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"I can calculate the movement of the stars, but NOT the madness of men!" Sir Issac Newton
日光之下無新事, 聰明如數學物理學家牛頓, 也在1720年South Seas Company股票泡沫中損失了大量財富!
網上找來South Seas Company 的小故事, 原來現在的財技早在十八世紀已開始.....
Why is this important for a company like the South Seas?
The company is established in 1911 by the financiers John Blunt and George Caswall, backed by Robert Harley, Lord Treasurer. It's a time of war. The company is granted exclusive trading rights with South America if they take over the national debt caused by the war and consolidate it. Somehow it's established as a sort of parallel organisation to the Bank of England.
After the war Britain is in debt for more than £10 million. (yes, 1713's Pounds, not 2007's). All that debt is funneled through the company transforming short-term debt into stock. In exchange the government is committed to paying £576,534 perpetually, that is roughly a 6% return.
But a trade company needs more than an annuity to exist. That is also provided by the Treaty of Utrecht. In it is also established that the Kingdom of Great Britain and Ireland will be able commerce with Spanish South America (something that they already discounted when founding the company). The South Seas company is able to send one trading ship each year.
Astonishingly, the company fails to do any trade for the first four years. Nonetheless it has the backing of the British Government, which soon converts a further £2 million in stock. No actual business, but a promise of a bright future (sound familiar?).
Stocks going up…
But the company is not good enough at trade. What they are increasingly good is into transforming public debt into shares. And they manage to give away enough shares to important people (and rebuy them when they have increased enough) so that most politicians are interested in supporting and backing the South Seas Company. That is, to drive value up.
1719 is a good year for the South Seas company. They offer to buy half of the British national debt: £15 million. That means £15 million more in shares. But demand's pace keep up. There's a huge interest in their shares. After all they continuously rise and lucky owners feel they are richer every day.
1720 is going to be known as the bubble year. Not only will witness the skyrocketing of the South Seas but also the appearance of many similar ventures. The price per share will go from £100 to £1,000. People of all kinds will buy, selling whatever they have, going into debt, it's the South Seas frenzy!
The fall follows the rise
The last idea that the company has is to lend people money to buy the shares. But the money has to be returned. And there is no other way to return it than selling shares again. Until it all collapses and the shares fall back to £150 in september. A great loss for most investors. And from that to obliteration.
Sir Isaac Newton
What about Sir Isaac Newton? Well, he won a lot of money with the South Sea when he sold it, but the shares kept rising and rising. Until he couldn’t resist the temptation to buy again. At the highest price. In the next week they plunged. He lost £20,000.
(Source: http://scarcityrent.com/2007/06/21/the-south-sea-company-or-how-sir-isaac-newton-spurned-the-dismal-science/)
牛頓爵士
牛頓爵士呢？他就像我們許多小股民, 曾因為賣出南海而贏得了很多的金錢，但股價不斷上升和提高。直到他無法抗拒的誘惑而在最高價格再次購入。一星期後股價暴跌, 令他失去二萬英鎊 (約值現在三百萬美金)。從此, 不許人們在他面前再提及South Seas Company這間公司!
這段小故事令我這小師奶在金融風暴下也感到一點慰藉!
歷史不斷重複, 人們何時才學習到呢?
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