What is the difference between a financial bubble and financial contagion?

What is the difference between a financial bubble and financial contagion Introduction: The Intricacies of Financial Markets Hello, everyone! Welcome to our video on the intriguing world of finance. Today, we'll be exploring the differences between two concepts that often make headlines: financial bubbles and financial contagions. While both involve the financial realm, they have unique characteristics and implications. So, let's dive in! Defining Financial Bubbles: When Exuberance Takes Over A financial bubble refers to a situation where the prices of certain assets, such as stocks or real estate, become significantly detached from their intrinsic values. In simpler terms, it's when the market value of an asset greatly exceeds its actual worth. This deviation is often fueled by investor enthusiasm, leading to a 'bubble' that keeps expanding. The key element here is the disconnect between price and value. Causes of Financial Bubbles: From Irrational Exuberance to Herd Mentality Several factors can contribute to the formation of a financial bubble. One common catalyst is investor sentiment.