The Butterfly Effect

June 10th Weekly Market Update

Summer gets underway with a lot of beating wings as millions of butterflies travel home. This week, many northern states are seeing their first Monarch butterfly of the season. Monarchs migrate from their winter home in Mexico to summer homes across the United States.

The “butterfly effect” is a term from a pioneer of chaos theory, Edward Lorenz; his 1972 presentation Predictability: Does the Flap of a Butterfly’s Wings in Brazil Set Off a Tornado in Texas? describes the idea that a tiny event can start a chain reaction and have large and wide-reaching effects. It is why those seven-day forecasts for the weather are only right a small percentage of the time, and why it can be so challenging to predict markets with millions of seemingly random and tiny events each triggering a ripple effect that could cause a major impact half a world away.

For the full article:  The Butterfly Effect