Monday, June 25, 2007


I'm fascinated by the psychology of bubbles -- well, bubbles ARE psychology if you want to get right down to it. So I'm always questioning myself.

The nub of the article is that Silicon Valley people are suffering from "post-traumatic stress" and "tend to spot bubbles everywhere..."

So, is that what is happening with my own psychology.... or with fellow Bend Bubble Bloggers?.

First, Bend.

Is there a bubble?


Secondly, my own response to the bubble. If anything, my usual response is to go along with a bubble, at least emotionally. I can look around at my own situation, what's happening at the store, and say, 'everything's fine.' But experience has taught me to look at the signs as objectively as possible.

While the first 2 bubbles I experienced in my business nearly put me out of business, and the next 2 were a wash, the last 3 bubbles were very profitable for me. But it takes recognizing bubbles when you see them, and dealing with them in a very dispassionate way. If anything, I'm less likely to call a surge a bubble than most of my peers. I don't think I've seen what I would call a bubble in my business the last 7 years (which in itself is strange, since I experienced at least 7 bubbles in the proceeding 17 years.) Bubbles, by my definition, require a huge element of speculation. Also, the growth rate has to exceed 20% a year in my opinion, and a true bubble is exponential. I've seen strong growth in my store in several product lines, but they've been below 20%, and fueled with a rather large amount of investment in inventory.

I let my enthusiasm outweigh my doubts over the last year. But I'm now in the risk-adverse mode, and I'm just hoping I haven't waited too long. Either way, I've made my arrangements. Looking around, I'm seeing very few signs of slowdown in my store. Customer count is up, regulars are still showing up, no one is talking about losing their jobs, etc. So this is where the dispassionate element comes into play, because every bubble ends this way. At the very moment people should be cutting back, they double down. Why not? They've succeeded until unless you've lost your shirt once or twice, you aren't going to see the dangers.

In fact, you'll write and/or publish an article that implies that anyone who calls out "BUBBLE!" is "displaying a deep seated insecurity."

We'll see. The economy doesn't care.

No comments: