by Simon Black, Sovereign Man:
It was 1720, and Paris was completely mad.
The city’s brand new stock exchange, located at the ultra-swanky Hotel de Soissons, swarmed with citizens of all stripes looking to get rich.
Stocks were still a novel concept back then, and the allure of getting rich overnight was so appealing that people lined up for hours to buy shares.
The most popular was the ill-fated Mississippi Company, whose share price frequently rose up to 20% in the course of a single morning.
It was said fortunes changed so quickly that people often woke up poor and went to bed rich.
Newfound wealth was visible everywhere. Luxury home construction boomed. Lucky speculators erected statues of themselves. The jewelry market surged.
Of course, it didn’t last. Within a few years, the market crashed, and the Mississippi Company went down in history as one of the greatest bubbles of all times.
Looking back it should have been obvious.
In fact, all great financial bubbles often have watershed moments that in many ways signify the height of lunacy.
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