Just Bloggin

The market crisis dejour - historically, real estate markets have experienced a crowd mindset.  The more heated a market gets, the more people want to jump in, and the higher the prices are driven.

This bubble has occured throughout history and the cycles can be observed consistently.  Professor Watson teaches ethics and entrepreneurship and the role in the market economy. Regardless of whether we want to evaluate recent technology markets which have Broke, these fluctuations are not new.  They have consistently occurred throughout time.

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

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

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

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

Throughout time - we have observed 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 modern 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 demeaned and ignored.  But the market for products and the market for principles has a way of always correcting itself from the heat of the crowd mentality - and those polar views tend to have their bubbles burst as the inevitable correction occurs. Today’s market is no different.

Tags: 16th Century, Average Annual Income, Correct Speech, Financial Ruin, Florins, Market Crisis, Market Economy, Market Peak, Mindset, Professor Watson, Rare Variety, Recent Technology, Semper Augustus, Six Times, Stock Market Bubbles, Technology Markets, Time One, Tulip Bulb, Tulipmania, Tulips