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A History of Notable Stock Bubbles

A History of Notable Stock Bubbles

A History of Notable Stock Bubbles

In today’s insanely connected world, the ability to create and burst market bubbles is even more amplified. For those uninitiated, a bubble is when speculation in a type of security inflates the price far beyond the fundamentals allow. While they can go for years or even decades, eventually reality takes hold and the bubble can crash in a much shorter time frame. In just the last 15 years, two notable bubbles were popped in the Dot-Com and housing markets.

Right now, market analysts think that there may be asset bubbles in other places as well. Student loans and bonds are some areas that people have pointed to. Even more notably, the US stock market in October has recently corrected and then subsequently climbed back in value. Some pundits thought it was the beginning of a major bubble burst and others are still calling for it, saying that asset prices are artificially inflated through Fed tampering.

However, bubbles are nothing new. As the above infographic points out, bubbles go as far back as finance and speculation themselves. In the past, there have been bubbles in everything from real estate to railroads that have made fortunes and decimated people’s finances. It is important to learn about these events because there are lessons associated with each one. History doesn’t repeat, but it often rhymes.

Of particular interest is the Tulip Mania bubble in Holland in the 17th century. Wikipedia has a great summary of it here, and also even has a price index of tulip bulbs. It’s a reminder of how something without any intrinsic value can get inflated in price beyond all sensibility. Note: fiat money also technically has no intrinsic value, as it is just paper that governments legislate must be used.

Original graphic from: Bizbrain

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  • Otto

    Buy Gold! Buy Silver! I have too much invested in it for you not to. Here…here…here’s another reason to put yourself into the coming Gold and Silver Bubbles.

    • LOL I have been buying Copper and Tin for over 2 years now, no bubble, not really! 😉

      • Otto

        Get back to me when you’re rich.

        • Not trying to get rich, just preserve my dollar’s buying power 😉

  • I have invested in Gold, silver and copper. But also Numismatics in past 2 years.It’s hard to sya what to predict since everytime i buy price of precious metals just keep on dropping. 🙁

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