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