Tulip mania ( Tulip Craze Bubble)

Tulip Mania

• Generally considered to be the first recorded economic bubble

• The Tulip Mania of 1636-1637 was an episode in which tulip bulb prices were rising to incredible heights before collapsing and plunging the Dutch economy into a severe crisis that lasted for many years.

But,WHAT IS ECONOMIC BUBBLE?

• Economic bubble is a situation in which prices for securities especially stocks, rise far above their actual value.
• This trend continues until investors realize just how far prices have risen, usually, but not always, resulting in a sharp decline.
• Bubbles usually occur when investors, for any number of reasons, believe that demand for the stocks will continue to rise or that the stocks will become profitable in short order

Where and Where did it occur?

• Where: Holland
• When: 1634-1637

• Tulip Mania mostly occurred in Holland but England and Germany did experience small amounts of the mania
• In 1593, botanist Carolus Clusius brought tulips from Constantinople to Holland for research. He refused to give or sell any to the locals, so some of his neighbours stole some of these exotic new bulbs.
• This started the Dutch tulip trade. Tulips popularity and price increased dramatically  

How did it occur?

• People started to buy the bulbs and store them
The price was getting higher and higher due to bulbs was getting less and hard to find. 
• Bubbles usually occur when investors, for any number of reasons, believe that demand for the stocks will continue to rise or that the stocks will become profitable in short order
• Others started selling house and assets or any thing that could change into money to get those bulbs
• The Dutch made a huge profit by fooling the foreigners and those not knowing much about tulips.

Why Did It Occur?

• People started to value tulip bulbs so much that they could sell their assets to get one
• In the market like this, people started to act irrational
• They started to invest to the bulbs when they see other making money from doing it

HOW MUCH A SINGLE TULIP BULB CAN TRADE WITH!!

Item	Value (florins)
Two lasts of wheat	448
Four lasts of rye	558
Four fat oxen	480
Eight fat swine	240
Twelve fat sheep	120
Two hogsheads of wine	70
Four casks of beer	32
Two tons of butter	192
A complete bed	100
A suit of clothes	80
A silver drinking cup	60
Total	2,500

***A good trader could earn up to 60,000 florins in a month-- approximately $61,710 adjusted to current U.S. dollars

Bubble Burst!!!

• The height of the bubble was reached in the winter of 1636 – 1637
• So one day, people concerned about the price. It isn't worth paying that huge amount of money for just a single bulb
• And since people start realizing it, the price went down a lot
• When the price went down, they realized that if they don't sell it fast. They are going to go broke
• People started to panic
• Everyone started selling tulip bulbs all at one time. 
• As we know, when everyone start selling things all at time, there is no market. No one want to buy them anymore. 
• And when no one want to buy, as we know, it happened recently, the market go down. 
• It caused A CRASH!

What Can We Learn From This?

Don't chase and buy things just because many people are getting lots money from it. It may benefits you in the short run not in the long run. 
Not to invest in only a single stock or a single bond.
Make sure you DIVERSIFY YOUR PORTFOLIO! and REBALANCE YOUR PORTFOLIO!

Relfect:

Article: http://business.time.com/2013/09/16/explaining-the-financial-crisis-why-do-we-still-not-know-what-happened/

This quote shows that there are lots of book written about the economic bubbles in the past and how to recognize or how to avoid the bubble and the burst. But it seems like they don't help anything at all. I think this would have something to do with human psychology, the way we think. I think that people just crave to have a lot of money in a short run but they don't think about what will have next, or what will happen if they invest their money in a long run. Because no one will know when the market is going to drop. 

How non-americans invest their money

Essentially, a non-american can't just go and buy or sell stocks in US market. But there's no law against non-citizen trading U.S securities. To do so, you need first open an account either with brokers or on a trading online site or in person from the offices or one of bank group branches. They can put conditions on your access to the market and will require some basic information -- as well as money -- to open an account

So Mr Hallam showed us how a non-american can invest their money with a Singapore based brokerage called DBS Vickers. As he already opened an account, he can easily log in anytime with a DBS security device, which the password change every time you press the red button. Everything become really easy to do. You just need to follow the steps. One thing that is really important, that you need to know what stock you are going to invest in and how the quantity you are going to buy or sell. Example: Vanguard Total Stock Market ETF , the ticker (aka symbol) is VTI or Vanguard 500 Index Inv, it's ticker would be VFINX. You also need to know where you are going to trade your stock at, such as American Stock Exchange (AMEX), Toronto Stock Exchange (TSX or TSE). 

After you enter everything, things will be automatically go to where they should be. BOom! Your money will be ripped off and you will receive the amount of shares you wanted. Sometime, after you submitted your order, it may appear something like PEND, which is pending, the stock market have not open. But don't worry it will automatically do the magic when the stock exchange open. 

Reflect: I was asking my mom about the shares that I recently knew about. I asked her that did she buy it through the brokerage. She did not buy it through the brokerage. There's some offer within the company that they offer her an offer that she can buy shares directly from the company. They will give her half of the money which she invest when she buy the shares. She can buy the shares but she can only sell it back to the company and they will have no reason to deny it. And just like buying stock in the market, she can sell them with the market price. I think it's kind of cool how we non-american can buy shares directly from the U.S company and paying no transaction cost or any fees, which save us lots. 

Columbine 2

As I was keep on reading the rest of Columbime, one thing really struck me about the relationship between Eric and Dylan. In my opinion, from an angle I don't think Eric and Dylan carried a "true-friend" relationship. It was more like a leader and a follower type, Eric was a leader and Dylan was a follower.What ever Eric did, Dylan followed. Eric smoke Camel, Dylan followed. They seemed to appear to be close but I feel like almost it was forced to happen. They didn't choose pick each other but just had common in Zach. After Zach started dating Denon, Dylan felt like he just lost a best friend and the threesome was over. Dylan considered Zach his only best friend but did he ever consider Eric his best friend? I don't think so. From that day, Eric and Dylan committed crimes together. I also feel that Dylan made Eric's life become so easy. Whenever Eric and Dylan committed crimes, Dylan would be the one take all the works, eg: Eric just watched around left Dylan with all the works when they were breaking in the van and trying to steal stuffs. Plus, I think Dylan didn't want to do the massacre, he was just following Eric because Dylan was actually fall for it, he wouldn't shoot other students when Eric was not there,he was just pretended like he didn't see them. Sometimes it makes me feel bad because Dylan literally have no nothing against the plans Eric planned whether he wanted to do it or not.