Friday, 13 December 2013

Friday 13th December

What Sir Isaac Newton can teach us about London’s ludicrous property price bubble
(and Tower Resources)

It shows what happened to poor Isaac Newton in the South Sea bubble. He bought in early and sold out when things look ridiculously expensive . Then, as prices rose and rose and rose he lost confidence in his judgement and bought back in. That was fine for a very short period. Then came the crash. Prices fell back way below the level at which he had bought. Then the level at which he had first sold. And then the level at which he had first bought.
Newton went on to repurchase a good deal more South Sea Company shares at more than three times the price of his original stake, and then proceeded to lose £20,000 (which, in 1720, amounted to almost all his life savings). This prompted him to add, allegedly, that
“I can calculate the movement of stars, but not the madness of men.”

No comments:

Post a Comment

Note: only a member of this blog may post a comment.