Pete Kendall's Socio Times: A Socionomic Commentary

December 5, 2007
Flipping Elmo:
Sellers on eBay tickled by how much some are willing to pay
In February, Fisher Price told us there would be a new Elmo soon, a 10th anniversary edition of 1996's megahit toy. T.M.X. Elmo ("Tickle Me" plus "10") would be available for the holiday season. He would cost about $40.

Many people - with visions of dollar signs dancing in their heads - were tickled by this news. On Sept. 19, the Elmos arrived in stores, the people turned out, the toys disappeared.

And where did they go? About 15,000 ended up on eBay that first day, where they would be "flipped" for at least twice their retail price.

In 1996, when Tickle Me Elmo first appeared, some entrepreneurial types got hundreds of dollars (and by some reports as much as $1,500) for the doll via newspaper classified ads.

One can still find Elmo in newspaper classified pages - on Monday there were at least 17 listings for T.M.X Elmos in The Palm Beach Post, with prices ranging from $60 to $300.

The same day the Elmos hit store shelves, more than 15,000 of them were listed on the Internet auction site, eBay, the fifth-most visited Web site in the country. Bidding wars ensued with buyers paying as much as $200 - or five times the retail price - for the doll.

It seemed all the right ingredients were in place for a market frenzy: a beloved Sesame Street personality, a phenomenal track record, and, much like that of 1996's Tickle Me Elmo, a charmingly un-self-conscious belly laugh.

Although Elmo prices have dropped precipitously in the last two weeks, many eBayers expect demand will go up again as the holidays near.
Palm Beach Post

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Something New Greets Holiday Toy Craze: Selling
Category: MARKETS
By: Pete Kendall, December 5, 2006

The act of buying, or more precisely, of pushing up prices, is turning people on.
The Elliott Wave Financial Forecast, January 1997, on the holiday bidding rage for Tickle Me Elmo toys.

tickle me price list
We covered the significance of the Elmo phenomenon in this month’s issue of The Elliott Wave Financial Forecast (see Additional References below). For the first time since 2000, there’s a Christmas toy frenzy. But we also noted one hugely important difference. Back in 1996, when the first Tickle Me Elmo mania hit, prices went as high as $10,000. This year the article at left and the price list above shows that bidding is not nearly as intense. In fact, just a quick check of the Internet reveals that Wal-Mart is actually selling TMX below the suggested retail price of $40. In another departure from the salad days of the Great Asset Mania, this time around, the frenzy surrounding the must-have Christmas toy might not even last through Christmas. "I did not catch this one on time," says a Elmo scalper. “‘The Elmo Wonder’ - I think it's dying out now." Like the average stock trader, another buyer with several Elmos sounds a lot more optimistic. She's “certain she'll be able” to find buyers. But her expectations are more muted than a holder of the same inventory three weeks from Christmas 1996.  She’s already making plans for any leftovers -- donate them to a women's shelter.

Yes, the manic buying of the bubble era appears to be in place, but there’s something new out there, an opposing desire to sell. Obviously, with shortages and some Elmos going for more than $100 the sellers do not yet outnumber the buyers. But let’s see how Elmo does in the final shopping days before Christmas. If TMX Elmo prices flatten it will be another indication the speculative fury is leaking away. In any case, the latest Elmo does not measure up to the original, which does not bode well for stocks and other  financial asset prices as they rest on a foundation of 1990s price fevers. When the flame finally goes out, all the history books say prices should fall below the starting point of prior bubbles.

Additional References

October 2006, EWFF
Apparently, when it comes to toy crazes, the great mania wants to leave off right where it started. For the first time since Christmas 1999, there’s a bona-fide bidding frenzy surrounding a must-have toy—Elmo TMX, or Tickle Me Extreme. The toy is actually the 10th anniversary edition of Tickle Me Elmo, which sparked the first holiday bidding frenzy in 1996. When $10 Tickle Me Elmos brought as much as $10,000, here’s what The Elliott Wave Theorist said about the phenomenon:
People are buying these toys even though they know that Elmos will flood the store once the holidays are past. Why would anyone bid serious money for an asset that has virtually no chance of retaining its value? The only possible explanation is that the act of buying, or more precisely, of pushing up prices, is turning people on.

So far, Elmo TMX is not generating the price appreciation of the original. The range on eBay appears to be $50 to $140. Still for an item that is probably overpriced at $40 retail and likely to fall fast after Christmas, it bears the unmistakably daffy thumbprint of the great mania.

Other tried and true manifestations of the craziness have appeared in the usual places. After some relatively tame seasons, contracts for baseball and soccer players are skyrocketing again. Manchester United’s Wayne Rooney just signed a £100 million, six-year deal that will make him the highest-paid player in British football history. A 14-ounce bottle of Scotch whisky from the 1850s just sold for $28,700 at auction in London, beating the top presale estimate by almost 50%. The fall art sales broke all the records. More than $1.3 billion in works of art were sold in two weeks. The all-time record performance exhibited “broad strength throughout the market.” “Experienced dealers were astonished by some of the prices paid,” reports the Financial Times. “The worldwide boom shows no sign of slowing, with hedge fund managers providing a fresh pool of buyers.” As EWFF has previously noted, art price spikes marked stock peaks in 1990 and 2000.

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