Featured Insights

Research and Publications

INSIGHTS
by First Quadrant Team
While markets may not be “high risk” from a historical standpoint, investors have been shifting from optimistic to pessimistic on a regular basis. The rapid shifts in sentiment have been partly triggered by political issues, which are hard to predict, but there has been conflicting economic data, as well. Although global growth continues to be positive, manufacturing data has been weak, with the most recent Markit PMI indicating a manufacturing recession. Thus, we have some information pointing towards more resilient markets, where risk appetite tends to bounce back after shocks, and some towards fragile markets, where shocks can turn into bear markets.
INSIGHTS
by First Quadrant Team
Even in this historically-long bull market, we have seen (not-infrequent) shifts in investors’ risk sensitivity, ranging in both magnitude and duration. The past several months have been a particularly obvious reminder that risk appetite can shift abruptly, with volatility oscillating as market participants assessed global growth prospects, Brexit developments, trade uncertainty, and the US government shutdown. At First Quadrant, we believe the best way to understand how changes in the market environment will influence asset prices is to first understand how they will influence market participants.
INSIGHTS
by First Quadrant Team
The financial market is an incredibly rich and complex space, and academics and practitioners alike have dedicated enormous effort into understanding its forces. It is perhaps surprising, then, that few have focused on the forces that drive the individuals who come together to create the market. Many treat market participants as a homogenous group, all motivated by a singular desire to maximize profit. But of course, different market participants have different needs and preferences – sometimes even during the same trading session!