Investor Glossary-bubbleInvestor Glossary-bubbleInvestor Glossary-bubbleInvestor Glossary-bubbleInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Bubble

The HTML to link to this page
 

In markets, a bubble is an extended period of extreme overvaluation. Bubbles occur in stock markets, real estate, commodities and precious metals. There have even been bubbles in the flower market, the most famous example being the Dutch Tulip Mania of the seventeenth century. Bubbles are formed when excessive speculation enters a market. Instead of viewing the intrinsic value of an asset, speculators in a bubble market instead focus on the resale value of the asset. This is sometimes referred to as the greater fool theory of investing. In a bubble, it doesn't seem to matter that a price is irrationally high - it only matters that it can be sold for an even more irrational price at a later date. Bubbles often end with steep declines, where most of the speculative gains are quickly wiped out.



Rate this bubble definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: dividends payable, limit order, phantom income, deferred tax, wholly-owned subsidiary, cancelled check, LIBOR, 1031 exchange, average price per share, per diem, APR, covered put, irrevocable trust, inflation, labor relations, current ratio, required rate of return, ex-dividend date, stock split, retained earnings, risk management, minority interest, open position, liquidity ratio, command economy, class C shares, ex-dividend, 144a, debt service coverage, diluted share, option premium, balance sheet, margin rate, real GDP, Key Rate Duration, reverse mortgage, FTSE, deferred revenue, FICO score, annual return, stock market close, 401a, EBITDA, implied volatility, 1035 exchange, Zero Cost Collar, quality assurance, VIX, in escrow


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use