Definition of an asset bubble: When the prices of securities or other assets rise so sharply and at such a sustained rate that they exceed valuations justified by fundamentals, making a sudden collapse likely - at which point the bubble “bursts". - Financial Times
A Picture is Worth a Thousand Words
I ran across this combination of images today and thought it worth mentioning, because they (and the article) have been the source of a tremendous amount of online discussion since they were first published. The first graph (below) shows the global production of what we traditionally think of as cameras, from 1947 to 2014. Photographer Sven Skafisk then thought to add sales of smartphones to the chart, which makes sense given how many people use their phones instead of cameras to take pictures now. Sven chose to maintain the y-axis scale which puts the explosive sales growth in perspective (see chart on right).
It’s a powerful image for sure, but does it really help put the growth in perspective, or does it distort it? To answer that question, take a look at the image on the next page, showing the same data (camera plus cameraphone sales) versus an exponential growth rate of 21% per year. In other words, begin with the actual camera sales from 1932 and grow sales at a constant 21% per year. Perhaps, we are affected by how information is delivered to us after all.