4 ms·

What is the functional difference between a melt up and recovering? Don't they both imply an increase in asset prices with different reasonings? What would indi

• nostromo 7y ago
  Christmas 2018 was a melt up. You had a case where the market felt like it was in freefall. People piled into puts and some panicked longs sold their portfolios and sat on cash. Then, when it was clear the market had stopped falling and was moving up quickly, cash hoarders suddenly piled back into the market in a panicked attempt of buying the dip. Two weeks or so and the market was in an identical place. People that sold paid taxes on their gains, a huge hit to any portfolio. Everyone that held was better off.
  • cycrutchfield 7y ago
    This time feels quite a bit different from Christmas 2018. We have not yet hit rock bottom.
    • hogFeast 7y ago
      lul
• hogFeast 7y ago
  Look at the distribution of equity returns. A melt up would be 3%+ down, and people panicking (we saw panic towards the end of last week). A recovery would be stop falling or gain on the week. I would put the recovery scenario at far better than chance though. It looks like 60-70% to me. We may sell off more if things get worse later but right now, we have got through the point of maximum panic (just from what I witnessed, this was a December situation...I live in the UK so our December was motivated by Brexit but back then people were talking about stockpiling, etc. it was one of those times where you don't know whether to laugh or cry).
  • kgwgk 7y ago
    Melt up is the opposite of sell off. Melt up means prices going... up.
• hogFeast 7y ago
  -4 rep on my original post. It is amazing how consistently wrong people on here are. Made some nice change today.