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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


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.)

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Bubble tea can be served both in hot or cold form, as per consumer preference and it uses a fat straw through which the pearls can be easily eaten by the consumers.
Besides bubble tea simply being a popular drink for various age groups, the shops selling it have become a haunt for youngsters because of their facilities and decor.
If the mood of a bubble is manic, as overexcited investors drive daily trading volumes skyward, the mood of an anti-bubble is the opposite, marked by little trading at all.
The prevailing view in policy circles on how to deal with bubbles thus shifted away from the wait-and-see approach and toward a view that policymakers confronted with a potential asset bubble should move in some way to contain it.
FRIENDS OUR AT DUDLEY CREATURE Friendly one-year-old Bubbles joined us from Longleat Safari Park in Wiltshire at the start of June and shares the paddock with our two-year-old female Romy.
These youngsters had no trouble blowing bubbles at a fun activity day last week.
2680 liquid argon atoms surrounding a cavitation bubble are distributed in a three-dimensional computational domain, with diameter of bubble is d=4.64[sigma].
The final characteristic of a bubble is that a bubble bursts.
Bubble Playground features multiple "bubble stations" that offers various hands-on and educational experiences with the creation of bubbles.
Given D/L = 0.2, the center coordinates of the bubble are (0.5 L, 0.5 L).
In March, the Daily Post told how the giant bubble firm was expanding rapidly with the opening of a dedicated manufacturing unit and the world's first bubble tourism attraction.
DUBAI: Can you imagine yourself inside an actual bubble? Or anything else, even an elephant, you might fancy?