The Science of Economic Bubbles and Busts

The academics need to catch up with trend followers. Trend followers have known of these finding for years…

You might like my 2017 epic release: Trend Following: How to Make a Fortune in Bull, Bear and Black Swan Markets (Fifth Edition). Revised and extended with twice as much content.

One thought on “The Science of Economic Bubbles and Busts

  1. “…demonstrated that some of the brain’s decision-making circuitry showed signs of money illusion on images from a brain scanner.”

    Aha, neurology against the housing bubble. Taken serious, it seems to me that all the false positives would be the problem of this indicator. Let’s call it ‘brain stochastics turnaround predictor’. What if the house actually represents a good deal, I need it, I can put something down, but my ‘nucleus accumbens’ fires a greed signal like mad (because of the agent) ?

    “…Capital Markets Safety Board, similar to the institution that investigates airline accidents, to collect data about past and future risks that could threaten the larger financial system”

    Hmhm, this could be a VERY VERY powerful institution with vast built-in failure and abuse potential, if it grows into any role of ‘prediction’ in the news or day-to-day operational consulting of large firms and government.
    For me, financial markets are so far away from aircrafts. They are much more complex, dynamic, and ever evolving. An aircraft+personnel+thunderstorm seems to me like a well defined, closed system with mainly known feedback loops compared to markets with millions of unknown players able to switch from individual to herd behaviour in only hours. Subsequently, the approach to both areas needs to be different.

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