The Swedish Behavioural Economist

Tag Archives: Capital Markets

People in finance like to flatter themselves by trying to keep equity markets in a black box, dressing in pinstriped suits and throwing financial terminology around them. So are financial decisions in capital markets complex? Should we consult experts to make clever investments?


The truth is that there are many people who’s job is to understand capital markets but as the markets are truly chaotic, they have the same chance to perform their job well as a ice cube can survive in hell. We just do not know what will happen in the next few months as we do not know what people are up to: some people sell and some people buy, for various striped reasons.

Read the hole article at

Share This:

How we wish that we could understand capital markets. Then it would make sense to do all the things we currently are doing, like make short-term forecasts on equity markets and certain equities. However, predicting markets does not make any sense at all. Improving companies and their communication however does.

Fyr i storm

Historic development of equity prices cannot be predicted because it is truly chaotic. So many uncontrolled forces are at work and their unpredictable interactions are so complex those extremely small variations in the strength of the forces and the way they interact can produce huge differences in outcomes. Historic equity market development is what is called a “level two” chaotic system. Chaotic systems come in two forms.

Read more about the two chaotic systems at

Share This: