At the end of the growth phase, a major collapse in asset values. It marks the end of growth in credit markets and business activity.
Investors in lulled into misdiagnosing risk as asset prices continue to grow. This leads to an overleveraging of speculative investments which could result in a cashflow crisis. Once the income revenue is insufficient to cover the debt payments, margins are called.
This leads to the sale of assets. If the practice was widespread, the market will experience a collapse as this is repeated across the board. As price drop, the cycle is reinforced as de-leveraging takes place, forcing more assets onto the market.
