by Asim Jalis
1. The dotcom bubble is considered something bad. Bubbles are
"bad". They are built on false promises. Some people suspect the
current inflation of real estate prices might be a bubble. There
is "good" solid sustainable growth and then there are bubbles
which are "bad" and unsustainable.
2. But what if everything is a bubble. Clearly civilization is a
kind of a bubble. We consume our natural resources. As
civilization and free markets expand our energy demands will
outstrip our supply. The unsustainability of the bubble will be
exposed and it will collapse.
3. McDonalds is experiencing shrinking market share and falling
profits. Despite their deals on big macs and cheeseburgers people
don't want to eat there. If McD collapses and goes out of
business it could be considered a bubble.
4. The value of McD stock derives its value from the premise that
each year more people will eat cheap fast food. As the market for
fat food becomes saturated McD is no longer able to grow and
begins to shrink.
5. Most corps require exponential growth to sustain positive
stock returns. Stocks are a kind of a crude pyramid scheme. Each
investor puts his money down in the hope that the company will
grow and entice other investors to replace his investment. When a
corp saturates its market the bubble becomes unsustainable, the
promise become hollow, and it pops.
6. In fact people are bubbles. They pop at around 70.
