Tulipmania, Crowd Psychology, and Low-Carb Diets

The most famous example of a speculative bubble is the "tulipmania" that struck Holland between 1634-1638. As the market reached a frenzied peak in early 1637, people mortgaged their homes and businesses in order to buy bulbs for resale at higher prices. The highest price bulbs sold for more than 3000 guilders...equivalent to the price of a large house. When the market  finally collapsed, many of the powerbrokers of Dutch society were ruined...almost overnight.

Investment history has been littered with the sad stories of market bubbles and manias. Consider:

• the Mississippi scheme that swept France in 1720,
• the South Sea Bubble that gripped England during the same years,
• the Stock Market mania and crash of the 1920's,
• the Dot.Com frenzy of the late 1990's,

Yesterday, I wrote about the Chapter 11 bankruptcy of Atkins Nutritionals, and the long history of dietary fads and trends. Although I am not a Behavioral Economist, I am struck with the parallels between the crowd psychology of market...and dietary...manias.

In this vein, I wonder if this wouldn't be a great topic for a seminar that explores the underpinnings of market...and dietary...manias; and provides common sense solutions to confused investors. Better yet, why not add the following list of invitees to your invitation list, and make it a celebration of the demise of Atkins Nutritionals?

• Potato farmers,
• Bakers,
• Pizza and pasta shops,
• Wheat growers,
• Fast-food franchisees,
• Fruit growers,
• and everyone else who is rejoicing upon the discredit of low-carb mania.

Just a wacky thought for a Friday in August. Have a great weekend!

Comments

[Griffey Shoes]

Your composition is very good, hope to have the opportunity to read more of your article.

[Ed Hardy]

I don't know how to receive my responce. Waiting for your reply, tks!