Friday, October 04, 2013
Anywhoo, yesterday's events at the US Capitol provided a microcosmic look at how fast declines tend to work. In years past we've looked at the differences between fast market declines and slow market declines. Historically fast declines like the 1987 crash tend to cause more panic but also tend to be lows, the low from the 1987 crash was a couple of days later.
The slow declines historically tend to be far more serious, they cause very little emotion until it is too late. Obviously there is contrarian aspect to this but the history of it is very consistent.
Yesterday when word of yesterday events went wide markets sold down in about a minute, maybe less, then about an hour later they went right back to where they were before the news.
Again this is just microcosm and while a little hindsight bias might lead people to say of course it was a non-event someone sold stock in the middle of yesterday's news.
Posted by Roger Nusbaum at 6:17 AM