Forecasting on the Collapse of Rational Speculative Bubble in Hang Seng, Nikkei 225 and S&P 500 in 2018

Rational speculative bubble is a situation where the price of an asset exceeds its fundamental value. The burst of the rational speculative bubble may cause a negative impact towards the economy. If the bubble burst in the country which act as the world’s main economy, it will cause a big impact, and this will also affect the developing countries. Currently, there are no specific way to prevent this bubble from occurring but if the existence is known, several measures can be taken, so that, the impact can be minimized. This study aims to shows the size of the rational speculative bubble in the world’s main economy in four cycle. Also, the prediction on the size and the time of the bubbles burst of the fifth cycle will be discuss.