Chapter 75

Advanced Early Warning Techniques

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As basic systems mature, advanced techniques multiply effectiveness:

Behavioral Discontinuity Detection

When established patterns break, disruption often follows. Monitoring for behavioral discontinuities provides early warning.

Sandra tracked behavioral patterns in her industry: - Customer purchase timing - Competitor investment patterns - Supplier relationship dynamics - Regulatory enforcement actions

When multiple behaviors shifted simultaneously, major disruption followed within 6 months.

Information Cascade Modeling

Understanding how information spreads helps predict when private signals become public knowledge. Positioning before cascade completion captures maximum value.

Tom modeled information cascades: - Initial signal detection by specialists - Spread to informed investors - Media coverage beginning - Mainstream awareness - Full public recognition

By acting during early cascade stages, he captured opportunities before competition intensified.

Correlation Breakdown Monitoring

Historical correlations breaking down signal regime changes. These breakdowns often precede visible disruption.

Elizabeth monitored correlation pairs: - Interest rates and property prices - Oil prices and airline stocks - Currency pairs that normally move together - Consumer confidence and spending

When established correlations broke, fundamental changes were underway.