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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.

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.