Pinpointing the Rise and Fall of Bubbles

03-04-2026

Asset market bubbles can feel obvious in hindsight, but even after they burst, it is surprisingly hard to say exactly when they began and when they collapsed. Think about the dot-com boom, the U.S. housing crisis or today’s hype cycles in cryptocurrency and artificial intelligence — everyone sees the bubble after the fact, yet its true timeline often remains blurry.

Daniels School Professor of Economics Mohitosh Kejriwal and his coauthors set out to fix that. In recent research, they developed a more reliable way to pinpoint when bubble-like behavior starts and ends in asset prices, improving on traditional statistical tools that often misdate these turning points or respond with a long delay.

Actionable insights for executives and investors

• Distinguish sustained acceleration from normal growth: Supplement trend analysis of asset prices with tools that detect whether price growth has fundamentally shifted into an unstable phase, rather than simply extrapolating recent gains.
• Be wary of late signals: Recognize that widely used indicators often confirm bubbles with significant delay and incorporate stress scenarios that account for an abrupt market implosion.
• Conduct post-crisis reviews using precise timelines: When evaluating past industry cycles (energy, housing, crypto, AI), ensure that the sequence of events is reconstructed carefully before drawing strategic conclusions.

More accurate dating allows leaders to distinguish causes from consequences. Read more on Kejriwal’s findings to further explore the importance of getting the timeline of bubbles right.

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