Bubbles before a match at London Stadium on Oct. 1, 2016. REUTERS/Tony O’Brien LONDON (Reuters Breakingviews) – Next year marks the 300th anniversary of England’s most notorious speculative mania. The South Sea Company owned the monopoly rights to trade with South America but never made much from those activities. It was the Company’s offer in 1720 to acquire 32 million pounds of Britain’s national debt, in exchange for its own shares, that juiced its returns. Between January and August of that year, the price of South Sea stock traded in London rose sevenfold. At its peak, the Company’s market worth was around twice the total value of land in all of England. The South Sea bubble contains lessons for contemporary investors – even if many of the tales told about the affair are the stuff of legend. Sir Isaac Newton, when asked about South Sea stock in the spring of 1720, famously declared that he “could calculate the motions of the heavenly stars, but not the madness of people”. The trouble with the great mathematician’s comment is that it was first recorded, in slightly different form, three decades after his death in 1727. Newton did, however, lose a great deal of… Read full this story
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