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Phuket Business: 200 years of market crises

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Phuket Business: 200 years of market crises | The Thaiger

PHUKET: With the US stock market sitting near its 52-week high, and already having made a 100% move upwards from its low at the peak of the sell-off that occurred during the financial crisis, I have dug a bit deeper into history to get a feel for the frequency of crashes.

I have a good grip on the longer bull/bear market cycles that typically last between 13-20 years or so, if measured by trailing p/e (price to earnings ratio) peaks and troughs, but I’ve never realized how much time there has historically been between crashes.

Unfortunately, there is not a large enough sample to draw any statistically significant conclusions, but we can look to history to see what some of the observations in the last 200 years might tell us.

Obviously hard data from the 1800s is not as easy to come by as the current market data you can access online, but looking at crashes, which drew enough public panic to be recorded as a historic event on Wikipedia, gives us a starting point.

Few academics would admit how commonly used this source is, prior to digging up “real references” that expand upon and clarify what you initially learned from Wikipedia.

There are entries for 1819, 1837, 1847, 1857, 1869, 1873, 1882, 1884, 1896, 1901, 1907, 1929, 1937, 1973, 1980 (silver crash), 1982 (Kuwait market, third highest market cap in the world at the time), 1987 (Black Monday), 1989 (mini-crash), 1991 (Japan), 1992 (Black Wednesday), 1997 (caused by the “Asian crisis” often blamed on a bubble in “Amazing Thailand”), 1998 (Russian Ruble Crisis), 2000 (dot-com bubble), 2001 (9-11), 2002 (global drop in equities), and more recently crashes resulting from the credit crunch, European sovereign debt crisis, etc.

Some interesting points can be gleaned from these numbers. There is usually not more than 10 years without a crisis of some sort. The long stretches without any crashes may contain some, which have just not made it onto Wikipedia.

It appears that crashes generally were more spaced out in the last two centuries increasing in frequency during the last 30 years (especially since the invention of the Internet).

This leads me to believe that we can hardly expect to go more than a decade without a crash in the stock markets.

It seems more likely that they will continue to occur even more frequently due to the ability of the “electronic herd” to move out of markets en masse with a few clicks of the mouse.

This can cause massive panics such as the “flash crash” (which was created simply by computer algorithms picking up on drastic movements in the markets and amplifying them, rather than any panic by the investing public who are the usual suspects).

Thus, six years would be the upper end of my prediction for when we can expect the next crash or crisis of some sort (not that we are really through the current one).

The fact that we are approaching record high levels in US markets is more a cause for concern than a reason to celebrate in my view.

Obviously at some point the old highs will be replaced with new ones, but historically this has been the time to begin selling rather than buying.

One promising expectation of all of this, is that recoveries are likely to happen more quickly as well. This means a contrarian investor will not only see opportunities more frequently, but will likely be paid off more quickly as well.

David Mayes MBA lives in Phuket and provides wealth management services to expats around the globe, focusing on UK pension transfers. He can be reached at 085-335-8573 or david.m@faramond.com.

— David Mayes

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Governments & old media versus social media – who will win? | VIDEO

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Governments & old media versus social media – who will win? | VIDEO | The Thaiger

We look at the recent changes made by the Australian and Indian governments to except control over the world’s biggest social media platforms. India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social. There is now an open battle between the rise of social media platforms and the governments and ‘old’ media that have been able to maintain a certain level of control over the ‘message’ for the last century. Who will win?

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told. The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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The social media giants in battle with ‘old’ media and world governments | VIDEO

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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Never miss out on future posts by following The Thaiger.

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Business

Turbulence ahead for Thailand’s aviation industry | VIDEO

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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