#market-overvaluation

#market-overvaluation

If you want to stir up some frothy drama, ask an economist about bubbles. (SOUNDBITE OF ARCHIVED NPR CONTENT) EUGENE FAMA: The word bubble drives me nuts, frankly. GUO: That's Nobel Prize winner Eugene Fama talking to us on the Planet Money podcast back in 2013, when he issued a famous challenge to his fellow economists. Try and predict the next financial bubble. Robin Greenwood has been working on that challenge for years.

I watched it happen. On October 19, 1987, the Dow Jones Industrial Average tumbled 508 points, which was 22.6%. It fell from 2,246.74 at the open to 1,738.74 at the close on the day known as Black Monday. Such a drop would be just shy of 11,000 points today. The market was actually worse than that when taken over two days. The Dow had dropped almost 5% the Friday before. The anxiety over the weekend between the two was terrific.