Features

Bubble Psychology


TABLET COMPUTERS
Estimated increase in unit sales worldwide, between 2010 and 2013: 1,571%

Why It's a Bubble: IPad competitors are rushing in. The names alone reek of overkill: Xoom. ViewPad. TouchPad. Playbook. Flyer. G-Slate. Streak.
Not to Worry: Many of the entrants have real innovations, and consumer appetite is strong.

RENTS IN PORT-AU-PRINCE, HAITI
Increase in monthly rents since the earthquake in January 2010: 400-900%

Why It's a Bubble: A 34-child orphanage is fighting a $6,000 increase in its monthly rent.
Not to Worry: Housing hasn't been built since the 2010 earthquake. And the aid workers who have pushed up rents aren't leaving.

GOLD
Price rise since 2001: 464%

Why It's a Bubble: The SPDR Gold Trust, which enables individual investors to speculate on gold, now holds more of it than the Swiss central bank.
Not to Worry: Gold will look cheap at these prices if Fed Chairman Ben Bernanke lets inflation get out of control.

PRESIDENT DONALD TRUMP
Increase since Jan. 1 in the price of an Intrade bet that he will get the 2012 Republican nomination: 460%

Why It's a Bubble: Bettors give him a 5.6 percent chance of getting the nomination, ahead of Sarah Palin, Jon Huntsman, or Mike Huckabee.
Not to Worry: Stranger things have happened. Reagan was in Bedtime for Bonzo.

JUSTIN BIEBER
Increase in Bieber's Twitter followers over the past year, to almost 9 million: 450%

Why It's a Bubble: Someone paid $40,668 for the heartthrob's hair clippings in a charity auction this year.
Not to Worry: L.A. Reid, the head of Island Def Jam, predicts Bieber "will go beyond the teenage puppy-love thing."

NETFLIX
Price rise In past year: 304%

Why It's a Bubble: Netflix's stock price is 79 times the past 12 months' earnings per share, vs. 15.6 for the S&P 500.
Not to Worry: How can you bet against a CEO who founded the company after getting hit with a late fee when he rented Apollo 13?

TRADITIONAL CHINESE ART
Price rise from 2009 through the end of 2010: 300%

Why It's a Bubble: An 18th century Qianlong-era porcelain vase sold last year for a record $84 million. (The presumably sure-handed buyer was anonymous.)
Not to Worry: China overtook the U.S. as the world's biggest fine-art auction market last year.

RARE WINES
Six-year rise of the Liv-ex Fine Wine 100 Index of the most-sought-after bottles: 261%

Why It's a Bubble: A bottle of Chateau Lafite Rothschild from 1869 sold last year for $232,692.
Not to Worry: Prices are supported by seemingly insatiable demand from China.

CHINESE CEMETERY SPACES
Price increase since 2001 for sites with good feng shui: 200%

Why It's a Bubble: There's a new Chinese saying: "You can't afford to live, and you can't afford to die."
Not to Worry: Population and wealth are growing. Land isn't.

COTTON
Increase in futures trading over the past year: 156%

Why It's a Bubble: In December 2010, China imported 450,000 tons of cotton--by far the highest ever, according to Southeast Farm Press.
Not to Worry: Rising Asian prosperity is increasing the demand for apparel. People don't want to wear the same clothes day after day.

SKYSCRAPERS
Height advantage of the tallest (in Dubai, built in 2010) over the next tallest: 63%

Why It's a Bubble: Despite earthquakes and a lousy economy, Japan is completing the 2,080-foot Tokyo Sky Tree, which will top China's tallest skyscraper.
Not to Worry: Building upward is a reasonable response to high land prices.

JUNK BONDS
First-quarter increase over the $84 billion raised globally in the same period last year: 40%

Why It's a Bubble: High-yield investors are accepting just 4.63 points of extra yield over government bonds, down from 21.82 in the worst of the credit crisis.
Not to Worry: Which is plenty when you consider how little savings accounts and Treasuries yield.

U.S. FARMLAND
Price rise from 2005 through 2010: 31%

Why It's a Bubble: Yale economist Robert "Irrational Exuberance" Shiller called farmland "my favorite dark-horse bubble candidate for the next decade or so."
Not to Worry: Global food demand will rise with population growth.

AUSTRALIAN HOUSING
Sydney price rise since 2003: 15%

Why It's a Bubble: Research firm Demographia's survey of selected markets puts Sydney behind only Hong Kong in housing unaffordability.
Not to Worry: Funds manager Rismark International says incomes have been rising faster than home prices.

COCOA
Futures-price rise in the past year: 1%

Why It's a Bubble: Prices spiked because of a violently disputed Presidential election in the Ivory Coast, the world's largest producer.
Not to Worry: Prices are already down 18 percent from their peak, and commodity traders are betting against further declines.


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