Many commentators argue that we are at the end of the cycle. But are we just facing a typical business cycle winter or are we facing a perfect storm? This is a difficult question, since financial markets are the result of human interactions that are fuelled by emotions (such as fear and greed)and group dynamics.
A financial bubble will continue to grow as long as we collectively want it to, but as soon as trust in the underlying driver of the bubble is gone, the bubble bursts. This means that it is not possible to predict the future precisely, but we can observe reoccurring patterns emerging in financial markets which allows us to assess the fragility of markets.
download hiernaast het volledige artikel van Pim van Diepen en Stefan Lundbergh in VBA.