How does one define “bubble”?

BusinessInsider, of course, says that the stock market’s performance is making fools of the bears and I suppose it is, for now, but when I hear “experts” cheering a decline in housing starts as good news, and the rise in stock prices as earnings expectations go down, I wonder who exactly is the fool.

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7 Comments

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7 responses to “How does one define “bubble”?

  1. Libertarian Advocate

    Yes, and then remember who runs BI and that will pretty much tell you all you need to know about the value of his analysis.

  2. Westchesterer

    The Edict of Bernanke.

    You didn’t hear, Chris?

  3. Anonymous

    Maybe a decline in housing starts leads to less additional inventory.
    Less available inventory plus pent up demand and record low interest rates, leads to higher prices, appreciation of homes everywhere, and appreciation of mortgage backed securities, not to mention any and all stocks related to home improvement will benefit.
    Portfolio appreciation makes any and all wall streeter’s happy because it leads to optimism and less “cash on the sidelines”
    When interest rates are this low, cash in savings accounts nets a negative return, and leads to more buying of securities, thus swelling the stock market even further.
    Companies everywhere know this, and the ones that have offered new, or additional dividends on their stock owners have done very well.
    As financial institutions stock prices appreciate and more people look to portfolio managers for yield on their personal investments, greenwich does very well….very very well.
    We all know the drivers of real estate in this town begin and end with financial institutions, their well paid employees and the eventual trickle down effect.
    Realtors do better, real estate attorneys do better, home remodelers and builders do better. The list goes on and on.
    As much as I detest their salaries, when they do well, we all do well.
    Better to eat their bread crumbs, then not eat at all.

    • Prosperity is good for all of us (especially the taxer/spenders in Hartford), so I’ve always cheered for Wall Street’s success. If people can get past the idea that we’re in a zero sum game, that there’s a finite amount of wealth which by necessity means that someone else’s large slice means less for others, we can all prosper, or at least transcend our envy and greed.

  4. Anonymous

    Seriously, will you drop the reliance on BI for any semblance of intelligent commentary or idea generation?

    I have a pal who worked with that numbnuts, and lemme tell ya, he was nothing but a shill. Still is.

    • Trust me, I check out Business Insider just to see what the dumbest folks writing about Wall Street have on their dim minds. Good fodder for contrarians. Do you remember their breathless expose on the odd British custom of passing out “tombstones” after successful financing deals? They had never heard of the practice and treated it as something brand new. I suppose when you use 18-year old interns, everything old is indeed new again, but it’s obvious that even their editors are that green.

  5. Anonymous

    yes i remember that deep dive piece of writing on tombstones. it’s very compelling reading whilst enjoying a diarrhea on the loo, perhaps.

    and yes, i’ve made those tombstones both as a junior banker hack as well as a more senior hack, and sometimes more attention is paid to them than the deal itself.

    i’ve also been on other side of table as client when blodg-sh!t was pitching in tandem with bankers, and the drivel he spouted was embarrassing, especially coming from what should’ve been fine talent at mother merrill.