This blog is about upside and downside. So if there can be ‘Dream Bubbles’ formed of ‘irrational exuberance’ of upside, can there be similar ‘Bubbles’ in anticipation of ‘downside’? Driven by the opposite of ‘greed’…’fear’. Fear Bubbles. Or ‘Nightmare Bubbles’ is you will.
Absolutely. And given the disillusionment, dismay and discrediting of upside
Hysteria, panics, inquisitions all examples of ‘Fear Bubbles’. In the same way that ‘Dream Bubbles’ lead to things being created that might not otherwise (or even should) have been created, ‘Fear Bubbles’ lead to things being destroyed that might not otherwise not even should have been. The infographic above came from Allister Frost which highlights a decade of ‘Fear Bubbles’. I fear the worst is yet to come.
One of the most prominent places for ‘Fear Bubbles’ is travel. When there is perceived trouble in the world, people like to hunker down at home. In fact, when I met with the Ministry of Tourism last week as a part of my Maldives Complete tour, they showed me the graphs of the major dip in Maldives visits immediately after the 2004 tsunami. In fact, you still get people asking on TripAdvisor if it is safe to go to the Maldives for fear of ‘tsunamis’. And the Maldives was one of the least severely hit part of Asia (for those who don’t see the issue here, being hit by a tsunami is less likely than being struck by lighting or and hugely less likely that getting killed driving to Cornwall). Dominic Lawson also examined this syndrome that cropped up during the Iceland volcano ‘crisis’ in his piece ‘Tolerance set to zero, craziness to sky-high.’
Mind you, any ‘market failre’ irrationality provides an upside to ‘go long’. My wife and I got our best travel deals (including a dirt cheap flight on Concord) ever flying quite happily after 9/11 (where we went straight to an Arab country, Egypt, and were embraced by their nearly empty resorts) and the Asian tsunami.