Fasanara Capital – Fragile Markets On The ‘Edge Of Chaos’

Fasanara Capital letter to investors

"Learn how to see. Realize that everything connects to everything else." - Leonardo da Vinci

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Fragile Markets On The 'Edge Of Chaos'

Financial markets are complex adaptive systems, where positive feedback loops undermine resilience and bring to the brink of critical transformation

Abstract: this note posits that systemic risk in financial markets should be analyzed through the prism of complexity science, using the analytical tools available to non-linear socio-ecological systems, where a shift in positive loops comes in anticipation of a dramatic transformation. Chaos theory and Catastrophe Theory can then help shed light on the current set-up in markets. Years of monumental Quantitative Easing / Negative Interest Rate monetary policies affected the behavioral patterns of investors and...