RT Journal Article SR Electronic T1 Can We Predict Stock Market Crashes? JF The Journal of Portfolio Management FD Institutional Investor Journals SP 183 OP 195 DO 10.3905/jpm.2014.40.5.183 VO 40 IS 5 A1 Sergio M. Focardi A1 Frank J. Fabozzi YR 2014 UL https://pm-research.com/content/40/5/183.abstract AB In this article, the authors suggest how to think about a new framework for the analysis of financial bubbles and a possible vector of variables able to signal when an economy enters a state of disequilibrium. The working hypothesis is that market crashes are preceded by a bubble. The authors define a bubble as an anomalous increase in asset prices with respect to the economy. An exponentially growing spread between asset prices and the economy is therefore an indicator of the probability that a bubble is in the making. However, as the authors point out, this indicator alone is not sufficient as anomalous price growth can be generated by different macroeconomic scenarios. The authors discuss different macroscenarios that can lead to bubbles and the related indicators.TOPICS: Financial crises and financial market history, exchanges/markets/clearinghouses, portfolio theory