Editing Economic bubble (section)

====Extrapolation====
{{quote box|width=300px|quote= The term "bubble" should indicate a price that no reasonable future outcome can justify.|source=[[Clifford Asness]]<ref>{{cite web |author=Righoltz, Barry |date=6 December 2013 |title=How do you define a bubble?|url=https://www.bloomberg.com/view/articles/2013-12-06/how-do-you-define-a-bubble-and-are-we-in-one-now-|access-date= 11 November 2016|publisher=[[Bloomberg L.P.|Bloomberg]]}}</ref>}}
[[Extrapolation]] is projecting historical data into the future on the same basis; if prices have risen at a certain rate in the past, they will continue to rise at that rate forever. The argument is that investors tend to extrapolate past extraordinary returns on investment of certain assets into the future, causing them to overbid those risky assets in order to attempt to continue to capture those same rates of return.

Overbidding on certain assets will at some point result in uneconomic rates of return for investors; only then the asset price deflation will begin.  When investors feel that they are no longer well compensated for holding those risky assets, they will start to demand higher rates of return on their investments.