If you pay careful attention, you will find that the hotly discussed topics on the streets and alleys today have shifted from soy milk and fried dough sticks to the stock market and property market. In our country, especially in cities, people's pursuit of some virtual assets and financial assets once reached unprecedented popularity.

In economics, the market price of an asset, whether virtual or physical, far exceeds its actual value for some reason. This part of the price difference is what we call "Economic Bubble".

Not only financial assets, but also commodities can sometimes cause "bubbles" due to unreasonable factors. This is just because financial assets are basically virtual capital separated from the real economy and have the characteristics of generating bubbles. . Therefore, we often talk about "financial bubbles". So, when will a financial bubble occur?

A simple summary is fictitious capital. For example, the value of securities prices has been completely separated from physical capital. For example, the products operated by a company have developed disorderly and far exceed their actual value. In fact, there are many factors that lead to the occurrence of financial bubbles, such as flaws in the economic system, loopholes in the financial market environment, and investors' speculative psychology.

These factors will eventually lead to the above-mentioned value deviation, thus generating financial bubbles. From the beginning of 2006 to October 2007, the Shanghai Composite Index soared from around 1,300 points to 6,124 points, and the value of some individual stocks even increased dozens of times.

Logically, the stock price of a company is mainly determined by its operating performance, and the annual operating profit rate of a normal company generally does not exceed 50%. The operating profit indicators of some companies with good growth are also very high. Few exceed 100%; however, in this year and a half, the stock prices of these companies can rise several times, ten times or even dozens of times, which is very different from the development of the real economy. So, it can be said at this time that such a huge expansion in market value is full of "stock market bubbles."