WEBVTT - Episode 3: The Strange Story Behind the Beanie Babies Bubble 0:00:04.280 --> 0:00:08.080 Welcome to odd Lots. It's Monday, November three. I'm Tracy 0:00:08.119 --> 0:00:12.200 Allaway and I'm Joe. Joe. I've got a question for you. 0:00:12.680 --> 0:00:16.599 What were you doing to make money in the summer 0:00:16.640 --> 0:00:19.479 of nine was the best summer because I think I 0:00:19.560 --> 0:00:22.279 made about two thousand dollars from just a summer job 0:00:22.320 --> 0:00:25.120 that I had. But then I put that all into 0:00:25.120 --> 0:00:28.480 stocks because it was the Internet bubble, and I basically 0:00:28.520 --> 0:00:32.960 paid for two years of college thanks to essentially what 0:00:33.040 --> 0:00:35.280 I did that summer, So that's amazing. It was. It 0:00:35.320 --> 0:00:38.080 was a good time. Well, I was making money to 0:00:38.440 --> 0:00:40.680 a little differently. I was still in middle school. I 0:00:40.720 --> 0:00:44.519 was going to garage sales and selling old toys and 0:00:44.600 --> 0:00:47.120 one of the things I sold was a tie dyed 0:00:47.479 --> 0:00:51.560 beanie baby lizard. I sold it for two hundred dollars 0:00:52.040 --> 0:00:54.440 to a forty year old man, and at the time, 0:00:54.680 --> 0:00:56.560 me as an eleven year old, I thought this was 0:00:56.600 --> 0:00:58.880 amazing money and I was rolling in it. That is 0:00:58.920 --> 0:01:02.240 amazing money object for any age selling a stuffed animal 0:01:02.280 --> 0:01:05.520 for two dollars, right, So why are we talking about 0:01:05.600 --> 0:01:09.000 this today? We're going to delve into what can drive 0:01:09.240 --> 0:01:13.959 seemingly rational people to spend hundreds sometimes thousands of dollars 0:01:14.000 --> 0:01:16.640 on stuffed animals. We're going to talk about the beanie 0:01:16.680 --> 0:01:18.959 baby bubble, and we're going to talk about something more 0:01:19.000 --> 0:01:21.160 than that. We're going to talk about bubbles in general, 0:01:21.240 --> 0:01:26.399 the Internet bubble, and the psychology behind speculative mania. So 0:01:26.840 --> 0:01:30.120 here with us today is Zach Bissonett. He's the author 0:01:30.200 --> 0:01:33.240 of The Great Beanie Baby Bubble, Mass Delusion, and the 0:01:33.319 --> 0:01:35.840 Dark Side of Cute. It's a book that came out 0:01:35.840 --> 0:01:38.240 earlier this year and I just happened to finish it 0:01:38.319 --> 0:01:41.240 this morning. Zach, thanks for joining us. So why did 0:01:41.240 --> 0:01:45.080 you write a book about beanie babies animals? I like you. 0:01:45.240 --> 0:01:47.360 I I was in middle school when the beanie baby 0:01:47.360 --> 0:01:49.360 craze hit, and I was kind of a nerd, and 0:01:49.400 --> 0:01:51.560 I was into like old books and antiques and that 0:01:51.680 --> 0:01:53.240 kind of thing. And every weekend I would go to 0:01:53.280 --> 0:01:55.880 this flea market on Cape Cob with my mother, and 0:01:55.920 --> 0:01:58.080 we had never heard of beanie babies. And then all 0:01:58.080 --> 0:02:00.880 of a sudden, out of nowhere, that flea market was 0:02:00.920 --> 0:02:04.280 like beanie baby dealers, and they were wearing like Fannie 0:02:04.280 --> 0:02:08.000 packs and visors and talking just really really excitedly about 0:02:08.040 --> 0:02:09.800 how much they were going up in value and how 0:02:09.840 --> 0:02:12.440 this one they just paid five dollars for was now 0:02:12.480 --> 0:02:14.840 worth forty and they're not going to sell it this 0:02:14.840 --> 0:02:18.280 week because next week it'll be worth fifty. And that 0:02:18.400 --> 0:02:20.480 was like that for about two years, and then all 0:02:20.520 --> 0:02:22.480 of a sudden it was gone and no one ever 0:02:22.480 --> 0:02:24.680 talked about it again. I just I just want to say, uh, 0:02:25.040 --> 0:02:28.680 during those same years that my mother was dating a 0:02:28.680 --> 0:02:30.960 guy who was an antique dealer, and so I also 0:02:31.040 --> 0:02:33.440 went to a lot of flea markets in New England 0:02:33.520 --> 0:02:35.720 and I actually saw all the exact same thing where 0:02:35.720 --> 0:02:38.080 suddenly there were these flea markets where that used to 0:02:38.120 --> 0:02:40.600 be people bringing out their old stuff from their barns 0:02:40.639 --> 0:02:42.560 and then it's just people of stuff down and used 0:02:42.600 --> 0:02:46.680 to be traditionalist antique dealers hated it. Yeah, there was 0:02:46.720 --> 0:02:48.720 there was one guy I talked to who who he 0:02:48.800 --> 0:02:51.120 was so proud of this. He was a traditionalist antique 0:02:51.160 --> 0:02:54.359 dealer who had just railed against beanie babies. He would 0:02:54.400 --> 0:02:56.640 go on CNN. I would say, I'm not in kidding. 0:02:56.680 --> 0:02:59.400 CNN would have these like debates between this guy who 0:02:59.440 --> 0:03:03.240 they called the beanie Meanie and the beanie baby experts 0:03:03.280 --> 0:03:05.840 who were making millions of dollars selling one of them 0:03:05.880 --> 0:03:08.320 sold a million copies a month of a beanie baby 0:03:08.360 --> 0:03:10.840 magazine that she was publishing, and they would have these 0:03:10.880 --> 0:03:13.440 debates in this and this. A group of antique dealers 0:03:13.440 --> 0:03:17.080 in Indiana gave him a crucified skunk beanie baby with 0:03:17.120 --> 0:03:20.120 a certificate thanking him for being a traditionalist who stood 0:03:20.200 --> 0:03:23.600 up for traditional antiques. So this is the amazing thing. 0:03:23.680 --> 0:03:26.760 Walk us through how the beanie baby bubble came into 0:03:26.800 --> 0:03:30.000 existence and how we at one day actually got to 0:03:30.040 --> 0:03:32.760 the point where people were debating the value of stuffed 0:03:32.800 --> 0:03:35.240 animals on CNN. So it starts out with this this 0:03:35.440 --> 0:03:39.280 very sort of eccentric toymaker named Tie Warner, who dropped 0:03:39.280 --> 0:03:42.040 out of Kalamazoo College, tried to become an actor, failed 0:03:42.040 --> 0:03:45.440 at that, then became a toy salesman, was wildly successful 0:03:45.440 --> 0:03:46.920 with that, but then he got fired from that and 0:03:46.920 --> 0:03:50.040 decided to start his own stuffed animal company. And he 0:03:50.120 --> 0:03:54.080 started to create these beanie babies initially because he thought 0:03:54.160 --> 0:03:56.880 at a five dollar price point they would be irresistible 0:03:56.960 --> 0:03:58.640 and that it would help him the sort of a 0:03:58.640 --> 0:04:01.360 foot in the door with large accounts, and that he 0:04:01.400 --> 0:04:04.400 would then be able to kind of upsell bigger stores 0:04:04.880 --> 0:04:08.880 on selling his larger stuffed animal line, and it didn't 0:04:08.880 --> 0:04:12.320 work at all. I remember talking to talking to to 0:04:12.440 --> 0:04:15.080 the sales reps for Tye who remember just there was 0:04:15.120 --> 0:04:17.480 no interest in these beaning babies. People worried they were cheap, 0:04:17.560 --> 0:04:19.720 they thought they looked cheap. They worried people would buy 0:04:19.720 --> 0:04:22.440 the beanie babies instead of a more expensive product. He 0:04:22.560 --> 0:04:24.840 was just not getting any interest in them. But Ty Warner, 0:04:24.839 --> 0:04:27.520 the guy created them, really really believed in this product. 0:04:27.560 --> 0:04:31.560 And he combined that belief with an extremely sort of eccentric, 0:04:31.680 --> 0:04:34.960 obsessive approach to the product and the people who had 0:04:35.120 --> 0:04:36.520 who had worked with him, which at the beginning was 0:04:36.560 --> 0:04:38.440 just his girlfriend. But but she remembered when I when 0:04:38.440 --> 0:04:41.440 I talked with her, he would keep her up until 0:04:41.480 --> 0:04:44.760 like four in the morning debating one color of the 0:04:44.839 --> 0:04:47.360 ribbon on a bear should be. And then she'd think 0:04:47.400 --> 0:04:50.200 they would finally be done debating the color, and he 0:04:50.240 --> 0:04:52.080 would say, well what if it was tied this way 0:04:52.120 --> 0:04:54.240 instead of the other way, And then they would have 0:04:54.279 --> 0:04:56.960 to go back through the iterations of different colors again 0:04:57.000 --> 0:04:59.680 for hours. So he had this really really obsessive approach 0:04:59.720 --> 0:05:02.960 to the product. This is how the retirement came into 0:05:03.000 --> 0:05:06.560 being right precisely. So sometimes he would come out with 0:05:06.560 --> 0:05:09.719 a product and then a few months after he chipped 0:05:09.760 --> 0:05:11.800 a few thousand of them, he would like wake up 0:05:11.800 --> 0:05:14.479 in the middle of the night basically and decide that 0:05:14.520 --> 0:05:17.600 it should be a different color. So like one of 0:05:17.720 --> 0:05:20.479 his first beanie babies, not not one of the very first, 0:05:20.480 --> 0:05:22.080 but one of the one of the first was Peanut 0:05:22.160 --> 0:05:25.720 the Elephant, who was originally a royal blue color. And 0:05:25.760 --> 0:05:27.680 then after a few months of that, I think he 0:05:27.800 --> 0:05:31.159 chipped I think, like I can't remember the fourteen hundred 0:05:31.240 --> 0:05:33.400 or so of the of this beanie baby, and he 0:05:33.480 --> 0:05:36.800 decided it shouldn't be royal blue, it should be baby blue. 0:05:37.040 --> 0:05:39.400 And so the fact that they would get retired and 0:05:39.480 --> 0:05:41.599 never made again, there were never more than that, that's 0:05:41.600 --> 0:05:45.200 how they became collectible that people would see is going 0:05:45.279 --> 0:05:49.080 up in value entirely accidentally. So because this is happening 0:05:49.080 --> 0:05:51.719 before anyone cares about these his annual sales are like 0:05:51.800 --> 0:05:54.000 four million dollars a year at this point, mostly not 0:05:54.080 --> 0:05:56.960 from beanie babies. No one cares about beanie babies. Then 0:05:57.000 --> 0:06:00.480 all of a sudden, this small group of people suburban 0:06:00.560 --> 0:06:04.279 Chicago who lived on one cul de Sac started collecting 0:06:04.279 --> 0:06:06.400 beanie babies. They saw them in stores because they were 0:06:06.400 --> 0:06:08.400 near where Ty was headquartered, so that he had a 0:06:08.400 --> 0:06:10.560 big presence in stores there. And they decided they liked 0:06:10.640 --> 0:06:13.800 these beanie babies and that they wanted to assemble complete 0:06:13.839 --> 0:06:16.960 collections for their kids. And they became very obsessive. These 0:06:16.960 --> 0:06:19.080 were soccer mons. They came very very obsessive with trying 0:06:19.120 --> 0:06:22.440 to assemble complete collections, and so they would call stores 0:06:22.480 --> 0:06:25.080 and other towns to ask them what beanie babies they had, 0:06:25.640 --> 0:06:28.240 and then they remembered this. They would realize that there 0:06:28.279 --> 0:06:30.880 would be like these weird variations and these were the 0:06:30.880 --> 0:06:33.360 ones that he had retired, just changed the design because 0:06:33.360 --> 0:06:35.880 he took a few thousand and then changed entirely accidentally. 0:06:36.320 --> 0:06:39.720 And they started paying each other more for these kind 0:06:39.720 --> 0:06:42.320 of beanie babies. Started this small market for them just 0:06:42.440 --> 0:06:46.040 in this town. As this started to happen, as this 0:06:46.160 --> 0:06:49.800 kind of starts in this small town, this woman Peggy 0:06:49.839 --> 0:06:54.520 Gallagher and her sister Dr. Paula Brinko had this idea, 0:06:54.640 --> 0:06:57.839 you know, we're just calling stores like in the Chicago 0:06:57.920 --> 0:07:00.919 area where this all started, but we call stores in 0:07:01.000 --> 0:07:03.799 like other states will be able to find beanie babies 0:07:03.839 --> 0:07:06.560 that are really rare that no one else has, so 0:07:06.560 --> 0:07:09.240 they go to start going local chambers of commerce and 0:07:09.279 --> 0:07:11.760 getting lists of all of the gift shops. The woman 0:07:11.760 --> 0:07:14.400 who's a doctor at the same time that she's doing this, 0:07:14.520 --> 0:07:18.600 she's doing this study on women who were like diabetic 0:07:18.680 --> 0:07:21.920 or something where she had to call hospitals to talk 0:07:21.960 --> 0:07:24.840 to their researchers, and after she called the researcher, she 0:07:24.840 --> 0:07:27.000 would ask to be transferred to the gift shop to 0:07:27.040 --> 0:07:29.320 ask about beanie babies so she could try to order 0:07:29.320 --> 0:07:31.000 the rare one. But this is the part of the 0:07:31.000 --> 0:07:34.000 story that I love because we eventually go from this 0:07:34.080 --> 0:07:38.960 like small group of soccer mom collectors who professionalize themselves 0:07:39.040 --> 0:07:43.080 as beanie baby dealers and beanie baby market experts. I mean, 0:07:43.160 --> 0:07:46.680 one of them had a Beanie World magazine. She was 0:07:46.720 --> 0:07:50.320 a self described Chicago suburban soccer mom. She had a 0:07:50.360 --> 0:07:53.440 magazine with the circulation of more than one million million 0:07:53.480 --> 0:07:56.640 a month and more ads per copy than Glamour. These 0:07:56.640 --> 0:07:59.680 were like thick magazines full of ads. So people start 0:07:59.760 --> 0:08:02.160 seeing the priceless for these beanies, and they all figure 0:08:02.480 --> 0:08:04.360 prices are going to go up forever. These are good 0:08:04.400 --> 0:08:07.360 investments right, and the stores that are hearing all of 0:08:07.400 --> 0:08:09.880 a sudden out of nowhere start getting calls from these 0:08:09.880 --> 0:08:12.960 out of state collectors are like, oh my gosh, beanie 0:08:12.960 --> 0:08:15.640 babies are really hot. It starts out as like two 0:08:15.640 --> 0:08:18.440 people did the did the magazine that published the prices? 0:08:18.440 --> 0:08:20.800 Because I remember I used to collect baseball cards when 0:08:20.800 --> 0:08:22.920 as a kid, and there was the Beckett magazine, and 0:08:22.960 --> 0:08:25.600 there was like a crucial avenue by which the baseball 0:08:25.720 --> 0:08:29.720 card bubble, which also burst, everyone checked the prices each month. 0:08:29.760 --> 0:08:32.199 So did the magazine for beanie babies serve a similar 0:08:32.200 --> 0:08:35.600 purpose hugely, so that there's a reflexivity. I think two 0:08:35.640 --> 0:08:39.360 price guides where they impact prices as much as they 0:08:39.400 --> 0:08:42.400 report on them. And the first price let's which trebo 0:08:42.440 --> 0:08:45.480 this lady Peggy Gallagher, which she started to circulate. She 0:08:45.480 --> 0:08:47.840 put an ad in like a magazine for other collectors, 0:08:47.840 --> 0:08:50.160 saying he sent her self addressed stamped envelope, she would 0:08:50.160 --> 0:08:53.520 send you this checklist, and she was like, well, what 0:08:53.520 --> 0:08:55.840 should I do? Her prices? She just made them up. Basically, 0:08:55.880 --> 0:08:58.160 she told me this that she said this one's rare, 0:08:58.200 --> 0:09:00.360 so that one should be worth twenty dollars. These were 0:09:00.360 --> 0:09:02.920 not really based on anything, and then she kind of 0:09:02.960 --> 0:09:04.839 sat back and watched on like the A O. L 0:09:04.880 --> 0:09:08.720 message boards, is these priceless she was making up kind 0:09:08.720 --> 0:09:11.960 of became the the price and so talk about that 0:09:12.120 --> 0:09:14.280 how the internet and those are the early days of 0:09:14.320 --> 0:09:17.160 the Internet helped stoke that bubble, so that this is 0:09:17.160 --> 0:09:19.840 a bean babies were ten percent of ebays sales. In 0:09:19.880 --> 0:09:23.000 the early days of ebays. eBay disclosed in the risk 0:09:23.080 --> 0:09:26.600 factors to its sec FI lanes, a dependence on the 0:09:26.640 --> 0:09:32.160 contain crazy yes, and so people were getting computers and 0:09:32.200 --> 0:09:35.280 beanie babies more than anything. Really gave people a reason 0:09:35.400 --> 0:09:37.640 to go on eBay and to do online trading and 0:09:37.679 --> 0:09:39.760 actually just e commerce in general, not just there was 0:09:39.800 --> 0:09:41.920 also trader and message wards. In the early days of 0:09:41.920 --> 0:09:43.360 e commerce, there were a lot of stories that it 0:09:43.400 --> 0:09:45.320 was not growing as quickly as people thought it would. 0:09:45.520 --> 0:09:48.680 People weren't comfortable with it. Stuff was too expensive to 0:09:48.720 --> 0:09:51.480 ship with beanie babies something that had a kind of 0:09:51.520 --> 0:09:54.480 weird you weren't sure exactly what they were worth. They 0:09:54.520 --> 0:09:56.600 were easy to ship, and they were really hard to 0:09:56.600 --> 0:10:00.880 find locally. It brought people onto econ ummers in a 0:10:00.920 --> 0:10:04.040 way that other more mundane products like pets dot Com, 0:10:04.080 --> 0:10:07.240 we're not able to. So even though it's a completely 0:10:07.280 --> 0:10:11.199 pointless bubble of ultimately worthless stuffed animals, it actually did help. 0:10:11.280 --> 0:10:13.640 It had a beneficial effect on the development of these 0:10:13.679 --> 0:10:16.880 Internet markets. Meg Whitman has said in interviews that that 0:10:17.000 --> 0:10:19.520 eBay and I think Pierre Omyard said the same thing, 0:10:19.600 --> 0:10:21.600 that eBay may not have gotten off the ground without 0:10:21.600 --> 0:10:24.719 beanie babies. So, Joe, I know, you remember what the 0:10:24.840 --> 0:10:30.000 late nineties were like. When we look back on Beatie babies, 0:10:30.000 --> 0:10:32.720 it seems amazing that people spent all this money on them. 0:10:32.800 --> 0:10:36.280 All this time. We had one, at least one instance 0:10:36.320 --> 0:10:39.880 of a guy committing murder because of a soured Beatie 0:10:39.880 --> 0:10:42.600 baby deal. Do you remember how nuts it was? Are 0:10:42.640 --> 0:10:44.600 you talking about beanie babies? Are just the late nineties 0:10:44.600 --> 0:10:46.920 and gems? I mean, I would say they're linked, right, 0:10:47.080 --> 0:10:50.199 They're absolutely the people who when they think back and 0:10:50.240 --> 0:10:52.959 they talk about the nineties bubble, it's often referred to 0:10:53.160 --> 0:10:56.040 as a tech bubble or the Internet bubble or the 0:10:56.120 --> 0:10:59.480 dot com bubble. It completely misses the point. Yes, I 0:10:59.679 --> 0:11:03.120 was so much, It was so much bigger. It was 0:11:03.200 --> 0:11:06.640 such a big It was a sense of optimism about 0:11:06.760 --> 0:11:09.679 everything all at the same time, and so there's so 0:11:09.800 --> 0:11:13.240 many wonderful stories about people completely losing their mind. My 0:11:13.400 --> 0:11:17.880 single favorite story of the late nineties bubble was when 0:11:17.920 --> 0:11:22.360 a car dealership in Nevada. It was called Uniprime Capital Acceptance, 0:11:22.440 --> 0:11:24.240 And I remember this very vividly because I was on 0:11:24.320 --> 0:11:26.720 the message boards at the time. It was a penny 0:11:26.800 --> 0:11:31.199 stock maybe you traded trading, I was. They put out 0:11:31.200 --> 0:11:34.080 a press release that said they had a cure for AIDS. 0:11:34.360 --> 0:11:36.760 A car dealership in Nevada. The like was someone we've 0:11:36.800 --> 0:11:40.120 worked with or if we licensed this thing from a scientist. 0:11:40.280 --> 0:11:42.439 They just straight up we have a cure for AIDS. 0:11:42.679 --> 0:11:46.199 And you know, even in the craziest times, like that's 0:11:46.240 --> 0:11:49.800 kind of a skeptical belief, but enough people believed that 0:11:49.880 --> 0:11:52.520 that the stocks surged, it doubled, and then it doubled 0:11:52.559 --> 0:11:55.600 again because just on the possibility that maybe a car 0:11:55.720 --> 0:11:58.599 dealership in Nevada had found a cure for aid the 0:11:58.679 --> 0:12:02.559 people were so optimis stick of everything that it seemed 0:12:03.480 --> 0:12:07.440 not unbelievable. There was a people talk about the internet 0:12:07.480 --> 0:12:12.000 stocks anything that was that breathed on the Internet, people 0:12:12.000 --> 0:12:14.280 are going crazy for One of my favorite facts is 0:12:14.320 --> 0:12:16.840 the fact that k Tell, the company that makes really 0:12:16.960 --> 0:12:21.959 cheesy compilation CDs of like seventies DISCOMs, they sold their 0:12:22.000 --> 0:12:26.600 CDs online, Big whoop. The stock grew tenfold at one point, 0:12:26.679 --> 0:12:29.319 and then over the span of a few months, people 0:12:29.480 --> 0:12:31.480 were losing their minds. The other fact that I love 0:12:31.640 --> 0:12:34.320 is the fact that the segue that you know didn't 0:12:34.360 --> 0:12:37.000 really take off, but people still go tours around. People 0:12:37.040 --> 0:12:39.800 really thought the entire cities were going to be redesigned 0:12:40.200 --> 0:12:42.360 because of how the segue I got people around. So 0:12:42.600 --> 0:12:47.559 basically it was a time of just incredible optimism about everything. So, Zach, 0:12:47.640 --> 0:12:49.679 I'm curious. In your book you quote a lot from 0:12:49.760 --> 0:12:52.920 existing you know, economic and financial literature. You quote people 0:12:52.960 --> 0:12:56.400 like Robert Schiller on the optimism that precedes bubbles when 0:12:56.440 --> 0:12:58.559 it comes to beanie babies. If you could kind of 0:12:58.640 --> 0:13:03.520 pinpoint one thing that flipped it into speculative mania, what 0:13:03.600 --> 0:13:07.160 would it be. It's people seeing prices rise. That that 0:13:07.360 --> 0:13:10.800 is what drives what drives speculative bubbles is that as 0:13:10.880 --> 0:13:15.079 soon as there's you know, this insignificant phenomenon of someone 0:13:15.120 --> 0:13:18.160 who's trying to complete a set for their kid, as 0:13:18.240 --> 0:13:20.679 soon as they pay a hundred dollars for a beanie 0:13:20.720 --> 0:13:24.160 baby that someone paid five dollars for. That's what sets 0:13:24.200 --> 0:13:27.440 in motion, or at least can set in motion certainly 0:13:27.840 --> 0:13:30.480 this kind of chain, because that becomes a story and 0:13:30.520 --> 0:13:33.040 beanie babies, and I think all bubbles are spread by 0:13:33.160 --> 0:13:35.560 by narrative, by people saying I bought this beanie baby 0:13:35.640 --> 0:13:38.120 for five dollars and sold it for a hundred. Anyone 0:13:38.160 --> 0:13:40.160 who did that told a thousand people about it because 0:13:40.160 --> 0:13:41.880 it was so weird. So how big did it get in? 0:13:42.200 --> 0:13:45.040 Is there an estimate of what the total outstanding value 0:13:45.040 --> 0:13:48.079 of beanie babies was at the TIS annual sales peaked 0:13:48.080 --> 0:13:51.199 it around one point five billion dollars um. And that 0:13:51.360 --> 0:13:56.520 was just wholesale. Other people who there must be but 0:13:56.679 --> 0:13:58.319 have a bunch and held it all the way down 0:13:58.440 --> 0:14:00.439 and now just they live in a house filled with it. 0:14:00.480 --> 0:14:04.839 There is a retired soap opera star in Arizona. I think, 0:14:05.640 --> 0:14:07.520 remember what's come so long as I talked to him. Um, 0:14:07.960 --> 0:14:10.000 there's a retired soap opera star who lost his kids 0:14:10.040 --> 0:14:12.480 six figure college funds on them and has like thirty 0:14:12.520 --> 0:14:15.800 thousand of them still in his home. That's Graham. We 0:14:15.960 --> 0:14:19.120 talked about how these sort of bubbles began, at least 0:14:19.120 --> 0:14:21.240 in the case of beanie babies, how did it end? 0:14:21.720 --> 0:14:25.280 Because it did start to fizzle out in and within 0:14:25.400 --> 0:14:29.080 a couple of years the secondary market value of thousands 0:14:29.160 --> 0:14:31.560 millions of stuffed animals was gone. This was one of 0:14:31.640 --> 0:14:33.880 the funniest things about the reporting on this, and I 0:14:33.920 --> 0:14:36.040 think there's a lot of very similar stuff with the 0:14:36.160 --> 0:14:40.240 reporting on the housing bubble and the Internet stock bubble, 0:14:41.120 --> 0:14:44.000 is that I would kind of pose this question to 0:14:44.800 --> 0:14:48.280 the collectors anti executives about kind of how this thing 0:14:48.360 --> 0:14:53.440 had ended, and they all had these really specific explanations 0:14:53.520 --> 0:14:55.920 for it, these kind of linear cause and effect things. 0:14:57.040 --> 0:14:58.800 You know that there was one saying, oh, you know, 0:14:58.880 --> 0:15:02.360 the counterfeits really invaded the market and people were paying 0:15:02.400 --> 0:15:04.280 you know, six hundred dollars and if it hadn't for 0:15:04.360 --> 0:15:06.560 pieces they're trying to be fake, and if it hadn't 0:15:06.640 --> 0:15:08.720 been for all the fraud this, you know, it wouldn't 0:15:08.720 --> 0:15:11.160 have ended that way. A lot of people felt, you know, 0:15:11.280 --> 0:15:14.480 Ty got greedy and made too many, too many styles 0:15:15.000 --> 0:15:19.000 and overproduce them, and I'm like, okay, you know, maybe 0:15:19.120 --> 0:15:21.280 kind of, but you know, if he hadn't done that, 0:15:21.440 --> 0:15:23.960 then being would they still be temper cent and based 0:15:23.960 --> 0:15:26.200 sales and we'd all be rich. I Mean, these things 0:15:26.400 --> 0:15:30.080 end because they're stupid, right, Like that's ultimately they're they're unsustainable, 0:15:30.480 --> 0:15:33.280 and eventually there is something that nixed them and causes 0:15:33.360 --> 0:15:36.120 that kind of that kind of cascade of confidence that 0:15:36.240 --> 0:15:39.760 started it to just crescendo down and and that's what happened. Um, 0:15:40.680 --> 0:15:44.360 there's this thing. At the end of nine. Everything is 0:15:44.360 --> 0:15:48.400 still basically going well. Secondary market sales still good, top 0:15:48.440 --> 0:15:51.560 pieces still valuable, some overproduction on some of the newer pieces, 0:15:51.600 --> 0:15:54.280 those are stacking up a little bit, but basically still 0:15:54.320 --> 0:15:57.240 a strong market. No one's saying this thing's ending. Collectors 0:15:57.280 --> 0:16:01.480 still confident, magazine still selling. Tie announces at the end 0:16:01.520 --> 0:16:07.320 of that on that on January one, all of the 0:16:07.400 --> 0:16:10.800 beanie Babies will be retired and that they won't be 0:16:10.880 --> 0:16:14.320 made anymore. Theoretically, prices should have gone through the roof 0:16:14.400 --> 0:16:17.880 at that point for a minute. Yeah, they did for 0:16:17.920 --> 0:16:21.240 a minute, and people were very excited, and people are like, 0:16:21.280 --> 0:16:22.840 what's going on. This is going to do a different 0:16:22.880 --> 0:16:26.720 product and uh. And then he announced that he would 0:16:26.720 --> 0:16:29.720 do a vote to raise money for AIDS on whether 0:16:29.800 --> 0:16:32.680 people wanted to Beanie Babies to continue, and you would 0:16:32.720 --> 0:16:35.360 log in and online and don't and donate that there 0:16:35.440 --> 0:16:37.000 was some other stuff going on in his life. But 0:16:37.120 --> 0:16:39.120 where you could donate a dollar forty nine, I think 0:16:39.160 --> 0:16:42.960 it was to vote on whether Beanie Babies should be continued. First, 0:16:43.000 --> 0:16:45.520 I'll raise the question of who would spend a dollar 0:16:45.640 --> 0:16:49.240 fifty to vote to end Beanie Babies here that kind 0:16:49.280 --> 0:16:52.200 of like. But so he does this and almost no 0:16:52.360 --> 0:16:54.320 one voted, ended up just having to donate all the 0:16:54.360 --> 0:16:58.040 money himself because he hadn't gotten so many votes as 0:16:58.080 --> 0:17:00.840 he claimed he had, and announced that Beanie Babies would 0:17:00.840 --> 0:17:03.520 be continued and that all the new releases there will 0:17:03.520 --> 0:17:06.960 be all these new millennium collection coming out, and no 0:17:07.080 --> 0:17:09.600 one cared, and the whole thing just every month after that, 0:17:09.760 --> 0:17:13.280 the sales collapsed and people started to That caused your 0:17:13.280 --> 0:17:15.440 out crisis of confidence about the right and then what 0:17:15.600 --> 0:17:18.479 causes and then what happened was so these retire Beanie Babies. 0:17:18.560 --> 0:17:20.800 I remember talking to one of the first collectors who 0:17:20.880 --> 0:17:24.040 was underway back from speaking in a Beanie Baby convention 0:17:24.119 --> 0:17:26.840 as a paid expert, you know, like a keynote speaker 0:17:26.880 --> 0:17:28.960 on beanie babies, and she was at the O'Hare airport 0:17:29.680 --> 0:17:32.959 and she saw a stack of beanie babies. There were 0:17:33.000 --> 0:17:36.440 still five dollars in the store. But we're retired, and 0:17:36.560 --> 0:17:38.920 this was like mind blow. I mean, people thought it 0:17:38.960 --> 0:17:41.879 was a law of physics that a retired beanie baby 0:17:42.119 --> 0:17:44.960 was worth more than five dollars and that that was 0:17:45.040 --> 0:17:47.920 just true. And uh, I mean, you know, kind of 0:17:47.960 --> 0:17:49.680 like you know, hoving prices don't go down. None of 0:17:49.720 --> 0:17:52.280 the models included that. None of their models include the 0:17:52.359 --> 0:17:55.680 idea that a retired beanie baby could conceivably still just 0:17:55.800 --> 0:17:59.719 be worth the retail price. Um. One of my favorite 0:17:59.760 --> 0:18:02.320 saying on Wall Street is that something becomes a bubble. 0:18:02.760 --> 0:18:05.919 Once the bubble bursts, anything else is a great trade, right, 0:18:06.200 --> 0:18:09.600 he just made tons of money. When you look around 0:18:09.640 --> 0:18:13.119 the world, it seems like we are continuously seeing warnings 0:18:13.160 --> 0:18:16.159 about bubbles again in tech, lots of other areas and 0:18:16.280 --> 0:18:21.080 financial markets. Having studied, uh, the science of stuffed animals, 0:18:21.440 --> 0:18:23.320 do you have any wisdom for how we can spot 0:18:23.400 --> 0:18:27.520 bubbles before they burst and before they burst? I think 0:18:27.600 --> 0:18:31.600 the thing, just behaviorally is that when wood is driving, 0:18:31.680 --> 0:18:35.280 it is entirely stories about how much money people have 0:18:35.400 --> 0:18:38.600 been making on it. That's something to be really concerned about. 0:18:38.920 --> 0:18:42.800 And I think any time you have a kind of 0:18:43.080 --> 0:18:47.320 surge of interest in new entrants into a field based 0:18:47.480 --> 0:18:50.440 on sort of past successes of other ones, there was 0:18:50.480 --> 0:18:52.359 a ton of that with the Internet bubble. You had 0:18:52.440 --> 0:18:56.879 legitimate companies go public first and then the next one 0:18:56.960 --> 0:18:58.119 you know, this is going to be the next that, 0:18:58.200 --> 0:19:00.320 and that was a piece of crap. So I think, well, 0:19:00.720 --> 0:19:02.399 to me, you know, to bring your point to the 0:19:02.520 --> 0:19:05.120 current era. You know, we've been hearing about a possible 0:19:05.240 --> 0:19:08.000 tech bubble for the last ten years. I mean, when 0:19:08.040 --> 0:19:10.960 Facebook was valued at a billion dollars, people said tech bubble, 0:19:10.960 --> 0:19:13.440 and now it's worth hundreds of times that. But I 0:19:13.520 --> 0:19:16.560 did see an ad on Instagram this week that was 0:19:16.680 --> 0:19:19.800 promising how to make your billion dollar app, like a 0:19:19.920 --> 0:19:22.240 service that would teach people how to make an app 0:19:22.280 --> 0:19:24.880 that would be worth a billion dollars, And that reminds 0:19:24.960 --> 0:19:28.280 me of like telling stories just about the money. It 0:19:28.359 --> 0:19:30.760 was like, is the next level of the euphoria. I 0:19:30.840 --> 0:19:34.600 always love those like JP Morgan Shoeshine Bobbie stories about bubble. 0:19:34.680 --> 0:19:37.960 So I think, I mean, I remember when I was 0:19:38.000 --> 0:19:41.520 in high school, my bus driver and this was dangerous 0:19:41.520 --> 0:19:44.520 because he was driving a bus full of kids, and 0:19:44.600 --> 0:19:46.919 he had to cell phones and he was flipping houses 0:19:46.960 --> 0:19:49.240 while he was driving, talking to his like real estate 0:19:49.280 --> 0:19:51.480 ass and his manager, and I just so I always 0:19:51.480 --> 0:19:55.639 look for things like that. I remember when that year 0:19:55.720 --> 0:19:58.480 at a summer job, we'd go to the pizza place 0:19:59.119 --> 0:20:01.440 and they would allo so while it was just a 0:20:01.480 --> 0:20:04.439 little pizza shop, and they would also have a rival 0:20:04.640 --> 0:20:08.800 financial network to Bloomberg on TV all the time. That 0:20:08.960 --> 0:20:13.400 was what the pizza guys were watching was CNBC rival network. Well, 0:20:13.480 --> 0:20:17.120 said Joe, you actually managed to make some money from 0:20:17.160 --> 0:20:19.639