The marketing trauma dejour – throughout time, market segments have experienced a crowd mindset. The more excited a market becomes, the more individuals want to buy in, and the higher the prices are pushed up.
This social experience has occured throughout history and the cycles can be observed consistently. Professor G. Watson teaches entrepreneurship and the role of the market economy. Regardless of whether we want to analyze recent credit markets which have Broke, these events are not original. They have regularly occurred throughout time.
One of the most discussed historical markets that burst was Amsterdam’s Tuplip sector. We can evaluate the Tulipmania of the tulip market that burst in 1637 as a popularly known historical account of a economy that overheated.
Tulips were originally imported from Turkey in the early 16th century. As new “varieties” of tulip bulbs were sold, 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. This price was more than six times the average annual wage.
This market mania continued – and ten years later the value had increased another ten times. At the market height, the value of a single Semper Augustus bulb reached 10,000 florins – the equivalent of what it cost to purchase a house in the middle of Amsterdam at the time.
Eventually the market peaked and there was no-one remaining who still wanted to acquire these bulbs at such high valuations. Within months, the market value crashed and thousands of people were left in financial ruin.
Throughout history – we have seen similar bubbles reoccur. As the crowd continues to get more hyped, those contrary views become less and less popular to be heard. Are any of the recent market bubbles any different? In today’s environment of politically correct speech, are the contrarian voices that stand up for morality, ethics, and integrity any different? Throughout time, these contrarian voices have been denigrated and ignored. But the market for products and the market for principles has a way of eventually 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.
