market folly

We're posting up notes from the Sohn London conference 2017.  Next up is Bruno Castres of H2O Asset Management.


Bruno Crastes's Sohn London Presentation

Investment managers are not prepared for the return of inflation. Deflationary forces have prevailed for many years. Investors are like the frog in a pan of water that is slowly being brought to the boil – they will not move, they won’t jump out.

Most investors have become machines, they have become mechanised. One of the main reasons is the over use of statistical risk management. Statistical risk management is based on spurious assumptions. In markets you need to understand your environment and anticipate it. Statistical risk management prevents you from doing that. Volatility has become a poor risk indicator, yet everyone is using it.

Crastes recommended a book called “God or Golem” by Norbert Wiener about communication between machines and humans.

Due to central bank intervention risk premia are fake. We are out of deflation. What has worked since 2013 won’t work in the future.


Be sure to check out the rest of the presentations from Sohn London 2017.