What is an echo bubble?
The echo bubble is a situation that occurs after the main bubble crash on the stock market. Usually, after this happens, there is a short, temporary, post-bubble rally that takes place within a few days, after a crash. These assemblies are called an echo bubble because it is usually not as pronounced or as the original bubble, so it resembles an echo. Must answer a number of questions. Investors may ask themselves whether this is a temporary situation caused by a failure of one society. They may also be surprised whether there is a panic reaction to the knees, which is based on emotions, not a good trade. Investors must also consider when the market will resolve itself. Some, either through their own procedures for everyday trading, or perhaps through a financial advisor, may believe that they see Opportunity. Shares that looked like a bad value before the fall suddenly look significantly better at a lower price. There are speculators who are involved in shopping action and cause echo bubble.
This shopping event cheats temporarily higher because the demand increases. In the real bubble, however, prices will never get what they originally achieved, at least not in the short term. When a crash occurs, permanent, slower growth may occur, but it is not a bubble. This is normal market behavior.
post-bubble assemblies almost always occur. When Dot-Com Bubble collapsed in 2001, there was a short rally, but that was not maintained. Nasdaq, which has technologically demanding supplies, reached a peak at more than 5,000 points. Quickly dropped to a level of about 3,500 and then bounced off to more than 4,000.
in October 2002 NASDAQ Bottomed at 1 1110 points. Between March 2001 to October 2002, there were major losses and not so much profits, and all the echoes have become. Since then, Nasdaq has slowly begun to rebuild, although not almost to the extent he has done over the years.
bubble echoes je generally quite easy to see. It has a clear starting point just after a large loss on the market, followed by an end point where the loss will be almost the same as the Echo bubble profit, although it can be more or less. While Nasdaq provides a good example during the Dot-Com bubble, all other markets can also have post-bubble assemblies.