Stairway to heaven or highway to hell? – 3rd quarter 2016
By Geoff MacDonald, Portfolio Manager
I read an article in The Economist a few weeks ago about a concept called the Nash equilibrium, named after John Nash who won the Nobel Prize in Economic Sciences for his contribution to game theory. The article highlighted that the Nash equilibrium helped economists better understand how self-improving individuals could lead to self-harming crowds.
The first thing I thought of was the massive rise in “low-volatility” funds and ETF products. If the Nash Equilibrium was applied to these trends it would likely explain that as more and more investors rush into them, the more the promise of low volatility and peace of mind is a fairy tale. Read full article here >>