A bubble is defined as a period of time during which the market value or price of assets rapidly increases.
The price of the provided assets is considered to be overvalued during a bubble.
A ‘bubble burst’ or a ‘crash’ occurs when the value of these assets begins to quickly decline.
Bubbles are said to arise as a result of shifting investment behaviour; some feel that a bubble creates a shift in investing time-frame from long to short.
You may recall or have read about how, in the 1990s, individuals were pouring money into all tech firms in an attempt to get a share of the internet as the values of tech stocks skyrocketed.
People began to sell their stocks as soon as they realised there was nothing substantial in these excessive prices, and the markets crashed.
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