Market-Psychology

In March 2000, the NASDAQ peaked at 5,048—more than double its value from a year earlier. Companies with no revenue, no profits, and often no viable business model were worth billions. Pets.com spent $27 million on advertising (including a Super Bowl ad) and collapsed nine months after its IPO. Webvan raised $800 million to deliver groceries. It shut down after burning through all the money in less than two years. ...

In February 1637, the Dutch economy experienced one of the most bizarre financial collapses in history. The cause? Flower bulbs. Not gold. Not land. Not ships or spices or any of the valuable commodities that drove the Dutch Golden Age. Tulip bulbs. At the peak, a single rare tulip bulb sold for 10 times the annual income of a skilled craftsman. One bulb—“Semper Augustus”—was worth more than a luxury canal house in Amsterdam. ...