Cascading effects spread market disturbances from "summary" of Why Stock Markets Crash by Didier Sornette
The idea that disturbances in the market can spread like a cascade is a central concept in understanding why stock markets crash. This concept suggests that a small event or shock in the market can trigger a chain reaction of effects that ultimately lead to a crash. Imagine dropping a pebble into a pond - the initial disturbance creates ripples that spread outwards in all directions. Similarly, in the stock market, a small event can create waves of panic and instability that reverberate throughout the system. These cascading effects can be fueled by a variety of factors, including investor behavior, market dynamics, and external events. For example, if a major company unexpect...Similar Posts
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