Summary of Famous First Bubbles

The Fundamentals of Early Manias

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Famous First Bubbles book summary
When rare tulips bloomed in old Holland, the tulipmania bubble flowered and burst, leaving economic myth behind.


6 Overall

3 Applicability

9 Innovation

5 Style


During the collapse of the so-called Internet bubble, the legendary Dutch fiscal intoxication with tulips, called tulipmania, was widely cited as a lesson from history. The financial press hyped stories of deluded Dutch farmers who mortgaged all their worldly possessions to purchase a single prize tulip bulb, only to meet financial ruin when the bubble inevitably burst. Economist Peter M. Garber dug into history, and found that most of the common wisdom about the tulipmania was false. So, if you ever wondered how Dutch investors could have been so foolish, there is a simple answer: they weren’t. Famous First Bubbles clearly evolved from a series of academic papers but, nonetheless, the book is entertaining. The primary focus on the tulip bubble makes the sections on the Mississippi and South Sea Bubbles seem like afterthoughts. recommends this to iconoclasts who enjoy debunking historical legends and to bubble watchers everywhere.

In this summary, you will learn

  • Why the oft-used term "bubble" is imprecise at best and a complete mischaracterization at worst
  • The true story of Dutch tulip bulb prices during the so-called tulipmania
  • Why the Mississippi and South Sea Bubbles are also best explained by market fundamentals, instead of crowd psychology


What Is a Bubble?
Amid the bursting of the putative Internet bubble, the financial press waxed eloquent about "bubbles" in the stock market without precisely defining the term. Essentially, a price increase becomes a bubble if the price suddenly drops. The implication is that investors...
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About the Author

Peter M. Garber is a global strategist at Global Markets Research at Deutsche Bank and Professor of Economics at Brown University

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