Have you ever thought that that click you make to bet online is child’s play compared to the crazy bets of history?

Tulip mania: when a flower was worth more than a house

Holland in 1630. The air is crisp, the streets are crowded, and everyone is talking about one thing: tulips. But we are not talking about amateur gardening. Oh no, this is serious business. So serious that a single tulip bulb could cost more than a luxury house in Amsterdam!

At the height of the madness, in 1637, a bulb of the “Semper Augustus” variety sold for 6,000 florins, when the average annual salary was 150 florins. Do the math! People sold land, jewelry, even houses to get their hands on these precious bulbs.

It got to the point where they were trading “futures” of ungrown tulips. Basically, people were betting on flowers that didn’t exist yet!

How did it all end? Not well. In February 1637, the market suddenly crashed. From one day to the next, tulips were back to… well, just flowers. Thousands of people lost everything.

Historian Mike Dash, in his book “Tulipomania”, describes this period as “the first documented example of a speculative bubble in history”.

The South Sea Company: When an Entire Nation Gambled on Nothing

England, 1720. The star of the moment? The South Sea Company. Founded in 1711, it promised incredible riches from trade with South America. There was just one small problem: they had almost no real trade!

The company’s shares skyrocketed. The price went from £100 in January to over £1,000 in August. Everyone wanted a piece of the pie, from the servants to Queen Anne herself!

Isaac Newton invested and lost a fortune. He is said to have later said: “I can calculate the motions of heavenly bodies, but I cannot calculate the madness of people.”

The crash, when it came, was spectacular. Thousands of people were ruined, the British government was on the verge of collapse. It was so bad that Parliament passed the “Bubble Act”, banning the formation of joint-stock companies without royal approval.

The Great Depression: When Wall Street Gambled the World Economy

Let’s jump to 1929. The Roaring Twenties are about to end with a roar, but not the kind you’d expect.

Wall Street is in full speculative frenzy. People are buying stocks on margin, essentially betting with borrowed money. Everyone thinks the market can only go up. Spoiler: it doesn’t.

On October 24, 1929, “Black Thursday,” the house of cards collapses. In a single day, nearly 13 million shares are traded. Panic spreads, everyone tries to sell. On October 29, “Black Tuesday,” the market loses $14 billion in value. That was about half of the US GDP at the time!

The aftermath? A global depression that lasted a decade. Mass unemployment, bank failures, widespread poverty.

Cryptocurrencies: The Latest Frontier of Speculation?

And today? Well, we have cryptocurrencies. Bitcoin, Ethereum, and thousands of other digital “coins.” In 2017, the price of Bitcoin went from $1,000 to nearly $20,000 in a year. People were mortgaging their homes to buy Bitcoin!

But as always, what goes up quickly can go down just as quickly. In 2018, the price dropped 80%. And yet, the fever is not over. In 2021, we saw a new peak, followed by another crash.
Is this the new frontier of finance or the latest speculative madness? Only time will tell.