The Ghost of “Tulip Mania” Comes to America – How Long Until It Spooks the Economy into the Next Crash?
Peter Reagan, March 28, 2017
It’s CRAZY to imagine today, but in 17th Century Holland, just a few rare tulip bulbs were enough to buy a mansion.
It all started when the Dutch got caught up in an irrational mania for tulip bulbs. They fell in love with the idea that they could get rich simply by buying these flowers… and then waiting to sell them to someone else for a higher price.
There was nothing about tulips that made them worth so much money. There was no good reason for them to continue to soar in value. And yet the prices went sky high. Normally-reasonable people spent their life savings on the mania. They hoped to become rich.
Eventually, the inevitable happened: The “tulip bubble” popped in spectacular fashion, delivering massive losses to all those whose savings were exposed to the madness.
The Tulip Mania is a perfect illustration of the “Greater Fool Theory”: There are only so many “fools” who will pay exorbitant prices for something that has little or no intrinsic value. Once you run out of “greater fools”, prices collapse. And the greatest fools of all are financially ruined.
A Ghost of “Tulip Mania” Has Again Infected American Stock Markets (Remember 2008?)
It has happened as recently as 9 years ago. Now, it’s happening again.
For example, take Tesla stock. Its price-to-earnings ratio is -39.90. That’s a negative P/E ratio, because Tesla is losing lots of money very fast.
Because of this, you could argue that Tesla stock is worth less than nothing… yet some Americans are still gobbling up shares at $260 or more.
The whole point of investing is to make money. So if a company pays no dividends and is losing as much money as Tesla, then investors must be relying on a stream of “greater fools” to buy their shares at a higher price.
This mania has infected the entire market. Here are 2 more examples…
These are just 3 examples (of many) that illustrate the insanity that has gripped America. With the stock market hitting highs, a modern “tulip mania” is in full effect. I can only wonder, How long until the next crash?
Will You Be the “Greater Fool”… or Will You Get Out Before It’s Too Late?
Listen, I get it. The markets have been going up, and going against them goes against human nature. But you know better.
Failure to act in moments like these is what has decimated the savings of so many Americans in past crashes (like 2008).
Right now, you have two choices:
Of course, I’m talking about gold. Over thousands of years, gold has been proven to be a valuable protector of savings during times of market insanity… times like RIGHT NOW.
That’s why thousands of Americans have already moved their savings and retirement into gold. And now, I want to invite you to do the same.
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Remember, no matter the economic devastation that may result from today’s stock market mania, gold is a time-tested and proven way to protect your savings through good times and bad. To get started, click here to get this free info to protect your savings.