Is a Huge Stock Market Crash Imminent?

Blog written on January 12-th, 2015. In a recent article “Why The Next Stock Market Crash Will Happen Any Day Now”  it is claimed that a massive stock market crash (down by 50%) will happen any day now. Based on past crash patterns it is said that we are on the verge of another huge…

Low Complexity Portfolios Beat Markets

Recent research confirms that high portfolio complexity impacts negatively mid and long-term expected returns. This is because high complexity has been shown to be a formidable source of fragility, hence vulnerability. In a turbulent economy highly vulnerable portfolios and financial products are more exposed, therefore more risky. Assetdyne has demonstrated that a portfolio design strategy…

How To Create New Derivatives Based on Complexity

According to Wikipedia: “In finance, a derivative is a special type of contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, or interest rate, and is often called the “underlying”. Derivatives can be used for a number of purposes – including insuring against price…

The Secret Financial Market Only Robots Can See

The following article is by Tim Fernholz, and has been written on September 16-th, 2013 and is proposed here verbatim.   What if someone told you the stock market crashed and spiked 18,000 times since 2006, and you had no idea? That’s the contention of a group of scientists who study complex systems after analyzing…

ASSETDYNEX: Complexity of Major Markets in Real-Time

  The ASSETDYNEX tool (www.assetdynex.com) has a new and powerful graphic feature which enables users to quickly visualize the time histories of the complexity, resilience and value of portfolios. Complexity provides a multi-dimensional measure of the vitality and volatility of single stocks, portfolios or markets. The following examples, corresponding to main stock market indices, are…

Europe’s Banking Union: A Fragile Super Monster?

The scope of the European Banking Union is (see here): “In response to the financial crisis that emerged in 2008, the European Commission pursued a number of initiatives to create a safer and sounder financial sector for the single market. These initiatives, which include stronger prudential requirements for banks, improved depositor protection and rules for…

The Derivatives Time-Bomb

Warren Buffet said in 2003 that the derivatives market was “devised by madmen” and a “weapon of mass destruction”. Global GDP stands at $69.4 trillion while the derivatives market is today over $700 trillion. What this means is that the financial industry has run up phantom paper debts worth more than ten times what the…

On the Complexity of Dynamics and the Dynamics of Complexity

When talking of derivatives and other sophisticated financial products, people often say that they are complex, that they have complex dynamics. But what does that really mean? When is dynamics complex? What does complex mean? A layman’s definition of complex is difficult to grasp, to understand, to control, to forecast. While mathematically speaking things a…

Coping With Turbulence: More Theories and Math?

Isn’t it time to review our theories on economics, to see them in a radically different light? What lessons are we learning from this and other  crises, if any at all? In the 1930 around 10000 banks have defaulted. The total amount of assets involved was equivalent to approximately 100 billion of today’s dollars. In…