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I thought one of the characteristics of a bubble -- almost a pre-requisite -- was for the money of the general public to be flowing in. If things like this poe

by roc 14y ago

I thought one of the characteristics of a bubble -- almost a pre-requisite -- was for the money of the general public to be flowing in. If things like this poetry IPO idea haven't happened and garnered piles of cash from unwitting investors throwing money into a market they don't understand in a herd mentality ... how exactly is it a sign of anything other than a goofy idea?

jcfrei 14y ago
a bubble in the sense of the dotcom bubble doesnt require the involvment of the public at all - it's simply an overvaluation of companies. as mentioned before, bubbles may be limited to very small sectors (eg. social media) and don't need to take down whole economies (like the housing bubble did) once they pop.
- roc 14y ago
  But it's a chronic or widespread overvaluation of something, right? I guess I just don't see how professional investors could be snowed on a grand scale. Even if there is a bit of a trend in, say, social media - that doesn't mean an incubator is going to be taken in by a nonsense pitch, does it? I would think you would need a lot more money from less educated or indirect sources to start passing off unquestionably weak companies, due the heat of the sector. (e.g. people trusting their long term money to money-managers with conflicting short-term incentives who are willing to gamble on known-bad goods on the assumption that they can find a bigger idiot to sell to before the music stops. Which essentially describes the entirety of the IPO and CDO nonsense in the last two bubbles.)
jonhendry 14y ago
"I thought one of the characteristics of a bubble -- almost a pre-requisite -- was for the money of the general public to be flowing in." The recent US "JOBS" bill included "Loosening regulations on small businesses that wish to raise capital, including through crowdfunding, while retaining investor protections." aimed at getting more of the general public's money flowing into early-stage ventures. Given its timing, it likely hasn't played a role in the bubble to date, but it's clear that those behind that language in the bill want to inflate a bubble.

by roc 14y ago

jcfrei 14y ago

a bubble in the sense of the dotcom bubble doesnt require the involvment of the public at all - it's simply an overvaluation of companies. as mentioned before, bubbles may be limited to very small sectors (eg. social media) and don't need to take down whole economies (like the housing bubble did) once they pop.

roc 14y ago
But it's a chronic or widespread overvaluation of something, right? I guess I just don't see how professional investors could be snowed on a grand scale. Even if there is a bit of a trend in, say, social media - that doesn't mean an incubator is going to be taken in by a nonsense pitch, does it? I would think you would need a lot more money from less educated or indirect sources to start passing off unquestionably weak companies, due the heat of the sector. (e.g. people trusting their long term money to money-managers with conflicting short-term incentives who are willing to gamble on known-bad goods on the assumption that they can find a bigger idiot to sell to before the music stops. Which essentially describes the entirety of the IPO and CDO nonsense in the last two bubbles.)

jonhendry 14y ago

"I thought one of the characteristics of a bubble -- almost a pre-requisite -- was for the money of the general public to be flowing in." The recent US "JOBS" bill included "Loosening regulations on small businesses that wish to raise capital, including through crowdfunding, while retaining investor protections." aimed at getting more of the general public's money flowing into early-stage ventures. Given its timing, it likely hasn't played a role in the bubble to date, but it's clear that those behind that language in the bill want to inflate a bubble.