When Bubbles Become Manias

From housing in 2007 to dot.com stocks in 2000 and all the way back to those infamous tulip bulbs, we've heard about and experienced market bubbles. While Eddy Elfenbein might indeed be right when he defines a bubble as a bull market in which we don't have a position, there have certainly been times in which financial assets have become so subject to speculative fervor that they have lost their anchoring to fundamental value. Consider Japan's Lost Decade following its real estate bubble; it's understandable that investors wish to both avoid bubbles and potentially profit from them.