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Finance at the End of Old Norms
- Prof. Constantin Gurdgiev | Trinity College Dublin
Finance at the End of Old Norms Prof. Constantin Gurdgiev | Trinity - - PowerPoint PPT Presentation
Finance at the End of Old Norms Prof. Constantin Gurdgiev | Trinity - - PowerPoint PPT Presentation
Finance at the End of Old Norms Prof. Constantin Gurdgiev | Trinity College Dublin 1 2 3 Tech & Institutional Demand Complexity Migration 1 Demand: Its Behavioral Short-term Challenges: 2016-2017 The Luckiest Generation will
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Demand: It’s Behavioral
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Short-term Challenges: 2016-2017…
The Luckiest Generation will be around for a long while yet, strumming their guitars and enjoying their concessionary fares, ensuring young people keep working to pay their pensions, outraged at demands they cash in their property wealth to fund their future in care homes.
Nature of Demand
- Precautionary savings
- Sticky global demand
- Low sectorial trust
- Changing liquidity
- Returns compression
Nature of Response:
Behavioral Nudging
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Product Flexibility
- Risks from the ‘Gig’ Economy
- Life-cycle wealth
- Trust capital
Threat Awareness
- Low Margins
- Digitally ‘wired’, financially weak
- Deleveraging will continue -
globally
…hedging for 2018 & beyond
Behavioral Activation
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1940
1960 1980
2000
2010 2020 2050
Gen-‘Jinx’ Millennials Decennials
Low returns & simplified products Higher volatility, speed & complexity High returns, low margins & volatile markets
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Tech & Complexity
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Disruptive Platforms…
Hybrid & Natural Language Computing
Wearables Nano
Augmented Reality Big Data design Congestion charging E-Payments
Cryptos exchanges Advice ‘scalping’ Cryptos enabling Autonomous Analytics Advice automation Micro-data Software-designed security
Bio-Augmentation
Atomized services Behavioral software Data arbitrage
Gesture control Virtual Reality
Behavioral sensing
3D printing
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…The ‘Deep Blue’ of Change
Big Data Design Congestion Charging E-Payments
Increasing Complexity Increasing Speed
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Breakdown in historical properties Demand for instrumentation up Information flows
- utpace analytics
Margins compression + + Liquidity squeeze = Higher risk & leverage # Buffett’s Alpha Data flows imply more complex portfolio metrics Smart α à à Hybrid Return Speed à à indeterminacy & models exhaustion Synthetics out
Tech & Complexity: Asset Classes Disruption
Asset classes Allocations Performance
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Institutional Migration Counters Tech Momentum
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Old Players are coming back…
2016 - 2017 Learning Models New structures formulation à Zero bound liquidity exhaustion Traditional v Fintech competition 2018 on… Weak & fragmented demand remains Liquidity premium & margins pressure à Space for new consolidations…
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250 nanoseconds à 80 35-sigma 10^116 margin
- n Gaussian
Higher moments instability Fractal instability / switching Differentiation between providers/investors is now a multi-faceted game of speed, data & strategy…
to 2020… Data Naturals
Cost delta -360 bps on pre-GFC average Duration: 181 months Funding costs, access to leverage & risk management will drive returns…
… and beyond ‘Buffett’s Alpha’ mainstreaming
…Eating Traditional Institutionals’ Lunch
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