Class #2: The Nature of Asset Bubbles and How to Avoid Them (1.0 CE)


The second class explains the commonly observed phases of asset bubbles using multiple historical examples. The class begins by recounting the Mississippi Bubble, which formed in Paris from 1717-1720, and ends with the rise and collapse of cryptocurrencies and decentralized finance.

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The class also will explain the differences between two distinct types of bubbles. Type 1 bubbles involve speculation in which the financial system is a facilitator only (example: Dot-com bubble). Type 2 bubbles, which are much more dangerous, form when the financial system is both a facilitator and a participant (example: Global Financial Crisis
of 2008).


Key Learning Objectives

  1. How to Differentiate between Type 1 and Type 2 asset bubbles
  2. Understanding the six phases of asset bubbles
  3. Identifying common red flags that signal the onset of an asset bubble