What is bubble theory of economic?
When applied to finances and investment strategies, the bubble theory has to do with the performance of security prices. Essentially, the concept of the bubble theory states that the security price of a given security or group of securities will go through a phase in which the price per unit will rise rapidly and high above the value that is indicated by past performance and current market conditions. Following this rapid upswing in price, the securities will achieve a point where this bubble bursts, and the security price goes into a period of rapid descent. There are investors who take the idea of the bubble theory very seriously. To that end, some investors will make it a point to look for stocks that are deemed to exhibit some indication of developing a rapid upswing in price in the near future. When the investor finds a stock that he or she feels will soon perform according to the pattern outlined in the bubble theory, the investor will buy as many shares as possible. At that poin
