La Finance en 2040 vue par les experts : Bluford (Blu) H. Putnam, Ph.D.

Finance in 2040 by Blu Putnam, Chief Economist & Managing Director CME Group

I met Blu over 20 years ago in New York, I was an intern for 18 months, and he was the President & CIO of the asset management company. He was and still is the most accessible and smartest person I know, with such a dedication to share his expertise, and ensure that people under his responsibility are to develop and progress. He hired me then for a job in London, working with him on FX forecasting models. I owe him all my career in finance.

He has a passion for Thomas Bayes, dogs, sailing and Rosé Wine. It is quite sad this is a written interview, because Blu is quite a story teller…

Meet Bluford Putnam in 2040

We are in 2040, how do you see the world around us?

Climate is the big challenge we knew it would be.  Sea levels are much higher in 2040.  Being an avid sailor, I knew we had a reached a tipping point of sea levels, when back in the late 2020’s huge glaciers were breaking off antarctica.  That’s when I decided to sell my house on the Chesapeake Bay and move inland.

One thing I enjoy in 2040 is incredibly fast air travel.  I remember back in the beginning of my career when we could reach Paris from New York in three hours with the Concorde, but now in 2040, supersonic air travel is back again and much more affordable. We travel as much as before, but this is so much faster, not to mention easier on the body, and fortunately in a more sustainable manner!

How will the financial markets have evolved?

Financial markets are still the same. Their role is to discover the price.  But in 2040, they are much more efficient; transaction costs have fallen drastically. There are more choices of securities as well, but the way they work is still the same than decades ago: same old process, there is a seller, a buyer, and you agree on a price.

"I regret the decision to switch markets to 24/7"

In 2040, I regret the decision to switch markets to 24/7. I miss the 8-hours per day for 5 days a week. These days (in 2040!) we are so immersed in everything that we have lost track of time and with it some perspective!

What role will asset management professionals play in 2040?

In 2040, the asset management industry has changed dramatically.

The 2020’s saw the acceleration to passive management.  In 2040, there is an incredible choice of securities, transaction costs are so low, and the key is personalization. Investors have far more ways in 2040 to personalize their portfolio in terms of securities they wish to invest, the level of risk they wish to take, the maximum drawdown they can accept.

In this age, asset managers are remunerated for their advice. Advice will be at premium.

You have to imagine a supermarket, where investors can decide on all the instruments (ingredients) they wish for: More volatility, more E (environmental pillar), less drawdown, more of this theme or that theme, etc…  But at the end they need a recipe book and someone to tell them if they have too much salt in their recipe, how to mix this and that, and that the meal is lacking spice.

"You have to imagine a supermarket, where investors can decide all the instruments (ingredients)"

2040 is a new era of personal control on your investments, people will be able to build their own customized index. Essentially a personalized, yet passive index.  The super highly efficient markets that have evolved allows for this extreme client-centric vision of investments.

In the 2020s people used to think in terms of the “direction of the markets”, in 2040 this is no longer the case. Markets are so much more efficient, there are myriad types of securities to allow for customized risk management — binary options, cross-product options, all with many maturities. In 2040 you tailor-make your risk.

Also, 2040 is the revolution of visualization.  In the 2020s, performance and funds reports were made of numbers and tables. In 2040, investors can visualize their investments, it is the revolution of animation.  Gaming has met finance.  It started in the 2020s but now in 2040, investments can be visualized in way we could not dream in the earlier era.  Asset managers in 2040 report their performance in animations, not boring tables.  And fortunately, presentations with text-based slides with cute diagrams and unreadable bullet points died with the visualization revolution along with a culture of consultancy-dependancy that was challenged by the ambiguity of what the future might bring.

Looking back, what is the biggest forecasting/anticipation mistake you have made?

In 1987, the company for which I was working transferred me from the New York office to London. Without thinking and also because the company made it so easy, I decided to sell my lovely New York apartment. In 1987. Biggest.mistake.ever.

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