Recently, I have been organizing some historical financial data and discovered a very interesting phenomenon—almost every so often, the market experiences a cycle of economic bubbles. These cases all tell us the same truth: speculative frenzy often ends in tragedy.

Starting with the earliest example. In the 1600s, the Netherlands experienced a "Tulip Mania," when this exotic foreign flower suddenly became a favorite investment. Prices soared to unprecedented heights, attracting more and more people to follow the trend and invest. But eventually, the bubble burst, leaving many investors with nothing but worthless bulbs, including wealthy merchants and nobles who were not spared. This is considered the earliest warning of an economic bubble in history.

More than a hundred years later, Britain staged a similar drama. The South Sea Company, due to its monopoly on trade with South America, saw its stock prices skyrocket as speculators frantically bought in. By 1720, the bubble finally burst, with stock prices plummeting and investors suffering heavy losses. This crisis not only caused widespread poverty and unemployment but also eroded public confidence in the entire financial system, a distrust that lasted for decades.

By the 1840s, Britain experienced another "Railway Mania." At that time, the railway industry was booming, and railway stocks became the new focus of speculation, with prices rising rapidly. But after the bubble burst in 1847, stock prices collapsed, causing huge losses for the wealthy and bankers. Consumer spending declined accordingly, and the entire economy was severely impacted.

Moving to 1929, the United States stock market faced an even greater disaster. Driven by loose lending and optimistic sentiment, the speculative stock bubble inflated for over a decade. On October 29th—later called "Black Tuesday"—the bubble finally burst, with the Dow Jones Industrial Average dropping nearly 25% in a single day. From the high in September to July 1932, the index lost nearly 89% of its value. This economic bubble-triggered Great Depression was one of the deepest recessions in world economic history.

Fast forward to the late 1990s, when explosive growth in the internet industry sparked a new round of economic bubbles. Companies like eBay, Google, Amazon, and Yahoo became favorites among speculators, with their stock prices soaring amid frenzied speculation. When the bubble burst in 2000, it resulted in a massive financial disaster, with internet stocks plummeting and causing profound impacts on the global economy.

Looking at these historical cases, the pattern of economic bubbles is actually quite similar: easy access to credit, low interest rates, and optimistic investor sentiment combine to push asset prices higher and higher. More and more people follow the trend and invest, causing the bubble to grow larger. When prices finally fall below sustainable levels, selling begins, leading to a sharp decline in value, widespread investor losses, and a detrimental impact on the entire economy. This cycle repeats itself time and again throughout history, each time leaving market participants with profound lessons.