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The Beanie Baby Bubble of '99

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Re: The Beanie Baby Bubble of '99

#91

Post by pcthrowaway »

a_shovel wrote: post #63

This leads to a pretty interesting comparison between plain cryptocurrencies and NFTs. Cryptocurrencies are beanie babies: Once available for a trifle, their value has ballooned based on speculation. But that already happened, you missed out on it, and it has no bearing on their future prospects. And if a bunch of people ever feel the need to cash out at once, they'll find out just how much value they really have whe…

To play devil's advocate, this is a thing that could have said various times in the past 12 years as each previous peak look like "the bubble that you missed out on".

Also, financial instruments work differently from physical assets; if you have conviction that the peak has already happened ("the bubble happened, and there won't be another one"), you can take a bet against the price by shorting.

Of course, this leads to very different kinds of market dynamics which aren't directly comparable to the beanie baby bubble. Too much pressure on the short or (with leverage) long side can lead to liquidation cascades which result in very dramatic price movement. On the short side this would look like a short squeeze as a large fund can buy a bunch of the crypto to liquidate shorts, then sell it after the market moves at a profit.

Re: The Beanie Baby Bubble of '99

#92

Post by yumraj »

pcthrowaway wrote: post #91
a_shovel wrote: post #63

This leads to a pretty interesting comparison between plain cryptocurrencies and NFTs. Cryptocurrencies are beanie babies: Once available for a trifle, their value has ballooned based on speculation. But that already happened, you missed out on it, and it has no bearing on their future prospects. And if a bunch of people ever feel the need to cash out at once, they'll find out just how much value they really have whe…

To play devil's advocate, this is a thing that could have said various times in the past 12 years as each previous peak look like "the bubble that you missed out on". Also, financial instruments work differently from physical assets; if you have conviction that the peak has already happened ("the bubble happened, and there won't be another one"), you can take a bet against the price by shorting. Of course, this leads…

> you can take a bet against the price by shorting.

John Maynard Keynes said, “the markets can remain irrational longer than you can remain solvent.”

Re: The Beanie Baby Bubble of '99

#93

Post by nonford150 »

If only we had gone all in on Beanie Babies. We cleared $20K+ selling BBs on the side of the road that year. I wanted to spend our whole savings and hire people to sell them for us - we were buying them out the back doors of Hallmark stores. Wife didn't. But we still made enough to put down a sizable down payment on our current house.

It was a crazy time. Crazy people fighting each other for cheap stuffed animals.

Re: The Beanie Baby Bubble of '99

#94

Post by lowercased »

toomuchtodo wrote: post #89
lowercased wrote: post #67

Earlier quoted context omitted.

I did some tech consulting and dev work for them around the peak of the craze. I never met Ty personally, but was in their office multiple times. One Christmas (98?) everyone got a bonus of their salary, IIRC. The money was just... pouring in at that point. I'm sure it's died down since then, but the stories were... nuts.

I think we worked at the same place? Office in the suburbs moved to downtown near the train station, foozball table in the kitchen and green carpets? Coldfusion app running on Solaris gear.

I seem to remember the office I visited was in Rosemont...?

Re: The Beanie Baby Bubble of '99

#95

Post by toomuchtodo »

lowercased wrote: post #94
toomuchtodo wrote: post #89

Earlier quoted context omitted.

I think we worked at the same place? Office in the suburbs moved to downtown near the train station, foozball table in the kitchen and green carpets? Coldfusion app running on Solaris gear.

I seem to remember the office I visited was in Rosemont...?

Rolling Meadows perhaps? I think the Ty craze was wrapping up when the dev shop moved downtown (right before the dot com bust).

Re: The Beanie Baby Bubble of '99

#96

Post by pandaman »

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…

I don't see the data about 1.1 homes per household in your links. What is accounted as a "home" whenever you are taking this number from? Given that the rate of home ownership is about 65% it is probably counting rentals, unless an average household owns 1.7 houses.

On the other hand, https://fred.stlouisfed.org/series/COMPU1USA shows that the number of SFHs completed in 2021 finally reached levels of 1994, when population had been 100M less than now. I might be just too dumb to see where there are enough houses.

Re: The Beanie Baby Bubble of '99

#97

Post by ytjohn »

a_shovel wrote: post #63

This leads to a pretty interesting comparison between plain cryptocurrencies and NFTs. Cryptocurrencies are beanie babies: Once available for a trifle, their value has ballooned based on speculation. But that already happened, you missed out on it, and it has no bearing on their future prospects. And if a bunch of people ever feel the need to cash out at once, they'll find out just how much value they really have whe…

With Beanie Babies, you actually own something. You might not be able to sell it for what you paid, but you still have something to display or give away. With NFT, you own a URL to an image, but you're relying on the NFT marketplace to maintain that. You're not buying the artwork itself, but some token related to the artwork.

I think a better comparison for NFTs is a star registry. You pay a company to name a star after you (or someone else as a gift). That company will provide a star locator chart and publish a book each year with all the star names they registered that year. You don't own the star, but you do own an certificate saying the star is named after you. Unlike an NFT though, you can't transfer the star registration to someone else.

Re: The Beanie Baby Bubble of '99

#98

Post by UncleOxidant »

adam_arthur wrote: post #90
lowercased wrote: post #87

Earlier quoted context omitted.

I vaguely remember knowing that we had a mortgage rate of ... 16% when I was a kid (we moved in 1982). But ... it was a direct note with the previous owner, and when rates fell, they wouldn't refinance at a lower rate. And it was hard to get a bank to lend because we were relatively close to the edge already, financially (it's been.. 35+ years - I'm getting some second hand stories through family). When I first bough…

It is crazy how much rates have fallen. But the historical average for mortgage rates has been around 5-7%. The 70s in particular had very bad inflation that was pretty abnormal relative to history. Also important to note that rate only matters in the context of price. Rates by themselves don't provide you much info. e.g. 0% on 10 million is still expensive, just as 1000% rate on 1 dollar is pretty cheap

We'll find out in a couple of quarters or so if this inflation is "sticky" or just a temporary result of the pandemic. My feeling is that it's mostly the latter, but it's important to note that there were already inflationary trends in play prior to the pandemic - the push to return more manufacturing to the US and the resulting trade wars, for example, were going to lead to some inflation. If this inflation proves to be "sticky" like the 70s/early 80's inflation then we're likely to see some relatively high mortgage rates for a bit. Probably not as high as they were in the early 80s, though.

Re: The Beanie Baby Bubble of '99

#99

Post by pessimizer »

hsbauauvhabzb wrote: post #44

I’m not a crypto evangelist or anything, but what about alternatives like Pokémon cards which seem to have increased in value over the same period. There’s currently a pump and dump on retro video games but I don’t think the same supply issues exist in Pokémon cards, but I’m not actively monitoring either market.

The difference is whether the market is ultimately driven by people who want to own things or who want to flip things. It's not black and white, but I bet it's wonderful. They can afford everything they want.

A market of flippers (like Beanie Babies) has to terminate at bagholders. While you can also lose your shirt in a collectors' market, it's because they're driven by the tastes and disposable income of those top-level collectors. They tend to shift from area to area based on particular books, articles, or even influential threads on message boards, and those markets move as a whole with wealth inequality and against interest rates, like fine art.

Re: The Beanie Baby Bubble of '99

#100

Post by adam_arthur »

pandaman wrote: post #96
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…

I don't see the data about 1.1 homes per household in your links. What is accounted as a "home" whenever you are taking this number from? Given that the rate of home ownership is about 65% it is probably counting rentals, unless an average household owns 1.7 houses. On the other hand, https://fred.stlouisfed.org/series/COMPU1USA shows that the number of SFHs completed in 2021 finally reached levels of 1994, when popu…

Total Households: https://fred.stlouisfed.org/series/TTLHH

Total Housing Units: https://fred.stlouisfed.org/series/ETOTALUSQ176N

Divide one by the other to get housing units per household. You can see ratio in 2020 is roughly the same as 2000.

You have to consider multifamily construction too (which can include SFH-like duplexes, or full apartment buildings). Housing is fungible to a certain extent. If rents fall, that will reduce demand for purchasing and vice versa.

Completions is a backwards looking metric. Look at pipeline, not completions to predict forward trajectory. Housing in pipeline now matches the 2000s peak, and looks to surpass the 70s peak within a few months

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