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| > A brief history
of the 17th century Dutch Tulip Bulb Mania> |
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Manias are a basic part of human nature. Whether it is a mania for the latest hot pop star
or a mania to buy a sure thing financial asset, manias have exerted their influence for
centuries. Unlike the lessening of the fervor directed towards a pop star, the end of a
financial mania can often have devastating effects on its participants.> |
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Tulips were first imported into Europe from Turkey in the mid 1500's. The flowers soon
gained in popularity, and a demand sprang up for different varieties of the bulbs.
The supply (and increasing popularity) of rare varieties of Tulip bulbs couldn't keep up
with the demand, and prices soon began to rise sharply. Prices rose to such heights that
by 1610 one rare bulb was considered an acceptable dowry for a bride. As prices soared
ordinary citizens soon began to view tulip bulb speculation as a sure fire way to get rich
(echoes of the stock market?). Holland, the largest producer of the bulbs, soon became the
epicenter of the mania for tulips. People mortgaged their homes and businesses to
buy the bulbs. The prices for many rare bulb types reached several hundred dollars each.
One bulb of a very rare variety even changed hands at over $20,000. By 1637 people began
to see that prices had reached an outlandish level. Distribution began to take place, and
as often happens after the smart money has already sold, a crash soon followed. Many
Dutch families lost the homes and businesses they had mortgaged to take part in this
"sure thing" investment.> |
| > At
Tulips and Bears, we
hope to alert you to the stock market tulips and to help you learn how to avoid getting
caught holding a tulip when its bottom is about to drop out. We also hope to teach
you to make all of your decisions yourself without following the crowd. Make your
own investment decisions and do your own research--do not take someone else's advice.> |
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