Rate Of ReturnCharacteristics of a bubble:
(1) Asset prices are high relative to traditional standards.
(2) Market expectations that current high prices will continue to rise rapidly.
(3) Widespread bullish sentiment.
(4) Use of high leverage to finance asset purchases.
(5) Buyers purchase assets well in advance (e.g., increasing inventory, signing supply contracts, etc.) for speculative purposes or to hedge against future price increases.
(6) New buyers (previously uninvolved in the market) enter the market.
(7) Stimulative monetary policy further fuels the bubble (while tight monetary policy causes the bubble to burst).
—Debt: The First 5,000 Years
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