Bubble Spotting Omnibus 2014

LOTS OF EXAMPLES

30 “EASY STEPS” TO SPOT A BUBBLE
*WARNING: CONTAINS MEMES

Everything* (well, almost) you wanted to know about bubbles, but were too
afraid to ask – stylishly combined in a single nifty presentation.

*Obviously one presentation cannot cover everything

Cover page art: Minions –”Despicable me” © Universal Pictures – (wallpaper)

NO, NOT
THAT KIND
OF BUBBLE
(well ok …maybe kind off
slightly similar …)

ctdblog.northwestern.edu

WHY SHOULD YOU CARE?
BECAUSE YOU PROBABLY
DON’T WANT THIS TO
HAPPEN TO YOU …
flickr - danielmoyle

AND MAYBE NOT THIS …
eideard.com – art by Banksy (graffiti artist)

DEFINITION OF 'BUBBLE'

“A surge in (equity) prices, often more than
warranted by the fundamentals and usually in a
particular sector, followed by a drastic drop in
prices as a massive sell-off occurs.”
Investopedia.com
pixabay.com - adriana7_9

AND ANOTHER
DEFINITION OF 'BUBBLE'

“Speculative or market bubbles occur when
prices rise far higher than can be justified by
fundamentals and for no other reason than that
investors believe that something bought today
can be sold at a higher price in the future.
Bubbles can occur in any tradeable item or
instrument, from tech stocks to tulips.”
Reuters.com
pixabay.com - adriana7_9

FEATURES:
• Chats to your friends when you
don’t want to
• Jabbertalky™ battery – charges
itself each time you talk
• Me-gination ™ (32 patents
pending) - codes and sells THE
apps YOU DREAM ABOUT
• NETIZEN © reports your
neighbours for not paying tax –
free airtime reward !
• Solves unemployment and brings
about world peace
Terms and conditions apply:
• Max 1 X unit per customer
• Accessories and world peace-beta
sold separately
The-Window-Phone-Concept www.shutupandtakemymoney.org

beatlemania culturexchange1.wordpress.com

CONSUMERS START RE-SELLING
P
R
I
C
E

H
Y
P
E

0
TIME

PRICE GOES UP,
HYPE INCREASES

SUPPLY CHAIN
PROBLEMS…

photoblog.nbcnews.com

unitenews.wordpress.com

www.sail3oceans.wordpress.com

reuters

P
R
I
C
E

H
Y
P
E

0
TIME

DUE TO SCARCITY AND DEMAND,
THE PRICE GOES UP, AND UP

onedirectionland2.blogspot.com

P
R
I
C
E

H
Y
P
E

0
TIME

…UP, AND UP, AND UP …

ANOTHER NEW

EXCITING
PRODUCT LAUNCHES,
RENDERING THIS
PRODUCT

P
R
I
C
E

H
Y
P
E

0
TIME

PRICE PLUNGES
THROUGH THE FLOOR

THOSE WHO THOUGHT
THAT PRICES WILL KEEP ON
RISING, AND INVESTED
WHEN PRICES ACTUALLY
PEAKED, ARE NOW
PRACTICALLY GIVING AWAY
THE PHONE FOR FREE JUST
TO GET LITTLE MONEY BACK
(ASSUMING SHORT SELLING IS NOT POSSIBLE)

www.kamagrashop.uk.com

IF YOU THINK MY EXAMPLE WAS A BIT
OTT OR UNREALISTIC …

NOW IMAGINE THE NEXT DAY AFTER
YOU BOUGHT THAT PHONE ON
EBAY….

FLAPPY BIRD
COMES BACK !

e.g. Bought Flappy Phone here

P
R
I
C
E

H
Y
P
E

0
TIME

THAT WAS A
SIMPLIFIED & MOSTLY
FICTIONAL EXAMPLE
NOW LET’S LOOK AT …

Wing-Chi Poon Wikicommons.com

YOU ARE PROBABLY
WONDERING WHAT CAN YOU
POSSIBLY CAN LEARN FROM THE
PAST …. IT’S HISTORY !?

www.unsplash.com

The following section deals specifically with major historical bubbles. Each separate
bubble is available as a separate presentation, and has been hyper-linked to this
presentation. It is highly recommended to read each of these quick summaries.

On previous page the orange frame
denotes independent hyperlinked
presentations:
- Viewing on Mobile – clicking the
hyperlink will connect you to the
next presentation
- Viewing on PC – clicking on the
hyperlink should open a new
window

Click on title below to visit this presentation

Flickr - The shifted librarian


WIKICOMMONS. -Petar Milošević


wtf.thebizzare.com


www.dailyfresher.com

THROUGH THE YEARS THERE HAVE BEEN
MANY OTHER BUBBLES - IF YOU WANT,
ALSO LOOK INTO :
• THE SOUTH SEA BUBBLE (1711-1720)
• THE MISSISSIPPI BUBBLE (1716-1720)
• THE FLORIDA PROPERTY BUBBLE OF THE
1920S
• KUWAIT’S SOUK AL-MANAKH STOCK
BUBBLE & CRASH 1982
• STOCK MARKET CRASH OF 1987
• JAPAN’S BUBBLE ECONOMY OF THE
1980S
Unsplash.com

BUBBLES CAN HAPPEN WITH
ALMOST ANY COMMODITY, IN
ALMOST ANY MARKET*, ALL
OVER THE WORLD, WHEN THE
CONDITIONS ARE CONDUCIVE.
* MORE LIKELY IN ACTIVELY TRADED MARKETS

.
graphics.ucsd.edu~iman Soap_bubbles_RGB

SUPPLY &
DEMAND

Markets are affected by
VARIOUS FACTORS e.g. supply
and demand, which can
change over time.
Scarcity, as well as supply
vs, demand (and many other
factors) can have a direct
impact on the price.

FEAR &
GREED

When sellers or buyers get
GREEDY or become SCARED,
they may behave differently
from their normal behaviour.
This behaviour can have a
SIGNIFICANT and sometimes
UNEXPECTED impact on the
markets, and on prices.

http://www.4shared.com

Deviantart - krizeii

BUBBLES CAN BE
VERY COMPLEX

There may be many cocontributing factors leading
to the build-up or blow-off
phase of a market bubble.
These factors may behave
either directly or indirectly
proportional, independently
or lag one another.

E.g. the initial low interest rates (which contributed to an increase in demand), may
already have increased significantly, however the net effect is that demand has not
yet cooled down and is still increasing.

http://physicsworld.com/cws/article/news/2013/may/10/getting-to-the-bottom-of-foamy-physics

COMPLEX
(Cont.)

Due to the potentially
complex nature and
interrelationships of many
variables, market bubbles do
not necessarily end with a
single “pop” or “big bang”
event.

Contributing factors may peak and “pop” independently, and not all necessarily
have an equal effect. Using the analogy of a complex bubble rising in the air
(similar to picture indicated above), once a sufficient number of the independent
(but connected) bubbles cease to exist or reduce in size, the complex bubble as a
whole will lose momentum, and will begin to drop, ultimately ceasing to exist.

A TICKING
TIME BOMB

It is theoretically possible to
prevent or slow down a
bubble, or maybe even turn
market conditions around
back to normal.
But the process is complex
and difficult.
Too much or too little of the
right or wrong thing, at the
wrong time, invariably leads
to unintended consequences.

BUBBLES CAN
BE TOXIC

As can be seen from the
Asian Debt Crisis and Subprime Crisis, even though
bubbles are first observed in
one product (or market), the
possibility exists that

CONTAGION can spread
to other products or
markets.
(due to complex underlying financial transactions or the
instruments involved and their interrelationships).

like this presentation
so far ?

Tweet a friend.

DURING THE
BUILD UP AND BLOW OFF PHASE
OF A BUBBLE,
MANY OF THE FOLLOWING
(BUT NOT NECESSARILY ALL),
MAY BE OCCUR

STAGES OF A BUBBLE

economist.com

THE S QU NCE MIGHT DIFFER SLIGHTLY
THAN INDICATED HERE, HOWEVER
MORE OR LESS ALL OF THE FOLLOWING
HAPPENS

THE UNDERLYING
BUSINESS IDEA(S) COULD BE A
SOLUTION / APP / CONCEPT FOR:

__________________
E.g. this could be a solution / app for
a) taking notes,
b) Booking taxis,
c) Alternative currency,
d) Or ….
flickr -nhuisman

2
DEBT
IS PLENTIFUL AND CREDIT
EASILY ATTAINABLE
MONEY FLOWS LIKE WATER

oldgregg.net/bob/halloween2009/themound.jpg

3

THE CONCEPT MAY HOWEVER BE A BIT

COMPLEX AND CANNOT BE
FULLY EXPLAINED OR
EASILY UNDERSTOOD.

IF IT CONTAINS A NEW FINANCIAL DERIVATIVE,
BE EXTRA CAREFUL

http://www.usagold.com/op-ed/cartoons.html

4

INVESTOR
EXCITEMENT
BUILDS

AND EVERYBODY WANTS TO

JUMP ON THE BAND
WAGON,
MANY WITH EXCESS LEVERAGE
www.myconfinedspace.com/2010/07/18/overloaded-train/overloaded-train-2/

5

PRICE STARTS TAKING OFF

LIKE A ROCKET…

WELL ABOVE RECENT MARKET
AVERAGES AND SIGNIFICANTLY ABOVE
RETURNS, WHICH FUEL EXPECTATIONS
OF EVEN HIGHER PRICE INCREASES.

VOLUME STARTS SPIKING TOO
commoditiesman.files.wordpress.com

6

CENTRAL BANKS, REGULATORY
AGENCIES OR SIMILAR ROLE PLAYERS
MAY EXPERIENCE DIFFICULTY IN
COMING TO TERMS WITH THIS SUDDEN

NEW MARKET PHENOMENON
(OR WARN AGAINST IT, OR CHOOSE TO
IGNORE IT)

bitcoinexaminer.org/18-awesome-bitcoin-memes/

7
6

EXPERTS AND POSSIBLY EVEN
ACADEMICS
PROUDLY ANNOUNCE THE

NEW PARADIGM
AND JUSTIFY ANOMALIES WITH

therealsingapore.com

NEW ERA THEORIES

8

OLD SCHOOL VALUATION
METHODS ARE

THROWN OUT OF THE WINDOW
IN FAVOUR OF MORE RADICAL AND UNTESTED

“NEW ECONOMY”
VALUATION APPROACHES

9

MEDIA HYPE BUILDS EXCITEMENT
IN THE MARKET

10

SOME
MARKET PLAYERS MAY SEE

EXCITING NEW
OPPORTUNITIES

myblessedwestlife.files.wordpress.com

1

CLONES

OR REASONABLE COPIES MAY
APPEAR, OFFERING BASICALLY THE
SAME VALUE PROPOSITION,
HOPING TO

CASH IN ON THE TREND

onlyhdwallpapers.com the matrix agent smith

1

NOBODY WANTS TO BE LEFT BEHIND

(FOMO*)
NOVICE INVESTORS ARE SUCKED IN BY THE
PROMISE OF EASY MONEY

INVESTORS START TAKING ON MORE RISK
THAN THEY OTHERWISE WOULD
*FEAR OF MISSING OUT

1
GREED AND OVERLY POSITIVE
MARKET SENTIMENT
PUSHES THE MARKET WAY BEYOND THE
FUNDAMENTALS INTO UNCHARTERED AND
RISKY TERRITORY
Looney Tunes

1

TRADITIONALLY CAUTIOUS
AND CONSERVATIVE FUND

MANAGERS START THROWING

CAUTION TO THE WIND

dilbert.com © Scott Adams

1

INVESTORS AND
MARKET PARTICIPANTS
LIVE THE HIGH LIFE

http://www.fandango.com

EXCITED BY ALL THE HYPE, EVERYBODY
AND HIS DOG START INVESTING

THE ROOKIE INVESTORS LOVE TO
SHARE THEIR HOT TIPS ON WHERE TO
INVEST FOR A QUICK PROFIT

1

CENTRAL BANKS MAY GO
THROUGH VARIOUS ROUNDS OF

CREDIT TIGHTENING IN ORDER TO
CURB SPENDING AND LENDING

2

GOVERNMENTS MAY
ATTEMPT TO
IMPLEMENT

ADDITIONAL
INDUSTRY
REGULATIONS AT
THIS LATE STAGE.
THIS MAY HAVE

UNINTENDED
CONSEQUENCES.
Far-Side – © Gary Larson

1

THE MARKET STALLS, EVERYBODY
HOLDS ON TO THEIR RICHES.

NOBODY WANTS TO BUY

BECAUSE THEY DON’T THINK THE
PRICE WILL INCREASE FURTHER.

2

BUT THEN THE

UNTHINKABLE
HAPPENS…

3

VOLUME INCREASES
AND

PRICES START
DROPPING
looney tunes

4

DESPERATE SELLERS MAY AT FIRST
TRY TO CONTAIN LOSSES

Jerry Maguire (1996) TriStar Pictures

INVESTORS SOON DO ANYTHING TO

5

GET RID OFF SHARES

LOSSES ARE
SUBSTANTIAL

6

AND GROWING BY THE DAY –
THE AVERAGE INVESTOR LOSES HIS …

Deviant art Propaganda_Panda

COMMISSIONS OF ENQUIRY
ARE LAUNCHED TO DETERMINE POSSIBLE
CAUSES OF THE CRASH.

7

ON OPENING THE CAN, THEY MIGHT

FIND ALL
KINDS OF
WORMS.
deviantart.- in-tays-head

NON-DISCLOSURES, CONFLICTS OF
INTEREST, INSUFFICIENT REGULATORY
OVERSIGHT, VIOLATIONS OF
ACCOUNTING POLICY, AND POSSIBLY
EVEN WORSE

www.addletters.com

8

SOME MAY FEEL STRONG URGES OF
SPONTANEOUS CREATIVITY

SOMEBODY
HAS TO TAKE THE BLAME

lgsquirrel.files.wordpress.com

9

SCEPTICS AND DISSENTERS FIND THEIR VOICE
AGAIN AND SPEAK OUT

MOSTLY TO SAY

“TOLD YOU SO”

LIFE SLOWLY
RETURNS TO NORMAL.
MEANWHILE
SOMEWHERE …

NEW DEVELOPMENTS
SPIKE PUBLIC INTEREST

AND SPIKE SOME MORE

www.businessofbitcoin.com
Meme- reddit.com

Contact details: benjaminv.za@gmail.com
This presentation is provided in the sake of public interest and for broad consumer educational
non-profit purposes, and has been compiled based on publically available information sources on
the web.
While great care has been taken in the preparation and compilation of information indicated here,
the author does not accept any legal or other liability for any inaccuracy, mistake, misstatement or
any other error of whatsoever nature contained herein.
This presentation is not investment advice, not a solicitation for any type of investment, financial
or otherwise, nor is this presentation an opinion expressed on, nor endorsement of markets,
commodities or investments.
Any names, trademarks and images are copyright their respective owners and rights in the
graphic artwork and photos used in this presentation belongs to, and are courtesy of the
respective owners thereof. Unless where otherwise indicated, I don’t claim to have any rights
therein.

The following section contains a list of information sources and suggested reading material.

Tulip Bubble:
http://www.investopedia.com/features/crashes/
crashes2.asp
http://www.economist.com/blogs/freeexchange/
2013/10/economic-history
http://www.thebubblebubble.com/tulip-mania/
http://www.damninteresting.com/the-dutch-tulipbubble-of-1637/
http://www.thetulipomania.com/
http://en.wikipedia.org/wiki/Tulip_mania

Railway Bubble
http://www.thebubblebubble.com/1929-crash/
http://www.investopedia.com/terms/s/stockmarket-crash-1929.asp
http://www.reuters.com/article/2008/01/21/usmarket-crashes-idUSL2126592320080121
http://www3.nd.edu/~jstiver/FIN462/US%20Mar
ket%20Crashes.pdf
http://en.wikipedia.org/wiki/Wall_Street_Crash_o
f_1929

1929 Wall Street Crash
http://globaltrehttp://en.wikipedia.org/wiki/Wall
_Street_Crash_of_1929
http://www.thebubblebubble.com/1929-crash/
http://www.investopedia.com/terms/s/stockmarket-crash-1929.asp
http://www3.nd.edu/~jstiver/FIN462/US%20Mar
ket%20Crashes.pdf
http://www.wallstreetsurvivor.com/blog/2013/0
6/28/fridays-not-so-fun-fact-the-1929-stockmarket-crash/
http://www.reuters.com/article/2008/01/21/usmarket-crashes-idUSL2126592320080121

http://globaltrendtraders.com/stock-marketcrash/learning-from-the-stock-market-crash-of1929/

Asia Debt and Currency Crisis
http://www.ifg.org/khor.html
http://www.tradingeconomics.com
http://internationalinvest.about.com/od/gettingst
arted/a/What-Was-The-Asian-Financial-Crisis.htm
http://www.wright.edu/~tdung/asiancrisishill.htm
http://www.fes.de/ipg/ipg2_98/debschulmeister.
html
http://en.wikipedia.org/wiki/1997_Asian_financial
_crisis
http://pendientedemigracion.ucm.es/info/eid/pb
/ICEIwp10.pdf
http://www.uv.es/~mperezs/intpoleco/Lecturco
mp/Geoeconomia%20y%20Globalizacion/Asian%
20crisis%20de%20King.pdf

http://www.imf.org/external/np/pp/eng/2012/0
31312.pdf
http://www.ucm.es/info/icei/asia/Bustweb1.htm
HTtp://www.newyorkfed.org/research/economist
s/pesenti/whatjapwor.pdf
http://www.twnside.org.sg/title/fire-cn.htm
https://www.mtholyoke.edu/courses/sgabriel/ile
ne_grabel.htm
http://www.imf.org/external/np/seminars/eng/
2006/cpem/pdf/kihwan.pdf

Dot.com bubble
http://www.thebubblebubble.com/dot-combubble/
http://www.investopedia.com/terms/d/dotcombubble.asp
http://www.moneycrashers.com/dot-combubble-burst/
http://www.businessinsider.com/heres-why-thedot-com-bubble-began-and-why-it-popped-2010-12
http://www.scaruffi.com/politics/sv.html
http://www.cnet.com/1990-11136_1-62783871.html

http://www.imf.org/external/np/seminars/eng/
2012/fincrises/pdf/ch12.pdf
http://thenextweb.com/entrepreneur/2011/10/2
7/17-dot-com-failures-and-their-moderncounterparts/#!qzNFE
http://en.wikipedia.org/wiki/Dot-com_bubble

Also See
Irrational Exuberance - Robert Shiller
Extraordinary Delusions and the Popular
Madness of Crowds - Charles Mackay

Sub-prime crisis / housing bubble
http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf
http://www.milkeninstitute.org/pdf/riseandfallexcerpt.pdf
http://www.oecd.org/finance/financial-markets/40451721.pdf
http://www.slideshare.net/robinthieu/subprime-mortgage-crisis2008-presentation-646026
http://www.slideshare.net/amarranu/sl-vs-subprime-final
http://money.cnn.com/news/storysupplement/economy/bailouttr
acker/
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZc
hK__XUF84
http://en.wikipedia.org/wiki/Subprime_mortgage_crisis
http://www.nytimes.com/interactive/2009/02/04/business/200
90205-bailout-totals-graphic.html?_r=0
http://www.conservapedia.com/Financial_Crisis_of_2008
http://online.wsj.com/news/articles/SB1000142412788732405970
4578473310943230002
http://money.cnn.com/news/storysupplement/economy/bailouttr
acker/
http://www.investopedia.com/articles/07/housing_bubble.asp

http://economistsview.typepad.com/economistsview/2009
/07/what-caused-the-housing-bubble.html
The Journal of Business Inquiry
http://www.uvu.edu/woodbury/jbi/volume8/journals/Sum
maryofthePrimaryCauseoftheHousingBubble.pdf
http://online.wsj.com/news/articles/SB12381122571645324
3
http://www.frbsf.org/education/publications/doctorecon/2002/january/federal-funds-discount-rate-2001
http://www.imf.org/external/np/seminars/eng/2012/finc
rises/pdf/ch12.pdf
http://www.ritholtz.com/blog/2011/12/bailout-total-29616-trillion-dollars/
http://www.conservapedia.com/Financial_Crisis_of_2008
http://topinfopost.com/2013/12/18/700-billion-bankbailout-was-a-lie-it-was-secretly-7-trillion

30 Criteria
Condensed and adjusted from Sources of the various
aforementioned sections, in addition to the following:
http://www.solerinvestments.com/Online-Trading/Stock-MarketCrash.html
http://pages.stern.nyu.edu/~%20adamodar/New_Home_Page/inv
fables/bubbles.htm
http://sandyyadav.com/2013/11/18/stock-market-bubbles-laws/
http://www.alsosprachanalyst.com/markets/five-criteria-toidentify-asset-bubbles.html
http://www.forbes.com/2009/04/26/market-panic-vinesmarkets-equities-asia.html
http://www.investopedia.com/financial-edge/1209/5-ways-tospot-the-next-stock-bubble---and-avoid-it.aspx
http://sabew.org/2009/08/how-to-spot-the-next-investmentbubble-2/
http://en.wikipedia.org/wiki/Economic_bubble

flickr Kalexanderson

Bubble Spotting Omnibus 2014

Recommended

Recommended

More Related Content

Viewers also liked

Viewers also liked (8)

Similar to Bubble Spotting Omnibus 2014

Similar to Bubble Spotting Omnibus 2014 (6)

Recently uploaded

Recently uploaded (20)

Bubble Spotting Omnibus 2014