What Tulip Fever has taught traders

Last year, the movie “Tulip Fever” came out on the screens, which tells about the speculation of flowers in Holland at the beginning of the 17th century. Should crypto investors learn from the Tulip Man experiment?

Tulip derivatives
There are indeed some analogies between speculating in flowers and trading on the exchange. For example, in the 1630s, futures trading spread on the market. Instead of flower bulbs, speculators traded in contracts for their supply, which in fact allowed them to go around the seasonality of floriculture in Holland. It is possible to dig out young flower bulbs only from July to October, but to provide a receipt for them – at any time of the year. As a result of this, futures strongly warmed up the auction.

Bulb pricing was tied to their weight, measured in aces. In “Tulip Fever” we see, in fact, that speculators had the opportunity to earn not only on the resale of bulbs, but also to secure their own benefit from the seasonal rise of the planted bulb. When all deals with flowers began to be measured in aces, other derivatives were also noticed. Historians reinforce, in fact, that at the peak of the excitement, the trade went to a fraction of the flower bulbs or to their “children”, that is, the buds that separated from the bulb.

The rise of the economic pyramid in the film is given out by a giant chain of intermediaries for “tulip” agreements, which also included the key character. All members had the opportunity to benefit in the coming season only under the condition that, in fact, an oversold onion would produce offspring and that all intermediaries would fulfill their own promises. When, by the will of the option, designer Jan van Loo was not able to transfer the precious onion to the end customer, all his partners suffered losses.

Not a very elegant hint
The premiere of the movie “Tulip Fever” took place at a good time: last August, attention to cryptocurrencies was heated by the SEC decision to equate stock tokens with securities. Not a bad time to release a picture of the famous stock bubble on the screens. As it turned out, this coincidence is not accidental.

The first closed screening of Tulip Fever took place in Cannes in May 2015, but the view did not attract much attention from critics. The movie was supposed to expire on a sweeping rental in the fall of 2015, but the premiere screening was repeatedly postponed. In the end, the favorable moment has come – in the summer of 2017, the direction of bitcoin overcame the mark of $ 1,000, and the picture was quickly hooked up to hire.

But the movie developers did not manage to make money on the hype around the “cryptocurrency bubble”. “Tulip Fever” failed at the box office, collecting a little more than $ 8 million at an expense of $ 25 million. Undoubtedly, the hints of developers on the monotony between flowers and cryptocurrencies did not seem to be smart to visitors.

Subsequently, the failure of “tulip mania”
1 of the reasons for the collapse of the cinema is a defect in interest in historical components. They did not explain to visitors how the decline in the market affected the Dutch economy, and did all the woeful merchants rush to the West Indies?

In fact, but the collapse of the “tulip” bubble led to the bankruptcy of a number of traders, he did not do serious harm to the economy of the state. It is also worth noting, in fact, that the reason for the failure of the tulip market was not reckless costs, but external shock actions associated with the Thirty Years War. According to historians, there was absolutely no “post-tulip” decline in Holland, and floriculture remained a profitable sector of the economy.

In progressive Holland, flowers and flower bulbs are still considered one of the leading export notes. The modernization of the agricultural industry allowed district farmers to increase their creation, and now 9.3% of Holland’s exports go to flower plants.

As a result of this, one should not succumb to artificial origin to escalate panic. Ignoring the sonorous text on the theme of “bubble” and “financial pyramids”, the accumulation of funds and minds in a particular branch positively affects its formation.

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