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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 ?
Mumbai (Maharashtra) [India], Mar 15 ( ANI ): Bubble tea, a flavoured fruit tea of Taiwan, has lately been gaining popularity amongst the Mumbaikars.
A bubble transfers money from one group in society (asset buyers) to another group in society (asset sellers).
The Arabian Bubble Celebration, to be held from May 19 to 21, is expected to be a huge draw among children and Image Credit: Supplied The Arabian Bubble Celebration, to be held from May 19 to 21, is expected to be a huge draw among children and Image Credit: Supplied
A new version of the companys iconic brand, Bubble Wrap IB is an ideal cushion packaging material for companies that want to enhance their e-commerce and supply chain efficiency.
Unknown parameters include the number of active bubbles, the acoustic pressure acting on each bubble, initiation of bubble sizes, and the interaction between bubble fluid and thermal properties.
The bubble that led to the financial crisis was a little more complex.
Wall effects on the rise of single gas bubbles in liquids, Int.
In advanced economies with reasonably free markets, bubbles are unavoidable.
The imagery used by Vohra during that dinner conversation in 1990 reminds me of the childhood game of making bubbles.
Some bubbles come complete with their own private shower and toilet blocks, while bubble suites come complete with an ecological ensuite facility.
Furthermore, the removal action of lipid by absorption of lipid into air bubbles and floating was observed using the high speed camera.