{"id":29733,"date":"2018-01-15T07:49:34","date_gmt":"2018-01-15T12:49:34","guid":{"rendered":"http:\/\/olduvai.ca\/?p=29733"},"modified":"2018-01-15T07:49:34","modified_gmt":"2018-01-15T12:49:34","slug":"the-fascinating-psychology-of-blowoff-tops","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=29733","title":{"rendered":"The Fascinating Psychology of Blowoff Tops"},"content":{"rendered":"

The Fascinating Psychology of Blowoff Tops<\/a><\/h3>\n

Central banks have guaranteed a bubble collapse is the only possible output of the system they’ve created.<\/i><\/p>\n

The psychology of blowoff tops in asset bubbles is fascinating:<\/b> let’s start with the first requirement of a move qualifying as a blowoff top, which is the vast majority of participants deny the move is a blowoff top.<\/i><\/p>\n

Exhibit 1: a chart of the Dow Jones Industrial Average (DJ-30):<\/b><\/p>\n

<\/p>\n

Is there any other description of this parabolic ascent other than “blowoff top” that isn’t absurdly misleading?<\/b> Can anyone claim this is just a typical Bull market? There is nothing even remotely typical about the record RSI (relative strength index), record Bull-Bear ratio, and so on, especially after a near-record run of 9 years.<\/p>\n

The few who do grudgingly acknowledge this parabolic move might be<\/i> a blowoff top are positive that it has many more months to run.<\/b> This is the second requirement of qualifying as a blowoff top: the widespread confidence that the Bull advance has years more to run, and if not years, then many months.<\/p>\n

In the 1999 dot-com blowoff top, participants believed the Internet would grow at phenomenal rates for years to come, and thus the parabolic move higher was fully rational.<\/p>\n

In the housing bubble’s 2006-07 blowoff top, a variety of justifications of soaring valuations and frantic flipping were accepted as self-evident.<\/p>\n

In the present blowoff top, the received wisdom holds that global growth is just getting started, and corporate profits will soar in 2018.<\/b> Therefore current sky-high valuations are not just rational, they clearly have plenty of room to rise much higher.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

The Fascinating Psychology of Blowoff Tops Central banks have guaranteed a bubble collapse is the only possible output of the system they’ve created. The psychology of blowoff tops in asset bubbles is fascinating: let’s start with the first requirement of a move qualifying as a blowoff top, which is the vast majority of participants deny […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[36,17930,3921,1799,127,7195,587,658],"class_list":["post-29733","post","type-post","status-publish","format-standard","hentry","category-economics","tag-asset-bubble","tag-blowoff-tops","tag-bubble-collapse","tag-bubbles","tag-charles-hugh-smith","tag-market-bubble","tag-of-two-minds","tag-psychology"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/29733","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=29733"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/29733\/revisions"}],"predecessor-version":[{"id":29734,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/29733\/revisions\/29734"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=29733"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=29733"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=29733"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}