“Speculative Froth Cleared” describes a market condition where excessive, unsustainable speculative activity has been purged, typically through a significant price correction or downturn. This process removes overleveraged positions and less committed investors, leaving a more stable and potentially healthier market foundation. It indicates a reduction in irrational exuberance. This phrase suggests a market reset.
Context
News reports often refer to “speculative froth cleared” during or after bear markets, suggesting that the market has undergone a necessary cleansing. This phrase implies that assets are now trading closer to their fundamental value, setting the stage for more sustainable growth, although timing such events remains challenging. It is a common term used to explain market corrections.
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