The Beanie Baby Bubble of '99

There's a great history of this, The Great Beanie Baby Bubble: Mass Delusion and the Dark Side of Cute by Zac Bissonnette. It's a quick read, almost entirely original reporting. Aside from the colorful characters, it's really compelling to see the way some individuals' and limited information combined with mass media fell together to create the bubble. It seems like it couldn't have happened at any other time because it needed cheap independent publishing (both print and web) before ubiquity eroded the perceived legitimacy.

This leads to a pretty interesting comparison between plain cryptocurrencies and NFTs.<p>Cryptocurrencies are beanie babies: Once available for a trifle, their value has ballooned based on speculation. But that already happened, you missed out on it, and it has no bearing on their future prospects. And if a bunch of people ever feel the need to cash out at once, they&#x27;ll find out just how much value they really have when there&#x27;s nobody buying.<p>NFTs are Collector&#x27;s Edition items: Their original purchase prices are artificially inflated (normally by distributor&#x27;s decision, for NFTs by wash trading). An association with some pop-culture property or pretty artwork attracts eyeballs to it. You could buy it, <i>or</i> you could just get the regular edition (which, for online artwork, is free.) And the price they&#x27;re available for doesn&#x27;t necessarily have anything to do with what <i>you&#x27;ll</i> be able to get for it.

I still have a visceral reaction to seeing Beanie Baby&#x27;s actually be played with. I had young cousins that were into &quot;collecting&quot; them in the 90s, and remember part of it was keeping the tags and not playing with them.<p>Now I have young kids that immediately yank the tags and carry them to school. I have nieces that have outgrown their&#x27;s and have passed them down to the family dog as a chew toy. Both give me a moment of &#x27;aaah aaah!&#x27; before I can make my rational brain remember they&#x27;re just a $5 stuffy that once had a bubble.

Relevant portion of the article:<p>&quot;According to economists David Tuckett and Richard Taffler, we often view a hot new financial opportunity as a “phantastic object,” or an unconscious representation of something that fulfills our wildest desires.<p>These objects are “exciting and transformational.” They appear to “break the usual rules of life and turn aspects of ‘normal’ reality on its head.” They promise something far departed from the market’s typical behavior.<p>During a bubble, we formulate a “collective hallucination” of prosperity, and fall victim to groupthink, a phenomenon where “a significant chunk of society feverishly buys into a shared dream” and ignores reality.&quot;

Lot of people making comparisons to crypto &#x2F; NFTs etc. Looking at it from another angle, what are the best examples of things that lots of people thought were bubbles, but turned out not to be?

My son learned SO MUCH from 3d printing and selling fidget spinners.<p>Bulk purchasing skate bearings, charging 3 times as much for the same plastic because it had different colors…and the STEM school really couldn’t do much, because that kind of thinking was in their charter…plus, you know, distract the hands while keeping their brains engaged.

I’m not a crypto evangelist or anything, but what about alternatives like Pokémon cards which seem to have increased in value over the same period.<p>There’s currently a pump and dump on retro video games but I don’t think the same supply issues exist in Pokémon cards, but I’m not actively monitoring either market.

Many parallels with what is going on with NFTs right now.

I remember being in grade school while this was happening and a girl was explaining to me how it worked, that such-and-such Beanie Baby was being &quot;retired&quot; and only a few thousand of each one was made. I just didn&#x27;t get it. Why wouldn&#x27;t they make more? I mean it&#x27;s not like we&#x27;re going to run out of polyester and plastic pellets anytime soon. Not to mention the company itself doesn&#x27;t benefit if they appreciate on the used market. Why would they leave all that money on the table by deliberately making less than people wanted?<p>There were also rumors going around that the whole thing - production of <i>all</i> Beanie Babies - was going to end in the year 2000 which actually turned out to be very briefly true before it wasn&#x27;t anymore.<p>As an adult I was smart enough to miss cryptocurrency 10 years ago because I thought it sounded like Flooz.com or Beenz. Magic internet money you can earn by solving sudokus? Who the hell wants that? I then missed NFTs (won&#x27;t they just right click?) and now I&#x27;m too scared to get in for fear I will end up as the bag holder.<p>I&#x27;m probably going to end up learning the wrong lesson from this and throw fifty bucks into every crazy-sounding scheme I come across from now on in hopes one of them will hit it big. But that&#x27;s not so different from venture capital. Just on a smaller scale.

If I had $5 for every Beanie Baby my kids had…. Wait - I did.

My ex-wife and I divorced in 1999 during the height of the craze. She was an avid Beanie Baby collector and I gladly let her have the entire collection in exchange for a quicker divorce.

Poor Beanie Babies, but what about other investments you can hug?<p><a href="https:&#x2F;&#x2F;priceonomics.com&#x2F;when-the-great-alpaca-bubble-burst&#x2F;" rel="nofollow">https:&#x2F;&#x2F;priceonomics.com&#x2F;when-the-great-alpaca-bubble-burst&#x2F;</a>

If you are curious about asset bubbles, how they form and how they unravel, I would suggest you read Hyman Minsky&#x27;s &quot;Can &#x27;It&#x27; happen again?&quot;.

If only we had gone all in on Beanie Babies. We cleared $20K+ selling BBs on the side of the road that year. I wanted to spend our whole savings and hire people to sell them for us - we were buying them out the back doors of Hallmark stores. Wife didn&#x27;t. But we still made enough to put down a sizable down payment on our current house.<p>It was a crazy time. Crazy people fighting each other for cheap stuffed animals.

How were these plastic beans even considered child-safe?

Yeah but they didn&#x27;t have ape beanies.

Ahem. Bitcoin! *cough*

The current state of NFTs etc. amazes me in the context of Beanie Babies.<p>So many people have learned nothing. Granted the time gap means these are entirely new people making those mistakes.<p>We have such a degraded level of discourse now that if it were used in the Beanie Baby craze there would be people arguing about whether all soft toys are evil.