When Bubbles Pop

The burst is always faster than the buildup. Bubbles typically inflate over years but collapse within weeks or months. This asymmetry catches investors off guard every time. The dot-com bubble took five years to inflate, then wiped out trillions of dollars in market value within two years of its March 2000 peak.

The aftermath extends far beyond financial losses. Burst bubbles destroy confidence, tighten credit, and trigger recessions that affect people who never participated in the speculation. Innocent bystanders lose jobs because bubble enthusiasts overextended the economy.