Homonym: Bubble (Soap)
A "Bubble" refers to a situation in financial markets where the prices of assets, such as stocks or real estate, rise significantly above their intrinsic value. This often occurs due to excessive speculation, where investors buy assets expecting prices to continue rising, rather than based on the underlying fundamentals. When the bubble bursts, prices can plummet, leading to significant financial losses.
Bubbles can be identified in various markets, including the dot-com bubble of the late 1990s and the housing bubble leading up to the 2008 financial crisis. Understanding bubbles is crucial for investors to avoid potential pitfalls and make informed decisions.