Posts filed under “Psychology”

Real Estate’s Wall of Worry

One of the odder aspects of the so-called housing bubble phenomenon is how so many pundits have been so self-confident in their declarations of bubbleosity.

I find that somewhat ironic — the same people who missed the largest stock bubble in human history have now become expert in spotting bubbles. And they now are spotting bubbles everywhere. The lone exception being Yale’s Robert Shiller, who was timely in spotting the stock bubble, and has also declared housing to be a similar bubble. (I do agree with Shiller that Real Estate may be one of many proximate causes of the next recession).

One of the characteristics of bubbles is that, in its full throat, most of the “fools” involved don’t believe its a bubble. Greed trumps rationality, and nearly everyonme wants a piece of the action, despite the apparent dangers. Hey, this time, its different. Recall the “new paradigm” at the height of the internet bubble: measuring eyeballs, clicks per page, etc.

While there certainly were naysayers, the words “stock bubble” were hardly splashed across the front pages of the WSJ every other day. Over the past 2 weeks, I’ve seen at least 2 front page stories about real estate in the Journal with the word “bubble” in it the title.

There’s something off about that, and its part of the reason for my skepticism.

Which brings us to a Yahoo story about a company called T-shirtHumor.com. It seems their best selling shirt is a parody of the bubble bath soap Mr. Bubble, titled Mr. Hou$ing Bubble.

Here’s the ubiquitous excerpt:

“Striking a chord with uneasy U.S. property investors, T-shirtHumor.com’s latest design — “Mr. Housing Bubble” — has become its best seller in less than a week.

The parody of the decades-old Mr. Bubble bath foam package offers a “Free Balloon Mortgage Inside.” But the smiling pink house-shaped bubble also warns: “If I pop, you’re screwed.”

A disclaimer at the bottom reads, “Not affiliated with Mr. Internet Bubble.”

Anthony Phipps, T-shirtHumor.com communications director, said the Austin, Texas-based t-shirt design and marketing firm has sold hundreds of the $20 cotton shirts since they went on sale last week.”

Think back to 1999 — Can you imagine a t-shirt declaring that tech/telecom/internet stocks were a bubble becoming a best seller back then?

Or even more odd and perplexing, try to wrap your brain around a similar item declaring the “South Sea Bubble” in 1720.

I cannot quite put my finger on precisely why the entire world declaring a housing bubble exists makes it less likely to be so at the moment.

Perhaps all the declarations of the housing bubble are the equivalent of Wall Street’s Wall of Worry. (Note that the cliche is that markets climb a wall of worry).

>>

Sources:
Mr Housing Bubble” shirts strike chord, draw ire
Reuters, Tue Aug 16,11:25 AM ET

http://news.yahoo.com/s/nm/20050816/us_nm/economy_housing_shirts_dc

T-shirtHumor.com

SOUTH SEA BUBBLE
FAMOUS FIRST BUBBLES

http://www.few.eur.nl/few/people/smant/m-economics/southsea.htm

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