Stock Market Bubbles may Break - Is anything unique Today?

The marketing trauma dejour - throughout time, financial markets have followed a crowd mindset.  The more popular a market gets, the more individuals want to jump in, and the higher the prices are pushed up.

This mindset has occured throughout history and the cycles can be studied consistently.  Professor Watson teaches entrepreneur and the role of the market economy. Regardless of whether we want to evaluate recent real estate markets which have Burst, these fluctuations are not new.  They have consistently occurred throughout history.

One of the most popular historical markets that popped was Amsterdam’s Tuplip sector.  We can analyzie the Tulipmania of the tulip market that burst in 1637 as a popularly reported historical account of a market that overheated.

Tulips were originally imported from Turkey in the early 16th century.  As new “varieties” of tulip bulbs were discovered, competition intensified and their prices soared.  One apparently rare variety was the Semper Augustus which reached values in excess of 1,000 florins per single bulb in 1623.  That price exceeded more than six times the average annual wage.

This industry mania continued - and ten years later the value had increased another ten times.  At the market peak, the value of a single Semper Augustus bulb reached 10,000 florins - the value of what it cost to acquire a house in the middle of Amsterdam at the time.

With time the market peaked and there was no-one remaining who still wanted to buy these tulips at such high prices.  Within weeks, the market value crashed and thousands of people were left in financial ruin.

Throughout time - we have witnessed similar bubbles reoccur.  As the crowd continues to get more hyped, those contrary voices become less and less popular to be heard.  Are any of the recent market bubbles any different?  In today’s times of politically correct speech, are the contrarian voices that stand up for morality, ethics, and honesty any different?  Throughout history, these contrarian voices have been ridiculed and ignored.  But the market for products and the market for ideas has a way of always correcting itself from the heat of the crowd - and those polar views tend to have their bubbles burst as the neccessary correction occurs. Today’s market is no different.