bubble


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Bubble

A situation in which prices for securities, especially stocks, rise far above their actual value. This trend continues until investors realize just how far prices have risen, usually, but not always, resulting in a sharp decline. Bubbles usually occur when investors, for any number of reasons, believe that demand for the stocks will continue to rise or that the stocks will become profitable in short order. Both of these scenarios result in increased prices.

A famous example of a bubble is the dot-com bubble of the 1990s. Dot-com companies were hugely popular investments at the time, with IPOs of hundreds of dollars per share, even if a company had never produced a profit, and, in some cases, had never earned any revenue. This came from the theory that Internet companies needed to expand their customer bases as much as possible and thus corner the largest possible market share, even if this meant massive losses. NASDAQ, on which many dot-coms traded, rose to record highs. This continued until 2000, when the bubble burst and NASDAQ quickly lost more than half of its value.

bubble

A price level that is much higher than warranted by the fundamentals. Bubbles occur when prices continue to rise simply because enough investors believe investments bought at the current price can subsequently be sold at even higher prices. They can occur in virtually any commodity including stocks, real estate, and even tulips.

bubble

A period of rapid expansion and price increases, followed by a market slowdown and contraction.Many analysts claim a real estate bubble exists in some cities characterized by a price growth of more than 30 percent per year.Other analysts disagree.(For housing cost information in various states and cities, see the Office of Federal Housing Oversight Web site at www.ofheo.gov, and click on House Price Index.)

References in periodicals archive ?
Unless or until the bubble dissolves into the polymer, it is subjected to buoyant and drag forces in the centri fuge.
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The minimum time of contact of the bubble and grain necessary to attach the grain to the bubble is called the induction time, which most commonly is measured by moving either a captive bubble in a solution toward and away from a bed of mineral grains or by moving the beds of grains toward and away from the bubble.
Set in Tel Aviv, The Bubble charts the complicated relationship between an Israeli indie record store employee and a Palestinian visitor from the West Bank, whose love for each other is constantly undermined by anti-Arab sentiment, bitchy roommates, familial strains, and suicide bombings.
Earlier studies of lakes in the region had noted bubbles of methane but hadn't considered them important, says Walter.
He had to build a special seven-metre wand to create the bubble around the children.
If you have a hot runner, it is possible that a venturi effect can suck air between the plates into the hot runner, forming a bubble.
Now in a new book called Bubble Man: Alan Greenspan and the Missing 7 Trillion Dollars Peter Hartcher, the former Washington bureau chief for the Australian Financial Review, condemns Greenspan for the stock market crash of 2001.
So instead of coating the bubble in a vibrant hue, the dye just pooled in an inky puddle at the bottom of a clear bubble.
Is the real estate bubble real or is it all media hype?