Foundations
Historical Case Studies
Six bubbles examined on the same template: what happened, what inflated it, what popped it, how far it fell, who got the value in the end, and what it rhymes with today.
Updated
Every case page follows the same structure so you can compare like with like, and each one ends with "echoes in today's AI boom," linking to the current-state evidence elsewhere on this site. If you only read two, read the telecom and fiber bubble, which the research identifies as the closest structural match to the AI build-out, and the Railway Mania, the oldest and still the clearest demonstration that a world-changing technology and a ruinous investment can be the same thing.
- 1840s · Britain The British Railway Mania Parliament authorized railway capital approaching a year's GDP. Shares fell 50-70%, and the network took a generation to pay off.
- 1920s · United States The 1929 Crash & the Investment Trusts Funds that owned funds that owned funds, on borrowed money. The Dow fell 89% and took 25 years to recover.
- 1980s · Japan Japan's Asset Bubble Companies owned each other's shares, muting every warning. The unwind took three decades.
- 1995-2002 · United States The Dot-com Bubble The internet was real. The Nasdaq still fell 78%, and most of the companies died anyway.
- 1998-2002 · Global The Telecom & Fiber Bubble Vendors lent customers the money to buy their gear. The closest structural match to today's AI boom.
- 2002-2012 · United States The Housing Bubble The one that reached everyone. Prices fell a third nationally, and the financing chain amplified it into a global crisis.
The rest of the catalog, briefly
The full 15-bubble dataset lives in the comparative table on What Is a Bubble?. The nine episodes below did not get full pages, but each contributes something to the pattern.
US railroads and the Panic of 1873
Post-Civil War America laid track at a pace of roughly 6,000 miles a year, funded by heavy bond issuance. The Panic of 1873 tipped the economy into the Long Depression; many lines went through receivership and were bought at deep discounts by consolidators, who captured most of the value. (Wikipedia (opens in a new window))
Florida land boom (1920s)
Lots in Miami flipped multiple times in months at multiplying prices. When the music stopped around 1926, prime parcels fell 70-90%, and many locations did not see comparable prices for decades. The land was real; the prices were not. (NBER (opens in a new window))
Nifty Fifty (late 1960s to 1974)
Fifty 'one-decision' blue chips traded at 40-60 times earnings on the theory you could buy them at any price. They fell 60-70% in 1973-74. Notably, many later grew into their old valuations, a reminder that great companies and terrible entry prices coexist. (Stanford GSB (opens in a new window))
Poseidon nickel (1969-70)
An Australian nickel discovery took Poseidon NL from about A$0.80 to an intraday A$280 in roughly five months, then down more than 95%. The deposit existed but was worth far less than the price implied. The purest example of story outrunning substance. (Wikipedia (opens in a new window))
Hunt Brothers silver (1979-80)
Two Texas billionaires tried to corner the silver market, driving it to about $50 an ounce. When exchanges changed the rules, silver lost 75 to 80% of its value in about three months. Silver did not touch $50 again for 31 years. (Britannica (opens in a new window))
Nordic banking bubbles (late 1980s)
Sweden, Finland, and Norway deregulated credit, property boomed, and the banking systems failed in 1991-93 with losses reaching double-digit shares of GDP. The cleanups became the textbook for handling banking crises. (PIIE (opens in a new window))
Asian Financial Crisis (1997)
Years of foreign borrowing and property speculation ended when Thailand's currency broke in July 1997. Contagion swept the region; equity markets lost 50-80% in local terms and often more in dollars. The canonical case of borrowing short-term in someone else's currency. (PIIE (opens in a new window))
Chinese A-shares (2007)
Retail investors drove Shanghai above 6,000 in October 2007 at 40-60 times earnings; the index lost about 70% within a year. A compressed, almost time-lapse version of the classic arc. (chronology (opens in a new window))
SPAC, meme stocks, and crypto (2020-21)
Zero interest rates plus lockdowns produced a triple mania: blank-check companies, GameStop at $483, and a $3 trillion crypto market. Most of it fell 70-99% when rates rose in 2022. The most recent full run of the pattern, within living memory of everyone now watching AI. (Wikipedia (opens in a new window))