Which of these US market indices is the most complex: DJI, NASDAQ or the S&P? Surely, it is the NASDAQ because it is full of tech stocks. The DJI, being based on what we would call the real economy, is quite the opposite, more suited for investors who are less risk-hungry. The S&P clearly lies somewhere in the…
The EU is a huge system of systems. In our previous blogs on the subject we have shown how the resilience of this system is still very low – just over 60% – and how its dynamics is difficult to govern and steer. Both those in favor and against the so-called Brexit are producing numerous arguments, projections and…
Resilience Ratings of major markets are reported in the table below. Analysis performed on 31/12/2015. The results are presented without comments. Resilience is the capacity to absorb shocks or destabilizing events, such as financial contagion, stock market collapses, market bubbles, natural disasters or geopolitical events. Opposite of fragility, resilience provides an indication of…
You only appreciate the importance of systemic analysis once you see the kind of new knowledge it delivers. There is much talk of systemic analysis in finance but there is very little research on the subject, not to mention a regulatory vacuum. We analyze stock markets on a daily basis. In particular, we focus on…
The GDP of Greece accounts for a very small percentage of that of the Eurozone. And yet, the magnitude of the reaction that the Greek crisis is inducing in the markets and in the media is certainly out of proportion. The amount of market capitalization that has been lost in the past few days exceeds…
Over the past few months stock markets have been registering very positive performance. Some analysts claim the markets are in a bubble condition. Bubbles can emerge from cognitive biases, herd behaviour and involve positive feedback loops which accelerate bubble growth. The S&P, for example, has tripled since its low in 2009. Since the 1990s, the…
Complexity-induced risk. In the WEF 2015 Global Risks Report, the word ‘complexity’ is mentioned only 8 times and in a colloquial manner, never as an independent source of risk. Complexity is not mentioned in the Executive Summary of the report. And yet, as the complexity of the global society increases, it becomes probably the most…
Blog written on February 3-rd, 2015. After the anti-bailout party has won the elections in Greece, global stock indices have edged up and the Euro has rebounded. The reaction of the markets appears to be, after much trepidation, mild, almost nonexistent. Has the Syriza-effect been compensated by the ECB’s money-printing programme? It is too early…
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…
A quick look at the resilience of the major indices on December 19-th, 2014. The analysis is performed on a daily basis, we report the situation we have registered after the markets closed yesterday. EU: FTSE.MIB – 63.7% SSMI – 81.5% FTSE – 64.5% CAC40 – 44.6% DAX30 – 76.3% Asia: HSI – 68.9%…
