SeanReadsTheNews

The Next Bubble: Hamburgers

My lapsed devotion to this blog may not be fixed completely any time soon but I'm going back through the archives of posts that should have been and giving them their due.

David Tao, writing for CNNMoney.com on June 17, wrote that upscale hamburger joints are now - yes - a bubble!  I've largely retired the "Next Bubble" category since then because writing them up has gotten as bad as trying to attack a swarm of gnats with a flyswatter.  But, hamburgers!

UBurger isn't the only new burger on the proverbial American block, and it will be harder to succeed as the specialty burger market becomes saturated. Nationwide, the trend of providing higher-quality alternatives to the major burger chains -- hence the "better burger" moniker -- has quickly spread from a few pioneering restaurants to dozens of copycats. How long before the burger bubble pops?

How long indeed?  The article is actually a fairly straightforward accounting of competition in the upscale burger category no different from other reviews of software, cars or home electronics really.  But why do they have to call everything a bubble?

Forbes on the Higher Education Bubble

Because of my history with the topic and the venue, I feel obligated to link this Forbes.com article by Richard Vedder of Ohio State on how higher education is a bubble.

That is all.

Fortune on How to Spot Bubbles?

Nin-Hai Tseng of Fortune performed a miracle back on March 18 - she found a novel way to write about market bubbles, noting that identifying them is easy but that knowledge is useless unless you can tell when they are going to burst.  I wish I could report that since then there have been no articles about asset bubbles without notes about how accurate the bubble-caller has been on that score but you have to start somewhere.

The rest of the article is an interview with a bubble caller, Vikram Mansharmani, managing director at Boston-based hedge fund SDK Capital, who names all the usual suspects - gold, China, most commodities, stopping only at saying energy is NOT a bubble.

I can only hope this is the end of bubble-mania in business journalism and not just a move to the next level.

Fortune - All the Stocks You've Heard of Are a Bubble

Duff McDonald of Fortune today calls "bubble" on all the social media companies that have been getting IPO buzz lately, the latest of a stream of journalism that is itself a fad.

In McDonald's defense, he shows his work with a well-written, well-argued article about why Pandora, Groupon, Facebook and their peers can't possibly be worth what investment banks and private equity investors seem to think they are.

How many basic advertising plays are people going to get suckered into buying just because they're on the Internet? Google, fine. But that company is like a pure distillation of advertising in the 21^st century. The rest are just derivative. Facebook might really be selling data about me six ways from Sunday, but that doesn't make it the greatest investment opportunity on earth. Certainly not one worth 25 times revenues. And Twitter may help foment revolution, but that doesn't mean its ever going to make a meaningful amount of money. I'm not a buyer.

Still, this is a story that has been written so many times, did it need to be written again?

The Observer: A Bubble in Bubbles

I'm on vacation today (as opposed to just not getting around to blogging, which has been common lately) but had to point out Emily Witt's New York Observer article "Bubblemania: Is It Time to Be Skeptical of Skeptics," which strongly echoes my own March 2010 Forbes.com article on the subject.

Economists say that it's unlikely that "bubble" is the best term for what is going on with the market today. For there to be a real bubble, says Bill Fleckenstein, another market pessimist and manager of a Seattle-based hedge fund, "the behavior of the participants has to impact the economy." He cited signs from previous bubbles such as people quitting their businesses to form dot-coms or taking money out of their home equity.

Of course, she's writing from the perspective of market fundamentals and I was writing about how focusing on every asset class as a bubble is a form of lazy journalism - but it's nice to see the idea getting out there.

TheStreet.com - Social Media is The Next Bubble

Lauren Bloom's Street.com article on how social media sites like Facebook are being over-valued by the market follows a very tired trope of comparing any company's rise to what happened during the dot com bubble and noting the same thing could happen again.

The sudden, meteoric explosion in value of online social media sites like Facebook and Twitteris eerily reminiscent of the rise, about 15 years ago, of the online businesses that created the "dotcom bubble." The Internet was far less widely used than it is today, with many consumers feeling a little queasy about sharing personal and credit-card information with businesses that lacked brick-and-mortar facilities. Still, visionaries saw the potential for the Internet we have today, so virtual companies sprung up and grew like weeds as investors threw money their way.

Two points: 1) this no longer counts as insightful analysis and 2) you work for TheStreet.com.  If there was a future for TheStreet.com, isn't it likely there is one for Facebook?

Ok, that wasn't really fair as the investors who bought into TheStreet.com initially did lose their shirts in the bargain but any article that uses "Pets.com" as a cautionary tale in 2011 is looking hard enough at the examples.

Fortune: The Next Bubble Is Social Media Hiring

Reading Anne VanderMey's Fortune article on social media hiring reminded me of British author Douglas Adams' observation that any technology invented between birth and the time you turn 35 is exciting and potentially a way to make a living - and anything after that point seems like an affront to the natural order.

The demand for social media jobs has exploded, even as overall unemployment hovers around 10%. A recent study published by SocialMediaInfluence.com showed that 59 of the Fortune 100 companies have at least one employee who works full time in social media, and that job postings directly related to social media have soared 600% in the last five years.

You can tell from the headline there is a "but" coming.  And it's my favorite one of all - the hiring boom is a bubble!

As the field matures, Durbin and others foresee widespread restructuring. To prepare, Durbin is opening a social media consulting and placement firm designed for mid-career professionals, where he sees the most growth potential. Durbin foresees that it's just a matter of time until dubiously qualified social media experts, both young and old, but especially those with little to no experience, are exposed.

"The good news is, I think that's the bubble," Durbin says.

But even for the most qualified social media wizards, pure social media careers may not exist 10 years down the line. As it becomes more ubiquitous, social media is evolving into a skill set, not a profession.

The article is about how the newness of social media and its unfathomable but clearly important nature has led to anyone claiming to be an expert being hired, even if they don't know what they are doing.

There was a lot of that in media relations during the dot com boom, when the job market for PR people was so tight a manager at a Blockbuster could get a job as a corporate communications VP if he knew the right people.

And the author is correct - a violent shakeout happened and left the people who know what they are doing standing.

 

The Next Bubble: Chinese IPOs

Thomas Kaplan of The New York Times Dealbook calls bubble on the Chinese IPO market, a controversial call within a week of the Royal Bank of Scotland touting sovereign debt default by the Middle Kingdom a financial risk for 2011.

The evidence is that Chinese IPOs are finding a friendly home in the U.S., where anxious bankers are using them to keep busy during tough times for new issuance here.

Amid a sluggish I.P.O. market, companies from China are finding a home in the United States. Last week, six Chinese stocks started trading on the New York Stock Exchange and Nasdaq, the most ever in a single week. The 35 Chinese offerings so far this year have accounted for 23 percent of I.P.O.’s in the United States, up from 1 percent in 2000, according to Thomson Reuters.

The article compares the numbers between Chinese and U.S. listings and finds the U.S. ones hold up pretty well, and raises cautionary notes about how much we really know about these companies' fundamentals.

But a bubble?  Kaplan and his sources don't have the evidence - only a thought that because there are a lot of companies it might be like the dot com bust again.

“That is what looms in the shadows,” Mr. Menlow said. “When one of these deals unravels because of accounting problems, restatements or anything that is going to eviscerate the foundation of the financials in a company, then we may end up having somewhat of a mini tsunami effect with the rest of the Chinese deals that are out there. It will be like dominoes that will fall.”

 

The Fed, A Bubble, Underwater Research and Netflix Conquers The Universe

Today was a really good day for The Wall Street Journal but a really bad day for blogging.  So here are some bullets of interesting business stories from the past few days that I haven't had a chance to blog in full.

• Here, because I laughed at Groupon whose CEO today turned down $6 billion from Google, is Bryan Walsh's TIME story on SnapGoods, a business that uses the internet to allow people to lend personal items to each other and avoid the cost of purchase.
• Because I can't stop, Ambrose Evans-Pritchard's story on why China is The Next Bubble.  Actually, it's interesting because he's saying the bubble is in China's debt.  If the country with the biggest net asset balance in the world can't cover its debts, what chance does the United States have?
• In the entertainment section goes Gautam Naik's article on Aquarius, an underwater research lab the size of a school bus that uses a wet outhouse.   It's a great story, made better by accompanying online video.
• Netflix had a round of triumphant coverage right after it beat Wal-Mart in online video rental.  Today it gets its most over-the-top coverage yet, as The Wall Street Journal's Nick Wingfield and Sam Schechner report that the company is on the verge of also putting network television, movie theaters, bitorrent and the cable companies out of business as well.  Well, maybe it isn't that breathless - but I mean who could have seen?
• Robin Sidel and Aparjita Saha-Bubna of The Wall Street Journal take a look at pre-paid debt cards as banks latest attempt to find products they are still allowed to make big margins on.  It was intriguing to me because I can't see any value to them whatsoever except that banks are still legally allowed to charge for them.  So government regulation has pushed banks to invest marketing effort in worthless products?  This is a win-win?
• A late one from last week, Paul LaMonica of CNNMoney's The Buzz writes on why wikileaks won't be a big deal for banks - but also that they have plenty of real problems.  There is a big PR think piece for someone on living in a transparent world.  Maybe I'll write one.
• And also from last week, Shawn Tully of Fortune writes about a study that shows that the IRS is auditing minorities disproportionately because they can't defend themselves.

Reuters: The Next Bubble is Farmland

Kristina Cooke and Maria Aspan of Reuters fall for an old analyst trick of calling a bubble to get attention, today showering a feature article on the observations of Rochdale Securities analyst Richard Bove, who notes that with commodities prices soaring in the face of a decline in global production - farmland may become less valuable if those prices fall.

Grain prices are rising because of demand for grain-fed meat from emerging middle classes in India and China, and crop production problems globally, including a drought in Russia.

This example is another in which the laws of supply and demand are likened to a pure bubble - which is usually defined as investors using leverage to bid up the price of an asset in the face of flat demand.  Crops are more valuable now because most of Russia burned to a crisp during the Summer.  Investors see that and invest where the crops are still growing.

That isn't a bubble and its dishonest to say so.