How To Manage Geopolitical Risks In The Markets

Benzinga

Scott Redler, Chief Strategist at T3Live joined us on Benzinga's Premarket Prep today to discuss how to manage geopolitical risks in the markets.

Transcript

00:00Scott, I was just looking at the years that you talked about, 2000, 2008, 2020, and now

00:08we're in 2024, all those presidential election years, right?

00:15All those years and different things.

00:18How do you...

00:19I mean, we could talk about the charts and we could talk about the fundamentals, we could

00:22talk about the valuations, the S&Ps here.

00:27But I think that all these times, those were great buying opportunities, right?

00:32With the crises and everything.

00:34How do you keep the geopolitical...

00:38I mean, we are at a point in our country and our world where you would think things are

00:45like...

00:46You should be extremely bearish, extremely bearish, the way things are transpiring.

00:51And I think you know what I'm talking about.

00:54How do you separate all that when you know what kind of potential risks are out there?

01:01Well, it depends on your account, depends on your risk, depends on your threshold.

01:06If I'm 51 years old and I have a 401k, then I put money in every single month as a chief

01:10strategic officer, I don't care.

01:12It'll help my average cost the same way the other crisis has happened.

01:15But as an active trader who trades for a living, if things start to get temperamental, like

01:21back to the chart, before the 9% moved lower, look at this candle on July 18th, we broke

01:27the eight day moving average.

01:28We had a gap down that never got filled.

01:30So technically it said the market cares about whatever the narrative was then.

01:34And then we were below all the moving averages the whole way.

01:38Listen, the other presidential elections, the same thing happened.

01:40They said the world was going to end when Trump got elected.

01:42It was down that night and they never looked back.

01:45They said the world was going to end when Brexit happened.

01:47The world was always going to end and it doesn't end.

01:49You just need to know how much risk do you have on.

01:51I tend to take more options when we get into areas that anything could happen because risk

01:56is premium paid versus being caught in a mess that you can't control.

02:02So as traders, maybe you have a little less on because there's enough volatility that

02:06if you get paid for the month, you could short a huge gap up and if it doesn't pull in, you

02:11could flip and buy them and use your charts and if big gap down, you could do the other

02:15and you could make money tactically.

02:17But I would say when we get closer to these binary events, whatever they are, and it's

02:22going to probably be the election when we move closer.

02:26First one now will be the jobs report on Friday because the street thinks we're still getting

02:30one basis point of worth of cuts and it looks like we might get a quarter in September and

02:37I don't think we can get one basis point unless Tom Lee is now changing his gears and we're

02:42going to go down 6-7%.

02:43It's 6-7% down in October.

02:46Maybe we go a quarter, then a half because of sentiment.

02:49Remember when we were down August 5th, What's-His-Name on TV was crying for a one basis point cut

02:54that day and we were still up 11% in the S&P.

02:57What the hell is that?

02:58So I'm just thinking that these binary events happen.

03:03You just have to know which account you're looking to focus on and what's in harm's way.

03:09But long-term, it doesn't matter.

03:12Obviously everyone thinks like, I don't want capital gains taxes to go up.

03:15I've paid 50% all in a bunch of years.

03:18I want to keep more than half my money.

03:20So capitalism, free enterprise, I'd rather pick which charities I want to give to than

03:27them take my money and distribute it whichever way they want, whoever that is.

03:31But I'm not going to name names and get political.

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