Image Credit: Edward Matthew Ward, “The South Sea Bubble” (1847), Tate Britain
By Jason Zweig | July 17, 2020 10:00 am ET
Back in Business is a new, occasional column that puts the present day in perspective by looking at business history and those who shaped it. Read the first installment here. Mr. Zweig’s Intelligent Investor column will return next week.
A hot stock doubles and then doubles again in a matter of weeks. Thousands of people who have never invested in their lives suddenly try to beat the market.
That isn’t just a description of Tesla Inc. and day-trading customers of the Robinhood smartphone app in 2020. It’s also what happened in 1720. Three hundred years ago, one of the biggest manias in financial history was at its peak.
In the summer of 1720, shares in the South Sea Co. and other leading stocks roared to all-time highs as speculators chased instant profits. Ever since, this sudden outbreak of stock trading has been known as “the South Sea bubble.” Even faster than it inflated, it burst — and left us with lessons about human nature that reverberate today.…
To read the rest of the column:
For further reading:
Benjamin Graham, The Intelligent Investor
Jason Zweig,The Devil’s Financial Dictionary
Jason Zweig, Your Money and Your Brain
Jason Zweig, The Little Book of Safe Money
Articles and other resources:
South Sea Bubble 1720 Project, Yale School of Management’s International Center for Finance
South Sea Bubble Resources, Baker Library, Harvard Business School