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Defining chaos

July 29, 2011

I've been doing a lot of reading on chaos, in particular on the nature of chaotic systems. I was recently trying to explain to a friend why a dynamic system, which can be perfectly captured by a "deterministic" equation, can nonetheless exhibit chaotic behavior. His refusal at first to accept that fact reminded me of my […]

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Chaos and markets

October 20, 2010

This morning I came across a post by David Varadi on the (futile?) quest for simplicity. He writes: The most optimistic quantitative researcher knows deep down that an unexplained noise dominates the data that mysteriously eludes linear models such as regression. Markets are chaotic systems characterized by feedback. If they were neat and orderly (and […]

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