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2 Tulip Mania

October 20, 2009

180px-TulipomaniaTulip Mania represents all economic bubbles. This bubble began in Holland in November 1636 when the price of tulip bulbs started to rise. Tulips became fashionable with fashionable names ( eg. Alexander the Great). Bulbs were sold before they had been dug up.  Like all bubbles it ‘popped’.  (See Extraordinary Popular Delusions and the Madness of Crowds, written by British journalist Charles Mackay in 1841.)

There have been many over the years from the Railway Bubble (1840s USA) to the property bubble (2007).  A stock market bubble brought about the Great Depression in the 1930s. There have also been bubbles in mining shares, computer shares (Dot Com Bubble),  art and the growing or breeding of llamas, ostriches and aloe vera. 

 

The Maths Error: Assuming a Graph is Linear!!!!


 tulip graph

People look at graphs and assume they straight-line graphs.  But many graphs are not based on a rule or formula but rather hope. And when hope crashes so does the value of the stock.

Take note mathspigs is because Sports Cards, comics, collectibles (eg. Bean Kids) and memorabilia (eg. Signed shirts etc) can also be prone to crashes in the school yard.  If the price for any product is unbelievable … don’t believe it!!!! There will be kids or others out there trying to tell you ‘Don’t worry. The prices are still rising.’

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