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Posts Tagged ‘Stock Market’

In this conference conducted by the Ayn Rand Center, Dr. Yaron Brook responds to a query regarding The Great Depression of the 1930s in the United States. The salient points of Dr. Brook’s talk relate to the establishment and the consequent actions of the Federal Reserve beginning in 1914 which ultimately culminated into the stock market crash of 1929 and the resulting depression. This talk is very timely now that the United States and Europe are entering a contracting phase in their economies in the wake of the crash of subprime mortgages and the bursting of the housing bubble and stock market crashes.

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Saw this on Finance Manila. It’s a humorous but surprisingly accurate assessment of how the housing and mortgage bubble created the financial crisis gripping the US and the world presently. It’s also a good analysis of investor psychology and herd mentality.

The scary part is: what comes after bailout?

visualguidecrisis2sv5

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Just quick refresh on the ongoing turmoil in the financial markets. The DOW dropped 777 (auspicious?) points last night. Here’s how last night’s drop stacks up against history:

The prognosis? It might be too early to tell, but large scale collapses have been associated with investors “capitulating” or giving up on the market–which is often the turning point in any collapse.

From Investopedia:

In the stock market, capitulation is associated with “giving up” any previous gains in stock price as investors sell equities in an effort to get out of the market and into less risky investments. True capitulation involves extremely high volume and sharp declines. It usually is indicated by panic selling.  

Although as we can see from the above table, the DOW drop busted point records, but not percentage records. There still might be a long ways to go before people can be said to have really “given up”.

Bloomberg shares more of the situation here.

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