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The Modular-Finance Matrix
  • Complexity Economics
  • Multiple Modalities 
  • Design Thinking
  • Adaptive Markets
  • Street Smarts
  • New Smarts
  • Imagination
  • Artificial Intelligence
  • Game Theory
  • Multiple Models
  •  Orgel's Rules 
  • Big Data
  • Worldly Wisdom  
  • Emergence
  •  Machine Learning 
  •  Combinatory Play

The Effectiveness of Modular Finance in New York, NY

“During a visit to the London School of Economics as the 2008 financial crisis was reaching its climax, Queen Elizabeth asked the question that no doubt was on the minds of many of her subjects; ‘Why did nobody see it coming?’ The response, especially by the University of Chicago economist Robert Lucus was blunt: Economics could not give useful service for the 2008 crisis because the economic theory has established that it cannot predict such a crisis. As John Kay writes, ‘Faced with such a response, a wise sovereign will seek counsel elsewhere.’ And so might we all.” - Richard Bookstaber, The End of Theory

The modern world of finance is in the middle of a much-needed re-examination. The foundation of this re-evaluation is modular finance in New York, NY. These complex adaptive systems aren’t merely the offspring of personal finance (Main Street), corporate finance (Wall Street), or public finance (Pennsylvania Avenue), but instead are a unique mix of all three. This creates a new discipline in its own right, one that Main & Wall University can help you understand better.

What is a Business for?

"On day one of an economics course, a new student is taught the answer: to maximize shareholder profit. But this single idea that pervades all our thinking about the role of the corporation is fundamentally wrong. Constraining the firm to a single narrow objective has had wide-ranging and damaging consequences: economic, environmental, political, and social. First professor and former Dean of the Said Business School in Oxford, Mayer is a leading figure in the global discussion about the purpose and role of the corporation. In Prosperity, he considers a radical and carefully considered agenda for corporations themselves, and for the regulatory frameworks that will enable them to do this. Drawing together insights from business, law, economics, science, philosophy, and history, he shows how the corporation can realize its full potential to contribute to the economic and social well-being of the many, not just the few."

- Colin Mayer, PROSPERITY

The Home of Financial Innovation

"In a world where the future is indeterminate and depends on reflexive interactions between human behavior, expectations, and reality, the concept of a single model of how the economy operates, bound by rational expectations, is an absurd delusion." - Anatole Kaletsky, Capitalism 4.0

"No tool is omnicompetent. There is no such thing as a master-key that will unlock all doors." - Arnold Toynbee, A Study of History

"The Way we understand economics and economies is by learning from lots of sources and thinking about them in lots of different ways." - John Kay, Economics in the Real World

"We cannot solve our problems with the same thinking we used when we created them." - Albert Einstein

The foundation for modular finance is a complex systems theory that incorporates multiple models, game theory, integrative thinking, and combinatory play to help you find the solutions you are after. An evolutionary way to look at finance, this system no longer takes its cues from the mechanical and statistical physics used in neoclassical economics. Instead, it uses a bottom-up approach more in line with evolutionary biology. This approach is grounded on several related theories, including dynamics, reflexivity, complexity, and emergence.


The World of Finance in The 21st Century...

Modular Finance In Motion

Complexity / Chaos / Culture / Catastrophe / Cybernetics / Neuroscience / Narrative Science / Cognitive Psychology / Behavioral Finance / Anthropology / Efficient Markets / Adaptive Markets / Radical Markets / Biomimicry / Multiple Models / Wicked Problems / Design Thinking / Lean Startup / Blue Ocean / Inductive Reasoning / Deductive Reasoning / Agent Based Modeling / Systems Thinking / Humility / Combinatory Play / Radical Transparency / Principles / ideate / iterate / Integrate / Stationarity / Modularity / Reflexivity / Metacognition / Capitalism 4.0 / The Fourth Industrial Revolution / The Third Wave / Code / Recode / Decode / ReThink / Unlearn / Blink / Factor Investing / ESG / EBI / HFT / Just Capital / Financial Economics / Narrative Economics / Emergent Behavior / Antifragility / Fat Tails / Fat Tony / Black Swans / Generation Flux / Thermodynamics / Asymmetrical Information / Asymmetrical Math / Fractal Geometry / Big Data / Data Science / Artificial Intelligence / Machine Learning / Algorithmic Trading / Game Theory / Shareholder Value / Stakeholder Theory / Wisdom of Crowds / Madness of Mobs / Skin in the Game / Nudge / Ubiquity / Udacity / Obliquity / Optionality / Animal Spirits / Orgel's Rules / Occam's razor / Entropy / Information / Imagination / Competition / Evolution / ATBPO - And The Band Plays On... / MFiM

 

The Key Components of Modular Finance

Complex Systems Theory, Adaptive Markets, Multiple Models, & Orgel’s Rules

Business Intelligence: Design Thinking & Systems Thinking

Machine Intelligence: Big Data, Machine Learning, & Artificial Intelligence

Human Intelligence: Street Smarts, New Smarts, Worldly Wisdom, Principles, Imagination, Humility, Combinatory Play


Complexity, Simplicity & Modularity

Modularity, Evolution & Emergence:

The Design Principle and Behavior of Complex Adaptive Systems

The Adaptive Market Hypothesis

The Adaptive Market Hypothesis is based on the insight that investors and financial markets behave on the principles of biology, rather than physics. This means governing the market as if it was comprised of a population of living organisms competing to survive instead of a collection of inanimate objects subject to immutable laws of motion.

This is a simple truth, but it has far-reaching implications. For instance, it implies that the principles of evolution—competition, innovation, reproduction, and adaptation—are all more useful for understanding the inner workings of the financial industry than previously thought. This is especially true when placed next to physics-like principles of rational economic analysis.

Math Is Overrated

For more than half a century, academic finance has been dominated by highly mathematical models and methods that were derived from physics. These sophisticated, quantitative techniques spawned a wave of financial innovation. However, it is argued that despite the advantages of these advanced quantitative techniques, the mass “mathematization” of finance has some significant flaws. 

At the end of the day, finance simply isn’t physics. The financial crisis of 2008 showed us that portfolio managers, investors, and regulators all have feelings. That means if this human behavior isn’t accounted for, then you aren’t going to be able to get a clear picture of today’s financial economics.

"The good news is that, contrary to common perception, math for its own sake does not get you far in the economics profession. What's valued is "smarts": the ability to shed new light on an old topic, make an intractable problem soluble, or devise an ingenious new empirical approach to a substantive question. In fact, the emphasis on mathematical methods in economics is long past its peak." - Wang Zhenying


Financial Graph

Complex Adaptive Systems

"What the human being is best at doing is interpreting all new information so that prior conclusions remain intact." -Warren Buffett

"In order for us to truly create and contribute to the world, we have to be able to connect countless dots, to cross-pollinate ideas from a wealth of disciplines, to combine and recombine these pieces and build new castles." - Maria Popova

Bird flocks, ant colonies, rain forests, businesses, organizations, communities, the stock market, and the global economy all have something in common—they are complex adaptive systems. “Complex” because they are composed of many parts that are joined together. “Adaptive” because they are all living systems capable of dynamically adapting to their continually changing environments. “System” because everything is interdependent and interconnected.


Using powerful computers, scientists from a wide range of fields have developed unique models used to simulate the evolution and changes that occur as a complex adaptive system moves, adapts, survives, and thrives. It also shows that, if their strategies are wrong, the system will die.

The key to this is that, unlike non-adaptive complex systems, these systems have the ability to internalize information. To learn and modify their behavior as they adapt to the changes within their environment. This makes the systems more intelligent and capable of changing as needed.


Complexity Economics and Modular-Finance...™

Twin Peaks and Parallel Universes:

An Introduction to Modular Finance

In 1996, David Colander of Middlebury College expressed his dissatisfaction with decades of economics by invoking a lofty analogy. He said that complexity economics is the application of complexity science to the problems of economics. It is one of the four “C’s” of a new paradigm surfacing in the field of economics. The four C’s include: 

  • Complexity
  • Chaos
  • Catastrophe
  • Cybernetics