Re:Tulip mania: the classic story of a Dutch financial bubbl...
by matwood on Saturday February 17, 2018 @10:07AM
(#16400971)
> How is that not irrational? Come on.
This kind of statement always interests me in an socio-economic sense. What is rational? What it often comes down to is a personal "my choice is the rational one, and everyone else is irrational". Take an iPhone for example. There are much cheaper phones out there, so is everyone buying an iPhone irrational? And then it only follows, is everyone who buys Apple stock irrational?
Additionally, bubble is a term I find thrown around too easily. It seems any time an asset price is high, people immediately think bubble. A high asset price is not enough. The price must be far beyond some underlying value. The rub is determining value. Is BTC in a bubble? The price is high, and has been very volatile, but what is the value? With my laymen knowledge of BTC, I think the value is certainly > 0$, but is it < 10k? I don't know.
Thinking about this reminds me of the housing bubble. In Vegas house prices made no sense because there is literally land as far as you can see in every direction. Where I live now, there were also clear disconnects from value and price (crappy apartments turned into crappy condos), but not every piece of expensive property was selling way beyond its value. There are properties along the water or on the beach that really are in short supply. Those barely moved down when the housing bubble popped.
Defining 'value' is also a fun conversation, but I've rambled on too long :)
This kind of statement always interests me in an socio-economic sense. What is rational? What it often comes down to is a personal "my choice is the rational one, and everyone else is irrational". Take an iPhone for example. There are much cheaper phones out there, so is everyone buying an iPhone irrational? And then it only follows, is everyone who buys Apple stock irrational?
Additionally, bubble is a term I find thrown around too easily. It seems any time an asset price is high, people immediately think bubble. A high asset price is not enough. The price must be far beyond some underlying value. The rub is determining value. Is BTC in a bubble? The price is high, and has been very volatile, but what is the value? With my laymen knowledge of BTC, I think the value is certainly > 0$, but is it < 10k? I don't know.
Thinking about this reminds me of the housing bubble. In Vegas house prices made no sense because there is literally land as far as you can see in every direction. Where I live now, there were also clear disconnects from value and price (crappy apartments turned into crappy condos), but not every piece of expensive property was selling way beyond its value. There are properties along the water or on the beach that really are in short supply. Those barely moved down when the housing bubble popped.
Defining 'value' is also a fun conversation, but I've rambled on too long :)