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I don't think we're in a bubble for one very simple reason: people keep insisting we are in one. There's more to bubbles than overvaluation. There's a psycho

by j_baker 16y ago

I don't think we're in a bubble for one very simple reason: people keep insisting we are in one. There's more to bubbles than overvaluation. There's a psychological component to it that blinds people to that overvaluation. To me, the only way to effectively determine a bubble's existence is in hindsight. For instance, how many times did you hear anyone talking of a housing market bubble before it popped? Little to none. Right now, there's just too much talk of a tech bubble for there to actually be one. And it's not just on sites like HN. You see it in the MSM too: http://money.cnn.com/2010/12/20/technology/tech_startups_bubble/index.htm http://money.cnn.com/2010/12/20/technology/tech_startups_bub... http://www.foxnews.com/scitech/2011/02/10/twitter-tech-bubble-barometer/ http://www.foxnews.com/scitech/2011/02/10/twitter-tech-bubbl... http://dealbook.nytimes.com/2011/01/14/in-groupon-i-p-o-another-tech-bubble/ http://dealbook.nytimes.com/2011/01/14/in-groupon-i-p-o-anot... http://www.cnbc.com/id/37636070/Kaminsky_s_Call_Tech_Bubble_IPO_Trouble http://www.cnbc.com/id/37636070/Kaminsky_s_Call_Tech_Bubble_... Sorry, but I just don't see it happening just this moment. A year or two later might be a different story. But I don't see it happening now.

jwhite 16y ago
I agree about it only being clear in hindsight. Part of the problem is that many people who write about bubbles have a vested interest one way or another (not implying anything about the OP as I'm not familiar with the author). Real estate in Australia, where I live, is in a similar place right now. Lots of statistics show it is significantly overvalued; there are lots of counter-arguments why this level of house prices is "sustainable". "This time it's different," etc. Often the same statistics are used to support opposing conclusions by different authors. Unsurprisingly, most of the people who argue that housing prices are sustainable and Australia is not experiencing a real estate bubble also have an interest in selling houses. Arguably those on the other side have an interest in selling equities...
dereg 16y ago
There was actually concern about the housing prices for a while. There were also many guests on MSM TV shows who talked about the meteoric rise in housing prices. However, what you missed is the fact that the housing bubble lasted for a good decade or so. Bubbles aren't necessarily hidden and unknowable. The problem with bubbles is element of timing. People can spot an abnormal increase in asset prices, but predicting the timing of the reversal is impossible. After a while, some people thought that the housing price increase was a paradigm shift towards more housing (i.e. a natural phenomenon because the price increases were seemingly sustained.

by j_baker 16y ago

jwhite 16y ago

I agree about it only being clear in hindsight. Part of the problem is that many people who write about bubbles have a vested interest one way or another (not implying anything about the OP as I'm not familiar with the author). Real estate in Australia, where I live, is in a similar place right now. Lots of statistics show it is significantly overvalued; there are lots of counter-arguments why this level of house prices is "sustainable". "This time it's different," etc. Often the same statistics are used to support opposing conclusions by different authors. Unsurprisingly, most of the people who argue that housing prices are sustainable and Australia is not experiencing a real estate bubble also have an interest in selling houses. Arguably those on the other side have an interest in selling equities...

dereg 16y ago

There was actually concern about the housing prices for a while. There were also many guests on MSM TV shows who talked about the meteoric rise in housing prices. However, what you missed is the fact that the housing bubble lasted for a good decade or so. Bubbles aren't necessarily hidden and unknowable. The problem with bubbles is element of timing. People can spot an abnormal increase in asset prices, but predicting the timing of the reversal is impossible. After a while, some people thought that the housing price increase was a paradigm shift towards more housing (i.e. a natural phenomenon because the price increases were seemingly sustained.