LPPL Oscillations as Vernadsky’s “Pressure of Life”

The H,Q derivative approach taken by The Bubble Index was developed from the paper, Generalized q-Analysis of Log-Periodicity: Applications to Critical Ruptures by Wei-Xing Zhou and Didier Sornette. This approach has its origin in studying the critical ruptures arising in pressure storage tanks. Pressure and LPPL Oscillations are connected. This implies the existence of some sort of pressure build-up which occurs in financial markets which create LPPL Oscillations. What is this pressure mechanism?

I wonder if The Bubble Index (and LPPL Oscillations in general), might be measuring directly/indirectly the Vernadskian “pressure of life” exerted by individual social groups of H. sapiens on the biosphere. This scale-free “pressure of life” exerted by these groups of H. sapiens on the environment builds over time, until it reaches a critical point when the system ruptures. A crash in wealth and a shock to economic growth occurs to relieve the pressure which inevitably results in a depression/recession as the “pressure of life” exerted by H. sapiens begins to find a new state.

Growth is a double edged sword – creating pressure on the biosphere while increasing the prosperity of H. sapiens in aggregate. However, if this pressure can now be directly/indirectly measured, the interaction between H. sapiens and the biosphere can be engineered. It is possible that the prosperity of H. sapiens can be designed to increase with a simultaneous reduction in pressure exerted on the biosphere.

The Bubble Index Contour: DJIA (1871 – 2015)

The results for The Bubble Index Contour: DJIA from 1871 to 2015 are presented below. There are several features worth mentioning.

Overall Trend

The first is the overall trend toward larger absolute values as time progresses towards the present.

23,200 Day Window Growing Pressure

The second most striking feature, which is most relevant to current investment strategies, is the large pressure formation centred on the 23,200 day window. The values in the graph were interpolated with a spline, so there are some artefacts produced. They falsely seem to indicate that the pressure has peaked in the 23,200 window, however, upon inspecting the raw data, this time window has not yet peaked. However, the derivative is close to and fast approaching zero. This would seem to indicate a phase transition of the largest magnitude yet observed will occur in the near future.

2008-9 Pressure Peaks

The pressure peak below and slightly to the left of the current 23,200 pressure growth corresponds to the bottom of the 2008-9 crash, where the DJIA reach a low of 6,443. This pressure point has a peak which occurred in the 15,000 day window.

The pressure peak below and slightly to the left of the aforementioned 15,000 day window peak was the peak in the 9,500 day window which corresponded to the peak value of 14,200 in the DJIA in 2007.

Other images:

djia-17  djia-2 djia-3 djia-4 djia-7   djia-8 djia-9 djia-10 djia-11 djia-12 djia-13 djia-14 djia-15 djia-16