The sources reporting post flow that today is ‘risk on’ or ‘risk off’ are useless.

 

Maybe the uptick in the whole planetary financial system’s going singular / correlated has something to do with the phrase catching on?

 

Will have to figure out how to anwer your poll. I don't really care and sometimes (like if I'm exposed to it more than about 5 minutes) the 'phrasing' of bs does annoy the heck out of me.

[TheNegotiator 13]

Maybe the uptick in the whole planetary financial system’s going singular / correlated has something to do with the phrase catching on?

.

 

Could be. But also I find that due to the vastness and non-regulated nature of the internet as a news/idea delivery method, you have to take into account the 'Chinese whisper' effect.

[SIUYA 11]

they annoy the heck out of me....but ultimately like Zdo...i dont care.

You have to remember that most of this is perpetuated by news people who are just parroting the brokers, who have nothing better to do.

Remember what a risk free asset was - it was a government backed security.....now these are riskier than corporate bonds!!

 

Other jargon that drives me nuts as its miss/over used....

"bargain hunters",

when a market pulls back --"profit taking in the market today"

and the continual - this is the biggest up day in X weeks, X days, whatever.....usually nothing significant.

and the best is....

"long term" :haha:

[zdo 20]

way back when - before the talking heads co-opted it and it became Bull -

what did it really mean in the banks when the desks got the edict

risk on

or

risk off

???

[WeToddDid 10]

I think that those terms are complete bullshit.

 

The way the talking heads use the term "risk on" is when stocks are going up therefore meaning traders are buying the market. This infers that going long the market is risky and going short the market (i.e., risk off) is getting out to risk assets. I think if the talking heads thought about the message that they are conveying for just a second they would stop using the term because it seems as though that is the exact opposite message that they want to convey.

[WeToddDid 10]

Just to clarify. I am not inferring that there is no risk in going long or short. There is certainly risk in going long or short. I am simply making the observation that the talking heads tend to be cheerleaders for the market and using the term "risk on" and "risk off" seems to be at odds with the cheerleading.

[SIUYA 11]

I worked at a broker many years ago....on a floor with many other people from various brokers and banks.....I had never heard of the expression before the recent few years.

It also appears more along the lines of " high correlation is on/of"

 

I did find this....

 

http://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=2Q70z09rbF&n=282506.PDF

[MadMarketScientist 11]

My pet peeve is when I read a headline says 'Company X surges on Y' ... and the stock moved up 1%

 

Surges ... seriously??

 

MMS

[joshdance 10]

My peeve is when I go to marketwatch or some other BS site, and there was news 15 minutes ago , and it just now gets posted... like, I could have created a freaking web site and announced the headline in less time than it took for you to just post it.

 

My REAL peeve though, is how they try to attribute some fundamental reason to ever single move they report. "Dow moves higher on euro debt concerns" and yada yada. Sometimes it's legit. But sometimes the market just moves. The funniest was the other day when unemployment report was the high of the globex day, then proceeded to sell off the entire day. Yet, because globex traded higher than the last day's close, the headline was "Stocks soar on positive unemployment, ..." Despite the fact that the report was released AFTER a whole globex trading of up, up, up.

[SunTrader 10]

The worst to me is when markets drops and they say it is to do with "profit taking" but then it raises again next day. I guess "profit-taking"is always a one day event.

 

Doh! :doh:

 

They got to say something, Most of the time it is meaningless made up stuff. I don't care.

[TheNegotiator 13]

They got to say something, Most of the time it is meaningless made up stuff. I don't care.

 

Unfortunately, I think you're right. Media don't like no news and so tend to look to sensationalise anything, to the point of idiocy.

 

Interestingly though, right now the thread poll(although only 10 voters admittedly) has zero votes for option 2!

 

[SunTrader 10]

Unfortunately, I think you're right. Media don't like no news and so tend to look to sensationalise anything, to the point of idiocy.......

Not just sensationalize but fill news pages or airtime.

 

Like reporting the weather these days. All we want to know, with some kind of certainty if possible, what will tomorrow will brings us? They spend 15 minutes to tell us what has already happened today before they get to the actual forecast (30 seconds worth) for the following day. Sheesh! :doh:

 

Edited December 12, 2011 by SunTrader

[RealDemo 10]

Best thing I ever did was disconnect myself from all that media chatter

 

.... now I just have to wean myself off of forums...

[MightyMouse 12]

Best thing I ever did was disconnect myself from all that media chatter

 

.... now I just have to wean myself off of forums...

 

There is a wealth of information being distributed here.

[joshdance 10]

There is a wealth of information being distributed here.

 

Problem is, for every good piece of information that is helpful to someone, there are another ten pieces of information which distract and delay the learning process... I'm not excluding my own posts from the "useless" or "harmful" category if the shoe fits of course. And of course some information may be factually correct but mislead one trader while it helps another. The challenge is to personally find what works for each of us. Just my , which should be noted, may not be worth anything to the reader.

[jpennybags 11]

When first reading this thread, I answered the poll as "don't really care"... though there was a time that I would've answered differently.

 

As a newbie CNBC was on all day long. It didn't take long before I started turning it off when Larry Kudlow and the mid day crew aired (wow... what BS). Then I started turning it off when Cramer came on... then I dropped the "fast money" crew. Now, CNBC is relegated to "sound off... through the economic numbers"... then the TV is shut down for the day... listen to music... some days silence feels good... just me, the chart, and my money.

 

I must admit to some irritation at hearing catch phrases such as: "risk on / risk off". I get the same notion of bruised sensibility when hearing politicos speak about "jobs, jobs, jobs". Although; the latter probably irritates me more.

[SIUYA 11]

what about as a social experiment.....collectively we come up with a new term OR a few terms as its generally a numbers game.

 

Once it has been decided on....then proceed to drop them into everyday conversation, or threads etc with others and see how long it takes to possibly get one of the catchy terms to be said by a broker or newscaster on TV.

 

Off the top of the head I might suggest...

 

"Eurocronies" - the banks, governments - anyone - who wont toe the line and will keep breaking their obligations to the Eurozone treaties.

[RealDemo 10]

There is a wealth of information being distributed here.

 

It was said with tongue in cheek, but they are not that different to one another. Filtering and sifting through the chaff and double talk on a forum is not that easy when your own knowledge is weak. I've been led up many a trading garden path.....

[fxarcher 10]

When first reading this thread, I answered the poll as "don't really care"... though there was a time that I would've answered differently.

 

As a newbie CNBC was on all day long. It didn't take long before I started turning it off when Larry Kudlow and the mid day crew aired (wow... what BS). Then I started turning it off when Cramer came on... then I dropped the "fast money" crew. Now, CNBC is relegated to "sound off... through the economic numbers"... then the TV is shut down for the day... listen to music... some days silence feels good... just me, the chart, and my money.

 

I must admit to some irritation at hearing catch phrases such as: "risk on / risk off". I get the same notion of bruised sensibility when hearing politicos speak about "jobs, jobs, jobs". Although; the latter probably irritates me more.

 

I had the same experience also, first on CNBC and I am fast approaching the same on Bloomberg.

I keep reminding myself what Mark Douglas said, and that is that "the only job these commentators have is to sound reasonable", nothing else and (IMHO) real informative content be dammed.

Other peeves I have besides some of the annoying visuals and Ginzu knife commercials is the constant flaunting of sexual images. I always click the sound back on when I see what one might call a "not so good looking" preferably older woman or man for that matter, because they might actually only be there because they have something to say.

A female "Presenter,Reporter or whatever they prefer to be called, sitting on a four foot high bar stool with only a clipboard to hide her privates is something I prefer to be only confronted with while being served a Dirty Martini by someone with only a serving tray to......but I ramble....

[TheNegotiator 13]

what about as a social experiment.....collectively we come up with a new term OR a few terms as its generally a numbers game.

 

Once it has been decided on....then proceed to drop them into everyday conversation, or threads etc with others and see how long it takes to possibly get one of the catchy terms to be said by a broker or newscaster on TV.

 

Off the top of the head I might suggest...

 

"Eurocronies" - the banks, governments - anyone - who wont toe the line and will keep breaking their obligations to the Eurozone treaties.

 

Great idea Siuya! Let me refine it slightly though. In addition to standard terms for things in the media, why don't we coin terms for when crap is written by the media(and various other people).

 

For example, in the forum a classic is the "Noob-baiter".(or even maybe the "Noobinator" if they're really good at it lol!)

 

In the media could be a "Keyword Clown" who writes an article.

 

Or maybe there is a ZIBSO article (Zero Idea - Bull Shit Only).

 

These three are especially common due to the proliferation of the internet and retail trading/investing.

 

I'll have another think about some more mainstream terms we could implant.

[SIUYA 11]

that i would like to see ...someone in the media calling another persons work a ZIBSO article.

[TheNegotiator 13]

ZIBO might be catchier though