This bubble must burst soon

We hear it all the time. “This bubble must burst soon”. “It will surely burst sooner or later”. “This is a huge bubble”. “The end is near”.

Nothing but fear. Nothing but talk in general without getting to details. “Why” are you asking? Because although people use this phrase constantly, it’s pretty hard to define what a bubble is.

So before jumping and screaming the ‘bursting bubble’, let’s define the concepts that make up the ‘bursting bubble’ situation:

1. The bubble — What is the bubble? Is this the value of X? Or is it the salary that Y profession earns? Or is it the business case of concept Z that doesn’t make sense?
2. Affecting factors — What are the different factors that affect this bubble? Probably there are multiple factors that can affect the bubble. Most of the cases are not a two-variables equation. Is it the demand that you suspect is going down? Or is it the supply that is growing rapidly? Or maybe it is another player that is getting into the game and is going to shuffle the deck?
3. The needle that will burst it — What is the root cause, from the affecting factors we described in section ‘b’, that you identify as the needle that will burst the bubble? Do you think it is the only needle that will potentially burst it?
4. The scope of the burst and its consequences — How is the bubble going to burst? What will happen and what will it affect? Is the value of property X will go down? How down will it go? 20%? 50%? How about the long-term view?

I really love discussions. I really like to argue. But when we talk in so general about a “bubble” we don’t allow ourselves to advance to deeper discussions and thoughts.

Therefore, instead of using “I think this bubble will burst” we can now speak to the substance of matter and details, such as “The bubble here is the price of X, and the affecting factors are Y, Z & V, and the needle that will burst this bubble will be the moment when the demand will align with the supply or when Y will get into the game. And also, honestly, I think the alignment won’t be so painful and the price will be moderated slowly”.

The last point that I want us to remember here is that a bubble burst sounds like a “POP!”. By that sound, after the burst, nothing will be left. Nothing will stand or stay. Think for a moment, how many things in our lives are acting this way? Like there was a huge growth in a specific domain and then just “POP!” it’s gone?

See you! さようなら！להתראות!