Over the (Very) Long Run, Stock Bubbles Are Rare

Yale University

William Goetzmann

Article

5 Pages

Yale Insights looks at whether rapid industry booms usually spill into broader market crashes. Using market history from 1792 to 2024, the article suggests true full market bubbles are rare, even when fast growing sectors trigger understandable anxiety.

Key Takeaways

Bubbles Are Rare: Researchers found just 10 total market bubble episodes across more than 200 years, using a definition requiring gains to fully reverse.
Long History Helps: The study extends earlier research from 1926 back to 1792, adding more than 130 years of market history to test prior findings.
Booms Bring Volatility: Industry booms were more likely to see additional gains than crashes, but large runups also made both gains and losses more likely.
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