👉 Background: If ya haven't heard of lithium since high school, it's a metal that has been making headlines lately. Why? It's a critical component in lithium-ion batteries - the kind used in most electronics, including electric vehicles.

👉 What happened: Thanks to high demand for EVs, lithium has made some massive share market gains over the years. But lithium stocks tanked 10% this week, wiping $7 billion bucks off their value.

👉 What else: The sell-off came after a new Bloomberg report said road transport's net-zero emissions goal is still VERY out of reach. And Goldman Sachs said the bull market for battery metals was over... So was lithium just living in its own asset bubble?

🔔 What's the key learning?

💡 An asset bubble occurs when the price of an asset (like lithium) rises at a rapid pace without the underlying fundamentals to keep it up. In other words, nothing is really justifying the price hike.

💡The price of lithium has been skyrocketing due to investors seeking exposure to the green energy transition. We're talkin' 432% increase year-on-year and 1350% since the start of 2020. Wild!

💡The report says investors may have piled in too quickly, without realising lithium might not be a perfect climate solution. But asset bubbles don't always burst completely, sometimes they deflate. Some say this is the deflation lithium needed to come back down to earth.