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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…

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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.…

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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┬áhinted 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…

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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…

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Investing Based on Systemic Analysis of Markets

Suppose that one wishes to invest in US public companies and eventually two candidate portfolios are available. Suppose that both portfolios are built on companies having a resilience that is higher than that of the entire system of US public companies. The plot below indicates the resilience and complexity of this system which comprises over…