Even if you don’t pay a lot of attention to markets or investing, you’ve probably heard the term “market bubble”. The global property bubble of the early 2000s led to the sub-prime crisis. The dotcom bubble of the late 1990s led to the dotcom bust. The South Sea Bubble of 1720 cost Sir Isaac Newton millions of pounds in today’s money. But how exactly can we define a market bubble? Given that it’s probably one of the most famous terms in investing, it’s somewhat ironic that the correct answer to that question is “we can’t”. There is no specific recognized definition of a market bubble. This is partly because financial ... (full story)