A stock market bubble occurs when the prices of stocks rise significantly above their intrinsic value, driven by excessive speculation and investor enthusiasm. This inflated demand often leads to a rapid increase in prices, attracting more investors who hope to profit from the rising market. However, the underlying fundamentals of the companies do not support these high valuations. Eventually, the bubble bursts when investors realize that prices cannot sustain themselves, leading to a sharp decline in stock values. This can result in significant financial losses for those who bought in at inflated prices. Historical examples include the Dot-com Bubble and the Housing Bubble.