Ever heard of “Tulip Mania”?
It was the first economic “bubble.”
In the early 1600s, the Dutch went wild over the rare tulip bulbs being imported from China.
They were seen as a luxury status symbol, much like a Rolls Royce or Gucci dress today.
Rampant speculation sent prices soaring.
In 1633, a single bulb of the rare Semper Augustus tulip was selling for $330,000 in today’s dollars.
By 1636, the price had reached today’s equivalent of $1,200,000.
That’s a rise of over 260% in just three years…
A single tulip bulb would be exchanged by 10 different people in a single day…
Folks were making massive profits on a single bulb.
Then, in February 1637, the bubble burst.
Prices plummeted, and many people lost everything.
Hindsight Not Always 20/20
It seems insane in hindsight. Why would anyone pay a million dollars for a tulip bulb?
We would never be so dumb, right?
Wrong.
Look at this rock…
It was sold as a non-fungible token (NFT) for $1 million.
Yes. One million dollars for a JPEG image of a rock.
This “EtherRock” was minted from a royalty-free clip art database and sold for a small fortune.
As one NFT collector explained, “The ownership of something so utterly useless is a quintessential example of a flex.”
In my humble opinion, this guy is a moron. But he’s not alone.
The buzz surrounding the metaverse, which is a very real and possibly the largest investment opportunity of our lifetime, has spawned a network of get-rich-quick bubble markets in its shadow.
In 2021, worthless digital coins were pumped to the moon by day traders.
Electric vehicle companies went public with multi-billion-dollar valuations before selling a single car.
And a JPEG of a rock sold for a seven-figure sum.
Now, the reckoning has arrived.
Bubbles Finally Bursting
The bubbles are bursting, and amateur “investors” who have been taught to buy every dip are losing their ill-gotten gains.
The market has a way of humbling even the brightest investors.
I don’t think the guy who paid a million bucks for a rock falls in that category.
But even elite money managers like Cathie Wood, CEO of ARK Invest, are learning that some stocks don’t come back.
This is why one of my rules is to never risk more than 10% on a stock.
Avoiding big losses is the secret to long-term success in the stock market.
As I’ve said before, you will be blown away at the results you can achieve by simply avoiding any big losses.
You don’t need a slew of triple-digit winners to see huge growth.
Just be disciplined.
Be consistent.
And keep those losses small.
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
