Negative Bubbles: What Happens after a Crash
33 Pages Posted: 18 Sep 2017
Date Written: September 2017
We study crashes using data from 101 global stock markets from 1692 to 2015. Extremely large, annual stock market declines are typically followed by positive returns. This is not true for smaller declines. This pattern does not appear to be driven by institutional frictions, financial crises, macroeconomic shocks, political conflicts, or survivorship issues.
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