Crash Stories

Harold L. Vogel ()

Chapter Chapter 3 in Financial Market Bubbles and Crashes, 2021, pp 147-187 from Springer

Abstract: Abstract Crashes differ from bubbles in many ways. In bubbles, there’s a fear of missing out (FOMO). In crashes, which crystallize faster, there’s a fear of staying in (FOSI). This chapter reviews and compares crash episodes, introduces a crash intensityCrash intensity metric. It shows that diversification fails to protect, liquidity disappears, there’s no place to hide, and hedging is expensive and typically ineffective. In a bear market, normally the only asset class in which real purchasing power and optionality rises is cash.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-79182-7_3

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DOI: 10.1007/978-3-030-79182-7_3

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