Speaker 1: But knowledge to work and grow your business with c
Speaker 1: i T from transportation to healthcare to manufacturing. C i
Speaker 1: T offers commercial lending, leasing, and treasury management services for
Speaker 1: small and middle market businesses. Learn more at c i
Speaker 1: T dot com put Knowledge to Work. Hello and welcome
Speaker 1: to another episode of the Odd Lots podcast. I'm Joe
Speaker 1: Wisenthal and I'm Tracy Alloway. So, Tracy, I have to
Speaker 1: admit I have a I have a certain pet peeve
Speaker 1: about other financial journalists, just one, actually a lot. Haven't
Speaker 1: you been complaining that I've been attacking financial media too much,
Speaker 1: like work and stuff like that. Well, yes, good, because
Speaker 1: now I have an entire set up to an episode
Speaker 1: that's basically me just venting about other people in our field.
Speaker 1: This is exactly what I wanted, now, you know. It
Speaker 1: really annoys me. The prevalent of people to say that
Speaker 1: there's a bubble in everything. Journalists are always calling things
Speaker 1: a bubble. If you go back to any market at
Speaker 1: any time, you could probably find someone who's like stroking
Speaker 1: their chin and trying to sound smarter and more wise
Speaker 1: than everyone else and saying, oh, this is a bubble.
Speaker 1: Looks like to me because they want to be the wise,
Speaker 1: skeptical one that didn't get caught up in the hype. Right, Okay,
Speaker 1: I mean I get the complaint, But isn't that sort
Speaker 1: of like our goal in life is to be the
Speaker 1: watchdogs with the potential like disaster scenario always ready at hand.
Speaker 1: Shouldn't we be warning people? We should be. I think
Speaker 1: we should be judiciously warning people. But I mean the
Speaker 1: goal should be right, to be right, not necessarily, and
Speaker 1: there are other ways to express concerns about development rather
Speaker 1: than immediately say bubble. Okay, I'm with you that the
Speaker 1: term bubble might be overused. Yes, the big said, it's
Speaker 1: kind of a timely now because you know, just talking
Speaker 1: about the stock market, the stock market is at the
Speaker 1: highest level, very close to its all time highest levels.
Speaker 1: Many traditional valuation measures are arguably stretched, and there was
Speaker 1: a survey recently done that showed Americans are more bullish
Speaker 1: about the stock market than they have been at any
Speaker 1: time since the tech bubble. Right, Americans and also their
Speaker 1: fund managers. Right, everyone seems to be super optimistic at
Speaker 1: the moment, exactly, at least about equities. Yeah, at least
Speaker 1: about stocks. And you know, there's that just that alone
Speaker 1: would be caused for some reason to perhaps be concerned.
Speaker 1: But then you know, you sort of layer on top
Speaker 1: of that the sort of volatile political environment, and you
Speaker 1: certainly have a lot of people right now who are
Speaker 1: starting to throw around the B word again regards to
Speaker 1: stocks words. But I mean, when you hear a statistic
Speaker 1: like people are the most positive on stocks since the
Speaker 1: year two thousand, you immediately remember what happened in the
Speaker 1: year two thousand or shortly after, right, No, you have
Speaker 1: to immediately say, well, that might be a bad contrarian signal.
Speaker 1: But rather than just speculate, and rather than just throw
Speaker 1: out random statistics that say, oh, scary, the last time
Speaker 1: this happened, markets plunged right afterwards. How about we actually
Speaker 1: talked to someone who's expertise is in identifying when the
Speaker 1: market is in a bubble or not. You sure you
Speaker 1: don't just want to like stroke your chin. We could
Speaker 1: and pontificate. We could do that a few more minutes
Speaker 1: that I can just ran some more, But I don't know,
Speaker 1: Maybe we should actually talk to someone who knows what
Speaker 1: they're talking about. Okay, let's do it. Who is it?
Speaker 1: So today we're going to be talking to Robin Greenwood,
Speaker 1: He is a professor at Harvard Business School, and as
Speaker 1: part of his research, he looks into what are the
Speaker 1: true characteristics of stock price bubbles? What do they have
Speaker 1: in common? How do you distinguish between what is a
Speaker 1: bubble and what's just a rising boom? He sounds perfect.
Speaker 1: Let's bring him on. He is perfect. Robin Greenwood, thank
Speaker 1: you very much for joining us. Hi, Joe, Hi, Tracy.
Speaker 1: So let's just start with a question, is why is
Speaker 1: it so hard to call bubbles? People? As we were
Speaker 1: just talking about, people do it all the time. Sometimes
Speaker 1: it seems really obvious that something must be in some
Speaker 1: irrational price. Actually, you know what, here's the question, now, yeah,
Speaker 1: why is it? What's so okay? Here's my question? What
Speaker 1: is a bubble? People throw this word around and Tracy
Speaker 1: and I probably mentioned at fifteen times in the intro,
Speaker 1: but what is a bubble? So it's funny that you
Speaker 1: you were talking about journalists and how regularly they're they're
Speaker 1: willing to use the word bubble Among economists, bubble is
Speaker 1: actually somewhat of a four letter word. I mean, I
Speaker 1: can't tell you the number of times that I've been
Speaker 1: in conversations with other economists and describe something as a
Speaker 1: potential bubble, and they say, what do you mean, what's
Speaker 1: a bubble? That it's a bubble um, there's no such
Speaker 1: thing as a bubble. And in fact, that idea is
Speaker 1: pretty well encapsulated by the most recent one of the
Speaker 1: most recent Nobel Prize winners, Gene Fama, who has famously
Speaker 1: said in lots of different outlets that there's really no
Speaker 1: such thing as a bubble. And I think that the
Speaker 1: starting point for many economists is that it's easy to
Speaker 1: say after the fact that something has crashed, or that
Speaker 1: something has run up and then crashed, But in fact
Speaker 1: it's not really very meaningful to describe something after the fact.
Speaker 1: You really want to be able to say something, as
Speaker 1: you point out, before the fact, before the crash. And
Speaker 1: so I think people have in mind lots of different
Speaker 1: concepts when they talk about bubble. We actually defined in
Speaker 1: our work. We made a very uh specific decis vision
Speaker 1: too to have a narrow concept of a bubble, which
Speaker 1: is a very rapid price run up followed by a crash.
Speaker 1: So really, thank dot com stocks, that was our idea.
Speaker 1: Let's try to understand episodes that are like that. So
Speaker 1: someone in the investment industry once told me that another
Speaker 1: term for a bubble that hasn't crashed is a really
Speaker 1: good good bull run. Right, Um, so when you look
Speaker 1: at your definition of bubbles, how many how many actual
Speaker 1: bubbles do you count versus how many really good bull
Speaker 1: runs that haven't ended with a crash? Great? Yes, So
Speaker 1: we looked in history and we looked at industries. And
Speaker 1: the reason we looked at industries was because in many
Speaker 1: of these run ups, like dot com and in the
Speaker 1: nineteen twenties, there's this huge industry component. So for example,
Speaker 1: not every industry went up in the late nineteen nineties.
Speaker 1: So that said, we're looking at these price run ups,
Speaker 1: we only find forty since the nineteen twenties in the US,
Speaker 1: and roughly half of those crash. And then we also
Speaker 1: look at thirty four countries back to the nineteen eighties,
Speaker 1: and we identified a hundred and seven episodes and essentially
Speaker 1: find identical findings there, which is to say that about
Speaker 1: half of those crash as well. Now, one of the
Speaker 1: challenges in one of the reasons this is such an
Speaker 1: important and difficult question, and I want to next get
Speaker 1: to the sort of common characteristics of all these bubbles.
Speaker 1: But one of the reasons why it's such a important
Speaker 1: question is that calling a bubble is a very difficult
Speaker 1: thing for investors and can often be harmful to one's career,
Speaker 1: even if correct. So one might have identified in that
Speaker 1: internet stocks were in a bubble, but you might have
Speaker 1: gone broke between and March of two thousand, either shorting
Speaker 1: the market in which you would have been destroyed or
Speaker 1: avoiding the market. Inch case, perhaps all of your investors
Speaker 1: might have taken their money out of you and gone
Speaker 1: with some other manager. Yes, so, Joe, that observation we
Speaker 1: found in the data in all of these historical episodes.
Speaker 1: So even in the cases where you were right, so
Speaker 1: meaning we had this price run up, we said it's
Speaker 1: a bubble, it's gonna crash, and it ultimately did crash,
Speaker 1: we actually were off by five months on average, meaning
Speaker 1: that subsequent of the price run up, actually prices continue
Speaker 1: to run up an average of an additional five months
Speaker 1: and go up by an average of about So imagine
Speaker 1: you're short the tech bubble, and the tech bubble it
Speaker 1: was worse because if you used our signal, you would
Speaker 1: have been short starting in March, and you know you
Speaker 1: would you would have lost everything just being short through
Speaker 1: April of two thousand, but more generally, if you look
Speaker 1: across episodes, you would have been off by at least
Speaker 1: five months. Mhm um. In your research, did you find
Speaker 1: anything that suggests what the catalysts are for an actual
Speaker 1: crash to occur in a bubble, Because, as we've just
Speaker 1: been discussing, you know, if it's not a bubble, it's
Speaker 1: a bull run that just goes on for a long
Speaker 1: long time. So what is the actual thing that tips
Speaker 1: it over? So the thing we did not investigate and
Speaker 1: we are looking at now is the exact timing and
Speaker 1: how it What are the characteristics around the crash um
Speaker 1: that might help you be a really good timer of
Speaker 1: of that crash. What we did instead was say, we've
Speaker 1: got these forty episodes. You know, whether it was the
Speaker 1: utilities in the twenties or the dot com stocks or
Speaker 1: healthcare stocks in nighties, what are the characteristics of that
Speaker 1: price run up? You know, extra speculation, volatility, issuance, a
Speaker 1: new paradigm, all that kind of stuff doesn't help us
Speaker 1: forecast which of the episodes are going to ultimately crash.
Speaker 1: And there there we found I think pretty useful evidence
Speaker 1: that you can predict, at least to some extent, which
Speaker 1: of those episodes are going to crash. So let's talk
Speaker 1: about some of these attributes. You identify a few very
Speaker 1: specific things that all these bubbles that crashed have in coming,
Speaker 1: Why don't you tell us what a few of them are. Short.
Speaker 1: One of the things that we found was a new
Speaker 1: a new characteristic we called acceleration. An acceleration really means
Speaker 1: that if the price has been going up even faster
Speaker 1: more recently, that's a good sign of a potential crash.
Speaker 1: The other thing we looked at was issuance, so for example,
Speaker 1: lots of new firms coming online I P O S
Speaker 1: so thick, also twenties um. And then finally, one of
Speaker 1: the things we looked at was new firms versus old firms,
Speaker 1: So a lot of these episodes involved new new firms.
Speaker 1: In fact, this is less well known, but the bubble
Speaker 1: in the nineteen twenties was largely around the electrification of America.
Speaker 1: So in nineteen twenty there were thirty of households had electricity.
Speaker 1: By the end of that decade, it was there was
Speaker 1: the same kind of hype about electrification that we had
Speaker 1: abound dot com, and so we said, well, let's try
Speaker 1: to measure kind of the novelty of the industry at
Speaker 1: this time and whether there's a way to link that
Speaker 1: to the crash probability. Wait, I have a personal anecdote
Speaker 1: that I just remembered. No, no, I don't think I've
Speaker 1: ever told you that. It just I actually have very direct,
Speaker 1: relevant personal anecdote that I just remembered that relates to this.
Speaker 1: So it was and I was, I think a freshman
Speaker 1: or sophomore in college, and I like traded stocks a
Speaker 1: little bit with some money that I made for a
Speaker 1: summer job, and I invested in this company called Spyglass,
Speaker 1: which was a company that made uh software for TVs
Speaker 1: and phones to connect to the Internet, and they actually
Speaker 1: like had revenues in real business, but the stock didn't
Speaker 1: go anywhere. And then there's other company called Liberate Technology,
Speaker 1: which was actually an Oracle spinoff, did the exact same thing,
Speaker 1: and they had almost no revenue or anything, but that
Speaker 1: stock went nuts, and I I just remember this. It
Speaker 1: seems like a good example of people. Spyglass had been
Speaker 1: around traded for several years, it just traded like dead money,
Speaker 1: and Liberate when bananas and I couldn't understand the gap.
Speaker 1: But now hearing this, I'm reminded what you're exactly what
Speaker 1: you're saying, this sort of the fetish for the new
Speaker 1: company rather than the old, established one. Yeah, I think
Speaker 1: bubbles are sometimes about new companies and new industries. They're
Speaker 1: always about a new story, and that's something that's very
Speaker 1: hard to quantify because we're looking at all these episodes
Speaker 1: over essentially a hundred years of data, so we can't
Speaker 1: quantify that very well. But new industry is a way
Speaker 1: to get at that. I mean, on your dot Com experience,
Speaker 1: there was an amazing phenomena where just adding dot com
Speaker 1: to your stock name added seventy price to the to
Speaker 1: the stock price. So, Robin, you mentioned that when it
Speaker 1: comes to identifying actual bubbles, the acceleration of the price
Speaker 1: increases can be valuable or a valuable indicator and also issuance.
Speaker 1: Is it because of this same dynamic, because you basically
Speaker 1: just have a bunch of people jumping on the bandwagon.
Speaker 1: I think acceleration is measuring well, actually we're not sure
Speaker 1: what acceleration measures, but we think it might be related
Speaker 1: to people coming in and buying following the very high
Speaker 1: already prices and past returns. The issuance I would say
Speaker 1: is related to firms understanding it's great times that people
Speaker 1: want to buy stock and they just want to supply
Speaker 1: that stock. Why not. Um So, there's a lot of
Speaker 1: research already in finance showing that subsequent to a bunch
Speaker 1: of issuance, that returns are low. But the thing that
Speaker 1: we have that's new is combined with this massive price
Speaker 1: run up, it's a pretty good predictor of crash. But
Speaker 1: knowledge to work and grow your business with c i
Speaker 1: T from transportation to healthcare to manufacturing. C i T
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Speaker 1: and middle market businesses. Learn more at c i T
Speaker 1: dot com put Knowledge to Work. You mentioned at the
Speaker 1: beginning of the episode that economists hate the word bubble,
Speaker 1: and I guess that's because economists and Joe no I
Speaker 1: like the word bubble. I just think that we should
Speaker 1: use it sparingly. But I've been forced to get rid
Speaker 1: of it that word in multiple things that I've written
Speaker 1: over the years. Isn't that just because so many economists
Speaker 1: more or less have an efficient markets view of the
Speaker 1: world that at any given moment, the markets are perfectly
Speaker 1: pricing in all information and bubble is too judgmental in
Speaker 1: terms of markets are getting something wrong. I think it's that,
Speaker 1: but I think it's also what you mentioned earlier, which
Speaker 1: is that we don't really have a clear definition of
Speaker 1: a bubble. So is it a big price run up
Speaker 1: followed by a crash? Is it just misspricing of some degree?
Speaker 1: So for example, if the stock market is miss priced
Speaker 1: by ten or is that a bubble or bonds of bubble?
Speaker 1: People don't really agree on the definition. And I think
Speaker 1: that's a strength of what we did was really fix
Speaker 1: a definition and then just see where it takes us. Tracy.
Speaker 1: It reminds me of like one of our episodes. We're
Speaker 1: talking about the definition of money, and we're talking about
Speaker 1: how any person on the street can tell you what
Speaker 1: money is, accept an economy miss who couldn't do it
Speaker 1: in a really hard question. The same thing as with bubbles.
Speaker 1: Anyone could sort of define it except an economist. So
Speaker 1: away from the definition's issue, which I have a feeling
Speaker 1: we could talk about for a while, I kind of
Speaker 1: have a structural question, which is it's really great to
Speaker 1: sit and talk about what a bubble actually is, but
Speaker 1: doesn't help anyone who's actually investing, because I remember, way
Speaker 1: back in the day, City Group had a really good
Speaker 1: definition of a bubble, which was that a bubble is
Speaker 1: an asset that I get fired for not owning. If
Speaker 1: you see, like if you see tex stocks accelerating by
Speaker 1: a hundred percent over the course of a year and
Speaker 1: you don't have those in your portfolio, someone's going to
Speaker 1: yell at you. Right, even if you think it might
Speaker 1: be a risky investment. How do you square that? I
Speaker 1: think you're raising a great set of questions about why
Speaker 1: these bubbles come to be in the first place. And
Speaker 1: to be fair, our research don't really doesn't really speak
Speaker 1: to that question. You know my opinion, I think what
Speaker 1: you're saying is exactly right. These very large price run ups,
Speaker 1: you actually have to participate. I actually did some work
Speaker 1: a few years ago looking at the tech bubbles specifically,
Speaker 1: and one of the things that we found there was
Speaker 1: that the we were looking at mutual fund managers, and
Speaker 1: we found that the old guard so mutual fund managers
Speaker 1: over we're essentially loath to get into the dot com
Speaker 1: stocks until the very end, So they actually performed very poorly.
Speaker 1: But the young, the young people were involved sort of
Speaker 1: right from the beginning. So I don't know if that's
Speaker 1: career incentives beliefs. We pushed the line that it was
Speaker 1: a lot driven by beliefs that you know, young people
Speaker 1: haven't experienced the crash. They don't say, well, we've seen
Speaker 1: this before, um, And we had some other evidence to
Speaker 1: support that view. I think it's probably a bit of
Speaker 1: both of beliefs and incentives, and it also sort of
Speaker 1: you know, people always talk about this, not necessarily with bubbles,
Speaker 1: what markets turn. When you talk about the final bears capitulated,
Speaker 1: the final bulls capitulate often being a sign of some
Speaker 1: sort of market turn. There's a very famous picture of
Speaker 1: Isaac Newton's holdings during the south Sea bubble, where he
Speaker 1: is in at the beginning, so when prices are low,
Speaker 1: he gets out when they rise by some extent, let's
Speaker 1: say it's and then prices keep rising and he's looking
Speaker 1: around and presumably all of his friends are making a
Speaker 1: lot of money, and he gets in again at the
Speaker 1: peace peak and um gets completely wiped out. I just
Speaker 1: googled this chart right now, I'm looking at it. It
Speaker 1: is pretty sad, and it really is sort of like
Speaker 1: the perfect emblem of if you if you searge Isaac
Speaker 1: Newton's South Sea Bubble, you'll immediately see the chart online
Speaker 1: and it perfectly describes the psychology of capitulating to a
Speaker 1: bubble at the worst possible times, both on the run
Speaker 1: up and the and the way down. You see this
Speaker 1: in the ships market actually, so if you go back
Speaker 1: to two thousand and eight, there was this incredible run
Speaker 1: up and ship prices so dry ball carriers, and if
Speaker 1: you look at the data, there was actually this little
Speaker 1: price run up in two thousand six two thousand seven,
Speaker 1: and a lot of people in the industry at the
Speaker 1: time said, wow, we've never seen price prices as high,
Speaker 1: and they got out and then prices went up a
Speaker 1: little bit more and they said, we must be wrong.
Speaker 1: It's a new paradigm. M So, I mean, but this
Speaker 1: kind of raises an important question, which is that are
Speaker 1: are we just our markets doomed to experience bubbles forever
Speaker 1: or will like we be able to inhibit human nature
Speaker 1: because to some extent, this is all about human nature, right,
Speaker 1: Like you don't want to miss out on the next
Speaker 1: big thing um, and you're fearful of of missing the
Speaker 1: big wave of price increases, so I think they're here
Speaker 1: to stay. There's always a new story. I think we
Speaker 1: tend not to repeat history in exactly the same form.
Speaker 1: And so if you look at all of the episodes
Speaker 1: that we did in the paper, they're all different in
Speaker 1: some way, but they're all similar in some ways as
Speaker 1: as well. So I think whether you look in the
Speaker 1: U S or abroad, this is something that's going to
Speaker 1: be with us. Uh. Your paper looks specifically at equities,
Speaker 1: and there are certain characteristics of an equity bubble that
Speaker 1: can't be replicated with other asset classes, such as new
Speaker 1: share issue in or a fetish for new types of
Speaker 1: companies versus the old types of companies. I know it's
Speaker 1: not that direction of your paper, but is there anything
Speaker 1: in your paper that um could perhaps be applied to
Speaker 1: non equity bubbles, such as, say, you know, bubble and
Speaker 1: a precious metal or some other commodity or currency or
Speaker 1: something like that. Yes, so we didn't look at other
Speaker 1: asset classes. I've done in my other work some research
Speaker 1: on the credit markets, and there there's some similar features
Speaker 1: in the data. So issuance actually is associated with poor returns. So,
Speaker 1: just to give you an example, when they're lots of
Speaker 1: low rated firms, so junk debt and so on relative
Speaker 1: to investment grade debt. That tends to forebode very poor
Speaker 1: returns in the credit markets more generally. So that's I
Speaker 1: think would be kind of consistent with what we find
Speaker 1: in the equity markets. We haven't looked at commodities. In fact,
Speaker 1: that was suggested to us recently. There's hundreds of years
Speaker 1: of commodities prices. You're only we might take a look
Speaker 1: at that. So Robin, I have to ask, Um, you've
Speaker 1: obviously been looking at many bubbles throughout history. What is
Speaker 1: your all time favorite bubble? Dot Com? I was in
Speaker 1: graduate school, and I was an M I T undergraduate,
Speaker 1: and I graduated in and many of my classmates went
Speaker 1: to pets dot com and all these kind of companies.
Speaker 1: And I was sitting in graduate school solving problem sets,
Speaker 1: and I couldn't believe that they were making all this
Speaker 1: money and doing all this excitement. And then it all
Speaker 1: came crashing down and I became a business school professor.
Speaker 1: So it was okay in the end, but it was
Speaker 1: a great experience just to watch and be part of it.
Speaker 1: Did you you felt that visceral feeling of missing out.
Speaker 1: And I guess you didn't ultimately jump drop out of
Speaker 1: school to become a join pets dot com pets dot com,
Speaker 1: but you must. You must have felt that sort of
Speaker 1: like that thing in your gut that a lot of
Speaker 1: managers who tried to avoid the uh the run up felt. Oh. Absolutely.
Speaker 1: One of the reasons I'm a behavioral finance economists is
Speaker 1: because I inherently feel all of these features of the
Speaker 1: financial markets, and so I find them fascinating and worthy
Speaker 1: of study. One other aspect of bubbles that people often
Speaker 1: talk about, and you look at these quantitative things, but
Speaker 1: certain cultural things. So I think, you know, there's the
Speaker 1: famous thing about sell if you hear the shoeshine boy
Speaker 1: uh giving stock tips, or I remember in my friend
Speaker 1: and I used to go to this pizza restaurant for
Speaker 1: lunch and then of it. During like late ninety nine,
Speaker 1: they started showing uh financial TV. They turned the channel
Speaker 1: from ESPN onto to watch the stock market, and that
Speaker 1: was probably in retrospect, quite a clear sign if you
Speaker 1: don't any work on that, because people always love to
Speaker 1: point out those signs and culture that sort of signify
Speaker 1: that something has moved beyond the financial realm and really
Speaker 1: become like sort of a cultural mania. Do you think
Speaker 1: there are any interesting avenues down that to explore? So, Joe,
Speaker 1: I think those things are pretty hard to measure. But
Speaker 1: there's a saying that if you hear about it at
Speaker 1: the Harvard Business School locker room, it's probably a bubble.
Speaker 1: I think measuring this pretty reliably going back is difficult.
Speaker 1: We're trying to do that, so look at more interesting,
Speaker 1: kind of more difficult to quantify measures. So, for it, example,
Speaker 1: what are people writing about in the press at the time,
Speaker 1: are when when when it's a bubble? Are people saying
Speaker 1: it's a bubble? So we don't actually know the answer
Speaker 1: that question. Um, So that kind of data is becoming
Speaker 1: increasingly possible to access going back and to quantify, and
Speaker 1: so we're definitely going to be looking at that going forward.
Speaker 1: It's becoming very meta if we're talking about journalists over
Speaker 1: use of the word bubble and then analyzing the word
Speaker 1: bubble in financial news stories. Anyway, We'll take what we
Speaker 1: can get, all right. Robin Greenwood of the Harvard Business
Speaker 1: School fascinating research. You should check out the paper he
Speaker 1: authored entitled Bubbles for FAMA alongside his co authors Yang
Speaker 1: You and Andre Schleifer. Really appreciate you coming on the podcast.
Speaker 1: Fascinating topic and a very sort of interesting introduction to
Speaker 1: a topic that people talk about all the time, but
Speaker 1: that I don't think they have much real insight into.
Speaker 1: Thanks Joe, Thanks Tracy. I really like that conversation, Tracy.
Speaker 1: And you know what I like, I feel like we
Speaker 1: may have actually given our listeners some useful information this
Speaker 1: time so as to what we normally do well. I mean,
Speaker 1: you know, some of our some of our past UH
Speaker 1: topics like the nature of cattle auctions, and some of
Speaker 1: them there might be interesting food for thought. But you know,
Speaker 1: I could I feel like someone might actually make some
Speaker 1: smart decisions based on listening to Professor Greenwood's explanation of bubbles,
Speaker 1: for sure. And I think one reason why bubbles are
Speaker 1: perennially fascinating, I think is the human nature aspect of it,
Speaker 1: right Like, it basically speaks to how we how we
Speaker 1: behave right like, we're greedy and then we're fearful, and
Speaker 1: then we're too greedy again, and we're always sort of
Speaker 1: dealing with our natures in that way. But actually, so Joe,
Speaker 1: one thing we didn't get into that. I wonder about
Speaker 1: is this idea that how do you know there's a bubble? Oh,
Speaker 1: it's when the you know, shoeshine boys are getting stock tips.
Speaker 1: Do you think that's still relevant today in a market
Speaker 1: that's increasingly about massive flows. That is a really great
Speaker 1: question because, um, and I've kind of thought about this,
Speaker 1: you know, in the late nineties, stock picking and buying
Speaker 1: tech stocks and one's tech stock portfolio is such a
Speaker 1: cultural thing. And now people are so into passive and
Speaker 1: e t f and focusing on low fees relate as
Speaker 1: opposed to trying to beat the market. It does raise
Speaker 1: the question of whether, I mean you have to figure
Speaker 1: at some point it will happen, but whether stocks will
Speaker 1: ever when could they ever match the sort of cultural
Speaker 1: importance and the idea of picking your own stocks and
Speaker 1: all that stuff. Um, just because people have gotten so
Speaker 1: into this sort of obsession with just low fees and ETFs,
Speaker 1: it's a great you know, the sort of nature of
Speaker 1: people's relationship with the stock market has changed quite a bit,
Speaker 1: right because you see it even with the Trump rally,
Speaker 1: you don't hear that much about like picking the right
Speaker 1: companies that are going to benefit the most. It's just like, oh,
Speaker 1: this is a growth story, it's an inflation story by stocks. Yeah,
Speaker 1: I think it's a very different people of a very
Speaker 1: different relationship with the stock market than they did during
Speaker 1: the bubble. And even you know, the bubble was weird,
Speaker 1: but even now, you know, going back to the eighties
Speaker 1: and nineties, I think it was much more interesting. I
Speaker 1: like this stock or I like beating this. When you
Speaker 1: hear people talk about investments who aren't in the industry,
Speaker 1: and it's pretty rare for anyone to talk about them
Speaker 1: these days. It's almost always in the context of, you know,
Speaker 1: they're like interested in, you know, a robo advisor, how
Speaker 1: can they get low fees? Or what is passive strategies?
Speaker 1: So we've really come full full circle on how people
Speaker 1: think about stocks. But look, we know it'll we know
Speaker 1: bubbles will come again, it just might be in a
Speaker 1: different form. Joe, what's the secret to spotting a bubble?
Speaker 1: Timing um. On that note, it sounds like a good
Speaker 1: time to uh wrap it up. This has been another
Speaker 1: episode of the Odd Lots podcast. I'm Joe Wisenthal. You
Speaker 1: could follow me on Twitter at the Stalwart, and I'm
Speaker 1: Tracy Alloway. I'm on Twitter at Tracy Alloway. But knowledge
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