Tuesday, March 11, 2008

A Dollar's Worth of Wine, and Three Dollars' Worth of Bubbles

I had this New Yorker cartoon on my desk in 2002. I felt for that guy. Wait, I was that guy.

I totally missed out on the real estate bubble. Well, I bought a house in 2003, so I guess I played a bit role. Eric Janszen has a great article in Harper's about the dot com bubble and the real estate bubble. While I disagree with about half of what he says, that's a pretty good percentage for me, so I recommend reading it.

He makes a case that the next bubble is starting to inflate now. He also lays out the timing and size of the next bubble by looking at the characteristics of past bubbles. It's a bit simplistic, but it's fun reading. If he's right, then knowing what the next bubble is, investing in it now and selling anywhere near the future peak he has identified would be a nice way to get rich without needing to be a super-genius, a hard worker or anything other than a huge risk-taker (and, of course, somewhat wealthy already.)

So, what's the next bubble? He thinks alternative energy. That doesn't seem right to me: creating that type of company requires actual deep technical expertise-- unlike creating a dot com or buying a house--so I don't see how enough investable companies are created. Any other ideas?

All I know is, I'm going way short in 2013.


josh reich said...

Over here in the Netherlands, court proceedings are starting this week on the “biggest speculation fraud ever in the Netherlands”, according to a national newspaper that ran a big story about it today. Investors have lost tens of millions of euros in what turned out to be a big pyramid scheme.

Now for the ultimate irony. Any idea what these people were investing in? Tulip

Stolen from here

Jerry Neumann said...

I know, right? How could anyone in the Netherlands invest in Tulips, of all things. That would be like American VCs investing again in internet startups that have no discernible revenue model! Oh, wait.

pabz said...
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