Economists and the investment community must learn to open their eyes, use their common sense more and also their imagination, according to Pippa Malmgren, an American policy analyst speaking at the Cayman Alternative Investment Summit (CAIS), which is taking place in the Cayman Islands this week.
Malmgren is well known for predicting the 2007 economic crash (selling her home months before it in anticipation) and, in 2016, both the UK's vote to leave the EU and Donald Trump becoming US president.
Explaining to the audience how she managed this, she explained that she is simply willing to look at the world with a perspective of common sense and see things others are blind to.
"As a woman, it is not easy to say I was right but, yes, I called Trump's election and Brexit and in 2007 I sold up my assets because I predicted a crash was coming. The fact is, the financial markets continuously miss the most important events of our time.
"I believe this is because too many people look at things with one eye closed. We love math and polls and algorithms and models and we think that if they don’t show something then it cannot be real. But that approach makes you miss things. You need to open the other eye," Malmgren said.
In terms of Donald Trump and Brexit, she says these are the result of a global populist uprising. She predicted Trump by simply looking at how he would fill venues when he spoke, whereas she saw empty seats at rallies by Hilary Clinton. "I know it sounds almost childish to say I looked at the pictures but given we all missed so many major events, maybe it is time to stop relying so much on numbers and start looking at more practical things."
She added that imagination or a willingness to accept an alternative future should also be in the toolkit of economists and the investment community. "Imagination is a critical tool you should have in your own portfolio," she said.
Malmgren also served as Special Assistant to the President of the United States for Economic Policy on the National Economic Council and is a former member of the US President's Working Group on Financial Markets. She is the founder of the DRPM Group and co-founder of H Robotics.
Now in its fourth year, CAIS is a not-for-profit event hosted by Dart which uses its experts and expertise to benefit philanthropic efforts both in Cayman and internationally. Its keynote speakers this year included Arnold Schwarzenegger, the former Governor of California, Captains Mark & Scott Kelly, former NASA astronauts & retired US Navy Captains; and retired DEA agents Stephen Murphy & Javier Pena, responsible for apprehending the infamous drug lord Pablo Escobar.
CAIS 2017, Cayman Islands, Pippa Malmgren, Economists