Stock Market Bubble

A stock market bubble occurs when the prices of stocks or other financial assets rise significantly above their intrinsic value, driven by irrational investor behavior, speculation, or excessive optimism. Eventually, the bubble bursts, leading to a sharp decline in prices. Bubbles are often fueled by hype, easy credit, and herd behavior, and they can have severe consequences for the broader economy when they collapse.

Example

The dot-com bubble of the late 1990s saw a massive rise in technology stock prices, which collapsed in the early 2000s, wiping out billions of dollars in market value.