OT:
amazon.com
lachlan.bluehaze.com.au
amazon.com
The Florida Real Estate Craze
Beginning with Florida real estate, the 1920's saw the greatest period of speculation in American history. Sparked by the favorable climate, farmers who wished to enjoy warm winters while their land lay fallow purchased plots of land in Florida. They were soon followed by successful bankers from New York, eager to vacation and flaunt their wealth at the same time. Then, as is true today, real estate could be purchased on mortgage for only about ten percent down, which provided the financial leverage for the boom. Mania rapidly built, with acres of Florida swampland going for up to a thousand dollars (a lot of money at the time) and dirt being trucked in to make swamps into land to meet the demand of speculators. At the peak, one third of the population of Miami consisted of real estate agents which in hindsight should have been a warning of impending disaster. Among wealthy Americans, a contest of extravagance took place, with everyone trying to own the most palatial estate around.
The Florida real estate bubble was burst prematurely by a sudden hurricane (hardly unknown to the region) which destroyed many homes and caused tremendous property damage. Soon prices collapsed, and the usual bankruptcies and defaults followed not far behind. Florida was quickly forgotten as speculation went national in the stock market boom of 1926-1929.
clarity.net
Read them. And John Law and the South Sea Bubble and the Dutch Tulip Craze. And there's more. You need to know the signs of bubbles. And DON'T plan on bailing out at or near the top. I have yet to see anyone who can call them with consistency. Tops are a royal b**** to call.
But bubbles- -stocks, real estate, whatever- -have common psycholical characteristics. Know them and you won't get caught. You may have to spend 1, 2, 3 years on the sidelines watching other people make money, though, while you don't. On the other side, you will still have your money and they won't, though.
But being a long term investor, gains since then have comforted the blow.
If you bought the Dow at the topm in 1929, when would you have gotten your money back?
1953.
You willing to wait 24 years? |
