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Liquidity Cascades

Flirting with Models

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The Keystone of a Complex Market System

Liquidity acts as the keystone to a complex market system held together by arbitrage boundaries. If that liquidity disappears during periods of stress, it can lead to cascades that send markets spiralling out of control. We discuss some ideas for how investors might try to build portfolios that can both seek to exploit these dynamics and remain resilient to them. I hope you enjoyliquidity cascades, the co ordinated risk of uncoordinated market participants.

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