Echo Bubble

DEFINITION of 'Echo Bubble'

A post-bubble rally that becomes another, smaller bubble. The echo bubble usually occurs in the sector in which the preceding bubble was most prominent, but the echo is less dramatic.

BREAKING DOWN 'Echo Bubble'

People point to the rally that occurred after the market crash of 1929 as an example of an echo bubble. Just like its more prominent predecessor, the smaller echo bubble eventually burst. Also, after the technology bubble that occurred at the turn of the 21st century - one of the biggest bubbles of all time - people believed that another echo bubble was on the way.

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RELATED FAQS
  1. What is an echo bubble?

    To understand the term "echo bubble", you have to understand what a bubble is. A financial or economic bubble occurs when ... Read Answer >>
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    A financial "bubble" refers to a situation where there is a relatively high level of trading activity on a particular asset ... Read Answer >>
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