Analysts spend thousands of hours trying to mathematically determine what will trigger the next rally and how long it will last. Technical analysis is especially prevalent in this effort, although less sophisticated indicators such as hemline fashions or the NFL division of the latest Super Bowl winner also provide fodder for such predictions. This in turn can sometimes lead to speculation that a rally is just around the corner, which can then become a self-fulfilling prophecy.
Rising investor confidence also indicates a rally, and it is perhaps more powerful than any economic indicator because when investors believe something is going to happen (a rally, for example), they tend to take action (purchasing shares in order to profit from expected price increases) that actually turn expectations into reality. Although it is an objective concept, investor sentiment shows through in mathematical measurements such as the put/call ratio, the advance/decline line, IPO activity, and the amount of outstanding margin debt.
Although there had been exceptions like the outlandish Ford V8 specials created by the Romanians for the 1936 Monte Carlo Rally, rallies before World War II had tended to be for standard or near-standard production cars, a rule supported by manufacturers because it created a relatively even playing field. After the war, most competing cars were production saloons or sports cars, with only minor modifications to improve performance, handling, braking and suspension. This kept costs down and allowed many more people to afford the sport using ordinary family cars, so entry lists grew into the hundreds.
The causes and characteristics of rallies vary, but most financial theorists agree that economic cycles and investor sentiment both play a role in the creation and momentum of rallies. In general, information about a strong or strengthening economy, indicated by high employment, high disposable income, low inflation and high business profits usually ushers in a rally. The existence of several new trading highs for well-known companies also indicates a rally is occurring. It is important to note that government involvement affects rallies: Changing the federal funds rate or tax rates indirectly encourages economic expansion or contraction.
In an attempt to cut costs, since 2006 new regulations required mechanical front and rear differentials, while the central differential remained active. Active suspension and water injections were also prohibited. Cars entered by a manufacturer had to be equipped with the same engine for two rallies; further limitations were imposed on the changing of some parts, including suspension, steering, turbochargers and gearboxes.
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In the past, most rally courses were not allowed to be scanned prior to the race, and the co-drivers used only maps supplied by the organization. The exact route of the rally often remained secret until race day. Modern rallies have mostly converted to using organizer-supplied notes or allowing full reconnaissance, as opposed to racing the stages blindly. This change has been brought on in large part due to competitor demand.
The causes of rallies vary. Short-term rallies can result from news stories or events that create a short-term imbalance in supply and demand. Sizeable buying activity in a particular stock or sector by a large fund, or an introduction of a new product by a popular brand, can have a similar effect that results in a short-term rally. For example, almost every time Apple Inc. has launched a new iPhone, its stock has enjoyed a rally over the following months.
With victory in the Safari Rally in 2002, McRae made the record books as the driver with most event wins in the World Rally Championship. His record has since been broken by Carlos Sainz, Sébastien Loeb and Marcus Grönholm. McRae's contract with Ford came to an end following the 2002 season, and after reportedly asking for wages of five million pounds a year, Ford decided against renewing the contract, reluctant to commit such a high amount of their budget to a driver's salary. The two parties split on amicable terms, with Ford's European director of motorsport Martin Whitaker stating "On behalf of all of us at Ford Motor Company I would like to publicly thank Colin and Nicky for their efforts during the past four years with the Ford team. I wish them both well in the future." McRae said of his time with Ford "It's been a very successful four years, we've achieved a lot of very good results and I'm quite happy that myself and Ford have had a very successful partnership."
“Ask anyone to name a rally driver and the first name that comes to mind is invariably Colin McRae,” said Silverstone’s Adam Rutter. “He was always a favourite among rally fans but his incredible success also made him a household name.” The auction house expects this very Focus to sell for between £120,000 and £140,000, or about $170-200k when the gavel drops on February 23.