SI402: Why Markets Can’t Stop Trending ft. Richard Brennan

What happens when markets stop behaving like machines and start behaving like living systems? In this episode, Richard Brennan joins Niels to explore passive investing, complex adaptive systems, volatility suppression, and the hidden forces reshaping modern market structure. From structured products and reflexive flows to demographics, trend following, and the fragile illusion of equilibrium, this conversation asks whether markets are becoming more unstable precisely because investors believe they have become safer. A thoughtful and layered discussion about why price discovery may be weakening, why trends persist, and why systematic strategies may be more relevant in a world increasingly shaped by feedback loops.
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Episode TimeStamps:
00:00 - Introduction to the episode and overview of today’s discussion
02:22 - Richard Brennan breaks down passive investing through the lens of complex adaptive systems
06:51 - What “complex adaptive systems” actually means in markets
14:53 - Why passive investing changes market structure without individual investors realizing it
24:06 - Niels discusses structured products, volatility suppression, and market fragility
29:23 - How demographic shifts could eventually reshape passive investing trends
35:37 - Trend following performance update and the TTU Trend Barometer
38:48 - Listener question on variance, volatility, and correlation in systematic trend following
42:04 - The “murmuration” analogy and why markets behave like flocks instead of machines
48:31 - Why equilibrium theory survives despite failing to explain real markets
51:17 - The endogenous engine of markets and the mechanics of reflexivity
57:47 - How trend followers align with the architecture of modern markets
01:03:12 - Why passive investing weakens balancing forces and strengthens trends
01:13:43 - The statistical evidence showing markets structurally trend over time
01:21:18 - Why trend following may become even more effective in the future
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