If it looks like a bubble and walks like a bubble…

June 2, 2011, 10:25 PM UTC
Image representing Marc Andreessen as depicted...
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FORTUNE — Marc Andreessen reportedly said this today at the AllThingsD conference: “A key characteristic of a bubble is that no one thinks its a bubble … If everybody’s upset, it’s a good sign . . . I hope there are lots of bubble stories.”

The trouble with his declaration is that it’s the precise opposite of the truth. Seconds after I read that quote in TechCrunch, I logged on to Facebook, where I saw this status update: “A universal rule of financial mania. If there’s widespread, worried speculation about whether there is a bubble — then it’s a bubble.”

That far more sensible, historically accurate statement came from Jason Pontin, editor and publisher of Technology Review.

Andreessen’s idea that “no one thinks it’s a bubble” is a persistent myth surrounding all bubbles. This myth is spread both during a bubble’s expansion and, especially, after it has popped. That’s when people start asking “How did we not see this coming?” and “Where were the watchdogs?” But in all cases, plenty of people saw it coming.

During the tech/Internet bubble of the late ’90s, there was all kinds of discussion of whether or not there was a bubble. The supposed “cheerleaders” of the tech boom – the “new economy” publications like Wired, The Industry Standard, Red Herring and others often asked that question. With companies going public that were not only profitless, but had negative gross margins (that is, they lost money on every sale), how could they not be skeptical? (Full disclosure: I wrote or edited for all the above-named publications, and several others.)

Indeed, Pontin’s boss at the time, Red Herring publisher Anthony Perkins, wrote a book in 1999 called “The Internet Bubble: Inside the Overvalued World of High-Tech Stocks–And What You Need to Know to Avoid the Coming Shakeout.” This was at the height of the Internet stock frenzy and more than a year before that shakeout indeed came. The book was well received. What little criticism it got focused on the fact that it was obvious (to the critics, at least) that there was an Internet bubble. And yet, the bubble continued to expand for many more months.

Similarly, during the housing bubble, there was constant chatter in the media and in backyards and barrooms over whether there was a bubble or not. I searched the Nexis database for the years between the end of the 2001 recession and the peak of housing prices in early 2005.  There were stories nearly every day throughout that period — thousands and thousands of them, on TV, in newspapers, in the trade press and elsewhere — examining whether there was a bubble and how worried we should be.

Granted, some of this coverage was lame. Some of it pooh-poohed the notion that there was a bubble. And much of it centered on whether it was even possible that a real estate bubble could go beyond local markets and become national (it actually went global). But the point is that lots of people were issuing warnings. Whether buyers and investors (or government officials) decided to listen or not is on them.

The trouble with bubbles isn’t that nobody recognizes them, it’s that people do recognize them, and move in to take advantage, positive that they can buy in and sell out before the crash. This of course has the effect of expanding the bubble further, making the crash worse for the losers who get in too late. This is the very nature of a bubble: it depends on people recognizing what it is. A market expansion doesn’t really become a bubble until people start using the b-word.

None of which is to necessarily argue that we are in a bubble now, but if Pontin’s rule holds up, we are. And if we are, as TechCrunch’s Michael Arrington notes (as have many others), it’s a very different kind of bubble. Note for instance that many of the publicly traded tech giants’ stocks are still very close to the ground even as buzzier companies both private and public — Facebook, Groupon, LinkedIn (LNKD), etc., – are flying high (perhaps appropriately, perhaps not). Recall that during the previous bubble, just about every company associated with technology or the Internet was trading at frothy levels. Not so now — a whole slew of tech giants are acting more like value stocks.

Bubbles will behave very differently depending on general economic conditions. In 1999-2000, and on into the peak of the real estate market, there were vast piles of cheap capital floating around, looking for a home. That’s not the case today. But what capital is out there still wants to land somewhere. Often, it lands on an expanding bubble.