20 June 2006

Note these numbers of note

2.5 million: The number of barrels (a barrel is 159 litres) of oil India consumes every day. The US burns 10 times this amount

30 per cent: The growth recorded by the PC market in India in 2005-06 compared to the previous year. HP retained the top slot with total market share of 18 per cent, followed by HCL at 14 per cent, and Lenovo at 9 per cent in terms of unit shipments

48: Number of airports China is planning to open over the next five years. With passenger numbers forecast to grow 14 per cent annually, Beijing plans to spend $17.5 billion on airports by
2010. It is also planning to increase this number further to 220 by 2020

1 billion: The number of songs sold by Apple Computer through the iTunes Music Store thus far throughout Europe as well as in the US, Canada, Australia and Japan

£228 million (Rs 1,778.4 crore): The amount Indian companies spent buying eight British businesses last year, including the £80 million acquisition of Premier Foods' Typhoo tea brand by Apeejay International

$224 million (Rs 1,008 crore): The amount raked in by The Da Vinci Code in its worldwide opening, the second-biggest debut ever at the global box office, behind the $253 million tally for "Star Wars: Episode III-Revenge of the Sith"

$3.54 million (Rs 15.93 crore): The amount paid by an anonymous bidder for 'The Hammer', a Stradivarius violin made in 1707, at Christie's in New York recently, making it the most expensive musical instrument ever sold at an auction

69.3 points: The value of CII's business confidence index for April-September 2006, up from the September-March 2005-06 level of 67.2 points. A score above 50 indicates "positive confidence" while a score above 75 indicates "strong positive confidence"

$5.5 billion (Rs 24,750 crore): Annual remittances from 3.5 million Keralites who work abroad. Eighty-five per cent of them are settled in West Asia

Rs 19,990: The price of the XBox360 Core, which will be launched in India in October

Rs. Can't quantify: The amount depositors have lost while investing for higher returns in shares, mutual funds, fixed deposits of finance companies and chit funds

Crystal Gaze the Indian Stock Markets
Bit of Humour - Southern Style
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19 June 2006

Crystal gazing the Indian stock markets

Indian stock market is currently in the classic..."kill the bull, trap the bear" phase. Values of many stocks have come down 50-75+% from May 1, 2006. Such a fall in a matter of about a month is unprecedented and various reasons suggest that it is an orchestered fall. Such a game is played to make the weak exit and the strong enter. Stocks have changed hands for sure. Hence lends more credence to the fact that bottom is somewhere near.

Ok, at such times, we lose rationality due to panic/fear but to think of it...money is a mind game not emotional or psychological. What is a share...it is after all a part ownership of the company. And if a company worth Rs100 crore is available at Rs20 crore...how long can panic withhold genuine investors, who know that ups and downs are part of market and market never dies. Suppose if BHEL is made available to you at Rs80...then won't you be inclined to sell your house and buy as much as you want as you know for sure that in the next cycle of bulls, you are sure to at least sell at 200+, when rationality returns. Then maybe you can move to a bigger better house.
Well, the operator knows that and therefore he never brings down prices to that level wherein fear fades out and people are willing to take increased bets. It’s like jumping from first floor of a building for a prize...out of 100 people, 90 may agree. From third floor, maybe 20-25 may agree (factoring in a fracture or two) and from fifth floor...maybe 1-2 may undertake suicidal attempt. Values are down to Sensex 5000 levels in many cases and match prices prevailing in 2003. Well, in some cases, to levels when Sensex was sub-3000.
Let us tell you the case of Mansukh bhai. When his favourite stock was Rs100. He had clever information that it will come down to 50 and so he waited patiently to buy. Luck favoured him and price did come down to 50 as Sensex plummeted from 12674 to sub-9000. But at that time there was panic all over and sentiment was bruised. There were talks of 6000-7000 in Sensex very soon.
Greed got better of him and he immediately lowered his buy target to Rs30. So money lying idle
waiting to be deployed got pushed further down. The stock reacted from 50 to 62...Mansukh thought it was a technical reaction and how true he was...the stock again tumbled to 46 and Mansukh was cheerful that now his price of Rs30 was but within reach. He had dreams of selling the stock again at a future point of time at 100+ (Note he was sure that 100+ will be back again at a point of time). But from 46, market again bounced and the stock made it to 58 before tumbling again to 50. Mansukh bhai was sure that his (un)reliable sources cannot be wrong and market has to go to 6000 and hence price of 30 has to come. So he still did not deploy the money. The stock then rose to 68 from 50 in a matter of 15 days. Mansukh bhai got a little tensed and put some money at 68 but at that point profit booking came and stock tumbled back to 58 where mansukh bhai sold off at a loss, again feeling that 30 was coming. But in another 10 days stock was 75 again and Mansukh had no idea what to do. From 50 to 75, 50% gain and just because of his oversmartness and lack of discipline coupled with fear and greed, he let opportunity slip out of his hand and now he was suffering a mental block to buy at 75+.
Moral: Money could not be deployed at lower levels though the most popular school of thought says, "buy low sell high".

OR waiting for the elusive bottom. As explained above, at a certain price, demand overtakes supply and prices therefore rise. Every share has an intrinsic value and you cannot keep investors forever at bay. Sentiment changes in favour in no time hence the best time to buy is when everybody is selling. Time tested theory. Bears make bargain hunting possible and at a point of time all bears turn to bull.
Veena behn, a widow, had invested Rs70,000 of her hard earnings in the same stock at 104 in March as her nephew was a fund manager and he had informed her that within a year the stock would cross 250+ as some corporate development was expected and net profit was expected to improve sharply. In good faith, Veena invested but in three months flat, she saw price tumbling to 85, 75, 60, 52, 46...at every fall she would call the nephew and ask what to do...she at times cursed him also. The nephew knew what was going on in the market and that things would be normal in a few months and asked her to hold on with patience.
But she was not in peace and was having sleepless nights as her Gujarati neighbours constantly kept talking of Rs30 for her stock and how market was in a bear phase. Fear of further downfall was in her mind and like everyone else...she wanted her stock 1) to fly immediately after buying and 2) never go down below the buy price. It’s like asking for too much, isn't it?
But she knew that she had to believe in her nephew more than anybody else and when in next 4-6 months prices climbed back to 104, she sold off without asking the nephew thinking "saved" without understanding the ploy that getting to exit at buy price means that stock is headed higher. And she will never buy again even at 125.
Lalwani was smarter. He had bought the same stock at 100 but he did not expect a correction more than 75. However, when stock breached 75 and was at 52, he broke his fixed deposit and bought more quantity. His logic was when he saw value at 100, then why should he lose opportunity at 50. He was willing to wait with faith and patience. He had done his homework and was sure company fundamentals were poised to take it to 150-200+ in 1-2 years and for a 200-300% returns in such uncertain times...the risk was worth it (after all, equity means risk).
He was sure...aakhir free mien to stock nahi dega market and bottom has to be somewhere. Even if at 30, he was willing to wait. Today, in less than 2 months of turmoil, his stock is trading at his average price and all agonies have been buried. In 8 months, he sold the stock at 160. Smile back on the face.
But Govindji was unlucky...he got panicky and sold his stock bought at 85 at 48 as he wanted to benefit from the fall and buy back at 30. He forgot that market was smarter. Finally, he had 2 choices, either to buy back at 75 or let go the stock. As human psychology is, he did not have the courage to buy and was cursing himself for acting on unreliable information and impulse.
We had earlier sent the price history of Fortune Info showing how a stock jumps from 22 to 52, tumbles down to 25 again and shoots to 113. All within 3 months. Similarly of Tyche Peripherals, how after buy reports, it fell from 26 to 8 and then jumped to 52...just in 3 months. History has many such evidences in store.

What you should understand from the above is that...
-->If you have the money, buy on declines with a 1-2 year horizon and you may well get 100-200% returns. Avoid fear and greed and start buying in phases. Do not wait for the elusive bottom.
-->If you are stuck up at higher levels and the stock is strong fundamentally, hold on to the stock with faith and patience. Not only your cost price will come back but profit will also be made. Do not trade on your investment. And for God's sake, do not sell and exit the market...that is what operators want.
If possible, arrange for some more money and average lower or enter some new stock to take advantage when market bounces back.
*There is nothing wrong with the markets and bull run is definitely not over. Maybe the bottom has been made or maybe it is yet to be made. But by June-July, this mayhem will end for sure as you cannot keep a spring down for long. Powerful people who have lost out will come back with a vengeance...remember you are least affected because of your limited investment size (very small stake as compared to them) and these people have the power and lobby to turn the markets. And they will. They will rescue you to rescue themselves.
We expect 11000 to be tested once by July and 12500-13000 anytime from August to October and 16000+ anytime between December-March. Buy with these levels in mind. Even if things do not move as fast as expected...16000 is very much likely latest by December 2007. At this level, your cost+profit is guaranteed.
Further, the correction has removed many excesses from the system, weak players have exited and expectations have come down. Now people are worried about saving capital...a month back they wanted 10-15% gains every 2 days whereas prudent investment philosophy says to expect 15-20% annual returns from stock market. However, many a trader have paid price for their greed and understand now why people work hard to make a living and not enjoy life by playing the markets. It was never easy and it is never going to be. A strategic and informed decision followed by a disciplined execution can alone make you laugh your way to the bank.
For the market to go back in confirmed bull mode, it will take at least 1-2 months. June-July should be months of volatility, with ups and downs creating greed, panic and fear. Rise will be treated with skepticism and disbelief and invite selling and profit booking...falls will be seen as opportunity by many to short sell and also raise hopes of buying lower...this will be followed by consolidation of the market and then a gradual rise which will be accompanied by hesitancy and disbelief again, this time by bulls and bears both...finally when it dawns that market has changed course, money waiting on the sidelines will enter (albeit at much higher levels). You must only be a buyer on declines or hold on to shares...not at all be a seller.
There is nothing wrong with the India story. Our sources say FIIs are gung-ho on India and lot of money is waiting to be deployed. Mutual funds are also at comfort. All MRH (main reh gaya) people unable to benefit from previous rally are just waiting to pump money and hedge funds who have been bruised are equally impatient to buy. So let’s see who bells the cat first....
Digest the pain. You have lived almost 90% of it. Bear 10% more with closed eyes. Do not look much at markets for 1-2 months (i.e. if you cannot buy lower) and you will see things have changed in your favour without doing anything...sometimes time heals faster and is better than any medicine or measure.
Published with thanks to:
Giving market advises for Profitability @ High Probability
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17 June 2006

Boss has no Socceritis

I am a cricket fan out and out and like many Indians out there watch Tennis with good interest too.

I promise you I have been having interest in Tennis watching even before Sania Mirza burst into the scene with her tight t'shirts and thigh gripping shorts.

Then I watch billiards and snooker (don't know the difference between the two, however).

When I wanted to go little ungentlemanly I used to watch (like many of my countrymen) Hockey, especially when India played Pakistan.

In a nut(?)shell I have interest in the indoor and outdoor games that had smaller balls in play.

As far bigger balls that were kicked around, I do not have much interest, though it is a rage world over especially when there is this once in four years event called World Cup. Quite a lot of people around the world, cutting across time lines, stay awake to watch Soccer irrespective of whether their country was in contention or not. They simply pick one team to support and tango on.

It is also a fact that people bunk offices to be able to watch the game.

These are the times when humorists on the net come up with interesting mail forwards (who is the author?). One such forward was sent to me on email (!) by my room-mate who sits in front of the computer 28 hours a day plus the six or seven hours he sleeps in front of it.

I found the forward interesting enough to be shared with you folks.

Memo to staff: Get some work done By Melvin Durai

From: Company president
To: All staff

Subject: Low productivity

It has come to my attention that productivity has dropped drastically since Friday, June 9th. I'm not sure what's going on, but please be assured that I'm monitoring the situation closely and will suspend or terminate employees who aren't pulling their own weight. For the company to be successful, it's important for all of us to work hard. We need to learn from the examples set by the following managers, whom I'm pleased to recognize.

John Tembo, Human Resources Manager: I was walking past John's office and heard him and several employees shouting "Goal! Goal! Goal!" When I knocked on the door, John told me they were watching a training video to help them achieve company goals. I have nominated each of them for our Employee of the Month Award. It's important for all of us to focus on goals. As John said, "Without goals, our team will lose."

Carlos Mendez, Sales and Distribution Manager: Carlos called me on Friday morning to say he was ill and couldn't come to work. His doctor had diagnosed him with a rare illness called socceritis. The illness affects patients for at least a month and there's a chance of relapse every four years. As you can imagine, I was rather shocked and saddened. I wondered how we could manage without Carlos for so long. Perhaps Carlos read my mind, for he immediately put me at ease. "I'll come to work, boss," he said. "The illness isn't contagious. I just need to return home to get 90 minutes of rest a few times a day." What an example Carlos is setting for all of us. I am nominating him for our Courage and Inspiration Award.

Ravi Narayanan, Product Design Manager: As of Friday, Ravi is testing an innovative program he developed called WHFH (Work Hard From Home). He believes it will not only increase productivity in his department but also lower costs considerably, particularly the cost of buying coffee and doughnuts. Ravi came to work briefly on Tuesday and I overheard him saying to another manager, "South Korea 2, Togo 1." I asked him about it and he said, "That's the number of customers we have in each country." I was extremely pleased. I didn't realize we had a customer in Togo. I am nominating Ravi for our Innovative Spirit Award.

Hans Mueller, Advertising Manager: Hans, as you know, is always looking for new ways to advertise, new ways to reach potential customers. Since Friday, he has been personally manning an information booth at the ESPN Sports Bar. I paid a surprise visit to the bar and heard Hans talking to an employee about something called "World Cup." He told me it's an acronym he's using to motivate employees: WORLDCUP (Working Overtime Results in Less Disappointment and Creates an Upsurge in Productivity.) I am nominating Hans for the High Motivation Award.

Ming Yu, Technology Manager: I found Ming coming out of a bathroom stall with a small battery-operated TV. He said he's testing a video conferencing system that will enable employees to continue to work while doing their business. A few minutes later, I heard Ming telling his assistant how many customers we have in certain countries. I was proud to hear all the numbers, but disappointed to realize we have no customers in America. That's a huge market that we're missing out on. In any case, I am nominating Ming for the Bathroom Productivity Award.
(Football world cup 2006 FIFA Argentina Brazil England Costa Rica Germany France Italy Ronaldino Ronaldo Maradona Soccer Pele Beckham penalty kick corner hand of god goal)

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09 June 2006

Tulip Mania

Whether you are someone investing/ trading in shares are not, you must have surely followed with some interest the headline grabing stories starting some time in 2nd week of May 2006 till now about the speed with which the stock market indices have fallen and the resultant wealth erosion to countless stock market enthusiasts across the country.

People have given various reasons for the fall, from FII selling to negative global cues to overvalued stock prices to increasing fiscal deficit to whatever is the thought of whoever who thinks he has the right reason for the fall.

If you were a stock market enthusiast but had the privilege of watching it from outside of the ring then you would have got the out of box view of the comedy that was being played at investors as the sensex and nifty gyrated up and down all on its own taking the advisors and predictors and analysts off guard all the time.

That dance was to me one of the most entertaining one.

All analysts will shout in one go 10070 strong support, it must hold. And as if they were Gods (must be crazy) Sensex will stop, pause, smile at the analysts and then will turn around for the crazy Gods to shout "I told you". And before their chorus would have died, the market would put the reverse gear in fifth gear and pass below the 10070 mark with even greater speed.

The musicians will not stop there, they will say, 9800, it must hold. This selling cannot continue, the India story (is it only a story? Haven't we been thinking it is real?) was in tact and 9800 must hold, must hold. They waved their Elliot Waves and trendline wands across the graphs and assured the investors.

Sensex, came to 9800 and then conquered the musicians. Going for a even wilder twist(er) it took all in its path and went down even further. The marketmen shouted 9500, it will hold (whom?). Buy at every fall, stocks are going cheap, they shouted. Some thought they were contrarians.

They told investors to wait. Sensex seems to be going downward. Some said 7K was on the cards. All FIIs have lost interest in India (all of a sudden). Indian Mutual Funds were facing redemption troubles. People were asked to cough up cash margins for the positions they had taken in futures markets.

Some said the market needed a healthy correction (12.7K to 9K in a matter of 3 weeks, is it healthy correction?) and so investors need not panic. They said 8K was possible but then buying can come.

Some said the Sensex had breached 200 EMA, DMA (and B. Com., M.Com., CFA, CA etc. etc.) and so dooms days was back.

Sensex, saw them. Found how pathetic they sounded. Marched past 9500 and stopped to take a breather at 9200+.

What all forgot was that markets were the reflection of the crowd behaviour rather than the EMAs DMAs. To me the crowd has started getting hit badly and they are wriggling out licking their wounds. Till such time they are fully out and again come back to get back in the hope of getting back whatever they lost out from the same markets, the momentum on the upside will be weak.

Crowd behaviour is best explained in in the following article.

THE TULIPOMANIA

Quis furor o cives! -- Lucan.

The tulip,--so named, it is said, from a Turkish word, signifying a turban,-- was introduced into western Europe about the middle of the sixteenth century. Conrad Gesner, who claims the merit of having brought it into repute,--little dreaming of the extraordinary commotion it was to make in the world,--says that he first saw it in the year 1559, in a garden at Augsburg, belonging to the learned Counsellor Herwart, a man very famous in his day for his collection of rare exotics. The bulbs were sent to this gentleman by a friend at Constantinople, where the flower had long been a favourite. In the course of ten or eleven years after this period, tulips were much sought after by the wealthy, especially in Holland and Germany. Rich people at Amsterdam sent for the bulbs direct to Constantinople, and paid the most extravagant prices for them. The first roots planted in England were brought from Vienna in 1600. Until the year 1634 the tulip annually increased in reputation, until it was deemed a proof of bad taste in any man of fortune to be without a collection of them. Many learned men, including Pompeius de Angelis and the celebrated Lipsius of Leyden, the author of the treatise "De Constantia," were passionately fond of tulips. The rage for possessing them soon caught the middle classes of society, and merchants and shopkeepers, even of moderate means, began to vie with each other in the rarity of these flowers and the preposterous prices .they paid for them. A trader at Harlaem was known to pay one-half of his fortune for a single root--not with the design of selling it again at a profit, but to keep in his own conservatory for the admiration of his acquaintance.

One would suppose that there must have been some great virtue in this flower to have made it so valuable in the eyes of so prudent a people as the Dutch; but it has neither the beauty nor the perfume of the rose--hardly the beauty of the "sweet, sweet-pea;" neither is it as enduring as either. Cowley, it is true, is loud in its praise. He says--

"The tulip next appeared, all over gay, But wanton, full of pride, and full of play; The world can't show a dye but here has place; Nay, by new mixtures, she can change her face; Purple and gold are both beneath her care- The richest needlework she loves to wear; Her only study is to please the eye, And to outshine the rest in finery."

This, though not very poetical, is the description of a poet. Beckmann, in his History of Inventions, paints it with more fidelity, and in prose more pleasing than Cowley's poetry. He says, "There are few plants which acquire, through accident, weakness, or disease, so many variegations as the tulip. When uncultivated, and in its natural state, it is almost of one colour, has large leaves, and an extraordinarily long stem. When it has been weakened by cultivation, it becomes more agreeable in the eyes of the florist. The petals are then paler, smaller, and more diversified in hue; and the leaves acquire a softer green colour. Thus this masterpiece of culture, the more beautiful it turns, grows so much the weaker, so that, with the greatest skill and most careful attention, it can scarcely be transplanted, or even kept alive."

Many persons grow insensibly attached to that which gives them a great deal of trouble, as a mother often loves her sick and ever-ailing child better than her more healthy offspring. Upon the same principle we must account for the unmerited encomia lavished upon these fragile blossoms. In 1634, the rage among the Dutch to possess them was so great that the ordinary industry of the country was neglected, and the population, even to its lowest dregs, embarked in the tulip trade. As the mania increased, prices augmented, until, in the year 1635, many persons were known to invest a fortune of 100,000 florins in the purchase of forty roots. It then became necessary to sell them by their weight in perits, a small weight less than a grain. A tulip of the species called Admiral Liefken, weighing 400 perits, was worth 4400 florins; an Admiral Von der Eyk, weighing 446 perits, was worth 1260 florins; a shilder of 106 perits was worth 1615 florins; a viceroy of 400 perits, 3000 florins, and, most precious of all, a Semper Augustus, weighing 200 perits, was thought to be very cheap at 5500 florins. The latter was much sought after, and even an inferior bulb might command a price of 2000 florins. It is related that, at one time, early in 1636, there were only two roots of this description to be had in all Holland, and those not of the best. One was in the possession of a dealer in Amsterdam, and the other in Harlaem. So anxious were the speculators to obtain them that one person offered the fee-simple of twelve acres of building ground for the Harlaem tulip. That of Amsterdam was bought for 4600 florins, a new carriage, two grey horses, and a complete suit of harness. Munting, an industrious author of that day, who wrote a folio volume of one thousand pages upon the tulipomania, has preserved the following list of the various articles, and their value, which were delivered for one single root of the rare species called the viceroy :-- florins. Two lasts of wheat.............. 448 Four lasts of rye............... 558 Four fat oxen................... 480 Eight fat swine................. 240 Twelve fat sheep................ 120 Two hogsheads of wine........... 70 Four tuns of beer............... 32 Two tons of butter.............. 192 One thousand lbs. of cheese..... 120 A complete bed.................. 100 A suit of clothes............... 8O A silver drinking cup........... 6O ----- 2500 -----

People who had been absent from Holland, and whose chance it was to return when this folly was at its maximum, were sometimes led into awkward dilemmas by their ignorance. There is an amusing instance of the kind related in Blainville's Travels. A wealthy merchant, who prided himself not a little on his rare tulips, received upon one occasion a very valuable consignment of merchandise from the Levant. Intelligence of its arrival was brought him by a sailor, who presented himself for that purpose at the counting-house, among bales of goods of every description. The merchant, to reward him for his news, munificently made him a present of a fine red herring for his breakfast. The sailor had, it appears, a great partiality for onions, and seeing a bulb very like an onion lying upon the counter of this liberal trader, and thinking it, no doubt, very much out of its place among silks and velvets, he slily seized an opportunity and slipped it into his pocket, as a relish for his herring. He got clear off with his prize, and proceeded to the quay to eat his breakfast. Hardly was his back turned when the merchant missed his valuable Semper Augustus, worth three thousand florins, or about 280 pounds sterling. The whole establishment was instantly in an uproar; search was everywhere made for the precious root, but it was not to be found. Great was the merchant's distress of mind. The search was renewed, but again without success. At last some one thought of the sailor.

The unhappy merchant sprang into the street at the bare suggestion. His alarmed household followed him. The sailor, simple soul! had not thought of concealment. He was found quietly sitting on a coil of ropes, masticating the last morsel of his "onion." Little did he dream that he had been eating a breakfast whose cost might have regaled a whole ship's crew for a twelvemonth; or, as the plundered merchant himself expressed it, "might have sumptuously feasted the Prince of Orange and the whole court of the Stadtholder." Anthony caused pearls to be dissolved in wine to drink the health of Cleopatra; Sir Richard Whittington was as foolishly magnificent in an entertainment to King Henry V; and Sir Thomas Gresham drank a diamond, dissolved in wine, to the health of Queen Elizabeth, when she opened the Royal Exchange: but the breakfast of this roguish Dutchman was as splendid as either. He had an advantage, too, over his wasteful predecessors: their gems did not improve the taste or the wholesomeness of their wine, while his tulip was quite delicious with his red herring. The most unfortunate part of the business for him was, that he remained in prison for some months, on a charge of felony, preferred against him by the merchant.

Another story is told of an English traveller, which is scarcely less ludicrous. This gentleman, an amateur botanist, happened to see a tulip-root lying in the conservatory of a wealthy Dutchman. Being ignorant of its quality, he took out his penknife, and peeled off its coats, with the view of making experiments upon it. When it was by this means reduced to half its original size, he cut it into two equal sections, making all the time many learned remarks on the singular appearances of the unknown bulb. Suddenly the owner pounced upon him, and, with fury in his eyes, asked him if he knew what he had been doing? "Peeling a most extraordinary onion," replied the philosopher. "Hundert tausend duyvel," said the Dutchman; "it's an Admiral Van der E. yck." "Thank you," replied the traveller, taking out his note-book to make a memorandum of the same; "are these admirals common in your country?" "Death and the devil," said the Dutchman, seizing the astonished man of science by the collar; "come before the syndic, and you shall see." In spite of his remonstrances, the traveller was led through the streets, followed by a mob of persons. When brought into the presence of the magistrate, he learned, to his consternation, that the root upon which he had been experimentalizing was worth four thousand florins; and, notwithstanding all he could urge in extenuation, he was lodged in prison until he found securities for the payment of this sum.

The demand for tulips of a rare species increased so much in the year 1636, that regular marts for their sale were established on the Stock Exchange of Amsterdam, in Rotterdam, Harlaem, Leyden, Alkmar, Hoorn, and other towns. Symptoms of gambling now became, for the first time, apparent. The stockjobbers, ever on the alert for a new speculation, dealt largely in tulips, making use of all the means they so well knew how to employ, to cause fluctuations in prices. At first, as in all these gambling mania, confidence was at its height, and everybody gained. The tulip-jobbers speculated in the rise and fall of the tulip stocks, and made large profits by buying when prices fell, and selling out when they rose. Many individuals grew suddenly rich. A golden bait hung temptingly out before the people, and, one after the other, they rushed to the tulip marts, like flies around a honeypot. Every one imagined that the passion for tulips would last for ever, and that the wealthy from every part of the world would send to Holland, and pay whatever prices were asked for them. The riches of Europe would be concentrated on the shores of the Zuyder Zee, and poverty banished from the favoured clime of Holland. Nobles, citizens, farmers, mechanics, seamen, footmen, maidservants, even chimney-sweeps and old clotheswomen, dabbled in tulips. People of all grades converted their property into cash, and invested it in flowers. Houses and lands were offered for sale at ruinously low prices, or assigned in payment of bargains made at the tulip-mart. Foreigners became smitten with the same frenzy, and money poured into Holland from all directions. The prices of the necessaries of life rose again by degrees; houses and lands, horses and carriages, and luxuries of every sort, rose in value with them, and for some months Holland seemed the very antechamber of Plutus. The operations of the trade became so extensive and so intricate, that it was found necessary to draw up a code of laws for the guidance of the dealers. Notaries and clerks were also appointed, who devoted themselves exclusively to the interests of the trade. The designation of public notary was hardly known in some towns, that of tulip notary usurping its place. In the smaller towns, where there was no exchange, the principal tavern was usually selected as the "showplace," where high and low traded in tulips, and confirmed their bargains over sumptuous entertainments. These dinners were sometimes attended by two or three hundred persons, and large vases of tulips, in full bloom, were placed at regular intervals upon the tables and sideboards, for their gratification during the repast.

At last, however, the more prudent began to see that this folly could not last for ever. Rich people no longer bought the flowers to keep them in their gardens, but to sell them again at cent. per cent. profit. It was seen that somebody must lose fearfully in the end. As this conviction spread, prices fell, and never rose again. Confidence was destroyed, and a universal panic seized upon the dealers. A had agreed to purchase ten Sempers Augustines from B, at four thousand florins each, at six weeks after the signing of the contract. B was ready with the flowers at the appointed time; but the price had fallen to three or four hundred florins, and A refused either to pay the difference or receive the tulips. Defaulters were announced day after day in all the towns of Holland. Hundreds who, a few months previously, had begun to doubt that there was such a thing as poverty in the land, suddenly found themselves the possessors of a few bulbs, which nobody would buy, even though they offered them at one quarter of the sums they had paid for them. The cry of distress resounded everywhere, and each man accused his neighbour. The few who had contrived to enrich themselves hid their wealth from the knowledge of their fellow-citizens, and invested it in the English or other funds. Many who, for a brief season, had emerged from the humbler walks of life, were cast back into their original obscurity. Substantial merchants were reduced almost to beggary, and many a representative of a noble line saw the fortunes of his house ruined beyond redemption.

When the first alarm subsided, the tulip-holders in the several towns held public meetings to devise what measures were best to be taken to restore public credit. It was generally agreed, that deputies should be sent from all parts to Amsterdam, to consult with the government upon some remedy for the evil. The Government at first refused to interfere, but advised the tulip-holders to agree to some plan among themselves. Several meetings were held for this purpose; but no measure could be devised likely to give satisfaction to the deluded people, or repair even a slight portion of the mischief that had been done. The language of complaint and reproach was in everybody's mouth, and all the meetings were of the most stormy character. At last, however, after much bickering and ill-will, it was agreed, at Amsterdam, by the assembled deputies, that all contracts made in the height of the mania, or prior to the month of November 1636, should be declared null and void, and that, in those made after that date, purchasers should be freed from their engagements, on paying ten per cent. to the vendor. This decision gave no satisfaction. The vendors who had their tulips on hand were, of course, discontented, and those who had pledged themselves to purchase, thought themselves hardly treated. Tulips which had, at one time, been worth six thousand florins, were now to be procured for five hundred; so that the composition of ten per cent. was one hundred florins more than the actual value. Actions for breach of contract were threatened in all the courts of the country; but the latter refused to take cognizance of gambling transactions.

The matter was finally referred to the Provincial Council at the Hague, and it was confidently expected that the wisdom of this body would invent some measure by which credit should be restored. Expectation was on the stretch for its decision, but it never came. The members continued to deliberate week after week, and at last, after thinking about it for three months, declared that they could offer no final decision until they had more information. They advised, however, that, in the mean time, every vendor should, in the presence of witnesses, offer the tulips in natura to the purchaser for the sums agreed upon. If the latter refused to take them, they might be put up for sale by public auction, and the original contractor held responsible for the difference between the actual and the stipulated price. This was exactly the plan recommended by the deputies, and which was already shown to be of no avail. There was no court in Holland which would enforce payment. The question was raised in Amsterdam, but the judges unanimously refused to interfere, on the ground that debts contracted in gambling were no debts in law.

Thus the matter rested. To find a remedy was beyond the power of the government. Those who were unlucky enough to have had stores of tulips on hand at the time of the sudden reaction were left to bear their ruin as philosophically as they could; those who had made profits were allowed to keep them; but the commerce of the country suffered a severe shock, from which it was many years ere it recovered.

The example of the Dutch was imitated to some extent in England. In the year 1636 tulips were publicly sold in the Exchange of London, and the jobbers exerted themselves to the utmost to raise them to the fictitious value they had acquired in Amsterdam. In Paris also the jobbers strove to create a tulipomania. In both cities they only partially succeeded. However, the force of example brought the flowers into great favour, and amongst a certain class of people tulips have ever since been prized more highly than any other flowers of the field. The Dutch are still notorious for their partiality to them, and continue to pay higher prices for them than any other people. As the rich Englishman boasts of his fine race-horses or his old pictures, so does the wealthy Dutchman vaunt him of his tulips.

In England, in our day, strange as it may appear, a tulip will produce more money than an oak. If one could be found, rara in tetris, and black as the black swan alluded to by Juvenal, its price would equal that of a dozen acres of standing corn. In Scotland, towards the close of the seventeenth century, the highest price for tulips, according to the authority of a writer in the supplement to the third edition of the "Encyclopedia Britannica," was ten guineas. Their value appears to have diminished from that time till the year 1769, when the two most valuable species in England were the Don Quevedo and the Valentinier, the former of which was worth two guineas and the latter two guineas and a half. These prices appear to have been the minimum. In the year 1800, a common price was fifteen guineas for a single bulb. In 1835, so foolish were the fanciers, that a bulb of the species called the Miss Fanny Kemble was sold by public auction in London for seventy-five pounds. Still more astonishing was the price of a tulip in the possession of a gardener in the King's Road, Chelsea. In his catalogues, it was labelled at two hundred guineas! Thus a flower, which for beauty and perfume was surpassed by the abundant roses of the garden,--a nosegay of which might be purchased for a penny,--was priced at a sum which would have provided an industrious labourer and his family with food, and clothes, and lodging for six years! Should chickweed and groundsel ever come into fashion, the wealthy would, no doubt, vie with each other in adorning their gardens with them, and paying the most extravagant prices for them. In so doing, they would hardly be more foolish than the admirers of tulips. The common prices for these flowers at the present time vary from five to fifteen guineas, according to the rarity of the species.


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