From Wikipedia: The 2020 stock market crash was a global stock market crash that began on 20 February 2020. On 12 February, the Dow Jones Industrial Average, the NASDAQ Composite, and S&P 500 Index all finished at record highs (while the NASDAQ and S&P 500 reached subsequent record highs on 19 February). From 24 to…
We reproduce verbatim a very interesting article by Angel Gurría, OECD Secretary-General. All our blogs are original, with very minor exceptions. This is one of those exceptions. An exceptional article: “The recent financial crisis exposed some serious flaws in our economic thinking. It has highlighted the need to look at economic policy with more critical,…
Businesses rely heavily on information and data. Many businesses actually store data. Some businesses use this data to derive statistics and models which are then used in an attempt to make the business more profitable, more efficient and streamlined. In other cases, models are used to produce forecasts, improve resource allocation, perform scenario analysis or…
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…
Research confirms that high portfolio complexity impacts negatively mid and long-term expected returns. This is because high complexity is a formidable source of fragility, hence vulnerability. In a turbulent economy highly vulnerable portfolios and financial products are more exposed and more volatile. Therefore, a new portfolio design strategy based on complexity has recently been developed.…
In the past few weeks stock markets have been plummeting. There is talk of a perfect storm. On May 18-th our blog hinted the possibility of a generalized market collapse in virtue of low levels of the Global Financial Resilience Index (GFRI) and its downward trend. With falling oil prices, a troubled banking system, low inflation…
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…
Innovation is the result of R&D which is something that requires vision, strategy, leadership, will-power, money, persistence, continuity. Vision requires solid preparation and plenty of knowledge. You don’t get great visions or flashes of intuition under a shower unless you’re obsessed with something and unless you’ve put plenty of time and effort into it. There…
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…
