Theory The tension between speculative inflows and fundamental outflows continues to increase, causing violent price swings, until such point as those inflows are not sufficient to offset the rising tide of outflows. Like an inventory overhang that seems to appear out of nowhere in the wake of over-investment, the result is a supply–demand imbalance in [...]
Fundamental Deterioration — The Local Currency Becomes Volatile [theory]
Fundamental investors and speculators do not necessarily sit easily together. They have different investment aims and parameters, the first looking for regular investment capital gain or income over time, the latter looking frequently for short, quick moves. Granted, this is a gross exaggeration and generalization, but it gives at least something of a flavour for [...]