Guest rigsby II Posted October 24, 2005 Share Posted October 24, 2005 Some of these crashes are mind-boggling, but I'm sure at the time they made rational sense with £££ signs in your eyes and boom-gas in your nostrils. http://www.investopedia.com/features/crashes/crashes1.asp How close are we to any of these now ? I like this quote from the 1926 Florida Real Estate Crash "Then everybody simultaneously saw the writing on the wall, and panic selling ensued. With thousands of sellers and very few buyers, prices came down with a sickening thud, twitched a bit, and then crawled down even lower." Quote Link to comment Share on other sites More sharing options...
BandWagon Posted October 24, 2005 Share Posted October 24, 2005 They've left out the biggest bubble of them all. The one we're living in now. Good old real estate. It only goes up, don't you know? Quote Link to comment Share on other sites More sharing options...
oracle Posted October 24, 2005 Share Posted October 24, 2005 nothing like history repeating then!! that's why I think japan is such a good play.....everyone out of the know seems to still link it with lacklustre growth. contrarian bull sign or what? Quote Link to comment Share on other sites More sharing options...
Milkshock Posted October 24, 2005 Share Posted October 24, 2005 nothing like history repeating then!! that's why I think japan is such a good play.....everyone out of the know seems to still link it with lacklustre growth. contrarian bull sign or what? people living in japan dont think its a good bet. in fact those who who dont know enough about demographics etc in japan look only at the fact that its been in a down cycle for years. big mistake imo. Quote Link to comment Share on other sites More sharing options...
marzipan Posted October 25, 2005 Share Posted October 25, 2005 http://www.housepricecrash.co.uk/forum/ind...topic=17362&hl= Quote Link to comment Share on other sites More sharing options...
smiley Posted October 25, 2005 Share Posted October 25, 2005 The key question, whether it's tulips, stocks or houses, is: what pricks the bubble? Is it just a pyramid scheme that runs out of new fodder, or some external shock? And, has this happened yet to housing? Quote Link to comment Share on other sites More sharing options...
Tempest Posted October 25, 2005 Share Posted October 25, 2005 (edited) The key question, whether it's tulips, stocks or houses, is: what pricks the bubble? Is it just a pyramid scheme that runs out of new fodder, or some external shock? And, has this happened yet to housing? I think fodder runs out - the people best able to deal with/afford increased prices are those who chase the market up (but with people being increasingly less comofortable/able to do so) - it is the ones towards the end who are forced to squeeze (overstretch) the cashflow/income to the maximum to get on. Eventually the market runs out of them. My favourite bubble which is often overlooked is the classic car boom/bust of 1987-90. I am a car fan so no excuses but it is also a recent example of an asset bubble which is (i) not a stock/pure financial instrument or (ii) a house/property (which can be justified by some as being a home or having a business/retail purpose). As incomes boomed in the late 80s and money was everywhere people needed something else to buy (it was aided and abetted by the aspirational, material atmosphere of the times). Nick Mason (ex Pink Floyd) was offered £10m for his GTO. Ferrari Daytonas went for £500,000 (now worth £60-70,000). A new Ferrari 328 (list price) in 1989 cost around £50,000 and were selling for £75-100,000 (now worth £25-30,000). One day it just popped. I knew someone (now an old fella) who bought a Dino for £110,000 with his bonus in 1989. If he still has it it will only be worth £50,000 ish (not to mention the probable £20k+ he will have spent on maintenance since then). Not forgetting the effects of 16 years of inflation... Btw, if anyone thinks this irrelevant you should check out the prices in the US of 60s and 70s US muscle cars (corvettes, mustangs, chargers etc) right now. From $20-30,000 several years ago to $100,000 now (and these are cars made in their (tens of) thousands in their day not hundreds like the vintage Ferraris etc) Same signals now as then: stock market boom/peak/fall, a switch in money to real estate and other lifstyle "investments". Another lesson of the past to add to the "to be relearned" list in detention. Edited October 25, 2005 by Tempest Quote Link to comment Share on other sites More sharing options...
The_Equalizer Posted October 25, 2005 Share Posted October 25, 2005 (edited) The classic car bubble is also interesting in the fact that some cars have since made a come-back showing the cyclic nature of markets. For example, the price of classic Astons which were just as mad in 1989 (£50K minimum) and crumbled just as quickly. So much so, I remember DB4 in good nick going for roughly £15K in the (then) Brookes' December 1996 sale. You'd now be looking at least 3 times that for the same car. Whether or not this is a peak we’ll have to wait and see. Other more down-to-earth vehicles are also presently making serious money. Look at the price of VW camper vans. Any good split-screen commands £10K+. The rarest made £55K recently at auction. P.S. Tempest, can I take it you deal in such things or just very interested in? It's the one thing I'd love to get into properly (I've done a little dabbling now and again.) Edited October 25, 2005 by The_Equalizer Quote Link to comment Share on other sites More sharing options...
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