In class with Mr. Drix today you had your debrief of the Chaos Hits Wall Street article, pointing out some key phrases like state space, which is a broad term that describes the current status (state) of a dynamic, changing system (space). You drew some sketches of state space diagrams for a perfect frictionless pendulum, then a more realistic damped pendulum, closing out the lesson with a look at the random, chaotic behavior of a double pendulum. Through this you learned a new property of chaos (in addition to the **constrained randomness** from yesterday): **sensitivity to initial conditions**. Changing the starting state of the double pendulum even slightly resulted in a wildly different oscillation pattern

For a more modern take on Chaos Theory in the financial investment industry, check out this 2010 blog post from MoneyMorning.com: What We Can Learn from the Stock Market Genius That Wall Street Loves to Ignore.

Keep in mind, however, that this “technical analysis” approach of stock market forecasting (as opposed to the “fundamental analysis” approach of looking at the strength of a company) is not without its detractors. For a counterpoint, see this bluntly-titled post from The Motley Fool, also from 2010: Technical Analysis is Stupid

### Like this:

Like Loading...