[NeedMoreTea]

Agreed, to a point.

Having been through several more recessions, since the mid 70s, all have been different. Different symptoms, different causes, different sectors.

+ 1970s - Oil crisis & OPEC

+ 1980s - Deliberate govt policies and adoption of monetarism

+ 1990s - ERM, Black Monday, US S&L

+ 2002 - dot Com bust, post y2k contraction

+ 2008 - Global banking crisis

The nearest I've seen to being able to "recognise the top" is some young person, usually looking too young to drive, turning up on national TV financial news explaining why "this time it's different", why the boom will continue, or why the property market isn't overheated. This is usually a clear sign that the economy is now having a Loony Tunes moment, in mid-air and not yet noticing there's no ground any more.

[nostrademons]

Interestingly, I haven't seen that irrational exuberance about the economy as a whole in a long time. Perhaps for specific sectors, like mobile in 2013 or Bitcoin last December (both of which turned out to be market tops). But in general people seem incredibly pessimistic today, with none of the optimism about everything that characterized the late 90s or even the Web 2.0 boomlet from 2005-2007. People have been predicting a (further) financial crash since the bottom of the market in 2009.

I wonder if that's a sign that the current boom still has a while to go.

[NeedMoreTea]

Post 2008 has been very odd. The post recession growth phase was more like becoming bored of too long a bust than actual growth as seen previously. Some areas and sectors barely seem out of recession even now. Especially with the added pressure brought by austerity. In a lot of ways we don't yet seem done with the causes of 2008.

The top could be much harder to find without hindsight. :)

[rmason]

I was running a startup during the dotcom boom. Started seeing successful entrepreneurs selling growing businesses where it didn't make any sense. They were young and I thought in five years their company would be worth 10x, so why not hold on?

What I learned was that some people have the talent to spot a market top. Some equally smart people hung on and in a few years had nothing and their investors were left holding an empty bag. One person isn't a trend but when you see multiple people selling for no apparent reason that's a clue to start playing very close attention.

The only time in my life that I was pretty certain of a decline was in 2007. Knew some real estate people who complained of crazy funny business going on. Things that reminded them of an earlier crash. They were told by younger people that the rules of the game had changed and what they thought was crazy was just the new normal and to get used to it. I thought where had I heard that before? Yep, the dotcom go go years. I advised them to trust their gut feelings.

[Izkata]

Okay so, I'm about to pay off my mortgage, so a month or two ago I started looking into ways to invest all the extra money I was using to pay extra principal. I've never really paid attention to this before, but in most of the charts I found about market performance, there were dips coinciding with a both the 2002 and 2008 recessions - this part makes sense.

The part I'm confused about is that they also had a similar dip in 2016. Yet no one seems to even mention it.

Was there a small recession in 2016 as well, or were there other factors involved and the 2002/2008 dips just coincidence?

[systoll]

A common definition of 'recession' is a period of two or more quarters of negative GDP growth. Early 2016 saw 0.5-0.6% growth.

The dip isn't a coincidence, but we didn't quite cross the 'reccession' threshold.

[NeedMoreTea]

Not sure about in the US, but the dot com bust wiped out IT work and contracting in the UK for a couple of years, but did not translate into a recession for the UK economy. It was very much of the sector. So here 2001/02 didn't count as recession, just a little local crisis, even though friends and I were wondering where the next meal was coming from.

[judgardner]

Another term for a Loony Tunes Moment is a Minsky Moment[0]

[0] https://en.wikipedia.org/wiki/Minsky_moment

[NeedMoreTea]

Thanks! I hadn't come across that before.

I think I quite like Dr Minsky: "Dr. Hyman Minsky, who noted that bankers, traders, and other financiers periodically played the role of arsonists, setting the entire economy ablaze".