Subject: Quantitative Analysis of Non-Linear High Entropy Economic Systems VII

Subject: Quantitative Analysis of Non-Linear High Entropy Economic Systems VII: "A concluding example, the DJIA
Revisiting the DJIA, (since it has a long historical database,) a meticulous analytical approach will be used to analyze the characteristics of the closing values of the DJIA. The analytical procedure will use a conscientious process commonly used in engineering practice:"

Black Scholes Merton methodology can be used to estimate the severity of a downturn in the markets. The methodology assumes the paradigm that equity prices are a random walk fractal, i.e., starting at any specific time, a Gaussian/Normally distributed random number, (with a standard deviation of about 1% = 0.01, of the current price,) is added to the current price of the equity to get the next day's price, and then a second random number is added to get the third day's price, and so on. (Note that the market's value, over time, is a sum of Gaussian/Normally distributed random numbers under this paradigm.)