16 Big Bubbles That Are Getting Ready To Burst

With stocks hovering around all-time highs, many are wondering if this asset class is the next great bubble ready to burst.

But stocks aren’t the only things that look frothy. There may be lots of other asset classes that sure look like bubbles.

We’ve compiled the assets analysts now believe are flashing warning signs of over-inflating.

If you think we reached peak bubble-calls last spring when Robert Shiller¬†diagnosed a “bubble on bubbles,”¬†think again.


Warning stat: The price of college textbooks is up over 800 per cent since 1978.

What the experts say: 'The cost of college textbooks has been rising at almost twice the rate of general CPI inflation for at least the last 30 years,' according to Mark J. Perry, American Enterprise Institute. 'As Glenn Reynolds reminds us, 'a process that cannot go on forever, won't,' and the college textbook bubble is certainly one of those processes.'

Chinese Housing


Warning stat: The 'crypto currency' now trades at $63 -- double what it was at the beginning of March.

What the experts say: 'In hindsight, the people who bid the price of Bitcoins up to $30 in 2011 may not have been so crazy after all. It just took the broader market, including me, a couple of years to catch up with them,' according to Ars Technica's Timothy B. Lee.

US Treasury Securities

Warning stat: Investors recently bid a record $3.16 for each dollar of the $2.011 trillion in bonds the U.S. government auctioned in 2012, Bloomberg says.

What the experts say: 'Long-term interest rates are now unsustainably low, implying bubbles in the prices of bonds and other securities,' warns economist Martin Feldstein. 'When interest rates rise, as they surely will, the bubbles will burst, the prices of those securities will fall, and anyone holding them will be hurt.'

Guns And Ammo

Warning stat: Between December 2012 and February 2013 -- when Congress proposed a new assault weapons ban -- Colorado background checks soared 102 per cent. Gun sales in Maryland between December and January totaled 68 per cent of all the state's gun sales in 2010.

What the experts say: 'We wouldn't see the demand increase if there weren't a ban, so we're getting a bubble that's caused by that demand increase due to the ban,

US Farmland

Warning stat: American farmland prices continue to grow at a blazing hot double-digit rate. An industry group recently forecast that values could surge 15 - 20 per cent in 2013.

What the experts say: 'It doesn't have all the hallmarks of a bubble,' according to Robert Shiller. 'One of them is most people have never heard of it. In my view of a bubble it's something that gets people excited. well, some people are excited. But most people don't even know about it.'

Phoenix And San Francisco Housing Markets

Warning stat: January home prices surged 23 per cent in Phoenix and 17.5 in San Francisco, according to Case-Shiller.

What the experts say: 'The real question in my mind is, 'Are we possibly off to the races again?' asked economist Robert Shiller. 'I think in cities like Phoenix and San Francisco, we might be seeing something pretty big developing. People there are very speculative-minded.'


Warning stat: Casino magnate Steve Wynn bought Picasso's 'La Reve' in 1997 for $48 million. In March, he reportedly sold it to hedge fund manager Steve Cohen for $155 million.

What the experts say: 'Art is in an insane bubble with many classic pieces going from $35 to $50 million and up,' warned Dow Theorist Richard Russell.


Warning stat: Gold has gone from around $1,000 per ounce in 2009 to around $1,600 today.

What the experts say: George Soros called gold the 'ultimate asset bubble' in 2010 when it was priced at $1,275. We're obviously still above those levels.

US health care


Warning stat: Europe stabilised after ECB president Mario Draghisaid, 'Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.'

What the experts say: 'To us the key word about the post summer 2012 Euro Area asset boom is that most of it is a bubble, and one which will burst at a time of its own choosing, even though we concede that ample liquidity can often keep bubbles afloat for a long time,' warns Citi Chief Economist Willem Buiter.


Warning stat: Prices are up 47 per cent year-over-year, and are sitting at an 8.5 year high of $432 per 1,000 board fee.

What the experts say: 'Signs of a housing bubble in the world's most populous nation may force the Chinese government to take measures to 'draw air' out of the rising housing market and to clamp down on construction lending, which would likely put a significant dent in the demand for building materials such as Lumber and Copper,' according to Mike Zarembski, OptionsXpress.

US College Tuition

Warning stat: College tuition is up around 1,115 per cent since 1978.

What the experts say: Jeff Gundlach notes that not only have wages not increased commensurate with tuition inflation, wages have actually been falling. 'What have all these soaring tuition costs got you?' asked Gundlach rhetorically.

Craft Beer

Warning stat: Craft beer production surged 15 per cent year-over-year in 2012.

What the experts say: Boston Beer Co. founder Jim Koch says most stores have reached their limit for carrying new breweries, and that too many breweries are making similar beers without adding anything to the market.

Canadian housing

Warning stat: Canadian home prices mirrored the U.S. housing rally. However, Canadian prices never fell. A recent Canadian Housing Affordability study says the country's home market is 10 per cent overvalued.

What the experts say: 'I worry that what is happening in Canada is kind of a slow-motion version of what happened in the U.S', said Robert Shiller.

US Stocks

Warning stat: The S&P 500 recently closed at an all-time high, up 135 per cent from its March 2009 low.

What the experts say: 'What we find is that Bernanke does not have nearly as a great a track record on inflation as he thinks he has. Greenspan could not see that the housing market was an inflated bubble. Evidently Bernanke cannot see that the stock market is an inflated bubble.'

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