Theory
In behavioral finance, this specific bias causes investors to interpret ambiguous information as supporting their existing optimistic beliefs during a bubble.
What is confirmatory bias?
This valuation metric became notoriously inflated during the dot-com bubble, often exceeding 100 for unprofitable firms.
What is Price/Earnings Ratio?
The collapse of this U.S. investment bank in September 2008 symbolized the onset of the global financial crisis
What is Lehman Brothers?
This long-term valuation measure smooths inflation-adjusted earnings over 10 years to assess equity pricing.
What is the CAPE ratio?
This 17th-century Dutch mania over rare flowers became the first recorded speculative bubble.
What is Tulipmania?
This economist’s model argues that financial instability is endogenous to capitalism, driven by cycles of leverage expansion and contraction.
Who is Minsky?
Term for startups whose valuations surged on hype despite lacking revenue, exemplifying bubble-era irrationality.
What is a unicorn?
This term describes the network of non-bank institutions performing credit functions outside regulatory oversight.
What is the shadow banking system?
This cascading effect occurs when margin calls and leverage constraints amplify price declines.
What is a liquidity spiral?
The 1997 Asian Financial Crisis began when this nation’s currency sharply devalued.
What is the Thai Baht?
What single market dynamic transforms rising asset prices into accelerating asset prices, creating self-reinforcing momentum?
What is the Positive Feedback?
This business mantra defined late-1990s internet strategy by prioritizing user growth over profitability.
What is get big fast?
This phrase captures the sudden withdrawal of short-term funding that froze interbank markets in 2008.
What is a credit freeze?
When short-term interest rates exceed long-term rates, the yield curve is said to be this.
What is inverted?
Japan’s late-1980s asset boom was amplified by this ultra-accommodative central-bank policy.
What is loose credit (or monetary easing)?
According to Minsky’s taxonomy of financing types, this term describes debt structures where cash flows cover interest but not principal.
What is the speculative finance?
This single-word term refers to tech-sector overinvestment driven by exaggerated expectations of future adoption.
What is hypergrowth?
This three-letter acronym refers to the structured securities composed of bundled mortgage debt central to the crisis.
What are CDOs/MBSs (Collateralized Debt Obligations)?
This single word describes when valuations become disconnected from fundamentals due to speculative sentiment.
What is irrationality?
This two-word term describes sudden reversals of foreign-capital inflows that destabilize emerging markets.
What is a sudden stop?
What is the term for the tipping-point moment where leveraged positions unwind simultaneously, triggering cascading forced selling?
What is the deleveraging?
This “law” states that investors overestimate short-term technological change but underestimate its long-term impact.
What is Amara's Law?
This phrase describes the wave of mortgage defaults that followed rate resets on adjustable-rate loans.
What is the subprime shock?
This volatility index—often called the “fear gauge”—spikes when investor anxiety rises.
What is the VIX?
This phenomenon occurs when a shock in one market spreads rapidly across countries and asset classes.
What is financial contagion?