A speculative bubble occurs when the prices of assets, such as stocks or real estate, rise rapidly to levels that are not supported by their fundamental value. Investors buy these assets with the expectation that prices will continue to increase, often driven by emotions rather than rational analysis. This can lead to a situation where prices become detached from reality. Eventually, the bubble bursts when investors realize that prices cannot sustain their inflated levels. This can result in a sharp decline in asset values, causing significant financial losses. Historical examples of speculative bubbles include the Dot-com Bubble and the Housing Bubble.