Thread by @_groww

Around 1000 years ago, a particular flower was becoming popular in Turkey.

This flower was primarily found in Central Asia. Not in Turkey.

Its appearance was so unique and striking, it caught the attention of the royals of Turkey.

(Thread)

Its name was derived from the Turkish word for turban. The tulip flower.

In the 1500s, the Sultan of Turkey fell deeply in love with the flower. He ordered for the flower to be extensively cultivated to decorate his palace.

In early the years of the 17th century, a botanist from the Netherlands traveled to Turkey. He was fascinated with the palace’s obsession with the tulip flower.

The flowers looked very beautiful, indeed.

In the interest of science and research, he decided to carry a few tulip bulbs back home to the Netherlands.

Tulips are grown using tulip bulbs which are similar to potatoes.

They grow as nodes in the roots of plants and can be planted separately yielding new tulip plants.

Thus, the tulip flowers reached the Netherlands.

Science might have been the original intention but vanity caught on pretty fast.

The tulip flowers became common in the wealthier households of the Netherlands.

Tulip doesn’t grow very fast.

The growth cycle of tulip bulbs spans years. It’s not like you can plant one today and get a flower a week or a month later.

As with anything that becomes popular among wealthy folk, other wealthy folk wanted tulips too.

So whatever tulip bulbs were there in the market, their prices rose quite fast.

As with cars, watches, handbags, and other status symbols, people who weren’t exactly wealthy but were a notch below wanted tulips too.

Here’s where things change.

So far, the price had been rising because more people wanted to buy the tulips and plant them.

But since the prices of tulips rose so fast, it attracted the attention of people who weren’t interested in the tulips themselves.

It attracted people interested only in the rising price.

Soon, more people joined, trying to buy tulip bulbs.

Some people bought the bulbs and sold them within a few days making unheard-of gains.

The news spread.

More people bought.

Then, a new kind of tulip showed up.

Tulips usually are one solid color. This new one had streaks.

Wildfire. The news spread like wildfire.

This even-more-rare tulip’s bulbs' prices rose to astronomical values.

At a point in time, one streaked tulip bulb cost more than a mansion in a posh neighborhood.

Everybody wanted a piece of this party.

The rich, the middle class, the poor - all poured vast amounts of their personal wealth into tulip bulbs.

Some very brave (foolish) investors borrowed money to invest in tulips.

It eventually reached a point where the sellers couldn't find buyers at the prices.

Then the prices started to fall. And buyers kept lowering the offer price rapidly after that.

The prices plummeted. The bubble had burst. Many people lost money.

In the frenzy of watching prices rise multifold in a few days, people forgot to question what it was that the tulips had to offer that justified prices like that.

As an investor, this lesson is easy to listen to but may be difficult to adhere to.

This episode is called the Tulipmania.

If you’re not new to the world of personal finance, you’d have heard of this tale a couple of times - it is a common example cited to caution investors from investing in manias.

And that’s one lesson to take from this. There’s another lesson.

Very often, in examples, Tulipmania is believed by many to have ruined the economy of the Netherlands because so many had lost their money to this mania.

The truth as we know now is that the Tulipmania wasn’t as big as some would like us to believe.

It was a mania, no doubt. But it didn’t affect the economy of the Netherlands in a monstrous manner.

The ultra-rare streaked tulip bulbs were bought by less than 100 people only.

Another detail that is casually skipped while narrating this tale is that the reason the prices of tulips fell was the bubble bursting.

Yes, but also, tulip supplies eventually caught up - so there were more tulip bulbs in the market all of a sudden in 1637.

Also, the streaked tulip wasn’t a special tulip - it was caused by a viral infection that jumped to the tulips from potatoes.

There’s information and then there’s the full information.

That’s the second, less popular lesson the Tulipmania has to offer us.

Anyway, tulips never really left the Netherlands.

Today, Netherlands is famous for its tulip fields - it is the world's largest producer of tulips.

The Netherlands exports the flower all over the world.

And today, if you want a bouquet of tulips in India, you’ll have to pay around Rs 800 - 1000.