What makes a market go mad? Why do rational people pay absurd prices for things they know are overvalued — and why does it keep happening century after century?

A speculative bubble follows the same pattern every time. Something new and scarce appears. Early buyers win. Everyone notices. Fear of missing out takes over. Price detaches from value. Then someone stops buying — and everyone stops at once.

This short explainer breaks down exactly how speculative bubbles form, why they're almost impossible to see from the inside, and why understanding them might be the most useful thing you ever learn about money.

Part of the History Illustrated financial history series. Pairs perfectly with Tulip Mania — history's first and most famous speculative bubble.