By | 2017-09-13T13:08:49+00:00 13th September 2017|

A bubble is a financial market process with a rapid escalation of asset prices followed by those prices falling away. Part of the definition of a bubble is that the fundamentals of the assets do not suggest that a price surge is justified. Instead, exuberant market behaviour drives that surge. When no more investors are prepared to buy at the elevated price, a massive selloff occurs, causing the bubble to deflate. Examples in history include the 1600s “Tulip Mania” in the Netherlands, the “South Sea Bubble” in England in the 1710s and the “Dotcom Bubble” in the USA that culminated in the year 2000.