The Next Bubble?

[Githyanki]

In the mid to late-90s, there was the tech-bubble; in the mid-00s there was the mortgage-bubble. What's the next bubble?


In the summer of 2000, when I was in college, I took that summer off; I had the money (from pell-grants and didn't need to work). It was my first summer off since I was a freshmen in High School (when you had summers off). I often regret not going down to the mall that summer and getting a job. But now, if I could go back, I'd work in the mortgage industry and make as much money as possible, saving most of it for when the bubble pops.

Since my life goals don't involve a mortgage or children, I don't need to make steady income.

Any thoughts on what next, "Booming" industry will be?

[SeanF]

The next bubble to begin, or the next one to pop? Higher education might be the next to go.

[Extravoice]

I suspect so-called "green energy" will experience a bubble.

BTW: I knew the tech bubble was about to burst when the kid selling ceiling fans at Home Depot tried to give me unsolicited tech investment advice. I knew the housing bubble was about to burst when my neighbor, who has been a house painter for as long as I've known him, repainted his truck to say "XYZ Building Management" instead of "XYZ Painting."

[novaderrik]

right now, oil is looking to be a big bubble that will burst eventually.
again.

[Romanus]

Re Extravoice:
That reminds me of the story relating how Joseph Kennedy supposedly got out of the stock market before the Crash when a shoe-shine boy gave him stock tips...

[novaderrik]

i don't think Joseph Kennedy needed a shoe shine boy to tell him what was going to happen in the stock market.

[HenrikOlsen]

Everybody knows what'll happen in a bubble, it'll bust, what people don't know is when.
The point of the story is that getting advice from the shoeshine boy told him it was bursting Now!

[Kaptain K]

i don't think Joseph Kennedy needed a shoe shine boy to tell him what was going to happen in the stock market.

I think you missed the point!

When shoeshine boys are giviing market advice, it's time to bail!

[Chuck]

Maybe it will be gold. I should spend all of my money buying it just to test out this theory.

[Ara Pacis]

As the saying goes, "When the going gets weird, the weird turn pro."

[Ara Pacis]

After reading the library thread in small media at large, I realized that the next bubble may be, or has long been, government. This isn't political or partisan. I'm just suggesting that when people start looking at government as us v. them and start replacing entities that are putatively of, for and by the people with grassroots entities that are of, for and by the people to perform the same function, then you have a bubble.

[kamaz]

In the mid to late-90s, there was the tech-bubble; in the mid-00s there was the mortgage-bubble. What's the next bubble?


1. "Green" tech

2. Food. China is getting richer and buying up everything in sight, while climate change is taking toll on producer countries.

[Extravoice]

I think you missed the point!

When shoeshine boys are giviing market advice, it's time to bail!

Or the young sales clerk at Home Depot.

ETA: Hey! I just took a good look at my avitar!

[Inclusa]

I decide not to predict, but look closely at any developments.

[John Jaksich]

Social Networking

[Extravoice]

Social Networking

On a related note, my 24-year-old daughter recently closed her facebook account.

[Strange]

Tulips.

[MAPNUT]

The next bubble to begin, or the next one to pop? Higher education might be the next to go.

I really like this idea. The costs (at least for private colleges) have been increasing much faster than inflation for many years, and many people are coming to understand that there are other ways to prepare for life.

I think food is more likely to be a reverse bubble; prices have been held artificially low for many years by subsidies.

[rommel543]

In Canada it's the real estate, prices here have been steadily increasing over the last 5 years and people that have owned any more that 5 years are doubling or tripling what they originally paid. In 2000 we bought our house for $60,000 and were told by the bank that we over paid (1100 sqft story and a half). We replaced all the windows and doors; new furnace, hot water tank and installed central air; gutted and re-insulated; put a new metal roof on; upgraded the electrical to 200 amp service; re-did the hardwood floors. In spring of 2009 we sold the house for $159,000. Even with all the upgrades and reno's we came out ahead. There are houses currently on the market that sold for 150-200,000 5-6 years ago that are now selling for 350-450,000 with nothing done to them. They were expecting a downturn to the prices last year and it didn't happen. There were still may houses that were getting bidding wars happening with 20-30 offers coming in on the due date. There was a report in the local newspaper that one particular house had 70+ offers and sold for over 400,000 (although the exact amount wasn't given), 80,000 over asking. Looking at the pictures of the house, our current house is bigger, in better shape, in a nicer neighborhood, with a nicer yard, and we only paid 220,000.

[Trebuchet]

I'm surprised that the real estate market in Canada is still like that. In the US, it collapsed at the end of 2008. I could really use a replay of the real estate bubble right now to get rid of the three houses we need to dispose of. One is my mother-in-law's, she lives with us now, one is my late parents' place, and the third is the one I'm sitting in now.

[rommel543]

Winnipeg generally follows behind by a couple of years, although usually is more stable with less highs and lows than the bigger market places. Not just in real estate but everything else as well. Not including the weather that is.

[mutineer]

Treasury Bonds are currently the biggest bubble, inflated by Quantitative Easing and the puny Federal Discount Rate.
Thing is, this has been obvious for a long time ... but you never know when the bubble will actually burst.

[jfribrg]

I don't see any bubble at the moment. I see problems with various players screwing things up by trying to corner some market or other. I also see problems from political and economic instability in various parts of the world, but that is different than a bubble where huge numbers of people irrationally ignore huge risks in expectation of unrealistic profits. With the stock market bubble in the mid-70's, the junk bond bubble in the 80's (they were euphemistically called high yield debt securities, but they really were just junk), the .com bubble in the late 90's and the real estate bubble, people were getting in who had no understanding of just how risky things were. There were all these young day traders and real estate flippers who were gambling everything they had (and plenty of other people's money as well) without any consideration that they may ever lose any of their money. After the past three years, almost everyone who still has investable funds understands that there really is no such thing as a free lunch. Once this passes, we need a decade or so to pass before you get a whole new generation of yuppies who did not experience the previous bubble. They will make the same mistake but not realize it because supposedly things will have changed in some fundamental way.

On the other hand, at some point someone will suggest that we tax municipal bond interest and remove the state tax deduction. The reality is that muni's are a way of transferring the tax burden from the states to the federal government. Every dozen years or so, someone suggests that we eliminate the tax free status of munis as a way of reducing the federal deficit. It has been over 20 years since someone made this suggestion so we are overdue. The muni market invariably tanks when this happens. For better or for worse, this may come to pass in the next few years. When it does, a lot of bond portfolios will be hurting and states will have higher borrowing costs to add to their already tight budgets. That is why I have never had any money in muni's.

[KaiYeves]

Soap.

Or maybe gum.

;)

[Strange]

There is a really cool new investment opportunity in something called the South Sea Company...

[HenrikOlsen]

The US Dollar. When it bursts everyone will be hurting.

[Tostig]

Everybody knows what'll happen in a bubble, it'll bust, what people don't know is when.

They're are all kinds of things that "everybody knows," and some of them are even true.


The point of the story is that getting advice from the shoeshine boy told him it was bursting Now!


The US Dollar. When it bursts everyone will be hurting.

Nobody ever thinks they're the shoeshine boy.

Predictions without any kind of time frame are useless. I predict the US dollar will collapse, maybe it will be tomorrow, or maybe it will be 500 years from now, and maybe most other current major currencies will have collapsed first. I predict there will be a big stock market crash (pick your favourite stock market). Maybe it will be tomorrow, maybe it will be many years from now, and maybe after it crashes, it will still be at a level five times higher than it is now. But when it does, I will have predicted it.

I've heard predictions about the collapse of the US dollar practically every day since the 1970s. I'm sure if we wait long enough, it will happen.

[Ronald Brak]

The US Dollar. When it bursts everyone will be hurting.

US assets already look pretty cheap. Australians are already buying up a lot of US stuff. Not that a puny little nation like Australia can make much difference, but we're competing with Chinese and other investors, so I don't think the US dollar will fall too much further. Especially considering the lack of inflation in the US compared to China/Oz.

[Extravoice]

Nobody ever thinks they're the shoeshine boy.

:whistle:

[Ara Pacis]

Nobody ever thinks they're the shoeshine boy.After thinking about it a bit, I bet the shoe-shine boys tend to hear a lot of conversations between people who get their shoes shined...

[Delvo]

In the USA, the next one will be real estate. People talk as if that were already over, but there are two catches with that. One is that what's happened so far has only been in home loans, and loans for small business properties have some of the same issues. The other is that the home loan situation still never really got straightened out. Prices went down, but not very far compared to how excessive they were at the peak, and the main response to the situation so far has been to try to stall the results (and keep propping up the prices artificially) by coming up with ways to let borrowers who aren't paying get away with it without being foreclosed on anyway, which only hits the "pause" button on the bubble's popping mid-pop, instead of actually preventing or ending it.

[Atraveller]

What if the next bubble is China?

Demand in China is one of the prime drivers of the world economy right now.

Analysis from Canadian Business Magazine (March 14 2011)


China is engaged in an elaborate shell game to hide a mountain of bad debts piling up on the balance sheets of its banks, developers and state–owned enterprises.


The Middle Kingdom's prosperity is an illusion. And when China finally falls, we'll all feel the pain.

By Jason Kirby full article: China's coming colapse (http://www.canadianbusiness.com/managing/strategy/article.jsp?content=20110314_10024_10024&utm_source=_BNdVMoB8Zgt1M3&utm_content=mwnl1&utm_medium=email&page=1)

[Extravoice]

There may be something to the idea that College Tuition may be the next bubble to burst. The company that handles my retirement investments sends me a quarterly magazine that currently includes article an about inflation.

As a side-bar, it contained a comparison between 1950 and 2010 for average income and costs of a few things. Here is how much they increased (I assume these are US averages, but look-up their footnotes) :

Family Income: +16x
Automobile cost: +20x
House cost: +25x
College tuition: +59x