Terms

Irrational exuberance refers to investor enthusiasm that drives asset prices up to levels that aren't supported by fundamentals. It is believed to be a problem because it gives rise to a bubble in asset prices. When the bubble bursts, investors engage in panic selling, sometimes selling their assets for less than they're worth. The panic can also spread to other asset classes, and can even cause a recession.

More About Irrational Exuberance