Two new reading assignments

I have added today two (2) new mandatory reading assignments. They are relatively short, (actually they are novels compared to today's twitter based world). Every trader should know or have heard of Tulipmania, which is now used as a common economic term defining an irrational economic bubble (much like the Internet bubble). The second excerpt is about the great South Sea bubble of 1721 which occurred in England.

As technical analysts we believe in our historical data and the repetition of patterns. These passages from Charles Mackay's 1841 book, Memoirs of Extraordinary Popular Delusions and the Madness of Crowds demonstrates that a man who has nothing in common with this century, writing about an event that was 200 years before his-time, can write about human behavior that appears timeless.

Mckay penned his book 168 years ago using very different technology then I am using writing this blog entry today. His subject is an event that occurred another 200 years before his lifetime, added together we are reading about an extraordinary set of economic events that occurred over 350 years ago. Times and technology might change but the driving forces behind human behavior remain the same. This is the basis of Technical Analysis. Our graphs and charts and data and indicators are readings of the current "madness of the crowds" and that these patterns repeat over and over and over again.

Please read and comment on the following:

Tulipmania
and
South Sea Bubble