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speculative bubble

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Financial Dictionary

Speculative Bubble

A temporary market condition created through excessive buying, and an unfounded run-up in prices occurs.

Investopedia Commentary

Speculative bubbles are generally a result of the "bandwagon effect." Investors, seeing an upward trend in prices, quickly enter long positions in an attempt to participate in the stocks' profitability. Typically, these bubbles are followed by even faster sell-offs once the prices begin to decline.

Related Links

The Greatest Market Crashes
How Investors Often Cause The Market's Problems

See also: Break, Bulge, Buoyant, Long, Sell-off, Trend

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