Changing economic/market environment and Strategy….

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Changing economic/market environment and Strategy…. 2017-03-03T15:26:56+00:00
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  • wes
    Participant
    Post count: 3

    I would like to comment on how strategy development and markets change and turn. The big picture economic shifts come along once in a great while, i.e.example the emerging markets turned a decade ago their momentum continued for some time. As the stock market bust of the dot coms came along the SP 500 fell the next decade while current assets shifted over to bonds due to lowering interest rate. How long will this economic force stay in place till they turn?

    Strategies are best adapted as economic conditions become illuminated and self evident. With the energy and currency markets rapidly changing the economic landscape, how will Logicalnvest adapt and develop/test new models to take advantage of this changing landscape? Or is this market environment nothing but noise and a red herring with value in attempting to development a quantitative model to capture this change? How do we measure real significant market evolution and adapt models that work well in them, mitigating as mush risk as possible ?

    I think the real benefit from Logicalnvest, is its focus on developing quantitative models that change with the environment as well as developing strategies that work for the long run. No one model will fit all times and the need to develop models that work as economic and market changes occur mitigating risk, is why we are all members.

    So whats on the back burner Logicalnvest?

  • Vangelis
    Moderator
    Post count: 154

    Wes, thank you so much for your kind words, which are very motivating to us.

    I hope others jump in to discuss the interesting questions you have raised.

    I have a fairly “classical” economic training, and always loved to analyze the macro conditions, however, I was rarely able to translate that analysis into investment edges, as generally the market was driven by other factors, and whatever I “discovered” was already fully priced in. I have found that following what the market is telling me — not by hour or day, but over weeks and sometimes months, has worked better. I work harder to listen to the direction and adapt to it, and strive to have models that do similar things. That may not be always ideal, but it adds value and keeps me out of trouble.

    While it remains fascinating to try to understand why things are happening, that can lead to the “CNBC” effect, of deciding “X” is driving “Y”, when they actually have no clue what caused “Y” nor its relationship to “X”. Doing that analysis can lead one to take a position due to “beliefs”, and cling to those beliefs, while it is unlikely to provide an “edge”. I suggest that might get in the way of simply reading and adapting to the changing market.

    Back Burner — so many things, so little time. Right now, working on getting you some better tools. To be continued.

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