Entropy and Market Efficiency

The concept of entropy in thermodynamics can be applied to financial markets to understand market efficiency.

High entropy states in markets signify high unpredictability and randomness, akin to inefficient markets.

Conversely, low entropy states indicate more predictable and orderly market behaviors, representing... See more

Perceived Value vs. Actual Money

It’s essential to differentiate between the perceived value of an asset and actual value.

When a non-public asset’s price falls, its perceived value decreases, but that doesn’t mean the equivalent amount of money has been destroyed.

It’s a paper loss until the asset is sold. If an investor holds onto the asset and its... See more