3 Bubbles That Burst

iStock
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.

Celebrate the Holidays With the 2020 Harry Potter Funko Pop Advent Calendar

Funko
Funko

Though the main book series and movie franchise are long over, the Wizarding World of Harry Potter remains in the spotlight as one of the most popular properties in pop-culture. The folks at Funko definitely know this, and every year the company releases a new Advent calendar based on the popular series so fans can count down to the holidays with their favorite characters.

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Right now, you can pre-order the 2020 edition of Funko's popular Harry Potter Advent calendar, and if you do it through Amazon, you'll even get it on sale for 33 percent off, bringing the price down from $60 to just $40.

Funko Pop!/Amazon

Over the course of the holiday season, the Advent calendar allows you to count down the days until Christmas, starting on December 1, by opening one of the tiny, numbered doors on the appropriate day. Each door is filled with a surprise Pocket Pop! figurine—but outside of the trio of Harry, Hermione, and Ron, the company isn't revealing who you'll be getting just yet.

Calendars will start shipping on October 15, but if you want a head start, go to Amazon to pre-order yours at a discount.

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Here's the Very Best Time to Buy a New Car—and the Very Worst Time

If you want the best deal possible on a new car, it pays to know when to shop.
If you want the best deal possible on a new car, it pays to know when to shop.
Zero Creatives/iStock via Getty Images

Shopping for a new car can be a challenge. In addition to figuring out what make and model suits your lifestyle best, features and accessories can make the decision even more confusing. All of it affects the sale price, and even if the seller is willing to negotiate, it can be hard to know if you’re getting the best deal possible.

As it turns out, the time of year can have an enormous influence on the cost of the vehicle. If you want the greatest amount of leverage, try to buy in December. Here’s why.

According to MarketWatch, dealers are offered incentives by automobile manufacturers based on their sales volume. The dealer might receive a cash rebate, or they might get an opportunity to continue selling popular models. Depending on the manufacturer, they might even get a bonus for every car sold, making it worthwhile to sell a car at or below cost if it means getting hundreds of dollars more for every other car moved off the lot. Whatever the incentive, it benefits the dealer to move inventory.

Those quotas are typically measured by month, by quarter, and by year. In December, all of those goals come together, and a dealer is likely more willing to come down on the price of a vehicle to satisfy their sales objectives before the end of the calendar year.

Because quotas are measured monthly and quarterly, it also makes sense to try and buy at the end of the month or the end of a quarter—March, June, September, and December.

Remember that this approach works best for new cars. Used cars don’t normally have the same quotas or incentives attached. Because the value of trade-in cars increase toward the end of the year, you might find the best prices and selection in the fourth quarter.

More anecdotally, you might also find better deals on a Monday compared to the rest of the week, as less foot traffic means a salesperson probably has more time to find ways to save you money.

The worst time to buy? Avoid going early in the month. Dealers aren’t as concerned with meeting quotas. And avoid Saturdays. Because people tend to go car shopping on weekends, the rush of customers means dealers have less time to negotiate and more opportunities to sell.

[h/t MarketWatch]