Weighing The Risks

Sam Rines of WisdomTree - Cyber Risks!

Episode Summary

This week, Rusty Vanneman and Nick Codola talk with Sam Rines, Macro Strategist at WisdomTree. In this episode, we will discuss cybersecurity, the implications should cybersecurity spending decrease or if vigilance wanes. In addition, we take a look at the implications of cybersecurity, and its potential shortcomings, for the global economy and markets.

Episode Notes

This week on Weighing the Risks we are joined by Sam Rines, Macro Strategist at WisdomTree. Samuel Rines is a Macro Strategist at WisdomTree, where he extends the firm's custom model portfolio management capabilities. Before joining WisdomTree in 2024, he was the Managing Director at CORBU, LLC, leading the PolyMacro advisory product. With over a decade of experience in economics and finance, Samuel has held significant roles such as Chief Economist at Avalon Investment & Advisory and Economist and Portfolio Manager at Chilton Capital Management LLC. He is also the author of "After Normal: Making Sense of the Global Economy," and holds a Master’s degree in Economics from the UNH Peter T. Paul College of Business and Economics, as well as having studied Economics at the University of Oxford.

Key Takeaways

[03:01] - Sam’s professional background and more on his current role at WisdomTree
[04:39] - How does Sam define risk and how does he think advisors and investors should think about it?
[06:08] - Should we be most concerned about the frequency or severity of cyber attacks, or some combination of the two? How do they affect the global economy and market stability over all?
[09:18] - Why do the markets often seem to shrug off seemingly massive cyber attacks (e.g. the Equifax breach)? Would it take a major attack on financial institutions to impact the broader stock market?
[11:12] - Are there any big trends in cyber security that could affect future risks, as well as investment in this industry going forward?
[12:27] - In the cyber security space, what are some potential technological breakthroughs or disruptions that might stand out?
[14:37] - Is investing in cybersecurity stocks an effective hedge against cybersecurity risks?
[17:17] - Base case market scenario for cybersecurity and how probable Sam thinks this is
[19:03] - Bad case market scenario for cybersecurity and how probable Sam thinks this is
[20:58] - Good case market scenario for cybersecurity and how probable Sam thinks this is
[22:23] - What other geopolitical risks does Sam think listeners should be thinking about and considering? Also, learn more about the geopolitical, risk-aware portfolios his team has built
[27:23] - How would Sam compare and contrast their three model portfolios?

Quotes

[04:39] ~ “I define risk as what is the probability of being wrong and how does that effect my portfolio vis-a-vis whatever your benchmark you might have, whether it’s a Nasdaq type benchmark, whether it’s an S&P 500 benchmark…It’s…what’s the downside risk to either not having something in the portfolio or putting it into the portfolio. ” ~ Sam Rines

[07:55] ~ “Cloudflare, and the shutdown that we had for basically half a day or a day…what’s interesting about that is it wasn’t even a hack, right? It was just an update that went wrong, and I think that was really more of a warning to people that if you have a significant hack that affects something that’s a base layer of US, and to a bit of an extent, Global technology, you could have very significant economic effects very quickly across parts of the economy that people probably didn’t think were vulnerable to a cyber attack.” ~ Sam Rines

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