Minsky moment

A sudden collapse in market sentiment. Named after Hyman Minsky, an economist, who developed a financial instability hypothesis. As asset prices rise, investors become more and more confident and use leverage to finance their positions. By the end, they will be buying regardless of underlying valuations. At some point, confidence will falter and investors will rush to sell and repay their debts, causing prices to collapse. For more, read our Schools Brief.