On the way to economic recovery certain industries in America have reached all time highs with little information given to their direct success. Some Analysts are on the lookout for which bubble is on the path to bursting. Here we have put together the list of assets and areas you should keep your eye on.
Textbooks
Warning stat: The price of college textbooks is up over 800 percent 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.”
Bitcoin
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 percent. Gun sales in Maryland between December and January totaled 68 percent 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,” according to Mac Clouse, Denver University finance professor.
Art
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.
Commodities
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: Health care spending has grown 2.5 times faster than incomes over the past 30 years.
What the experts say: “The health care system in the U.S. reminds us somewhat ominously of the bubble in housing finance, a ‘public/private partnership,'” says Citi’s Steve Wieting. “Housing consumption still receives strong tax preferences, as does health insurance (reflecting underlying health care consumption). Most aptly, prior to quasi-nationalization, housing GSEs earned private profits from public subsidies for housing, as do U.S. health care providers.”
Phoenix And San Francisco Housing Markets
Warning stat: January home prices surged 23 percent in Phoenix and 17.5 percent 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.”
Lumber
Warning stat: Prices are up 47 percent 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 percent 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.
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