Mark Twain is reported to have said "History doesn't repeat itself, but it does rhyme". My observation is that history and investor behavior are worth watching. I found this post from "Seeking Wisdom" insightful and thought you might as well.
The following excerpt was originally posted on janav.wordpress.com, on August 4th, 2013:
Manias, Panics, and Crashes
"History is replete with episodes of manias, panics and crashes. People go crazy and chase assets that are hot and in turn bid up the price to stratospheric levels. All these manias end with a crash. But these crashes were obvious only in the hindsight. In this post I am writing about the crashes that I read about and the ones that I have seen.
1. Tulip Bulbs – Holland (1637)
A tulip is a fat, round and bulging plant that usually flowers during spring. It comes in number of shapes and colors and it is one of the most magical flowers on earth. How much would you pay for it? I can buy 56 tulip flowers for $24.99 today. In Holland at the peak of tulip craze, in March 1637, a single tulip bulb sold for more than 10 times the annual income of a skilled craftsman. In 2011 the median household income in the United States is $50,000. Ten times that is $500,000. This is the price of a single tulip bulb if the bubble happened today. In the book Extraordinary popular delusions – Charles Mackay writes..."