Robert Shiller on How to Diagnose a Bubble

By on January 28, 2010

According to Robert Shiller the following clues will tell whether there is an investment bubble:

- Sharp increases in the price of an asset like real estate or dot-com shares
– Great public excitement about said increases
– An accompanying media frenzy
– Stories of people earning a lot of money, causing envy among people who aren’t
– Growing interest in the asset class among the general public
– “New era” theories to justify unprecedented price increases
– A decline in lending standards

Source: New York Times Dealbook

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