TIP784: History's Biggest Market Bubbles w/ Clay Finck

You're listening to TIP. On today's episode, we'll be outlining three of the biggest bubbles in financial history, the 1720 South Sea bubble, the railway mania of 1845, and the Japanese stock market and property bubble of 1989. They say that history doesn't repeat itself. but it often rhymes. And that is the theme that plays right into all three of these bubbles.

Each displayed unprecedented levels of greed, speculative excess, and the belief that fundamentals did not matter for investors. I believe that studying the financial bubbles of the past is practically essential to ensuring that we ourselves don't fall prey to one during our investing lifetime. Bubbles remind me a bit about house fires. We assume that it's something that only happens to other people.

It's easy for us as investors to become complacent and assume that the good times of the past will almost certainly continue. This kind of thinking led investors in Japan, for example, to lose tremendous amounts of wealth in a matter of a few years. As John Meener Keene said, the market can stay irrational longer than you can stay solvent, so sometimes bubbles can last much longer than we'd probably expect. In studying these three historic bubbles, I picked up Edward Chancellor's book

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