Reply to: Market bottoms and tops

[ChimpMaster]

I completely agree (having sat there with you watching it move up and down over the last two decades).

Trouble is, that 'up' phase can go on and on, inflating ridiculously and unsustainably for ages before we finally see it collapse. It almost seems to be self perpetuating - enough to fool even more newcomers into jumping in.

Anyone have a knitting needle?

You're right - markets will more often tend to move to extremes of highs of booms and lows of despair, beyond what people would expect. Otherwise I guess the game would just be too easy.

Certainly now many of us can sense the beginning of the end for the current contractor cycle. I just hope the extreme isn't too extreme.

[Xenophon]

I'll try and find some references that back up my gibberish. Maybe they can explain it better (sigh).

Here's one link that focuses on the computer modelling aspect Wall Street's Souped-Up Computers



and later ..



The point I was trying to make, evidently not very clearly, it that in a complex system with lots of interacting agents a change of state often involves, and its onset is thus indicated by, a chaotic interlude, and with stock markets this isn't just a modern phenomenon.

P.S. I may have meant "volcano" rather than "earthquake" in the analogy I used. Does that help?

Thanks babe.

[beercohol]

...in a complex system with lots of interacting agents a change of state often involves, and its onset is thus indicated by, a chaotic interlude, and with stock markets this isn't just a modern phenomenon.

Totally right, this is exactly what happend in the 1920s Wall St. crash. The market kept showing signs that it was unstable with several shorter crashes as a prelude to the big one. Each time the tremours came, rich tycoons plugged money into the market to prop it up - extending its miserable life until it was well and truly ready to die. Then it did.

[Marina]

Re-read it and it remains gibberish, ginge.

I'll try and find some references that back up my gibberish. Maybe they can explain it better (sigh).

Here's one link that focuses on the computer modelling aspect Wall Street's Souped-Up Computers

Big Board officials argue that the smoother flow of information made possible by the beefed-up gadgetry will help to avert a crisis, but some studies indicate that the opposite is true. Scientists say that a system with many players, such as a trading system, is subject to moments of chaotic behavior that are not understood. In a recent study, computer scientists found that when players in a computer model similar to a stock exchange were given more information about the behavior of other participants, the result was wildly volatile behavior rather than stability.

and later ..

Some studies have also raised concern that the chaos of a market collapse is not controllable by adding more technology - and actually may be exacerbated by it. For example, in one experiment conducted at the Xerox Corporation's Palo Alto Research Center, a complex system similar to a stock market experienced wild oscillations when additional information was provided to participants.

The point I was trying to make, evidently not very clearly, it that in a complex system with lots of interacting agents a change of state often involves, and its onset is thus indicated by, a chaotic interlude, and with stock markets this isn't just a modern phenomenon.

P.S. I may have meant "volcano" rather than "earthquake" in the analogy I used. Does that help?

[Xenophon]

I think she meant people aren’t as daft as they used to be... I beg to differ!

Re-read it and it remains gibberish, ginge.

[gingerjedi]

Gibberish. Didn't understand a word.

I think she meant people aren’t as daft as they used to be... I beg to differ!

[Marina]

tay, what part didn't you understand? Would you like me to try and use shorter words?

[gingerjedi]

Now would be a really bad time to jump from the tepid permie swimming pool into the contractor pool.

I agree but the sought of person who has blindly ran up debt and ignored the signs which lets face it have been blatantly obvious for a number of years isn't going to be put off by something like a downturn, its double bubble this contracting lark... isn't it?

[Xenophon]

A speculative bubble doesn't behave exactly like a real bubble, which just expands and then goes pop.

It's more like an earthquake, where you have periodic tremors and increasingly wild fluctuations, leading up to a crash (and ditto a recovery - it's usually windiest around the time of the equinoxes when the season is changing).

Because savvy traders know that these days, the very appearance of these tremors signals to many the start of a sea change in the market, and therefore their frenzied activity accentuates it in a feedback loop!

Gibberish. Didn't understand a word.

[tay]

A speculative bubble doesn't behave exactly like a real bubble, which just expands and then goes pop.

It's more like an earthquake, where you have periodic tremors and increasingly wild fluctuations, leading up to a crash (and ditto a recovery - it's usually windiest around the time of the equinoxes when the season is changing).

Because savvy traders know that these days, the very appearance of these tremors signals to many the start of a sea change in the market, and therefore their frenzied activity accentuates it in a feedback loop!

eh?

[Marina]

A speculative bubble doesn't behave exactly like a real bubble, which just expands and then goes pop.

It's more like an earthquake, where you have periodic tremors and increasingly wild fluctuations, leading up to a crash (and ditto a recovery - it's usually windiest around the time of the equinoxes when the season is changing).

Because savvy traders know that these days, the very appearance of these tremors signals to many the start of a sea change in the market, and therefore their frenzied activity accentuates it in a feedback loop!

[tay]

Now would be a really bad time to jump from the tepid permie swimming pool into the contractor pool.

[beercohol]

There does seem to be a wave a potential newbie contractors building up, and that tells us that we are past the mid-point in the contractor cycle.

I do remember that tripling my money was the reason I first started contracting back in '97. It was only afterwards that I came to realise how much I enjoyed all the other perks.

Although to be honest, when I was permanent, I never really felt it - always cramming to skill up for going independent. I'm sure my experience is the same as many others on this board.

[gingerjedi]

The contracting market probably acts in much similar fashion to other markets. The bottom of the market is usually characterised by it being out of fashion, not being spoken of much and certainly not in the news or on anyone's radar. Those in the market at that time are quietly speculating and accumulating, perhaps waiting for better days for the market.

The top of the market can often be characterised by an large influx of new, perhaps mostly naive, entrants. Look, for example, at the property market over the past 3 or 4 years. In this phase the market is constantly in the news or on peoples' minds, and attracts a great deal of attention, some unwanted. This is when the smart money moves on, handing over to the naivety of the new players.

It appears that we are now receiving a greater number of enquiries from wannabe contractors, which may indeed surmise the top of the contracting market - for now. Experienced contractors will be able to ride out the ensuing lull, financially and in terms of experience. New or prospective contractors should look at their gameplan and make sure they have a back up option in place.

Permies with massive personal debt, maxed out mortgages and nowhere to turn.

[moorfield]

The city market is already crashing. Several IBs are not renewing, imposing rate cuts, chopping heads etc. across the board. As I have mentioned previously this IB is imposing a cap on the number of weeks I can bill !