An ergotic system is one in which the forward distribution of returns is functionally indistinguishable from the past distribution of returns over an extended period of time. Perfect examples of this are roulette wheels or black jack games, where the probability of pulling out a royal flush from an undisturbed deck is always the same. Markets can't be run in reverse and people who live a thousand different lifetimes are going to have very different experiences than a thousand people who had the same lifetime. The simple fact is, we don't know that about markets. And it becomes hugely important when more than a hundred % of the incremental capital makes those assumptions.
In this episode of Infinite Loops we spoke with Michael Green, Partner & Chief Strategist at Logica Capital Advisers. In a wide-ranging discussion that could have lasted the rest of the day, we covered:
- The passive narrative, and its impact on market structure.
- Vanguard and Blackrock’s lobbying efforts.
- Target Date Funds and their increasing dominance.
- COVID-19 and the government’s response.
- The power of language.
- Michael’s recent paper: Policy in a World of Pandemics, Social Media, and Passive Investing (linked below)
And much more. You can find Michael’s paper here: https://www.logicafunds.com/policy-in-a-world-of-pandemics