Tech Stock Bubbles In the 17th Century

Diving Tech

The 17th-century tech bubble centered around diving technology companies, which promised exaggerated returns on investments. Jamie Catherwood explains that the hype was fueled by Sir William Phips' successful treasure hunt, which yielded a 10,000% return for investors 1. This sparked a frenzy of new companies offering diving apparatuses, like the Edmund Halley Bell, claiming similar returns 1. Joe Weisenthal finds it fascinating that such technology existed in the 1600s, allowing people to explore underwater for treasure 2.

The first thing I'm going to do after I get out of the studio here is go Google images of the diving bell, because I still find it almost unfathomable that in the 16 hundreds, they created ways for people to get to the bottom of the sea and be able to breathe.

--- Joe Weisenthal

However, most of these ventures failed to replicate Phips' success, with many companies finding nothing more than a few cannons at the bottom of the sea 3.

   

Prospectuses

The era's unregulated prospectuses played a significant role in the speculative bubble, as companies made grand promises without oversight. Jamie Catherwood notes that unlike today's regulated filings, these prospectuses were often filled with exaggerated claims of high returns 4. The lack of regulation allowed companies to entice investors with promises of secrets and massive profits, contributing to the mania 4.

I'm not an expert on this, but from what I've seen, it kind of. I mean, I can't imagine a government that was regulating prospectuses would let someone say, I'll give you the secrets to the company if you buy me out.

--- Jamie Catherwood

This environment is reminiscent of the Guinness IPO mania, where investors were so eager to participate that they resorted to throwing subscription forms tied to rocks through bank windows 5.

   

Mass Investment

The speculative bubble of the 17th century saw widespread participation, not just from elites but also from average investors. Jamie Catherwood explains that joint stock companies allowed ordinary people to invest, although many later shifted their funds to government lotteries offering better returns 6. This democratization of investment is akin to modern trends where technology enables broader access to financial markets 6.

They were just going wherever offered the higher return. So as soon as these lotteries offered a better chance at that, they ditched to the joint stock companies and kind of forgot about them.

--- Jamie Catherwood

Despite warnings from commentators about the speculative nature of these investments, the allure of high returns kept the mania alive, a pattern that persists in today's financial markets 7.