Investment As Complex System

Investors can use this information to their advantage and, more than ever before, find themselves in a position to understand far more about the world, and thus, are able to make better investment decisions.

There are downsides. A relatively new paradigm, the 24-hour news cycle, not only requires that we keep glued to our computer or mobile device screens to stay updated (because that’s what everyone else is doing), it also plays heavily on the hearts and minds of investors, resulting in violent swings in the market that stem from the emotions of players in the money game. Ours is a particularly volatile market-for this and other reasons.

Also, this constant information feed keeps us distracted with details. And while details are certainly important, we investors might slowly find ourselves ignorant of the underlying concepts that drive our business from the ground up. We need to keep equally updated to the relatively slow movement of nations, ideologies, trends in central banking and even what may seem like abstractions, such as social conditions and sentiments, the mood of voters, the values of a populace and the mentality of politicians.

For example, the Occupy movement-founded and largely occurring in the United States, but with worldwide reverberations-empowered financial regulators and the politicians whose jobs depended on catering to now politicized-voters to increase enforcement efforts. Did this result in actual enforcement of laws toward institutions whose policies ushered in the financial crisis? No. But it did result in enforcement against high-profile people who had nothing to do with it, people like Mark Cuban.

What does this mean for investors? That’s up to every individual investor, but I certainly had my ideas about it.

Let’s take another example. China is now widely considered to be the world’s next top economic competitor-if it isn’t already. But considering that it is as of yet a relatively undeveloped nation in terms of infrastructure and the apparatus that enables foreign direct investment (FDI), there sits in waiting a lot of potential. The problem is, China is very secretive by nature. It takes a lot of hours of research to get anywhere. Luckily, we have some help.