Speculative markets

Cases of markets that seem to operate almost completely independent of objective value have occurred many times in economic history, particularly in connection with innovations in technology or finance. Examples range from tulip bulbs in the mid-1630s to railroads in the mid-1800s to internet businesses in the late 1990s. (Note however that in any particular case it can be claimed that certain speculation was rational, even if it did not work out—but usually it is difficult to get convincing evidence for this, and often effects are obscured by generalized money supply or bankruptcy issues.)