Friday, March 18, 2011

Skyscraper Bubble Indicator

Hawking back to this debate in this blog between Jim Rogers and James Chanos on whether there is a bubble brewing in China's real estate market, this gem of a new indicator joined the discussion.

Does the building of skyscrapers, especially really tall ones, precede a bubble popping?  It sure looks that way in the past, but that is no indication of the future.

The author of this idea, Vikram Mansharamani, has a new book called Boombustology and I'm going to review it  here soon.  That's him in the picture, by the way.

In the meantime, his thinking makes a great deal of sense.  Capital investment is usually highest at the top of a bubble market so trophy projects that soak up lots of cash would be one genuine sign of a bubble.

I can't wait to read his new book.