What is the functional difference between a melt up and recovering? Don't they both imply an increase in asset prices with different reasonings? What would indicate one versus the other?
You had a case where the market felt like it was in freefall. People piled into puts and some panicked longs sold their portfolios and sat on cash.
Then, when it was clear the market had stopped falling and was moving up quickly, cash hoarders suddenly piled back into the market in a panicked attempt of buying the dip. Two weeks or so and the market was in an identical place.
People that sold paid taxes on their gains, a huge hit to any portfolio. Everyone that held was better off.
We may sell off more if things get worse later but right now, we have got through the point of maximum panic (just from what I witnessed, this was a December situation...I live in the UK so our December was motivated by Brexit but back then people were talking about stockpiling, etc. it was one of those times where you don't know whether to laugh or cry).
up.