Origin of the name Semper Augustus – The Tulipomania Our firm was founded in late 1998, toward the peak of arguably the greatest financial bubble and mania of all time, that in the share prices of many blue chip companies and certainly in the prices of technology and internet stocks. Mindful of the expanding bubble, we borrowed the name Semper Augustus from the historic financial archive. One of the early recorded financial manias, the Tulipomania, occurred in the 1630’s Dutch Republic. On the heels of a booming textile trade, shares of joint stock companies like the Dutch East India Company rose rapidly. Increasing financial wealth led to a housing boom in the urban financial centers of Amsterdam and Haarlem. Rising Dutch affluence ultimately afforded the middle and even lower classes to participate in horticulture and in the trading of tulip bulbs, leisure activities to be sure. Tulips were first brought into Holland from Constantinople in the middle of the sixteenth century. Eventually, possession of a tulip garden represented status, and as wealth and consumption climbed, so did the growing Dutch national passion for tulips. As shares on the Amsterdam bourse and real estate values climbed, the prices of the more rare bulbs began to climb as well. By 1636, bulb prices, even the more common varieties, were in a parabolic ascent. The country was crazed for tulips. The Semper Augustus was the most rare and valuable of the high-end tulips during the Tulipomania. It was an extraordinary flower with dark blood-red streaks and flashes on white petals. From a 1623 value of 1,000 guilders, or florins, a single bulb was reportedly sold for 5,500 guilders in 1633 and saw a 10,000 guilder asking price in February 1637, just before the bubble burst and prices cratered more than 90% to a fraction of 1623 prices. During the handful of years immediately preceding the peak of the mania, a single bulb fetched enough to purchase a very nice townhome on the banks of the nicest canal in Amsterdam, read as modern era 5th Avenue penthouses. The collapse of tulip prices erased vast fortunes for those unfortunate to be holding bulbs when the abrupt but inevitable end came. Many speculators were late to the bubble and saw wealth rise and fall suddenly, only returning to former lower stations in the social order. More painful were the fortunes of merchant families amassed over decades and gone overnight. Tulip prices would stabilize near the lows but would never again approach levels seen in the years immediately preceding the peak. The Tulipomania and correspondent bubbles in shares and real estate occurred in a highly inflationary period. The crash in tulip prices didn’t mark the eventual collapse in the Dutch economy. That deflationary end would come by 1670, following years of overbuilding and overconsumption. The bursting of the modern internet and technology bubble didn’t mark the end of the modern economy either. That chapter is plausibly being written now. Real estate and stock prices, which fell both in 1637 Holland with tulips – and in modern times with internet shares, would soon recover and reach new highs. The parallels to today’s situation are striking, as striking as the beautiful streaked Semper Augustus.