Asset Bubbles Explained

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Asset Bubbles Explained

IntroBooks Team
Asset Bubbles Explained Book PDF

Author : IntroBooks Team
Publisher : IntroBooks
Page : 128 pages
File Size : 42,8 Mb
Release : 2024-06-28
Category : Business & Economics
ISBN : 8210379456XXX

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Asset Bubbles Explained by IntroBooks Team Pdf

An element of asset bubble develops when the value of an asset, like real estate, commodities, stocks, or bonds, increases at a brisk rate without intrinsic factors, such as equivalent ever-increasing demand, to validate the spike in prices. An asset bubble is triggered when assets such as gold, stocks, or housing rapidly experience a dramatic price hike over a short period that is not sustained by the value of the commodity. The characteristic of a bubble is unreasonable optimism: a tendency when everyone is buying up a specific asset. When investors rush towards a category of assets, like real estate, it results in a rise in both price and demand. Investors carry on bidding up an asset’s price well beyond sustainable and real value in the course of a bubble. Inevitably, when prices are in a collision, the bubble "bursts, and subsequently, demand disintegrates, and the result is often significantly lowered domestic spending and dismal business and the economy's possible future downturn. Knowing the historical trends and causes of asset bubbles will prevent one from responding and falling prey to a future debacle. Illogical exuberance is a crucial indicator of a continuing asset bubble.

Asset Price Bubbles

William Curt Hunter,George G. Kaufman,Michael Pomerleano
Asset Price Bubbles Book PDF

Author : William Curt Hunter,George G. Kaufman,Michael Pomerleano
Publisher : MIT Press
Page : 650 pages
File Size : 48,9 Mb
Release : 2005
Category : Business & Economics
ISBN : 0262582538

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Asset Price Bubbles by William Curt Hunter,George G. Kaufman,Michael Pomerleano Pdf

A study of asset price bubbles and the implications for preventing financial instability.

Boom and Bust

William Quinn,John D. Turner
Boom and Bust Book PDF

Author : William Quinn,John D. Turner
Publisher : Cambridge University Press
Page : 297 pages
File Size : 44,9 Mb
Release : 2020-08-06
Category : Business & Economics
ISBN : 9781108421256

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Boom and Bust by William Quinn,John D. Turner Pdf

Why do stock and housing markets sometimes experience amazing booms followed by massive busts and why is this happening more and more frequently? Boom and Bust reveals why bubbles happen, and why some bubbles have catastrophic economic, social and political consequences, whilst others have actually benefited society.

Bubbles, Booms, and Busts

Donald Rapp
Bubbles Booms and Busts Book PDF

Author : Donald Rapp
Publisher : Springer
Page : 374 pages
File Size : 54,5 Mb
Release : 2014-11-14
Category : Business & Economics
ISBN : 9781493910922

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Bubbles, Booms, and Busts by Donald Rapp Pdf

This book deals at some length with the question: Since there are many more poor than rich, why don’t the poor just tax the rich heavily and reduce the inequality? In the 19th century and the first half of the 20th century, the topic of inequality was discussed widely. Ending or reducing inequality was a prime motivating factor in the emergence of communism and socialism. The book discusses why later in the 20th century, inequality has faded out as an issue. Extensive tables and graphs of data are presented showing the extent of inequality in America, as well as globally. It is shown that a combination of low taxes on capital gains contributed to a series of real estate and stock bubbles that provided great wealth to the top tiers, while real income for average workers stagnated. Improved commercial efficiency due to computers, electronics, the Internet and fast transport allowed production and distribution with fewer workers, just as the advent of electrification, mechanization, production lines, vehicles and trains in the 1920s and 1930s produced the same stagnating effect.

Famous First Bubbles

Peter M. Garber
Famous First Bubbles Book PDF

Author : Peter M. Garber
Publisher : MIT Press
Page : 180 pages
File Size : 43,9 Mb
Release : 2001-08-24
Category : Business & Economics
ISBN : 0262571536

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Famous First Bubbles by Peter M. Garber Pdf

The jargon of economics and finance contains numerous colorful terms for market-asset prices at odds with any reasonable economic explanation. Examples include "bubble," "tulipmania," "chain letter," "Ponzi scheme," "panic," "crash," "herding," and "irrational exuberance." Although such a term suggests that an event is inexplicably crowd-driven, what it really means, claims Peter Garber, is that we have grasped a near-empty explanation rather than expend the effort to understand the event. In this book Garber offers market-fundamental explanations for the three most famous bubbles: the Dutch Tulipmania (1634-1637), the Mississippi Bubble (1719-1720), and the closely connected South Sea Bubble (1720). He focuses most closely on the Tulipmania because it is the event that most modern observers view as clearly crazy. Comparing the pattern of price declines for initially rare eighteenth-century bulbs to that of seventeenth-century bulbs, he concludes that the extremely high prices for rare bulbs and their rapid decline reflects normal pricing behavior. In the cases of the Mississippi and South Sea Bubbles, he describes the asset markets and financial manipulations involved in these episodes and casts them as market fundamentals.

Optimal Macroprudential Policy and Asset Price Bubbles

Nina Biljanovska,Lucyna Gornicka,Alexandros Vardoulakis
Optimal Macroprudential Policy and Asset Price Bubbles Book PDF

Author : Nina Biljanovska,Lucyna Gornicka,Alexandros Vardoulakis
Publisher : International Monetary Fund
Page : 51 pages
File Size : 45,5 Mb
Release : 2019-08-30
Category : Business & Economics
ISBN : 9781513512662

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Optimal Macroprudential Policy and Asset Price Bubbles by Nina Biljanovska,Lucyna Gornicka,Alexandros Vardoulakis Pdf

An asset bubble relaxes collateral constraints and increases borrowing by credit-constrained agents. At the same time, as the bubble deflates when constraints start binding, it amplifies downturns. We show analytically and quantitatively that the macroprudential policy should optimally respond to building asset price bubbles non-monotonically depending on the underlying level of indebtedness. If the level of debt is moderate, policy should accommodate the bubble to reduce the incidence of a binding collateral constraint. If debt is elevated, policy should lean against the bubble more aggressively to mitigate the pecuniary externalities from a deflating bubble when constraints bind.

Financial Market Bubbles and Crashes, Second Edition

Harold L. Vogel
Financial Market Bubbles and Crashes Second Edition Book PDF

Author : Harold L. Vogel
Publisher : Springer
Page : 477 pages
File Size : 45,6 Mb
Release : 2018-08-16
Category : Business & Economics
ISBN : 9783319715285

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Financial Market Bubbles and Crashes, Second Edition by Harold L. Vogel Pdf

Economists broadly define financial asset price bubbles as episodes in which prices rise with notable rapidity and depart from historically established asset valuation multiples and relationships. Financial economists have for decades attempted to study and interpret bubbles through the prisms of rational expectations, efficient markets, and equilibrium, arbitrage, and capital asset pricing models, but they have not made much if any progress toward a consistent and reliable theory that explains how and why bubbles (and crashes) evolve and can also be defined, measured, and compared. This book develops a new and different approach that is based on the central notion that bubbles and crashes reflect urgent short-side rationing, which means that, as such extreme conditions unfold, considerations of quantities owned or not owned begin to displace considerations of price.

The Origin of Financial Crises

George Cooper
The Origin of Financial Crises Book PDF

Author : George Cooper
Publisher : Vintage
Page : 210 pages
File Size : 45,9 Mb
Release : 2008-10-29
Category : Business & Economics
ISBN : 9780307473455

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The Origin of Financial Crises by George Cooper Pdf

In a series of disarmingly simple arguments financial market analyst George Cooper challenges the core principles of today's economic orthodoxy and explains how we have created an economy that is inherently unstable and crisis prone. With great skill, he examines the very foundations of today's economic philosophy and adds a compelling analysis of the forces behind economic crisis. His goal is nothing less than preventing the seemingly endless procession of damaging boom-bust cycles, unsustainable economic bubbles, crippling credit crunches, and debilitating inflation. His direct, conscientious, and honest approach will captivate any reader and is an invaluable aid in understanding today's economy.

Investors' optimal response to stock price bubbles

Maximilian Wegener
Investors optimal response to stock price bubbles Book PDF

Author : Maximilian Wegener
Publisher : GRIN Verlag
Page : 27 pages
File Size : 47,7 Mb
Release : 2013-04-08
Category : Business & Economics
ISBN : 9783656403197

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Investors' optimal response to stock price bubbles by Maximilian Wegener Pdf

Bachelor Thesis from the year 2013 in the subject Business economics - Investment and Finance, grade: 8.0, Maastricht University, language: English, abstract: According to the efficient market hypothesis there should not be an asset overvaluation. Nevertheless, bubbles appear from time to time in the real world. In a financial bubble, the price of a security deviates grossly from its fundamental intrinsic value (Watanabe, Takayasu & Takayasu, 2007). Fundamentals or fundamental value refer to economic variables such as discount rates or future cash flows (Siegel, 2003). Depending on the valuation technique one can define an asset’s intrinsic or fundamental value, based on economic variables and assumed growth. A financial bubble is defined as a price run-up, where an initial price rise generates positive expectations of higher future prices, which attracts new buyers that are rather interested in reaping profits by trading the assets than using its earnings capacity (Siegel, 2003). There is a long history of bubbles such as the 1720 South Sea bubble, 1929 the Great Crash, in the mid-1970s the REIT bubble, in 1987 the housing crash, in 1991 the banking crisis, in 2002 the NASDAQ technology bubble and just recently the housing bubble in the United States, just to name a few. This capstone assignment deals with the question of how investors should act in the case of asset overvaluation in financial markets. In particular, it tries to answer how investors should behave. The central question asks whether investors should step aside and wait until the bubble bursts, whether they should ride the bubble or trade against it. Of course, there is support for all three, albeit contradicting theories. The different trading and investment strategies are reviewed, thereby touching upon various asset bubbles, financial concepts and empirical evidence in the academia. Moreover, it is elaborated on positive feedback trading and rational speculations, as well as behavioral finance concepts such as herding or overconfidence. The remainder of this paper describes different concepts outlined in the empirical literature, starting with asset overvaluation, followed by the efficient market hypothesis and the random walk phenomenon. The role of arbitrage traders is explored, and their impact on efficient markets and bubbles discussed. A review of behavioral traits during bubbles and the impact of human behavior on asset prices is included. Further, there is an examination of mutual fund strategies and their success in exploiting profit opportunities during bubbles. Finally, it is summarized which arguments support each of the viewpoints.

New Perspectives on Asset Price Bubbles

Douglas D. Evanoff,George G. Kaufman,A. G. Malliaris
New Perspectives on Asset Price Bubbles Book PDF

Author : Douglas D. Evanoff,George G. Kaufman,A. G. Malliaris
Publisher : Oxford University Press
Page : 480 pages
File Size : 43,8 Mb
Release : 2012-02-08
Category : Business & Economics
ISBN : 9780199939404

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New Perspectives on Asset Price Bubbles by Douglas D. Evanoff,George G. Kaufman,A. G. Malliaris Pdf

This volume critically re-examines the profession's understanding of asset bubbles in light of the global financial crisis of 2007-09. It is well known that bubbles have occurred in the past, with the October 1929 crash as the most demonstrative example. However, the remarkably well-behaved performance of the US economy from 1945 to 2006, and, in particular during the Great Moderation period of 1984 to 2006, assured the economics profession and monetary policymakers that asset bubbles could be effectively managed with little or no real economic impact. The recent financial crisis has now triggered a debate about the emergence of a sequence of repeated bubbles in the Nasdaq market, housing market, credit market, and commodity markets. The realities of the crisis have intensified theoretical modeling, empirical methodologies, and debate on policy issues surrounding asset price bubbles and their potentially adverse economic impact if poorly managed. Taking a novel approach, the editors of this book present five classic papers that represent accepted thinking about asset bubbles prior to the financial crisis. They also include original papers challenging orthodox thinking and presenting new insights. A summary essay highlights the lessons learned and experiences gained since the crisis.

Asset Pricing Under Asymmetric Information

Markus Konrad Brunnermeier
Asset Pricing Under Asymmetric Information Book PDF

Author : Markus Konrad Brunnermeier
Publisher : Oxford University Press, USA
Page : 264 pages
File Size : 50,8 Mb
Release : 2001
Category : Business & Economics
ISBN : 0198296983

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Asset Pricing Under Asymmetric Information by Markus Konrad Brunnermeier Pdf

The role of information is central to the academic debate on finance. This book provides a detailed, current survey of theoretical research into the effect on stock prices of the distribution of information, comparing and contrasting major models. It examines theoretical models that explain bubbles, technical analysis, and herding behavior. It also provides rational explanations for stock market crashes. Analyzing the implications of asymmetries in information is crucial in this area. This book provides a useful survey for graduate students.

Advances in Mathematical Finance

Michael C. Fu,Robert A. Jarrow,Ju-Yi Yen,Robert J Elliott
Advances in Mathematical Finance Book PDF

Author : Michael C. Fu,Robert A. Jarrow,Ju-Yi Yen,Robert J Elliott
Publisher : Springer Science & Business Media
Page : 336 pages
File Size : 50,9 Mb
Release : 2007-06-22
Category : Business & Economics
ISBN : 9780817645458

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Advances in Mathematical Finance by Michael C. Fu,Robert A. Jarrow,Ju-Yi Yen,Robert J Elliott Pdf

This self-contained volume brings together a collection of chapters by some of the most distinguished researchers and practitioners in the field of mathematical finance and financial engineering. Presenting state-of-the-art developments in theory and practice, the book has real-world applications to fixed income models, credit risk models, CDO pricing, tax rebates, tax arbitrage, and tax equilibrium. It is a valuable resource for graduate students, researchers, and practitioners in mathematical finance and financial engineering.

Boombustology

Vikram Mansharamani
Boombustology Book PDF

Author : Vikram Mansharamani
Publisher : John Wiley & Sons
Page : 287 pages
File Size : 49,8 Mb
Release : 2011-02-08
Category : Business & Economics
ISBN : 9781118028575

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Boombustology by Vikram Mansharamani Pdf

A multi-disciplinary framework through which to spot financial bubbles before they burst. Based on a popular undergraduate seminar, entitled Financial Booms & Busts, taught by the author at Yale University, Boombustology presents a multi-disciplinary framework for identifying unsustainable booms and forthcoming busts. The magnitude of our recent financial crisis mandates a firm understanding of this phenomenon before the next crisis occurs. Boombustology provides an in-depth look at several major booms and busts and offers a solid framework for thinking about future occurrences. Examines why booms and busts are not random and can therefore be identified Focuses upon various theoretical and disciplinary lenses useful in the study of booms and busts Contains a framework for thinking about and identifying forthcoming financial bubbles including several tell-tale indicators of a forthcoming bust. Illustrates the framework in action by evaluating China as a potential bubble in the making. If you want to make better decisions in today’s turbulent investment environment, understanding the dynamics of booms and busts is the best place the start. Boombustology can help you achieve this elusive goal. Vikram Mansharamani is a Lecturer at Yale University and a global equity investor.

Anatomy Of Stock Market Bubbles

György Komáromi
Anatomy Of Stock Market Bubbles Book PDF

Author : György Komáromi
Publisher : ICFAI Books
Page : 129 pages
File Size : 54,6 Mb
Release : 2006-11-14
Category : Business enterprises
ISBN : 9788131404089

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Anatomy Of Stock Market Bubbles by György Komáromi Pdf

This book presents one of the most controversial happenings in economics stock market bubbles. The author discusses this topic threadbare and provides a critical analysis of related literature from different economic schools. This book also presents analy

Narrative Economics

Robert J. Shiller
Narrative Economics Book PDF

Author : Robert J. Shiller
Publisher : Princeton University Press
Page : 408 pages
File Size : 41,9 Mb
Release : 2020-09-01
Category : Business & Economics
ISBN : 9780691212074

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Narrative Economics by Robert J. Shiller Pdf

From Nobel Prize–winning economist and New York Times bestselling author Robert Shiller, a groundbreaking account of how stories help drive economic events—and why financial panics can spread like epidemic viruses Stories people tell—about financial confidence or panic, housing booms, or Bitcoin—can go viral and powerfully affect economies, but such narratives have traditionally been ignored in economics and finance because they seem anecdotal and unscientific. In this groundbreaking book, Robert Shiller explains why we ignore these stories at our peril—and how we can begin to take them seriously. Using a rich array of examples and data, Shiller argues that studying popular stories that influence individual and collective economic behavior—what he calls "narrative economics"—may vastly improve our ability to predict, prepare for, and lessen the damage of financial crises and other major economic events. The result is nothing less than a new way to think about the economy, economic change, and economics. In a new preface, Shiller reflects on some of the challenges facing narrative economics, discusses the connection between disease epidemics and economic epidemics, and suggests why epidemiology may hold lessons for fighting economic contagions.