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In my experience, bubbles are made from greed not ignorance. In 2007-8 there was a lot of acknowledgment of the real estate bubble but there was always somebod

In my experience, bubbles are made from greed not ignorance. In 2007-8 there was a lot of acknowledgment of the real estate bubble but there was always somebody to say well real estate isn’t really a national market so it won’t all pop at once. Ha. Similarly everybody knew it was a bubble in 1999. That’s why you had companies rushing to ipo like lemmings off a cliff. Personally I don’t think we are in a bubble right now and all the early bubble callers (since 2013 or so) have no credibility left.

TheAdamAndChe 6y ago
In my opinion, we are in a bubble now. In stocks, P/E ratios are extremely high, and many companies are IPOing, many more than two years ago. All asset pricing is going through the roof, and money is chasing money. Speculative assets have become trendy again with cryptocurrencies, ARK, and memes like dogecoin. We're all flush with cash and either terrified of inflation or riding a euphoria of asset inflation.
- lotsofpulp 6y ago
  > either terrified of inflation or riding a euphoria of asset inflation. Why not both? At this point, the biggest risk I see is a materials shortage that the Fed can’t fix by adding zeros in a database. Such as gas prices spiking, or food shortages, or some other critical infrastructure failing.
  - Supermancho 6y ago
    The lumber shortage is forcing homes to be built largely with pressed wood. Ironically this makes home building even more expensive, as pressed wood prices have skyrocketed... passing traditional lumber because of availability issues.
- fumar 6y ago
  What do you do to prepare for a crash? I follow the asset and commodity price increases. But, I can't see the next logical step. Save more money that is worth less over time? Are we on a train towards hyperinflation that can't be stopped?
  - deleted 6y ago
    [deleted]
  - nicbou 6y ago
    Traditional advice is to park your money in goods with intrinsic value. I believe that the common examples are housing and gold.
- strgcmc 6y ago
  On the point about IPOs, this would seem to back up the idea that, a boom in IPOs has correlated with recessions and crashes soon after, in the past ~20 years: https://www.statista.com/statistics/270290/number-of-ipos-in-the-us-since-1999/ https://www.statista.com/statistics/270290/number-of-ipos-in... A drop in IPOs seems like a lagging indicator (they will drop off after the economy has cooled off), but it's not clear to me if a boom in IPOs is a leading indicator or not.
JackPoach 6y ago
Greed needs rationalization too.
jdsully 6y ago
Ignorance was a theme of many past bubbles. In the 20's it was the common man not understanding stocks. In the 80s it was "Savings and Loans are just banks, they're safe!". '08 it was "They wouldn't give me a mortgage if it wasn't a good decision". In all bubbles you see a few shrewd hawks and millions of lemmings - that's where all the money comes from. In this scenario its, "There's nowhere else to put my money", but not having a better alternative doesn't necessarily make it a good investment.
vladimirralev 6y ago
It's not greed. The chair of the Fed sat on national television and said they flooded the system with cash and will not stop until everybody gets it while ignoring any stretched valuations or inflation signals. All bubbles are policy decisions by the Fed to spark risk-taking and optimism, guided by the "less than honest" intermediaries on Wall St.
robotron 6y ago
There is a lot of greed driving home sales right now. Every homeowner I know has at least considered making bank in this market. The only thing stopping them is they'll then need to buy a home cheaper and further out or lose that profit.
Cd00d 6y ago
Completely off-topic, but I was just watching a YouTube video about lemmings with my 6 yo to answer some questions she was asking. Lemmings to not commit suicide from cliffs, en masse. This is a myth that came about from a staged incident in a Disney documentary about the arctic wilderness. It's completely made up. Was an interesting 5 or so minutes: https://www.youtube.com/watch?v=2fHYNMvcAhc https://www.youtube.com/watch?v=2fHYNMvcAhc
- smithza 6y ago
  Myth notwithstanding, lemmings are the proverbial manifestation of "following your friend off a cliff". Disney did this brilliantly. Here is a fun podcast on it: https://99percentinvisible.org/episode/sounds-natural/ https://99percentinvisible.org/episode/sounds-natural/

TheAdamAndChe 6y ago

In my opinion, we are in a bubble now. In stocks, P/E ratios are extremely high, and many companies are IPOing, many more than two years ago. All asset pricing is going through the roof, and money is chasing money. Speculative assets have become trendy again with cryptocurrencies, ARK, and memes like dogecoin. We're all flush with cash and either terrified of inflation or riding a euphoria of asset inflation.

lotsofpulp 6y ago
> either terrified of inflation or riding a euphoria of asset inflation. Why not both? At this point, the biggest risk I see is a materials shortage that the Fed can’t fix by adding zeros in a database. Such as gas prices spiking, or food shortages, or some other critical infrastructure failing.
- Supermancho 6y ago
  The lumber shortage is forcing homes to be built largely with pressed wood. Ironically this makes home building even more expensive, as pressed wood prices have skyrocketed... passing traditional lumber because of availability issues.
fumar 6y ago
What do you do to prepare for a crash? I follow the asset and commodity price increases. But, I can't see the next logical step. Save more money that is worth less over time? Are we on a train towards hyperinflation that can't be stopped?
- deleted 6y ago
  [deleted]
- nicbou 6y ago
  Traditional advice is to park your money in goods with intrinsic value. I believe that the common examples are housing and gold.
strgcmc 6y ago
On the point about IPOs, this would seem to back up the idea that, a boom in IPOs has correlated with recessions and crashes soon after, in the past ~20 years: https://www.statista.com/statistics/270290/number-of-ipos-in-the-us-since-1999/ https://www.statista.com/statistics/270290/number-of-ipos-in... A drop in IPOs seems like a lagging indicator (they will drop off after the economy has cooled off), but it's not clear to me if a boom in IPOs is a leading indicator or not.

JackPoach 6y ago

Greed needs rationalization too.

jdsully 6y ago

Ignorance was a theme of many past bubbles. In the 20's it was the common man not understanding stocks. In the 80s it was "Savings and Loans are just banks, they're safe!". '08 it was "They wouldn't give me a mortgage if it wasn't a good decision". In all bubbles you see a few shrewd hawks and millions of lemmings - that's where all the money comes from. In this scenario its, "There's nowhere else to put my money", but not having a better alternative doesn't necessarily make it a good investment.

vladimirralev 6y ago

It's not greed. The chair of the Fed sat on national television and said they flooded the system with cash and will not stop until everybody gets it while ignoring any stretched valuations or inflation signals. All bubbles are policy decisions by the Fed to spark risk-taking and optimism, guided by the "less than honest" intermediaries on Wall St.

robotron 6y ago

There is a lot of greed driving home sales right now. Every homeowner I know has at least considered making bank in this market. The only thing stopping them is they'll then need to buy a home cheaper and further out or lose that profit.

Cd00d 6y ago

Completely off-topic, but I was just watching a YouTube video about lemmings with my 6 yo to answer some questions she was asking. Lemmings to not commit suicide from cliffs, en masse. This is a myth that came about from a staged incident in a Disney documentary about the arctic wilderness. It's completely made up. Was an interesting 5 or so minutes: https://www.youtube.com/watch?v=2fHYNMvcAhc https://www.youtube.com/watch?v=2fHYNMvcAhc

smithza 6y ago
Myth notwithstanding, lemmings are the proverbial manifestation of "following your friend off a cliff". Disney did this brilliantly. Here is a fun podcast on it: https://99percentinvisible.org/episode/sounds-natural/ https://99percentinvisible.org/episode/sounds-natural/