Forty-two chapters. Almost a year of posts. Stories spanning from 1637 to 2018, from Amsterdam flower auctions to cryptocurrency exchanges. And here I am, writing the last post in this series.
Forty-two chapters. Almost a year of posts. Stories spanning from 1637 to 2018, from Amsterdam flower auctions to cryptocurrency exchanges. And here I am, writing the last post in this series.
John Fredriksen did not drill for oil. He carried it. He did not fish in the ocean. He farmed it. Chapter 24 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of a Norwegian who built an eight-billion-dollar empire on tankers, oil rigs, and salmon.
John Fredriksen did not drill for oil. He carried it. He did not fish in the ocean. He farmed it. Chapter 24 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of a Norwegian who built an eight-billion-dollar empire on tankers, oil rigs, and salmon.
If you have seen the 1983 movie Trading Places with Eddie Murphy and Dan Aykroyd, you remember the final scene. The trading floor of the New York commodity exchange. Two old millionaires trying to corner the frozen orange juice market. Total chaos. People yelling, waving paper, sweat everywhere. That scene was fiction, but the commodity was real. Frozen concentrated orange juice is traded on NYMEX, and the price can move violently when nature decides to get involved. Chapter 23 of Torsten Dennin’s “From Tulips to Bitcoins” tells what happened when the most destructive hurricane seasons in recorded history hit the real orange juice market. The price quadrupled. And unlike the movie, nobody was laughing.
If you have seen the 1983 movie Trading Places with Eddie Murphy and Dan Aykroyd, you remember the final scene. The trading floor of the New York commodity exchange. Two old millionaires trying to corner the frozen orange juice market. Total chaos. People yelling, waving paper, sweat everywhere. That scene was fiction, but the commodity was real. Frozen concentrated orange juice is traded on NYMEX, and the price can move violently when nature decides to get involved. Chapter 23 of Torsten Dennin’s “From Tulips to Bitcoins” tells what happened when the most destructive hurricane seasons in recorded history hit the real orange juice market. The price quadrupled. And unlike the movie, nobody was laughing.
“Amaranth” is Greek for “imperishable.” The flower that never fades. Somebody at the hedge fund picked that name on purpose, imagining a fund that would last forever. Instead, Amaranth Advisors became the biggest hedge fund collapse since Long-Term Capital Management in 1998. Two-thirds of its capital gone in two weeks. Six billion dollars, vanished on natural gas bets. Chapter 22 of Torsten Dennin’s “From Tulips to Bitcoins” tells this story.
“Amaranth” is Greek for “imperishable.” The flower that never fades. Somebody at the hedge fund picked that name on purpose, imagining a fund that would last forever. Instead, Amaranth Advisors became the biggest hedge fund collapse since Long-Term Capital Management in 1998. Two-thirds of its capital gone in two weeks. Six billion dollars, vanished on natural gas bets. Chapter 22 of Torsten Dennin’s “From Tulips to Bitcoins” tells this story.
Most of the stories in this book are about people. Traders who got greedy. Governments that miscalculated. Speculators who cornered a market and then lost control. Chapter 21 of Torsten Dennin’s “From Tulips to Bitcoins” is different. The main character is a hurricane. And the commodity it moved is one that most people have never thought about: zinc.
Most of the stories in this book are about people. Traders who got greedy. Governments that miscalculated. Speculators who cornered a market and then lost control. Chapter 21 of Torsten Dennin’s “From Tulips to Bitcoins” is different. The main character is a hurricane. And the commodity it moved is one that most people have never thought about: zinc.
In November 2005, a 36-year-old copper trader for the Chinese government stopped answering his phone. His apartment door stayed shut. He did not show up at work. His employer, the State Reserve Bureau, first told the London Metal Exchange that the man did not exist. Then they said he acted alone. Then they stopped talking. Chapter 20 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Liu Qibing, who shorted up to 200,000 tons of copper on the LME and vanished when the bet went wrong.
In November 2005, a 36-year-old copper trader for the Chinese government stopped answering his phone. His apartment door stayed shut. He did not show up at work. His employer, the State Reserve Bureau, first told the London Metal Exchange that the man did not exist. Then they said he acted alone. Then they stopped talking. Chapter 20 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Liu Qibing, who shorted up to 200,000 tons of copper on the LME and vanished when the bet went wrong.
Most people have never heard of palladium. Ask someone on the street to name a precious metal and they will say gold. Maybe silver. Maybe platinum if they know jewelry. Almost nobody would say palladium. But in January 2001, palladium became the first precious metal in history to break $1,000 per ounce. More expensive than gold. Chapter 19 of Torsten Dennin’s “From Tulips to Bitcoins” tells how this obscure metal went from $120 to over $1,100 in four years. A 10x increase. And it all came down to one country: Russia.
Most people have never heard of palladium. Ask someone on the street to name a precious metal and they will say gold. Maybe silver. Maybe platinum if they know jewelry. Almost nobody would say palladium. But in January 2001, palladium became the first precious metal in history to break $1,000 per ounce. More expensive than gold. Chapter 19 of Torsten Dennin’s “From Tulips to Bitcoins” tells how this obscure metal went from $120 to over $1,100 in four years. A 10x increase. And it all came down to one country: Russia.
St. Paul, Alberta. A town of five thousand people in the Canadian prairies. The town’s only claim to fame is a UFO landing platform, built in 1967 for Canada’s centennial. A concrete pad with a sign inviting extraterrestrial visitors to land. Nothing ever landed. But in the mid-1990s, something stranger than aliens happened to this town. Chapter 18 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Bre-X Minerals, the biggest mining fraud in Canadian history.
St. Paul, Alberta. A town of five thousand people in the Canadian prairies. The town’s only claim to fame is a UFO landing platform, built in 1967 for Canada’s centennial. A concrete pad with a sign inviting extraterrestrial visitors to land. Nothing ever landed. But in the mid-1990s, something stranger than aliens happened to this town. Chapter 18 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Bre-X Minerals, the biggest mining fraud in Canadian history.
How do you hide $1.8 billion in losses for over a decade? You stay at the same desk, you forge your boss’s signature, and you pray that the market turns around. Chapter 17 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Yasuo Hamanaka, a copper trader at Sumitomo Trading in Tokyo who controlled 5% of the global copper market, lied about it for eleven years, and brought down the biggest single-company trading loss the world had ever seen.
How do you hide $1.8 billion in losses for over a decade? You stay at the same desk, you forge your boss’s signature, and you pray that the market turns around. Chapter 17 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Yasuo Hamanaka, a copper trader at Sumitomo Trading in Tokyo who controlled 5% of the global copper market, lied about it for eleven years, and brought down the biggest single-company trading loss the world had ever seen.
Three of the richest men on Earth all decided to put money into silver during the 1990s. Same metal. Same decade. Completely different strategies. And wildly different outcomes. Chapter 16 of Torsten Dennin’s “From Tulips to Bitcoins” tells this story, and it reads almost like a parable about what separates a good investment from a disaster.
Three of the richest men on Earth all decided to put money into silver during the 1990s. Same metal. Same decade. Completely different strategies. And wildly different outcomes. Chapter 16 of Torsten Dennin’s “From Tulips to Bitcoins” tells this story, and it reads almost like a parable about what separates a good investment from a disaster.
In 1991, German business magazine named Heinz Schimmelbusch “Manager of the Year.” Two years later, he was fired for nearly destroying one of Germany’s oldest industrial companies. Chapter 15 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Metallgesellschaft, and it is one of the most painful corporate implosions in the book.
In 1991, German business magazine named Heinz Schimmelbusch “Manager of the Year.” Two years later, he was fired for nearly destroying one of Germany’s oldest industrial companies. Chapter 15 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Metallgesellschaft, and it is one of the most painful corporate implosions in the book.
August 2, 1990. One hundred thousand Iraqi soldiers cross the border into Kuwait. Within hours, the small oil-rich country is occupied. Within three months, oil prices double. Chapter 14 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of how a debt dispute between neighbors turned into the biggest oil shock since the 1970s.
August 2, 1990. One hundred thousand Iraqi soldiers cross the border into Kuwait. Within hours, the small oil-rich country is occupied. Within three months, oil prices double. Chapter 14 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of how a debt dispute between neighbors turned into the biggest oil shock since the 1970s.
“Every moron could buy a printing press, everything might be better than paper money.” That is Nelson Bunker Hunt explaining why he bet the family fortune on silver. Chapter 13 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of the Hunt brothers, two Texas oil heirs who tried to corner the global silver market. They almost pulled it off. And then they lost everything in a single day.
“Every moron could buy a printing press, everything might be better than paper money.” That is Nelson Bunker Hunt explaining why he bet the family fortune on silver. Chapter 13 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of the Hunt brothers, two Texas oil heirs who tried to corner the global silver market. They almost pulled it off. And then they lost everything in a single day.
“A diamond is forever.” That is probably the most successful advertising slogan in history. De Beers spent decades convincing the world that diamonds are rare, precious, and eternal stores of value. But Chapter 12 of Torsten Dennin’s “From Tulips to Bitcoins” tells a different story. A story where investment-grade diamonds lost 90% of their value in twelve months.
“A diamond is forever.” That is probably the most successful advertising slogan in history. De Beers spent decades convincing the world that diamonds are rare, precious, and eternal stores of value. But Chapter 12 of Torsten Dennin’s “From Tulips to Bitcoins” tells a different story. A story where investment-grade diamonds lost 90% of their value in twelve months.
November 25, 1973. A Sunday morning in Germany. The autobahn is completely empty. No cars. No trucks. Nothing. The country that gave the world Mercedes, BMW, and Audi, the country that has no general speed limit on its highways because people love driving that much, just banned driving on Sundays.
November 25, 1973. A Sunday morning in Germany. The autobahn is completely empty. No cars. No trucks. Nothing. The country that gave the world Mercedes, BMW, and Audi, the country that has no general speed limit on its highways because people love driving that much, just banned driving on Sundays.
For most of human history, money meant metal. Gold coins. Silver coins. Paper notes that you could walk into a bank and trade for actual gold. Then in 1971, a US president went on television and changed everything. Money became just paper. Backed by nothing but trust.
For most of human history, money meant metal. Gold coins. Silver coins. Paper notes that you could walk into a bank and trade for actual gold. Then in 1971, a US president went on television and changed everything. Money became just paper. Backed by nothing but trust.
In the summer of 1972, the Soviet Union pulled off one of the most audacious trades in the history of commodity markets. They bought almost a third of America’s wheat supply. And almost nobody noticed until it was too late.
In the summer of 1972, the Soviet Union pulled off one of the most audacious trades in the history of commodity markets. They bought almost a third of America’s wheat supply. And almost nobody noticed until it was too late.
Imagine you are a bank. Someone comes to you and says, “I have millions of pounds of soybean oil stored in tanks in New Jersey. Give me a loan.” You send an inspector. The inspector dips a measuring rod into the tank. Oil floats on top. Looks fine. You approve the loan. What you do not know is that 95% of the tank is filled with water and there is just a thin layer of oil floating on the surface.
Imagine you are a bank. Someone comes to you and says, “I have millions of pounds of soybean oil stored in tanks in New Jersey. Give me a loan.” You send an inspector. The inspector dips a measuring rod into the tank. Oil floats on top. Looks fine. You approve the loan. What you do not know is that 95% of the tank is filled with water and there is just a thin layer of oil floating on the surface.
A 16-year-old kid who speaks four languages watches his family lose everything overnight. He flees to Argentina with nothing. No money. No connections. No plan. Thirty years later, he owns the largest private tanker fleet on the planet, throws parties with JFK and Churchill on his yacht, and marries the most famous widow in America.
A 16-year-old kid who speaks four languages watches his family lose everything overnight. He flees to Argentina with nothing. No money. No connections. No plan. Thirty years later, he owns the largest private tanker fleet on the planet, throws parties with JFK and Churchill on his yacht, and marries the most famous widow in America.
A city burns down. Warehouses full of wheat turn to ash. Storage capacity drops overnight. And a group of traders looks at this disaster and thinks: “We can make money off this.”
A city burns down. Warehouses full of wheat turn to ash. Storage capacity drops overnight. And a group of traders looks at this disaster and thinks: “We can make money off this.”
There is a famous Rockefeller quote: “Competition is a sin.” Most people hear that and think it is just a rich guy being arrogant. But when you read Chapter 5 of Torsten Dennin’s “From Tulips to Bitcoins,” you realize this was not just talk. This man actually eliminated competition. All of it. He controlled 90% of the oil refining in the United States. One person. Ninety percent.
There is a famous Rockefeller quote: “Competition is a sin.” Most people hear that and think it is just a rich guy being arrogant. But when you read Chapter 5 of Torsten Dennin’s “From Tulips to Bitcoins,” you realize this was not just talk. This man actually eliminated competition. All of it. He controlled 90% of the oil refining in the United States. One person. Ninety percent.
Picture this. A 30-year-old guy from Massachusetts moves to Chicago with no connections and no fortune. Within a few decades, he becomes the most feared trader on the floor of the Chicago Board of Trade. They called him “Old Hutch.” And he figured out how to squeeze money from wheat like nobody had done before.
Picture this. A 30-year-old guy from Massachusetts moves to Chicago with no connections and no fortune. Within a few decades, he becomes the most feared trader on the floor of the Chicago Board of Trade. They called him “Old Hutch.” And he figured out how to squeeze money from wheat like nobody had done before.
You know what is funny about the California Gold Rush? The guy who found the gold died broke. The guy who sold shovels became rich. If that does not tell you everything about how money works, I do not know what does.
You know what is funny about the California Gold Rush? The guy who found the gold died broke. The guy who sold shovels became rich. If that does not tell you everything about how money works, I do not know what does.
If you ever opened a stock trading app, you probably saw those red and green bars on the price chart. They are called candlestick charts. Every trader uses them today. Every finance app shows them. And they were invented by a Japanese rice trader in the 1700s.
If you ever opened a stock trading app, you probably saw those red and green bars on the price chart. They are called candlestick charts. Every trader uses them today. Every finance app shows them. And they were invented by a Japanese rice trader in the 1700s.
Imagine paying a million dollars for three flower bulbs. Not rare diamonds. Not a house. Flowers. That actually happened in the Netherlands in 1637. And then the whole thing collapsed in a single week.
Imagine paying a million dollars for three flower bulbs. Not rare diamonds. Not a house. Flowers. That actually happened in the Netherlands in 1637. And then the whole thing collapsed in a single week.
Here is a question that bothers me. We have thousands of years of recorded history. We have examples of every possible financial mistake. We have libraries full of books about market crashes. And yet people keep doing the same thing over and over.
Here is a question that bothers me. We have thousands of years of recorded history. We have examples of every possible financial mistake. We have libraries full of books about market crashes. And yet people keep doing the same thing over and over.
I just finished reading “From Tulips to Bitcoins” by Torsten Dennin, and I have to say - this book is a wild ride through 400 years of people losing (and making) fortunes on commodities and crypto.
I just finished reading “From Tulips to Bitcoins” by Torsten Dennin, and I have to say - this book is a wild ride through 400 years of people losing (and making) fortunes on commodities and crypto.