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An economic bubble (also called a speculative bubble or a financial bubble) is a period when current asset prices greatly exceed their intrinsic valuation, ...
The major acceleration started in 1634 and then dramatically collapsed in February 1637. It is generally considered to have been the first recorded speculative bubble or asset bubble in history. [2] In many ways, the tulip mania was more of a then-unknown socio-economic phenomenon than a significant economic crisis.
A stock market bubble is a type of economic bubble taking place in stock markets when market participants drive stock prices above their value in relation to some system of stock valuation. Behavioral finance theory attributes stock market bubbles to cognitive biases that lead to groupthink and herd behavior .
Irrational exuberance is the psychological basis of a speculative bubble. I define a speculative bubble as a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, in the process amplifying stories that might justify the price increases, and bringing in a larger and ...
Below is a collection of 10 charts that tell the story of market and economic resiliency in 2024 — with all eyes set on 2025. The bull market roars on.
Crashes are driven by panic selling and underlying economic factors. They often follow speculation and economic bubbles . A stock market crash is a social phenomenon where external economic events combine with crowd psychology in a positive feedback loop where selling by some market participants drives more market participants to sell.
Data by YCharts.. The U.S. economy is large and highly complex, but it appears the Fed has a history of misjudging the lagged effects of interest rate policy.
The growth of the bubble is followed by a precipitous collapse fueled by the same phenomenon. [12] [15] Speculative bubbles are essentially social epidemics whose contagion is mediated by the structure of the market. [15] Some economists link asset price movements within a bubble to fundamental economic factors such as cash flows and discount ...