Who Rates Ratings?

  The economy is a dynamic system which is far too complex for us to understand. Human nature is extremely complex and billions of irrational humans form the economy. How can such a system ever be thought to be efficient, in equilibrium and stable, as many prominent economists have claimed? But this system, like every…

The Cost of Complexity

    Thomas Frey is currently Google’s Top Rated Futurist Speaker.  He serves as the Senior Futurist and Executive Director of the DaVinci Institute. Read his article “The Complexity Disease”. “As complexity of a system increases, the costs associated with it increase exponentially to the point where the costs approach infinity, and collapse is a certainty. ….…

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…

Complexity-Based Estimation of Drug Toxicity

As the patents on many drugs, which have been launched in the 1990s, will soon expire, the pharmaceutical industry finds itself at a turning point in its evolution, particularly as far as research and development are concerned. As the pipelines of new products are shrinking, the exposure of many companies is increasing. This will surely…

Measuring the Complexity of Sounds and Music

Have you ever wondered how complex a sound is? Our brain is fairly good at recognizing sounds or pieces of music, even from incomplete information. It is also able to hint if a sound or piece of music is simple or elaborate. However, because the brain is essentially an analogue device, it is not good…

Systemic Resilience Analysis: Supercomputers Provide New Tools for Regulators, Investors and Governments

  In a world dominated by turbulence and interdependency, fragility and complexity are the main new factors which are impacting the global economy and driving financial performance. While the unprecedented challenges affecting the global economy are a source of both opportunities and threats, traditional analytics technology is insufficient when it comes to capturing new drivers…

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…