Why Some Asset Bubbles Don't Burst

Money For the Rest of Us

J. David Stein

Investing, Investing Podcast, Business, Economics, Economy

4.5 • 1.4K Ratings

🗓️ 10 November 2021

⏱️ 25 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

What conditions need to be in place for an asset bubble to continue and how that applies to stocks, cryptocurrency, and houses.

Topics covered include:

How to determine if there is an asset bubble
What are microbubbles and anti-bubbles
How the cannabis stock bubble burst
What is required to sustain an asset bubble
How the current runup in home prices differs from the housing bubble in the mid-2000s
What structural changes have led to the high valuations for U.S. stocks
What is the Great Wealth Transfer and will it impact stock prices

Thanks to Commonstock and LinkedIn for sponsoring the episode.

For more information on this episode click here.

Show Notes

All-Transactions House Price Index for Oakland-Berkeley-Livermore, CA (MSAD)—Federal Reserve Bank of St. Louis

S&P/Case-Shiller CA-San Francisco Home Price Index—Federal Reserve Bank of St. Louis

What Pops Stock Market Bubbles? Only Surprises, Rob Arnott Says by Vildana Hajric and Michael P. Regan—Bloomberg

Yes. It's a Bubble. So What? by Rob Arnott, Bradford Cornell, and Shane Shepherd—Research Affiliates

Bubble, Bubble, Toil and Trouble by Rob Arnott, Bradford Cornell, and Shane Shepherd—Research Affiliates

What's really going on with San Francisco Walgreens closures? by Eric Ting—SFGATE

SF ranks high in property crime while it ranks low in arrests by Phil Matier—San Fransisco Chronicle

Zillow’s Algorithm-Fueled Buying Spree Doomed Its Home-Flipping Experiment by Patrick Clark—Bloomberg

In Search of the Origins of Financial Fluctuations: The Inelastic Markets Hypothesis – Xavier Gabaix and Ralph S.J. Koijen

The Great Wealth Transfer—Cerulli Associates

How Does Intergenerational Wealth Transmission Affect Wealth Concentration? by Laura Feiveson and John Sabelhaus—Board of Governors of the Federal Reserve System

Related Episodes

226: How To Spot Asset Bubbles and What To Do About Them

234: Index But Don’t Herd

329: Meme Stocks, GameStop, Short Squeezes, and Bubbles

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Transcript

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0:00.0	Welcome to Money for the Rest of Us.
0:03.2	This is a personal financial on money.
0:06.0	How it works, how to invest it, and how to live without worrying about it.
0:09.8	I'm your host David Stein today's episode 365.
0:13.6	It's titled Why Some Asset Bubbles Don't Pop.
0:18.4	The pro and I have spent the last week in the East Bay area visiting our son.
0:23.7	We have a friend who is a first time home buyer here.
0:26.8	He recently purchased a modest ranch house in a quiet neighborhood about 20 miles away
0:33.0	from San Francisco.
0:34.8	The home was built in 1950.
0:36.8	Two bedrooms, one bath, 900 square feet.
0:40.2	He paid over $600,000.
0:43.2	$700 a square foot.
0:45.9	Is that a bubble price?
0:48.3	Not necessarily.
0:50.7	Home prices in the East Bay area are up 11% in the past year.
0:56.0	They're up 30% from the peak in 2006 and double from the bottom of 2012.
1:03.7	Home prices fell 39% from 2006 to 2012.
1:08.3	The East Bay area is incredibly beautiful.
1:11.0	They're not making more of it.
1:12.9	There are amazing vistas, great weather, wonderful shops and restaurants, super people.
1:18.8	There's scarcity when it comes to the East Bay area.
	...

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