Bubble: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Add link.) |
(Add quote.) |
||
| Line 1: | Line 1: | ||
Bubbles are market conditions in which prices are greatly in excess of 'fundamental' valuations. | Bubbles are market conditions in which prices are greatly in excess of 'fundamental' valuations. | ||
The bubble is likely to burst at some future point, with a rapid fall in market prices. | The bubble is likely to burst at some future point, with a rapid fall in market prices. | ||
It can often be difficult to detect the existence of a bubble before it has burst. | |||
:<span style="color:#4B0082">'''''False presumption delayed effective action'''''</span> | |||
:"The prudential apparatus has worked in the past on the presumption that all movements in asset prices were based on fundamentals. | |||
:This approach may prevent supervisors from dealing with excessive procyclicality until it is too late. | |||
:The existence of bubbles, for instance, is impossible to prove until they burst. | |||
: And, at least in the initial phase of a bubble, there is no lack of "fundamental" explanations for observed movements in asset prices." | |||
:''Jean-Pierre Landau, Deputy Governor of the Bank of France, BIS Review 94/2009.'' | |||
| Line 11: | Line 27: | ||
* [[Efficient market hypothesis]] | * [[Efficient market hypothesis]] | ||
* [[Fundamental analysis]] | * [[Fundamental analysis]] | ||
* [[Herd behaviour]] | |||
* [[Mean reversion]] | * [[Mean reversion]] | ||
* [[Overshooting]] | * [[Overshooting]] | ||
* [[Procyclicality]] | |||
* [[Random walk]] | * [[Random walk]] | ||
* [[Rational expectations]] | * [[Rational expectations]] | ||
* [[Speculation]] | * [[Speculation]] | ||
* [[Supervisor]] | |||
* [[Systemic risk]] | * [[Systemic risk]] | ||
* [[Trend]] | * [[Trend]] | ||
* [[Volatility]] | * [[Volatility]] | ||
[[Category: | |||
==Other resource== | |||
*[https://www.bis.org/review/r090805d.pdf Procyclicality - what it means and what could be done - Jean-Pierre Landau, Deputy Governor of the Bank of France, BIS Review 94/2009] | |||
[[Category:The_business_context]] | |||
[[Category:The_business_context]] | [[Category:The_business_context]] | ||
Latest revision as of 23:47, 21 November 2023
Bubbles are market conditions in which prices are greatly in excess of 'fundamental' valuations.
The bubble is likely to burst at some future point, with a rapid fall in market prices.
It can often be difficult to detect the existence of a bubble before it has burst.
- False presumption delayed effective action
- "The prudential apparatus has worked in the past on the presumption that all movements in asset prices were based on fundamentals.
- This approach may prevent supervisors from dealing with excessive procyclicality until it is too late.
- The existence of bubbles, for instance, is impossible to prove until they burst.
- And, at least in the initial phase of a bubble, there is no lack of "fundamental" explanations for observed movements in asset prices."
- Jean-Pierre Landau, Deputy Governor of the Bank of France, BIS Review 94/2009.
See also
- Adaptive expectations
- Correction
- Crash
- Dislocation
- Efficient market hypothesis
- Fundamental analysis
- Herd behaviour
- Mean reversion
- Overshooting
- Procyclicality
- Random walk
- Rational expectations
- Speculation
- Supervisor
- Systemic risk
- Trend
- Volatility
