More Money Made Simple

The public confidence crisis dejour - throughout time, real estate markets have experienced a crowd mentality.  The more popular a market becomes, the more people want to jump in, and the higher the prices are driven.

This mindset has occured throughout history and the cycles can be studied consistently.  Professor Watson teaches business strategy and the role in the market economy. Regardless of whether we want to analyze recent banking markets which have Burst, these scenarios are not original.  They have regularly occurred throughout history.

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

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

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

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

Throughout history - we have seen similar bubbles reoccur.  As the crowd continues to get more excited, those contrary views become less and less popular to be heard.  Are any of the recent market bubbles any different?  In today’s environment of politically correct speech, are the contrarian voices that speak up for character, ethics, and honesty any different?  Throughout history, these contrarian voices have been denigrated 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 required correction occurs. Today’s market is no different.