3 Bubbles That Burst

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iStock

Like many young people, I'm gradually coming to terms with the sad fact that I won't be able to retire at 25 with the fabulous wealth I accumulated through shrewd sports card speculation in the late 80s and early 90s. While it's disappointing to learn that one can't trade his stack of Harold Miner rookie cards for a new car, there's some small solace in knowing that you weren't the only person to be caught in a bubble. (At least be thankful that you had baseball cards and not, say, Pets.com stock.) Let's have a look at three other popped bubbles:

Tulipmania

Although tulips are inextricably linked to the Netherlands in most peoples' brains, the flowers didn't actually start growing in the area until the late 16th century, when bulbs were imported from the Ottoman Empire. When the plants finally found soil, though, they quickly became immensely popular. Every Dutch aristocrat longed for a garden full of the beautiful, rare spring flowers, and tulip bulbs were suddenly the Netherlands' hottest commodity. Even better, the country's booming trade with the New World had given the potential buyers purses full of disposable income, so there was nothing to keep a boom from taking off.

By 1623, the market for tulip bulbs was starting to warm up, and by 1636, it was overheating. Although the surviving evidence is largely anecdotal, there are stories of collectors being offered the equivalent of year's pay for a single bulb"¦and turning down the offer. Speculators traded their houses and livestock for bulbs they thought they could flip for a large profit, and professional tulip traders peddled their wares throughout the country. Enterprising traders were even offering what amounted to futures contracts for bulbs they intended to plant at later date; this practice was decried as the "tulip wind trade" because the buyers rarely got any sort of tangible return.

The deathblow for the craze didn't come until February 1637 when a group of traders gathered in Haarlem to auction their bulbs. No one seemed interested in buying the bulbs, though, and the traders began dumping their bulbs at reduced prices. The public, though, had already begun to panic and wanted no part of the tulip trade. Certain varieties lost 99% of their value in a matter of days, and speculators faced financial ruin.

Some modern academics have questioned whether these tales of the tulipmania's scope are a bit exaggerated, but the tale is still recounted as a cautionary tale after a speculative bubble bursts. At the end of the day, wouldn't you rather have a garden full of tulips than a portfolio full of dot-com stocks?

The South Sea Company

The South Sea Company was established in 1711 as the exclusive English trading partner with Spain's holdings in South America. As the plan went, the treaty ending the War of Spanish Succession, which was being fought at the time, would grant the company extensive trading rights with these colonies. The South Sea Company could provide the colonies with slaves, and an even more rewarding racket could be built around trading English cloths and textiles to the natives for precious metals and jewels.

However, when the war finally wound up with the Treaty of Utrecht in 1713, the trading rights weren't as extensive as the South Sea Company's shareholders had hoped. The company could only send one general-commerce ship to South America each year, and contentious relations with Spain meant that these voyages were vulnerable to harassment by the Spanish navy. Although the South Sea Company was fairly efficient as a slave trader, it didn't seem to have the huge long-term potential that its directors claimed.

The company continued to hawks its potentially lucrative trade in the Americas as a great business opportunity, though. The South Sea Company began taking on England's war debts and converting them into equity in the company. For the holders of these debts, converting them into South Sea Company stock seemed like a great way to get in on an up-and-coming commercial enterprise, while the company itself gained a steady revenue stream as the country paid off war debts it now held. In 1720, Parliament agreed to let the company take over an even larger share of the country's debt, and the company's stock went through the roof. Stock prices rose from 128 pounds in January to over a 1,000 pounds in August, and investors were euphoric.

There was a slight hitch, though; this whole endeavor was something of a pyramid scheme. The company was trading its equity for the government debt, but the underlying trading business with South America was fundamentally weak. As investors gradually realized that the South Sea Company had very little in the way of actual products or services to offer, the stock price collapsed. In short, all of this government debt had been converted into stock in a company with comparatively meager prospects for future earnings. By September 1720, the price had dropped all the way back down to 150 pounds a share and continued falling.

This precipitous drop undercut the entire British stock market, and investors wanted answers. The ensuing investigation showed that the South Sea Company had been allowed to get away with such shaky business practices in part because it had bribed officials with cash and free stock. Not everyone lost out on the transaction, though; Robert Walpole, a longtime critic of the company and reformer following the collapse of the South Sea Bubble, parlayed his role in straightening this mess out into the role of the first de factor prime minister.

Beanie Babies

Nothing says "Destined to hold its value indefinitely" quite like a teddy bear stuffed with plastic pellets. Or so collectors thought in the late 1990s when Beanie Babies, the plush stuffed animal brainchild of Ty Inc. founder Ty Warner, were sweeping the national collecting market.

What made these little stuffed critters a billion-dollar industry that sucked in both children and scores of adults? A number of factors contributed to the beanbags' meteoric rise as collectibles. Ty's brass originally envisioned the product line as a set of inexpensive, high quality stuffed animals that kids could afford. Prices were generally around $5, low enough that kids could get the whole set of Beanies. Ty eschewed normal distribution chains for stuffed animals; the company avoided big chain discount retailers in favor of smaller gift-shop type outlets, a decision that made the product seem classier and rare.

Moreover, the Beanie Babies themselves received constant tweaks. Colors or names changed, their trademark ear tags would be subtly redesigned, and, most importantly, Ty retired certain models, further spiking collector demand.

As you may remember, the secondary market for the toys absolutely exploded. By 1996, Beanies had graduated from kids' fad to full-blown collecting craze. It seemed that almost any Beanie could conceivably become the next hot limited edition, so collectors snapped them up as soon as they hit store shelves. A royal blue Peanut the Elephant, which was only produced in limited quantities for a short time in 1995, could sell for over $3000. Other individual Beanies, like a wingless Quackers the Duck, fetched prices well over $1,000 apiece. The good times were never going to stop rolling, and Beanie Babies seemed poised to replace the less-adorable dollar as the nation's currency.

That is, until the good times promptly stopped rolling. By 1999, the craze had started to lose its steam. Most of the newer toys hadn't appreciated like their predecessors, possibly because the market was so flooded with bean-filled animals. (Ty's revenues had ballooned to over $1 billion, which represents an awful lot of stuffed bears flowing into collectors' hands.) In 1999, Ty announced it was completely retiring the entire Beanie line, and although a fan outcry convinced the company to revive the line in 2000, the hysteria was dead.

Certain rare Beanies still have significant value, but they're far below their heady late-90s peaks. Peanut the Elephant seems to be bravely soldiering on; two examples of his royal blue variant sold for $1100 and $2000 on eBay last week. These examples are exceptions, though; the great bulk of speculative Beanie purchases seem to be worth a few bucks at most.

Ethan Trex grew up idolizing Vince Coleman, and he kind of still does. Ethan co-writes Straight Cash, Homey, the Internet's undisputed top source for pictures of people in Ryan Leaf jerseys.

Turn Your LEGO Bricks Into a Drone With the Flybrix Drone Kit

Flyxbrix/FatBrain
Flyxbrix/FatBrain

Now more than ever, it’s important to have a good hobby. Of course, a lot of people—maybe even you—have been obsessed with learning TikTok dances and baking sourdough bread for the last few months, but those hobbies can wear out their welcome pretty fast. So if you or someone you love is looking for something that’s a little more intellectually stimulating, you need to check out the Flybrix LEGO drone kit from Fat Brain Toys.

What is a Flybrix LEGO Drone Kit?

The Flybrix drone kit lets you build your own drones out of LEGO bricks and fly them around your house using your smartphone as a remote control (via Bluetooth). The kit itself comes with absolutely everything you need to start flying almost immediately, including a bag of 56-plus LEGO bricks, a LEGO figure pilot, eight quick-connect motors, eight propellers, a propeller wrench, a pre-programmed Flybrix flight board PCB, a USB data cord, a LiPo battery, and a USB LiPo battery charger. All you’ll have to do is download the Flybrix Configuration Software, the Bluetooth Flight Control App, and access online instructions and tutorials.

Experiment with your own designs.

The Flybrix LEGO drone kit is specifically designed to promote exploration and experimentation. All the components are tough and can totally withstand a few crash landings, so you can build and rebuild your own drones until you come up with the perfect design. Then you can do it all again. Try different motor arrangements, add your own LEGO bricks, experiment with different shapes—this kit is a wannabe engineer’s dream.

For the more advanced STEM learners out there, Flybrix lets you experiment with coding and block-based coding. It uses an arduino-based hackable circuit board, and the Flybrix app has advanced features that let you try your hand at software design.

Who is the Flybrix LEGO Drone Kit for?

Flybrix is a really fun way to introduce a number of core STEM concepts, which makes it ideal for kids—and technically, that’s who it was designed for. But because engineering and coding can get a little complicated, the recommended age for independent experimentation is 13 and up. However, kids younger than 13 can certainly work on Flybrix drones with the help of their parents. In fact, it actually makes a fantastic family hobby.

Ready to start building your own LEGO drones? Click here to order your Flybrix kit today for $198.

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The Best Way to Defer Your Credit Card Payments During the Coronavirus Shutdown, Explained

Credit card companies can offer financial assistance, but there can be drawbacks.
Credit card companies can offer financial assistance, but there can be drawbacks.
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A number of financial relief options are available to Americans who have been affected by the unprecedented health situation created by the spread of the coronavirus. Mortgage companies are offering forbearances; insurance companies have lowered premiums for cars that aren’t being driven. Credit card companies have also acknowledged that cardholders may have trouble keeping up with their bills. While many companies are eager to help with debt and interest, there are some things you should know before picking up the phone.

The good news: If you’re unable to make your minimum monthly payment in a given month, major card issuers like Chase, Capital One, and others are willing to grant a forbearance. That means you can skip the minimum due without being hit with a negative strike on your credit report for a missed payment.

A forbearance is no free ride. Interest will still accrue as normal, and the card issuer may consider the missed payment deferred, not waived. If you pay $50 monthly, for example, and are able to skip a May payment, make sure the card won't expect a $100 minimum in June to cover both months. Ask the company to define forbearance so you know what’s expected. Some may be willing to lower your minimum payment instead, which could be a better option for you.

While the skipped payment won’t impact your FICO credit score directly, be aware that it could still have consequences. Because many minimum payments mainly cover interest, your balance won’t remain the same—it will continue to grow. And because that interest is still adding up, your total amount owed is still going up relative to your available credit, which can affect your score.

If you have a sizable amount due, the National Foundation for Credit Counseling (NFCC) recommends looking into alternatives to forbearance, like using savings to pay down some high-interest cards, taking advantage of zero-interest balance transfer offers, or even taking out a personal loan with a lower interest rate.

If you have multiple credit card balances and the prospect of trying to get through to a human to discuss payment options seems daunting, the NFCC is offering their assistance. The agency can put you in touch with a credit counselor who can act on your behalf, obtaining forbearances or other relief from the card companies. Be advised, though, that card issuers may want to get your permission to deal with the counselors directly. The program is free and you can reach the NFCC via their website.

Be mindful that emergency relief is different from a debt management plan, which consolidates debt and can have a negative impact on your credit card accounts.

In many cases, the best thing to do is to pick up the phone and deal with the card issuer directly. Explain your situation and ask about what options they have. Some might waive payments. Others might offer to lower your interest rate. No two card issuers are alike, and it’s in your best interest to take the time to see what’s available.

[h/t lifehacker]