History's Most Famous Bubbles Of All Time
With every generation, a new investment becomes popular.
1 November 2021
Brenda Ward looks at eight of history’s most famous bubbles.
Dutch Tulip Craze
The Dutch Tulip Craze is believed to be the first recorded bubble. The tulip was new to Holland, and at the craze’s height, single bulbs were selling for more than 10 times the average wage. When the prices collapsed in 1637, many investors were ruined and the Dutch economy was badly affected.
British Canal Mania
After the American War of Independence ended in 1783, investors felt rich and, from 1790 until 1793, 20 new canal-building schemes were authorised. Some of the canals were profitable, but many never returned a penny. Others, such as the Grand Western Canal, were never finished.
British Railway Mania
By the 1840s, the industrial revolution created wealth, and new train tracks became a speculative frenzy. As railway shares went up, more money was poured in, until the industry collapsed. A third of the lines were never built, some companies turned out to be scams, and many families lost everything.
After the 1929 stock market crash, many investors started redeeming dollar notes for gold. There were fears that the US might run out of gold, so the Fed raised rates. But then the US entered the Great Depression and people hoarded gold, driving prices up. Finally, private ownership of gold was outlawed.
NZ Property Boom
The buzz word in New Zealand in the 1970s was property. High inflation, an immigration boom, and a shortage of builders and building materials pushed up house prices in value by 53 per cent. Then the oil crisis hit, immigration slowed, and house prices fell 40 per cent.
The Share Market
The 1980s were the years of investing in ‘blue-chip’ companies like Brierley, Chase and Equiticorp, all giving investors great returns. Kiwis joined share clubs and borrowed to invest. Then, on 19 October 1987, the share market plunged. Fisher & Paykel is the only New Zealand 1987 top-30 company still listed.
The Dot-com Bubble
Investors speculating on tech start-ups, from 1997 to 2001, caused the dot-com bubble. Many internet-based companies, ‘dot-coms’, were launched and became share-market darlings. The bubble burst in 2000-02 and many of those start-ups failed. Amazon.com and eBay were two of few that recovered.
The Emissions Trading Scheme was set up in 2008 so New Zealand could meet its commitments under the Kyoto Protocol. Forest owners claimed carbon credits for carbon stored by their trees. Prices reached $18 to $20 a tonne, then cheap international carbon credits hit prices and many forests were turned into dairy farms.
By Brenda Ward
First published 1 February 2018
The editorial below reflects the views of the editorial contributor only and content may be out of date. This article is sourced from a previous JUNO issue. JUNO’s content comes from sources that it considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only. JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions.
Informed Investor's content comes from sources that Informed Investor magazine considers accurate, but we do not guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk.