Market Bubbles should Burst – Is anything unique Today?

The marketing trauma dejour – throughout time, markets have followed a crowd mindset. The more heated a market gets, 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 observed consistently. Professor G. Watson teaches ethics and entrepreneurship and the role in the market economy. Regardless of whether we want to analyze recent banking markets which have Pop, these scenarios are not new. They have consistently occurred throughout history.

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

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

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

With time the market peaked and there was no-one remaining who still wanted to acquire these bulbs at such high valuations. Within months, the market price crashed and thousands of people were left in financial ruin.

Throughout time – we have seen similar bubbles develop. 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 today’s times of PC speech, are the contrarian voices that stand up for character, ethics, and honesty any different? Throughout history, these contrarian voices have been ridiculed 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 polar views tend to have their bubbles burst as the neccessary correction occurs. Today’s market is no different.

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