Corporate sustainability, social responsibility and sustainability in general are trendy subjects nowadays. There exist numerous programmes, institutes and research centers dedicated to the subject of sustainability. One aspect such initiatives have in common is that they don’t provide measures of sustainability. On some occasions an index or a score is defined, whereby experts in different…
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…
As we know, excessive complexity is a formidable source of fragility. If you want to make something fragile, make it very complex. Problems are guaranteed. This is because a highly complex system may behave according to many ‘modes’ (in non-linear mechanics these are called ‘attractors’). High complexity means that under certain circumstances a system…
Suppose that one wishes to invest in US public companies and eventually two candidate portfolios are available. Suppose that both portfolios are built on companies having a resilience that is higher than that of the entire system of US public companies. The plot below indicates the resilience and complexity of this system which comprises over…
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…
Sustainability is a popular subject nowadays Sustainability implies permanence, a sort of steady-state, almost some kind of equilibrium. However, in today’s world, speaking of permanence or steady state is a contradiction to say the least. From an energetic-thermodynamic standpoint a system or a process is sustainable if there is sufficient long-term energy supply to keep…
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%…
