El blog de Maria

Trias de Bes goes on in his book: “The man who changed his home for a tulip”, after analyzing the bubble produced by the Company of the South Seas (1711-1720) in England, the crack of 1929 in the U.S., the Japanese bubble in the nineties in Japan and the subprime crisis of 2006,  that the foundation of value growth of assets during a bubble is never solidly founded: it is enough that someone important or famous purchase of these assets so that the demand is triggered. Trias de Bes tells how Isaac Newton lost 20,000 pounds in the Company of the South Seas (for the years 1711-1720: a fortune), hence his phrase: "I can calculate the motions of heavenly bodies but not the madness of people".

Another important finding of the author is that during the bubbles, it is believed that the asset´s value will go up indefinitely and those who buy the commodity which is speculated with are considered more creditworthy. The collapse of bubbles is usually sudden and without obeying exact criteria.