The earliest known BUBBLE? The Tulip Bubble.
Lawrence Young
Senior Wealth Manager with 30 years of experience. Personally servicing clients in 26 countries. Creating growth for my clients through portfolio building and continued management.
Are we in a bubble? No not at all. But I have been around long enough to see various bubbles form and “pop” over the decades. The “dot com” bubble or real estate bubbles have come and gone over the years. As a wealth manager, it is my responsibility to be aware of herd mentality trading and make sure my clients are not caught up in over-valued stocks or trends. Certainly not at the point when the music stops playing.
But do you know what the earliest “bubble” recorded was? You may be surprised at the answer.
Tulip Mania, also called Tulip Craze, Dutch Tulpenwindhandel, a speculative frenzy in 17th-century Holland over the sale of tulip bulbs. You wouldn’t think it was possible would you over a flower!
Tulips were introduced into Europe from Turkey shortly after 1550, and the delicately formed, vividly coloured flowers became a popular if costly item. The demand for differently coloured varieties of tulips soon exceeded the supply, and prices for individual bulbs of rare types began to rise to unwarranted heights in northern Europe.
By about 1610 a single bulb of a new variety was acceptable as dowry for a bride, and a flourishing brewery in France was exchanged for one bulb of the variety Tulipe Brasserie. The craze reached its height in Holland during 1633–37. Before 1633 Holland’s tulip trade had been restricted to professional growers and experts, but the steadily rising prices tempted many ordinary middle-class and poor families to speculate in the tulip market. Homes, estates, and industries were mortgaged so that bulbs could be bought for resale at higher prices.
Sales and resales were made many times over without the bulbs ever leaving the ground, and rare varieties of bulbs sold for the equivalent of hundreds of dollars each. The crash came early in 1637, when doubts arose as to whether prices would continue to increase. Almost overnight the price structure for tulips collapsed, sweeping away fortune’s and leaving behind financial ruin for many ordinary Dutch families.
A great story and told many times including more recently in the film “Wall Street, Money Never Sleeps” with Gordon Gecko recanting this rather good tale. Only one problem, it is mostly a myth albeit a great myth.
It is true that tulip prices sky-rocketed but there are other facets to the story that may have caused this. The plague came during the 30’s and many that died left inheritances which became disposable income and another theory is that because of the high death rate, people became extravagant with their money and decided that they may as well spend it on frivolous items. Fantastic fortunes don’t appear to have been lost by all and sundry. But a good number did regret taking up gardening.
I have never had “green fingers” but I do have 30 years of experience managing the “Green Back” incredibly well for my clients. If you require the services of a veteran financial advisor in wealth/portfolio management then please get in touch.
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4 年Nice post Lawrence! This post of yours reminded me of my favourite tree.... if you like the Tulip story, you might like this.... https://www.sciencealert.com/40-types-of-fruit-tree-artwork-van-aken-2018