Science meets markets

Science study of switching events, where something goes from positive to negative, or up to down in the case of stock prices, related to bubble events.   "We find that this empirical law with a unique parameter is valid for very small bubbles as well as for huge bubbles." In other words, the formation of bullish and bearish trends does not depend on the time scale. The well known catastrophic bubbles that occur over large time scales, such as the global financial crashes of 1929 and 2008, are not outliers. "We found the blueprint of financial trends," summarizes Preis and concludes: "We can learn from the large number of tiny bubbles how huge market bubbles emerge and burst. The challenge is to destroy bubbles before they become huge."

From the research paper:  We suggest that the well known catastrophic bubbles that occur on large time scales—such as the most recent financial crisis—may not be outliers but single dramatic representatives caused by the formation of increasing and decreasing trends on time scales varying over nine orders of magnitude from very large down to very small.