Revisiting The Strange Story Behind the Beanie Babies Bubble

Tracy Alloway (0:09)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:14)

And I'm Joe Weisenthal.

Tracy Alloway (0:16)

Joe, I'm really sad to say we are coming to the end of our Bubble series.

Joe Weisenthal (0:22)

I thought you were going to say we're coming to the end of the podcast overall, so I'm actually kind of relieved that we're... But I am sad, too. I think I said it last time, like, bubbles are just the best. And I love talking about them. We'll probably talk about them again on future episodes.

But for now, we're wrapping up.

Tracy Alloway (0:43)

All right. So as we wrap up and as you look over a bunch of the different bubbles that we've just been learning about, what stands out for you? Like, what are the lessons that you are actually taking away?

Joe Weisenthal (0:55)

Human psychology is just so consistent. I think it was the first one. We talked with Scott Nations about various booms and busts throughout US stock market history.

There's always the great story that goes with them. And so at the kernel of every bubble that we talked about, there's some root of truth to it. It's not a complete fabrication, something at some point made some sense. And then, of course, humans being the animals that we are, we just can't put things in perspective and we extrapolate way too far.

Tracy Alloway (1:29)

Yeah, that's something that's going to stick with me as well. There's always a certain narrative to explain what's happening.

The other thing I was thinking about is almost every bubble that we've spoken about comes or spurs a sort of cottage industry around it, like crazy things, like the guys that used to stand outside in Florida trying to hawk real estate during the land bubble. Binder Boys, that's it. Or the baseball card bubble, all the new sets of baseball cards that came in.

Joe Weisenthal (2:01)

Yeah, that's specifically the way supply expands when people are in a mania for X. Whatever it is, whether it's land, whether it's baseball cards, whether it's some sort of equity or whatever, the industry will find a way to create supply. The supply never just stays fixed. Of course, we talked about the Florida real estates, so people just bought marshland in the middle of nowhere when all the prime real estate, like around Miami, was sold up. So they always find a way to sell something new. People don't just sort of say, oh, they bought it all, and now prices will go up. The supply eventually swamps demand.

Tracy Alloway (2:40)

The one thing I'm a little bit sad that we didn't learn more about is the catalyst for the bubbles actually bursting. Because if we knew that, if we knew that, Joe, we could make so much money.

Joe Weisenthal (2:55)

We could all be rich. You just see a bubble and just ride it until the day before.

Tracy Alloway (2:59)

Yeah. All right. Well, as it is, we have to stick with podcasts and various other things. But to celebrate the end of our bubble series, we are going to share with our listeners a rerun of one of our most favorite bubbles ever.

Joe Weisenthal (3:15)

That's right. So obviously, as we're saying, we're probably going to keep doing more episodes in the future about bubbles from time to time. Of course, we did some even before we started the original series. And there was one in particular that really stood out that just like totally fits, doesn't it?

Tracy Alloway (3:30)

Yeah. This was one of our earliest ever episodes, and it was so much fun. It was one on the Beanie Baby Bubble. So for those of you who are unfamiliar with it, in the 1990s, Beanie Babies, these small stuffed animal toys, became a huge cultural phenomenon.

And with that phenomenon came a lot of speculation, a lot of trading that came with it.

Joe Weisenthal (3:55)

Right. And, you know, they're just stuffed animals. But there was this, a lot of the themes that we discussed in this episode, we discussed with other bubbles on later episodes. So the supply thing that we just mentioned, at one point, you know, the idea was that once a line of these stuffed animals was made, there would never be another one, but the supply expanded massively.

Last week, remember, we talked about the role that the Beckett Magazine had in baseball cards, the sort of first pricing guide.

Tracy Alloway (4:25)

The price guide, sure.

Joe Weisenthal (4:27)

Beanie Babies, as we discussed on that episode, also had their price guide.

Very similar idea, very similar phenomenon at work. As soon as people could see visually that prices were changing every month or every week, that made people even more inclined to see them as speculative vehicles.