A period in which prices rise far beyond what earnings justify – driven by expectations of still higher prices.
Bubbles often follow a similar pattern: a credible new story, cheap money, rising prices, a rush of inexperienced buyers and the conviction that “this time is different”. Famous examples include tulip mania in 1637, the South Sea Bubble of 1720, the dot-com bubble around 2000 and the US housing bubble before 2008. Obvious in hindsight, bubbles are hard to identify in real time.