"a disaggregated view of speculative behavior and an explicit recognition of belief heterogeneity."
At any point in time there are a variety of price views within the population of speculators, and trading based on this distribution of beliefs causes prices to move. Prices rise if those expecting appreciation are more confident or better capitalized than those expecting depreciation. The rise then reinforces the price views of buyers and further increases their capitalization advantage relative to sellers. This propels further appreciation.
The main check on the process is the increasing perception among some investors that "the risk of a setback outweighs the prospect of further gains." When such fears become sufficiently widespread, further price appreciation is arrested. But the crash does not follow until selling is synchronized, an event whose precise timing is essentially impossible to predict. "
note carefully
"Prices rise if those expecting appreciation are more confident or better capitalized than those expecting depreciation"
in particular
"better capitalized "
that is the key
the credit lines feeding the spec bubble blowers
and gander on this too :
" the crash does not follow until selling is synchronized"
link to
"The resilience of the bubble stems from the inability of arbitrageurs to temporarily coordinate their selling strategies. This synchronization problem together with the individual incentive to time the market results in the persistence of bubbles over a substantial period ....news events, by enabling synchronization, can have a disproportionate impact relative to their intrinsic informational content.."
i can think of covert synch ups can't u ??
do dah word market corner come to you as this in extremum
how big a conspiracy need form to drive a spec mart
radical uncertainty is the foundation of capitalist systems
hence
there will be both "minds with flashes of baseless conviction "
and 180 conversions that come in waves to ass hole innocent specs
but those with credit to command can drive the market in both directions
credit is concious concentration
the illusion of a pack of independent specs rushing to buy or sell
", the presence of non-fundamental volatility in speculative asset prices is important to consider in the execution of monetary policy. "
tie in to the news of the day:
"Headline inflation has recently exceeded core inflation largely due to pressures from commodity prices"
