The rise of the US dollar and the collapse of the pound. This is the recent study published by The Economist, the English weekly that deals with politics and finance, which highlights through a careful analysis, the turmoil on the global market, resulting from the current relationship between these two currencies, as well as the high volatility of traditional stocks. This parameter, which measures the uncertainty of performance, is not the only trend indicator and is not enough to label a financial instrument as “dangerous”, but together with others (VaR, Beta factor, Max Draw Down)* it is an important numerical indicator to frame its tendency to risk by measuring the amplitude and frequency of the excursion with respect to its average value, over a given period of time: generally one year.
But knowing how to juggle by quantifying the risks in a market that has to be interpreted, a high volatility of a stock can be an element to be exploited to obtain good returns: the greater the volatility of some stocks, the greater the earning opportunities. For this reason, it is necessary to turn to qualified operators in the economic sector, capable of managing risks and identifying the margins for speculative interventions that offer interesting earning opportunities to the most experienced trenders.
In this global economic framework characterised by considerable turbulence, the fine wine market has proved to be a stable life raft and much less volatile than financial assets.
At the end of July, the 5-year annualised return of the Liv-ex Italy 100 index was 8.1% and its volatility equal to 4.9%: lower than that of Burgundy (9%). These data in equilibrium between potential growth and stability, without neglecting liquidity on the market, can be interpreted as a defensive element against regions such as Bordeaux which at the end of September confirms its high commercial activity (55.4% of total trade). Trade in Californian wine is also increasing, but demand is concentrated on Opus One which helps the region reach 7.7% of total transactions.
* VaR: more specific indicator that analyses potential investment losses