A financial bubble occurs when a specific asset or investment category becomes widely overvalued, followed by a sudden drop in value. Usually, it’s back to a more reasonable value — but it doesn’t make it sting any less for investors who jumped aboard the bandwagon. We’ve seen this pattern over and over throughout history with different assets, in different countries. It’s bound to happen again in the future. That’s why it’s important to understand how bubbles happen so you know how to react when you spot a one growing. The economy works in cycles of growth and contraction. Strong economic periods often lead to ... (full story)