What will the next bubble be?

[Spanky]

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.

Sounds like cash is the way to protect assets now?

 

[chinaco]

There are bubbles and there are normal corrections.

The nice thing about a bubble, if one does not get greedy, is the opportunity to cash out early. That is if the person was lucky enough to participate in the run up to begin with.

If we were in the tech bubble again, I would recognize it and make adjustments. My adjustment would be along the lines of rebalancing.


I have been reading some information lately that indicates that Value has had a good ride and it is time for growth to shine again.

 

[jIMOh]

There are bubbles and there are normal corrections.

The nice thing about a bubble, if one does not get greedy, is the opportunity to cash out early. That is if the person was lucky enough to participate in the run up to begin with.

If we were in the tech bubble again, I would recognize it and make adjustments. My adjustment would be along the lines of rebalancing.


I have been reading some information lately that indicates that Value has had a good ride and it is time for growth to shine again.

I am going to be scaling back international holdings over the next 4-6 months.... lowering contributions and selling some of what I have- even selling to get below my normal allocation for these classes.

 

[Spanky]

I have been reading some information lately that indicates that Value has had a good ride and it is time for growth to shine again.

There are a lots of talks about a possible recession. Growth stocks will be hit most.

 

[teachme]

One way to recognize is when many of your friends and co-workers talk about it. I remember working on one contract where everyone and their brother was buying Enron stock.....

Another indicator is when multiple people under legal drinking age are doing workshops on how to make big money in XYZ and talking about their vast market experience.

 

[Grizz]

The current rising bubble in energy (oil, nuclear, ethanol) still has legs, but I expect water related stocks and depending on the depths that the U.S dollar goes to, possibly precious metals to be next. One thing that I would stay away from right now is the U.S dollar. Hopefully it will bottom sooner or later, but for now I would keep your cash holdings to daily expenses. The fed "controlling" the dollar is like the fed "controlling" a three wheeled shopping cart.

 

[haha]

The current rising bubble in energy (oil, nuclear, ethanol) still has legs,

IMO, not everything that has a bull market is a bubble. To take it to a possibly absurd level, eventually oil will be in very short supply. When that happens, although prices will still fluctuate, because that is what prices do, they likely will fluctuate about a much higher level. This will nevertheless not be a bubble, it will be the price mechanism working as it should to ration tight supplies.

Ha

 

[brewer12345]

IMO, not everything that has a bull market is a bubble. To take it to a possibly absurd level, eventually oil will be in very short supply. When that happens, although prices will still fluctuate, because that is what prices do, they likely will fluctuate about a much higher level. This will nevertheless not be a bubble, it will be the price mechanism working as it should to ration tight supplies.

Ha

Agreed. But I would suggest that the bubble would be in oil and gas companies, ratgher than the commodity itself.

 

[laurence]

Agreed. But I would suggest that the bubble would be in oil and gas companies, ratgher than the commodity itself.

The downside risk would be less, though, right? I mean, oil and gas companies are actually engaged in a genuine commodity vs. the dot com fluff. I think continuing to investigate investments in these companies still makes sense.

 

[haha]

If you like natural gas, look at UNG- United States Natural Gas. While crude is trading at the top of its channel, NG is near the bottom of recent prices. OTOH storage is very high, it looks like no hurricane can be expected in the Gulf, and a recesion would be hell on demand, not to mention another balmy globally warmed winter.

Still, it won't go bankrupt, and it is not leveraged. On a buy and hold basis it should work out.

Ha

 

[Nords]

IMO, not everything that has a bull market is a bubble. To take it to a possibly absurd level, eventually oil will be in very short supply. When that happens, although prices will still fluctuate, because that is what prices do, they likely will fluctuate about a much higher level. This will nevertheless not be a bubble, it will be the price mechanism working as it should to ration tight supplies.

Maybe bubbles should be determined in relation to some inflation rate like the CPI. IIRC gasoline at $3/gallon was still lagging the 20-year rate of inflation. Perhaps it's a bubble when a year-over-year gain is 2x or even 3x the CPI?

 

[Lsbcal]

Bubble = high valuation in relation to normal pattern. Abbey Cohen once said that valuation was not a very good way to time the market. OK, you are probably saying "so what, there is really no way to time the market". And I sort of agree but when valuations get to perhaps 2x the historical average one should at the very least scale back expectations.

Most of us don't have great stats on things like the China market valuations and historical patterns (what history? you might say). You can definitely look at the history of Exxon's P/E and P/E versus the market. See, for example, ValueLine for the last 15yrs.

The dollar is not at historical lows so I'd stick with my international allocation. See this chart St. Louis Fed: Series: DTWEXB, Trade Weighted Exchange Index: Broad

Can someone point out a bubble based on some real data? I'd be interested in that.

Les

 

[Grizz]

IMO, not everything that has a bull market is a bubble. To take it to a possibly absurd level, eventually oil will be in very short supply. When that happens, although prices will still fluctuate, because that is what prices do, they likely will fluctuate about a much higher level. This will nevertheless not be a bubble, it will be the price mechanism working as it should to ration tight supplies.

Ha

I really think that oil is in mid bubble level. 10 yrs ago it was $10 per barrel, now $75. Those multiples look like they have potential to be bubbly to me. The entire economy where I live is oil. Alberta, Canada, alone, has enough oil reserves in the oil sands to supply the world for hundreds of years at current utilization. Billions of dollars are being spent here for plants that separate the oil from sand. If the U.S. goes into a sustained recession, we'll have oversupply and see low oil prices again, and in typical stock market fashion, the trip down tends to be much speedier than up. It's been a rollercoaster of boom and bust since before I was born in the oil industry, and I expect more of the same to come.

 

[haha]

Alberta, Canada, alone, has enough oil reserves in the oil sands to supply the world for hundreds of years at current utilization.

Let me see if I understand. You are saying that the entire world's oil demand could be satisfied by the oilsands in Canada?

Could you present some documentation for this?

Ha

 

[cho oyu]

Let me see if I understand. You are saying that the entire world's oil demand could be satisfied by the oilsands in Canada?

Could you present some documentation for this?

Ha

From what I have seen, proven oil (tar) sand reserves in Canada are <200 billion barrels. At present consumption rates approaching 100 million bpd, that's only around 6 years world supply.

Production from oil sands is also 1)costly 2)energy inefficient and 3)more highly polluting than most present drilling operations (this relates to #2, also).

Tar sands may alleviate some immediate oil production concerns, but they certainly aren't a long-term solution to our upcoming energy problems.

 

[Grizz]

Let me see if I understand. You are saying that the entire world's oil demand could be satisfied by the oilsands in Canada?

Could you present some documentation for this?

Ha

Canada Oil Sands Most folks who live here roll their eyes when we hear the fear mongers in the media saying that oil is scarce. American and international companies are building mega projects worth billions everywhere you look. It's almost surreal. We just haven't got enough people to fill all of the jobs. Lots of $100k per yr jobs if you have a trade and want to live and work in an area that you probably wouldn't care to visit, and lots of recruiters looking for workers all over the world, but ya gotta find a place to live and there's nothing cheap here. Once these obstacles are cleared, technology improves, and pipelines are in place, you can count on many happy years of gas gobbling SUV's clogging your highways.

I shouldn't complain, as it is the reason that myself and many of my friends are young and FI. Still, I can attest to the environmental and societal filth that this industry can cause. I want to leave here now, but will wait until kids are done school.

 

[CourtneyC]

Here's a cool bubble that you may not have heard about: domaining. Let me explain. Generic internet domain names (i.e. seniors.com, creditcheck.com, bald.com, etc.) have sold for REALLY big money in the past year ($3 mil, $1.8 mil, and $400,000 respectively). I'm not sure if or when this bubble will burst, but it's fun to follow!

 

[twaddle]

Here's a cool bubble that you may not have heard about: domaining. Let me explain. Generic internet domain names (i.e. seniors.com, creditcheck.com, bald.com, etc.) have sold for REALLY big money in the past year ($3 mil, $1.8 mil, and $400,000 respectively). I'm not sure if or when this bubble will burst, but it's fun to follow!

Those numbers are hard to believe. It'd be nice to see some independent confirmation.

 

[CyclingInvestor]

Wikipedia's estimates of tar sands and oil shales -

World deposits of oil shale are estimated to equal 2.9–3.3 trillion barrels of recoverable
oil, 1.5–2.6 trillion barrels of which are in the United States

Oil shale - Wikipedia, the free encyclopedia

Tar sands may represent as much as 2/3 of the world's total petroleum resource, with at least
1.7 trillion barrels in the Canadian Athabasca Oil Sands and perhaps 1.8 trillion barrels in
the Venezuelan Orinoco tar sands

Tar sands - Wikipedia, the free encyclopedia

 

[W2R]

OK, on the topic of what the next bubble will be...

I will retire in a couple of years in a paid off house, with everything I need. The absolute worst case would be if food prices skyrocketed.

I could grow veggies, but this city gal isn't about to raise cattle or chickens in her spare time.

Based on absolutely nothing other than the specter of bad luck, my prediction is that the next bubble will be in food prices.

 

[Grizz]

Wikipedia's estimates of tar sands and oil shales -

World deposits of oil shale are estimated to equal 2.9–3.3 trillion barrels of recoverable
oil, 1.5–2.6 trillion barrels of which are in the United States

Oil shale - Wikipedia, the free encyclopedia

Tar sands may represent as much as 2/3 of the world's total petroleum resource, with at least
1.7 trillion barrels in the Canadian Athabasca Oil Sands and perhaps 1.8 trillion barrels in
the Venezuelan Orinoco tar sands

Tar sands - Wikipedia, the free encyclopedia

OK, so it's official? There's more than enough oil, it's just not of the Jed Clampett variety.

 

[Grizz]

Those numbers are hard to believe. It'd be nice to see some independent confirmation.

I remember a story several years ago about the PGA wanting to use pga.com, but the Potato Growers of America had it already. Not sure how it all played out.

 

[Retire Soon]

Many market pundits believe the next bubble will be emerging markets because of the fed rate cut according to a Wall Street Journal article:

Free Article - WSJ.com

 

[youbet]

OK, on the topic of what the next bubble will be...

I will retire in a couple of years in a paid off house, with everything I need. The absolute worst case would be if food prices skyrocketed.

I could grow veggies, but this city gal isn't about to raise cattle or chickens in her spare time.

Based on absolutely nothing other than the specter of bad luck, my prediction is that the next bubble will be in food prices.

I tend to agree with you. Not sure that it will be the next bubble, but in the not so distant future...... Another doubling of the earth's population, some minor climate changes decreasing productivity in the USA bread basket, food transportation costs skyrocketing......

It's coming. It's just a matter of exactly when.

 

[DblDoc]

OK, on the topic of what the next bubble will be...

I will retire in a couple of years in a paid off house, with everything I need. The absolute worst case would be if food prices skyrocketed.

I could grow veggies, but this city gal isn't about to raise cattle or chickens in her spare time.

Based on absolutely nothing other than the specter of bad luck, my prediction is that the next bubble will be in food prices.

Not an unreasonable prediction - especially if the ag community buys into the ethanol for fuel solution GWB is supporting. Just look at what it has done this year alone in terms of decreased acreage in non-corn crops and the resulting rising costs of those commodities.

DD