global perspectives

From 2016 to 2017: a quantum leap

Salman Ahmed, PhD - Chief Investment Strategist

Salman Ahmed, PhD

Chief Investment Strategist

From 2016 to 2017: a quantum leap?
Not surprisingly, the rise of populism in some of the world’s most important economies has led to a lot of talk about a “return to the 1930s,” particularly after the UK opted to leave the European Union and Donald Trump ascended to the Presidency of the US in 2016.

We propose a return to the 1920s, however, not to draw analogies, but to draw inspiration from two concepts established during that decade: economist Frank Knight’s differentiation of uncertainty and risk from 1921; and physicist Werner Heisenberg’s Uncertainty Principle from 1927.

With mainstream thinking wrong-footed during 2016, often informed by what turned out to be “blind” polls, it feels as though uncertainty has made a big comeback and is here to stay. But the ideas of these two key thinkers on uncertainty might suggest a different conclusion – one directly relevant to investment strategy as we move from 2016 into 2017.

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