TAILIEUCHUNG - Lecture Financial markets - Lecture 23: Stock market booms and crashes

The main contents of this chapter include all of the following: Stock market crash of 1929, stock market crash of 1987, Mexican Crisis 1994, Asian financial crisis 1997-1998, Nasdaq crash 2000-2001, role of financial innovations in these crashes and in their likelihood in the future. | Lecture 23: Stock Market Booms and Crashes Brief History of Booms and Crashes For hundreds of years, speculative markets have undergone dramatic ups and downs, that appear irrational to many observers Tulipmania, 1630s, Holland Mississippi Scheme, 1720, France, John Law’s Mississippi Company had monopoly of trading for province of Louisiana. South Sea Bubble 1720, England, South Sea Company had British monopoly on trade in South Seas Up-Crashes Popular view that markets rise slowly and crash suddenly is overblown January 3, 2001, Nasdaq went up 14% in one day, following rate cut October 6, 1931, Dow went up following President Hoover’s plan for economic recovery Biggest 1-day crash October 19, 1987 Dow fell , much larger than largest upcrash, but also twice as big as next largest downcrash Mackay vs. Garber David Mackay, Extraordinary Popular Delusions and the Madness of Crowds, 1841, popularized these stories of bubbles Peter Garber, Famous First Bubbles, 2000, said Mackay’s bubble stories were not inconsistent with perfect investor rationality Efficient Markets Hypothesis Stock market level is always unforecastable, not inconsistent with crashes Volatility may be forecastable, and in that sense crashes may be forecastable Efficient markets hypothesis denies the Mackay theory that something fundamentally irrational is going on in booms and crashes Fundamental disagreement in the finance profession about how to model markets Irrational Exuberance The Stock Market in Historical Perspective Part 1: Structural Factors Part 2: Cultural Factors Part 3: Psychological Factors Part 4: Attempts to Rationalize Exuberance Part 5: Tension between Efficient Markets Theory and Financial Innovation The Next Few Decades The Stock Market in Historical Perspective S&P500 Jan 1871-Feb 2004 S&P 500 Price/(10-Year Earnings) Jan 1881-Feb 2004 Nikkei Index, Jan 1984-Feb 2004 Germany Dax Nov. 1990 – Nov. 2003 Monthly peak was February 2000. UK FTSE 100 April 1984-Nov. 2003 .

• Tài chính doanh nghiệp
• Financial markets
• Lecture Financial markets
• Economics 252
• Monetary policy
• Stock market booms
• Stock market
• Thị trường tài chính
• Financial futures markets
• Valuation of financial futures
• Interest rate futures
• Financial institutions
• Lecture Financial markets and institutions
• Financial institutions markets
• Capital markets
• Money markets
• Derivative securities markets
• Futures markets
• Option markets
• Swap markets
• Foreign exchange derivative markets
• Bank management
• Types of Financial Markets
• Securities traded
• Valuation of securities
• Money market yields
• Bond markets
• Municipal bonds
• Mortgage markets
• Primary mortgage market
• Stock markets
• Common stock
• Foreign exchange markets
• Foreign exchange
• Commercial banks
• Financial statements
• Risks at financial institutions
• Market risk
• Exchange rates
• Efficient markets
• Excess volatility
• Efficient Markets Hypothesis
• Interest rate derivative markets
• Interest rate swaps
• Mortgage backed securities
• Globalization of mortgage markets
• Financial markets and institutions
• The financial system
• Interest rates change
• Financial markets efficient
• Term structure affect interest rates
• The stock market
• The mortgage markets
• The international financial system
• Financial regulation
• Interest rate fundamentals
• Interest rates
• Security valuation