"Butterfly effect" is a phrase that embraces the idea that small variations in the initial conditions of a dynamic system can produce large variations in the long term behavior of the system. A common description of the effect says that a butterfly flapping its wings in Brazil can cause a tornado in Texas months later. "The butterfly effect was quite possible inspired by the 1952 Ray Bradbury short story A Sound of Thunder. In that story, a time traveler accidentally steps on a butterfly in the distant past, causing broad changes in the present.

The practical consequence of the butterfly effect is that complex systems such as the weather and the stock or bond markets are difficult to predict over any useful time range. Finite models that attempt to stimulate these systems still don't possess the ability to fully account for the system and the timing of events. These errors are magnified as each unit of time is stimulated until the error bound on the result exceeds one hundred per cent. It is at this point, that the butterfly could have actually caused the tornado!