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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.


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.


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 ?
Dr Bubbles Chai Specialist is a popular chain that serves its trademark Bubble Tea, to which they gave a makeover by adding fruit jelly and fruit poppers to the milk and fruit tea, to suit the Indian taste.
A bubble transfers money from one group in society (asset buyers) to another group in society (asset sellers).
Bubble Playground is open every day, Monday through Friday, from 1:00 PM to 7:00 PM, and Saturday and Sunday, from 11:00 AM to 8:00 PM.
Today, they hold 18 Guinness World Records and have created everything from a bubble with an elephant to a bubble with 128 people inside.
Today, too many kids are surrounded by computer and TV screens," says Samuel, the man who wowed crowds with his giant bubbles at the London Olympics, and who has crafted bubbles to please the likes of royals and celebrities like Prince Charles, Sir Paul McCartney and Lady Gaga, amongst others.
Bubble Wrap IB is shipped flat and inflated on premise and on demand by the customer, using a simple-to-operate machine, the NewAir I.
The formation of individual bubbles and the subsequent development of bubble clouds are directly related to reductions in pressure to a critical value, which in turn is associated with dynamic effects.
Even more importantly, investors still remember the tech bubble.
1 shows the bubble terminal velocity and bubble aspect ratio as a function of viscosity ratio.
It's always easier to identify a bubble after it has burst than while it's inflating.
Vohra replied to that, "Bubbles always burst but maybe Dubai will just dig into its bag, pull out more soapy water and make another bubble and another and another and another ad infinitum.
The gas bubble motion is relatively complex and it strongly depends on distribution of forces acting to the moving bubble.