Universally accepted as the first economic bubble, the Great Dutch Tulip Craze, also known as Tulipmania, of the late 1620’s to February 1637 serves as a reminder to all of us involved in business, that value can be driven by greed and not intrinsic worth. During this time period, a tulip bulb rose in price from 60 times its original value to over 150 times the original price.
A futures contract is simply a document that a seller of a commodity will deliver the commodity at a given date for a set sum. That sum can be paid today or on the day of delivery. Because this is a legal document, the owner of the contract can sell this financial instrument at any time.