„THE-CASTLES-IN-THE AIR” INVESTMENT THEORY: AN EMPIRICAL STUDY

Abstract

The goal of this paper is to study empirically the Malkiel’s „castles in the air theory”. The research framework builds up on two hypotheses. The first one considers the Greenspan’s „irrational exuberance” as being the core driver behind boosted stock prices, which eventually results into a blown-off bubble. The other one views the bubble occurrence as a superimposition of several cyclical waves reaching their peaks (or possibly bottoms) simultaneously.