BC BITCOIN
Saved by @Mollyycolllinss

Tulips, the #Bitcoin of the 17th century

How a pandemic, FOMO, and speculation made a flower worth the same as a mansion

/THREAD/

 1/ During the beginning of the 1630s in the Netherlands, tulips were difficult to cultivate and preserve.

This made them a luxury good reserved for the rich and affluent of the upper class living in mansions with big gardens.
2/ The tulip market was not organized nor regulated, as other trades, which made it easy for professional growers to enter it.
Due to the international trade expansion, the growers starting cultivating rare varieties, to achieve higher prices.
3/ The biggest change occurred when florists used tulip bulbs as speculative assets.

The market expansion led to forward bulb-purchase contracts, thus enabling trading during the entire year, and not just during the summer months when tulips bloom.
4/ Easy loans and credit for forward contract purchases led many to enter the market since not much capital was required.

People from the lower economic class (maids, servants, craftsmen) could not resist the temptation for some quick profits and entered the speculative market.
5/ Many sold or remortgaged their houses, which led to a decline in the price of real estate.

The influx of new investors and capital led to a surge in the tulip bulb prices.
6/ Ordinary bulbs saw their prices rise by 20 times, while the rare ones skyrocketed to 4-6,000 fiorins, equivalent today to $750,000.

More than enough to purchase a luxury mansion in the most expensive neighborhood of Amsterdam at the time.
7/ In February 1637, bulbs could not be auctioned even at lower prices.

The news spread like wildfire, with contract holders trying to sell their contracts as soon as possible.
8/ This created a chain reaction of lower prices, lower interest, fewer willing buyers, and lower speculation which is what drove the market at the time.

Contract holders refused to pay the agreed price and tried to settle with florists for 10% of the contract price.
9/ The government refused to intervene and delegated the issue to the local authorities to mediate the disputed contracts.

Desperate growers sold at low prices to secure a profit.
10/ After a court ruling in 1638, the contracts were canceled at only 3.5% of their initial price.

Despite the bubble bursting, the broader economy and most people were unaffected, since it was brief and localized.
11/ Most of the debt was personal, and in some cases canceled out between two parties.

Most of the credit was provided by people involved in the tulip trade and not banks, which didn't harm the country's financial system.
12/ The biggest losses were incurred by growers with large quantities of worthless tulip bulbs and those who sold or remortgaged their real estate and got credit to speculate on margin.

The numerous disputes and court litigations for the contracts lead also to a loss of trust.
13/ Historians have many theories regarding the origins of the first speculative bubble in history.

The most common was that people were bored from the bubonic plague that was ravaging the country at the time.
14/ All they had left to do was drink in taverns and pubs, play drinking games and speculate the price of the bulbs in their possession.

Sounds familiar?

/END/
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Companies to AVOID

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Some tips by Peter Lynch, one of the most successful investors of all time, on which companies to avoid investing in


1. Hottest stock in the hottest industry, with nothing but hope and thin air to support them (MJ stocks in 2017, internet stocks in 2000, electric vehicles in 2020)

Deteriorating balance sheet.

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2. Product/service, not protected by patent or niche, easy to be replicated by competitors, especially in a high-growth industry.

3. The "Next Something"

Everyone wants the next $TSLA, $AMZN, $GOOG

Most likely you won't find a company to replicate their business with that success.

4. Diversification = companies wasting capital on foolish acquisitions, in new sectors they do not understand, and in companies that are overvalued.
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Charles Ponzi and the Postal Service

The story of the man who put the 'Ponzi' in 'Ponzi scheme'

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1/ Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi, a.k.a. Charles Ponzi, was an italian swindler and con-artist.

Born in 1882 in Italy, he became notorious for his money-making fraudulent schemes in North America in the 1920s.


2/ He arrived in Boston in late 1903 with $2.50 in his pocket.

After many professional failures, he moved to Montreal in 1907 and started working as a bank teller at Banco Zarossi, where he rose to the position of bank manager.


3/ This is where he first witnessed the bank's scheme, where Zarossi was funding interest payments using deposits from newly opened accounts instead of investment profits.

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California Gold Rush, the biggest get-rich-quick scheme in American history

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1/ On January 24, 1848, a carpenter named James W. Marshall discovered gold at John Sutter's Mill in Coloma California (close to present-day Sacramento), where he was employed.

Californian residents were the first to rush into the area in late 1848.


2/ By 1849, the word had spread around the world with almost 100,000 gold-seekers and merchants immigrating to California from across the US and abroad, being named forty-niners.

By 1855 the number reached 300,000. It was the biggest immigration movement at the time.


3/ The gold influx into the money supply system rejuvenated the country's economy giving statehood to California.

The rise in population led to an expansion in various sectors, such as agriculture, ranching, and merchandising.


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The Mother of All Squeezes

How Volkswagen went from being on the brink of bankruptcy to the most valuable company in the world in two days

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1/ At the peak of the 2008 financial crisis, Volkswagen was considered a very likely candidate for bankruptcy.

Heavily indebted and already financially struggling before 2008, with car sales expected to plummet due to the ongoing global crisis.


2/ With GM and Chrysler filing for bankruptcy in 2009, shorting the VW stock would seem a safe bet.

If you are not familiar with stock shorts and short squeezes check my thread


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This was a surprise to many who were led to believe that Porsche wasn't planning a takeover of VW, based on the company's announcements.


4/ Before the announcement, the short interest was approximately 13% of the outstanding shares, a number considered relatively low.

Porsche had a 30% stake, the Lower Saxony government fund held 20% of the shares, and another 5% was held by index funds.
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https://t.co/CJJvHavSOn

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In collaboration with @niki_poojary


Importance of Trading only BO or BD stocks by @Mitesh_Engr Sir: 👇

•Two questions to always ask:

~Why stock is going up/down and when?
~ Who is behind big up/down and when?

• Trade only stocks with Momentum
• Instant results
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Sir's take on how to Trade: 👇

• Observe fight between buyer & seller
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• Just find BO or BD
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• ATP importance explained


How to take trade in Breakout/Breakdown stocks by @Mitesh_Engr Sir: 👇

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