Economic bubbles form when the market price of a group of assets persistently exceeds their real value, often in a specific sector such as housing or tech stocks.
These bubbles often begin during moments of excitement—about new technologies, fast-growing industries, or unusually cheap borrowing. As prices rise, more people purchase the assets, fearing they’ll miss out on future gains.
Bubbles burst when confidence is shaken, typically due to disappointing news, rising defaults, or a sudden realization that prices are no longer justified. When that shift happens, investors rush to sell their assets—prices can fall just as quickly as they climbed. The fallout can strain banks, wipe out household wealth, and sometimes even trigger broader economic downturns.
Bubbles tend to follow similar patterns. Whether it’s tulips in 1630s Netherlands, regarded as the first financial bubble, or early internet companies in the 1990s, they all generally move through similar phases: early enthusiasm, rapid price increases, broad public participation, and an abrupt collapse.
Hours of research by our editors, distilled into minutes of clarity.
A video breaks down the core forces behind economic bubbles, illustrating how forces including cheap credit, soaring optimism, and feedback loops push asset prices far beyond fundamentals—until a single shock triggers panic, selling and a rapid collapse.
A scene from "The Big Short" visualizes how Wall Street bundled shaky mortgages into complex housing bonds and sold credit default swaps on top of them—showing, step by step, how the structure of the 2008 housing bubble was vulnerable to collapse.
Economist Hyman Minsky originated what became a five-stage model of an economic bubble: a new “displacement,” a rapid boom, euphoric speculation, early profit-taking by insiders, and finally panic selling. From Japan’s 1980s real-estate surge to the 2008 crash, the pattern repeats across eras and assets.
A video examines the massive surge in AI spending—forecast to hit $500B by 2026—and how this may be propping up a fragile US economy. Experts warn that if AI investment slows or under-delivers, the consequences could be felt in markets, jobs and growth.
The Beanie Baby boom saw collectors drive prices for stuffed animals into the hundreds or thousands of dollars, fueled by hype surrounding scarcity and online bidding wars. When demand collapsed in the early 2000s, the market crashed—leaving steep losses for many speculators.
This podcast revisits tulip mania, the 1630s Dutch craze where rare bulbs were briefly traded like luxury assets. It unpacks the myths surrounding the event and shows how its legend continues to shape modern perceptions of financial bubbles.
During “Railway Mania,” speculative excitement pushed British rail shares to extreme valuations as investors chased rapid expansion. When costs ballooned and profits failed to materialize, the bubble collapsed in 1847—wiping out fortunes across the country.
This video illustrates how the South Sea Company in Britain sparked a stock boom in 1720, with promises of huge trading profits, driving shares to unprecedented heights before a sudden crash wiped out the fortunes of investors—including Isaac Newton, who lost an estimated £20K.
Fueled by margin speculation and intense optimism, stock prices soared to unsustainable levels before collapsing in late October—erasing billions in market value within days.
An interview with Alphabet CEO Sundar Pichai warns that the trillion-dollar surge in AI valuations may contain clear signs of irrationality, echoing past tech bubbles. He says no firm—including Google—would be immune if the boom cools or bursts.
The United States is home to more than 33 million businesses, the vast majority of which are small businesses, with millions being created (and others closing shop) every year. These businesses often rely on loans, provide the goods and services that keep the economy flowing, and sometimes even grow large enough to enter public markets or provide private investment opportunities. Explore key topics central to business and finance, from the role of the Federal Reserve to how initial public offerings work, how millions of American students finance higher education, and more.