Johnny Grew

The crisis dejour – throughout time, market segments have followed a crowd mindset. The more popular a market gets, the more individuals want to buy in, and the higher the prices are pushed up.

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

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

Tulips were originally imported from Turkey in the early 16th century. As new “varieties” of tulips were sold, competition intensified and their value 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 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 tulip bulb reached 10,000 florins – the value of what it cost to purchase 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 purchase 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 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 PC speech, are the contrarian voices that stand up for character, ethics, and integrity any different? Throughout time, these contrarian voices have been denigrated and ignored. But the market for products and the market for principles has a way of eventually correcting itself from the heat of the crowd – and those extremist views tend to have their bubbles burst as the neccessary correction occurs. Today’s market is no different.