Readers reviews of Tulipomania
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I bought this book because I was interested in better understanding the way this
speculative bubble developed. A third of the book is devoted to a background of the tulip,
and the last third to its history after the Dutch incident. What is left is a good
historical survey but it does not shed any new light on the bubble in terms of our current
understanding of market behaviour. The suggested reasons for these events discussed in
Popular Delusions and the Madness of Crowds remains just as useful.
From an historical perspective the event is notable because it introduces the first
concept of a futures market, and also an options market. There are some contracts which we
would recognise today as other forms of derivative trading and margin lending.
Unfortunately the author is not familiar with the market and does not fully explore or
explain these innovative financial developments.
The most important
message from the book is left in limbo. Only those who turn speculative profits
into hard cash can hope to survive these bubbles. For traders involved in
Internet stocks this is the key to their survival.
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