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 classic literature ?
Here they found a spring of pure bubbling water, around which the grass was full of wild strawberry plants, their pretty red berries ripe and ready to eat.
Long after the others were asleep, however, the shaggy man sat in the starlight by the spring, gazing thoughtfully into its bubbling waters.
Blood was bubbling over his chin and down upon his ragged shirt.
Captain Jim told his stories better, Gilbert was quicker in argument and repartee, Anne felt little gushes and trickles of fancy and imagination bubbling to her lips under the influence of Leslie's personality.
He used to call the Countess Lidia Ivanovna, well known in society, a samovar, because she was always bubbling over with excitement.
She blows at the pipe as she speaks, and, occasionally bubbling at it, inhales much of its contents.
A mighty fire was blazing on the hearth and roaring up the wide chimney with a cheerful sound, which a large iron cauldron, bubbling and simmering in the heat, lent its pleasant aid to swell.
We want everyone to experience the same kind of joy we do every time we go bubbling.
In recent years, efforts were also made to understand the non-linear characteristics of bubble formation processes or chaos in bubbling.
Consequently, Siberian lakes are making a surprisingly large contribution to atmospheric methane, a planet-wanning greenhouse gas, according to a new analysis of the methane bubbling from those lakes.
If bubbling outside, be aware of the wind - it should always be behind you.
2~ gas begins effusing, or bubbling out of the liquid in which it is dissolved, as it seeks equilibrium with its surrounding environment.