What to do when a bubble crisis breaks out?

“Bubble Crisis” may be a word many people are familiar with when watching the news about the economy or investment. The bubble crisis has a lot of effect on investors. This time, ACU PAY will introduce a bubble crisis, how it affects our lives, and how to cope.

What is a Bubble Crisis?

The “Bubble Crisis” is when the price of investment assets has risen above the actual price or inflation has become unreasonable. Typically, this is caused by investors trying to speculate on assets until they are saturated and explode. Investment prices plunge rapidly and suddenly which is like a bubble that is pushed high up till it bursts and leaves only emptiness.

Example of Bubble Crisis

Dot Com Crisis

This was one of the most devastating events in world history. Back in the mid-1990s, when the use of computers and the Internet was on the rise, the U.S. stock market ran wild from buying shares of Internet companies and related technologies, which initially paid off investors as expected.

However, as the day went by, new investors with no basic knowledge began to invest in the current trend, causing stock prices to soar, especially those that ended up as dot com(.com) Eventually, a bubble burst, also known as the Dot-com Bubble, caused the stock market to fall from the peak of 78 % and many tech companies to go bankrupt.

How to cope with the bubble crisis for the general public

Revise your investment objectives every time before investing
When we see that the bubble crisis is about to happen, we will understand what the purpose of this asset investment is.
Do not invest in something you do not know about it
Avoid investing in what you have heard or what you don’t know, especially if the beginning of this investment comes from listening to other people because you believe it will have a fast and high return. This is a sign that we are causing the bubble crisis to happen.
If it is needed to be invested, gradually invest in the assets
Limit the proportion of investments to diversify the risks to more comfortable investments instead. If you analyze and find out that the investment assets do not meet your investment goal, you may quit investing in those assets at an early date.
Choose assets with low risk
For those who are interested in investing but are concerned about risks, it is recommended to invest in low-risk assets to prevent inflation that will reduce the value of money on your hands every year or wait for the market to recover and start investing in high-risk assets.
Reserved funds for emergency
The last thing that’s going to save you from this bubble crisis is having reserves of money for emergencies so that you can spend and move on with this bubble crisis.
This is the story of the bubble crisis, a term many novice investors might encounter. To get through the crisis safely, before investing in assets, you should study and plan your investment in the right way every time.