It may be a decent time to recall Tulip Bulb Mania from Dutch history of the 1600’s. When the tulip contract market became primary to the overall Dutch tulip industry, limitless differentiations such as coloration, size and supposed rarity began to dictate price variations in tulip bulb contract purchases. While growing popularity and demand were contributing factors to increasing prices, “flippers” drove reasonable prices to skyrocketing levels. By the time tulip prices peaked in February, 1637, one single tulip bulb demanded ten times a normal worker’s annual income.
As more and more people insisted on participating in rising prices, tulip contracts even began to be traded on the London Stock Exchange and in Paris, too. Eventually, defaults on contracts began the bursting of the bubble and markets plunged, resulting in an economic depression that lasted years for the Dutch. A few people made a lot of money during the rise of tulip prices. But, like any other subsequent bubble-mania, the last-ones-in experienced financial losses that impacted the rest of their lives.
American history books record a couple of eras not unlike Dutch Tulip mania: the 1929 stock market mania-crash and the Dot.com bubble of the late 1990’s. Human behavior is the driving force of manias like these. Hopes of financial profits or locking in prices before inflation erodes purchasing power are both good reasons to pay over-market prices for a product. However, greed sometimes overcomes reason and causes people to pay unreasonable prices for some goods. Just as fear of further loss may cause a person to sell a product at a less than reasonable price, greed may cause the converse behavior.
The truth is that no one can predict the size of a bubble before it explodes. Only AFTER it bursts are we able to see that it had grown too large. All of us can remember the aftermath of sticky bubblegum on our faces after we had pushed just one more breath of air into the magnificent bubble on our lips. The consequence was messy…ick! And after every burst bubble, we promised to stop just a breath short of the explosion the next time.
Today’s drinking fountain discussions include these subjects: seemingly endless supply of new global investors, companies-countries whose growth appears limitless, impossible-to-comprehend computer trading activities, far above-average recent portfolio gains, apparent impossibility of normal market corrections, inconceivable size of financial product universe. …
Is it possible to be satisfied BEFORE the last breath is blown into our next bubblegum bubble?
This Side of the Street 
Ah. A classic business school case. I’m reminded of this when I think of the housing bubble.