The 84-year-old Soros announced his retirement in Davos and quit the investment management field.

This legendary master finally said the emperor's new clothes when he got old - especially for those who speculate in the stock market, remember his famous saying

The history of world economics is a A series based on illusions and lies. The way to gain wealth is to recognize the illusion, get involved, and then get out of the game before the illusion becomes public knowledge! ——George Soros (investor)

Attachment:

Crazy Tulips

The first famous speculative mania in history occurred in In the Netherlands in the 17th century, the object of speculation was not stocks, real estate, or Dutch oil paintings, but a kind of flower - tulips. When the first carloads of tulips arrived in Antwerp from Constantinople, the broad-leaved perennial bulbous herbaceous plant was considered to be of great value "for the dissemination of knowledge and ornamental art." Appreciating and cultivating tulips soon became fashionable and evolved into a speculative trend. The price of rare varieties of flowers is rising endlessly, and the more exotic the bulbs are, the more valuable they are.

Nobles, citizens, farmers, merchants, sailors, maids, and even old chimney sweeps and old tailors were all intoxicated in the tulip speculation craze. Everyone thought that the craze for tulips would last forever, and that speculators from all over the world would go to the Netherlands to buy tulips at any price the Dutch offered.

Those who initially thought that prices would not rise, saw their relatives and friends returning home with full loads, and they all beat their chests and felt very upset. Few Dutch people can resist this temptation. People are willing to exchange furniture, jewelry, land and other things for these small tulip bulbs, just because the latter is more valuable. This farce continued until early 1637, when prices finally rose to incredible levels and began to fall sharply: the price of tulip bulbs, which had increased at a rate of 20 times in January 1637, plummeted at a rate of more than 20 times in February. The government's efforts to rescue the market were ineffective, and the price plummeted from the cliff. In the end, the price tag was less than that of an ordinary onion. 99% of people were doomed, and the entire Dutch economy fell into a long-term depression.

As spring comes and goes, tulips are still blooming beautifully.

Mississippi Scam

In 1716, when France was in economic chaos, heavily in debt, and on the verge of financial collapse, a "god of wealth" and a "financial wizard" came from Scotland - John Law. gentlemen. The French royal family admired his plan to supplement metal currency with paper money and agreed to give him some capital to establish the "Lloyd's Company" bank. The banknotes issued by this bank were used to pay for the national debt and could be purchased and redeemed at will according to the privilege, and their value remained unchanged after issuance. This led to "Lloyd's Notes" being considered to hold their value better than gold and silver, which often depreciated due to government intervention. Since paper currency must be backed by hard currency, Mr. Law obtained a monopoly development privilege in the Mississippi River Basin and Louisiana in North America in 1717. He sold the Mississippi Company's ever-increasing stock of stock by claiming that it was "full of gold."

However, the funds obtained from the sale of stocks were not used to mine "gold everywhere", but were used by the royal family to pay off debts.

The public was seduced by the prospect of huge profits from Mississippi companies, and people who subscribed for new shares had to wait in line day and night, sometimes for weeks. The price of the company's stock skyrocketed, sometimes rising by 20% in a few hours. The banknotes used to purchase government bonds flowed into the stock market, and the skyrocketing stock prices stimulated the issuance of new shares. The snowballs are getting bigger and bigger, the whole of France is immersed in the craze for getting rich, and the economy seems to be really prospering.

In early 1720, Prince Conti failed to buy new shares at a satisfactory price. In a rage, he took three carriages full of banknotes to Lowe's Bank to exchange them for coins. More people began to think that gold might be better than paper money and joined the ranks of exchanges. Because banks lacked enough coins, Lowe's notes were declared inconvertible during the run, and the Mississippi Company's stock plummeted in panic selling. Countless people were left destitute and destitute as a result.

The South Sea Bubble

In 1711, Earl Harry of Oxford, England founded the South Sea Company. In return for taking on British government debt, the company not only received a "safe interest rate" of 6% from the government, but also won the South China Sea trade monopoly and the right to mine gold and silver deposits in South America.

But this grand plan seemed to deliberately ignore an important fact: Spain, which still dominated the sea at that time, claimed a monopoly on these areas. In the frantic atmosphere of people's desire to make a fortune, no one cared about the fact that the South Sea Company's monopoly on trade was in vain. The company's stock price rose from ￡128 in January 1720 to ￡330 in March, ￡890 in June, and ￡1,000 in July. Never before have so many people become so rich in such a short period of time! Inspired by the "South China Sea Effect", many companies have also launched "new inventions" that they claim can bring "rolling profits", such as perpetual motion machines, new soaps, extracting sunlight from cucumbers and "a huge advantage but A project that no one can explain clearly at the moment"... All the stocks are bought by people, and all the stocks are worth a hundred times.

In the end, Nanhai Company's senior management felt that the gap between the company's stock price and operating performance was so outrageous, so they decided to short all the company's stocks they held.

As soon as the news leaked, the stock price immediately fell. Soon, the entire market was in extreme panic due to the plummeting stock prices. Efforts by government officials to restore investment confidence have also been ineffective. Public confidence in the market has completely collapsed beyond repair. The stocks of countless companies were turned into piles of scrap paper.

The big losers in the "South Sea Bubble" crisis include the famous genius scientist Newton. Afterwards, he lamented: "I can calculate the movement of celestial bodies, but I cannot calculate the crazy behavior of the crowd."

Lessons from the United States

It is precisely because of greed and fear caused by freedom and prosperity that Americans personally directed two of the most spectacular speculative booms and the most disastrous crashes in the history of human civilization.

In the 1920s, people were full of confidence in the American economy. It was this optimism that fueled a boom in real estate and stock market speculation across the country. One of the biggest centers of this speculative boom was Florida. The climate there is pleasant and the population is growing rapidly, resulting in housing supply exceeding demand and land prices skyrocketing. Investment speculators from all over the country are flocking here, hoping to get good returns. Loose lending conditions from banks have added fuel to the fire, with house prices doubling in a matter of weeks. People are convinced that there is absolutely no chance that the real estate market will fall. Although hundreds of years have passed, this argument is almost the same as the argument made by the Dutch when they were crazy about tulips.

Like all speculative manias, this one inevitably came to an end. By 1926, the market was oversupplied, real estate prices began to fall, and speculators were forced to sell out, triggering the collapse of the entire market.

In 1928, the battlefield of speculation moved from Florida to Manhattan. This time, Wall Street took the lead. Speculation in the stock market has almost become a universal hobby. Thousands of people have no intention of doing their jobs, and stock trading has become the focus of people's lives. There are many cases where big funds, stockbrokers, consulting firms and listed companies join forces to manipulate stock prices to lure the public into being fooled. Just when people were dreaming of wealth, "there was a thunderbolt from the blue." On October 28, 1929, the famous "Black Tuesday" broke out in the New York stock market. The stock index hit a historical record of falling 12.82% that day, which kicked off a major economic crisis.

World-renowned economists and professors said: "Stock prices do not reflect their true price and should continue to rise." The stock market responded with a fall. President Hoover stood up and said: "The country's economic fundamentals are healthy and prosperous." The stock market still responded with a decline.

From September 1929 to January 1933, the average price of 30 Dow Jones industrial stocks fell from $364.9 to $62.7 per share, a drop of 82.8%. During the crisis, thousands of banks collapsed, tens of thousands of companies closed down, and stocks worth hundreds of millions of dollars and the dreams of millions of people were wiped out.

Electronic Mania

In the early 1960s, with the development of science and technology, the advent of the electronic age, Wall Street also ushered in the electronic mania. At that time, almost all listed stock names were related to "electronics", regardless of whether the company's business was related to the electronics industry. People don't care what kind of products the company produces. As long as they sound related to "electronics", they will attract fierce buying and speculation.

The American Music Association, whose business is selling phonographs and records to customers door-to-door, changed the company's name to "Electronic Melody" in order to go public. The company's stock issue price was $2 per share, one week Then it rose to $14.

A small company with a history of 40 years that produces shoelaces changed its name from "Shoelace Company" to "Electronic Silicon Chip Kinetic Energy Catalysis Company". The company's product is still shoelaces, but the stock price has been turned upside down and soared into the sky. .

When the public is intoxicated with the dream of getting rich quickly and cannot resist any temptation, even pastry companies such as "Mom's Dessert" are not willing to be lonely and join the army of changing their names, hoping that the name change will make them popular overnight. rich.

The "electronic boom" came to an end in 1962. The buying frenzy turned into a selling frenzy, stock prices plummeted, and many wealthy people became beggars.

The Legend of Clivia

History is always surprisingly similar.

In the 1980s, the story of tulip bulbs repeated itself in China.

At the time of China's reform and opening up, various products have sprung up on the market to enrich people's lives, including household flowers, and Clivia is the most attractive one. The origin of this plant is Africa. After being introduced to China, it became a symbol of distinguished status, wealthy families, nobility and taste.

In the 1980s, the northern city of Changchun adopted Clivia as its city flower, and more than half of the families in the city began to plant it. Since the growth period of Clivia takes several years, the supply cannot keep up, and the market demand rises in vain, and the price begins to rise. The news spread like wildfire to other cities across the country. Many individual speculators began to raise funds and robbed the market of Clivia. Soon, the price of Clivia reached a dizzying height. At first, the general price of Clivia was 100 yuan per plant, and then the price increased 2,000 times to 200,000 yuan per plant.

This speculative craze will inevitably have the same end. Clivia is still Clivia, but the price has dropped by more than 99%, causing countless speculators to lose their money.

Japan’s “bubble” burst

The largest speculative frenzy in the late 20th century belonged to Japan.

In the decades after World War II, the Japanese worked hard to achieve economic development and national wealth. In the mid-1980s, many Japanese discovered that money could be made quickly from stock and real estate speculation, and "bubbles" quickly filled the air. From 1955 to 1990, Japanese real estate prices increased more than 75 times, and stock prices increased 100 times.

People's enthusiasm for speculation is getting higher and higher. They simply don't believe that Japan's limited land prices will fall, and they don't believe that stock prices will fall. Stock trading has become a necessity in Japanese people's life. The stock market value of Nomura Securities, Japan's largest securities firm, exceeds the combined market value of all securities firms in the United States. The total value of Japanese golf venues reaches US$500 billion, which is twice the value of all companies listed on the Australian Stock Exchange combined. According to real estate prices, Japan only needs to sell the city of Tokyo to get enough funds to buy real estate across the United States; it only needs to sell the palace to raise enough funds to buy the entire California.

Finally, the government recognized the dangers of the "bubble economy" and applied an emergency brake, adjusting interest rates and tightening credit, hoping to curb the rise in real estate prices and allow the stock market to land softly.

But the situation is no longer controllable. Japan's stock market did not choose a soft landing, but a complete collapse. At the end of 1989, the Nikkei Index was at almost 40,000 points. By August 1992, the index fell to around 14,300 points, and has been in decline ever since. As of November 29, 2002, the Nikkei Index closed at 9,215 points. At the same time, real estate prices fell by 70%.

Internet boom

History does not simply repeat itself, but there are often striking similarities.

In the late 1990s, the world ushered in the Internet boom. Under the slogan of "high technology, new technology", everyone believes that "this time is really different!" Internet companies such as Amazon Bookstore and Yahoo have seen their stock prices increase 10 times in one year. No one calculates the price-earnings ratio, nor does People care about whether the business will make a profit. Just like the electronic craze of the 1960s, as long as a company changes its name and adds .com, it will immediately attract large sums of money from venture capitalists and the public's frantic buying of stocks.

A small company in the United States called "Audio and Video Network", its business is to disseminate various radio and television programs online. It has continued to suffer losses since its establishment in the mid-1990s. During the Internet boom, it changed its name to " Broadcast.com", the stock price immediately increased by 100 times, from US$18 per share to US$74 per share, and then further to US$300 per share.

The Chinese stock market on the other side of the ocean is also following the world trend. Hundreds of companies have announced that they will go online, change their names, put on high-tech clothing, and are busy selling sheep's heads as dog meat, performing scenes of absurd tragedies and comedies.

Perhaps to once again verify that the financial market also has the law of gravity, the U.S. Nasdaq stock index, which represents global high-tech, fell from 5,048 points in March 2000 to more than 1,000 points in October this year. ** *30-month decline reached 78.4%.

The hopes and enthusiasm, greed and dreams of countless investments and speculators eventually turned into bitter memories and bubbles.

Why are people always forgetful? Why don’t people learn the hard lessons of the past? Between tulips and the Internet, is the wind moving? Is the flag moving? Or is it human greed and fear?

Economic historians say that human "financial memory" is short. To be sure, the "bubble history" of mankind will continue to be written.

So Soros said: "The history of world economics is a series based on illusions and lies. The way to gain wealth is to recognize the illusion, invest in it, and then exit the game before the illusion is recognized by the public!" ”