How_Much_is_a_Tulip_Worth

How_Much_is_a_Tulip_Worth - How Much is a Tulip Worth? By...

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How Much is a Tulip Worth? By Mark Hirschey School of Business University of Kansas Lawrence, KS 66045-2003 e-mail: [email protected] and Managing Director Jayhawk Partners, Ltd. 4604 Merion Ct. Lawrence KS 66047-1811 Suggested citation: Mark Hirschey, “How Much is a Tulip Worth?” Financial Analysts Journal , vol. 54, no. 4 (July/August 1998): 11-17 Revised: March 1998 * I wish to thank Bill Beedles, Mike Ettredge, Jack Graham and Christine Hauschel for their helpful
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How Much is a Tulip Worth? Abstract: More than 350 years ago, a passion to possess beautiful tulip blossoms, sometimes called "The Tulipomania," took hold in Holland. As the mania increased, many persons were known to "invest" the present day equivalent of roughly $35,000 in the purchase of a single tulip bulb. Silly as this particular mania now appears, current market prices for internet stocks suggest that extraordinary popular delusions and the madness of crowds may not be confined to the Dutch people of the 17th century. KEY WORDS: Tulipomania, Holland, internet stocks.
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How Much is a Tulip Worth? To present-day investors, the tulip is nothing more, nothing less, than a lovely garden flower. They grow from bulbs with leaves and stems that range from 4 inches to over 30 inches tall. The tulip usually develops one large, bell-shaped flower at the tip of its stem. The flowers may be almost any solid color; some tulips have flowers with two colors. Some tulip flowers become streaked with other colors because of viral diseases that affect the plant's color but not its health. Thousands of varieties of tulips have developed from a few species. Almost all the cultivated kinds of tulips were developed from tulips of Asia Minor that were brought to Vienna, Austria, from Constantinople, Turkey (now Istanbul), in the 1500's. The name tulip comes from a Turkish word meaning turban, because their beautiful blossoms look a little like turbans. Popular garden varieties of tulips include the Darwin hybrids and the Triumphs, Lily-flowered, Fringed, and Parrot tulips. Tulips belong to the lily family, Liliaceae. The tulip brought to Europe in the 1500s is Tulipa gesneriana . Although tulips grow in many parts of the world, they are generally associated with the Netherlands where tulip cultivation remains an important industry today. It is also important in the northwestern part of the United States. Billions of tulip bulbs are produced every year. Dutch growers produce nearly 2,000 varieties (see De Hertogh, 1994). After the tulip was brought to Europe, it became the most fashionable flower in both England and Holland. Interest in the flower developed into a craze in Holland, called the "tulipomania," between 1634 and 1637. Individual bulbs sold for huge prices. While many present-day investors are vaguely familiar with this so-called tulipomania, it is not generally recognized just how high tulip prices became during this period and how destructive the mania had become by its conclusion. A fascinating early account of Holland's tulipomania can be found in Charles Mackay's (1841) classic Memoirs of Extraordinary Popular Delusions and the Madness of Crowds.
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This note was uploaded on 07/09/2011 for the course MK MK 640 taught by Professor Dr.lee during the Spring '11 term at Jefferson College.

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How_Much_is_a_Tulip_Worth - How Much is a Tulip Worth? By...

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