Speaker 1: Hello, and welcome to another episode of the Odd Thoughts Podcast.
Speaker 1: I'm Tracy Alloway and I'm Joe Wish. Joe, I am
Speaker 1: really sad to say we are coming to the end
Speaker 1: of our bubble series. I thought you were going to
Speaker 1: say we're coming to the end of the podcast overall,
Speaker 1: so I'm actually kind of relieved that were But I
Speaker 1: am sad too. I think I said it last time, like,
Speaker 1: bubbles are just the best. Yeah, I love talking about them.
Speaker 1: We'll probably talk about them again on you know, future episodes,
Speaker 1: but for now we are we're wrapping up, all right.
Speaker 1: So as we wrap up, and as you look over
Speaker 1: a bunch of the different bubbles that we've just been
Speaker 1: um learning about, what stands out for you, like what
Speaker 1: are the lessons that you're actually taking away? Human psychology
Speaker 1: is just so consistent. I think it was the first
Speaker 1: one we talked with Scott Nations about various booms and
Speaker 1: bust throughout US stock market history. There's always the great
Speaker 1: story that goes with them. And so at the kernel
Speaker 1: of every bubble that we talked about, there's some route
Speaker 1: of truth to it. It's not a complete fabrication. Something
Speaker 1: at some point made some sense and then of course
Speaker 1: humans being uh, the animals that we are, we just
Speaker 1: can't put things in perspective and we extrapolate way too far. Yeah,
Speaker 1: that's something that's going to stick with me as well.
Speaker 1: There's always a certain narrative to explain what's happening. The
Speaker 1: other thing I was thinking about is almost every bubble
Speaker 1: that we've spoken about comes or spurs a sort of
Speaker 1: cottage industry around it, Like crazy things like you know,
Speaker 1: the guys that used to stand outside in Florida trying
Speaker 1: to hawk during the lamb bubble Binder boys, that's it.
Speaker 1: Or the baseball card bubble, all the new sets of
Speaker 1: baseball cards that came in. Yeah, that specifically the way
Speaker 1: supply expands when people are in a mania for X.
Speaker 1: Whatever it is, whether it's land, whether it's baseball cards,
Speaker 1: whether it's uh, some sort of equity or whatever, the
Speaker 1: industry will find a way to create supply. The supply
Speaker 1: never just states fixed. And of course, you know we
Speaker 1: talked about the Florida real estates, so you know, people
Speaker 1: have just bought marsh land in the middle of nowhere
Speaker 1: when all the prime real estate like around Miami was
Speaker 1: sold up. So they always find a way to sell
Speaker 1: something new. People don't just sort of say they bought
Speaker 1: it all and now prices will go up. The supply
Speaker 1: eventually swamps demand. The one thing I'm a little bit
Speaker 1: sad that we didn't learn more about is uh the
Speaker 1: catalyst for the bubbles actually bursting. Because if we knew that,
Speaker 1: if we knew that, Joe, we could make so much money.
Speaker 1: We could all be rich. We just have to you
Speaker 1: just see a bubble and just ride it until the
Speaker 1: day before. Yeah. Alright, well, as it is, we have
Speaker 1: to stick with the podcasts and various other things. But
Speaker 1: to celebrate the end of our Bubble series, we are
Speaker 1: going to share with our listeners a rerun of one
Speaker 1: of our most favorite bubbles ever. That's right. So obviously,
Speaker 1: as we're saying, we're probably going to keep doing more
Speaker 1: episodes in the future about bubbles from time to time.
Speaker 1: Of course, we did some even before we started the
Speaker 1: original series, and there was one in particular that really
Speaker 1: stood out there just like totally fits, doesn't it. Yeah,
Speaker 1: this was one of our earliest ever episodes and it
Speaker 1: was so much fun. It was one on the Beanie
Speaker 1: Baby Bubble. So for those of you who are unfamiliar
Speaker 1: with it. In the nines, Beanie Babies, these small stuffed
Speaker 1: animal toys, became a huge cultural phenomenon, and with that
Speaker 1: phenomenon came a lot of speculation, a lot of trading
Speaker 1: that came with it. Right, and you know, they're just
Speaker 1: stuffed animals, But there was this a lot of the
Speaker 1: teams that we discussed in this episode we discussed with
Speaker 1: other Bubbles on later episodes. So the supply thing that
Speaker 1: we just mentioned at one point, you know, the idea
Speaker 1: was that once a line of these stuffed animals was made,
Speaker 1: there would never be another one, but the supply expanded massively.
Speaker 1: Last week, remember we talked about the role that the
Speaker 1: Beckett magazine had in baseball cards, the sort of first
Speaker 1: pricing guide, the price guide. Sure, Beanie Babies, as we
Speaker 1: discussed on that episode, also had their price guide. Very
Speaker 1: similar idea, very similar phenomenon at work. As soon as
Speaker 1: people could see visually that prices were changing every month
Speaker 1: or every week, that made people even more inclined them
Speaker 1: to see them as speculative vehicles. Yeah, and of course,
Speaker 1: in the same way that you were a young boy
Speaker 1: trading baseball cards, I was a young girl trading beanie babies.
Speaker 1: So yeah, it was the same time it was traditional
Speaker 1: gender roles here at Joe. All right, so this episode,
Speaker 1: let's see it aired. It was November, so well almost
Speaker 1: two years ago. It's crazy, all right. So this is
Speaker 1: the beanie baby bubble from November two thousand and fifteen.
Speaker 1: We interviewed Zach Bissinett. He's a prolific author and he
Speaker 1: wrote a fantastic book on this exact topic. Take a listen, Joe.
Speaker 1: I've got a question for you. What were you doing
Speaker 1: to make money in the summer of nine was the
Speaker 1: best summer because I think I made about two thousand
Speaker 1: dollars from just a summer job that I had. But
Speaker 1: then I put that all into stocks because it was
Speaker 1: the Internet bubble, and I basically paid for two years
Speaker 1: of college thanks to essentially what I did that summer.
Speaker 1: So that's amazing. It was. It was a good time. Well,
Speaker 1: I was making money to a little differently. I was
Speaker 1: still in middle school. I was going to garage sales
Speaker 1: and selling old toys and one of the things I
Speaker 1: sold was a tiedyed beanie baby lizard, and I sold
Speaker 1: it for two hundred dollars to a forty year old
Speaker 1: man and at the time me as an eleven year old,
Speaker 1: I thought this was amazing money and I was rolling
Speaker 1: in it. That is amazing money objectively for any age
Speaker 1: selling a stuffed animal for two dollars, right, So why
Speaker 1: are we talking about this today? We're going to delve
Speaker 1: into what can drive seemingly rational people to spend hundreds,
Speaker 1: sometimes thousands of dollars on stuffed animals. We're going to
Speaker 1: talk about the beanie baby bubble, and we're going to
Speaker 1: talk about something more than that. We're going to talk
Speaker 1: about bubbles in general, the Internet bubble, and the psychology
Speaker 1: behind speculative mania. So here with us today is Zach Bissonett.
Speaker 1: He's the author of The Great Beanie Baby Bubble, Mass Delusion,
Speaker 1: and the Dark Side of Cute. It's a book that
Speaker 1: came out earlier this year and I just happened to
Speaker 1: finish it this morning. Zach, and thanks for joining us.
Speaker 1: So why did you write a book about beanie babies
Speaker 1: so animals? I like you. I was in middle school
Speaker 1: when the beanie baby craze hit, and I was kind
Speaker 1: of a nerd, and I was into like old books
Speaker 1: and antiques and that kind of thing. And every weekend
Speaker 1: I would go to this flea market on Cape Cod
Speaker 1: with my mother and we had never heard of beanie babies,
Speaker 1: and then all of a sudden, out of nowhere, that
Speaker 1: flea market was like beanie baby dealers, and they were
Speaker 1: wearing like Fannie packs and visors and talking just really
Speaker 1: really excitedly about how much they were going up in
Speaker 1: value and how this one they just paid five dollars
Speaker 1: for was now worth forty and they're not going to
Speaker 1: sell it this week because next week it'll be worth fifty.
Speaker 1: And that was like that for about two years, and
Speaker 1: then all of a sudden it was gone and no
Speaker 1: one ever talked about it again. I just I just
Speaker 1: want to say, uh, during those same years that my
Speaker 1: mother was dating a guy who was antique dealer, and
Speaker 1: so I also went to a lot of flea markets
Speaker 1: in New England, and I actually saw all the exact
Speaker 1: same thing, where suddenly there were these flea markets where
Speaker 1: that used to be people bringing out their old stuff
Speaker 1: from their barns and then it's just people have stuff
Speaker 1: down and used to be traditionalist antique dealers hated it. Yeah,
Speaker 1: there was there was one guy I talked to who
Speaker 1: who he was so proud of this. He was a
Speaker 1: traditionalist antique dealer who had just railed against beanie babies.
Speaker 1: He would go on CNN, I would say, I'm not
Speaker 1: in kidding. CNN would have these like debates between this
Speaker 1: guy who they called the beanie Meanie and and the
Speaker 1: beanie baby experts who were making millions of dollars selling
Speaker 1: One of them sold a million copies a month of
Speaker 1: a beanie baby magazine that she was publishing, and they
Speaker 1: would have these debates and this, and this traditionalist antique
Speaker 1: dealer was given a group of antique dealers in Indiana
Speaker 1: gave him a crucified skunk beanie baby with a certificate
Speaker 1: thanking him for being a traditionalist who stood up for
Speaker 1: traditional antiques. So this is the amazing thing. Walk us
Speaker 1: through how the beanie baby bubble came in to existence
Speaker 1: and how we at one day actually got to the
Speaker 1: point where people were debating the value of stuffed animals
Speaker 1: on CNN. So it starts out with this this very
Speaker 1: sort of eccentric toymaker named Tie Warner, who dropped out
Speaker 1: of Calamazoo College, tried to become an actor, failed at that,
Speaker 1: then became a toy salesman was wildly successful at that,
Speaker 1: but then he got fired from that and decided to
Speaker 1: start his own stuffed animal company. And he started to
Speaker 1: create these beanie babies initially because he thought at a
Speaker 1: five dollar price point, they would be irresistible and that
Speaker 1: it would help him sort of a foot in the
Speaker 1: door with large accounts, and that he would then be
Speaker 1: able to kind of up sell bigger stores on selling
Speaker 1: his larger stuffed animal line. And it didn't work at all.
Speaker 1: I remember talking to talking to to the sales reps
Speaker 1: for Tye who remembered just there was no interest in
Speaker 1: these bean babies. People worried they were cheap, They thought
Speaker 1: they looked cheap. They worried people would buy the beanie
Speaker 1: babies instead of a more expensive product. He was just
Speaker 1: not getting any interest in them. But Ty Warner, the
Speaker 1: guy created them, really really believed in this product, and
Speaker 1: he combined that belief with an extremely sort of eccentric,
Speaker 1: obsessive approach to the product and the people who who
Speaker 1: had worked with him, which at the beginning was just
Speaker 1: his girlfriend. But but she remembered when I when I
Speaker 1: talked with her, he would keep her up until like
Speaker 1: four in the morning, debating one color of the ribbon
Speaker 1: on a bear should be. And then she'd think they
Speaker 1: would finally be done debating the color, and he would say, well,
Speaker 1: what if it was tied this way instead of the
Speaker 1: other way, And then they would have to go back
Speaker 1: through the iterations of different colors again for hours. So
Speaker 1: he had this really really obsessive approach to the product.
Speaker 1: This is how the retirement came into being, right precisely,
Speaker 1: And so sometimes he would come out with a product
Speaker 1: and then a few months after he chipped a few
Speaker 1: thousand of them, he would like wake up in the
Speaker 1: middle of the night basically and decided that it should
Speaker 1: be a different color. So like one of his first
Speaker 1: beanie baby is not not one of the very first,
Speaker 1: but one of the one of the first was Peanut
Speaker 1: the Elephant, who was originally a royal blue color. And
Speaker 1: then after a few months of that, I think he
Speaker 1: chipped I think like four hundred I can't remember the
Speaker 1: fourteen hundred or so of the of this beanie baby,
Speaker 1: and he decided it shouldn't be royal blue, it should
Speaker 1: be baby blue. And so the fact that they would
Speaker 1: get retired and never made again. There were never more
Speaker 1: than that that's how they became collectible that people would
Speaker 1: see is going up in value entirely accidentally. So because
Speaker 1: this is happening before anyone cares about these, his annual
Speaker 1: sales are like four million dollars a year at this point,
Speaker 1: mostly not from beanie babies. No one cares about beanie babies.
Speaker 1: Then all of a sudden, this small group of people
Speaker 1: in suburban Chicago who lived on one cul de sac
Speaker 1: started collecting beanie babies. They saw them in stores because
Speaker 1: they were near where TY was headquartered, so that he
Speaker 1: had a big presence in stores there. And they decided
Speaker 1: they liked these beanie babies and that they wanted to
Speaker 1: assemble complete collections for their kids. And they became very obsessive.
Speaker 1: These were soccer mons. They came very very obsessive with
Speaker 1: trying to assemble complete collections. And so they would call
Speaker 1: stores and other towns to ask them what beanie babies
Speaker 1: they had. And then, and they remember this the sort
Speaker 1: of very strange converse, they would realize that there would
Speaker 1: be like these weird variations, and these were the ones
Speaker 1: that he had retired, just changed the designer because he
Speaker 1: took a few thousand and then changed entirely accidentally, and
Speaker 1: they started paying each other more for these kind of
Speaker 1: beanie babies, started this small market for them just in
Speaker 1: this town. As this started to happen, As this kind
Speaker 1: of starts in this small town, this woman, Peggy Gallagher,
Speaker 1: and her sister, Dr. Paula Brinko, who was a doctor,
Speaker 1: had this idea, you know, we're just calling stores like
Speaker 1: in the Chicago area where this all started, but if
Speaker 1: we call stores in like other states, we'll be able
Speaker 1: to find beanie babies that are really rare that no
Speaker 1: one else has. So they go to start going local
Speaker 1: chambers of commerce and getting lists of all of the
Speaker 1: gift shops. The woman who's a doctor is at the
Speaker 1: same time that she's doing this, she's she's doing this
Speaker 1: study on women who were like diabetic or something where
Speaker 1: she had to call hospitals to talk to their researchers,
Speaker 1: and after she called the researcher, she would ask to
Speaker 1: be transferred to the gift shop to ask about beanie
Speaker 1: babies so she could try to order the rare one.
Speaker 1: But this is the part of the story that I love,
Speaker 1: because we eventually go from this like small group of
Speaker 1: soccer mom collectors who professionalize themselves as beanie baby dealers
Speaker 1: and beanie baby market experts. I mean one of them
Speaker 1: had a Beanie World magazine. She was a self described
Speaker 1: Chicago suburban soccer mom. She had a magazine with the
Speaker 1: circulation of more than one million million a month and
Speaker 1: more ads per copy than Glamour. These were like thick
Speaker 1: magazines full of ads. So people start seeing the priceless
Speaker 1: for these beanies and they all figure prices are going
Speaker 1: to go up forever. These are good investments, right, well right,
Speaker 1: And the stores that are hearing all of a sudden
Speaker 1: out of nowhere start getting calls from these out of
Speaker 1: state collectors are like, oh my gosh, beanie babies are
Speaker 1: really hot. It starts out as like two people did
Speaker 1: the did the magazine that published the prices? Because I
Speaker 1: remember I used to collect baseball cards when as a kid,
Speaker 1: and there was the Beckett magazine and there was like
Speaker 1: a crucial avenue by which the baseball card bubble which
Speaker 1: also burst. You know, everyone checked the prices each month.
Speaker 1: So did the magazine for bringing beanie babies serve a
Speaker 1: similar purpose hugely, so that there's a reflexivity. I think
Speaker 1: two price guides where they impact prices as much as
Speaker 1: they report on them. And the first priceless which were
Speaker 1: pread about Lady Peggy Gallagher, which she started to circulate.
Speaker 1: She put an ad in like a magazine for other
Speaker 1: collectors saying he sent her self address stamped envelope, she
Speaker 1: would send you this checklist and she was like, well,
Speaker 1: what should I do? Her prices? She just made them up, basically,
Speaker 1: she told me this that she said this one's rare,
Speaker 1: so that one should be worth twenty. These were not
Speaker 1: really based on anything, and then she kind of sat
Speaker 1: back and watched on like the AOL message boards, is
Speaker 1: these priceless she was making up kind of became the
Speaker 1: the price and so talk about that how the Internet
Speaker 1: and those are the early days of the Internet helped
Speaker 1: stoke that bubble, so that this is a be Babies
Speaker 1: were ten percent of ebays sales in the early days
Speaker 1: of ebays. eBay disclosed in the risk factors to its
Speaker 1: sec FI lanes a dependence on the contain crazy fact yes,
Speaker 1: and so people were getting computers and beanie babies more
Speaker 1: than anything. Really gave people a reason to go on
Speaker 1: eBay and to do online trading and actually just e
Speaker 1: commerce in general, not just there was also trader and
Speaker 1: message wards. In the early days of e commerce, there
Speaker 1: were a lot of stories that it was not growing
Speaker 1: as quickly as people thought it would. People weren't comfortable
Speaker 1: with it. Stuff was too expensive to ship with beanie
Speaker 1: babies something that had a kind of weird You weren't
Speaker 1: sure exactly what they were worth. They were easy to ship,
Speaker 1: and they were really hard to find locally. It brought
Speaker 1: people onto e commerce in a way that other more
Speaker 1: mundane products like pets dot Com we're not able to.
Speaker 1: So even though it's a completely pointless bubble of ultimately
Speaker 1: worthless stuffed animals, it actually did help. It had a
Speaker 1: beneficial effect on the development of these Internet markets. Meg
Speaker 1: Whitman has said in interviews that that eBay and I
Speaker 1: think p r om yards had the same thing that
Speaker 1: you know, eBay may not have gotten off the ground
Speaker 1: without beanie babies. Joe, I know, you remember what the
Speaker 1: late nineties were like. Um, when we look back on
Speaker 1: beanie babies, it seems amazing that people spent all this
Speaker 1: money on them all this time. We had one, at
Speaker 1: least one instance of a guy committing murder because of
Speaker 1: a soured Beatie Baby deal. Do you remember how nuts
Speaker 1: it was the late ninety Are you talking about beanie babies?
Speaker 1: Are just the late nineties? And I mean I would
Speaker 1: say they're linked, right, They're absolutely the people who when
Speaker 1: they think back and they talk about the nineties bubble,
Speaker 1: it's often referred to as the tech bubble or the
Speaker 1: Internet bubble or the dot com bubble, it completely misses
Speaker 1: the point. Yes, it was so much bigger. It was
Speaker 1: such a big I like the closest thing I was like.
Speaker 1: It was a sense of optimism about everything all at
Speaker 1: the same time. And so there's so many wonderful stories
Speaker 1: about people completely losing their mind. My ingle favorite story
Speaker 1: of the late nineties bubble was when a car dealership
Speaker 1: in Nevada. It was called Uniprime Capital Acceptance. And I
Speaker 1: remember this very vividly because I was on the message
Speaker 1: boards at the time. It was a penny stock maybe
Speaker 1: you traded trading. I was. They they put out a
Speaker 1: press release that said they had a cure for AIDS.
Speaker 1: A car dealership in Nevada, Like someone we've worked with
Speaker 1: or if we licensed this thing from a scientist. They
Speaker 1: just straight up we have a cure for AIDS, and
Speaker 1: you know, even in the craziest times, like that's kind
Speaker 1: of a skeptical belief, but enough people believed that that
Speaker 1: the stocks surged, it doubled, and then it doubled again
Speaker 1: because just on the possibility that maybe a car dealership
Speaker 1: in Nevada had found a cure for AIDS. People were
Speaker 1: so optimistic of everything that it seemed not a unbelievable
Speaker 1: And people talk about the internet stocks, anything that was
Speaker 1: that breathed on the Internet, people going crazy for One
Speaker 1: of my favorite facts is the fact that k Tell,
Speaker 1: the company that makes really cheesy compilation CDs of like
Speaker 1: seventies DISCOMs, they sold their CDs online, Big whoop. The
Speaker 1: stock grew tenfold at one point, and then over the
Speaker 1: span of a few months, people were losing their minds.
Speaker 1: And then the other fact that I love is the
Speaker 1: fact that the Segue that you know, didn't really take off,
Speaker 1: but people still go tours around. People really thought entire
Speaker 1: cities were going to be redesigned because of how the
Speaker 1: Segue got people around. So basically it was a time
Speaker 1: of just incredible optimism about everything. So, Zach, I'm curious
Speaker 1: in your book you quote a lot from existing, you know,
Speaker 1: economic and financial literature. You quote people like Robert Schiller
Speaker 1: on the optimism that precedes bubbles when it comes to
Speaker 1: beanie babies. If you could kind of pinpoint one thing
Speaker 1: that flipped it into speculative mania, what would it be.
Speaker 1: It's people seeing prices rise. That that is what drives
Speaker 1: what drives speculative bubbles, is that as soon as there's
Speaker 1: you know, this insignificant phenomenon of someone who's trying to
Speaker 1: complete a set for their kid, as soon as they
Speaker 1: pay a hundred dollars for a beanie baby that someone
Speaker 1: paid five dollars for, that's what sets in motion. Or
Speaker 1: these can set in motions certainly this kind of chain,
Speaker 1: because that becomes a story. And beanie babies, and I
Speaker 1: think all bubbles are spread by by narrative, by people
Speaker 1: saying I bought this beanie baby for five dollars and
Speaker 1: sold it for a hundred. Anyone who did that told
Speaker 1: a thousand people about it because it was so weird,
Speaker 1: So hum big did it get in the end? Is
Speaker 1: there an estimate of what the total outstanding value of
Speaker 1: beanie babies was at the TIS annual sales peaked It
Speaker 1: around one point five billion dollars um and that was
Speaker 1: just wholesale other people who there must be but have
Speaker 1: a bunch and held it all the way down and
Speaker 1: now just they live in a hou filled with it.
Speaker 1: There is a retired soap opera star in Arizzona. I
Speaker 1: think I remember what's been so long as I talked
Speaker 1: to him. Um, there's a retired soap opera star who
Speaker 1: lost his kids six figure college funds on them and
Speaker 1: has like thirty thousand of them still in his home.
Speaker 1: That's we talked about how these sort of bubbles began,
Speaker 1: at least in the case of beanie babies, how did
Speaker 1: it end, because it did start to fizzle out in
Speaker 1: and within a couple of years the secondary market value
Speaker 1: of thousands millions of stuffed animals was gone. This was
Speaker 1: one of the funniest things about the reporting on this,
Speaker 1: and I think there's a lot of very similar stuff
Speaker 1: with the reporting on the housing bubble and the Internet
Speaker 1: stock bubble, is that I would kind of pose this
Speaker 1: question to the collectors anti executives about kind of how
Speaker 1: this thing had ended, and they all had these really
Speaker 1: specific explanations for it, these kind of linear cause and
Speaker 1: effect things, you know, like you know, there was one saying, oh,
Speaker 1: you know, the counterfeits really invaded the market and people
Speaker 1: were paying you know, six hundred dollars and if it
Speaker 1: hadn't for pieces they trying to be fake, and if
Speaker 1: it hadn't been for all the fraud this, you know,
Speaker 1: it wouldn't have ended that way. A lot of people felt,
Speaker 1: you know, Ty got greedy and made too many, too
Speaker 1: many styles, um and and and and overproduce them. And
Speaker 1: I'm like, okay, you know, maybe kind of, but you know,
Speaker 1: if he hadn't done that, then being would they still
Speaker 1: be ten per cent and B B based sales and
Speaker 1: we'd all be rich. I Mean, these things end because
Speaker 1: they're stupid, right, Like that's ultimately they're they're unsustainable, and
Speaker 1: eventually there is something that nixed them and causes that
Speaker 1: kind of the kind of cascade of confidence that started
Speaker 1: it to just crescendo down and and that's what happened. Um,
Speaker 1: there's this thing. At the end of nine. Everything is
Speaker 1: still basically going well. Secondary market sales still good, top
Speaker 1: pieces still valuable, some overproduction on some of the newer pieces,
Speaker 1: those are stacking up a little bit, but basically still
Speaker 1: a strong market. No one's saying this things ending, collectors
Speaker 1: still confident, magazine still selling, and Tie announces at the
Speaker 1: end of that on that on January one, all of
Speaker 1: the Beanie Babies will be retired. Whoa, and that they
Speaker 1: won't be made anymore. Theoretically, prices should have gone through
Speaker 1: the roof at that point for a minute. Yeah, um,
Speaker 1: they did for a minute, and people were very excited,
Speaker 1: and people like, what's going on? This is going to
Speaker 1: do a different product and uh. And then he announced
Speaker 1: that he would do a vote to raise money for
Speaker 1: AIDS on whether people wanted to Beanie Babies to continue,
Speaker 1: and you would log in and online and don't and
Speaker 1: donate that there was some other stuff going on in
Speaker 1: his life, but where you could donate a dollar forty nine.
Speaker 1: I think it was to vote on whether Beanie Babies
Speaker 1: should be continued. First, I'll raise the question of who
Speaker 1: would spend a dollar fifty to vote to end Beanie Babies.
Speaker 1: We're not kind of like. But so he does this
Speaker 1: and almost no one does voted, ended up time to
Speaker 1: donate all the money himself because he hadn't gotten so
Speaker 1: many votes as he had claimed he had, and announced
Speaker 1: that Beanie Babies would be continued and that all the
Speaker 1: new releases, there would be all these new millennium collection
Speaker 1: coming out and no one cared, and the whole thing
Speaker 1: just every month after that, the sales collapsed and people
Speaker 1: started to that cause your crisis of confidence about the
Speaker 1: and then what causes and then what happened was so
Speaker 1: these were tire beanie babies. I remember talking to one
Speaker 1: of the first collectors who was under way back from
Speaker 1: speaking in a beanie baby convention as a paid expert,
Speaker 1: you know, like a keynote speaker on beanie babies, and
Speaker 1: she was at the O'Hare airport and she saw a
Speaker 1: stack of beanie babies. There were still five dollars in
Speaker 1: the store, but we're retired, and this was like mind blow.
Speaker 1: I mean, people thought it was a law of physics
Speaker 1: that a retired beanie baby was worth more than five
Speaker 1: dollars and that that was just true. And uh, I mean,
Speaker 1: you know, kind of like you know, hoving prices don't
Speaker 1: go down. None of the models included that. None of
Speaker 1: their models include the idea that a retire beanie baby
Speaker 1: could conceivably still just be worth the retail price. So
Speaker 1: one of my favorite stings on Wall Street is that
Speaker 1: the only thing that's a bubble, well, something becomes a
Speaker 1: bubble once the bubble bursts. Anything else is a great trade,
Speaker 1: right he just made Tony. When you look around the world,
Speaker 1: it seems like we are continuously seeing warnings about bubbles
Speaker 1: again in tech, lots of other areas and financial markets.
Speaker 1: Having studied, uh, the science of stuffed animals, do you
Speaker 1: have any wisdom for how we can spot bubbles before
Speaker 1: they burst and before they burst? Yeah, I mean, you know,
Speaker 1: I think the thing, just behaviorally is that when wood
Speaker 1: is driving, it is entirely stories about how much money
Speaker 1: people have been making on it. That's something to be
Speaker 1: really concerned about. And I think any time you have
Speaker 1: a kind of surge of interest in new entrants into
Speaker 1: a field based on sort of past successes of other ones.
Speaker 1: There was a ton of that with the Internet bubble.
Speaker 1: You had legitimate companies, we go public first, and then
Speaker 1: the next one you know, this is gonna be the
Speaker 1: next that and that was a piece of crap. So
Speaker 1: I think I think those are you know, anytime you
Speaker 1: see well to me, you know, to bring your point
Speaker 1: to the current era. You know, we've been hearing about
Speaker 1: a possible tech bubble for the last ten years. I mean,
Speaker 1: when Facebook was valued at a billion dollars, people said
Speaker 1: tech bubble, and now it's worth hundreds of times hundreds
Speaker 1: of times that. But I did see an add on
Speaker 1: Instagram this week that like was promising how to make
Speaker 1: your billion dollar app, like a service that would teach
Speaker 1: people how to make an app that would be worth
Speaker 1: a billion dollars. And that reminds me of like telling
Speaker 1: stories just about the money. It's like it is the
Speaker 1: next level of the euphoria. I always love those like
Speaker 1: JP Morgan shoeshine bubbie stories about bubble. So I think,
Speaker 1: I mean, I remember when I was in high school,
Speaker 1: my bus driver and this was dangerous because he was
Speaker 1: driving a bus full of kids and he had to
Speaker 1: cell phones and he was slipping houses while he was
Speaker 1: driving talking to his like real estate ass and his
Speaker 1: manager at I just so I always look for things
Speaker 1: like that, and im when that year at a summer job,
Speaker 1: we'd go to the pizza place and they would also
Speaker 1: while it was just a little pizza shop, and they
Speaker 1: would also have a rival financial network to Bloomberg on
Speaker 1: TV all the time. And you know, I think the pizza.
Speaker 1: You know, that was what the pizza guys were watching
Speaker 1: was CNBC Wow, rival network. Well, said Joe, you actually
Speaker 1: managed to make some money from internet stocks. How did
Speaker 1: you time it? Because it seems like the timing is
Speaker 1: key here. Lots of people did get rich off beanie
Speaker 1: babies and lots of people got really poor. It was
Speaker 1: really it was the best luck I've ever had. I
Speaker 1: was trading through UM the basically Christmas break of two
Speaker 1: thousand and or anyway two thousand and then I UM
Speaker 1: had to study. I studied abroad in Switzerland, and the
Speaker 1: ring of two thousand and before I left UM, I
Speaker 1: sold all my stocks because like, I'm not going to
Speaker 1: be able to trade while I'm studying abroad. That it
Speaker 1: didn't seem plausible. And then the bubble birth while I
Speaker 1: was studying abroad, So out of pure luck with no insight,
Speaker 1: you need to craft that into a narrative about your
Speaker 1: own foresight. No, it was just the opposite. That's just
Speaker 1: pure luck. I just happened to sell like a couple
Speaker 1: of months before the peak, so that that worked out well,
Speaker 1: all right, So you made thousands off internet stocks and
Speaker 1: I made two bucks from a single beanie baby, but
Speaker 1: you got to cuddle it, so that's okay. I'm not sure. Um,
Speaker 1: all right, Zach, it was lovely having you on the show.
Speaker 1: Thank you so much. It's great. Thank you all right, Joe,
Speaker 1: We just had a really interesting, entertaining conversation. What did
Speaker 1: you learn? I actually think my favorite single fact was
Speaker 1: that point about the magazine and the relationship between seeing
Speaker 1: prices written down and seeing prices move and then the
Speaker 1: effect that has on actual prices. I think that's a
Speaker 1: fascinating point, right. I just love the idea that this
Speaker 1: group of soccer moms in Chicago became a market and
Speaker 1: Tycoons and I have thought about that before, this idea
Speaker 1: of their being there needing to be a complete set
Speaker 1: of them, um, and so it sort of creates this
Speaker 1: inherent scarcity to them that drives up demand. That was
Speaker 1: an aspect of the beanie baby boom that I had
Speaker 1: not realized before. All Right, Well, artificial scarcity is a
Speaker 1: hot topic in economics right now. Maybe that's something for
Speaker 1: another podcast. This is Tracy Alloway. You can find me
Speaker 1: at Tracy Alloway on Twitter and I'm Joe Wisnthal. Find
Speaker 1: me at The Stalwart on Twitter and If you want
Speaker 1: to follow Zack, he's on Twitter too at Zach Pissinet.
Speaker 1: And thank you for listening to Odd Lots. Tune in
Speaker 1: next time. O