Stock market bubble
The stock market is heavily regulated, traded by the smartest, most dedicated people in the world, but all of that money flying around can still make for mayhem every now and then.
A stock market bubble is where the price of a stock, a collection of stocks, commodities, or anything else rises exponentially for no real reason. This may sound nice, but for every bubble there is a crash. This decade alone we have seen technology stocks rise exponentially and then come crashing down. We have seen real estate values skyrocket and then come to a much lower level. And we have seen the price of a barrel of oil go from 30 dollars, to 140, back down to 50.
A bubble in the stock market is always backed by some bit of actual fact and reason. Technology was exploding in the 90′s and still today, many companies like Microsoft, Google, and Intel are now worth hundreds of billions and are making billions a year. However investors took it way to far and let emotion get into the way of there thinking which is dangerous.
A good way to spot a bubble is to look at what has risen or is rising exponentially. Currently clean energy stocks are going through the roof. They have done very well the past couple of years. Of course we are going to rely on hydrogen, wind and solar power more and more in the future, but you have to make sure that you are not overpaying to buy a part of these companies.
Do your best to be rational and do not let your emotions get in the way of how you handle your money and you will successfully avoid any stock market bubble’s.