Post on 28-Jul-2020
John Casti The X-Center
Vienna, Austria casti@xevents.com
Human events = chance + necessity
= “random trigger” + context
• Rare
• Surprising
• High-Impact
• Complexity gap/mismatch • Collective beliefs about the future (the “mood” of the population)
Tainter, J. The
Collapse of Complex Societies
(1988)
Arab Spring
(government vs public)
2011 Japanese earthquake
(nature vs humans)
Financial Crash of 2007
(financial services vs regulators)
Eurozone/EU
(EU regulations vs global markets)
Goal: Create a Fund that trades on the occurrence/non-occurrence of X-events, not on price movements
Tradeable Types of X-events: political and/or economic
Choose specific type of X-event X*
Identify landscape of X*
Gather past data on drivers of X
Identify early-warning signs of change in drivers
Develop financial actions to take when early-warning signals appear
X* = military coup in Chile
Financial Market = Copper futures exchange
Drivers of change (1) = gap between complexity of military and civilian power
Drivers of change (2) = increasing negative social mood in population
Early-warning signal(s) = gap increasing too rapidly; mood declining rapidly
Financial action = buy copper futures
• Complexity kills
• Human events cannot be “forecast”
• Mood biases events
• X-events are necessary for rebirth