Friday, June 24, 2011
Embedded crash: Researchers discover how to predict market crashes
Using new statistical analysis tools of complexity theory, researchers at the New England Complex Systems Institute (NECSI) performed new research on predicting market crashes.
It has long been thought that market crashes are triggered by panics that may or may not be justified by external news. This new research indicates that it is the internal structure of the market, not external crises, which is primarily responsible for crashes.
NECSI researchers show that a dramatic increase in market mimicry occurred during the entire year before each market crash of the past 25 years, including the recent financial crisis.
"We have demonstrated mathematically that there is significant advance warning to provide a clear indicator of an impending [stock market] crash," explained Professor Yaneer Bar-Yam, president of NECSI and principal investigator on the research.
BAD HARDWARE WEEK: Will another economy crash strike even this year or the next one? Possible or not?.
It has long been thought that market crashes are triggered by panics that may or may not be justified by external news. This new research indicates that it is the internal structure of the market, not external crises, which is primarily responsible for crashes.
NECSI researchers show that a dramatic increase in market mimicry occurred during the entire year before each market crash of the past 25 years, including the recent financial crisis.
"We have demonstrated mathematically that there is significant advance warning to provide a clear indicator of an impending [stock market] crash," explained Professor Yaneer Bar-Yam, president of NECSI and principal investigator on the research.
BAD HARDWARE WEEK: Will another economy crash strike even this year or the next one? Possible or not?.
THIS LINK posted by Joseph Bell : 1:59 PM
