This infographic shows how interconnected our financial markets are — and how that could trigger the next crash

Business Insider | 9/13/2017 | Jeff Desjardins, Visual Capitalist
abbycraig (Posted by) Level 3
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Complex systems are all around us.

By one definition, a complex system is any system that features a large number of interacting components (agents, processes, etc.) whose aggregate activity is nonlinear (not derivable from the summations of the activity of individual components) and typically exhibits hierarchical self-organization under selective pressures.

Today - Meraglim - Snow - Avalanche - Example

In today’s infographic from Meraglim we use accumulating snow and an impending avalanche as an example of a complex system – but really, such systems can be found everywhere. Weather is another complex system, and ebb and flow of populations is another example.

Just like in the avalanche example, where various factors at the top of a mountain (accumulating volumes of snow, weather, temperature, geology, gravity, etc.) make up a complex system that is difficult to predict, markets are similarly complex.

Fact - Markets - Properties - Systems - Scientists

In fact, markets meet all the properties of complex systems, as outlined by scientists:

4. Adaptive Behavior —

Avalanche - Example - Snowflake - Event - Signs

And like the avalanche example, where a single snowflake can trigger a much bigger event, there are increasing signs that the complexity behind the stock market has also reached a critical state.

Here are just some examples that show how the market has entered into an increasingly critical state:

Record-Low - Volatility - VIX - Index - Volatility

Record-Low Volatility — The VIX, an index that aims to measure the volatility of the market, hit all-time...
(Excerpt) Read more at: Business Insider
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