I am currently researching what the next potential bubble is cause by the FED's massive cutting of rates and have a few ideas. In the 90's when the Fed had cut interest rates to an all time low, we had a massive bubble in the form of new IPO's (lead by cheaper financing) of .dot com companies. Ofcourse, we know how that ended.
In 2002-03 with lower interest rates again, we had the formation of our currently deflating housing bubble. Ofcourse, we all know how that is ending now.
So with interest rates starting to fall again, what do you guys think will be the next bubble? I think if we can identify it, we can all get in early on the next bubble and maybe make a penny or two off it in the next year :) We have all wondered at some point how we would have made real good money in the prior 2 bubbles if we only had the means when it happened (i.e. knew more about trading and had more disposable income to put into the market in 1999 so i could have ridden amazon.com to $400, knew more about the housing market and actually bought a house in 02-03 and ridden it for a 70% gain, etc) I think by having a blueprint ready, we can act swiftly if and when we do see the next bubble emerge.
As for my thoughts: I think the next bubble is in commodity prices. All the commodities have risen to all-time inflation adjusted highs (Oil, Gold, Wheat, etc). Also i do believe the USD is bottoming out right here and will start rising once the market realises the FED is coming to an end with the rate cuts. Over the next few days, I will be researching how to start playing the USD through currency ETF's and also look into shorting OIL and GOLD. I am very confident that oil will CRASH this year in to the $65-$75 range from $110/barrell by the end of 2008.
Any thoughts/comments on what the next bubble can be? I am very interested in hearing new ideas.
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Alternative energy with clean energy (HOKU, SPIR) leading the way and solar following - the question is how far behind. If they are manufacturers of PV cells, make sure they are Chinese (no brainer) and have begun implementations in Asia and Europe...that will give them a leg up on entering the North American market. - I am bullish on SOLF and STP. If NanoSolar even hints at going public, its time to play with the kids college fund - here is the investor list (http://www.nanosolar.com/investors.htm). For pure speculative bullshit, I go with NTRZ (food + intellectual property = ?).. it wins the scratcher since its Phoenix based.
This is crazy, i was also going to say that the next decade might finally see the rise of alternative/green energy companies and perhaps an accompanying bubble. However, i dont have any research backing me up, similar conditions to now went by in the 70s with no alternative energy companies taking off. This is also more wishful thinking, its about time we had reasonable non fossil fuel energy sources!
Ateet, the tech run might somehow have been easy to call due to the technical revolution...and by early 2000 many analysts were saying stocks were over priced. I dont know how people could have called the housing bubble, but some people actually did! why dont you write your thoughts on each sector, tech, financial, energy etc. Perhaps the enxt bubble will be in an entirely new sector, or perhaps an analysis of the existing sectors will give us some ideas?
Sahal
Beautiful Post. I think everyone is looking for the Bubble 2.0 (even though its technically the third bubble)
My thoughts...
As far as tech bubbles go - I don't see much happening in that arena. Especially, when it comes to IPO's. Most web-based tech ventures are positioned to be acquired by existing players... so there is no money to be made for the common man unless you are part of a venture group backing these new companies. Also, the barriers to entry to set up webshops are low now...and not of particular interest to investors as every 16 year old kid, wired on monster or redbull can crack out "awesome" websites.
It's interesting you mention Amazon. I personally feel a second rising coming for Amazon. A lot of retail stores (speciality) are closing - such as Sharper Image
to name one. This makes way for big companies like Amazon,Walmart and Costco (the generalists/ wholesalers in a recession). With less speciality retailers in the market these guys can negotiate better pricing. I am especially impressed with Amazon's web services and infrastructure as no one even comes close to their infrastructure. Amazon's affiliate channels will only get stronger and lets fsce it ...its the largest database of consumer goods and buying habbits in the world. I see a lot of money coming in from API fees... low cost , high value model. hence the rise of Amazon from the current lows.
Last but not the least, couldn't agree with you more on the energy bubble. The VC investments in alternative fuels is only accelerating. US needs alternative energy more than before...killing dependency on oil will not only save the dollar, it will stop pumping the dollar into foreign hands (if they are still taking it)
Nice call on the USD and Oil prices, Ateet!
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