Regenerative Portfolio Theory

some initial thoughts

Traditional and modern portfolio theories prioritize the management of the risk-return relationship and the intrinsic value of an asset, respectively. Both theories focus on the desired outcome rather than the process. However, as global instabilities push us toward a new phase, assessing the risk and intrinsic value of an asset may become increasingly difficult.

Regenerative Portfolio Theory (RPT) differs from traditional portfolio management by considering the potential attractor basins we may find ourselves in and identifying assets with a high probability of maintaining their intrinsic value in the new system states. This approach reduces risk by focusing on common assets across various scenarios.

Portfolio management has always considered the system as a whole, but the global system has remained stable for the past 10,000 years. RPT sets a long-term positive outcome for humanity as its central goal, recognizing that the asset landscape will likely remain similar in both the best and worst-case scenarios.

In both scenarios, we will likely shift from a transactional, quantifiable perspective on value exchange to a relational, qualifiable perspective. Traditional and modern approaches may not be equipped to measure quality, making the transition in the financial system during the phase transition challenging.

While assigning intrinsic value to quality rather than quantity is crucial during this transition, there is no solid theory on how to do so. Therefore, given sufficient interest, i would love to offer som open and shared learning sessions to explore this topic further.