3 Great Speculations that collapsed Markets
In these years, we have witnessed over and speculation owns markets, making up or down, so unexpected and often destructive effects on personal finance, business, or even the States themselves.
But let us start at the base, and know first what the term speculation.
The term is known to all trade or financial transactions aimed at obtaining an economic benefit, based on price fluctuations. A speculator does not seek to enjoy rather than buying, but profit from price fluctuations.
In this way a speculator is someone who buys goods or products at low prices while providing an increase in demand, hoping that demand drives up prices, which managed to sell for a higher price than he bought at a profit. They are knowledgeable people who know the markets, fundamental thing to predict where there is a buying opportunity.
Now that we have relatively clear concepts, it is time to know three great speculations that the market collapsed.
1. First Great Speculation: The tulip fever
Between 1634 and 1637, years of prosperity in the Netherlands, there was an unprecedented demand for some tubers can produce some exceptional tulips. Within weeks, these tubers came to be worth a house. Prices rose as the market collapsed, and at any moment, the price of these tulips, dropped their real level, which was minimal compared to what was being paid, and many magnates were ruined.
2. Second Great Speculation: The South Seas
Another was the speculative momentum that occurred in the eighteenth century, and is known as the South Sea bubble. Many were those who invested in the British South Sea Company, thinking that his ships would return laden with treasures from overseas.
For this reason, the shares rose as they reached an exorbitant price and then fall to rock-bottom prices, on news the sad reality on boats did not arrive with the expected amount. One of those who suffered the setback of the speculation was Isaac Newton, the father of the theory of gravity.
3. Third Great Speculation: The great stock market crash
As it was called that occurred on Wall Street in October 1929 and has gone down in history as the Crash of 29.
Shares of General Motors and RCA multiplied its price. Speculators borrowed to keep buying, but the Dow Jones collapsed.
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