GameStop, Robinhood and the Return of the Wind Trade
The history of economic bubbles casts doubt on the idea that the Reddit rebellion was a victory of the little guy over “the suits.”
William Hogarth knew a bad investment when he saw one.
Photographer: Edward Gooch Collection/Hulton Archive via Getty Images
The mistake of betting that a stock will fall, then getting crushed when it doesn’t, goes back a long way.
In August 1719, as the first stock market bubble in history was gathering steam, the mercurial Scottish financier John Law made a bet with Thomas Pitt, the earl of Londonderry and uncle of the prime minister, William Pitt, that the price of British stocks would fall in the year ahead. Law was at that time the master of the French financial universe, the man in control not only of the Mississippi Company, which held a monopoly on trade with the French territory of Louisiana, but also of the Banque Royale, and hence the French money supply. He was long France, short England.