What is a 'Bubble'?

A bubble is an economic cycle characterized by rapid expansion followed by a contraction. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

| Term of the Day Bubble A bubble is an economic cycle characterized by the rapid escalation of asset prices followed by a contraction. It is created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior. When no more investors are willing to buy at the elevated price, a massive sell-off occurs, causing the bubble to deflate. Breaking it Down: Bubbles form in economies, securities, stock markets and business sectors because of a change in... Read More » Related to "Bubble" How Do Asset Bubbles Cause Recessions? Understand how asset bubbles often lead to deep, protracted recessions. Read about historical examples of recessions preceded by asset bubbles. Read More » Components Of The 2008 Bubble The 2008 financial crisis proved that no two recessions are the same. Read More » Five Of The Largest Asset Bubbles In History The five bubbles discussed here were among the biggest in history; their lessons should be heeded. Read More » Related Definitions Bubble Theory Bubble theory is an economic hypothesis that irrational investors generate precipitous rises in asset prices, leading to overvaluation. Read More » Dotcom Bubble The dotcom bubble was a rapid rise in U.S. equity valuations fueled by investments in internet-based companies during the bull market in the late 1990s. Read More » Standard Of Living Bubble The standard of living bubble is the concept of consumers living beyond their means for an extended period of time. Read More » Irrational Exuberance Irrational exuberance refers to investor enthusiasm that drives asset prices up to levels that aren't supported by fundamentals. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com If you wish to unsubscribe, please click here 114 West 41st St, floor 8 New York NY 10036 © 2019, Investopedia, LLC, All Rights Reserved | Privacy Policy