“I’m sure Warren Buffett is a great guy but when it comes to stocks he’s washed up. I’m the captain now.” - Tweet by day-trader Dave Portnoy (@stoolpresidente), 9th June 2020.
This commentary was first published on 21 September 2020. It is republished here unchanged, just for the hell of it.
Amsterdam, September 1637 (Ruyters): The latest Dutch tulip harvest is in, and experts confidently predict another bumper year for tulip growers and tulip investors alike. Billionaire hedge farmer Jon Paulsen is rumoured to have added hyacinths to his multi-strategy offering and has just launched a fund denominated in daffodils. Visionary entrepreneur Elon Müsk has just unveiled his new tulip-powered car, the model T, and launched a dedicated electric tulip subsidiary, Tul-IPO. Tulip stocks climbed by a few millimetres, as they are prone to every day if they grow at their normal organic rate; Couleren bulbs rallied another 2 guilders in heavy Antwerp trading; Rosen and Violetten bulbs ended the trading session more or less unchanged, albeit a bit squashed, at record highs. The market has been further buoyed in recent weeks by a tide of manure issued by the leading tulip advocate Pol Kruygman from his op-ed column in the New Amsterdam Times, ‘Witterings of a Tulip Fanatic’.
The popularity and rising value of this colourful perennial plant evidently knows no bounds and this is surely a golden age that is never likely to end. Future generations will evidently marvel at the effortless wealth on offer to investors committing their capital unreservedly to tulips today. Dutch housewives bedecked in tulip hats, tulip scarves, tulip dresses and tulip shoes danced gaily in the streets of Tuliptown (formerly Amsterdam) whilst smoking tulip cigarettes, slurping tulip soup, and drinking tulip beer from tulip beer glasses with environmentally friendly, recyclable tulip straws. Given that the anthocyanin Tulipanin is toxic to horses, cats and dogs, the inhabitants of Amsterdam have long since stopped rearing horses, cats and dogs; they have chosen to rear tulips as pets instead.
Many Dutch households have also abandoned the country’s traditional export trades in herring, gin and cheese in order to concentrate their energies where the action is: tulips. Tulip promoter Dirck Pieter Tulip commented:
“Tulip tulip tulip ! At my tulip worship museum and emporium, ‘All Things Tulip’, you can see the very latest in tulip technology, tulip breeding and tulip trading strategies.”
Dirck Pieter Tulip is offering courses in tulip cash / futures arbitrage and tulip swaptions. Price: One Tulip. Mr Tulip was formerly a stockbroker. In addition to curating his tulip museum he also edits the specialist tulip fanciers’ magazine, ‘Bulb!’
“I have just sold my house, its contents and all my extended family in order to speculate indefinitely in tulips, heavily on margin, and advised all my friends to do the same,” he added. “What can possibly go wrong?”
Tulip Reserve Bank Governor Jeroem Pöell agreed, and greeted the news of the tulip harvest warmly.
“There has never hitherto been a nationwide fall in tulip prices,” he pointed out, “So evidently that can never ever happen.”
And Governor Pöell pledged to support tulip prices down to the very last taxpayer, now that the tulip-related economy accounted for about 99.6% of Dutch GDP. Lending against tulips accounted for the other 0.4%.
Analysts at the business network ZeeNBZee were quick to voice their compliance with the almost universal approbation for the pretty, multi-hued offspring of Tulipa gesneriana.
“Tulips are definitely the future,” said one.
“Although I have only been in the market since about 7.30 this morning, this is the most incredible and exciting thing I have ever seen. So I recommend leveraged long tulip positions to anyone witless enough to listen to me.”
New derivative markets in tulips are sprouting up daily to enable people to speculate in tulip price appreciation without having to worry about the tiresome fuss of actually taking delivery of the attractively patterned flowers. And prices are continually reaching new highs, even in new digital-only varieties of the plant, or bit-tulips. Talk of tulip billionaires is all the rage. Popular balladeer Jostin Beebör is said to have been an early investor, but he is rumoured to have sold all his tulip positions now and diversified into foxgloves.
Sceptics of the tulip cult are obviously fusty-minded dullards who lack imagination, vision or a healthy sense of disbelief. One sceptic, speaking on condition of anonymity although his name is Cornelis Van De Graaff Generatoer and he resides at 33 Meadomsley Road, Utrecht, remarked,
Something about this environment feels dreadfully wrong to me – a complete contradiction in terms of logic, common sense and fundamental economics. Every day new tulips come onto the market and the supply of them has never been higher, and yet every day the prices also reach new records. But the market is drowning in tulips and there is almost nobody left who doesn’t already own them. There’s not a whole lot you can do with them. And they only bloom for a week. Unless the laws of supply and demand have been magically rescinded, this fantastical bubble in tulips – in the middle of a government-mandated global depression – is likely to end very badly, particularly for neophyte investors who have been urged by irresponsible reserve banks and an unregulated financial media into the tulip market to the exclusion of just about everything else.
Commentators aside from Mr Generatoer, however, were unanimous in their confidence that for as long as the tulip reserve banks stood ready and willing to throw liquidity at the tulip market, and for as long as that market was going up, there were no clouds on the horizon, although the weather correspondent for the New Amsterdam Times pointed out that there was actually a gigantic, pitch-black, deadly mass of clouds glowering evilly on the horizon.
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: firstname.lastname@example.org.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and specialist managed funds.
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