Didier Sornette
- Published in print:
- 2017
- Published Online:
- May 2018
- ISBN:
- 9780691175959
- eISBN:
- 9781400885091
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691175959.003.0010
- Subject:
- Business and Management, Finance, Accounting, and Banking
This chapter examines stock market crashes in the entire financial history of the United States as well as the world economy and population dynamics over the last 2,000 years. It suggests the ...
More
This chapter examines stock market crashes in the entire financial history of the United States as well as the world economy and population dynamics over the last 2,000 years. It suggests the existence of strong positive feedbacks that point to an underlying finite-time singularity around 2050, signaling a fundamental change of regime of the world economy and population around 2050 (a super crash?). Three leading scenarios are described: collapse, transition to sustainability, and superhumans. After analyzing financial as well as economic and population times series over the longest time scales for which reliable data is available, the chapter considers the pessimistic viewpoint of “natural” scientists vs. the optimistic viewpoint of “social” scientists regarding human population size and growth. It also discusses the faster-than-exponential growth of population, GDP, and financial indices before concluding with an overview of the increasing propensity to emulate the stock market approach.Less
This chapter examines stock market crashes in the entire financial history of the United States as well as the world economy and population dynamics over the last 2,000 years. It suggests the existence of strong positive feedbacks that point to an underlying finite-time singularity around 2050, signaling a fundamental change of regime of the world economy and population around 2050 (a super crash?). Three leading scenarios are described: collapse, transition to sustainability, and superhumans. After analyzing financial as well as economic and population times series over the longest time scales for which reliable data is available, the chapter considers the pessimistic viewpoint of “natural” scientists vs. the optimistic viewpoint of “social” scientists regarding human population size and growth. It also discusses the faster-than-exponential growth of population, GDP, and financial indices before concluding with an overview of the increasing propensity to emulate the stock market approach.
Didier Sornette
- Published in print:
- 2017
- Published Online:
- May 2018
- ISBN:
- 9780691175959
- eISBN:
- 9781400885091
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691175959.003.0006
- Subject:
- Business and Management, Finance, Accounting, and Banking
This chapter describes the concept of fractals and their self-similarity, including fractals with complex dimensions. It shows how these geometric and mathematical objects enable one to codify the ...
More
This chapter describes the concept of fractals and their self-similarity, including fractals with complex dimensions. It shows how these geometric and mathematical objects enable one to codify the information contained in the precursory patterns before large stock market crashes. The chapter first considers how models of cooperative behaviors resulting from imitation between agents organized within a hierarchical structure exhibit the announced critical phenomena decorated with “log-periodicity.” It then examines the underlying hierarchical structure of social networks, critical behavior in hierarchical networks, a hierarchical model of financial bubbles, and discrete scale invariance. It also discusses a technique, called the “renormalization group,” and a simple model exhibiting a finite-time singularity due to a positive feedback induced by trend following investment strategies. Finally, it looks at scenarios leading to discrete scale invariance and log-periodicity.Less
This chapter describes the concept of fractals and their self-similarity, including fractals with complex dimensions. It shows how these geometric and mathematical objects enable one to codify the information contained in the precursory patterns before large stock market crashes. The chapter first considers how models of cooperative behaviors resulting from imitation between agents organized within a hierarchical structure exhibit the announced critical phenomena decorated with “log-periodicity.” It then examines the underlying hierarchical structure of social networks, critical behavior in hierarchical networks, a hierarchical model of financial bubbles, and discrete scale invariance. It also discusses a technique, called the “renormalization group,” and a simple model exhibiting a finite-time singularity due to a positive feedback induced by trend following investment strategies. Finally, it looks at scenarios leading to discrete scale invariance and log-periodicity.
