A Minsky Moment is the onset of a market collapse brought on by the reckless speculative activity that defines an unsustainable bullish period. It's named after economist Hyman Minsky, who argued that financial stability breeds instability.Minsky moments are often hard to predict, but they can have devastating consequences. The most famous example is the stock market crash of 1929, which precipitated the Great Depression. Other examples include the 1987 stock market crash and more recently, the subprime mortgage crisis of 2008.While Minsky moments can't be prevented, there are steps that can be taken to mitigate their impact.For example, diversifying one's portfolio across different asset classes can help reduce losses in a downturn. And having a well-thought-out exit strategy can help prevent panic selling when markets start to tank.
