Market bubble
Also called: asset bubble, speculative bubble, FOMO
A market bubble is when prices rise far above any reasonable measure of value because buyers expect to sell to someone else at a higher price, until confidence breaks and prices crash.
Famous examples include Dutch tulip mania in the 1630s, the dot-com bubble that burst in 2000 and the US housing bubble before 2008.
Related terms
- Bull market: A bull market is a long period of rising prices, often defined as a 20% rise from a recent low.
- Bear market: A bear market is a long period of falling prices, usually a drop of 20% or more from a recent high.
- Efficient market hypothesis: The efficient market hypothesis says stock prices already reflect all available information, so no one can consistently beat the market except by luck or by taking more risk.
- Short squeeze: A short squeeze is a sharp price rise that forces short sellers to buy shares back to limit their losses, which pushes the price even higher.
Practise with $10,000 in play money
Free. No real money involved.
For learning only. This isn't financial advice.