The earliest example of an economic bubble in mankind - the hype of tulips
Tulip is a very beautiful flower, produced in Turkey around the 10th century, introduced to the Netherlands at the end of the 16th century, the climate of the Netherlands is very suitable for its growth, so people cultivate a lot, it is the symbol of the Netherlands, is the national flower of the Netherlands.
In the Netherlands in the 30s of the 17th century, new varieties of tulips were very rare, the price was rising, and wearing tulips throughout Europe was a symbol of status and status, so many people were attracted to hype royal tulips to earn the difference and obtain high profits. The price of this beautiful flower, under the crazy operation of people, in two years, the price has increased a thousand times. The Netherlands also invented a tulip futures so that every ordinary person can participate in hyping this flower.
The expensive tulip touches up to 10,000 guilders, the annual salary of ordinary workers is only 150, and decades of wages can buy one, without futures, ordinary people can not participate at all.
One day in February 1637, people suddenly realized that the price of tulips was far from its true value, so the price plummeted, everyone was selling, the first financial crisis in human history broke out, the Dutch government issued a statement saying that tulips had no reason to fall, but to no avail, on April 7, 1637, the Dutch government banned the trade in tulips.
Tulips are the best example of modern silly theory, speculative hype is dangerous, and value investing is king.
