Scarcity is driving multiple bubbles

The idea of scarcity is driving so many of the bubble’s in 2021. Assets from cryptocurrency to trading cards to watches to art work (even NFTs) are using the concept of scarcity as a means to an end — the end being to scam you out of money, cash, dollars, euros, pounds, etc.

In some markets, there definitely is a scarcity challenge. It takes a lot of raw materials to make a Rolex or Patek or Tesla while trading cards are printed on a piece of cardboard and don’t get me started on digital assets. The economy doesn’t value scarcity, people value certain assets more than others.

If you plan on living online in virtual reality (VR) then digital assets may be necessary. That idea (because I’m an 80’s baby) sounds horrible. Of course, I used to collect sports cards and when I got to a certain age, I stopped. I’d be lying (to myself mostly) if I said it didn’t hurt a bit. At today’s prices, I’m sure I had at least five figures worth of cardboard. Remember, it is paper with a printed image on it. That’s all.

Some believe these elevated values have something to do with the economic crisis from 2008/09 along with the cheaper dollar, which I can’t argue with. However, the other side of the coin is scarcity. Investors (yes that’s right, investors) in trading cards have seen an incredible 18 months of price gains. Very similar to cryptocurrency, the idea of scarcity has driven people to spend money on an asset that produces nothing.

Buy a Lebron James rookie card and then what? Look at it… store it… yawn. Buy a bitcoin and then what? Look at it… store it… maybe stake it for other fools to pay you in bitcoin. Buy a Rolex and you at least get to wear it and you should, they’re great. Buy equity in a company you like and shop with and you’ll keep a good eye on things and even take part in the growth by spending money. In the latter two examples, the asset produces something of value.

Sports cards are now being valued like art… C’est la vie.

We’ll see if this continues or gets worse. What I see is that asset values are priced at extremely outlandish values currently. That cannot last, right?