Speculative bubbles are inherent in the financial markets from "summary" of A Short History of Financial Euphoria by John Kenneth Galbraith
Speculative bubbles are inherent in the financial markets. Periodic surges in asset prices are a common occurrence throughout history. These bubbles are driven by a collective belief in the sustainability of rising prices, leading to increased speculation and investment in the asset. The initial price increase may be based on fundamentals, such as strong economic growth or innovation, but it soon surpasses any reasonable valuation. As prices continue to rise, more investors are drawn into the market, fueling further speculation. The euphoria surrounding the asset creates a self-reinforcing cycle of buying and price appreciation. Rationality is replaced by greed as investors overlook warning signs and continue to pour mone...Similar Posts
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