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By Kostas Iordanidis, Co-Chief Investment Officer, Olympia Capital Management beliefs that the current level of complacency in financial markets is significant, especially with respect to equity and credit risk and portfolio managers should adjust their portfolios accordingly. The six page document includes four charts and can be downloaded from Opalesque at the link below. Kostas IORDANIDIS is co-chief investment officer at Olympia Capital Management in Paris,
where he is responsible for the management of the firm's fund of hedge funds portfolio.
Previously, Dr. IORDANIDIS was head of asset allocation at Julius Baer Asset Management
in Zurich. Additionally, he co-founded Z.I. Investments LLC, a global macro hedge fund, and
served as fixed-income portfolio manager at Lincoln Capital Management.
It is a challenging task to express views on market complacency. Over the past half a
century, the foundations of finance theory have been built on the concept of Efficient
Markets, with market prices being the reflection of the collective information on the
prospective returns of financial assets. And yet despite academic orthodoxy, markets reflect
not only the fair value of risk premiums for financial assets at any point in time but also the
behavioral biases of market participants.
If we define complacency as the systematic miss-pricing of financial market risks by market
participants for extended periods of time, complacency is then the direct result of the
behavior of b...................... To view our full article Click here
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