Newton’s Financial Misadventures in the South Sea Bubble [pdf]
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Re: Newton’s Financial Misadventures in the South Sea Bubble [pdf]
#2For those short on time, here's a TL;DR image: https://i.imgur.com/AEzxuLy.jpg
Re: Newton’s Financial Misadventures in the South Sea Bubble [pdf]
#3For those short on time, here's a TL;DR image: https://i.imgur.com/AEzxuLy.jpg
more than a thousand words. Tx, comboy.
Re: Newton’s Financial Misadventures in the South Sea Bubble [pdf]
#4Suppose he was a master of seeing trends till his last days. All this happened when Newton was almost 80 years old. However, he died 7 years later happily as one of most famous people of all times.
Re: Newton’s Financial Misadventures in the South Sea Bubble [pdf]
#5I read about it first in The Intelligent Investor By Graham, but it's nice to get a more in depth description of this anecdote.
One of my friends once asked me how the growth in cryptocurrency value i an unsustainable bubble when so many smart and math proficient people believe in it. This is a handy bit of Newton trivia to make the point that the intelligent investor is not necessarily the one with the best math proficiency but the one who understands and abuses market folly. When everyone goes right look if there's anything of value people might've missed to the left.
Re: Newton’s Financial Misadventures in the South Sea Bubble [pdf]
#6For those short on time, here's a TL;DR image: https://i.imgur.com/AEzxuLy.jpg
That chart shows a little under 10x from beginning to peak. Many people compare cryptocurrencies to the South Sea company, however, many of the different cryptocurrencies have gone 15-30x within the last year.
A lot of the hype in the media seems to be gone (or is now "doom and gloom"), so it will be interesting to see whether or not today's values can be sustained without a high rate of people continously buying in.
Re: Newton’s Financial Misadventures in the South Sea Bubble [pdf]
#7For those short on time, here's a TL;DR image: https://i.imgur.com/AEzxuLy.jpg
That chart shows a little under 10x from beginning to peak. Many people compare cryptocurrencies to the South Sea company, however, many of the different cryptocurrencies have gone 15-30x within the last year. A lot of the hype in the media seems to be gone (or is now "doom and gloom"), so it will be interesting to see whether or not today's values can be sustained without a high rate of people continously buying in.
Because markets move quicker than they did in the 18th century. These bubbles have progressively grown and collapsed quicker and quicker with the introduction of railways, telegraphs, phones, improvements in printing presses, radio, television and finally the Internet. The pattern is still the same.
You can look at Railway Mania, the Oil boom of the mid 1800s, the Florida property boom, the airline boom of the early 20th century and the Dot Com boom of the late 90s for reference if you want and you can see that they become progressively quicker.
Re: Newton’s Financial Misadventures in the South Sea Bubble [pdf]
#8For those short on time, here's a TL;DR image: https://i.imgur.com/AEzxuLy.jpg
That chart shows a little under 10x from beginning to peak. Many people compare cryptocurrencies to the South Sea company, however, many of the different cryptocurrencies have gone 15-30x within the last year. A lot of the hype in the media seems to be gone (or is now "doom and gloom"), so it will be interesting to see whether or not today's values can be sustained without a high rate of people continously buying in.
1. Most bubbles are not global but geographically restricted in some way; crypto is global.
2. There is some value to Blockchain technology, so the value is not $0.
3. When comparing, given all of these assets had a starting value of effectively $0 at launch, you should probably look at them from an angel investment PoV. Peter Thiel got similar returns when investing in Facebook.
I'm not saying crypto is (entirely) comparable to Facebook in value (it might, it might not -- too early), but that's how I think the gains could make sense. It's valued like an internet startup, and then some.
4. The global market is still tiny? The entire crypto space is $550bn in market cap. Facebook is $552bn in market cap.
Valuations have probably gotten ahead of themselves and a lot of the smaller coins will die eventually, but it's still a blip in the grand scheme of things.
5. There is too much capital in the world. Too much cheap debt. Too much free money. This will fuel the mania. You could have put $2m in the stock market in 2008-2009, and if you used leverage in a smart way, could have ended up with $75-100m.
Re: Newton’s Financial Misadventures in the South Sea Bubble [pdf]
#9Earlier quoted context omitted.
That chart shows a little under 10x from beginning to peak. Many people compare cryptocurrencies to the South Sea company, however, many of the different cryptocurrencies have gone 15-30x within the last year. A lot of the hype in the media seems to be gone (or is now "doom and gloom"), so it will be interesting to see whether or not today's values can be sustained without a high rate of people continously buying in.
1. Most bubbles are not global but geographically restricted in some way; crypto is global. 2. There is some value to Blockchain technology, so the value is not $0. 3. When comparing, given all of these assets had a starting value of effectively $0 at launch, you should probably look at them from an angel investment PoV. Peter Thiel got similar returns when investing in Facebook. I'm not saying crypto is (entirely) c…
> 2. There is some value to Blockchain technology, so the value is not $0.
The value of current crypto-currencies might very well be zero, even if there is some value to blockchain technology.
> 4. The global market is still tiny? The entire crypto space is $550bn in market cap. Facebook is $552bn in market cap.
Comparing market caps like that is silly. I launch my own coin pg314-coin, 1 billion exist. I sell one to my friend for $1000. The market cap is now $1 trillion, twice that of Facebook...
> You could have put $2m in the stock market in 2008-2009, and if you used leverage in a smart way, could have ended up with $75-100m.
That is true of any period in time where the stock market went up. If you have a positive return to start with you can have an arbitrary multiplier with 'leverage used in a smart way'.
Re: Newton’s Financial Misadventures in the South Sea Bubble [pdf]
#10Earlier quoted context omitted.
That chart shows a little under 10x from beginning to peak. Many people compare cryptocurrencies to the South Sea company, however, many of the different cryptocurrencies have gone 15-30x within the last year. A lot of the hype in the media seems to be gone (or is now "doom and gloom"), so it will be interesting to see whether or not today's values can be sustained without a high rate of people continously buying in.
1. Most bubbles are not global but geographically restricted in some way; crypto is global. 2. There is some value to Blockchain technology, so the value is not $0. 3. When comparing, given all of these assets had a starting value of effectively $0 at launch, you should probably look at them from an angel investment PoV. Peter Thiel got similar returns when investing in Facebook. I'm not saying crypto is (entirely) c…
2. There's value in blockchain technology, certainly, but someone who buys (any kind of) bitcoin is not buying technology. You wouldn't invest in baseball cards just because you think there's value in sport, would you?