Part 2/8:
A “bubble” occurs when stock prices are inflated far beyond their true market value, often driven by market hype rather than genuine business performance. The dot-com bubble of the early 2000s is a notable example—prices skyrocketed for many tech companies before plummeting as investors recognized that many of these businesses were not sustainable. When the bubble bursts, it can lead to dramatic drops in stock prices, as evidenced by the 80% crash of the Nasdaq index during this period.