An asset bubble is a sustained rise in asset prices well above fundamental value, driven by speculation rather than economic reality. Famous bubbles: Dutch Tulip Mania (1637), South Sea Bubble (1720), Wall Street Crash 1929, dot-com bubble (2000), US housing bubble (2008), crypto bubbles (2017, 2021). Bubbles end abruptly — Hyman Minsky described the cycle: hedge finance → speculative finance → Ponzi finance → collapse. Identifying bubbles in real-time is difficult; the smartest investors often miss the top. Behavioral factors fueling bubbles: FOMO, narrative momentum, easy credit, abandoning fundamentals. Post-bubble crashes typically retrace 50-90%+ of bubble gains.
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Bubble
August 22, 2026 · Aditya Gupta
Finance
Related terms
Bond Market
The bond market is the global market for debt securities — US Treasuries, corporate bonds, municipal bonds, mortgage-backed…
Comparative Advantage
Comparative advantage is David Ricardo's foundational economic theory: countries should specialize in producing goods where they have the…
Consumer Price Index
The Consumer Price Index (CPI) is the most widely-cited inflation measure in the US — tracking price changes…
Cost of Capital
Cost of capital is the rate of return investors require to provide capital to a business — combining…
Deflation
Deflation is the sustained decline in general price levels — opposite of inflation. Sounds appealing (things get cheaper!)…
Federal Reserve
The Federal Reserve (the Fed) is the central bank of the United States, established in 1913 to provide…
