🤯 Did You Know (click to read)
Shares rose from around £100 to nearly £1,000 before collapsing in 1720.
South Sea shares climbed nearly tenfold within a single year, creating an atmosphere of inevitability. Each upward surge reinforced belief that further gains were guaranteed. Investors interpreted price momentum as validation of underlying strength. Skeptics were drowned out by accelerating optimism. The psychological shift from cautious speculation to certainty occurred rapidly. When the trend reversed, confidence collapsed with equal speed. Endless growth proved a dangerous illusion.
💥 Impact (click to read)
The acceleration itself became proof in the minds of participants. Rapid appreciation distorted risk perception and recalibrated expectations. Investors anchored future projections to recent performance. The crash shattered that anchor abruptly. Britain’s financial community confronted the fallacy of extrapolation. Momentum had masqueraded as stability.
This cognitive pattern remains central to modern bubble dynamics. The South Sea episode provided an early demonstration of feedback loops in asset markets. Price increases fueled belief, which fueled further increases. Once reversed, the loop operated in the opposite direction. Embarrassment followed misplaced certainty. Markets reasserted gravity.
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