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Five Centuries of Bubbles and Bursts

Five Centuries of Bubbles and Bursts. by CNN Money www.cnnmoney.com. 1634-38: Tulips. The earliest well-documented financial bubble was for a bell-shaped flower. Some Dutch families mortgaged their life savings for these bulbs, some of which could cost as much as a home. 1720: South Sea Co.

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Five Centuries of Bubbles and Bursts

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  1. Five Centuries of Bubbles and Bursts by CNN Money www.cnnmoney.com

  2. 1634-38: Tulips • The earliest well-documented financial bubble was for a bell-shaped flower. Some Dutch families mortgaged their life savings for these bulbs, some of which could cost as much as a home.

  3. 1720: South Sea Co. • It was called a sure thing by British bankers who successfully hawked South Sea's shares as a play on New World trade. But profits never materialized, investors bailed, and South Seas' officials went to jail.

  4. 1848: Gold Rush I • After the discovery of gold in northern California, a nationwide frenzy erupted. The mass migration of speculators drove California's population up from 15,000 to more than 300,000 by 1854.

  5. 1860-73: Railroads • Railroad construction zoomed after the Civil War. Railroad stocks would make up as much as 40% of the total market capitalization of the NYSE. A financial panic in 1873 led to dozens of lines going bankrupt.

  6. 1890s: Bicycles • At one point more than 300 firms raced to corner the bike market. Then came the car, and by 1905 only 12 U.S. manufacturers remained.

  7. 1920s: Radios • The advent of radio technology fostered a dotcom-style boom in the roaring '20s. The biggest example: Radio Corp. of America. RCA's shares soared from $1 to $573 between 1921 and 1929. The stock then fell more than 95%.

  8. 1959: Electronics • At the dawn of the Space Age, stocks with "tron" in their name - like Astron and Transitron - zoomed to the moon. But in 1962, they came crashing back down to earth.

  9. 1974-80: Gold Rush II • As inflation soared - and as U.S. households were allowed to invest in gold for the first time since the Great Depression - prices skyrocketed from around $100 an ounce in 1974 to $850 by 1980. They would then collapse for the next quarter-century.

  10. 1980-84: PCs • Even before the rise of Windows or the Mac, personal-computer companies were the stars of the day. But PC stocks fell more than 50% in 1984, making investors gun-shy on tech for more than a decade.

  11. 1985-90: Japanese asset bubble • The land of the Rising Sun suffered twin bubbles - in real estate and equities. Between 1985 and 1989, Japanese stocks quadrupled in value. But they crashed in 1990, and prices haven't fully recovered.

  12. 1997-2000: Internet stocks • Not since the Depression was there so much speculation on Wall Street - this time in promising but in many cases profitless companies with ".com" in their names. After the party came crashing to an end in 2000, tech stocks lost four-fifths of their value

  13. 2003-07: Real estate • A conservative investment (the home) became the object of rampant speculation. The collapse of the housing bubble took the stock market down with it.

  14. 2008-present: Gold Rush III • Investors turned to gold when they thought the global economy was in trouble. But even as it became clear the world wasn't going to end, gold kept rising - and now trades above $1,100 an ounce.

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