FORGETTING FACTOR 2)5)
In markets, the progressive loss of "memory" of the system after a period of time. (after J. CASTI, 1994, p.106).
This curious feature corresponds to the loss of predictive power that can be obtained from cumulative data on the correlative evolution of the market. Moreover this factor is different for different stock markets. For example, according to CASTI, its value is 42 months for the NYSE, 36 months in London, 44 months in Tokio and 60 months in Frankfurt. CASTI concludes that: "chaos is a major factor influencing price fluctuations on the world stock markets" (p.106).
Stock markets and other markets seem to submit to criticality rules, which seems to be confirmed by sudden crashes and panics. How and why they lose their "memory" remains a good subject for further research.
The forgetting factor could be at work in living systems, in ecosystems and in social systems.
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Bertalanffy Center for the Study of Systems Science (2020). Title of the entry. In Charles François (Ed.), International Encyclopedia of Systems and Cybernetics (2). Retrieved from www.systemspedia.org/[full/url]
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