Bubbles and Manias: Unbelievable Episodes in Financial History

Speculative bubbles have occurred throughout modern financial history. While many people may have strong memories of the Great Financial Crisis of 2008/2009, history abounds with other examples of astonishing past financial market excess and subsequent crashes. From speculation in tulips 400 years ago to the 18th century South Sea Company, the 19th century railroads or early 20th century Florida land speculation, promises of wealth and speculative bubbles and manias have been part of history and will likely remain so. What is a financial market “bubble”? What common themes exist for explaining why bubbles happen? What are some classic examples of financial market bubbles and subsequent busts? Bubbles are important to study: severe economic consequences of bubbles lead to changes in markets and law (and by definition, a large loss in wealth for many investors).

Daniel Johnson, C.P.A., is a keen amateur historian and retired private fund executive currently managing a family portfolio. His 35-year career focused on building and managing start-ups and established institutional businesses in New York and London for a bank, a family office as well as a variety of private funds. Witness to many historic events, his career began shortly before the 1987 Wall Street crash and went on to include first-hand observations and reactions to the 1997 Asian Crisis, the 2000 Dot Com Bubble, the 2008/2009 Great Financial Crisis as well as other consequential events.