Filed under: Comfort Zone Investing
In the 1630′s, it was tulips. More specifically, it was Semper Augustus, a tulip of extraordinary beauty; deep, deep blue with a band of white and touches of crimson flares. In its day, it was the must have thing. There was one man who owned the dozen flowers known to exist. He was offered the equivalent of one year’s annual income from a wealthy merchant for one bulb. He turned it down.
Tulip prices increased throughout the decade as more speculators got into the game. In 1633, a farmhouse was traded for three rare bulbs. By 1636 any tulip could be sold for extraordinary sums. Futures markets started. Trades were made in fields or taverns, between farmers and merchants. Some bulbs were bought and sold 10 times in a day. One father left his seven children an inheritance of 70 tulips. One sold for the all-time record price of 5,200 guilders.
Then, one day in 1637 everyone decided to stop playing. No buyers showed up at the local tulip auction in Haarlem. Within days, panic started, then spread. Tulips that sold for 5,000 guilders soon went for less than 50. (Source: Tulipomania by Mike Dash)
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Comfort Zone Investing: Bubbles Always Burst originally appeared on BloggingStocks on Sat, 26 Feb 2011 10:30:00 EST. Please see our terms for use of feeds.
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When it comes to the biggest threat to world economies, oil scarcity is second only to nuclear war. What started in Tunisia, then spread to Egypt has now spreading to Bahrain and Iran, where protesters are clashing with police. In Iran, lawmakers are threatening death to protesters.
The story of the day is about oil. February contracts for Brent crude are trading at $98.03 per barrel, up 74 cents as of 10:15 a.m. EDT. The U.S. benchmark West Texas Intermediate crude (WTI) is trading at $91.85 per barrel, up 42 cents. Brent crude is used primarily in Europe. The drive to $100 per barrel is due in part to severe winter conditions in Europe.
Oil recently traded at $91.00 per barrel and many analysts are looking for $100 per barrel. Against that backdrop, global oil companies are ramping up exploration to record levels for 2011.
