Understanding Market Consciousness with Patrick Schotanus

In the Company of Mavericks

For today’s episode, I am joined by former fund manager and author Patrick Schotanus.

Patrick has extensive and varied experience analysing and investing in financial markets, culminating in 15 years of co-managing a large multi-asset fund.

Throughout his career, Patrick has questioned the relevance of mainstream economics in understanding the reality of financial markets and investment management, and over recent years he has focused all his time developing what he calls The Market Mind Hypothesis or the MMH.

Last year, Patrick published a book on his work titled The Market Mind Hypothesis: Understanding Markets and Minds through Cognitive Economics. It is a fascinating read.

In today’s conversation, Patrick discusses how mechanistic economics leads to damaging policy errors, how mechanistic investment strategies damage price discovery, and the amazing overlapping worlds of markets and minds. In short, Patrick believes markets are conscious and we would be better off if we established this as our way of framing how we think about economics and finance.

As Patrick says, if mainstream economics is the answer to our problems, then we are asking the wrong questions. And that the growing dominance of mechanistic and passive investment flows risk breaking markets' conscious means of price and value discovery.

Patrick’s analysis contains much practical guidance on thinking about real and financial markets, although he concedes that more research is required.

Please enjoy my conversation with the maverick thinker, Patrick Schotanus.

Brought to you by Progressive Equity.