Tuesday, April 7, 2009

Philosophy and hedge funds

The FT has an article about an Asian funds of hedge funds, Persistent Edge, whose founders use philosophy to understand the market.

I love the FT.

Specifically, they use Kant, Ilya Prigogine, and Taoism. That's a great combination. I didn't go far enough in my study of Kant to really get into his concept of antinomy (one of my regrets about my undergraduate studies in philosophy), but it makes perfect sense: two people can come to directly opposite conclusions from the same evidence. Sure seen enough of that in my time.

I don't know much about Prigogine, but I ran across his name while I was studying complexity theory, so my ears prick up. And I was into Taoism when I was in high school. So I am totally down with this group.

Their basic theory seems to be that they look at the fundamentals, and then they look at how others in the market are interpreting those fundamentals. Makes a lot of sense. That's how I play HSX, although I don't have as much data to go on.

I have always said that studying philosophy is like driving a Ferrari; 99% of the time it's either more trouble than it's worth, marginally useful, or potentially dangerous. But that 1% of the time that it's really useful, there's nothing like it in the world.

Looking forward to hearing more about this in the future. Persistent Edge. Remember that name.

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