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Stock Market Bubbles may Break - Is anything unique Today?

The marketing trauma dejour - throughout time, markets have experienced a crowd mentality.  The more excited 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 studied consistently.  Professor Watson teaches entrepreneurship and ethics and the role in the market economy. Regardless of whether we want to analyze recent credit markets which have Broke, these events are not new.  They have routinely occurred throughout time.

One of the most discussed historical markets that popped was Amsterdam’s Tuplip economy.  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 discovered, competition intensified and their value soared.  One honestly rare variety was the Semper Augustus which reached values in excess of 1,000 florins per single bulb in 1623.  That price exceeded more than six times the average annual wage.

This market mania continued - and ten years later the price had increased another ten times.  At the market peak, the price of a single Semper Augustus tulip bulb reached 10,000 florins - the equivalent of what it cost to purchase a house in central 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 many of people were left in economic ruin.

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