Thanks. Thank you very much for the introduction and of course thanks to all of you for attending this session on this beautiful day and also thank you for the Swiss CFA for well having me here, let's say I Have been involved in scenario analysis basically since the early days of my professional life both on the work on the On the business side, but also on the academic side. This was already mentioned in the introduction That goes back almost 20 years since that time. I've been yeah spending most of my working life on scenario analysis So hopefully I can make it worth your while for this hour It's only an hour and There's many things to say about scenario analysis So I'm gonna try to give you the main the main story and hopefully you can have some some fruitful discussion about that The story or the presentation that I have I should warn you upfront I have been doing this kind of presentation as well for The Dutch counterpart of your organization. So you're probably gonna evaluate me afterwards on the content of the presentation I can also evaluate you a bit and compare you to your Dutch to your Dutch counterpart. So Okay, the story that I have prepared It has basically two blocks The first is the part on what our scenarios and what can you use them for? That's that's then and how do they fit in? An approach to risk management Exxon to forward-looking risk management and strategic decision-making That's the first block. The second block is then I'm gonna go into more depth into how can you? Generate scenarios for these purposes And indeed they're going to be with frequency domain types of techniques Which are not very familiar in finance and economics in general, but nevertheless, I think have some some appeal So that's the two to do big parts So and in the whole line we're going to start off quite broad and slowly we're going to move into More detail and be a bit more Specific so in the beginning if it's a bit general hang in there. We're going to get more specific so first of all this light the general formulation of Decision-making problem a financial decision-making problem Looking at the future What is there in general lines whether it's for a pension plan or insurance company or a sovereign wealth fund or Even an individual and there is some things to make a decision about simple example asset allocation How do you divide your money across different asset classes at the top? There are of course objectives And there's some reason why you invest There are objectives in the long run or in the short run which you want to meet If there would be a one-to-one correspondence, let's say between an asset allocation and how that would play out in the future Things would be easy and we wouldn't be sitting here together and the key thing is of course that in the middle There's a lot of uncertainty in the world that lies ahead of us How will financial markets evolve? How will economies evolve and how they will evolve will have an impact on how good or bad our decisions that we make over here Will play out in terms of our objectives? So the key thing is uncertainty that lies ahead of us. We are in an Area where we need to make decisions under a lot of uncertainty Which is ahead of us and scenario analysis basically is a approach for dealing with that uncertainty And so scenario analysis the approach is mainly about this middle this middle part a bit more formal What is a scenario if you look into the the literature the operations research? Type of literature. I always use these two type of definitions, which I think yeah Give a quite good picture of what it's all about the first one says a scenario is a possible evolution of the future Consistence with a clear set of assumptions And there are two things important in there the clear set of assumptions is the first one It's basically says okay if we're talking about the future nobody knows what will happen So first of all everybody in one way or other will be making assumptions about how the future can evolve And this just says if you're making these assumptions just make sure that they're clear and that you know what you're doing The second one consistent sounds a bit trivial if you formulated your assumptions yet just implement accordingly But in practice that can be still quite tedious, but in principle it just says do what you intend to do the second definition you can read it for yourself But it's emphasized is one important another important aspect of scenario analysis or scenario definitions the interdependency if you're thinking about a scenario it's not just about how GDP growth we go or how inflation will evolve or how equity markets will evolve It's about how they will evolve together and so what a scenario is a possible evolution of the future basically of all financial markets and all Economic variables together including correlation And so don't think in terms of one dimension, but in a multi-dimensional approach Well, how can scenario analysis help in Improving those decisions that we make those strategy decisions that we make and it can be illustrated according to this picture on the left-hand side you see an example of Scenarios in this case scenarios of some interest rates horizontal axis is the future in years going from One until five years and on the vertical axis you see the level the value of the yields or the interest rate a Blue line is one individual Scenarios or one possible evolution of the future only for the interest rate the yellow lines all together are a thousand other potential scenarios And the orange line in the middle is the expectation We typically do not use the word forecast It's the expectation because what's the difference between a forecast and scenarios a forecast would only show you the orange line And not to take into account the uncertainty that there is Around that central line. That's one of the key ideas of course of scenario analysis Well, we're going to be talking later on about how do you construct these scenarios for the moment? Just think they are there. What do you need more you need a model? You need a model which translates those scenarios into sorry given What's called here input, but it can be those decision variables So an asset allocation a potential asset allocation that you would want to hold or an investment strategy in a wider sense Including hedging and derivatives etc that you would like to follow and in that model what that does that translates That asset allocation. Let's use that for simplicity translate that into the consequences In terms of the objectives So if you're in an asset liability management framework with assets and liabilities and solvency Legerations and contributions etc. And this is a You could say a balance sheet and a profit and loss type of model And you can use that then to produce scenarios again But now not of financial markets and economic variables But now of variables that you are interested in to evaluate your potential decision on and so if For a pension plan for example, you could show here the funding ratio the ratio of the value of the assets over the liabilities same interpretation of the graph and A correspondence between the two and so the blue line over here is how the funding ratio would evolve if the interest rate Would follow that scenario and if some kind of strategy would be followed Then this would be the evolution of the funding ratio and all the individual scenarios. There are the same just repeating it over and over Again in a Monte Carlo type of way Are you then done? No, you're not done because what the idea is of course the objective is to arrive here at Scenarios which yeah meet the objectives and the constraints of the organization or all the stakeholders If it doesn't meet the objectives at a fun ratio would be too low or the risk is too high You typically leave the scenarios intact. You go back over here and you try another asset allocation rerun the calculations and see how that works out in terms of these objectives and the Conceptual ideas that you keep circling over here experimenting with different strategies until you find or identify strategies which yeah meet your objectives as best as possible That's the whole idea and so it's a kind of a Monte Carlo version of the world And use it as a kind of management flight simulator I just experiment with strategies and see how they work out under all kinds of of scenarios yeah, and Indeed questions fine at the end if they're burning questions in the middle, please do not hesitate to jump in That's one part of the story as so these are the do you could say the rudimentary Calculations that you do if you are really moving into a decision-making space and so really comparing different strategies It's not very convenient if you're looking at these kind of graphs all the time and comparing them with each other What you need are kind of summary statistics which summarize Expected returns and risk in a general sense So in terms of these not just in terms of expected return and volatility of return But it can also be downside solvency risk for example, and so risk and return measures Which are relevant in terms of the actual objectives and constraint that the institution or the individual has well, one of the nice things about scenario analysis is You basically can think of any risk and return measure and you can calculate it from the scenarios and so here's a list Which you can read yourself off of risk return measures you can use Why can you use basically any of them? Well because it's based on the scenarios and you can show that on an example a path probability and so what is the probability that somewhere in the coming 15 years, let's say these are years and the coming 15 years that you will ever Arrive at a funding ratio below a certain threshold below 100 or below a 50 or whatever suppose these are a number of scenarios and What you then do well, you just count or identify the number of scenarios which in that 15 years ever One period or more periods in a row ever fall below that threshold You just count the number of scenarios suppose. It's ten and you divide it over the total number of scenarios Which suppose it's a hundred well you have ten out of a hundred so you get a ten percent probability as a very simple Math given that you have the scenarios can calculate any kind of risk and return measures That's the basic idea and on these risk and return measures. You can then compare start comparing Strategies you can also use it for risk management Purposes, so I want to show you a few examples What that looks like And so we call that Integrated Exanta risk management and both strategy formulation portfolio construction also the risk management and monitoring Of your strategy and just a few examples on what that looks like Again assuming you have the scenarios already and I have not said anything yet about how these scenarios are generated the first thing The first ingredient of that example risk management is then this stochastic scenario analysis, which I basically already told you Given that you have a set of scenarios Given that you have for example your current portfolio composition So how is it divided across the asset classes the maturity distributions the rating distributions and a strategy for taking the portfolio forward Fixed allocation rebalancing rules overlays etc etc if you have all of that you can simulate under all these scenarios For example the value of your assets Same interpretation of the grub. This is the expected evolution of the expected evolution of the assets and the wide range of Scenarios around that that's the index and these are then just the returns Well, you may wonder have why at all you such a stochastic Monte Carlo type of approach and why not work for example with Analytical approaches and so write out an analytical mathematical formulation of your problem Work out the optimal solution and produce a report with the numbers. Why do you want to work with scenario analysis? well, one of the reasons or to make two main reasons why at least it always had made me enthusiastic is a first of all flexibility and So no matter how you could almost say no matter how complex your investment strategy is in terms of dynamic rebalancing rules and overlays and derivatives etc or You have very complex solvency regulation as an insurance company for example You have complex dynamics in your contribution policy as a pension plan And so all these kinds of complexities are typically not a limitation to be applied in scenario analysis While on the other hand if you use these analytical approaches Yeah, just take the typical academic publications. They just start with well We make these and these and these simplifying assumptions because then we can fit it in a formula well, I know if you have ever tried going to a Client and then telling you well you've simplified your situation in this and this way and given these simplifications We think this is the right thing for you to do That's problematic, of course You want to get as close as possible to the real world as you can of course it at the end of the day It's still a model and it's supporting decision-making, but you need to get as close as possible to the true problem to have Yeah, the The largest value in the in the results that you come up with so flexibility Flexibility other one other important reason or pro of scenario analysis You can already see it from these kind of graphs and also from the next type of graphs I'm going to show you it has a lot of graphical at ingredients And so a lot of complex calculations are underlying The approach, but if you're talking at a decision-making level an investment committee or a board of a plan you work with graphical representations and it's typically relatively easy for people to relate to that and also therefore Again understanding or why certain decisions are good or why certain decisions are not good So it has a very good Communication value, which is important at the end of the day if you want people to actually make a change And so to take a decision rather than getting a thick report Put it on the shelf and keep doing what what what they were doing already. And so Understanding communication is also an important pro of the scenario analysis approach. I already said Only looking at these rudimentary calculations It's typically not enough when you start really experimenting with alternative strategies. What you do then is then you make these risk and return calculations As I told you as so C bars or probabilities or expected returns For different strategies and then plot them against each other in a graph So here you see on the horizontal axis. It has something like the expected Cumulative real return on a ten-year horizon and on the vertical axis It's the 10% CVAR of the cumulative real return. So a case where there would be some inflation objective To compensate for purchasing power the pie charts represent them different asset allocations Where red could be equities and green could be fixed income a very simplistic way and you can then calculate these efficient frontiers Underlying each of these pie charts are These rudimentary scenario simulations The economic scenarios underlying them is the same That's if you want to compare them in the in the same Monte Carlo world But the difference is of course in terms of the strategies in terms of the other allocations That you run and what do you do then in this space? Of course, yeah looking for efficiency improvements So moving the efficient frontier out in terms of the objectives and the criteria that you have So you want to move to the top right corner highest expected return lowest risk because it's negative fantasy bars And if you have arrived there if you have identified your efficient frontier You need a kind of a risk budget and some some kind of a risk limit and if you have the risk limit You can actually identify your optimal Decision and your optimal optimal asset allocation and that makes it kind of full circle has so having this Very basic problem. You need to make some decisions under uncertainty Well, you've translated your objectives in terms of basically any risk and return criteria You have a model for your strategy. How that translates into these objectives. You have the scenarios And when you are in this space you start doing your analysis and actually end up with an optimal strategy for a certain time period in certain conditions Yeah, that's the The strategy application of of the scenarios. Well, what we have learned at least over the last couple of years of course in the same may hold for you just having a strategy a long-term strategy and then Implementing it and well go do something else and look later on whether you've succeeded or not is of course not the right way to do Of course, you need to carefully monitor your strategy as you go along to see whether your strategy is still in line with what you assumed originally and Need to update the situation on how financial markets have evolved Also, there the scenarios play a role then you typically do not start experimenting any more with strategies you take your current strategy And you just update it to the latest market conditions and the latest Portfolio conditions as this would be as an example from December 2010 This is The funding ratio of a pension plan which doesn't want to be below one so 100% funding ratio The blue lines are the 10 percent quantiles from the distribution which was projected from December 2010 and the red line Is then what actually happened subsequently until end of 2011 as an example and the idea is of course Then you start monitoring, you know How have the how has the realization fallen into the distribution that I assumed and of course if from here I'm looking forward again, you know, this is still the right strategy to follow so scenarios also play a role in the Risk management or the risk monitoring of your strategy same type of scenarios Well, the final example what you can do With the scenarios in this risk management the process make risk-decompositions And so there's a lot of financial market and economic variables underlying The results that you get and in learning about, you know, where does most of the risk in my portfolio come from? A useful tool is a risk-decomposition Also that again because of the flexibility of scenario analysis you can calculate it on any measure basically that you like this This is some surplus at risk measure where it would be the total risk and you see here How it is build up from different sources interest rates equities inflation and at the end is brought down by the Frustration element different Yeah, exactly that exactly of course different ways of doing a risk-decomposition This is a scenario-based version of a risk-decomposition. You basically just Label your risk drivers according to these categories and indeed you run the simulations with and without These risk drivers switched on you could say and then look at the different risk components And you have the total and the difference is just the diversification. Yes Applications. Well, I already said to you This this can be applied for both strategy work portfolio construction and risk monitoring work Old scenario based it is also a very much applicable to different Yeah types of organizations or different types of problems and both on the institutional side. It's being used for pensions It's used for insurance companies private wealth or sorry sovereign wealth and are also more and more getting interested in this approach and Other types of versions but same idea are also being applied in the private wealth space of course all in very different Versions let's say so the the communication to individual clients of course is something very different than to a professional Investor, but the core idea is still the same Okay, so you can imagine that having said this that What these scenarios look like? And how they behave what are their correlations? What are their volatilities? Will have an impact on all these type of results and therefore it will have an impact on actual decisions That people and organizations will make so it's very important to think carefully about how do you formulate these scenarios rather than Just simulating some random numbers and then go on with your detailed work. At least that's what I've learned a long time ago So you need to think very carefully about How do you generate these scenarios? What is the basis I'm gonna take this what's the basis then what's the potential basis for producing these scenarios? I Should say first of all if you know the world's not so the word scenario or Monte Carlo probably also from another area of Valuation and so fell evaluation of derivatives for example also there you encounter the word Monte Carlo or scenarios Those are risk neutral evaluation type of scenarios. I'm talking now about risk management real-world type of scenarios And those are quite different Flavors as a basis for building these real-world scenarios. What's the end? Objective that we have the end objective that we have of course that these scenarios Bear resemblance to what can actually happen in the world that lies ahead of us Because if they are not realistic after there no resemblance to what can actually happen in the world ahead of us Also our decisions, you know will not be in line with what can happen and therefore we will not have you know The best results that we set out to achieve Well, there are two basic Ways you could think about you know how you how you want to set up these scenarios One would be great if there would be theory which could help us if there would be one theory which says, you know How do financial markets? How do economies evolve over time? How do they correlate with each other? It has been validated against the data the academics agree well in economics and finance We're not there yet and for a very long time probably not Are we completely lost then as a basis for scenarios? No, we're not because if you look carefully in the data you look in the literature You look at the models what you see is a kind of a list of what we call stylized facts So things that most people agree upon and saying okay These are things which are really out there and if you think about you know, how financial markets and economies evolve These type of issues should be included in there and you see typically that these stylized facts They have their own line of literature. They have their own types of models so And that's a basis for producing scenarios. I'm going to take you through a few examples and then Summarize them and then we're going to move on to how you do the techniques They go a bit from long to short term The first one is the term structure of risk and return. That's the notion that risk can return properties Can be different depending on the investment horizon? The key example we always give is the correlation between equity returns and inflation Cumulative equity returns and cumulative inflation across the investment horizon. This is the horizon in years 20 years into the future and on vertical axis its correlation between equities and inflation Then you see different lines the solid blue line is very long-term historical US data based You see that this correlation havers around zero until seven or eight years So not very much correlation between equities and inflation, but for longer horizons you see it gradually moving up So there's a pattern in this correlation, which depends on the horizon on the term So there's a term structure in this correlation The other lines you see in here There's the thin red line is also for the US but now not calculated from historical data, but calculated from Scenarios which are simulated with the approach. I'm going to be telling you a bit about it's not exactly the same But the idea is that you see that this increasing pattern is Observed in the scenarios in a similar way as it has been observed in the data and The other lines you see in there are for other countries and regions and that's just to illustrate that something is not a stylized fact If it is just observed for some country or some time period it needs to be kind of a broader concept And also in the academic literature there and also some some review or overview papers now on This topic in general. What do we know about this term structure of risk and return? Campbell and Vichyra if you know that line of literature They were the first at least in the academic side to look at the consequences of these type of properties for optimal asset allocations Across the investment horizon and because obviously if you have some inflation target and Leaving all else unchanged if you have a correlation around zero of a correlation around point two or point three We'll have an impact on the optimal amount of equities in your allocation and so if you're thinking about scenarios for all these applications I talked about you need to deal with this Stylized fact one way or the other on the medium term a Second stylized fact that you need to include or need to think about carefully is business cycle behavior repression a recession depression recovery and all the The words are a crisis and all the words of course from the news of the last couple of years People have thought several times in the past that it doesn't exist anymore and that we would only have Stable growth and high stable growth with no no hiccups on the way every time of course. We're proven differently So what is it's about it's about Medium-term deviations from longer term structural growth paths. There's a lot known about that started also in the In the US with the NBR started collecting information about you know What do we know about business cycle behavior? What are the lead lag relations between variables? What are the type with what are the is the average length of the cycles etc. etc? Example of what type of information We are talking about here. You see from 1974 onwards the blue line is the OECD Composite leading indicator just taken from the OECD website, you know, how does the OECD try to? Pre-track basically, what's the state of the business cycle in general for all developed countries? The red line is a kind of a counterpart of that which just pops out quite naturally from the methodology We're going to be spending a bit of time on and so it's not exactly the same It was also not designed to mimic the OECD indicator or something But you see that it shows a similar a pattern and the idea now if you use the red Type of information for producing scenarios going forward You say can say well I have produced scenarios in which business cycle behavior is included in a similar way as an organization like the OECD measures the state of the business cycle For the careful observers You can also see that the red one tends to be a bit leading on the blue one Which may sound a bit strange and because the leading Indicator of the OECD is meant to lead on the business cycle and apparently the lead can be improved We know from correspondence that it's actually true so this is not some artifact or something and that is for two reasons one is OECD tries to keep their methodology relatively simple because others that people can replicate it or Check the calculations. So they've given in a bit on the on the on the leading quality The other difference is that in the red one. There's much more financial markets Information used than by the OECD. OECD is very macro Type a key message here is that you think if you're simulating scenarios for the medium term You need to think carefully about the business cycle and business cycle behavior. How do you get that into your scenarios? Well, then if you move to the shorter horizons You get the obvious or the usual suspects you could say from the risk management world Volatility for example, we know that volatility is not stable. It for rise over time. It's also not just in equities It's in all kinds of asset classes. It's correlated across variables It has certain dynamics over time type of models over here Of course arch and gauge models and the typical way of dealing with this This phenomenon which can get you the the noble price So if you're simulating scenarios typically for the rock shorter run for volatility and how it moves should be included Another one from that line is still risk the notion that When things are really becoming really bad if we're moving in the really the left tails of the distributions Correlations are typically much higher than in more stable times Of course, it has been learned again also during the crisis an example here This is are the quantiles of the distribution We're looking here at the correlation between US equity returns and European equity returns monthly returns and Point 10 that means the worst 10% returns and point 05 means the worst 5% returns and so forth So if you move to the left we move into the tail of the distribution Then the green line shows you a correlation a normal correlation if you ignore That that correlation can vary across the distribution you would find a correlation historically of some point 75 point 8 If you look more carefully in the data you get the blue line Where you see well here? It's similar, but if you move into the left tail of the distribution this correlation moves to one very close to one So there's much more Codependency between variables in the tail Then in a normal circumstance and the red line now is the counterpart of that But now not calculated from historical data, but from the scenarios Which shows you not exactly the same, but that the scenarios have indeed Captured this type of stylized fact in an adequate way Well if you sum that all together You get this kind of list of stylized facts that you would like to include in your Scenarios if you want them to be realistic or plausible Looking forward and term structure for risk and return business cycle behavior volatility and tail risk Well, we know a lot of things also about distributions and that they're not normal, but skewed and fat tails Term structures, we know about how yield curves move and we have parallel movements and tilt movements all these special Factor models available there for yield curves on the dotted line at this high level You could still say there's something like seasonal behavior and typical macro variables show seasonal patterns What could you say then if you want to simulate? Realistic or plausible scenarios going forward and you want to use that for decision-making purposes strategy formulation risk management purposes You want to include all of these things in that framework, so that's kind of the Objectives you could formulate for producing Yeah, good real-world Scenarios everybody with me still yeah, okay I'm notorious for having trouble with time, so That's why I check my my my my time schedule now and then okay now We've talked about what our scenarios what can you use them for and what is a kind of a basis? You can use to construct these scenarios and these stylized fact Key question then is of course, how do you do it? So how do you produce scenarios in which all of these things are represented in an adequate way? That's of course where where most of the work is and indeed as I was mentioned in the introduction at the approach or The approach that I want to be talking a bit about is indeed a frequency domain type of approach which helps you to Actually achieve this and so I must say this is an Approach of scenario analysis, which we as a company and also me as a person think is a good way to do it It's it's a way which which has proven that it can do these things we talked about does it mean? It's the only way you can do it. No, it's not the only way. Of course. There are more Possibilities, but I'm gonna telling you be telling you about this approach In general for the approaches you could say that there are two big lines one is time series modeling in general So classical time series modeling approaches for producing this scenario This one is is basically in that category you could say and also encompasses some of the more Classical ways of doing that. The other category is more Yes, to get stick different differential equation base. So risk neutral You know black-shells whole wide type of models Which are also being being used for these purposes and they all have their their pros and cons So this is an approach from the From the class from from the time series modeling where it's what is a bit specific is indeed that it use a frequency domain approach At the heart of that approach and it's the most important thing that I want to share with you Is a decomposition approach and it's a by orthogonal decomposition approach I didn't think of that name myself It was a very bright guy at a European insurance company when I talked to this about him He said ah, you're doing a bio orthogonal decomposition as a move But after that I understood what he meant so by orthogonal it means by had to so we're doing a decomposition across two dimensions and The word orthogonal which means zero correlation and so they are orthogonal to each other So it's two decompositions which are orthogonal the first of these decompositions is a decomposition across horizons and frequencies as An example here you see us equity data total return basis on a logarithmic scale from 1900s a very long-term data It has been decomposed That historical data into these three colored lines the red one the green one and the Purple one in such a way that if you just add up these colored lines you get the blue one So it's just an additive decomposition very simple at the end of the day. I Already told you is orthogonal if you put these things in a spreadsheet and you calculate the correlation You will find a correlation of zero between these components. So they're orthogonal What is special otherwise about it? And you can already see that graphically of course that the red one captures kind of the long-term trending type of behavior in the index the green one tries to Focus or emphasize the medium-term business cycle type of fluctuations in the index and the purple one is more the Intra-year erratic type of movements in the index. I mean it cannot show you that here But intuitive you can think that the red one is very much driving. Let's say the decade returns in the index The green one is very much driving the annual returns in the index and the purple one is very much driving the monthly returns in the index So that's how you can think of them Approximately I could show you but it's not included in or what can you do with this on the one hand you can use this to Analyze historical data and so separately look at the long-term correlations and the short-term correlations for example And by the way a decomposition approach is also not Unique or something as that's also very well known. It was already Tim better already said, you know if you think about financial markets and Economies, it's a trend. It's a cycle. It's a seasonal and it's an irregular. It's also already a decomposition idea business cycle indicator Literature is all about decomposition decomposing the trend from The cyclical deviation so that's not unique. It's just the way that you make the decomposition Well, you can use it to analyze these components separately, but most importantly what you can do with it You can also use that Those components to build scenario models dedicated scenario models for the long term for the medium term and for the short term So this is the counterpart looking forward of the same graph. So same setup. This is the total logarithmic US stock price index total return and these are the components So the trend the business cycle and the monthly component a thousand simulations from each component going forward So let's say 30 years on a monthly basis same interpretation as the graphs as I showed you in the beginning so blue is just one number 500 something and The yellow ones are the other thousand Monte Carlo simulations and the orange line is the expectation So separate models here have been constructed for simulating the long medium and the short term Focusing on that long-term return behavior the medium term return behavior and the short term return behavior But of course, we're not interested in these components as such what matters at the end of the day is this one And the total scenarios of the US stock price index. How can they evolve? It would give you something like this And then the key question which I haven't said anything yet about why do you need to do it in this way? And why not just take monthly returns build a model and simulate from that again? I'm not saying this is the only way to do it, but if you start Digging into the properties of these scenarios and start looking for example at this term structure of risk and return Now how is the correlation between equity inflation across the horizon then by doing it in this way? That's a robust way of getting the job done Robust I mean if you add a little data you re-estimate the models The structure of the model stays in place where classical models have the tendency to be very sensitive in terms of their estimation results projecting long-term correlations all of a sudden, you know completely upwards or completely downwards So it's a way of getting these stylized facts in there by zooming in on the different type of characteristics of the data Yeah This is the first decomposition the second decomposition What does that relate to that relates to the fact that what I just talked about is just you as equities and I said to you in the beginning already scenario analysis is about Many variables many financial markets many asset classes many economies at the same time So how do you deal with the interdependencies with the correlations between the variables? and That's where the other decomposition comes in What you can do there is work with factor models That's a typical way of dealing with these correlations Factor models and an example what I showed you here all these this is zooming in on the business cycle Part the business cycle component from 1974 again. You see all these colored lines one of them is you as equities so that was That one but then from 74 with us equities But now it's been complemented with 300 other business cycle components of other equities interest rates Volatilitys credits GDP CPI exchange rates across a wide range of countries Basically mostly developed countries over here producing around 300 of these business cycle components of a lot of financial market and economic variables In there together describing the overall business cycle behavior or business cycle dynamics Well to extract the most important information from that you can use principal component factors And the principal components factor is just a linear combination Of all these time series which captures the largest part of the joint behavior I see all you most of you nodding so you know PCA and here you see The weights from the first principal component factors So now this is not time But these are 300 variables and if you just multiply these weights with these 300 lines you get the red line And so the first PCA is the Linear combination of all this data Which extracts the largest portion of the joint behavior of all these 300 business cycle filter series producing you the red line and This is the line I showed you together with the OECD leading indicator. I was just taking a lot of financial market and economic data Isolating the business cycle part of the behavior and extracting the first principal components factor. That's all that it does Producing you this line with the familiar dating of the troughs. I've learned a long time ago to pronounce it in English And so the loaves in there I thought I thought it was troughs, but it's troughs The beginning of the 80s 90s 2000 or 8 and so the familiar dating just you know pops up basically This is just one factor and this is only just Within the business cycle component to capture Sufficiently let's say the joint behavior you you typically need more than one factor So you mean you use 10 factors for example To capture all the the joint behavior and the second thing is you can do the same trick in The other components and so I was talking about this business cycle part now You can do the same thing for the trend model and the same thing for the for the monthly Model and then this by orthogonal approach. This is what it boils down to you start off with a lot of data You take it apart with this decomposition approach in terms of frequencies and horizon Isolating long-term medium-term and short-term behavior Per component you then build a factor model. You could say a classical Dynamic factor model where the factors drive the joint behavior of them and then when you have the simulations of the factors Yeah, you can use them very easily to also actually Produce the scenarios for the equities in the GDPs and the exchange rates, etc. And that's of course what matters And you bring it all back together at the end and you have your scenarios For all your variables and all your time horizons That's the that's the The core idea of this this bi orthogonal approach which which helps you to capture Long medium and short-term behavior in your scenarios as you would like it to be according to these stylized facts This one I'm gonna skip and just a short version is you need more than this And so if you want to have stochastic volatility if you want to have tail risk if you want to have yield curves in there This is not enough. So you need kind of add-ons To get them in there, but they can be integrated in the same framework Two things I still want to do one is show you an example what type of output you can get from such an approach And focusing then for a moment on this business cycle area What you see here in this graph this runs until March of this year The lines you see over here is the first business cycle factor So again the one I showed you together with the OECD and so it kind of mimics the general state of the business cycle but the lines the colored lines plotted over each other are The assessment based on this framework based on data Well, the last one is until March until February until January until December until November So as more information becomes available How does this approach assess the overall state of the business cycle where the dotted line is today you could say one key difference with an OECD type of approach is that Once you have this business cycle data and you have your dynamic factor model on this business cycle data You can make scenario projections going forward of the business cycle So what's according to this methodology based on where do we stand today? And what's kind of the average historical business cycle dynamics? What's then the assessment according to this methodology of the world that lies ahead of us? So after the dotted lines it gives the expectation going forward. This is only the expectation Yeah, so you see you get this pattern over here, which basically says well You know, there's been a bit of a turnaround. We are very high There are at the top Basically, well, we may linger on still at a high level for quite some time But then there's a turnaround to come and you can think of this one. This is very much directly related to equity type of Equity credit type of asset classes and also GDP Related so you get an expectation of the state of the business cycle four years to come Important remark going back again to the beginning Scenario analysis is not forecasting And so if you tell a scenario person that they're forecasting they get kind of Uncomfortable the key thing is of course that you have an expectation But around that that's uncertainty and scenarios analysis especially about taking into account this uncertainty and that you can see in this graph Same idea and so this is the business cycle indicator going forward the expectation But now with these red lines in there They indicate the 10 percent quantiles of the distribution So underlying that you can think of scenarios and just putting them in portions of 10 percent Yes, and from this you can deduce. Well, this actually probability of an improvement Further on improvement still but there's also probability of a much faster Turnaround and what actually if you look over here, you know the values of a rate Of course, they have a low probability But they are in that range as well So you can make also probability based assessments about the state of the business cycle and recently We have been very recently we have been doing some very formal backtesting of a type of experiments There's also the question which obviously pops up if you look at this On this approach and especially in this business cycle area You can show that you can actually do better with these Factor models than with a random walk type of approach. We can actually show you can get a little bit better forecasting Yeah, if you look at purely from the forecasting perspective, so this actually gives you some Confidence, you know that there's relevance because if you feel there's relevance in this historical data in this business cycle behavior as a Stylized fact that it says something about the future. Yeah, then you should be able to show all so that it Has its value and and and that's actually a possible And a way of thinking about that Is Especially for this audience perhaps if you look at the financial analyst journals some time ago two years ago or so there was an Interview with Eugene Farmer one of the founders of the efficient market hypothesis of the capital asset pricing model And this is a really nice quote. He said in an interview With with Robert Litterman. He said in the beginning we thought price changes were Random that that was what efficient markets meant. So we don't know anything at all later on He says now we know better. We say he says market efficiency means that deviations From equilibrium expected returns are unpredictable. We do not know where we will fall into the distribution, of course But he says ex equilibrium expected returns Can vary over time in a predictable way? and As a result overall The returns have a little bit of predictability in there and so these variations in equilibrium expected in Equilibrium expected returns have to do of course with changing Risk preferences for example over time and the what I showed you with this business cycle indicator And here it is in terms of some other variables and so equities high yield spreads And exchange rates and you look at the direction of the distribution projected from a certain Date in the past and how the realization has fallen in yet where exactly in the realization You know the spreads have fallen if you don't know but the direction of the expected returns and how the realization has fall show a very interesting relation so this way of looking at Returns and distributions very much links to how someone like using pharma thinks about that Just one final remark. I'm not going to do this in total All this I talked about is Scenario analysis based on stylized facts which are derived from literature, but also a lot about historical data So it builds on the presumption that there's relevance in historical data for looking at the future Already since the very early days of scenarios people have realized that of course that in itself is not enough or May not be enough to get the best forward-looking scenarios. Why not there may be changes over time Which impact the future which were not in the historical data and so when we For example from a long time ago. It was the the European Central Bank introduced its inflation target But at the moment they introduced that if you look back at the historical data that information was not included so inflations were For Europe were much above two percent If you would then have to given that information Project your expected inflation rate going forward. Of course you want to take into account What the European Central Bank has said about its inflation target? So then you put in additional Forward-looking you could say view type of information into your historical base framework in today's situation It would of course be central bank intervention and the effect that has on interest rates Not included in in that extent in the historical data on which you built your models You can also have other examples here You can have an investment committee of a pension plan which has certain Views on the equity risk premium for example and you want to include them in your scenarios or you want to do sensitivity Analysis so I just want to make the remark that it's important in scenarios that you not only you know Do your best as possible to extract information from historical data and literature But also allow for taking into account additional forward-looking information for abuse for producing the best forward-looking scenarios Well, if you summarize that how we've talked about stochastic scenario analysis Which in our experience is a very powerful tool to support strategy decision-making and also risk management in an integral way The properties of the scenarios that you put in there Are very important because if they are different The results from the models will be different and the decisions that people make will be different and that will actually impact You know to what extent will you achieve your objectives or not? Well, what I haven't put too much emphasis on but it's also important if you think about these different applications That's our long-term strategy and short-term risk management and all these stylized facts Which you typically see that people have different models for different purposes a Separate model for the long run and another model, which is good at tail risk for example. Well, of course strategy Portfolio construction and risk management are Integrated with each other So if you go through that process and along the way you switch from the underlying scenario model You're in trouble with consistency because a strategy which may be Working well in scenario model a may no longer be the optimal strategy in scenario model B So it's important to think about also about consistency in your scenario framework Well, we looked at these stylized facts that they Are a valuable basis for producing scenarios also if people use different methodologies It's my experience at the end of the day most scenario builders will recognize the list of stylized facts We talked about as a basis for producing your scenarios and also evaluating whether you have Good scenarios Well, it's indispensable to allow for views for additional forward-looking information And I told you a bit about this frequency domain type of technique as one of the possibilities Forgetting these stylized facts into the scenarios that leaves us still a little bit of time for the Four according to my schedule are there any questions or remarks Yeah Yeah, and it's a That's a very good point From I can best tell it from from from our experience The level where we typically stop with the modeling at the moment is let's say Triple a credits us So benchmark and sub benchmark at a type of left For fixed income the modeling typically works by simulating yield curves and putting in, you know the actual maturity distribution and rating distribution of The client of the pension plan for example, so then you could say Yeah, you're you're close to you know security level but in an aggregated a way Equity type is there more on a on a benchmark and sub benchmark level in concept For this methodology, it's not a limitation to push that further Especially also for this frequency domain technique that the original idea My personal ambition at the end for a long run still is you know, you can simulate scenarios from let's say 30 years out Until for the coming 10 days So it just would just would mean in what I talked about We have these let's say decade returns annual returns monthly returns There would be an additional component simulating the daily returns Conceptually is possible in them, but then you get into the typical short-term classical risk management Models and it would be great. Of course, you could really integrate long-term strategy until really Short-term operational risk management But the typical applications of these approach typically stop at the what we call the risk management or the risk monitoring of the strategy itself And they're the simulation the shorter simulation horizontally of horizontal is typically one month Combined with yeah, this benchmark sub benchmark way of modeling the assets But conceptually no no limitations and the other can always mean two things so either everything was completely clear I Yes Yes No, no, no, sorry it's that was yeah, no it is actually The horizon the horizon looking from today into the future No based on historical data, so this would take this has taken data from let's say 1900 So more than a century of data and then based on the data You're gonna collect all one-year returns and all one-year inflations calculate the correlation that gives you this number You're gonna look at all two-year returns and two-year Inflations gives you this number Until well the numbers over here So here it is all the ten-year returns and all the ten-year inflations giving you this number No, not yet. No because yeah, then you would get an equity index and a price index Which is not a good basis to calculate your so it's cumulative returns for different investment horizons Based in this case on long-term data, so that holds for the blue line The other lines are forward-looking calculated from the scenarios So then just having all these scenario simulations you do the same But then across all the scenarios and calculate these correlations Yeah, as well as well as well. Yeah, yeah, but drift but that there's still let's say the There's still considerable volatility. Let's say in in 20-year returns, so but of course indeed if if if the The longer the horizon the drift becomes more and more important for sure. Yes. Yes


Yes, good morning once again and we'll begin with the word of prayer, alright? Maybe we can have one of the students pray for us. If we could have Charles pray for us please. Alright, can you hear me? Oh yes. Alright, let's breathe and pray. Even further we thank for this one for morning to say thank you for bringing us together again. We thank you that you have programmed this to happen. Before the time was made, you knew it and that you would be meeting for this important topic about the book of John. And as we study the book of John O Lord, yes, he stayed with you. He knew you. He was speaking from the true evidence. He touched you. He stayed with you and Lord we pray that through that we'll be able to stay with you in the spiritual realm and be able to understand you fully and be able to even give that information to the people that you have given us that we are shepherding. We thank you that we are here. We pray for connections, that the internet will be stable and that the gadgets will be fully charged and we'll learn exactly what you wanted us to get for the growth of your name and the good of your people. For in Jesus name we print believe. Amen. Amen. Thank you so much Charles. We'll begin. So we have now covered in our study of John up to John chapter 7. So we would now be moving into John chapters 8 and 9 today. Our goal is to finish these two. So we would actually begin with John chapter 7 verse 53 because if you were to see in most of your Bibles, John chapter 7 ends with verse 52 and then when they begin chapter 8, they tend to put the last verse of the previous chapter here with John chapter 8 and some Bibles will even put this first portion of chapter 8 in brackets and then there would be a footnote down below with an explanation about why they have placed that particular portion in brackets. So we are dealing with that controversial passage right now. So John chapter 7 verse 53 up to John chapter 8 verse 11 which would be the passage of the woman who was accused of adultery and who was brought before Jesus for judgment. So this is the passage that we are dealing with and as it is explained in the footnote of some of our Bibles and also as it is explained in many commentaries, this particular passage, they say is not present in many of the very early Greek manuscripts which have been found. So some people wonder whether this is really inspired scripture or whether this is just something that was added later on. So there's a slight doubt regarding whether this should be accepted as a historical event that really took place or not because the most ancient manuscripts that we have available to us today, many of them do not mention this particular passage and there are some later manuscripts where it is mentioned but again they too use brackets or asteric marks to kind of indicate that there is some level of doubt regarding this passage. Also there are some manuscripts where we have this particular passage being included somewhere else in the Gospels. So there's one manuscript where we have this particular passage of the Lady caught in adultery. It's mentioned after Luke chapter 21 and in other manuscripts it's mentioned after John chapter 21 or maybe John chapter 7 in one manuscript. So these are all things which raise a doubt regarding the historicity of this particular passage. Now what should we conclude? Should we take this as an incident that really took place or should we dismiss it as something that somebody just came up with a story that someone came up with thinking it would sound nice because there were many other writings about Jesus time and these were written even later in the second century and even beyond that. So should we take it as that kind of a story or should we accept it as a historical reality? Now nobody really knows because there's no evidence so we cannot 100% say that this did take place but at the same time we cannot deny and say no no no we know for sure that this is a false passage. We cannot say that either. So my personal opinion regarding this in this passage we don't see Jesus saying or doing anything which is contrary to the things which he says and does in the rest of the Gospels. So it is quite possible that this passage is accurate. He stays in character, the words that he speaks, the actions that he does is very much in line with the way we see him operating in all of the other Gospels. So yes it is quite likely that this passage is historically accurate and this is an incident which actually took place. On the other hand if someone says how can we really accept this because the earliest manuscripts do not mention it if someone were to say that. Again it's not really a loss because the things that Jesus says and does in this passage he says and does those things even in other passages which have historical backing. For instance here he turns the tables on the leaders, the scribes who have come to trap him. He turns the tables very successfully upon them. He shows mercy to a person who has been living an immoral life and he gives her a second chance. We see him doing that in other Bible passages as well. We see him as a God who reaches out to the sinful and tells them not to live in sin any longer but to change their ways. So we see him doing that in other passages as well. Even if someone says no no we should not look at this passage at all. It is not such a great loss because the things that he says and does in this particular passage he has said those things, he has done those things even in other passages. So we would probably have to leave it at that because nobody has any clear proof regarding this particular passage. This one thing that some people say, they say that the writing style of this particular passage seems to be a little different from the rest of this book of John. For instance they talk about how when they accuse the people who want to trap Jesus, the leaders who want to trap Jesus, when they come over here to meet him, they address him as teacher. So they say in the book of John it is always the disciples who address Jesus as teacher and Nicodemus who had begun to believe in him and who was hoping for confirmation that he is really the Messiah. When he comes he too addresses Jesus as teacher but in the book of John nobody else ever addresses Jesus as teacher so they say maybe to somebody else who wrote this particular portion. So these are all just technicalities that they bring up but most scholars accept the fact that this is scripturally accurate and inspired simply because even in the later manuscripts where they were not sure whether to include it or not they did include it and put an asterisk mark or a bracket or something over there to indicate that there is some slight doubt regarding it but they did not want to just do away with it because they felt that this is a true passage. They did not want people to miss out on the teaching which can emerge from this passage. They were very reluctant to just discard it. So we see it preserved, we see this particular passage preserved in so many manuscripts in spite of the fact that they are putting a bracket over there. So when they felt so strongly that this probably is true maybe it's quite alright for us to accept it as a historical accurate passage. So coming to the passage itself we will just quickly go through the verses and see what we can learn. So if we could have maybe one person read out for us John chapter 7 verse 53 up to John chapter 8 verse 6. Yeah I think that would be good. 753 up to 86. Before we get into the passage as such I'm so sorry it's just that I forgot last time to mention this and I did not want to repeat the mistake again because once we start with the passage everything else just goes out of my mind. This is regarding the assessments. The first assessment will be posted next week. So just kind of keep an eye. Those of you who are on the e-platform and who will be looking at this video later you would get a notification in your e-platform saying that assessment one has been posted which would be multiple choice questions. So you will get a notification. The same for those of us who are right now in the Google Classroom. I will be putting it in the stream page. Notification saying that now the assessment one has been posted and you will get about two weeks to do it. So that would be more than enough time. So no hassles. It will not be difficult at all and you just have to take the correct answer. So sometime either this weekend or next week depending on how things go for me with my schedule I will be posting it. So without fail if not over the weekend at least by next week midweek it will be there. So you can take a look at the assessment one and just stick the correct answer as it's all just multiple choice. So with that out of the way and you are another thing that I really wanted to say many of you have posted wishes for Teachers Day in the stream page. Thank you so much. I really appreciate that. Thank you. So yes, let's get back into John. If someone could read out this passage for us please. John chapter 7 verse 53 to chapter 8 of verse 6. And everyone went to his own house. But Jesus went to the Mount of Olives. Now early in the morning he came again into the temple. Now all the people came to him and he sat down and taught them. And the scribes and the Pharisees brought to him a woman caught in adultery. And when they had set her in the midst they set him teacher. This woman was caught in adultery in the very act. Now Moses in the law commanded us that such should be stored. But what do you say? These they said testing him that they might have something of which to accuse him. But Jesus stood down and wrote on the ground with his finger as though he did not hear. All right. Okay. So it says very clearly in verse 6. They were using this question as a trap in order to have a basis for accusing him. So most probably they were hoping that things would go in a particular way where Jesus would probably want to show mercy. They have seen Jesus track record. He's been very friendly with people who have still not got their act together even though they have been living in sin. He has been reaching out to them in love and he has been giving them a second chance rather than just speaking judgment upon them immediately. He has advised them to go forth and sin no more and he has given them another chance to repent and turn to God. So there's a chance that even here in this particular case, he will probably want to show mercy to the lady caught in adultery. And if he does that, if he takes that route, they want to be able to accuse him and say, which means you're not following the law of Moses. You who consider yourself a teacher of the law, you are not following the law of Moses. They can take that line of accusation. On the other hand, he says, yeah, we need to respect the law of Moses and obey it. So let's go ahead and stone her. If he were to take that route, then they would be able to get him into trouble with the Roman government. Because the Romans had not given Jews the permission to execute people except in one or two cases where there's very serious temple violation. So the Roman government has allowed them that little bit of leniency where when it comes to very serious temple violations, like someone actually going into the holy of holies or something really atrocious like that, then you are allowed to give a death sentence.  But generally, no, they are not allowed to kill anyone on religious grounds. So if Jesus says, let us go ahead and fulfill the law of Moses by stoning her, then they can use that as an accusation and get him into trouble with the Roman law. So this is the trap which they set for him. And one point which people generally make regarding this particular story, they point out that it is only the lady who was brought. Whereas the man who participated in the adultery, he's not brought over there. He's just allowed to just leave, escape judgment. So most probably they did not bring him because like it says very clearly in verse six, this was meant to be a trap. Which means they would have requested the man to participate in this conspiracy. And if he's brought over there and if he opens his mouth, then their entire game would be up. So because it's something which they have generated a conspiracy which they have set up, they do not want the man over there. They do not want Jesus cross questioning him and exposing the truth. So they do not produce the man. The man is just allowed to escape and leave. On the other hand, the lady of course is produced because she's the pawn that they are using to capture him if in case they are able to capture him. So we see that and the verse six is interesting because we see what Jesus' response is to this trap which has been laid out for him. So it says in the last part of verse six, but Jesus bent down and started to write on the ground with his finger. So what is Jesus' response? His response is literally zero. He doesn't even bother addressing their question. He just continues doing whatever it is that he was doing. Now there are a lot of explanations given for this and everyone has a right to their own opinion simply because again we do not know what he wrote. If we knew what he was writing, then we could maybe say something specific. But then as it's not revealed over here in this passage as to what exactly he was writing on the ground, we will have to come up with our own conclusions. So this is my opinion regarding this. I believe that at dawn it says in verse one, at verse two it says, at dawn he appeared again in the temple courts where all the people gathered around him and he sat down to teach them. So Jesus came over there to teach the people and the people were eager to hear and so they have come and they have gathered around him. And so the teaching session begins and then when the teaching session is going on, these people come to lay their trap. So I believe that Jesus was just continuing to do what he was doing. He was writing on the ground something that he wanted them to see, something that he wanted to teach. For instance, I mean when I was a child and my father would teach me mathematics, he would not just explain with words, he would take paper and pen and start writing down all those digits over there and then show me how to do my multiplication and my division and all of that. So we demonstrate, we write it out so that people see what is being written and they learn. So Jesus had come over there to teach and I think he was in the process of writing down on the ground so that people would read what he is saying and so that he can explain those things better to them. For the simple reason that back then they did not have white boards, they did not have PowerPoint presentations. So and using a papyrus to write down and explain what I've been a highly expensive thing because those papyrus roles were very, very expensive and Jesus was not a rich person. So he would have just written down on the ground, maybe that particular portion of whatever words he is teaching them and then they would be able to read it and memorize it. The people who have come there to learn would read those words and memorize it. So I think here Jesus is just deliberately ignoring these people and the question that they have come up with, they ask their question and it says, but Jesus bent down and started to write on the ground with his finger completely ignoring them and they don't know what to do. So they go on pestering him. Verse 7 says, when they kept on questioning him, then he straightens up and then he says one sentence to them. So we see that. So maybe we can have someone read out verses 7 and 8 please. Verse 7 and 8. So when they continued asking him, he raised himself up and said to them, he who is without sin among you, let him throw a stone at her first. And again he stood down and wrote on the ground. So Jesus does not have anything much to say on this issue. He just has one sentence to say and then he again stoops down and continues with his work. So he knows the intentions of their heart and so it's a very clever sentence that he comes up with. So he says, anyone who is without sin, which actually is an unfortunate translation, it doesn't really bring out the word which is used over there. Because the word that is used over there is whoever is blameless, whoever is without fault, let him throw the first stone.  What on earth is Jesus talking about? It's just basically telling them what they already know from the Old Testament scriptures. These people who have come over here to lay the trap would have done their reading up on the Old Testament scriptures on what are the exact laws regarding adultery and what are the procedures regarding punishment. So I'm sure they've done their homework and come and they're well aware of what scriptures Jesus is referring to. So we who are not that familiar with these things would have to take a look at that. We could have one person read out Deuteronomy chapter 19 verses 16 to 18, please. Deuteronomy 19 verses 16 to 18, where it talks about the kind of witnesses who should be bringing an accusation. Deuteronomy 19 verses 16 to 18 says, if a false witness rises against any man to testify against him of wrongdoing, then both men in the controversy shall stand before the law, before the priests and the judges who serve in those days. And the judges shall make careful inquiry and indeed if the witness is a false witness who has testified falsely against his brother. So here it's talking about how there should be no false testimony involved. So you should have blameless witnesses bringing charges. So if they are saying that they have witnessed this sinful crime and they want to bring charges against the accused, they should be a true witness, they should not be a false witness. And so Jesus says, let anyone, any of you who is blameless, who is a genuine true witness, let that person start off the proceedings by throwing the first stone.  This is something that they have planned beforehand. So they are not genuinely coming over here out of concern for the righteousness of God. This is a trap which they have set.  They are witnesses who have schemed and conspired against him and now they are over here. Now Jesus is not saying that this lady has not participated in the adulteries, very much aware of the fact that she has committed a sin. So he is not saying that they are bringing a false story. He is talking about what kind of witnesses are they on the inside, with what motive have they come over there. So he says, anyone who is blameless, who is genuinely a true witness, let him begin the proceedings. So now you see he's turned the tables. Now they wanted him to say something or do something. Now he is saying, okay fine, you go ahead and you do what needs to be done now. So now the people who are standing over there ready to see how Jesus responds, they are in a tight spot. They are in the same tight spot into which they wanted to put Jesus. Now if they actually begin to stone her, they could get themselves into a lot of trouble with the Romans. On the other hand, if they say, no it's okay, let's leave it, then that same accusation can be made against them saying, oh they are disobeying and ignoring the law of Moses. So now it's their turn to act.  The first or the one who is the most genuine witness, start the proceedings, get going. And now they do not know what to do. And so we see the response in verse 9. If we can have one person read out verse 9 please. Could I have someone read out verse 9 please? Verse 9, then those who heard it being convicted by their conscience went out one by one beginning with the oldest even to the last. And Jesus was left alone and the woman standing in the midst. I really don't think the original wording had the words whose conscience was touched or something like that. That probably is the English translation trying to bring out, trying to explain the passage because it just says those who heard, they began to go away one at a time. So that portion about their conscience is being pricked. I mean we can just look it up in Bible Hub. I think most of you are familiar with that. It's a free software. You just go to Bible Hub and you type in your scripture and you ask for the original Greek and it would show up there. And I'm pretty sure there's no word about conscience or anything like that mentioned in the original. Just basically those who heard began to go away one at a time. And the older ones are the first ones to leave because I'm assuming the older ones, the elders would be the ones who would have mainly come up with the whole scheme. So now they realize that their scheme has flopped. So they leave the scene and then the rest of them, well with the leaders gone, what do you do? So they also leave. So I'm assuming that's basically how the story ends and then Jesus is left standing there alone with the woman. Now if Shai has raised a hand, please go ahead brother. Yes Ma, thank you. I don't know if this would be a diversion, but you mentioned that at this time when this story happened, it was unlawful for the Jews to stone anyone. I'm also just fast-forwarding to Stephen. What happened? Why then did they stone Stephen? If the Roman Empire was still in charge at that time? So I just wanted to get clarity on that or was it that that was a greater punishment and you were allowed to do that or what was just the difference? Just for clarity. I really do not know at all. This is just me making assumptions. When Jesus rose from the dead and all this talk began to go around that he has risen from the dead after three days and it created quite a stir and we have all these secular writings where you have secular historians recording this later on maybe about 50 years, 60 years, even 100 years later in their historical records where they talk about how the followers of this Christus is the term that they use, the Greek name. The followers of this Christus have started off with this myth about how their leader was raised from the dead and they are creating havoc everywhere and so for all of these secular historians the way they write their writings they regard these Christians as troublemakers who are creating confusion and disruption. So a lot happened after the resurrection. The entire nation of Israel was shaken up and for the Romans this was like a very they did not really know how to deal with the situation and so you have Jews rising up in certain places and beginning to attack the Christians saying you liars look at the fake stories that you are coming up with and then the Romans would have to quickly go over there and bring calm to the whole situation so a lot was happening and things were rather volatile so in that scenario is when Stephen's stoning happens so at that time there was a lot of communication between the emperor and the officers, the Roman officials stationed over here in Israel where we have I mean I am not prepared for this so I don't really remember the details you have one emperor who responds and says don't go too far, don't get too strict with all these riots be lenient, be considerate is the letter which one emperor sends to the official stationed over here on the other hand you have another emperor who writes saying I am glad that you are taking strict measures if they need to be killed go ahead and kill them so a lot of confusion is happening civil unrest is going on over here in this nation suddenly and the Romans don't know how to control the situation and the officials, the top officials are desperately sending letters to the top management in Rome asking for advice on what to do, how to proceed and the emperor is sending back letters saying let's do that so in that kind of scenario Stephen's stoning happens where things have already started getting out of control but before that in Jesus' times things were still calm, quiet the unrest began with Jesus coming up to them things were very much under control and things were peaceful with Jesus coming of course the unrest has already begun because you have people saying Messiah we have to accept what he says and then there are others who are kind of getting and they are saying no, no, no how can he be the Messiah and so already there is a little bit of unrest going on but things are still quite under control as far as the Roman admin and the Roman law and order is concerned so they would have been more careful about picking up stones and stoning someone but after the resurrection things got really difficult because the Jewish leaders can literally feel their hold slipping away I mean they were in power they were in a very good position where nobody could say anything to them and things were going really well but now you have this Christians rising up and a lot of people are now believing in what they are preaching about the gospel and people are turning to Jesus and the Jews are just losing their power, their position and so they began to really stir up the crowds trying to cause unrest trying to cause this riots and all of that and so they were desperate they were no longer thinking about how will the Romans react right now their immediate thing is let's do whatever it takes to get back into power and stay in power and just subdu this Christians because many of them are not very influential maybe we can just subdu them and finish them off so a rather long explanation sorry but I am just thinking stoning when things were peaceful would have had much greater implications and I would have been afraid to take the step but after the resurrection when things got really hot at that time they would not have been that careful about whom they are stoning, why they are stoning which is why Pope Paul gets beaten up and he'll treat it so many times and the law really doesn't do much to help him so there was a lot of civil unrest after the resurrection Thank you so much Pastor and I just wanted to add that I kind of as you were talking support what you were saying because even the resurrection of Jesus Christ the report of the Romans was actually falsified alongside with the Jewish leaders so there must have been a good cooperation between the Romans and the Jewish leaders in actually taking out of the Christians just taking them off the same so yes thank you so much for the explanation I just support what you were saying Thank you Thank you So yeah it's true they both had a common goal the Romans wanted peace they wanted things back to normal and of course the Jews definitely wanted things going back to normal so that they can hold on to their power and continue as they were earlier Alright So you finally have the last two verses 10 and 11 where Jesus says Has no one condemned you? No one sir she said Then neither do I condemn you Jesus declared Go now and leave your life of sin so he does not condemn her he does not judge her and speak judgment upon her immediately just like in the Old Testament and just like in all the earlier passages which we saw in the other gospels we see that Jesus is willing to give a second chance to people to repent so why does he not condemn her because he is giving her a chance to repent he is definitely not saying that he supports what she is doing no he is not supporting her sinful behavior he is just giving her a second chance to change her ways and so he advises her Go now and leave your life of sin Yes Did someone wanted to raise a question because they just heard a voice Alright we will go ahead Oh yes we will come to the passage was 12 onwards if you see in the previous chapter we were looking at the Feast of Tabernacles where you had the water being poured out on the altar every day during the Feast as a reminder of how God provided them with water in the wilderness and Jesus rises up and says I am the living waters Yes Moses once upon a time interceded on your behalf and water was given to you in a miraculous way but that was just physical water I on the other hand can give you eternal waters and Jesus declares that I am the living waters Now here that same story is continuing because this incident of the woman in adultery has been kind of trust in over here and it's not exactly the right place which is why some manuscripts try to put it at the end of the Gospel of John because at least over there it doesn't clash with the timeline with the storyline here in verse 12 onwards you have the Feast of Tabernacles thing going on it's continuing and so now the water part Jesus has referred to now we come to the light part where it talks about the light and if we could have one person read out verse 12 we can have the light of life Yes so the Feast of Tabernacles had a lot of very lovely ceremonies attached to it one of them of course was the pouring out of the water onto the altar each day as a reminder the other was this setting up of these large what do you call them lamps is it I mean lamps doesn't really explain it they call them in the modern English you know the lamp with those seven stems which they would light up now these were not exactly normal lamps which you can place on a table these were 75 feet in height four of them with all the lights lit up I mean the candles would have been lit up and so they would be rather high in height and probably each candle would not just be a candle but in a real flame a very large flame so this would really brighten up the entire temple area so this is something that they would light up those four large huge candles would be lit up and this would be a reminder to the people of how in during the wilderness journey the Lord had led them as a pillar of light so this was supposed to be a reminder of that so now here Jesus is saying yes at that time when your ancestors came out of Egypt the Lord led you through a pillar of light but now I myself have come as the light of the world so whoever follows me will never walk in darkness back then in the wilderness they were kept from stumbling they were kept from going in the wrong direction by that pillar of fire which was there to light up the way and now Jesus is saying I am doing the same thing for you I can do the same thing for you if you will believe in me and follow me so he says those who follow me will never walk in darkness but will have the light of life he will give them the correct direction to go in with them from stumbling and falling he will expose the wrong things which are there inside them so that they can correct them and rectify them so he will be their light if they choose to follow him and it is also interesting one point which was there in your textbook about the connection between the word and the light so it says in your textbook since Jesus is the word it makes perfect sense that he is also the light because in John 11 Jesus is established as the word he was the word and he was with God and he was God so Jesus is the word and the Old Testament clearly explains to us what the word does this whole light aspect that the word has because in Psalm 119 verse 105 it talks about how your word God's word is a lamp to our feet and a light to our path so and also in Psalm 43.3 it talks about how the Psalm is just crying out and saying send out your light and your truth so the light and the truth the light and the word they go together it is through the word that God lights up the path for us and he keeps us from stumbling so in that sense the word and the light go together so now here Jesus is declaring and saying I am that light I am that word which can light up your life and keep you from stumbling therefore follow me and of course the Pharisees do not want to do that and so they begin their arguments once again okay we are kind of running out of time if one of us could read out verses 13 and 14 please verse 13 and 14 so the Pharisees said to him you are bearing witness about yourself your testimony is not true Jesus answered even if I do bear witness about myself my testimony is true for I know where I came from and where I am going but you do not know where I come from or where I am going yes so they say the accusation which the Pharisees make is you are saying that you are the light that you are equal to the pillar let lit up the path for us back then but this is just your testimony these are just your words you do not have anyone else backing backing up what you are saying and earlier when kind of an accusation was indicated at that time in chapter 5 Jesus says you know I do have 3 witnesses who can testify that what I am saying is true over here he does not refer immediately to those witnesses he just says even if there were no witnesses I have every right to declare this by myself because of where I am from because of who I am you know so he says I know where I came from and I know where I am going because I am from heaven not from the earth so because I am from heaven I have superior knowledge to you I know more than you people who have only a human limited mind but because I am from heaven I know things and I can say things which go beyond the requirements of needing a witness and all of that so he says that he says I can give my own testimony because I am not from here I am from heaven and I know all things but then after that he again you know refers to the father as a witness so he does use that argument as well later that would be verses 15 to 18 if we could just have someone very quickly read out those verses 15 to 18 we will comment on that and then we will take 15 to 18 world you judge according to the flesh I judge no one yet even if I do judge my judgment is true for it is not I alone would judge but I and the father who sent me in your law it is written that the testimony of two people is true I am the one who bears witness about myself and the father who sent me bears witness about me yes so Jesus says over here the in your law in verse 17 in your law it says that if two witnesses are saying something then it is accepted as true and over here it is not just two human witnesses who are saying something the father is saying this about me that what I am saying is true and I myself who have come from heaven I am giving my witness so if two human witnesses are adequate then two divine witnesses are most definitely adequate and you should accept what I am saying as true and moreover he points out in verse 16 okay verse 15 he says you judge by human standards I pass judgment on no one but if I do judge my decisions are true because I am not alone I stand with the father who sent me he is saying no I never do any judging on my own I always depend on the father and do it in line with what he I know wants done and so he is saying my judgment and my testimony and my witness is always accurate because I do it in line with what the father wants I am not acting on my own so in this way Jesus supports his argument that he has a right to declare that he is the light of the world so maybe we can go for our break and then resume you know the verses after that so let's take a quick break thank you


Hey guys, how you doing? This is your boy, Rich from Rich TV Live and you too can join the club at richpicksdaily.com where you can learn how to win and trade. Hey guys, how you doing? This is your boy, Rich from Rich TV Live and we just launched a new website, a social media community for investors, buy investors, just go to richtv.io, learn how to trade and find winning picks like Numinous Wellness, N-U-M-I in Canada, N-U-M-I-F in America. Put on your radar, put on your watch list, big breaking news exclusively here with your boy, Rich. Let's take a look at this news, shall we? All right, so this is the big news, Numinous Wellness, N-U-M-I in Canada, N-U-M-I-F in America under the OTCQX exchange on the TSX in Canada, a mental, this is a company that is focused on mental healthcare. It's a mental healthcare company advancing innovative treatments and safe evidence-based psychedelic assisted therapies is pleased to announce it has advanced to the next implementation phase in the clinical trial, a multi-site open label extension study of MDMA assisted psychotherapy for PTSD at MAP-USX sponsored by the Multidisciplinary Association for Psychedelic Studies. That's right, psychedelic studies. Now, I think it's important that everybody is aware of their website, it's Numinous.com. And we're going to look at some of the different parts of this news. So, maps, be aware of maps, maps sponsored by the Multidisciplinary Association for Psychedelic Studies, MAPS, and organized by MAPS Public Benefit Corporation, MAPS PBC. And this is the MAPS website right here. MAPS, as you can see here, is the website and get to know it. And organized by MAPS Public Benefit Corporation, MAPS PBC by enrolling and dosing the first clinical trial volunteer in Canada. Numinous hosts the Canadian sites for MAPS USX through two purpose-driven clinics located in Montreal and Vancouver. This week, the Montreal site began drug administration led by trial co-therapists, Dr. Joe Flanders, VP Psychology, Numinous, and Dr. Emma Habke, staff psychiatrist, University Health Network, and principal investigator for the MAPS sponsored trial. The treatments follows MAPS protocol of three sessions of MDMA administration and therapy, each to be followed by three integration sessions. The full program is expected to complete in mid-summer 2022. Numinous is excited to administer the first MDMA assisted therapy dosing of MDMA at our clinics and contribute to the growing body of MAPS research, says Dr. Flanders, designed with accessibility and ethics at its core. We look forward to the continuation of this study and translating the findings into clinical practice. So love to know what you guys think of this news. MAP-USX is an extension of the parent study MAP-1 by MAPS, which investigated the safety of MDMA assisted therapy for treating severe PTSD. The trial is open to those participants from MAP-1 who were enrolled in the placebo arm or could not receive treatment due to COVID restrictions and the resulting data will. So this is the MAPS website and this is the Numinous website. You can see the world has changed and so has mental health care. And I'm gonna go through the chart and I really believe that this could potentially be very undervalued, very underappreciated and extremely under-exposed. You can see the services here for Numinous, ketamine therapy, psychotherapy, psychedelic integration, clinical trials, just to name some of the focuses for Numinous.com. And you can see here a global leader in analytical testing, research and development company that has got their hands in so many places that can literally change the world. We are proud of our clinical and research teams who have been, and then this is something that, you need to be proud of the work you do. So they are proud of their clinical and research teams who have been and continue to be instrumental in driving MDMA assisted therapy for PTSD research forward in Canada, said Peyton Nybkist, who we've had on our show numerous times CEO and founder of Numinous. Today trial progress in another step in our strengthening collaboration with MAPS as we work together to make psychedelic assisted therapy accessible to those in need. We will continue to work with MAPS, Health Canada and the industry to help make MDMA assisted therapy a reality. So you can also stay in the loop here. You can enter in your email and join their mailing list which I've done and you can follow them on social media. I'm gonna show you how I do that. I think it's important to do that. Here is them on LinkedIn. You can see that I'm following them on LinkedIn and this is them on Twitter. You can see I am following them on Twitter. This is their Instagram page. I follow them as well on Instagram so I can stay up to date on everything that is happening with Numinous wellness. Now a little bit about Numinous wellness and I'm gonna also show you guys their chart. This is their Facebook and a little bit about their chart. So I just feel like it's very undervalued at these levels as a company with money in the bank and a company that I think has a very nice position in the psychedelic space, despite the fact that the stock is down very much so over the last year you can see it's aggressively down over the last year. You can see the trend line has been down, right? So we are definitely in my opinion in a buy zone. I think at these levels are lower. It would be a very good buy for investors. I don't currently own any shares but if I do position myself, I will let you know. I do have exposure to psychedelics with other positions but this is one that I think is extremely undervalued underappreciated, underexposed and I believe there's a big gap to fill here in the market right here for this stock to go back to where it was at its 52 week highs, which is $1.25. There's a huge gap to fill there and a lot of money to potentially be made on this security. Now obviously it's come down so it's very risky but for it to go back to where it was at its peak of last year, there's 142% upside. I can't guarantee it's going to happen but with some of the breakthroughs that they are focused on, the potential is there. So a little bit about numinous wellness and the symbol in America is N-U-M-I-F and you can see here, it looks extremely similar here in America and you can see I've got a little zone here that I kind of, I put out there which I thought was kind of a decent buy zone and you can see it's just living in that zone. So I believe there's a huge gap to fill here. So a little bit about numinous wellness helps people to heal and be well through the development and delivery of innovative mental healthcare and access to safe evidence-based psychedelic assisted therapies. The numinous model and you can go to their website guys at numinous.com like here and learn everything about them, learn about their locations. You can see Vancouver, Montreal and Toronto services. You can see all the different services that they provide, five of them, bioscience and about us to learn more. And once again, the numinous model including psychedelic production, research and clinical care is at the forefront of the transformation aimed at healing rather than managing symptoms for depression, anxiety, trauma, pain and substance use. At numinous, we are leading the integration of psychedelic assist therapies into mainstream clinical practice and building the foundation for a healthier society. Now a little bit about MAPS, the company that they are obviously working very closely with now due to this news founded in 1986, MAPS is a 501C3 nonprofit research and educational organization that develops medical, legal and cultural context for people to benefit from the careful uses of psychedelics and marijuana. MAPS is sponsoring the most advanced psychedelic therapy research in the world, phase three clinical trials of MDMA assisted therapy for PTSD. Since its founding, MAPS has raised over 130 million for psychedelic and marijuana research and education and has earned both the guide star, platinum seal, transparency and a four star rating from charity navigator. So love to know what you guys think about this news. If you like this news, please smash the like button, comment down below, share the video everywhere and subscribe, this is Rich from Rich to be Live and I'm out.