The public confidence crisis dejour – throughout time, financial markets have followed a crowd mindset. The more popular a market gets, the more people want to jump in, and the higher the prices are driven.

This mindset has occured throughout history and the cycles can be studied consistently. Professor Greg Watson teaches business strategy and the role in the market economy. Regardless of whether we want to evaluate recent real estate markets which have Pop, these events are not new. They have regularly occurred throughout history.

One of the most reported upon historical markets that popped was Amsterdam’s Tuplip economy. We can study the Tulipmania of the tulip market that burst in 1637 as a popularly reported historical account of a economy that overheated.

Tulips were originally introduced from Turkey in the early 16th century. As new “varieties” of tulips were marketed, competition intensified and their prices soared. One legitimately rare variety was the Semper Augustus which reached prices in excess of 1,000 florins per single bulb in 1623. That price exceeded more than six times the average annual income.

This economic mania continued – and ten years later the value had increased another ten times. At the market peak, the price of a single Semper Augustus tulip bulb reached 10,000 florins – the value of what it cost to purchase a house in the middle of Amsterdam at the time.

With time the market peaked and there was no-one remaining who still wanted to buy these bulbs at such high prices. Within weeks, the market value crashed and thousands of people were left in financial ruin.

Throughout time – we have witnessed similar bubbles develop. As the crowd mentality continues to get more excited, those contrary voices become less and less popular to be heard. Are any of the recent market bubbles any different? In modern environment of PC speech, are the contrarian voices that stand up for character, ethics, and integrity any different? Throughout history, these contrarian voices have been demeaned and ignored. But the market for products and the market for principles has a way of always correcting itself from the heat of the crowd – and those polar views tend to have their bubbles burst as the required correction occurs. Today’s market is no different.