M. Damian Billy is the founder and Managing Partner of Econophy Capital Advisors since 2007. With a fixed income portfolio management and financial product designer xperience, Michael held Managing Director role at JTU Capital, a Shanghai-based hedge fund. He also held the same position at American Diversified Funds, a Naples, Florida-based alternative investment firm specializing in managed futures. As an investment banker, he structured absolute return performance trusts for political entities. At PAMCO, Michael led strategy and change management teams for banks and other financial institutions. Prior assignments involved working with the SEC and FINRA regarding investor rights issues. 

In 55 BC, Marcus Tullius Cicero, the great Roman philosopher and politician stated: “The budget should be balanced, the treasury should be refilled, the public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance”. Why is the wisdom of the ages lost in modern times? Contrary to adherence, devaluing a currency is an accepted method to countering a country’s debt. The task is daunting under ‘normal’ economic conditions and the consequences uncertain. But, when a myriad of causational factors are wreaking havoc within global markets, how do you adjust your FX or any asset class risk management control to ensure against losses? In tandem, how do you effectively implement the changeover process in order to avoid creating a counter measure to a self-initialized loss? Contrary to old-school applications, such as Statistical Models, Technical Analysis, Time Series, Neural Network, Chaos Theory and High-Frequency Measurements, there is limited observance of the price/volatility space. Conventional models aligned to adjusted risks/returns offer skewed predictability outcomes as they are predicated on mean averages and co-variance analysis. This is a new investment era: remodel and prosper. The old adage is “What goes around comes around”. We are in an uncharted global environment. Formally adhered to risk-adverse theories no longer embody the refined elements to protect against all of the erosive influences present today. Nor do they contain deterrents for preserving capital when unexpected future events occur.

The article continues to International Alternative Investment Review – n.2, 2010 www.iaireview.org/subscribe