Mitigating Counterparty Risks

An accomplished California-based finance professional, Micah Scheinberg leverages more than two decades of experience in securities as a financial advisor and managing director at Alex Brown, a division of investment bank Raymond James. Micah Scheinberg manages client portfolios and is knowledgeable about various instruments such as derivatives.

A derivative is a special type of financial security that is agreed upon by two or more parties. Their prices are determined by variations in the underlying assets which can be stocks, commodities, currencies, bonds, and market indexes. Over-the-counter (OTC) transactions are one of the most popular ways to trade derivatives; that is, the derivatives are not listed on an intermediary centralized exchange

Counterparty risk, or the chance that one of the parties engaged in the contract may default, is usually higher in OTC-traded derivatives. To avoid this investors usually purchase currency derivatives to lock in a certain exchange rate. Currency futures are a common option in this endeavor.

Currency futures are ETFs that define the price in one currency at which another currency may be purchased or sold at a later date. Currency futures contracts are legally binding, and counterparties who retain them on the expiration date must deliver the given currency amount on the specified delivery date at the provided pricing.

The Basics of Alternative Investments

A Los Angeles-based financial advisor and securities industry executive, Micah Scheinberg has 25 years of experience in the field and brings that experience to his position as managing director with Alex Brown, a division of Raymond James. Micah Scheinberg also has extensive knowledge of alternative investing.

A financial asset that doesn't fit into any of the conventional investment categories (such as stocks and bonds) is known as an alternative investment. Private equity, managed futures, hedge funds, commodities, and derivatives contracts are examples of alternative investments.

Because of their relative lack of regulation, complexity, and high risk, most alternative investment assets are owned by institutional investors or accredited high-net-worth individuals. Despite the fact that initial investment minimums of alternative assets may be too expensive for most investors, transaction costs are generally lower than traditional assets due to reduced turnover.

Alternative investments usually have little in common with traditional asset types. Because of their poor connection, they frequently move in the opposite direction. This feature makes alternative investments excellent instruments for portfolio diversification, as well as an effective inflation hedge. As a result, many large institutional funds, such as pension funds and private endowments, dedicate a part of their portfolios to alternative investments.

Wealth Preservation - What It Is & How To Do

California-based financial professional Micah Scheinberg serves as the managing director of Alex. Brown, a division of Raymond James, in Los Angeles, California. In this position, Micah Scheinberg helps clients preserve their wealth.

Wealth preservation is the management of assets so that their value does not decrease over time. Several processes can help preserve assets, such as forming a new entity to segregate assets and obtaining an insurance plan that covers certain assets. Estate planning to avoid probate also aids in wealth preservation since trusts or other estate documents protect assets from the probate process.

Wealth preservation strategies also incorporate risk re-evaluation. Re-evaluating investment risks includes the consideration of changing trends and future volatility. No investment is risk-free, but investors can preserve their wealth by regularly re-evaluating risks and distributing their investments among different companies.

An emergency fund also aids in wealth preservation. People should have at least three to six months of living expenses set aside to protect against unexpected crises. Emergency funds may not have the same returns as investments, but they are safer and easier to reach when needed.

How Hedge Funds Work

The managing director of Alex Brown, a division of Raymond James, Micah Scheinberg is based in Los Angeles, California. Having worked in the securities industry for over two decades, Micah Scheinberg has extensive experience in alternative investments such as hedge funds.

A type of pooled investment, hedge funds are operated by professional managers who control the money and returns of a limited number of partners or investors. Such investment vehicles are designed to minimize risk in the financial environment while still maximizing profit. Since capital is provided by each individual investor in the fund and then pooled together, the hedge fund manager is capable of making larger investments on behalf of the fund’s participants, thereby increasing the chances of higher returns.

With a hedge fund, investors can access a wide range of securities. Large hedge funds must register with the United States Securities Exchange Commission (SEC), but this isn’t a requirement for every fund. This gives hedge funds more freedom in how they achieve the goals of the fund manager and partners.

Since each hedge fund is structured differently, it has different goals that inform the fund manager how to invest. Some funds focus only on long equities, which means that they buy common stock and do not sell short. Meanwhile, others only focus on investing in private equity. The only unifying goal for hedge funds is that they all strive for market direction neutrality so they are capable of making money regardless of how the financial market fluctuates.