There are common factors to such crises as the current financial mess, the collapse of Enron, and the bursting of the Internet bubble. We should heed the warning signs next time
By Kevin P. Coyne
Although it may be the last thing professional investors, regulators, or congressional representatives want to think about in the midst of the current financial crisis, the idea of a next financial meltdown ought to be on all our minds.
I say this because it turns out that "unthinkable" meltdowns seem to occur quite frequently. The stock market crash of 1987 was so unexpected, it resulted in congressional investigations. In 1989, the real estate market crashed, crippling the banking system. In August 1998 the "impossible" happened when Russia defaulted on its bonds and all the Asian countries "not to mention U.S. subprime borrowers) were thrown into crisis. Long-Term Capital Management "impossibly" followed within months. In the spring of 2001 (six months before 9/11), the Internet bubble "shockingly" burst, sending stocks into a tailspin.
In the summer and fall of 2001, Enron crashed, becoming the largest bankruptcy in U.S. history, only a year after achieving its highest stock price. And only six or seven years (depending on when you date the start of the current meltdown) after Enron, yet another "event of the century" has occurred. (And bear in mind that this list I've compiled doesn't include most company-specific crashes.)
A nice rule of thumb to
nazarian 7 շաբաթ 2 օր առաջ
A nice rule of thumb to follow the bubbles are news items. When you start seeing media reports about people starting to make money off of 'insert investment category' then you know the end of the bubble is near. The problem is that you can't predict the precise time so you may bail out early and lose the potential to make an extra buck or two.
Nice article. Very
Կարեն Կարապետյան 7 շաբաթ 2 օր առաջ
Nice article. Very interesting read. I would especially agree with his points 4 and 5. But I would leave the DotCom bubble ot of the picture -- Unlike the Web2.0 startups and the huge VC floating around companies like Facebook, MySpace, YouTube, LinkedIn, Digg, Twitter etc, DotCom era was just an investment hype that was not backed by proper and extensive market research. Plus the technology wasn't quite there to be able to fascilitate those ambitious and therefore expensive dot.com business ventures. But Amazon is still around and I'm sure Google's shares will definitely recover faster than the share prices in other industries.
There is, however, an positive side to this meltdown: there will be a time-lag whereby the major Web2.0 as well as major Financial giants will not get their regular VC at a pace that they need in order to keep their edge. This also mens that if small businesses, small web2.0 startups and developing economies play their cards right, they could use this situation to their advantage and we may start seeing new Web2.0 wonders emerging outside of Silicone Valley as well as new financial players emerging out of the most obscure parts of the world.
Don't forget how Skype emerged out of Estonia, when 2 friends were designing it in the midst of the dot.com crash.
Պողոս Պետրոս
Կարեն Կարապետյան 7 շաբաթ 2 օր առաջ
By the way, I'm glad to see that people finally starting to use the *Պողոս Պետրոս* feature. Will be interesting to see where it leads to.
Business Cycles are Business Cycles
Vanasb 7 շաբաթ 1 օր առաջ
That is why they are called business cycle. They make a cycle reaching a high and then plunging to a low. It is all about the synchronization of the activities of those who know. If you happen to be in circle then you hit the jackpot. If not then you caucus with millions of "econokinsman" early next morning to collect the leftover of the glorious feast that was underway yesterday evening.
If this happens to be the age of the majoritarian rule then the majority reproduces the conditions of its abuse.
THE AMERICAN DREAM IS NOT RISK TAKING IN STOCK MARKETS.
THAT IT HAS BECOME SO, FOR MANY, IS AN UNFORTUNATE COURSE OF HISTORY.
I agree with the
miles 6 շաբաթ 5 օր առաջ
I agree with the administrator it was indeed interesting...
Thanks kevin Coyne for the insights ..Hope to read fact insights again from you..
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miles
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