Henrik Zeberg

So that was the time of the South Sea bubble.

Newton invested in FOMO.

saw his stock rise, earned a good money, got out, but saw his friends actually staying in and becoming even more rich.

He FOMOed in, invested more, actually a lot, and the bubble burst.

He famously said afterwards, I can calculate the movement of heavenly bodies, but not of the madness of men.

So FOMO can make us do things we don't want, that can be against what is good for us.

And that is actually also very visible, that crowd dynamics that is a part of, when we talk about what is called the smoked room experiment.

This is an experiment from 1968.

where a group of applicants to a job are invited into a room.

Eight of the nine applicants are actors.

They're told to stay seated, just work on their assignment, no matter what happens.

One person is a real applicant.

All of a sudden, while they do their application, smoke comes through the door.

When there are other people, the other eight actors are in the room, 90% of the time people stay seated and do not report on the smoke, on the potential hazardous event that is unfolding.

But when that person, the applicant is alone, 75% of them got up and actually reported on the smoke.

So crowd dynamics is something that changes the way we think.

And that is what actually also is part of why we see financial bubbles developing.

If you look at financial bubbles, then we saw one of the largest financial bubbles back in the 1630s, which was called the tulip mania.

It was at a time where the tulip had been introduced from the Ottoman Empire.

And for some reason, it became the center of attention.