Clockwork mechanism
Didier Darcet
1 December 2019

Financial ’Time’

Science and philosophy have debated the significance (and even the existence) of ‘Time’ since ancient Greece. Finance, however, is the only discipline providing a market price for the uncertainty of the future, which means ‘Time’. Resultingly, it deserves a seat in the debating chamber. There are two ‘clocks’ in Finance, turning at different speeds. The first one synchronizes market trading and option values. It provides the tempo of the inherent random variability of asset prices. Only the second clock controls the directionality in ‘Space’, i.e. the expected drift of an asset. The Theory of Fragility provides the missing link between the two clocks, which reconciles most of the scientific interpretations of ‘Time’. Unlike ‘Traders’, ‘Investors’ should ignore the first clock and focus on the second