Ullrich Q & A

Interesting facts about Ullrich Analytics, Ltd.

Peter F. Ullrich founded Ullrich Analytics in l989 because he clearly understands the importance and the need to correctly manage price risk in order to protect short, medium and long-term investments. Having more than 35 years of experience in finance, he closely follows the world's Commodity and Currency Markets. Acting purely as a technical analyst he combines his computer driven state-of-the-art proprietary technical analysis with his fundamental understanding of market movements to bring clients successful dynamic price risk management. His 24-hour service monitors all futures markets and any client specified price risks. He tracks all commodity and financial markets including:

*Industrial Metals*	*Precious Metals*	*Grains and Oil Seeds*
*Energy Complex*	*Lumber*	*Meats*
*Dairy*	*Interest Rates*	*Mutual Funds*
*Stock Market*	*Foreign Currencies*	*Foreign Stock Market*
*Dollar Index*	*Fidelity Sector Funds*	*Spyders*
	*Individual Stocks*

Price Risk Management (PRM) is the act of offsetting price risks in assets or liabilities by using contracts of equal but opposite dimensions in time and price.
Example: If you have a receivable of Japanese yen (JY) 1 Million due in 90 days you could minimize price risk by selling JY l million for forward delivery in 90 days with your bank or short a futures contract and cover it in 90 days with the receivables payment. If you plan to use 1 million gallons of heating oil in the next 90 days, you could buy a contract for forward delivery from a supplier at today's price (plus time premium), or you could buy a futures contract.

You need price risk management if you have any offsetable price risk. For example, there may not be any offset to labor costs, but you can offset electricity costs and many other costs of which you may not yet be aware, through correlated contracts.

Stock markets, market sectors, individual stocks, interest rates, most industrial metals, precious metals, grains and oil seeds, meats, virtually all forms of energy including: crude oil; unleaded gas; heating oil; natural gas (several types); propane gas; electricity, mutual funds, dairy prices, lumber, foreign currencies and the foreign stock market.

The company has known assets and liability prices which remain stable for a given period of time facilitating thereby the company's ability to stick to budgets and financial plans and to capture prescribed profit margins.

The greatest risk is not to hedge and to have a naked price (uncovered price risk). In other words, to have an exposed price risk not covered by a hedging program when one is available.
Other risks in price risk management are:
1. Being hedged when you don't need to be hedged, which results in marginal calls in your hedge accounts.
2. Hedging dynamically, which means going in and out of your hedge and trying to be hedged only when needed, but doing this without a proven technical system such as ours. You could have the worst of both worlds losing money in the hedge account and not being hedged when you need to be.

Almost all companies do not have a price risk manager because they don't understand the process and the value of hedging. As a result risks are undefined and remain uncovered. A Price Risk Management manager is useful because the knowledge and experience of valuable hedging techniques could be applied in multiple departments of the corporation without causing each department head to become an expert in hedging.

Some companies automatically lay off risks of subsidiaries with the head office which consolidates internally, offsets where applicable, and then hedges externally the residual risks e.g. one sub has a $l,000,000. of yen receivables and another sub has $300,000 of yen payables, leaving a corporate residual yen asset of $700,000. which is sold to the company's bank for forward delivery.

Ullrich Analytics has 20 years experience as a commodities broker; while our license is now inactive we will help you in establishing and operating an account with a discount broker of your choice.

A. Talk to your provider. Many providers have programs that lock-in prices for forward delivery and we can help you to determine when to execute the lock-in i.e. the lowest price this month to lock in next month's prices.
B. Talk to your bank about establishing a line of credit for hedging after describing to them your detailed hedging program and plans. This line of credit can be used for currency hedging for example. Also talk to them about interest rate hedges which usually are done in the form of "swaps."

Technical Analysis is based upon the realization that markets are driven by people. People have perceivable seasonal and historical rhythms and we technicians measure and analyze these rhythms. Analysis of charts with scientific computer-based techniques reveals what people are doing in the markets, including all the people all over the world who have done fundamental analysis and are taking action in the markets based on this analysis.

I developed a theory that I could form a bridge between the science of futures analysis and the needs of "Risk Management" in the cash world.

You can, but first you would have to consume many books and articles on classical futures analysis and you would need to acquire the 20 years of trading experience in chart pattern observation we have.

Example: It is useful for a poultry feeder to know when corn has bottomed so he can build inventory and buy forward contracts for future delivery from farmers and the commodity exchange. On the other side, he will need to hedge his inventory and his forward purchase contracts when the grain price has topped. He also needs to know the technical development of the basis, which is the price difference between near and deferred contracts. He needs to hedge his energy costs, and lumber costs when involved in new construction. The technical development of currencies is important for analysis of the economy and export prices. He needs to hedge his interest rate risk and lock in the lowest rate possible. Both interest rate, stock market and economic index analyses help him in financial planning and managing his personal investment portfolio. Finally, we provide technical analysis of competing meat contracts for him.

Send mail to webmaster@ullrich-analytics.com with questions or comments about this web site. Copyright © 2000 Country Computers Last modified: June 17, 2007

Send mail to webmaster@ullrich-analytics.com with questions or comments about this web site.
Copyright © 2000 Country Computers
Last modified: June 17, 2007