What exactly is August? Owen Lamont, senior vice president and portfolio manager at Arcadia Asset Management, suggested that for the average person it’s about relaxing on the beach, but for the financial market, it’s “Panic season. ”
Lamont, a leading economist for $150 billion quantitative hedge funds, Always a teacher At Harvard, Yale School of Management, University of Chicago Business School and Princeton University, financial history has been reviewed and an amazing pattern has been discovered. “Even if the system’s stock is not your business,” he wrote on the Acadian blog. Owenomics“You need to prepare for an epic financial disaster in the next three months.”
His research divides a direct line between many of the most destructive financial crises and hundreds of years of history: market collapses tend to gather during the so-called “harvest time” from August to October.
Historical Mode
“For gray practitioners of systemic equity strategies, August is the cruelest month,” Lamont wrote. He brought his heart back to “Quantum earthquake“Since August 2007, analysts have written to “forcefully check our phones and have nightmares for screens filled with glowing red numbers.” ”
When commenting with it Wealth informationLamont said he called from the same house in Maine during the 2007 quantitative collapse.
Although Lamont cast a shadow at the beginning of the big financial crisis in September 2008, Lamont wrote that quantitative collapse is a classic fit that occurs in markets with very thin liquidity because many traders are drowsy in the market because they are far away from the table. Lamont cites modern research that August and September are periods of unusually low trade liquidity as investors and market makers spend summer vacations in the northern hemisphere. Lower market liquidity means less ability to absorb large trade, which is the secret to large-scale fluctuations in the event of a crisis.
Over the past 50 years, Lamont has emphasized the fact that between August and October, most major U.S. market crises occurred when thinner markets amplified the shock. In these months, two of the historic market crashes were in September, the long-term capital management crash in 1998 and the bankruptcy of Lehman Brothers in 2008 (twice) in October 1987 – the Black Monday of the stock market crash and the 1997 Asian financial crisis. But back to the establishment of the United States itself, he also saw a similar pattern.
Harvest time
Lamont was the first bubble in America.”Scriptomania,” took place in July/August 1791, and 1857 and 1873 It occurs in August and September, respectively. Then The Panic of 1907 The October immediately followed.
The culprit is Lamont: Summer vacation. But in a chicken or egg discussion, he believed that the American agricultural economy needed a break in the summer, just like when harvesting, it needed the money needed to flow from the Greater East Coast cities into the Western agricultural areas.
Lamont Quote Oliver Mitchell Wentworth SpragueDiagnosis of the “panic season” in the 1910s Crisis history under the national banking system: “With a few exceptions. ” This model was discovered by British economists as early as 1884 William Stanley Jevons. Lamont added that the creation of the U.S. Federal Reserve system itself is itself a reaction to this panic. 1986 US Economic Review article Jeffrey Miron.
“If you do rough math, there is a 10% chance of epic disaster between August and October this year, and from November to July the following year, there is only a 2% chance of chance.”
Lamont told Wealth information He wasn’t particularly worried about the upcoming panic season than anyone else. He said the market crash was still a “rare event” and added that he was unaware that any particular leverage players in the market could cause a crash. But, he added, he said he was not aware of anything when the quantum crash occurred in August 2007.
Remote harvest time?
Lamont agrees wealthTake Harvest/Panish Season Papers with “Flash crashes“usually happening frequently before the end of the U.S. deal and beginning in Asia. He reiterates his belief that “weird things happen” in liquid markets.
Europe traditionally takes longer, sometimes the whole month, compared to Americans and their more retention-based policy? Lamont agrees, but points out that becoming a global financial center with the United States (global global financial center) has a greater impact on its market. He noted that other scholars covered seasonality in other countries (such as Australia), which seemed to be the opposite, or the impact of seasonal impact barriers on trade in northern countries.
Finally, he told wealththe benefits of the current system outweigh the risks. He said the “traditional, heavy-duty approach” was to close the market and cancel transactions entirely in August.
Lamont told wealth He grew up in two economic schools surrounding massive regulation and liberalism, the East Coast “salt water” tradition he learned at MIT had a significant impact on him, spending eight years as a teacher at the University of Chicago’s liberal “Freshwater” school. “The basic principle of economics is that you should let people trade,” he said. He also said he also believes in behavior finance, which thinks “people messed up and the market made mistakes.” He believes that the government has made mistakes.
He added that the entire problem may be solved over time by the rise of remote work. “One theory is that because now we can all work remotely, the holidays have a smaller impact on the number of[transactions],” he said, Lamont said that he was the week of August vacation he planned to spend at the same location, when he was working remotely from Maine.
He added that at the moment, we are trapped in the paradox that our agricultural economy began with traditional ones. People are on vacation in August because that’s when people are on vacation. “Especially at family gatherings, you want to go on vacation while your relatives are on vacation,” he said. How is behavioral finance.
For this story, wealth Use the generated AI to help with the initial draft. The editor verified the accuracy of the information before publishing.
