The Tulip Mania 1634-1637

The first financial bubble ever recorded, it took place in the Netherlads.
People sold their houses and personal assets and even risked money that they didn’t have, or need to merely own a tulip.
The notion that the tulip prices has one direction which is going up, fueled this mania. Without even measuring the underlying value of the asset it led to a positive feedback where everyone is buying and increasing the price by increasing the demand for the tulips.
Over a course of one week, the prices of the tulips plummeted to become worthless therefore people owning them went bankrupt.

Does this ring a bell?

Well then, i’ll help you if you haven’t figured it out.

I have been strongly against “investing” in Bitcoin, because if one can not measure the value of an asset hence it isn’t called an investment. For me it’s a pure gamble even if you think that you know that there is a hidden potetnial for those cryptocurrencies.
If you can’t measure the value of it, how can you know when to buy, hold or sell the asset? now everyone will come and shout: “BUT LOOK IT WENT UP! AND IT’S STILL GOING UP!!” well you are right and it might have more room to run. But that doesn’t make any difference, because you can’t know the value of it, and now the price is going up because people think that it should be higher, or even worse, they just want to make some fast money as their friend or neighbor just did. unlike Jamie Dimon i’m not saying that the Bitcoin is a fraud, or may not last. all i’m saying that it is not an investment, on the contrary it’s a pure gamble (which turns out to be paying off until now), as i said in my previous articles if you have some extra money or you really want to have some part of this action which involves huge price swings that is usually accompanied with drama then buy it. 

As i said before i’m hopefull that i’m wrong about this and the Bitcoin isn’t in a bubble because many people will lose a lot of money or everything they own.

Disclaimer: As of today 09.12.17 i don’t own any Bitcoins or any other cryptocurrency.  

 

 

Advertisements