The word ‘bubble’ in investing carries heavy weight. It can bring great profits for some but devastating losses for others. A stock market bubble lures investors with promises of huge gains, but underneath this appealing surface, prices become disconnected from reality.
Think back to the dot-com craze of the late 1990s when internet stock prices skyrocketed to unrealistic levels before crashing down spectacularly. Or recall the more recent housing bubble that burst with catastrophic consequences during the 2008 global financial crisis. This is a stark warning about the dangers of irrational exuberance.
In this article, we’re going to explore the history of market bubbles. We’ll dive into how greed and too much confidence have caused financial disasters before. By looking back at past bubbles, we can learn important lessons and how we can avoid getting caught in the next market bubble that inevitably comes along.
1990s dot-com bubble...