The Financial System Red in Tooth and Claw: 75 Years of Co-Evolving Markets and Technology

Figures & data

Figure 1. Semi-Logarithmic Plot of Estimated World Population from 10,000 BC to 2019 AD

Sources: US Census Bureau’s International Data Base and author’s calculation.

Exhibit 1. Timeline of Eight Eras of Financial Evolution from 1944 to 2021 and Key Technology, Financial, and Regulatory Milestones during Those Eras

Timeline: The Eras of Financial Evolution
Classical Financial	Modern Portfolio Theory	Alpha Beta	Derivatives	Automation	Financial Globalization	Algorithmic Trading	Digital Assets
Tech Milestones:	Tech Milestones:	Tech Milestones:	Tech Milestones:	Tech Milestones:	Tech Milestones:	Tech Milestones:	Tech Milestones:
Transistor Information theory ENIAC	IBM 650 Sputnik Integrated circuits Mass-market TV sets	Moore’s Law NASDAQ Instinet	Cboe DOT TI SR-52 calculator	Bloomberg Terminal SuperDOT/SOES Practical cryptosystems eCash	WWW RSA cryptosystem Smartphones Dot-com boom	Bitcoin, blockchain Dot-com bust Fintech Facebook, social media	Coinbase Fintech mRNA vaccines
Financial Milestones:	Financial Milestones:	Financial Milestones:	Financial Milestones:	Financial Milestones:	Financial Milestones:	Financial Milestones:	Financial Milestones:
Bretton Woods Hedge funds Diners Club card Financial Analysts Journal	Mean–variance analysis Portfolio optimization	CAPM Efficient Markets Hypothesis GNMA, FHLMC Floating exchange rates	Cboe Black–Scholes/Merton Vanguard BARRA	Program trading Portfolio insurance Statistical arbitrage 1987 crash	Credit derivatives Global portfolio optimization 1997 Asian crisis LTCM	HFT Securitization 2008 financial crisis Fintech	Coinbase Fintech GameStop COVID-19 policy responses
Regulatory Milestones:	Regulatory Milestones:	Regulatory Milestones:	Regulatory Milestones:	Regulatory Milestones:	Regulatory Milestones:	Regulatory Milestones:	Regulatory Milestones:
Multiple acts from previous decade (Glass–Steagall, Securities Exchange, Investment Company, etc.)	Bank Holding Company Act	Fair Credit Reporting Act FASB	Negotiable commissions Equal Credit Opportunity CFTC	Circuit breakers	Office of Thrift Supervision Glass–Steagall repeal	Sarbanes–Oxley Act Decimalization	Dodd–Frank Act CFPB OFR
1944–1951	1952–1963	1964–1972	1973–1981	1982–1988	1989–1999	2000–2009	2010–2021

Exhibit 2. Top 20 Authors and Words in the Titles of All Articles Published in the Financial Analysts Journal within Each of Eight Distinct Eras from 1945 to 2021

	Classical Financial Era: 1944–1951				Modern Portfolio Theory Era: 1952–1963
Rank	Author	AuthFreq	Word	WordFreq	Author	AuthFreq	Word	WordFreq
1	Slade	9	industry	32	Molodovsky	13	industry	108
2	Hooper	6	outlook	24	Griffith	12	stock	87
3	Graham	5	investment	20	Storer	12	investment	73
4	Bretey	5	utility	19	Bretey	11	market	62
5	Gutman	5	market	19	Greene	9	growth	61
6	Tatham, Jr.	4	stock	16	Davis	8	outlook	51
7	Young	4	security	16	Smith	8	stocks	49
8	Davis	4	analysis	16	Graham	8	new	39
9	Kerr, Jr.	4	railroad	15	Bolton	8	analysis	38
10	Tucker	3	stocks	14	Mennis	7	future	35
11	Naess	3	securities	13	Conklin	7	business	34
12	Boulton	3	public	11	Collins	6	common	33
13	Cogitator	3	earnings	10	Poole	6	security	32
14	Laufer	3	new	9	Lambourne	5	economic	31
15	Jenks	3	oil	9	Morehouse	5	financial	30
16	Sterling	2	method	8	Murray	5	price	27
17	Miller	2	factors	8	Peterson	5	research	24
18	Pastoriza	2	corporate	8	Kahn	5	oil	24
19	Dunn	2	forum	8	Naess	4	earnings	23
20	Stevenson	2	growth	7	Brown	4	economy	22
	Alpha Beta Era: 1964–1972				Derivatives Era: 1973–1981
Rank	Author	AuthFreq	Word	WordFreq	Author	AuthFreq	Word	WordFreq
1	Packer	11	investment	80	Weil	12	investment	45
2	Smith	11	stock	70	Treynor	7	market	43
3	Spigelman	10	industry	66	Davidson	6	stock	38
4	Stern	9	market	54	Black	6	inflation	33
5	Milne	9	earnings	49	Baylis	5	accounting	29
6	Gumperz	8	financial	43	Smith	5	financial	24
7	Bretey	7	growth	40	Rosenberg	5	risk	23
8	Molodovsky	7	performance	37	Ferguson	5	management	21
9	Murphy, Jr.	7	new	37	Jahnke	4	new	17
10	Johnson	7	management	35	Good	4	portfolio	17
11	Block	6	price	32	Barrett	4	industry	16
12	Neil, Jr.	6	analysis	30	Leibowitz	4	analysis	14
13	Ellis	6	corporate	30	Ellis	4	corporate	13
14	Hayes	6	portfolio	29	Williams	4	earnings	13
15	Mennis	6	accounting	28	Gutmann	4	long	12
16	Levy	6	policy	28	Reilly	3	policy	12
17	Renshaw	6	capital	24	Jones	3	securities	12
18	Reilly	6	money	23	Fisher	3	pension	12
19	Bauman	5	outlook	23	Norr	3	prices	11
20	Biggs	5	stocks	22	Sharpe	3	stocks	11
	Automation Era: 1982–1988				Financial Globalization Era: 1989–1999
Rank	Author	AuthFreq	Word	WordFreq	Author	AuthFreq	Word	WordFreq
1	Leibowitz	8	stock	44	Fridson	50	risk	70
2	Levy	7	market	34	Kritzman	26	market	66
3	Ferguson	5	portfolio	31	Treynor	17	stock	62
4	Treynor	5	investment	24	Leibowitz	16	performance	45
5	Canto	5	futures	22	Johnson	11	returns	40
6	Chua	5	returns	20	Morris	11	asset	39
7	Peavy III	5	bond	20	Black	9	equity	38
8	Arnott	5	pension	18	Statman	9	investment	34
9	Roll	4	performance	18	Kogelman	9	management	32
10	Siegel	3	asset	17	Ferguson	8	value	31
11	Ibbotson	3	risk	17	Altman	8	financial	30
12	Cummin	3	bonds	14	Harvey	8	bonds	29
13	Bierman, Jr.	3	financial	14	Brown	8	bond	28
14	Tosini	3	management	13	Arnott	7	stocks	28
15	Ferris	3	index	13	Levy	7	know	28
16	Herbst	3	model	13	Kawaller	7	portfolio	27
17	Beaver	3	duration	13	Bernstein	7	need	27
18	Sorensen	3	price	12	Renshaw	6	allocation	26
19	Good	3	analysis	12	Gastineau	6	practitioners	26
20	Hunter	3	allocation	12	Taylor	5	international	25
	Algorithmic Trading Era: 2000–2009				Digital Assets Era: 2010–2021
Rank	Author	AuthFreq	Word	WordFreq	Author	AuthFreq	Word	WordFreq
1	Fridson	101	risk	57	Sullivan	15	risk	38
2	Arnott	34	stock	49	Li	12	financial	32
3	Rzepczynski	18	market	44	Wang	12	asset	30
4	Ennis	15	investment	35	Siegel	9	market	27
5	Antia	13	financial	33	Ellis	9	investing	26
6	Statman	12	performance	31	Ibbotson	8	equity	23
7	Bernstein	10	value	31	Kritzman	8	stock	22
8	Leibowitz	8	markets	30	Asness	8	investment	22
9	Siegel	8	returns	29	Chen	7	management	21
10	Hirschey	7	pension	28	Xiong	7	returns	20
11	Morris	7	fund	25	Litterman	7	allocation	20
12	Xu	7	portfolio	25	Pedersen	7	performance	20
13	Smith	7	asset	24	Goldberg	7	markets	19
14	Treynor	7	allocation	24	Bernstein	6	long	19
15	Sullivan	7	equity	23	Zhou	6	portfolio	18
16	Brown	6	management	23	Leibowitz	6	volatility	15
17	Johnson	6	investor	22	Idzorek	6	active	15
18	Markowitz	6	corporate	21	Page	6	trading	15
19	Moy	6	capital	20	Hsu	6	investors	14
20	Waring	6	funds	19	Kalesnik	6	fund	14

Note: This exhibit is based on published research articles, comments and author replies, editorials, and book reviews.

Figure 5. Effective Federal Funds Rate, 1 July 1954–6 May 2021

Source: FRED^® Graphs ©Federal Reserve Bank of St. Louis. Effective Federal Funds Rate [FF], retrieved from FRED 8 May 2021. All rights reserved. All FRED^® Graphs appear courtesy of Federal Reserve Bank of St. Louis. https://fred.stlouisfed.org/.

Figure 6. 30-Day Rolling-Window Volatility of Daily Log Returns of Bitcoin, Etherium, and the S&P 500, 1 January 2020–25 April 2021

Source: www.coindesk.com/bitcoin-volatility-pattern (accessed 8 May 2021).