Into the Secret Garden or a Dark Pool An Exploration into Whether Investment Gardens Provide an Investment Alternative for Retail Investors
Mark Le Page*
ESCP Business School, Paris, France
*Corresponding Author: Mark Le Page, ESCP Business School, Paris, France.
Published: January 11, 2025
DOI: 10.55162/MCET.08.255
Abstract
This paper rejects the hypothesis that investment Gardens present financial harm to the public. Gardens are found on platform websites that allow anybody to create an investment product. The literature review sources the limited research noting the opportunities for abuse that managers of complex financial products can exploit against the unsuspecting public.
This research builds on the dialectic in the Decentralized Finance (“DeFi”) debate. How dare access to riches be denied to anyone? Are regulators obliged to restrict access to vulnerable investors?
Eight Gardens are regressed against the S&P 500, Bitcoin and Ethereum prices. Granger Causality Analysis seeks to establish whether there is rationality in the DeFi markets. Gardens’ Sharpe Ratios are compared to sixty traditional investment funds.
The paper proposes an extension of adverse selection within agency theory. The propensity for retail investors to understand a Garden from any sources should determine whether retail investors are allowed to invest.
Keywords: DeFi; game theory; adverse selection; investment gardens; finance democratization
.