Definition of a stock bubble
A bubble occurs in a stock when:
1. Implausible assumptions are applied to justify its present price using normal valuation (e.g. DCF) models.
2. There are people buying at these prices ignoring these implausible assumptions.
Based on this defintition, Tesla is a bubble while Apple and Microsoft are not at current prices.
A bubble occurs in a stock when:
1. Implausible assumptions are applied to justify its present price using normal valuation (e.g. DCF) models.
2. There are people buying at these prices ignoring these implausible assumptions.
Based on this defintition, Tesla is a bubble while Apple and Microsoft are not at current prices.
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