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Perfectionist

Physicists Predict Stock Market Crashes .....

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I think this only applies to a perfectly spherical stock market in a vacuum. :unsure:

Ho, ho.

But, to be serious (a bit of a weakness of mine), the opposite is the case. Classical physics, as exemplified by the laws of thermodynamics, made the simplifying assumption that it was dealing with a sealed system. The scientists reported in the article are approaching things through complexity theory, developed by a chemist named Pirogine from the 1950s onwards, which dispenses with this assumption of classical physics. Callled complexity theory, this assumes the existence of dissipative systems marked by, among other things, exogenous flows and more than two (often many more) variables that interact in feedback and feedforward loops. In such systems there can be, typically are, "phase state transitions" when the sytem undergoes rapid change. Unlike classical physics the behaviour of such systems is not precisely predictable - they do not work like clockwork. Many natural systems have been shown to work in this way an it is widely (well comparatively speaking) thought that complexity theory may be important in understanding social and economic systems. Through this you can see how a system opertates, for example what phase states potentials it has, but cannot predict exactly when it will enter a new phase state. In fact small causes can bring about big effects like eartquakes, hurricanes, species extinctions - and, maybe, market crashes. This incidentally is why a house price crash might not necessarily need a big trigger. In the right circumstances, when the conditions are close to those needed for phase state transition, even a small event can bring about a big change.

Here endeth the lesson. (I did warn you I have a tendency to be too serious :( )

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Ho, ho.

But, to be serious (a bit of a weakness of mine), the opposite is the case. Classical physics, as exemplified by the laws of thermodynamics, made the simplifying assumption that it was dealing with a sealed system. The scientists reported in the article are approaching things through complexity theory, developed by a chemist named Pirogine from the 1950s onwards, which dispenses with this assumption of classical physics. Callled complexity theory, this assumes the existence of dissipative systems marked by, among other things, exogenous flows and more than two (often many more) variables that interact in feedback and feedforward loops. In such systems there can be, typically are, "phase state transitions" when the sytem undergoes rapid change. Unlike classical physics the behaviour of such systems is not precisely predictable - they do not work like clockwork. Many natural systems have been shown to work in this way an it is widely (well comparatively speaking) thought that complexity theory may be important in understanding social and economic systems. Through this you can see how a system opertates, for example what phase states potentials it has, but cannot predict exactly when it will enter a new phase state. In fact small causes can bring about big effects like eartquakes, hurricanes, species extinctions - and, maybe, market crashes. This incidentally is why a house price crash might not necessarily need a big trigger. In the right circumstances, when the conditions are close to those needed for phase state transition, even a small event can bring about a big change.

Here endeth the lesson. (I did warn you I have a tendency to be too serious :( )

s'ok NewBear :)

A similar serious note, I'm also reading "Critical Mass - How one thing leads to another" which has a few chapters on the stockmarket and economics, and it seems to echo many of the points that the physicists have made. Wish I could explain what it all meant, though I need to re-read it as it's a difficult subject to understand immediately

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he might have a point you know.

there may well be a correlation between financial markets/political sytems and fluid dynamics.

for the uneducated the most obvious fluid dynamic in existence is the weather ...high pressure/low pressur......heatwaves/hurricanes etc etc.

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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