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18 Oct, 9 tweets, 2 min read

How a science genius lost millions in the #StockMarket

A thread.👇(1/9)

Could the man who discovered gravity, propounded the laws of motion, and created calculus out of nowhere, ever commit an error?

We’re talking about Sir Isaac Newton. No matter how glorious his scientific career was, turns out stock #trading wasn’t exactly his strong suit. (2/9)

It’s the year 1720 in England, a speculative mania is brewing up in the South Sea Company’s stock.
This market craziness was triggered after this company bagged a contract to take over Britain’s national debt. (3/9)

Let’s get this straight - this company underwrote £30 million worth of government debt for 5% interest.

And while there may be logistical impossibilities to it, its #stockprice went 10x immediately after the news. (4/9)

Right when the madness was revving up, Newton sold his shares in the South Sea Company - raking in £7,000.

But he wasn’t exactly proud of this decision - he noticed that it wasn’t such a good idea to dump the shares back then. Prices were still climbing, exponentially. (5/9)

So Newton did a crazy thing - jumped back in and bought the stock. Only this time it was different, the mania had reached its peak. (6/9)

Investors, who were highly exuberant until this point, were starting to realize maybe this company wasn’t all it was cracked to be - the market started to cool, prices tempered. (7/9)

By 1721, Newton saw all his initial gains wipe out (and more). He lost a whopping £20,000 in the sell-off, which is millions of dollars in today’s terms. (8/9)

And this freaky historical anecdote is totally relevant in today's bonkers markets. Exhibit A- meme stocks. Don't be a victim of the herd mentality.

Let us know your thoughts (9/9)

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