Tag Archives: Dutch Tulip Mania

Stock Bubbles And Dutch Tulip Bulbs

“People were purchasing bulbs at higher and higher prices, intending to re-sell them for a profit. Such a scheme could not last unless someone was ultimately willing to pay such high prices and take possession of the bulbs. In February 1637, tulip traders could no longer find new buyers willing to pay increasingly inflated prices for their bulbs. As this realization set in, the demand for tulips collapsed” – “Extraordinary Popular Delusions and the Madness of Crowds,” Charles Mackay

“So yes, in a way I’m saying we can keep going up while at risk of reverting at any moment”NorthmanTrader.com

The market is melting up and indicators that a top is approaching are proliferating. This is one of the typical anecdotes that accompany markets nearing a top:   On CNBC last Wednesday morning the hosts plus a couple guests were discussing the market and one of the guests said that value doesn’t matter anymore “it’s all about momentum.” I almost fell off my chair when I heard that because the “fundamentals don’t matter it’s all about momentum” was one of the mantras in late 1999.

Chris Marcus (Arcadia Economics) and I discuss the current stock market melt-up and whether or not it can be shorted with success and how to manage the risks of being short:

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Some of the commentary above is  excerpted from the Short Seller’s Journal. Each weekly issue contains macro economic analysis, market analysis, and short ideas.  I  To learn more about this short-sell focused newsletter, click here:  Short Seller’s Journal info

Sometimes They Do Ring A Bell A The Top

Ding ding ding ding…It was reported yesterday that Trump has appointed the co-author of the book “Dow 36,000,” Kevin Hassett, as the Chief of the White House’s Council of Economic Advisors (LINK).  “Dow 36,000” was published a few months before the dot.com/tech bubble burst in March 2000.

Given the irrational semi-parabolic move in the Dow since election night, the appointment of Hassett in the context of his spot in the history of stock market manias is seeded in comedic, if not tragic, irony.  There’s numerous similarities between the current stock market and pre-crash moves in 1929, 1987, 1999 and 2007.   However, in terms of true valuation metrics, the current market bubble is most similar to the Dutch Tulip Mania.

Jason Burack invited me on his Wall St. For Mainstream podcast to discuss the Fed’s interest rate hike threats, the massive amount of gold flowing from west to east, gold market manipulation and why the current stock market is the most overvalued in history: