It is established through the above discussion and review of the literature that the stock market bubbles are essentially formed when the opportunity for the investment profitability is recognised. The opportunity can be either based on new technologies or new markets and majority of the investors follow the initial investors in a herd like behaviour. The following investors make their investment without conducting their personal analysis on the stock and simply buy it on the basis of the rising cost. It is found that the rising prices of the stock provides with the motivation to the investors to keep buying the stock and other investors to capitalise on the growing prices. However, in the attempt to maximise the profits, the concern of the overvaluation is often ignored after identification by the investors.
Since the stock markets operate dynamically, they are related to the positive and negative feedback. Therefore, the accumulation of the investments creates a positive feedback loop and subjects the investments to the price volatility. Nevertheless, the self-adjustment or correction of the stock market takes place when the increment of the prices attracts the investors to sell the stocks and limits the investors to buy stocks at increased prices. The volatility is limited due to which when the positive feedback takes place in market, the state of disequilibrium is reached and the panic among the investors causes increased number of stocks to be sold. This economic value overvaluation causes the prices to reduce to the intrinsic value of the stock. This can be concluded for the stock market bubbles discussed in the paper.