How to identify a bubble - as featured on Slideshare

How to spot a bubble 

My 2014 Bubble Spotting Omnibus has been featured on Slideshare !

Will this be you during the next market crash ?  Wait, what market crash, when ? Where?

Judging by current market conditions, we might be in for an interesting ride....

 If you have been following my blog, you may have noticed that I have been doing a bit of reading up on market bubbles  - how do they form, which conditions are present, what happens in the process of building up, and what happens after the bubble bursts.

In the process of doing this research I discovered some fascinating information on the topic. I decided to put all the info in presentation format - this is so anybody who may be interested in this topic, can have a look. 

The Bubblespotting 2014 Omnibus presentation starts with one of the earlier recorded (and completely man-made bubbles) which was the Tulip Bubble in the Netherlands. It furthermore then covers (in a easy readable and quick summary format) a number of major economic bubbles in different markets around the world which have taken place since. These examples cover a diverse range of bubbles up to and including the Subprime crisis, which was the most recent very big bubble that popped. 

Also incorporated are some present-day pop culture examples, which, even though not strictly classifiable as a typical financial bubble (by a long shot), still interestingly enough display some of the same attributes.

The presentation furthermore covers some of the key characteristics and highlights commonalities between these various investment bubbles (apart from some of the more spectacular market meltdowns) - in the process identifying a number of conditions / characteristics which appear to be present in the build-up and blow down phases. 

In order to keep the theory interesting, it is explained with the use of memes and a bit of humour. 

Bubble Spotting Omnibus 2014 

Read it and see if you can recognize anything familiar happening in your neck of the woods?

Hope you like it - comments welcome.

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Property and housing bubbles

For those of you interested in the property market and property investments - I have just discovered a blog on Property Bubbles - and it covers a host of different aspects and various countries:

You can read all about it on http://www.torontocondobubble.com/2013/08/ultimate-guide-to-housing-bubbles.html

Photo courtesy of http://www.torontocondobubble.com/2013/08/ultimate-guide-to-housing-bubbles.html

The Subprime crisis - another contagion case study

Below is a short presentation that summarizes key aspects of the Subprime crisis - factors causing and contributing to the bubble, and what happened in the aftermath of this #bubble.

Bubble spotting - Sub-prime crisis / Housing bubble 2007-2008 from Benjamin Van As

The Subprime crisis (for at least the second time in recent history - the other being the Asia debt and currency crisis in 1997), showed the massively devastating effect that contagion can have on the financial markets on a global basis.  Whilst the crisis (at least on the surface) appeared to have its original in one market (being a specific portion of the residential housing market), it quickly proved that it was not an isolated problem, as the problem spread into various other local and international investment markets.  

Due to the increasing complexity of financial instruments these days, as well as the interwoven nature of markets and international cross-border transactions, going forward it is safe to say that it will become more and more difficult to isolate a sick patient (market experiencing a bubble) in time to prevent loss of money. 

Furthermore the current electronic age is aiding and abetting in both the ease as well as speed of transmission (infection).  The fall and or crash of a specific market on one side of the world will within minutes or seconds cause a ripple effect and spread to other markets. And one cannot stop this by quickly unplugging the computer after hearing the lightning strike or seeing the flash.

The risk of contagion will therefore in all likelihood pose very unique challenges in the financial world going forward.  One could argue that, as a minimum, the nature and extent of due diligence required prior to making any kind of future investment decision, would require some serious consideration. But not only this -  political as well as financial policy formulation can perhaps do with some rethinking as well. There seems to be not enough consideration or understanding of the potential cause and effect of proposed strategies or policies these days. And general ignorance about Newton's Laws. The words "unintended consequences" and "collateral damage" have become meaningless and empty rhetoric, used by those who have little intention of taking any responsibility for their decisions. 


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