U.S. Stock market Bubbles and Crashes

U.S. Stock market Bubbles and Crashes

Asset market bubbles are persistent deviations of prices from fundamentals. To the extent that bubbles exist, they can influence investment levels and the allocation of capital, and thereby have considerable economic effects. In recognition of their potential importance, the question of the existence and pervasiveness of bubbles has been a focus of extensive empirical investigation. These studies yield mixed results regarding the empirical relevance of bubble phenomena. One source of the differences in conclusions may be that, because the fundamental value of the assets cannot be observed, tests of the presence of bubbles are joint tests, with the particular specification of the process guiding the evolution of fundamentals also being tested.

I'm for the free market, yet, it does not mean I'm against regulation. We live in free country and we have police, we have court, we have law, we have army... We need all of these in order to protect the freedom. The same is with stock market. We have free trading, yet this free trading has to be protected. That is why I vote for regulations.

The Wall Street was created to support economy and to help it grows. It looks like now it's opposite - the economy has to support the appetite of the Wall Street and when the economy fails to do so we have stock market crash. That is why we need regulations. The stock market is not as it was a century years ago, it's not even as it was 10 years ago. The volume traded on the US stock market more than doubled over the last 10 years. Did the economy become better??? Maybe... but I'm not sure it's twice better as it was a decade ago... So, what is the source of increased ...