The Illustrated Bubble

Some very interesting charting by Gary Shilling:

The Coming Collapse in Housing

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13 Responses to The Illustrated Bubble

  1. SAS says:

    Are these the graphs that are out of the book “irrational exuberance”?

    A good book to read by the way…


  2. SAS says:

    wait, I am thinking of Robert J. Shiller.

    my mistake.

  3. lisoosh says:

    Chart 2 is really scary – the lead in to the mother of all crashes.

  4. BC Bob says:

    “And recall that overblown markets don’t just return to trend, but overshoot on the downside just as the housing market has on the upside.”

    Make sure you don’t just look at the charts. The article is a must read!!! Just a phenomenal article, have to read this 3-4 more times. I’ve said this many times, the charts pertaining to housing look more like a grain chart in the middle of a prolonged drought. Well when the rains come, the market plummets. Housing on the downside will mirror the move on the upside, just like a grain chart. Markets always retrace back to their underlying fundamentals. He is absolutely correct about it overshooting on the downside. Gotta go, have to read this again!!

  5. BC Bob says:


    Thanks!! What a geat find this was!!!!! Very powerful!!!

  6. Nothing less than 25% off peak 2005 says:

    Charts/Facts take the emotion out of the situation.

    All these charts show a bloated overpriced mania that is in the process of collapsing.


    Buy near asking be underwater from day 1.

  7. Nothing less than 25% off peak 2005 says:

    Buy at 25% off 2005 peak probably underwater at some point.

    Condos/townhomes 50% collapses most likely.




  8. Annamelbourne says:

    It’s a great windfall to get Gary Shilling for free. In that article, he answers thoroughly and convincingly, with evidence, a lot of the questions that people on this site have been asking for more than a year: How far will prices go? How long will it take? How will the rest of the economy be affected? How likely is a fed bailout? What form would a bailout take?
    I’d never bet against Gary Shilling, who has one of the most accurate forecasting records in the business. He works, by the way, in Springfield, NJ. Thanks so much for providing this piece.

  9. BC Bob says:


    One of the best according to Institutional Investor magazine. You are right, it is a windfall for all the readers on this site to get this for free. Some of the best that the street has to offer, by the way, no agenda!!!

  10. v says:

    We have seen so many graphs showing crash trend lines. Wonder why there aren’t any that show continued boom :)

  11. Jay says:

    If the Fed lowers rates [as predicted by Shilling] back down to 1%, what is that going to do to the dollar, and who will want to buy our debt [treasuries]???

  12. Robert Coté says:

    There’s Shiller’s Chart 2 again. For all his great work this one concept doesn’t belong in the equation. “Real quality adjusted,” just look at 1950-1990 and try to claim a 1950 median house and a 1990 house cost the same in 1990. Ignore the asbestos removal or anything like that. The 1990 house is 50% larger and has dozens more features. It just isn’t possible to track this concept.

  13. BC Bob says:

    “The 1990 house is 50% larger and has dozens more features. It just isn’t possible to track this concept.”

    Wrong. This chart has nothing to do with the median cost of a home. Chart 2 shows the real adjusted price, in terms of inflation. In real terms houses keep up with the rate of inflation, actually a little better, historically, except for the period from 1910-1945, where real returns were less than the inflation rate . It has nothing to do with features, size, proximity, etc.. From 1890 to 2000 the chart shows us that the price of a home averages a 1-1.2X return vs.inflation, except for that one period. Are you saying that this is a new paradigm where a McMansion with no furniture or a house with granite countertops now justifies a 2X return???? Which do you feel is more reliable 1890-2000 0r 2000-2005???

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