Markets tend to grow bubbles that eventually pop with drastic consequences. Financial bubbles often grow because of positive feedback
Explanation of volatile bear markets
The markets can suddenly shift due to outside factors, which causes investors to pay attention only to negative news. Initial selling leads to more selling as market participants liquidate their positions. The negative feedback loop tends to accelerate quickly, often resulting in a market full of undervalued stocks
globalization continues to increase and capital markets connect
Why it has become more important in nowadays ?
How it can lead to more episodes of extreme market volatility
Improvements in technology and wider access to the Internet has increased the degree to which international markets influence each other
Origin and Meaning of Butterfly Effect
Who and when was first coined the phrase “the butterfly effect”
The phrase was first mentioned during a scientific meeting in 1972. Scientist Edward Lorenz gave a talk on his work regarding weather prediction models.
What meaning has the frase“the butterfly effect”?
The phrase suggests that the flap of a butterfly’s wings in Japan could create a small change in the atmosphere that might eventually lead to a tornado in Texas
