Here’s a list of business bubbles you may / may not have heard of:
Tulip bubble – 1630’s tulip’s sold for more than houses!
South Sea Bubble – 1720
Bull market of 1920’s – resulted in the great depression
Japanese asset price bubble – Commercial real estate selling for US$1.5m per square meter!
Real estate bubble every 10 years or so… You’ve just lived through one!
Tech wreck (dot com)– Companies with negative cash flow valued over 1 billion!
Sub prime / hedge fund bubble 2008 – We’re yet to see all of this…
Green Marketing bubble ? – This one’s coming watch out!
Many business bubbles are focused in new industries where startups are abound.
Here’s when to get nervous. When you hear the words ’it’s different this time’, or people are overly focused on industry growth and the so called – revolution.
Here’s when there is no need to get nervous. When your business model based on basic business fundamentals like cashflow and growth in your net cash position. Startups take heed.
For 1000’s of years business and industries never grown much over 10% p.a. once compounded. Yes, there’ll be exceptions like Microsoft in the early 1980’s. But generally speaking when things are predicted to grow at rates above 20%, and valuations are more than 20 time earnings….get suspicious, very suspicious.
there might have been a bubble in real estate in Australia over the past 10 years, however a burst in that market may be far less than other asset classes, as 99% of the population spend the bulk of their income on housing themselves and almost 70% of us own our own residence (with some assistamce from the banks of course)