We Study Billionaires - The Investor’s Podcast Network TIP784: History's Biggest Market Bubbles w/ Clay Finck
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Jan 16, 2026 Explore the fascinating world of historical market bubbles! Discover how greed, speculation, and misplaced faith lead investors astray time and again. Clay delves into the notorious South Sea Bubble, exposing insider schemes and the role of leverage. He contrasts the frenzy of Railway Mania with transformative technologies and highlights Japan's unique cultural factors behind its asset bubble. Key takeaways shed light on how bubbles detach from fundamentals, reminding us of the enduring lessons in patience and prudence.
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Speculation Is A Double-Edged Engine
- Speculation lies on a spectrum between entrepreneurship and gambling and often fuels innovation despite risks.
- Clay Finck warns that extreme speculation abandons fundamentals and causes catastrophic losses for many investors.
How The South Sea Scheme Worked
- The South Sea Company converted government debt into shares and pushed prices higher to lure annuitants into trading safe income for market gains.
- Clay Finck recounts how directors and officials received shares, creating perverse incentives to keep inflating the price.
Leverage Fueled The Bubble
- Leverage amplified demand by letting speculators buy with a 20% deposit while the company effectively financed purchases.
- Clay Finck highlights that company-provided credit reduced available supply and intensified the bubble.
