We started watching a Nova documentary on The Strange New Science of Chaos. It’s from 1989, but it has held up well and serves as an excellent introduction to this strange new world of constrained randomness and sensitivity to initial conditions.
For Friday, there are three sections from Fractals: The Patterns of Chaos that I would like you to read:
- Pages 55-60 – Our Weather Today is Chaos
- Pages 93-97 – Chaos and Symmetry Hybrids
- Pages 99-106 – Chaos Sculpts Fractal Landscapes
We continued sketching state space diagrams for the frictionless pendulum, then a more realistic damped pendulum. We closed out the lesson today 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 our previous conversations): sensitivity to initial conditions. Changing the starting state of the double pendulum even slightly resulted in a wildly different oscillation pattern
We debriefed the Chaos Hits Wall Street article today, 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). We drew some sketches of state space diagrams for a perfect frictionless pendulum.
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