[HN Gopher] The Beanie Baby Bubble of '99
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The Beanie Baby Bubble of '99
Author : stephsmithio
Score : 38 points
Date : 2022-02-15 20:55 UTC (2 hours ago)
(HTM) web link (thehustle.co)
(TXT) w3m dump (thehustle.co)
| amelius wrote:
| How were these plastic beans even considered child-safe?
| anonymousiam wrote:
| Ahem. Bitcoin! *cough*
| amelius wrote:
| The article mentions Bitcoin!
| hsbauauvhabzb wrote:
| I'm not a crypto evangelist or anything, but what about
| alternatives like Pokemon cards which seem to have increased in
| value over the same period.
|
| There's currently a pump and dump on retro video games but I
| don't think the same supply issues exist in Pokemon cards, but
| I'm not actively monitoring either market.
| janmo wrote:
| Many parallels with what is going on with NFTs right now.
| waffle_maniac wrote:
| Only really rare cool limited edition collectible shit is worth
| it. Like cars that Jay Leno collects.
| edm0nd wrote:
| Agreed.
|
| 19.94B locked up in NFTs atm
|
| https://defillama.com/nfts
| khazhoux wrote:
| I call bullshit. We're supposed to believe people have
| invested almost $20B in NFTs? I have no data one way or the
| other, but this fails the smell test.
| [deleted]
| gonzo41 wrote:
| The reserve bankers would look at stats like that and just
| shake their head at the money wasting away.
| whatshisface wrote:
| That's a total volume number, not a market cap.
|
| If you want to see some market caps[0] they're still
| staggeringly high for what they represent, but beware: you
| can't see the demand curve on a price history chart. There's
| no way of knowing how much of the market could decide to sell
| before they ran out of buyers. Market caps are used to
| estimate value on wall street because it's imagined that the
| number of people who would want to buy MSFT today for $1 less
| than the price today are inexhaustible.
|
| That's much closer to the truth on the NASDAQ than on
| whatever exchange people are using to trade their beanie
| babies.
|
| [0] https://coinmarketcap.com/nft/
| [deleted]
| paulpauper wrote:
| except 1000x bigger. ppl are spending hundreds of thousands of
| dollars like it's nothing.
| dymk wrote:
| It's easier to spend money when purchasing things with a
| credit card versus cash. Or, users are more likely to make
| in-app purchases when it's with pre-loaded Robux or V Bucks
| rather than dollars.
|
| There's got to be something like that at play here with
| ETH/BTC. It's so much easier to spend it when it's hard to
| put into perspective just how much physical cash the purchase
| represents.
| ceejayoz wrote:
| They're mostly probably not.
|
| https://www.nbcnews.com/tech/security/nft-sales-show-
| evidenc...
| brimble wrote:
| "Collectibles" bubbles have been a feature of (at least)
| American society for many decades. The tendency of some people
| to fall for marketing that describes some mass-market junk as
| an "investment" or "collectible" and to think they're really
| getting in on something good, is documented in Fussell's
| _Class_ , so it was already a recognizable trend by 1983.
| pg_bot wrote:
| If you are curious about asset bubbles, how they form and how
| they unravel, I would suggest you read Hyman Minsky's "Can 'It'
| happen again?".
| jdkee wrote:
| Relevant portion of the article:
|
| "According to economists David Tuckett and Richard Taffler, we
| often view a hot new financial opportunity as a "phantastic
| object," or an unconscious representation of something that
| fulfills our wildest desires.
|
| These objects are "exciting and transformational." They appear to
| "break the usual rules of life and turn aspects of 'normal'
| reality on its head." They promise something far departed from
| the market's typical behavior.
|
| During a bubble, we formulate a "collective hallucination" of
| prosperity, and fall victim to groupthink, a phenomenon where "a
| significant chunk of society feverishly buys into a shared dream"
| and ignores reality."
| jpm_sd wrote:
| I think the most relevant portion of the article is:
|
| "There was one person who emerged handsomely from the Beanie
| Baby bubble: Ty Warner.
|
| Aside from getting caught secretly hoarding $107m of his Beanie
| Baby riches in an offshore Swiss bank account, Warner has kept
| a low profile over the years -- but he's quietly amassed a
| fortune the size of Djibouti's GDP.
|
| Today, the 73-year-old Beanie Baby inventor touts an estimated
| net worth of $2.7B, good for the 887th richest person in the
| world. He owns a fleet of luxury cars, a $153m estate, $41m
| worth of rare art, and the Four Seasons Hotel in New York,
| where you can rent the "Ty Warner Penthouse" for $50k per
| night."
| Lerc wrote:
| "$41m worth of rare art"
|
| That bit at least is rather amusing.
| jpm_sd wrote:
| He could sell NFTs of it and burn it, and double his money!
| technofiend wrote:
| You're thinking small. You sell raffle tickets to let
| someone burn the artwork and pocket the profits from that
| too. Bonus points if there's a sponsor of the event.
| carpintech wrote:
| Also: https://www.independent.com/2022/02/08/beanie-babies-
| billion...
| Damogran6 wrote:
| My son learned SO MUCH from 3d printing and selling fidget
| spinners.
|
| Bulk purchasing skate bearings, charging 3 times as much for the
| same plastic because it had different colors...and the STEM
| school really couldn't do much, because that kind of thinking was
| in their charter...plus, you know, distract the hands while
| keeping their brains engaged.
| tamaharbor wrote:
| If I had $5 for every Beanie Baby my kids had.... Wait - I did.
| Lerc wrote:
| The current state of NFTs etc. amazes me in the context of Beanie
| Babies.
|
| So many people have learned nothing. Granted the time gap means
| these are entirely new people making those mistakes.
|
| We have such a degraded level of discourse now that if it were
| used in the Beanie Baby craze there would be people arguing about
| whether all soft toys are evil.
| burnt_toast wrote:
| I've been hoping someone would make a satirical beanie baby nft
| website.
| technofiend wrote:
| >So many people have learned nothing.
|
| I would argue considering the plethora of NFT offerings both
| legitimate and plagiarized that many people learned trying to
| manufacture the next Beanie Baby is better than investing in
| them, sort of like selling shovels in a gold rush is more
| reliable than digging for gold.
| throwanem wrote:
| The difference is that stuffed toys have value independent of
| speculation.
| duxup wrote:
| I wonder how many individuals were buying beanie babies
| compared to nfts?
|
| I suspect far more beanie baby buying individuals.
| pushcx wrote:
| There's a great history of this, The Great Beanie Baby Bubble:
| Mass Delusion and the Dark Side of Cute by Zac Bissonnette. It's
| a quick read, almost entirely original reporting. Aside from the
| colorful characters, it's really compelling to see the way some
| individuals' and limited information combined with mass media
| fell together to create the bubble. It seems like it couldn't
| have happened at any other time because it needed cheap
| independent publishing (both print and web) before ubiquity
| eroded the perceived legitimacy.
| camjohnson26 wrote:
| Also Beanie Mania on HBO, not as insightful as the book but
| still a good documentary. The Beanie Baby bubble was
| essentially a textbook example of mania.
| adam_arthur wrote:
| Oh, bubbles can surely happen even in the era of widespread
| information. Look no further than housing.
|
| A few points on housing:
|
| - real home prices have now surpassed the 2000s peak
|
| - household formation and population growth has been
| decelerating, while building has been accelerating.
|
| - mortgage rates are climbing at a historically fast pace... If
| inflation doesn't abate we can expect 5-6% mortgages within a
| few months. Rates were kept low due to the belief in
| transitory, but confidence in this is quickly eroding.
| Mortgages roughly correlate with 10y treasury which is at 2%,
| while inflation at 7.5%. typically these values are close
| together
|
| - all in affordability will reach record lows within a few
| months, if inflation and mortgage trends don't abate
|
| - there's clearly a mass FOMO/psychological phenomena going on
| right now. Buyers aren't acting rationally from a financial
| perspective
|
| Home prices can avoid a correction if we quickly return to 0 or
| negative rates, which could happen. If inflation persists, they
| will correct in a big way within a year or two as rates adjust
| to inflation
|
| Sources:
|
| https://fred.stlouisfed.org/series/QUSR628BIS
|
| https://fred.stlouisfed.org/series/UNDCONTSA
|
| https://fred.stlouisfed.org/series/SPPOPGROWUSA
|
| https://www.mortgagenewsdaily.com/mortgage-rates/30-year-fix...
| thatfrenchguy wrote:
| > while building has been accelerating massively
|
| Nope, we have a decade of underproduction that led us to this
| crisis
| adam_arthur wrote:
| Households to number of homes built is exactly the same as
| it was in year 2000. You can compute it yourself using FRED
| data.
|
| 1.1 homes per household (or vice versa).
|
| People who count from 2010 are cherrypicking the
| underbuilding decade while ignoring the overbuilding
| decade, 2000s.
| brimble wrote:
| Builders have been working as fast as they can (and
| sometimes faster than they should) around here non-stop
| since maybe 2011 or 2012, and it's not enough. Tons of new
| neighborhoods, probably half the apartment buildings I know
| of were put up in the last ten years, and so on, but house
| prices and rent are nuts and still increasing faster than
| inflation anyway.
|
| We're at the end of what _sure looks like_ about a decade-
| long housing construction boom, in my city, which is not
| trendy or growing very fast, and prices have done nothing
| but go up at 2-5x the rate of CPI the entire time. It 's
| possible the under-supply was _so bad_ that all the
| construction still isn 't enough to catch up, but then why
| did prices not _start_ higher than they did? I find it hard
| to believe that this city 's gained new residents faster
| than it's gained new housing. Something else is going on.
| brightstep wrote:
| As someone who just sold their home and is currently renting
| while waiting for a correction, I definitely want this to be
| true. Why are you confident those factors, absent a rate
| intervention, will produce a correction?
| adam_arthur wrote:
| If inflation persists, I'm very confident in a correction,
| as rising mortgage rates will push affordability to record
| lows. We're already close
|
| If inflation abates quickly, then current prices can
| maintain and become the new normal.
|
| The rate shock will price out pretty much every primary
| buyer. Investors will stop buying and even sell if they
| fear it's a peak.
|
| On top of this, huge amount of backlogged supply is about
| to come into market in a big way in southern cities. The
| majority of the building is concentrated there. I would be
| very worried about Phoenix for example
| Cd00d wrote:
| Sorry, I think I'm not following.
|
| I think you're saying that housing prices are too high. Then
| you're saying that if inflation continues housing prices will
| drop?
|
| I totally get that most home sales are based on the monthly
| mortgage bill, so when interest rates are high, house prices
| are lower. But, if we have 7% inflation why wouldn't rates
| increase AND prices increase? I don' think the outcome is
| obvious when high inflation is coupled with high rates -
| though I'm sure there are several experts ready to jump in
| with information about how the US 70's and 80's worked :)
| adam_arthur wrote:
| It's a common misnomer.
|
| Inflation is good for assets once those assets have been
| valued using an inflation appropriate discount rate.
| Housing rate now is priced based on a 2% discount rate, not
| 7%.
|
| After the asset is priced appropriately for the current
| discount rate, then inflation is good for valuations.
|
| Median wages drive home prices in the long run. It's
| possible home prices can be sustained if we see median wage
| rapidly gain over the next few years. Gasoline going up and
| driving CPI inflation doesn't make housing more affordable.
| Only increase in incomes/buying power.
|
| Example: the 10y treasury was recently at 1%. If you bought
| that as an inflation hedge you would have lost a lot of
| money. Once people realize inflation is here to stay, they
| won't accept lower rates of returns.
|
| Now it yields 2%, and soon likely 3%. Holding cash is
| better than holding a treasury during the repricing phase.
| Same logic applies for other assets.
|
| Real home prices were super low in the 70s relative to
| today. Also wage inflation was very strong. I believe wages
| doubled over the decade. Not the same at all.
| marvin wrote:
| What is your argument on mortgate rates? That lenders will be
| unwilling to lend out at (still low) central bank rates due
| to inflation? I don't follow the reasoning.
| adam_arthur wrote:
| Mortgage rates historically track the 10y treasury rate.
| This is market driven, not Fed driven (outside of QE
| impact)
|
| 10y treasury yields 2% while inflation is 7.5%. Ergo
| mortgages will almost certainly run to 5-6% within a few
| months once the market perceives that inflation is not
| transitory and start selling off the 10y treasury en masse.
|
| We have seen this move already starting. It's why mortgages
| have run from 3-4% in just two months. But not even close
| to pricing in inflation.
|
| Mortgages were 5% in 2018 when inflation was significantly
| lower. We may even get to 6-7% in a shorter period of time
| Cd00d wrote:
| I still have a visceral reaction to seeing Beanie Baby's actually
| be played with. I had young cousins that were into "collecting"
| them in the 90s, and remember part of it was keeping the tags and
| not playing with them.
|
| Now I have young kids that immediately yank the tags and carry
| them to school. I have nieces that have outgrown their's and have
| passed them down to the family dog as a chew toy. Both give me a
| moment of 'aaah aaah!' before I can make my rational brain
| remember they're just a $5 stuffy that once had a bubble.
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