The first ever Economic Bubble - Tulip Mania !!

I am sure many people would not have heard about "Tulip-Mania".

In "Greed", everything seems to be "Bullish" & the price of a security seems to be "Unstoppable".

Let us take a brief look at "What the Tulip Mania or Tulip Fever actually was & How it turned out" !!

What would you say if i were to tell you that "This cute flower" once traded at the same price as "6 month average salary of a person in Holland" ?

Bonkers/ Crazy/ Insane/ Nuts you might say !!

 

Or better yet, one might say "You must be Nuts to pay a price like that for a Flower" !!

Well that was the case for "People of Holland, back in 1630's".

It began when "People started speculating on the price of a rare flower".

Dutch learned that "Tulips" could grow from seeds or buds that grew on the mother bulb. A bulb that grew from seed would take 7 to 12 years before flowering but a bulb itself could flower the very next year. "Broken bulbs" were a type of tulip with a striped, multi-colored pattern rather than a single solid color which evolved from a mosaic virus strain. This variation was a catalyst causing a growing demand for rare, “Broken bulb” tulips which is what ultimately led to its "High market price".

It was at that time "Professional traders/ Stock jobbers" got in on the action and everybody appeared to be making money, simply by possessing some of these rare bulbs. Indeed, it seemed at the time that "The passion for tulips would last forever". People began buying tulips with leverage. Once prices started their decline, holders were forced to sell their bulbs at any price and had to declare "Bankruptcy" in the process. "Hundreds who, a few months ago, had begun to doubt that there was such a thing as poverty in the land suddenly found themselves in that exact situation".

There is a lot more to it on "Google" if you would like to read more but i have just shared a "Snippet" of it to keep it "Simple & Relevant to the article" !!

You can look at your portfolio and decide for yourself if you are holding a "Real asset" or just a "Speculative Tulip".

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Regards !!