Financial bubble - a phenomenon on the financial market, when the assessments of people exceed the fair price. The description of key figures of financial bubble. Methods of predicting the emergence of financial bubbles, their use in different situations.
Table of contents Introduction The description of methods and key figures of financial bubbles The literature and the content Two methods of predicting financial bubbles Conclusion Introduction The subject of this research is the prediction of «financial bubbles». Financial bubble is such a phenomenon on the financial market, when the assessments of people exceed the fair price. If this phenomenon is considered graphically, it could be characterized by a sharp deviation of course of good up from historical trend with the following collapse. This phenomenon could be recognized only by analyzing the market data, which makes the financial bubbles being very hard to predict. However, there are some typical features of occurrence of financial bubbles, due to which they could be distinguished from an ordinary rise of a price. There are two types of financial bubbles, which are necessary to separate. The first type occurs due to attempts to eliminate the lack of financial package. The second one appears, on the contrary, when there is an assurance that some sector would be successful, and investments, which are put in this sector, effect oppositely. This theme is chosen because nowadays there are no effective methods of predicting and preventing the financial bubbles. There are different diverse perceptions and methods, based on previous observations, which can show some suspicious trends on markets. However, the state of the market could not be estimated only by analyzing share prices, because the information about the activity of different companies is mostly classified. This theme has become significantly relevant during the last two decades. This might happen due to the fact that nowadays more and more stock-jobbers (speculators), who have the access to the market, earn on the differences in prices, which leads to the «swinging» of the market.
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