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To: Les H who wrote (9332)	12/4/2003 7:34:30 PM
From: Les H	Respond to of 29596

Tulipmania II: from bloom to bust By Ian Bickerton in Amsterdam Published: December 4 2003 22:00 \| Last Updated: December 4 2003 22:00 Nearly four centuries after thousands of people were made bankrupt by Tulipmania, a modern-day variant of the speculative futures trade is again threatening to bring investors in the Netherlands to their knees. Like their 17th century counterparts - whose gamble proved worthless when the over-hyped tulip market collapsed - today's investors fear the money they spent on bulbs may turn to dust. In 1637 a single bulb was bought for the price of the grandest Amsterdam house. Four hundred years later, the flower fanatics forked out a minimum of €100,000 each on the promise of a possible return of 30 per cent. Dutch investigators are investigating the circumstances surrounding NovaCap Florales Future fund, an investment vehicle set up to support the development of new and profitable tulip varieties. About 120 Dutch investors ploughed €85.2m ($103m) into the fund. NovaCap paid Dutch growers to cultivate new varieties of tulip. But it now questions the validity of transactions made via Sierteelt Bemiddelings Centrum (SBC), a market maker specialising in new varieties which found buyers for the bulbs. The fund is doing its own investigation of the status of contracts which SBC is said to have agreed with about 200 mainly Dutch tulip buyers. In one case the contract had been cancelled, leaving investors worried that there may be no end-buyer for the bulbs. SBC, meanwhile, has declared itself bankrupt. Investors banking on the earning power of new and highly prized varieties of tulips were taking a huge gamble, industry experts said. One expert who wished not to be identified said the trade was highly speculative because barely a handful of bulbs would yield profitable tulip varieties, and then only after 20 years of painstaking cultivation. NovaCap denied it was a speculative investment vehicle. It said that by investing only in later-stage development of tulip bulbs, it reduced the risk to investors. It also said it had direct claims against buyers, regardless of SBC's financial position. A flower industry executive said: "This fund has attracted outside investors, not people from the trade. That has turned what was an easy-going relationship with growers into a highly speculative business." news.ft.com