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Irrational exuberance is a term used to describe behavior that is characterized by excessive, irrational, and often uncontrollable enthusiasm or passion. It is a psychological state in which one’s emotions and judgments are driven by intense, irrational feelings of excitement or admiration for a particular object, person, or idea.
What does irrational exuberance mean?
Irrational exuberance refers to overly optimistic investor behavior, where asset prices rise well above their true value due to emotional and speculative buying.
What causes irrational exuberance?
It is caused by a mix of market speculation, herd behavior, and emotions, leading investors to disregard fundamentals and push prices to unsustainable levels.
What is an example of an irrational market?
An example is the dot-com bubble in the late 1990s, where tech stocks soared despite lacking strong business fundamentals.
What is rational exuberance?
Rational exuberance is when optimism in the market is based on strong fundamentals and realistic expectations, rather than speculation or emotion.
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