Is the neobank bubble about to burst?

Welcome to the Investors Trading Academy talking glossary of financial terms and events.
Our word of the day is “Asset Bubble”
The term ‘bubble’ refers to an episode where the price of a financial asset rises significantly, often in response to speculation, which results in the asset trading at a substantial premium to its intrinsic value. When the bubble bursts, the price of the financial asset falls sharply leaving investors with reduced wealth.
When the prices of securities or other assets rise so sharply and at such a sustained rate that they exceed valuations justified by fundamentals, making a sudden collapse likely – at which point the bubble “bursts”.
This may impact discretionary spending and hinder economic growth. Central banks attempt to keep an eye on asset price appreciation and take measures to curb high levels of speculative activity which may make prices vulnerable to a sudden correction. The term ‘bubble’ was first used in 1720 in reference to the South Sea Bubble Crisis and more recently has been applied to Japan in the 1980s and even ‘dot-com’ companies in the late 1990s.

By Barry Norman, Investors Trading Academy – ITA

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Amsterdam, The Dutch Republic, 1630. Here Tulips are all the craze! You want them, your mom wants them, even that ship merchant across the road wants them! But, we’re not planting them in our gardens. We’re INVESTING! Triggering the first-ever “financial bubble” from these Nice Flippen Tulips.

—- Miss an episode in our Tulip Mania Series? —-
Part 1 – NFTs (Non-Fungible Tulips): https://youtu.be/QL5-YbvmYLE
Part 2 – Farming Gold: https://youtu.be/BgBdUWL85nI
Part 3 – To The Moon: https://youtu.be/h8Ng74D_9_Q
Part 4 – The Crash: https://youtu.be/GpDxENI64zI
Part 5 – Eternal Madness: https://youtu.be/7GApMtJ1QZQ
Series Wrap-up / Lies Episode – https://youtu.be/ZbuFKZVdMUo
Music From the Show – “First Financial Bulb!” – https://youtu.be/b2EhkP72ELc

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The internet changed everything…except basic stock valuation math. That, however, was not the general consensus during the latter part of the 1990s when stocks (especially tech stocks) increased in value at astounding rates – forming a bubble that market realities would eventually burst in dramatic fashion.

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Asset bubbles are easy enough to define, but not so simple to identify. WSJ’s Gunjan Banerji explains what bubbles are exactly, how they form and what happens when they burst. Illustration: Jacob Reynolds for The Wall Street Journal

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