What is a stock market bubble?
What constitutes a Stock Market Bubble?A stock market bubble is an economic cycle characterized by the rapid escalation of stock prices followed by a contraction. It is a scenario where asset prices appear overvalued, with stark deviations from intrinsic values that are not justified by the fundamentals of the assets. Understanding stock market bubbles is essential for investors, economists, and anyone with an interest in financial markets.The Anatomy of a BubbleBubbles are typically identified in retrospect after the prices have crashed. However, they often follow a pattern that consists of several phases:1. Displacement: A shift in investment focus, often due…