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Right after a giant real estate bubble everyone thinks they know what bubbles are and can spot them. A bubble is defined by the existence of debt fueled poor in

Right after a giant real estate bubble everyone thinks they know what bubbles are and can spot them. A bubble is defined by the existence of debt fueled poor investments in the more capital intensive higher orders of production. The consumer good industries suffer side effects of bubbles and their eventual busts but I can't think of a bubble that was created in the consumer good industry. It's just not capital intensive enough for that. I don't see why people trying to start companies based on developing higher quality apps could ever be a bubble. If those companies don't end up serving consumers they'll go out of business which is not abnormal at all. It's part of life.

gaius 16y ago
Yes, don't expect any sort of financial sophistication from the peanut gallery. Just after Bernie Madoff, journos called everything they could think of a "Ponzi scheme". Bubble is just today's word for "doubleplus ungood".
nadam 16y ago
I define a bubble like this to myself: too much is invested into something compared to the revenue it will generate in the future. Now if we assume that 'developer time' is an investment from the developer, then we can discuss whether apps are a bubble or not. I don't know the answer, because I don't know the numbers. We should sum up all the revenues generated by apps and divide it by the sum of all develoment time invested into apps. If this number is very low then we may speak about some kind of bubble. If we assume that users will buy even less apps in the future, then we can speak about a bubble even more.
- ja27 16y ago
  For me, I know it's a bubble when everyone from my neighbors, mom, coworkers, etc. start talking about investing in it or when there are "reality" shows and late night infomercials about it. That's when it's time to get out.
  - tocomment 16y ago
    Yeah, I'm waiting for my family to start talking about buying gold so I can short it :-)
    - ja27 16y ago
      I worked with a guy that got into buying and selling Beanie Babies right as that "bubble" burst. At least he didn't take out a second mortgage just to buy them.
    - chadgeidel 16y ago
      You mean they are not? I thought gold is the perennial "hedge against economic downturn" and non-financial specialists treat it as such. I hear friends and family talk about gold whenever the economy is sour.
tocomment 16y ago
Wasn't there a dutch tulip bubble once? Also baseball cards were kind of a bubble in the 80s/90s, right?
- arethuza 16y ago
  Speculative bubbles have been happening fairly frequently for centuries: http://en.wikipedia.org/wiki/Tulip_mania http://en.wikipedia.org/wiki/Tulip_mania http://en.wikipedia.org/wiki/South_Sea_Company http://en.wikipedia.org/wiki/South_Sea_Company http://en.wikipedia.org/wiki/Railway_Mania http://en.wikipedia.org/wiki/Railway_Mania
mechanical_fish 16y ago
I don't think you can have a bubble in a commodity that cannot be traded. You can sell an app, but you can't trade it for more than you bought it for, because there is an infinite supply of copies of the app available for sale by the original vendor. The touchstone of a bubble is that even rational people, who know that (e.g.) there is no rational reason why a tulip bulb should be 1000x more expensive this year than last, nevertheless feel inclined to buy an expensive tulip bulb because tomorrow it will be even more irrationally expensive and they can sell it for a profit. The app situation is a mere boom. Which, as you say, is a garden-variety occurrence. Fields boom and bust all the time.
btilly 16y ago
The consumer good industries suffer side effects of bubbles and their eventual busts but I can't think of a bubble that was created in the consumer good industry. It's just not capital intensive enough for that. What about the dot com bubble?
joe_the_user 16y ago
Uh, It is true that bubbles generally involve capital investment rather than "investment" in consumer goods (with some exceptions like Bennie Babies and such). However, the article argues that "the app bubble" is akin to the earlier "dot-com bubble" - ie, that the bubble involves venture capital investment in startups selling apps ("Venture capital is flooding into the app economy in spite of the questionable ROI proposition"). I don't know if that's true but the "dot-com bust" seems to refute your argument that such a bubble is not possible.

gaius 16y ago

Yes, don't expect any sort of financial sophistication from the peanut gallery. Just after Bernie Madoff, journos called everything they could think of a "Ponzi scheme". Bubble is just today's word for "doubleplus ungood".

nadam 16y ago

I define a bubble like this to myself: too much is invested into something compared to the revenue it will generate in the future. Now if we assume that 'developer time' is an investment from the developer, then we can discuss whether apps are a bubble or not. I don't know the answer, because I don't know the numbers. We should sum up all the revenues generated by apps and divide it by the sum of all develoment time invested into apps. If this number is very low then we may speak about some kind of bubble. If we assume that users will buy even less apps in the future, then we can speak about a bubble even more.

ja27 16y ago
For me, I know it's a bubble when everyone from my neighbors, mom, coworkers, etc. start talking about investing in it or when there are "reality" shows and late night infomercials about it. That's when it's time to get out.
- tocomment 16y ago
  Yeah, I'm waiting for my family to start talking about buying gold so I can short it :-)
  - ja27 16y ago
    I worked with a guy that got into buying and selling Beanie Babies right as that "bubble" burst. At least he didn't take out a second mortgage just to buy them.
  - chadgeidel 16y ago
    You mean they are not? I thought gold is the perennial "hedge against economic downturn" and non-financial specialists treat it as such. I hear friends and family talk about gold whenever the economy is sour.

tocomment 16y ago

Wasn't there a dutch tulip bubble once? Also baseball cards were kind of a bubble in the 80s/90s, right?

arethuza 16y ago
Speculative bubbles have been happening fairly frequently for centuries: http://en.wikipedia.org/wiki/Tulip_mania http://en.wikipedia.org/wiki/Tulip_mania http://en.wikipedia.org/wiki/South_Sea_Company http://en.wikipedia.org/wiki/South_Sea_Company http://en.wikipedia.org/wiki/Railway_Mania http://en.wikipedia.org/wiki/Railway_Mania

mechanical_fish 16y ago

I don't think you can have a bubble in a commodity that cannot be traded. You can sell an app, but you can't trade it for more than you bought it for, because there is an infinite supply of copies of the app available for sale by the original vendor. The touchstone of a bubble is that even rational people, who know that (e.g.) there is no rational reason why a tulip bulb should be 1000x more expensive this year than last, nevertheless feel inclined to buy an expensive tulip bulb because tomorrow it will be even more irrationally expensive and they can sell it for a profit. The app situation is a mere boom. Which, as you say, is a garden-variety occurrence. Fields boom and bust all the time.

btilly 16y ago

The consumer good industries suffer side effects of bubbles and their eventual busts but I can't think of a bubble that was created in the consumer good industry. It's just not capital intensive enough for that. What about the dot com bubble?

joe_the_user 16y ago

Uh, It is true that bubbles generally involve capital investment rather than "investment" in consumer goods (with some exceptions like Bennie Babies and such). However, the article argues that "the app bubble" is akin to the earlier "dot-com bubble" - ie, that the bubble involves venture capital investment in startups selling apps ("Venture capital is flooding into the app economy in spite of the questionable ROI proposition"). I don't know if that's true but the "dot-com bust" seems to refute your argument that such a bubble is not possible.