Stock market bubbles and the causes behind them have been a heavily discussed topic among economists. This study is aimed to capture the characteristics of bubbles based on previous academic literature applied on periods of acknowledged bubbles. In particular, the three bubbles that will be analysed: Dot-com period, Subprime mortgage crisis and the market boom during COVID-19. The test parameters that will be tested on each individual bubble are the Cyclical Adjusted Price Earnings- ratio (CAPE), real interest rates in relation to economic growth and credit spreads. The CAPE-ratio will be tested using descriptive statistics and time series to find threshold periods of overvaluation during each individual bubble and to compare to the historical period. Real interest rate and economic growth will be tested to see if economic growth has been greater than real interest rate in the build- up of bubbles which aligns with the rational bubble theory. Credit spreads will be analysed to see if any conclusion can be made on whether investors opinions on the market changes during times of uncertainty. The study will also present the test parameters from an historical context to compare with the individual bubbles to gain further insights on the topic.

In conclusion, bubbles can differ in their characteristics but can still be identified by some common traits. In many cases, overvaluation, economic conditions and investors' market expectations lay the foundation for stock market bubbles.