Stop Pretending that an Economy Can Be Controlled

We reproduce verbatim a very interesting article by Angel GurrĂ­a, OECD Secretary-General. All our blogs are original, with very minor exceptions. This is one of those exceptions. An exceptional article: “The recent financial crisis exposed some serious flaws in our economic thinking. It has highlighted the need to look at economic policy with more critical,…

A Bank in a Nutshell

Businesses rely heavily on information and data. Many businesses actually store data. Some businesses use this data to derive statistics and models which are then used in an attempt to make the business more profitable, more efficient and streamlined. In other cases, models are used to produce forecasts, improve resource allocation, perform scenario analysis or…

Who Rates Ratings?

  The economy is a dynamic system which is far too complex for us to understand. Human nature is extremely complex and billions of irrational humans form the economy. How can such a system ever be thought to be efficient, in equilibrium and stable, as many prominent economists have claimed? But this system, like every…

Optimum-Complexity Portfolios: How to Invest in Turbulent Times

Research confirms that high portfolio complexity impacts negatively mid and long-term expected returns. This is because high complexity is a formidable source of fragility, hence vulnerability. In a turbulent economy highly vulnerable portfolios and financial products are more exposed and more volatile. Therefore, a new portfolio design strategy based on complexity has recently been developed.…

In a Storm Stay Away From Complex Stocks

In the past few weeks stock markets have been plummeting. There is talk of a perfect storm. On May 18-th our blog hinted the possibility of a generalized market collapse in virtue of low levels of the Global Financial Resilience Index (GFRI) and its downward trend. With falling oil prices, a troubled banking system, low inflation…

Rating the Resilience of Major Markets, 31-st December, 2015

Resilience Ratings of major markets are reported in the table below. Analysis performed on 31/12/2015. The results are presented without comments.     Resilience is the capacity to absorb shocks or destabilizing events, such as financial contagion, stock market collapses, market bubbles, natural disasters or geopolitical events. Opposite of fragility, resilience provides an indication of…