More common is a large jump up, that in retrospect did have more solid reasons behind it, followed by a speculative overshoot and an actual bubble. Meanwhile some start saying its a bubble before the rise is mostly speculation feeding on itself, and others say its not a bubble until all the sudden the bottom falls out.
The great speculative bubbles in stock history were all fed by new technologies which promised great productivity advances and delivered on them - just not enough to justify the speculative bubble. Eg. joint stock companies, canals, telegraph, railroads, electricity, radio, computers, the internet. Each new technology, which promised much but was hard to fairly value in advance, sparked first a boom then a bubble.
You can tell a bubble once the speculative fervor has turned the stock market into a casino and prices have entered cloud cuckoo land, as they did on the Nasdaq in the later 90s. But the internet did bring huge advances, and real giant corporations like ebay, Amazon and Google emerged from basically nothing during this time, amidst the wreckage of hundreds of other internet tulips that went pop! when the bubble burst. |
