Japanese Potato Panic

In this video, I’ll look at Japan’s potato panic, and what it shows us about human behavior in the stock market.

In mid-April 2017, Tokyo-based Calbee announced it would temporarily halt sales of 15 types of potato chips due to a bad crop in the key potato-producing region of Hokkaido, which was struck by typhoons last year.

Calbee, which is 20% owned by PepsiCo, commands a 73% market share of potato chips in Japan.

The prospect of a shortage sparked soaring prices, with bags that usually sell for $1.20 going for $12 to $14.

However, as they did, plenty were available.

The possibility of shortage was enough to send prices up ten-fold, and make even people who hadn’t eaten chips in years suddenly desire them like mad!

Calbee and other chip companies are finding back-up suppliers, both inside and outside of Japan. Production will resume.

Therefore, we could say the potato panic of 2017 was irrational. By some angles, it was unjustifiable.

Historically, these prices were too much to pay, but people wanted those chips so it wasn’t irrational to them. Their emotions were goaded by media.

If products as well-known as potato chips can see their market situation change on a dime due to an emotional reaction, imagine those same emotions unleashed in the stock market. Coupled with the 24-hour news cycle, no wonder stock prices fluctuate in unpredictable ways.

Remember this the next time somebody claims to know where stock prices are heading.

The people buying and selling stocks are just like the people consuming potato chips. Weather, news, trends can cause the madness of crowds to take over at any time.

These variables fan the flames of emotion, sending both chip prices and stock prices all over the map. There’s no predicting these short-term moves because there’s no predicting the emotions that drive them.


Want more videos like this? Subscribe to The Kelly Letter YouTube channel.

Thank you for watching!

This entry was posted in Video. Bookmark the permalink. Both comments and trackbacks are currently closed.

One Comment

  1. jeff nabors
    Posted May 19, 2017 at 11:59 pm | Permalink

    Herdly mental. Amazing how correct you always are. Nice tie.

  • The Kelly Letter
    A Complete Investment Management System
    The Kelly Letter  every Sunday morning by email.
    Like no other. Many subscribers say this is the best read of their week, astonishing in its ability to distill seven days of noise into one succinct overview of the very few items that might matter. Start your Sundays right!
    A one-page Quick Start Guide
    with page number references to full information in The 3% Signal. You'll receive access to this right away so you can begin transforming your portfolio into a performance machine immediately.
    The 3Sig Calculator.
    A thing of beauty! You'll use it to generate your own personal signals every quarter including exact share amounts to buy and sell based on your account balances. It emails you the results to make later quarters easy by keeping last quarter's numbers at your fingertips. Some subscribers say this tool alone justifies their subscription price.
    The subscriber-only section of this website
    where likeminded investors are commenting on notes and discussing in forums. Jason joins these interactions every day. They're a treasure trove of investing tips and wisdom.
    The archive of Kelly Letter notes.
    It’s a research center, searchable and smartly tagged to make gathering time-stamped material on covered subjects easy.
    The subscriber podcast.
    Jason reads every letter word-for-word. This feature was requested by subscribers who prefer audio learning. They listen on their Monday morning commute, during a workout, or while reading along at their computer.



    $200/year
    Save 17%



    $20/month
    Pay as you go
    Or sign up to receive free email and learn more about the system.
    Do you have a question?
Bestselling Financial Author