標題: Understanding Economic Bubbles:How They Form and Burst,with Examples [打印本頁] 作者: edward 時間: 昨天 18:11標題: Understanding Economic Bubbles:How They Form and Burst,with Examples
Understanding Economic Bubbles: How They Form and Burst, With Examples
An economic bubble is marked by rapid escalation in asset prices, often due to speculative behavior, followed by a sharp contraction. These bubbles can be difficult to identify in real-time and are usually recognized only after they've burst, leading to significant economic consequences. Notable examples include the Japanese economy in the 1980s and the Dot-Com Bubble of the late 1990s.
Key Takeaways
An economic bubble is marked by rapidly increasing asset prices that exceed intrinsic value, leading to a sudden market contraction known as a "crash."
Bubbles typically stem from changes in investor behavior, but the specific triggers of these behavioral shifts are debated among economists.
Financial bubbles can redirect resources to quickly growing sectors; when they burst, these resources are reallocated, causing significant market adjustments.
Hyman P. Minsky's research identifies five bubble phases: displacement, boom, euphoria, profit-taking, and panic, explaining the progression from excitement to market collapse.
Historical examples like Tulip Mania in the 1600s and the dot-com and U.S. housing bubbles illustrate how speculative excesses can lead to widespread economic fallout.
Investopedia / Julie Bang
What Is a Bubble?
A bubble is an economic cycle that is characterized by the rapid escalation of market value, particularly in the price of assets. This fast inflation is followed by a quick decrease in value, or a contraction, that is sometimes referred to as a "crash" or a "bubble burst."
A bubble usually forms when asset prices surge due to highly optimistic market behavior. During a bubble, assets typically trade at a price, or within a price range, that greatly exceeds the asset's intrinsic value (the price does not align with the fundamentals of the asset).
The cause of bubbles is disputed by economists; some economists even disagree that bubbles occur at all (on the basis that asset prices frequently deviate from their intrinsic value). However, bubbles are usually only identified and studied in retrospect, after a massive drop in prices occurs.
The Mechanics of an Economic BubbleAn economic bubble occurs any time that the price of a good rises far above the item's real value. Bubbles are typically attributed to a change in investor behavior, although what causes this change in behavior is debated.
In equities markets and economies, bubbles shift resources to rapidly growing areas, and when the bubble bursts, resources shift again, causing prices to drop.
The Japanese economy experienced a bubble in the 1980s after the country's banks were partially deregulated.1 This caused a huge surge in the prices of real estate and stock prices. The dot-com boom, also called the dot-com bubble, was a stock market bubble in the late 1990s. It was characterized by excessive speculation in Internet-related companies.2 During the dot-com boom, people bought technology stocks at high prices, expecting to sell them for even more until confidence waned, leading to a major market correction.
Economist Hyman P. Minsky's research explains financial instability and outlines characteristics of financial crises. Minsky identified five stages of a typical credit cycle through his research.3 Although Minsky's theories were overlooked for decades, the 2008 subprime mortgage crisis renewed interest in them, as they help explain bubble patterns.
DisplacementThis stage begins when investors notice a new trend, such as a new product, technology, or very low interest rates—anything that catches their attention.
BoomPrices begin to rise and gain momentum as more investors enter the market, setting the stage for a boom. The fear of missing out drives more people to buy assets.
EuphoriaDuring euphoria, asset prices soar, and investors largely abandon caution.
Profit-TakingPredicting when a bubble will burst is difficult; once it bursts, it won't reinflate. It is possible to have an echo bubble, which is only a temporary rally. However, those who spot early warning signs can profit by selling their positions.
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