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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, being the valuation that the underlying long-term fundamentals justify.
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 .
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 ...
Investing in the stock market can be a volatile experience over the short term. While day-to-day movements are rarely large, there are dramatic corrections or even crashes where the market falls by...
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.
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 ...
The everything bubble was not only notable for the simultaneous extremes in valuations recorded in a wide range of asset classes and the high level of speculation in the market, [7] but that its peak in 2021 occurred in a period of recession, high unemployment, trade wars, and political turmoil – leading to a realization that the bubble was a ...
His admonition echoes what Allianz chief economic advisor Mohamed El-Erian said last month, when he told Bloomberg TV to expect a "huge sucking sound" of foreign capital flooding into the U.S.