After a week of wild volatility on Wall Street, are we any nearer a crash? In one trading day the Dow Jones Industrial Average opened up 15 points, and then collapsed in a vacuum of sentiment to end the morning trading about 165 points down.
Then after brokers and their clients got back from lunch the market was back up again to wipe out all its losses within 30 minutes and finally end the day nine points up.
In The Anatomy of an Investment Cycle, James Capel in the United Kingdom looks at what makes bull runs turn into bloodbaths where the bears get their dinner.
Looking back at every correction, crash and bear market since 1929, the brokerage came up with a criteria that needs to be met for the slaughter to begin.
Recession has been around the corner of every big fall or bear market onset. The exception to this rule was 1987.
An economic downturn did follow but it did not constitute a recession. A recession was avoided, says the brokerage, because the authorities aggressively pumped liquidity into the system.
