Financial contagion refers to the spread of shocks in financial markets due to excessive correlation and interconnectivity. The concept has been used to describe irrational behavior in markets since the late 19th century. Proximity and connectivity among market actors can enhance efficiency but also increase the risk of contagion. A modern example is the Quant Meltdown of 2007, where liquidity contagion caused problems in model-driven investing. This highlights the ongoing challenges of dealing with proximity and connectivity in financial markets.