Let's Look at Our Past - Economic Bubbles

Economic bubbles occur when the price of a financial asset or commodity rises above historical norms.


Examples from history:


The Dutch Tulip Bubble: In Holland, between 1636 and 1637 tulip prices shot up twentyfold over 4 months and then plunged by 99% in 3 months!


The Dotcom Bubble: In the USA during the 90s, as the internet gained popularity, NASDAQ soared from 500 to all the way to 5,000. IN the following two years, it dropped by almost 80%.

The US Housing Bubble: After US housing prices nearly doubled by 2006, over the span of next 2-3 years US housing lost nearly 1/3 of its value! Leading to the Great Recession.

There are many more (like south sea bubble: asset went up 8 times and then collapsed, or Japanese real estate bubble: went up 3 times in 4 years and then the huge drop later led to lost of more than a decade with no gains).



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