Economics

If you use a complex system approach which doesn't have a fixed period of time in the model, it enables you to start exploring what types of animals you will see! It's classifying the elephants in the room - it may not tell you which one will come, but it will give you a better idea of what is out there in terms of risk.

Physics professor studying complex systems, crowd behavior, and social networks.

This is not just about the elephant- it's about there being different types of elephants. When we have large changes in a market, they might last an hour, a few seconds, a day, a month - there's no fixed time over which they happen! Looking at the market in simplistic distribution perspectives misses the true effect, threat and risk of large movements.

Physics professor studying complex systems, crowd behavior, and social networks.

In the multi-agent model, if you feed in the real price of the market, they show that before the large dives in market prices you could see the crowding that was beginning to happen behind the scenes, even though you couldn't see it in the price.

Physics professor studying complex systems, crowd behavior, and social networks.

It's absolutely true that a lot of the time the market is indistinguishable from a coin toss. However, when the system is under some stress, when the market is undergoing changes, the coin toss model just doesn't work. The 'black swan' doesn't appear very often in coin-toss land but in agent based complex systems land, it appears quite a lot.

Physics professor studying complex systems, crowd behavior, and social networks.

The actual actions of the people in the market are the things that determine what happens next within the market. The 'standard' financial markets model is, effectively, based on a coin toss. That is how derivatives are priced and how every exotic financial instrument is seen- they are very fancy coins, where flipping creates price changes.

Physics professor studying complex systems, crowd behavior, and social networks.

All conflicts are different with their particular history and reasons. I think that inequality within societies and between regions has become a key cause for conflict, exacerbated by rapid information dissemination, as people are (now) more aware of inequalities...

Finnish President & Nobel Peace Prize Winner for Mediation Efforts

The absolute biggest risk out there I can identify would be if something went really wrong with China as it is so important to the BRIC and global economic future. Luckily, I think it is a small risk.

Economist who coined the term "BRICS" for emerging markets.

I think the biggest risk is the situation with the EMU as I have explained. I can see that this has the potential to derail the world economy in the same way the 2008 credit crisis did.

Economist who coined the term "BRICS" for emerging markets.

The biggest opportunities relates to the branded companies who are excellent at exploring opportunities in the BRIC and N-11 world, especially those with a consumer brand that is difficult to replicate and compete with, for example German cars, Louis Vuitton.

Economist who coined the term "BRICS" for emerging markets.

I think the 2008-2011 era has demonstrated that there are major problems with the structure and governance of the EMU and there is need for considerable change, probably more fiscal and political union, of which a common Euro denominated bond will be part of.

Economist who coined the term "BRICS" for emerging markets.

This decade, their GDP will increase by about $12 trillion, i.e. they will create another one of themselves! More importantly, the share of consumption in this decade's growth will be bigger and this is where the big opportunity lies. I am especially optimistic about the Chinese consumer.

Economist who coined the term "BRICS" for emerging markets.

The second big change I foresee is the continued convergence of the complex OTC derivatives market and the exchange traded futures and equity options market. Those lines will continue to blur due to regulation, legislation, increased capital and margin requirements, increased requirements for trade reporting, and increased pre and post trade price transparency in OTC markets.

Former CEO of CME Group, global derivatives exchange leader.

If you look at the notional value of trading on our exchanges in any given year, they range from $600-700 trillion to a quadrillion (1000 trillion) dollars in total value. People can use these markets very effectively, not just for bona-fide risk hedging and transfer and risk management but also for asset allocation, portfolio management and trading strategies as well.

Former CEO of CME Group, global derivatives exchange leader.

One of the things which is a really distinguishing factor about our markets in contrast to the OTC derivative market is that we're completely open, competitive and transparent with a very high degree of participation, a very high turnover, and a high degree of pre and post trade price transparency. That refers back to that old phrase of 'liquidity begets liquidity'.

Former CEO of CME Group, global derivatives exchange leader.

We clearly have more risk around the sovereign debt of mature and developed economies. Certainly that's an issue in the US- both at the federal and state level. We're seeing that right now in very dramatic fashion in the EU also. You also see the knock-on effects of aggressive monetary policy and weak fiscal policy driving activity in precious metals, commodities and also even in equities!

Former CEO of CME Group, global derivatives exchange leader.

We do show that there is a predictive effect which is quite consistent over time! In our paper we report an 86% accuracy in predicting the up and down movements in the Dow Jones three or four days out. The question is how you turn that into a money making strategy. It could be- for example- that you lose ALL your money in that other 14%!

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