Irreducible Complexity

Is investing today too complicated?

Hedge funds, ETFs, high-speed trading, flash crashes—is the market today too multifaceted and treacherous for the average investor to even understand, much less profit from?

It certainly can seem that way. Because computerized exchanges have largely replaced the physical hustle and bustle of the trading floor, the market now handles far more volume at far higher speeds than it ever could before. This has opened the way for a lot of new products, some of which represent real advances for investors—like exchange-traded funds based on efficient, low-cost indices. These allow the average person to invest bite-sized sums in a broadly diversified manner.

But many products aren’t advances. They’re just a way for clever marketers to convert your investment performance into their fee income. There’s a certain irreducible complexity to modern finance that precludes an easy understanding of its implications. Unscrupulous operators take advantage of this fact. That’s why ethics is the most important part of any finance curriculum.

Complexity is part of life. It’s the price we pay for efficiency. But now, as always, it pays to have a trusted guide.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2017-07-17T12:34:37+00:00 October 30th, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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