Understanding Butterfly Effect – A new perspective to markets, behavior and life

‘In one of Stephen King’s greatest books, 11/22/63, a young man named Jake discovers a time travel portal which leads back to 1958.

Jake deduces that altering history is possible. However long he stays in the past, only two minutes go by in the present.

He decides to live in the past until 1963 so he can prevent the assassination of President John F. Kennedy, believing that this change will greatly benefit humanity.

After years of stalking Lee Harvey Oswald, Jake manages to prevent him from shooting Kennedy”

He returns hoping to see a much improved world, instead he sees one in ruins and a nuclear war that has destroyed much of the world.

FS blog highlights this as a classic example of how everything is connected and of Butterfly Effect.

The butterfly effect is the idea that small things can have non-linear impacts on a complex system.

In 12th grade, at the Common Admission Test, I lost out the last general merit medical college seat in my city (that cost 200 USD/yr vs 1500 USD/yr that others were willing to pay) to a person who was 4 ranks ahead of mine.

That translated to probably 2-3 marks more than I scored in my Botany/Zoology exam.

3 marks that probably changed the course of what I did for the rest of my life – who I married, what I studied or where I worked.

For the longest time, my Quora profile read ‘Believer of the Butterfly Effect’.

We tend to misinterpret it as small events that can drive ‘leverage’ but ‘the reality is that small things in a complex system may have no effect or a massive one, and it is virtually impossible to know which will turn out to be the case’

The FS blog again summarizes this well.

“We like to think we can predict the future and exercise a degree of control over powerful systems such as the weather and the economy.

Yet the butterfly effect shows that we cannot.”

Be kind to yourself.

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Ranjani Mani

#ButterflyEffect

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