By Martin Baccardax

"Nobody goes to that bar anymore," baseball legend and accidental American philosopher Yogi Berra once declared. "It's too crowded."

Berra's paradox, intended or not, suggests what a lot of us generally understand to be true: A surge in popularity for something is often the first sign of its decline.

It's also a useful yardstick with which to measure a key market risk. Definitions might vary, but an asset bubble generally occurs when its price rises far in excess of what it can actually return to its owner.

Meme stocks, for instance, took off in early 2021 and powered the value of money-losing companies such as GameStop and Bed Bath & Beyond (which ultimately went bankrupt) to dizzying heights. Bitcoin prices, which are effectively based on the dollars committed to a particular form of blockchain technology, are worth more than 110,000 greenbacks.

Labubu, a plush collectible toy made by China-based Pop Mart International Group -- which carries a $60 billion valuation on the Hong Kong stock market -- is the newest, but by no means unique, addition to the "this is a bubble" debate.

Sold in so-called blind boxes, the toys have exploded in popularity over the past year and change hands at multiples of 100 or more to their retail value.

Scarcity, mystery, social-media zeitgeist, and an active secondary market have all combined to fuel the global Labubu phenomenon. It's also made Pop Mart's founder, Wang Ning, one of China's youngest billionaires.

It won't last, of course, because it never does. From Tulip Mania in the 17th century to the explosion of South Sea Company shares in the 18th century, asset bubbles have a long and sordid history.

Collectibles markets have also come and gone, as we've seen with pet rocks, Cabbage Patch Kids, and Beanie Babies all commanding short periods of obsession before fading into insignificance.

Some, however, continue to surprise. A rare-edition basketball card signed by legends Kobe Bryant and Michael Jordan sold for $12.9 million earlier this week. A baseball card featuring Babe Ruth sold for $24.1 million last summer.

It's hard to argue that a small piece of cardstock paper, measuring 2.5 by 3.5 inches, can return $13 million, to say nothing of $24 million, worth of value to its owner. But price and value aren't always connected, and, as Oscar Wilde once said, a cynic is a person who knows everything about the former, and nothing about the latter. Parsing the difference is crucial.

Big Tech stocks carry massive valuations, while newer entrants to the artificial-intelligence boom have attracted billions in new investment capital. That has led, inevitably, to comparisons of the tech market bubble that formed over the final years of the last century before spectacularly bursting in the current one.

Or, as Yogi Berra once noted: "it's déjà vu all over again."

But valuing companies with scant revenue and little opportunity to monetize their business plans, as was the case in the early 2000s, is quite different from what we're seeing today. The companies at the heart of the AI story are spending billions, but most of it is coming from the cash they're already generating. And they are growing profits at the same time.

Speculative bubbles aren't always an omen of something more sinister.

As Hardika Singh, economic strategist at Fundstart, said in a recent client note, the plush doll craze can certainly be a "window into consumer behavior, which is a big part of what economists and analysts study."

But reading too much into a current fad "goes to show how unwilling investors are to admit that this still very much remains a bull market, albeit at times a stupid one," she added.

So, we're still in a real bull market, but corners of it are forming bubbles. That's a paradox Yogi would appreciate.

Write to Martin Baccardax at martin.baccardax@barrons.com

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August 26, 2025 13:30 ET (17:30 GMT)

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