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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 ?
This sentiment was shared by Bubbly CEO, Thomas Clayton, who added:
Her first show in the sultanate was held in 1991 at the Al Bustan Palace InterContinental Hotel and in the 17-year gap, Bubbly has participated in around 25 group shows in Oman.
Fluin said yesterday: "We're leaving Bubbly Big Eddie in Ireland with his trainer Moss O'Connor to contest the Irish Puppy Derby and he'll then join Paul Young.
Bubbly, a Singapore-based social network which got US$39 million from prominent venture capital companiesSequoia Capital, Singtel Innov8, JAFCO Asia, and others, is liquidating after a fewpurchase agreements failed to work out, sources told.
com)-- Bubble Motion announces MD Media as its partner in launching exclusive audio content from athletes in the United Kingdom and Europe on its leading voice blogging service Bubbly with over 20 million users across the world.
Cheap supermarket bubbly tastes better than the wallet-busting stuff bankers and A-list celebrities routinely quaff, according to consumer tests.
Ministers and MPs ignored warnings from Tory high command about this year's "austerity conference", necking pounds 50-a-bottle bubbly in the bar of the plush five-star Hyatt hotel bar.
Lovely Bubbly, based in Newcastle, has supplied bottles of its fizz to the French consul in Edinburgh.
They stated: "Toni was a bubbly, friendly and loyal daughter who was deeply loved.
WIN a year's supply of Aero White Bubbly Chocolate.
Here, senior wine buyer Julian Twaites issues tips for snapping up the finest and best value bottles of bubbly in the shops as the countdown to the Millennium hots up: