Alina Khay

Alina Khay

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Alina Khay
Alina Khay
Detecting Asset Price Bubbles

Detecting Asset Price Bubbles

Asset price bubbles have fascinated and troubled economists and investors for centuries.

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Alina Khay
Feb 27, 2025
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Alina Khay
Alina Khay
Detecting Asset Price Bubbles
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Asset price bubbles have fascinated and troubled economists and investors for centuries. The allure of rapid price increases, followed by devastating crashes, has shaped financial history time and again—from the Dutch Tulip Mania of the 1600s to the dot-com boom and the 2008 financial crisis.While the causes of these bubbles may vary, their impact on markets, people's lives, and economies is undeniable. Detecting bubbles, however, is notoriously difficult. Distinguishing genuine growth from speculative excess requires more than just observing price surges—it demands a deep understanding of market behavior, investor psychology, and rigorous quantitative methods. In this article, we explore the intricate challenge of identifying asset price bubbles, combining theoretical foundations with quantitative techniques such as strict local martingales and neural networks. These approaches help shed light on the subtle signals that can indicate when an asset price is detaching from its fundament…

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