Take information. In an evolutionary game, information is a double-edged sword. It supports the cause of the long-term investor, by allowing them more easily to compare prices with fundamentals. But it also tests the patience of the untested investor subject to regular performance evaluation. Investors whose judgement is right, but whose timing is wrong, stand an increasingly high chance of exiting the game. More frequent information on performance risks contaminating the gene pool, driving out the patient to the benefit of the impatient.

Anecdotally at least, performance evaluation intervals have progressively shortened. Over recent decades, companies have migrated from annual general meetings, to a six monthly or quarterly reporting cycle to today's steady stream of within-cycle trading updates. In finance, information is in general a good thing. But in finance, as in life, it is possible to have too much of a good thing.

Liquidity is similarly double-edged. It reduces the impact of momentum trading on prices, thereby increasing market efficiency. But it also reduces the costs of pursuing such strategies. In other words, liquidity unlocks the impatience gene. Investors whose judgement is wrong, but whose timing is right, can lock in immediate gains. Liquidity, too, can pollute the gene pool by allowing the impatient to prosper. Like information, liquidity can be too much of a good thing.

Eoin Treacy's view The last year has been a difficult period for many investors. There seems to have been an unending succession of crises to worry about from the USA's deficits and unfunded liabilities to Europe's sovereign and banking crises to China's slowing growth. Media coverage of these events has been sensational and skewed toward a worst scenario. Volatility was extremely elevated. Between August and October 10-20% swings across indices were not uncommon. This was debilitating to sentiment because people felt buffeted by the wild gyrations in their portfolios. Price action appeared to have become divorced from reason.

As investors we need to foster a solution focused attitude. We need to be aware of problems as they arise and open to the negative consequences they can have for asset prices. However, when prices have already fallen and awareness of problems is much more widespread, time is better spent considering solutions than theorising on even worst outcomes..

In October, there was a high degree of uncertainty about what the ECB was going to do. As the situation deteriorated, and volatility increased, the central bank was more likely to step in as lender of last resort not less likely. This occurred in December and asset prices have posted one of the most impressive starts to a year in more than a decade.

Sentiment has reversed. I saw one quote today from a large investment bank that it expects the current uptrend to persist for a number of years. We also have espoused the cyclical bull market hypothesis since October. This does not negate the potential for prices to revert to the mean following overextensions in the short term. Such pullbacks would offer risk adjusted entry points.

The S&P 500 pushed through to a new recovery high last week, having paused in the region of the 2011 highs for four weeks. A sustained move below 1300 would now be required to question medium-term scope for additional upside.