[siralonso]

There are plenty of different definitions of the word "bubble" out there, but most of them relate in some way to asset prices coming untethered from fundamentals. For example, here's Schiller's from 2015:

> A situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, in the process amplifying stories that might justify the price increases and bringing in a larger and larger class of investors, who, despite doubts about the real value of an investment, are drawn to it partly through envy of others’ successes and partly through a gambler’s excitement.

You can find more academic definitions, but this one seems pretty spot-on when you hold it up next to the famous manias throughout history. Price increases drive further price increases, because the draw of future price increases is strong and the concept of "overpaying" for an asset ceases to exist.

The author, on the other hand, attempts to define a bubble as:

> ... an objectively irrational shared belief in a better potential future

While it's true that innovation/invention (and sure yes marriage too!) do require optimism and some degree of irrationality, it's a far cry from the "animal spirits" that cause investors to abandon any notion of a fair price in favor of momentum.

Sure, in some way bubble-era investors "believe in a better potential future", but it usually seems to be a future of further price increases, and any narrative required to support those prices becomes thinner as the price rises. This can be a lot of fun! However, it is neither sustainable nor a clear net positive.

One of the reasons that (certain!) bubbles are so damaging is that the least sophisticated investors with the most to lose get pulled in last. A series of investors are holding the assets through the entire post-bubble price decline - someone "cashing out" at the peak means that someone else is "buying in". It's a little uncomfortable to claim the following benefit to the 2008 financial crisis:

> It created more housing inventory, and since the new houses were quite standardized, that made it great training data for “iBuying” algorithms

On the other hand, some bubbles do create useful infrastructure - the Dotcom bubble laid a lot of fiber (mentioned in the article), and the railway mania of the 1840s laid a lot of track - although the latter was pretty "inefficient" due to high construction costs, parallel routes, and etc.

I'm not really sure what the author is trying to justify here. Bubbles are what they are, we basically know how they work, and we appear to be living in one today! They'd probably be getting a lot less push-back if they avoided trying to re-define the word "bubble".