Chaos & Volatility On The Rise

No, that’s not a ‘click bait’ sensationalist title. Things are getting ‘weird’ out there if you’re trying to be polite, and downright ‘chaotic’ if you’re being blunt.  Everywhere we look, we see signs that the systems that support us are breaking down.

The economy no longer spins off enough surplus for the elites to take what they consider their share with enough left over for everyone else.  So the wealth gap grows unchecked into politically and socially destabilizing levels.

The oceans are rapidly dying off: with corals bleaching, tide pools acidifying, and phytoplankton disappearing.  Weather weirdness is now so entrenched that all of the 50, 100 and 500-year events that happen each week are mainly reported on locally and garner little national and international attention.

Financial markets are increasingly volatile and dominated by an unruly universe of computer algorithms that now mainly play against each other, having driven off all the humans.

Politically, we’re seeing the former fringes of both parties increasingly come into power as they appeal to increasingly disenfranchised and disappointed electorates.

All of these are signs that the status quo has failed and continues to fail us. But the form of power expressed by our so-called ‘leaders’ today seems nearly incapable of healthy introspection coupled to correct action; preferring instead to do more of the same things that got us into this mess in the first place.

Those of us who can read the signs for what they are, not what we wish or believe them to be, have a special duty to first prepare ourselves for what’s coming and then help others. To put on our own oxygen masks first, and then help the others around us.

For a variety of reasons, most of them rooted in archaic evolutionary brain structures, most humans are not well adapted to face change, let alone major change.

And the volatility and chaos that’s arising all over the globe is well beyond major change. Therefore it’s well beyond the capability of most people respond to effectively — perhaps even at all.

So it’s up to you, the one reading this, to lead the way by becoming the change you wish to see.  If you want to live in a world of abundance and where everyone is at least minimally prepared for an uncertain future, then begin by building up your own 8 Forms Of Capital: financial, living, emotional, social, knowledge, cultural, material and time.  [Note: The 8 Forms of Capital are fully explained in this podcast with Ethan Roland as well as covered extensively in our new book, so I won’t re-explain them all here.  But the concepts are vitally important, and I encourage you to dig deeper now if you haven’t already]

Market Volatility

Recent market volatility, while pretty far from extreme absolute levels, is remarkably aggressive in terms of its relative swings.  The ups and downs are getting more frequent, packed together in a way that’s increasingly concerning to astute market observers.

There are many factors at play here that have created a fragile market structure.  First, the unchecked rise of the machines (computer algorithms) coupled with severe information asymmetry (the very biggest firms have access to tradeable data that you and I never see) has led to a lamentable abandonment of fundamentals in favor of momentum and trend following.

However, as mentioned before, these unhealthy market conditions have led to a general retreat by flesh and blood traders leaving only the computers to play financial ping pong with each other.  This means trading volumes have fallen and volatility has increased:

‘Paralyzing Volatility’ Means Trouble for Wall Street Giants

May 6, 2016

There’s plenty of volatility, but what happened to the volume?

From stocks to currencies and bonds, the upswing in turbulence to start the year is chasing all but the bravest traders from financial markets.

“We’re seeing huge dislocations in markets in this year,” said Atul Lele, the chief investment officer at Deltec International Group. “It isn’t the type of volatility where you see opportunities come out of the woodwork.”


Yes, the so-called “markets” are not really markets anymore.  They are the playgrounds of remorseless computer algorithms which can (and regularly do) turn on a dime and run the other direction simply because that’s where all the other programs are running.


-And it’s not just the little guys that are harmed here, even the biggest players are being smacked around in these brave new “markets.”

Hedge fund clients have noticed that they’re not making money. As a result, they’ve yanked roughly $15 billion in assets from hedge funds in the first quarter, the worst stint of redemptions since 2009, during the nadir of the Great Recession.


Even the hedge funds, with nearly $3 trillion under management are not big enough, or well-positioned enough, to figure out what’s going on and make positive returns.  This means that you and I stand even less of a chance of gaining access to useful trading information.

At any rate, market volatility is increasing and with it the chance of a market crash also increases.  Twitchy, trend surfing computers with microsecond reflexes are not exactly the makings of a resilient market structure.

Weather Volatility

Yes, sometimes weather does unusual things.  But it is the increasing frequency of such events that makes it increasingly obvious that we had better start planning on them continuing far into the future.

The problem is, we don’t have the slightest clue how to really plan because the new patterns are emergent – they don’t just happen all at once, it’s a process that takes time – and it’s too early to declare anything beyond “change is happening.”


Market volatility is on the increase, as are weather anomalies. Perhaps they’re connected in some deeper way that is not obvious. Or perhaps each just represents the logical end stage of a system grotesquely deformed by too much hot money (in one case) and trapped heat (in the other).

If you’re waiting for things to become even more deformed before you begin to prepare yourself for a future of disruptions — don’t.  Get started right now.  Preparing takes time, money and emotional energy. All of those things tend to evaporate once a crisis really gets rolling along.

This new volatility is now here with us. And that has enormous implications — some we can plan for, and others we cannot.  I can plan on losing peaches now and then but if the rains stop falling, I’m screwed.

In Part 2: How To Prepare For Volatility, we conclude that nobody can predict exactly how or when these changes will manifest.  We are entering a new dark age, one marked by an unknowing.  We can either acknowledge that reality and begin to act on it today, or we can ignore it and assume we’ll have time to react to circumstances later, along with most other people.

And there’s much we can do today — right now — that will make a huge positive difference difference in our outcomes should crisis arrive soon. But we need to act soon.

Those who wait will mostly be caught off guard and very disappointed in themselves. It happens all the time — just ask the residents of Fort McMurray.

Full article: Chaos & Volatility On The Rise (Peak Prosperity)

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