Bursting the Bubble Tulips were the first, but they won’t be the last. What forms a “bubble” and what causes them to burst? Share | Have A Question About This Topic? Name Email Address Question Thank you! Oops! Related Contents What Smart Investors Know Smart investors take the time to separate emotion from fact. A Look at Diversification Diversification is an investment principle designed to manage risk, but it can't prevent against a loss. What Is My Risk Tolerance? This questionnaire will help determine your tolerance for investment risk.