Wednesday, August 29, 2007
here's a fun chart
there are all sorts of problems with making these comparisons. are there similarities to 1987? yes -- but there are similarities between 1987 and any liquidity squeeze, and they don't all involve a 23% down day. much as with my awesome china/nasdaq chart, there are a lot of things that can go differently too.
of course, sometimes this shit is informative. i saw several nikkei-nasdaq charts in 1999 and, sure enough, the bubble popped. (so will china's.) i do think that markets are fractal and patterns within the markets echo. but one must conceive of limits in the utility of such simple comparisons. this is a good example. first chart -- scary! so similar! second chart -- best used to demonstrate that different events are in fact different.