What caused the turmoil in the financial markets?
APR 24, 2009
DOI: 10.1063/PT.5.023287
Science : During the 1990s, physicists flocked to Wall Street and other financial hubs, eager to turn their analytical skills and phenomenological mindset to the problem of making a killing. Now that the world’s stock markets are in retreat, they’ve turned to explaining why markets crash. According to one new analysis, leverageâmdash;the practice by hedge funds and other investors of borrowing money to buy investmentsâmdash;is the root of many nettlesome properties of financial markets that classical economics cannot explain, including a propensity to crash.
© 2009 American Institute of Physics
