Friday, June 17, 2016

MW/School for Modular-Finance™...

1- Complexity Science
2- Design Thinking
3- System Thinking
4- Orgel's Rules

Wednesday, April 6, 2016

What makes Finance different... (and Modular)...

The issue at the heart of all the explanations of boom-bust cycles just described is the unpredictability of the future. This is what makes finance different - and more unstable - than other economic activities. The primary purpose of any financial system is to link decisions made today with events many years or even decades ahead. Savers, investors, and businesses must resolve here and now how much to save

Tuesday, April 5, 2016

MF3D™ - A Game of Three-Dimensional Chess

"You learn from the past - you live in the present, and you hope for the future"

~ Albert Einstein

Sunday, April 3, 2016

Economics and Business - The Last Bastions of Modernism

"I think they are the last bastions of the idea that you can change the world in accordance with a rationally designed blueprint. Modernism in the twentieth century went through areas such as art, architecture and the humanities with the idea that we could rethink everything from the ground up and that we understood enough about the world to do that. I've come to believe that we don't . But people still think that they can analyse and structure economies as if they were a mechanical system and that they can do the same in business. So in the same way that Le Corbusier said - wrongly - that a house is a machine for living in, it exemplifies the idea that a business or an economy can be structured from first principles in the same way.

They are organic entities that evolve over time and operate within a social context. You can't look at them independently of that.

You can't understand how the financial crisis came about without understanding the politics of the relationship between the financial sector and government and the anthropology of the cultures of the organizations, or indeed without appreciating the history of bubbles and financial crisis.

Hat Tip ~ John Kay ( British Economist) on Economics in the Real World, Five Books

Monday, February 1, 2016


"There isn't a single story. The way we understand economics and economies is by learning from lots of sources and thinking about them in lots of different ways."

The development of firms and economies is fundamentally an evolutionary process that has the characteristics that evolutionary natural selection has of adaption, replication and selection. All of these are characteristics of the way economies and businesses evolve. That doesn't mean you do what some people have done and try quite literally to translate mathematical models developed to describe biological evolutionary processes into economic terms, but it does mean that kind of thinking and kind of mathematics is as relevant to economics as it is to biology.

Hat Tip ~ John Kay, Economist

Monday, January 25, 2016

The Power of Economics...

The  ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood.

Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.

- J.M. Keynes

Monday, January 11, 2016

Complexity Economics - A Darwinian World...

The notion that the economy is an evolutionary system is a radical idea, especially because it directly contradicts much of the standard theory in economics developed over the past one hundred years. It is far from a new idea, however. Evolutionary theory and economics have a long and intertwined history. In fact, it was an economist who helped spark one of Charles Darwin's most important insights. In 1798, the English economist Thomas Robert Malthus published a book titled An Essay on the Principle of Population, as It Affects Future Improvements of Society, in which he portrayed the economy as a competitive struggle for survival and a constant between population growth and humankind's ability to improve its productivity. It was a race that, Malthus predicted, humankind would lose. Darwin read Malthus's work and described his reaction in his biography.

     In October 1838, that is fifteen months after I had begun my systemic enquiry, I happened to read with    amusement "Malthus on Population", and being well prepared to appreciate the struggle for existence which everywhere goes on from long-continued observation of the habits of animals and plants, it once again struck me that under these circumstances favorable variations would tend to be preserved and unfavorable ones to be destroyed. The result would be the formation of a new species.

Here then I had at last got a theory by which to work.

   Darwin's great insight into the critical role of natural selection in evolution was thus inspired by economics. It was not long after Darwin published his Origin of Species that the intellectual currents began to flow back the other way from evolutionary theorists to economists. In 1898, the economist Thorstein Veblen wrote an article that still reads remarkably well today arguing that the economy is an evolutionary system.


In Theory...Theory and Practice are the Same... In Practice they Are Not...

The Art of Forecasting

Roger Martin...Don't need to Wait for Scientific Proof

John Kay - We Need to Think in Broader Terms....

It's The Culture Stupid...

In 1992. Bill Clinton beat George Bush to the White House...

The Folly of Modern Finance....

"There is a burning desire to think of finance as a science like physics or engineering...

We want to think it can be measured cleanly, with precision, in ways that make sense. If you think finance is like physics, you assume there are smart prople out there who can read the data, crunch the numbers, and tell us exactly where the S&P 500 will be on Dec 31, just as a physicist can tell us exactly how bright the moon will be on the last day of the year.

But Finance isn't like physics. Or, to borrow an analogy from investor Dean Williams, it's not like classical physics, which analyzes the world in clean, measurable ways. It's more like quantum physics, which tells us that - at the particle level - the world works in messy, disorderly ways, and you can't measure anything precisely because the act of measuring something will affect the thing you are trying to measure (Heisenberg's uncertainty principle). The belief that finance is something precise and measurable is why we listen to strategists. And I don't think that will ever go away.

Finance is much closer to something like sociology. It's barely a science, and driven by irrational, uninformed, emotional, veneful, gullible, and hormonal human brains."

Hat tip ~ Morgan Housel, The Motley Fool

Saturday, January 9, 2016

Competition - The Birth of a New Science

Competition Drives the Process.....

Modular-Finance Theory...

Theories of "complex adaptive systems" (of which this is one) follow the basic structures-context-changes template, but in addition, they are combinatorial: complex structures are built up of simple structures and complex changes occur as a result of combinations and sequences of simple changes. ( DR p11)