Why Stock Markets Crash: Critical Events in Complex Financial Systems

Name: Why Stock Markets Crash: Critical Events in Complex Financial Systems
Author: Didier Sornette

by Didier Sornette

The author aside from the problem of crashes presents an insightful exposition of tipping points. I don’t know why his approach makes it clearer and deeper than those of Watts and Barabasi – is it due to his using financial markets as a base? or his being an expert at fat-tailed dynamics? His work builds on the ‘abyssus abyssum invocat’ (panic begets panics) and the dynamics of compounding disequilibria. In addition the notion of ‘CRITICAL POINT’ is made very clear.

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Nassim Taleb

"The author aside from the problem of crashes presents an insightful exposition of tipping points. I don’t know why his approach makes it clearer and deeper than those of Watts and Barabasi – is it due to his using financial markets as a base? or his being an expert at fat-tailed dynamics? His work builds on the ‘abyssus abyssum invocat’ (panic begets panics) and the dynamics of compounding disequilibria. In addition the notion of ‘CRITICAL POINT’ is made very clear."

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