Tulip Mania

Dear investors,

I have warned multiple times that we are in a highly speculative bubble of mania and greed. Valuations are sky high, there are a significant amount of non-professional retail investors in the market, and with the boundless amount of monetary stimulus, money is flying like toilet paper off the shelves.

While scrolling through Twitter last night I came across something that absolutely floored me. An NFT project was released last night that pokes fun of the Dutch Tulip Mania that happened in 1637. And the crazy thing about this is that speculative gamblers are eating this thing up.

What makes this significantly ironic is the history that surrounds tulip bulbs. Back in 1637 during the Dutch Golden Age, contract prices for tulips reached unfathomable highs based on speculative mania or the “Greater Fool Theory”.

During 1637-1637 tulip bulb contracts began changing hands over ten times per day, with some estimated to have reached $750,000 per bulb (adjusted for inflation in today’s price).

A standardized price index for tulip bulb contracts, created by Earl Thompson. Thompson had no price data between February 9 and May 1, thus the shape of the decline is unknown. The tulip market is known to have collapsed abruptly in February

So when I was scrolling through twitter last night and saw that there was an NFT project specifically created to sell tulip bulb jpegs, I was hooked. At first I thought no one would bite, but then they started to sell.

In less than 3 hours all 50 of the tulip jpegs sold for an estimated price of over a quarter million. One even sold for 18 ETH, which at the time was around $50,000 USD.

What this insane mania revolving pictures on the internet (that will never generate any future free cash flow) means is that we are nowhere near the bottom. In fact I would venture to say we are near the 9th inning of a long and drawn out baseball game that is soon to end.

Sure, the people who sold those pictures of tulips for $50,000 are probably celebrating. And I’m sure someone else could potentially jump in and bid twice the amount (as seen by the rocks selling for millions). But when the music stops (and it will) you don’t want to be caught holding the bag on an asset that will never cash flow — period!

Be careful out there boys. These are dangerous times we are treading in.

Other Stuff

  • I found a decent research presentation on my number one top position for 2021 and 2022 (please see my original research report here). You can see their presentation here. Their research is focused more on technical analysis than fundamental but thought I would share. Overall, met coal prices continue to increase and so does my price target. Despite the 30% run-up since my publication, there is more room to go and I haven’t sold one single share.

  • COKING COAL DAILY: Mongolia supply disruption weighs on market sentiment in China: China’s domestic coking coal market rose sharply in the week to August 23 due to the supply shortage from Mongolia, which also weighed on market sentiment in seaborne coking coal prices in the cfr China market. The fob Australia market inched up amid steady buying interest for October-laycan cargoes, sources told Fastmarkets.