Minsky Moments in Venture Capital

Minsky’s big idea was that stability is destabilizing.

Noah Williams develops a simple model where adaptive learning by investors leads to recurrent booms and busts in asset prices. The model captures aspects of Minsky’s “financial instability hypothesis” in which periods of tranquility lead investors to increase their estimates of expected returns and reduce their estimates of return volatility. The c

In Minsky’s own words, ‘The tendency to transform doing well into a speculative investment boom is the basic instability in a capitalist economy.’

The frenetic build-up of bubbles and their violent collapse provides some of the purest examples of the mimetic process—they crystallize fear, hope, hype, overconfidence, or under-confidence