Before the pop

One way to think about bubbles…

… is as gross divergences between the function of assets (fundamentals) and financial market supply/demand dynamics (technicals).

This can only be truly known with hindsight – after the pop – and even then it’s a subjective conclusion…

A matter of how much, how wide, how long…

Macrotrends: NASDAQ Composite

Until that point, it could be that fundamentals drive the market as much as the other way around.

When we infer that a bubble has burst, we note that value got ahead of the use-case, or maybe the use-case never quite caught up.

Then a new cycle of theory and speculation starts… with causes and effects that are as circular as ever.

This does not apply to financial markets only…

It’s notable in all commerce and, for that matter, any network structure…

Where interaction and ideas form and flow.