Thoughts, from Russ Sears

March 4, 2017 |

 Is it wrong to argue that since future returns are unknown, future volatility is higher than in the past? If that's right, what does this imply about using historical data to trade in the present and future?

If you were to compare the modern economies to the distant past you would find that there is much more diversity in the economy, for example, a potato blight would hardly be noticed. However, this diversity is offset some by complexity. A modern corporation, even at the simplest level, is much more complex. In general this complexity increases productivity but it also increases potential for fraud and incompetency. I believe this would favor an investment strategy that is heavy on technology and innovation and light on those that rely on central planning, such as banks and highly regulated industries. But as one only has one future and one past to compare it to in hindsight, this is more philosophical than counting.


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