Brian Singer, head of William Blair’s Dynamic Allocation Strategies team, discussed how he applies game theory to assess the investment implications of several geopolitical hotspots across the globe on Bloomberg Asia’s “Trending Business” TV program.

Singer highlighted that game theory is about strategic negotiation among players who use different powers to push the negotiation to their benefit. And understanding who has the power and how they’re likely to use it is important in assessing how geopolitical events may impact the markets.

“Game theory doesn’t predict the outcome, but it helps us understand what’s happening, so we can try to anticipate what the implications are for the capital markets.”

– Brian Singer, head of William Blair’s Dynamic Allocation Strategies team

“[Game theory] doesn’t predict the outcome, but it helps us understand what’s happening, what’s a bluff, what’s not a bluff, and why they’re doing what they’re doing,” Singer said in the interview with anchor Angie Lau.

Singer goes on to discuss several geopolitical hotspots across the globe that his team is applying game theory analysis to help better understand their potential investing implications:

  • Biggest short-term geopolitical event: Spanish elections
  • Longer-term hotspot: Brexit
  • Asian region: Nine-dash line in South China Sea
  • U.S.: Presidential election

Despite elections in December 2015 and June 2016, Spain has been unable to form a coalition government, Singer noted, adding that the inability to form a government is a negotiation among several players, including the People’s Party, Cuidadamos, Podemos, and the Socialist Party. “They haven’t come to a resolution of that negotiation, and that’s what we’re looking to understand, so we can try to anticipate what the implications are for the capital markets,” Singer said.

When it comes to the U.S. Presidential election, Singer highlighted that populism is the key driver. He added that it’s important to understand that populist movements don’t stand for something—they stand against something. And, in this case Donald Trump represents a populist movement that’s standing against the established elite.

“Sometimes the more outrageous that Trump is, the more he communicates that he is outside the norm, and it doesn’t necessarily hurt him,” Singer told Bloomberg TV.

Watch Brian Singer’s Bloomberg TV Interview

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Learn More: Game Theory

Read several other blog posts on game theory and macro investing by Brian Singer, head of William Blair’s Dynamic Allocation Strategies team:

 

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Any statements or opinions expressed are those of the author as of the date of publication, are subject to change without notice as economic and markets conditions dictate, and may not reflect the opinions of other investment teams within William Blair Investment Management, LLC or the Investment Management Division of William Blair & Company, L.L.C.

This content is for informational and educational purposes only and not intended as investment advice or a recommendation to buy or sell any security. Investment advice and recommendations can be provided only after careful consideration of an investor’s objectives, guidelines, and restrictions.

Factual information has been taken from sources we believe to be reliable, but its accuracy, completeness or interpretation cannot be guaranteed. Investments are subject to market risk. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument. Statements concerning financial market trends are based on current market conditions, which will fluctuate.

William Blair does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax questions and concerns.

Distributed by William Blair & Company, L.L.C., member FINRA/SIPC.

Copyright © 2017 William Blair & Company, L.L.C. "William Blair” is a registered trademark of William Blair & Company, L.L.C. No part of this material may be reproduced in any form, or referred to in any other publication, without express written consent.

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