An economic bubble is a phenomenon in markets created by herd mentality, whereby people hear stories of others who bought in early and made big profits, causing those who did not buy to feel a fear of missing out. This causes irrational pricing of the asset which proceeds until the mania subsides.

Attempting to time the market on bubbles is a zero-sum game and has a negative expected return.

Historical bubbles:

  • South Sea Bubble
  • Beanie Baby Bubble
  • London Rail Bubble
  • Tulip Mania
  • Dot-com Bubble
  • Japanese Real Estate Bubble
  • Crypto asset Bubble

See "madness of crowds", market mania and bandwagon bias.


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  12. Kolchinski, Alex. 2022. ‘Crypto Is an Unproductive Bubble’. Alex Kolchinski (blog). 18 March 2022. https://alexkolchinski.com/2022/03/18/crypto-is-an-unproductive-bubble/.
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