What is Economic bubble?

An economic bubble is a situation in which asset prices are much higher than the underlying fundamentals can reasonably justify. Bubbles are sometimes caused by unlikely and overly optimistic projections about the future. They could also be described as prices which strongly exceed the asset's intrinsic value.

They are sometimes referred to as speculative bubbles, financial bubbles, or speculative mania.

In the early stages of a bubble, many investors do not notice the bubble for what it is. People notice the prices are going up and often think it is justified. Therefore bubbles are often conclusively identified only in retrospect, after the bubble has already popped and prices have crashed.