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Crash Stories

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Financial Market Bubbles and Crashes

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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 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.

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    Harold L. Vogel

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Vogel, H.L. (2021). Crash Stories. In: Financial Market Bubbles and Crashes. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-79182-7_3

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