Behavioural Finance Viev On Market Bubbles - Essay Example

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Behavioural Finance Viev On Market Bubbles

This paper investigates these market events through relevant research material and identifies the anatomy and behavioral finance phenomena of the events using information. The tulip bulbs speculation, which was at its peak in February 1637, and the consequent market crash that followed mark the most notorious economic hard times in the History of Dutch (Goldgar, 2007:5). Together with Britain’s Sothern Sea Buble in the 18th century, these are the earliest example of irrational market behavior that affected investors in Europe. The Semper Augustus, a tulip bulb type, was both sublime and prosaic than any comparable bonds or stocks, it was extraordinarily beautiful with its pure white top and midnight petals combined with accents of crimsons flares. In history, it remains the most valuable flower to date. Back in the early 1624, an individual in Amsterdam in possession of the last dozen specimens of tulips was o be given a high of 3,000 guilders, an equivalent of a wealthy merchant’s annual income, but turned down the offer. This is the height of how speculations had raised the prices of the tulip. ...
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Summary

Market Bubbles In financial and accounting practices, the terms market bubbles and behavioral view are not new since the introduction of rational expectations regarding economic models. A market bubble in economics refers to a sharp abnormal rise in the market price of a commodity or a set of commodities consistently, with the initial increase in the prices generating expectations on future rises, thus, attracting speculators whose interest lies in the trading profitability of such commodities rather than their earning capacity…
Author : amos79

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