What will the next bubble be?

[Retire Soon]

During the past twelve years, we've experienced both the "dot-com bubble" and the "housing bubble." Speculators continue to lose enormous amounts of money. The subprime crisis is now negatively effecting economies around the world. We never seem to learn from past mistakes which are always motivated by greed. The only thing we can really count on is that history will repeat itself. Does anyone have any predictions on what the next economic bubble will be?

 

[Nords]

Does anyone have any predictions on what the next economic bubble will be?

Commodities, followed by Pokémon cards...

 

[brewer12345]

Its about time for energy to be the bubble. Been long enough since the last episode of hard time for that industry for everyone to forget, and there is plenty of fast and dangerousy stupid money that has since jumped into the pool.

 

[Eyerishgold]

Gold.

Everybody and their mother will want the "safety" that gold offers. With the volatility in stocks and the real estate bubble bursting, I see tons of people investing in gold. It'll get pushed up to around $1200/oz. and then the bottom will fall out of that as well because as Retire Soon so elequently put it "We never seem to learn from past mistakes which are always motivated by greed."

 

[jIMOh]

International is the next bubble which will burst. The government is controlling the dollar, and once they reverse their control, that bubble will crumble.

Energy sounds like a good one to me. People seam to be putting lots of money in natural resources types funds and appears to be where everyone wants to go.

So right now I would be buying
a) financials
b) consumer durables
c) Tech

and holding/selling international and energy

 

[CuppaJoe]

International is the next bubble which will burst. The government is controlling the dollar, and once they reverse their control, that bubble will crumble.

Energy sounds like a good one to me. People seam to be putting lots of money in natural resources types funds and appears to be where everyone wants to go.

So right now I would be buying
a) financials
b) consumer durables
c) Tech

and holding/selling international and energy

I'll buy what you are saying! One of the reasons I bailed out of equities recently was that the housing news seemed to so affect the international markets. BTY, I did very well in an international fund.

I'm thinking that any mass movements by baby boomers could affect the markets. People are being advised to retire to less expensive areas and rent before buying. How about a bubble in retirement apartment complex building?

 

[haha]

Its about time for energy to be the bubble. Been long enough since the last episode of hard time for that industry for everyone to forget, and there is plenty of fast and dangerousy stupid money that has since jumped into the pool.

I assume that you are saying that energy is currently a bubble, but it will soon burst? Is that correct?

Ha

 

[Nords]

The government is controlling the dollar, and once they reverse their control, that bubble will crumble.

The government of which country?

 

[HFWR]

Re: The dollar - Don't forget the mints in Denver, San Fran, Philly, Tehran, and Pyongyang...

 

[brewer12345]

I assume that you are saying that energy is currently a bubble, but it will soon burst? Is that correct?

Ha

Actually, I don't think energy is at bubble proportions. I see the same cost to find and lifting cost trends as everyone else: nothing but upwards. That means that the floor level at which producers have to be paid continues to drift upwards at a healthy rate, and I see no signs of that stopping any time soon. But every drilling rig in existence seems to be pressed into service and this industry has a long history of boom and bust cycles, so eventually it will spawn a new bubble. The capital maret are already force-feeding money into the sector, so the potential is there.

I think you are safe for now, Ha, but pay attention. If you start seeing producers refuse to shut in production when prices slip, be on your guard.

 

[twaddle]

Does anyone have any predictions on what the next economic bubble will be?

China, and probably emerging markets in general, are already in bubble territory.

Shipping stocks will probably be the next bubble.

To find a bubble, look for good initial fundamentals followed by a flock of speculators rushing in.

 

[brewer12345]

Shipping stocks will probably be the next bubble.

Not yet, though. Valuations are still pretty low vs. charter rates and asset prices. But eventually they will overbuild like they always do.

In the meantime, the bulker stocks are very attractively priced.

 

[FinanceDude]

China, and probably emerging markets in general, are already in bubble territory.

Shipping stocks will probably be the next bubble.

To find a bubble, look for good initial fundamentals followed by a flock of speculators rushing in.

I predict the following:

Ethanol Bubble
Biodiesel Bubble
Coal Tar Bubble
Lithium Bubble (hybrid car batteries)

 

[teachme]

Gold.

+1 and add silver and maybe palladium. The usual summer bashing is taking place along with the PM sell offs for all of the big players to cover their rear ends due to the dollar losses.

Silver:
If the accused naked short selling of silver is investigated and corrected then silver will have a nice day indeed.

Palladium:
If some of the industries that currently use platinum decide to switch to palladium then it could be interesting. It might be just long enough from Ford getting burned that corporations will see that retooling and using palladium for significantly less might be the ticket.

 

[haha]

I predict the following:

Coal Tar Bubble

This would indeed be an unexpected one! Coar tar is a carcinogen, an ingrediant in some old but still curently used medicines, and a product of 19th century chemical industrial processing of coal.

Wow, what a bubble that would be!

Ha

 

[FinanceDude]

This would indeed be an unexpected one! Coar tar is a carcinogen, an ingrediant in some old but still curently used medicines, and a product of 19th century chemical industrial processing of coal.

Wow, what a bubble that would be!

Ha

Didn't Brer Rabbit get in trouble with coal tar??

 

[haha]

I figured that was tar from petroleum, but don't know that it was specified.

Ha

 

[Walter-NJ]

+1 for China

But let's not underestimate the effect on the USD, given the amount of their currency reserves....

(BTW first post! Been a reader for a while though...)

 

[justin]

Yeah, I'll vote +1 on China. Everything else others have posted - maybe. China is the only thing I see as a definite, obvious bubble today.

 

[twaddle]

China is the only thing I see as a definite, obvious bubble today.

When is a bubble obvious? One can make an argument that valuations are fair because of high growth. What makes it bubblicious to me is the assumption that high growth will continue. Investors (including professional analysts) almost always overestimate future growth by looking at past growth.

Personally, I like bubbles. As long as I get in early enough and out before it's too late. I think China gets one more year. Maybe.

 

[tryan]

Yeah, a gold or oil bubble would hurt ... oil probably more.

I vote for a beever cheeze bubble.

 

[justin]

When is a bubble obvious? One can make an argument that valuations are fair because of high growth. What makes it bubblicious to me is the assumption that high growth will continue. Investors (including professional analysts) almost always overestimate future growth by looking at past growth.

I know it is a bubble when I see it.

I view the bubble similarly to you. Sky high growth won't last forever. Economic expansions (proceeding at this rate) don't last forever. We will need to see many years of economic expansion at the current rates just to get to a "fair" valuation level with equity market prices staying constant (assuming potential long term growth rates aren't significantly higher than those typically achievable in other countries).

Whether this bubble ends with a whimper (years of zero returns or slightly negative returns) or with a bang (-50% returns) - who knows. I don't think it'll be pretty.

I've also heard reports of frenzied activity in China. These reports sound like they were cut out of newspapers from 1999 and 2000.

 

[DblDoc]

For those of us accumulating and rebalancing... bubbles be good!

DD

 

[jIMOh]

If the US balances our budget, doesn't the dollar get stronger? And this would cause foreign investments to burst, correct? If Demcrats win the white house, I think this bubble will be loud when it pops.

**this is not a criticism of one party or another, just a point that most of the democratic candidates preach fiscal responsibility and balanced budgets usually strengthen dollar while deficit spending weakens it**

International is the next bubble to pop. Not just China, not just Emerging Markets, but even those blue chip, stable international funds which have been returning me 10+% for years will also drop.

 

[chinaco]

Its about time for energy to be the bubble. Been long enough since the last episode of hard time for that industry for everyone to forget, and there is plenty of fast and dangerousy stupid money that has since jumped into the pool.

Yup! I know several people who made a wad on oil stocks... I would be averaging out if I owned them directly.