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The Beanie Baby Bubble of '99

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Re: The Beanie Baby Bubble of '99

#31

Post by adam_arthur »

thatfrenchguy wrote: post #26
adam_arthur wrote: post #22

Earlier quoted context omitted.

Oh, bubbles can surely happen even in the era of widespread information. Look no further than housing. A few points on housing: - real home prices have now surpassed the 2000s peak - household formation and population growth has been decelerating, while building has been accelerating. - there are 1.1 homes per household, same as the year 2000. We are not at historically low supply as some claim. Only low in terms of…

> while building has been accelerating massively Nope, we have a decade of underproduction that led us to this crisis

Households to number of homes built is exactly the same as it was in year 2000. You can compute it yourself using FRED data.

1.1 homes per household (or vice versa).

People who count from 2010 are cherrypicking the underbuilding decade while ignoring the overbuilding decade, 2000s.

There is no "shortage" of homes, there's a shortage of homes listed currently.

Re: The Beanie Baby Bubble of '99

#32

Post by marvin »

adam_arthur wrote: post #22
pushcx wrote: post #9

There's a great history of this, The Great Beanie Baby Bubble: Mass Delusion and the Dark Side of Cute by Zac Bissonnette. It's a quick read, almost entirely original reporting. Aside from the colorful characters, it's really compelling to see the way some individuals' and limited information combined with mass media fell together to create the bubble. It seems like it couldn't have happened at any other time because…

Oh, bubbles can surely happen even in the era of widespread information. Look no further than housing. A few points on housing: - real home prices have now surpassed the 2000s peak - household formation and population growth has been decelerating, while building has been accelerating. - there are 1.1 homes per household, same as the year 2000. We are not at historically low supply as some claim. Only low in terms of…

What is your argument on mortgate rates? That lenders will be unwilling to lend out at (still low) central bank rates due to inflation? I don't follow the reasoning.

Re: The Beanie Baby Bubble of '99

#33

Post by Cd00d »

I still have a visceral reaction to seeing Beanie Baby's actually be played with. I had young cousins that were into "collecting" them in the 90s, and remember part of it was keeping the tags and not playing with them.

Now I have young kids that immediately yank the tags and carry them to school. I have nieces that have outgrown their's and have passed them down to the family dog as a chew toy. Both give me a moment of 'aaah aaah!' before I can make my rational brain remember they're just a $5 stuffy that once had a bubble.

Re: The Beanie Baby Bubble of '99

#34

Post by adam_arthur »

Cd00d wrote: post #29
adam_arthur wrote: post #22

Earlier quoted context omitted.

Oh, bubbles can surely happen even in the era of widespread information. Look no further than housing. A few points on housing: - real home prices have now surpassed the 2000s peak - household formation and population growth has been decelerating, while building has been accelerating. - there are 1.1 homes per household, same as the year 2000. We are not at historically low supply as some claim. Only low in terms of…

Sorry, I think I'm not following. I think you're saying that housing prices are too high. Then you're saying that if inflation continues housing prices will drop? I totally get that most home sales are based on the monthly mortgage bill, so when interest rates are high, house prices are lower. But, if we have 7% inflation why wouldn't rates increase AND prices increase? I don' think the outcome is obvious when high i…

It's a common misnomer.

Inflation is good for assets once those assets have been valued using an inflation appropriate discount rate. Housing rate now is priced based on a 2% discount rate, not 7%.

After the asset is priced appropriately for the current discount rate, then inflation is good for valuations.

Median wages drive home prices in the long run. It's possible home prices can be sustained if we see median wage rapidly gain over the next few years. Gasoline going up and driving CPI inflation doesn't make housing more affordable. Only increase in incomes/buying power.

Example: the 10y treasury was recently at 1%. If you bought that as an inflation hedge you would have lost a lot of money. Once people realize inflation is here to stay, they won't accept lower rates of returns.

Now it yields 2%, and soon likely 3%. Holding cash is better than holding a treasury during the repricing phase. Same logic applies for other assets.

Real home prices were super low in the 70s relative to today. Also wage inflation was very strong. I believe wages doubled over the decade. That alone implies a 2x gain in prices ignoring changes in discount rates. Not the same at all.

Re: The Beanie Baby Bubble of '99

#35

Post by ceejayoz »

paulpauper wrote: post #5
janmo wrote: post #3

Many parallels with what is going on with NFTs right now.

except 1000x bigger. ppl are spending hundreds of thousands of dollars like it's nothing.

They're mostly probably not.

https://www.nbcnews.com/tech/security/nft-sales-show-evidenc...

Re: The Beanie Baby Bubble of '99

#36

Post by carpintech »

jpm_sd wrote: post #7
jdkee wrote: post #2

Relevant portion of the article: "According to economists David Tuckett and Richard Taffler, we often view a hot new financial opportunity as a “phantastic object,” or an unconscious representation of something that fulfills our wildest desires. These objects are “exciting and transformational.” They appear to “break the usual rules of life and turn aspects of ‘normal’ reality on its head.” They promise something far…

I think the most relevant portion of the article is: "There was one person who emerged handsomely from the Beanie Baby bubble: Ty Warner. Aside from getting caught secretly hoarding $107m of his Beanie Baby riches in an offshore Swiss bank account, Warner has kept a low profile over the years — but he’s quietly amassed a fortune the size of Djibouti’s GDP. Today, the 73-year-old Beanie Baby inventor touts an estimate…

Also: https://www.independent.com/2022/02/08/beanie-babies-billion...

Re: The Beanie Baby Bubble of '99

#37

Post by brimble »

thatfrenchguy wrote: post #26
adam_arthur wrote: post #22

Earlier quoted context omitted.

Oh, bubbles can surely happen even in the era of widespread information. Look no further than housing. A few points on housing: - real home prices have now surpassed the 2000s peak - household formation and population growth has been decelerating, while building has been accelerating. - there are 1.1 homes per household, same as the year 2000. We are not at historically low supply as some claim. Only low in terms of…

> while building has been accelerating massively Nope, we have a decade of underproduction that led us to this crisis

Builders have been working as fast as they can (and sometimes faster than they should) around here non-stop since maybe 2011 or 2012, and it's not enough. Tons of new neighborhoods, probably half the apartment buildings I know of were put up in the last ten years, and so on, but house prices and rent are nuts and still increasing faster than inflation anyway.

We're at the end of what sure looks like about a decade-long housing construction boom, in my city, which is not trendy or growing very fast, and prices have done nothing but go up at 2-5x the rate of CPI the entire time. It's possible the under-supply was so bad that all the construction still isn't enough to catch up, but then why did prices not start higher than they did? I find it hard to believe that this city's gained new residents faster than it's gained new housing. Something else is going on.

Re: The Beanie Baby Bubble of '99

#39

Post by adam_arthur »

brightstep wrote: post #27
adam_arthur wrote: post #22

Earlier quoted context omitted.

Oh, bubbles can surely happen even in the era of widespread information. Look no further than housing. A few points on housing: - real home prices have now surpassed the 2000s peak - household formation and population growth has been decelerating, while building has been accelerating. - there are 1.1 homes per household, same as the year 2000. We are not at historically low supply as some claim. Only low in terms of…

As someone who just sold their home and is currently renting while waiting for a correction, I definitely want this to be true. Why are you confident those factors, absent a rate intervention, will produce a correction?

If inflation persists rising mortgage rates will push affordability to record lows. We're already close

If inflation abates quickly, then current prices can maintain and become the new normal.

The rate shock will price out pretty much every primary buyer. Investors will stop buying and even sell if they fear it's a peak.

On top of this, huge amount of backlogged supply is about to come into market in a big way in southern cities. The majority of the building is concentrated there. I would be very worried about Phoenix for example

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