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Investments glossary

Bubble


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It is especially important to encourage unorthodox thinking when the situation is critical At such moments every new word and fresh thought is more precious than gold. Indeed, people must not be deprived of the right to think their own thoughts.

— Boris Nikolayevich Yeltsin

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.

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