Crashes

After the October 1987 crash, investors have been forced to think about long cycles and historic panics. There is in fact no certainty that such a thing as the Kondratiev long wave cycle exists. There is a certainty that market bubbles occur, and that market panics occur. This book is a history of some of the more notorious bubbles and some of the more catastrophic panics.

The bubble and panic do in fact have a mathematical shape, familiar to aeronautical engineers and other scientists. The bubble follows the line of an explosive curve; the panic usually shows a vertical drop at some point in its development. In aircraft this is the pattern of the stall, which killed so many of the pioneers of aviation. Panics finished off many of the pioneers of investment. The aircraft's rate of climb rises, passes beyond the point at which it can be sustained, the nose goes up and the plane falls. Many early aircraft fell right into the ground.