Sir Isaac Newton's South Sea Bubble Nightmare

In 1720 Isaac Newton had the good fortune to invest early in the South Sea Bubble, making a quick and decent profit. Satisfied with his gains, he exited before the bubble fully inflated. However, as he saw his friends amass incredible wealth, he couldn't resist re-entering the market. In an attempt to make up for lost time, he invested far more—some of it borrowed—and, unfortunately, bought in just before the bubble burst. As the stock plummeted, he lost almost everything, with his investment returning to roughly the value of his initial, smaller stake. It's said that Newton, reflecting on his experience, remarked, "I can calculate the movement of heavenly bodies but not the madness of men."

 

» There is nothing so disturbing to one's well-being and judgment as to see a friend get rich. « 

– Charles P. Kindleberger

 

Sir Isaac reportedly lost the equivalent of $4 to $5 million today, which amounted to almost the entirety of his investment in the South Sea Company. While this was a huge blow to his wealth, it did not leave him destitute, and he still maintained a fortune, though his stake in the company was essentially wiped out, losing around 90% of its value.

Lulled into Permabull Paradise | Callum Thomas

“To put it simply, and probably no one wants to hear it, but this is not a good set up 

— investors and speculators alike have been lulled into permabull paradise.”

 Callum Thomas, December 4, 2024.

 

S&P 500 E-mini Futures (daily bars - December 4, 2024) - Tom DeMark's Sequential 9-13 Setup. 

Another ATH (its 56th of the year), and up for the 11th session in 12.
Its daily MACD and RSI pushed further positive.