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That's what the word "bubble" refers to, though why? not at all. last spectacular bubble was in real estate - it was accompanied by stock market rise but not b

• Tycho 16y ago
  Was the real estate itself part of the bubble? I thought there was lots of trading of mortgage-backed assets that went on the ridiculous assumption that house prices would continue to rise indefinitely, then when they stopped rising the derived (high-volume) trading was exposed as irresponsible. So the bubble would be in credit-default-swaps or whatever you call them, not in actual property. Someone who knows what they're talking about explain please!
  • wrs 16y ago
    Yes, the bubble was in real estate. "People believe the value of X will rise indefinitely" is pretty much the definition of "there's a bubble in X". A lot of dumb things, not just selling exotic derivatives, were done based on the assumption that house prices could not fall. For example, people used crazy leverage to buy houses, figuring its value had to go up. Now they are underwater on their zero-down adjustable mortgages.
• sabat 16y ago
  In reference to the technology industry, "bubble" means stock market bubble -- because that's the kind of bubble that can have a direct, significant impact on the industry. And it did, in the late '90s. What kind of bubble are we in? A VC investment bubble? The investments that are being disparaged too anecdotal to have a significant financial impact. Why call it a bubble?
  • borism 16y ago
    Because there is a huge rise in early-stage investment activity and associated rise in valuations. That's the definition of a bubble regardless whether asset class is stock in startups, public companies, houses or tulips.