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How Isaac Newton Lost $3 Million Dollars in the “South Sea Bubble” of 1720: Even Geniuses Can’t Prevail Against the Machinations of the Markets.
Back in the spring of 1720, Sir Isaac Newton owned shares in the South Sea Company, the hottest stock in England. Sensing that the market was getting out of hand, the great physicist muttered that he ‘could calculate the motions of the heavenly bodies, but not the madness of the people.’ Newton dumped his South Sea shares, pocketing a 100% profit totaling £7,000. But just months later, swept up in the wild enthusiasm of the market, Newton jumped back in at a much higher price — and lost £20,000 (or more than $3 million today). For the rest of his life, he forbade anyone to speak the words ‘South Sea’ in his presence.
The great scientist was chasing hot performance as desperately as a day trader in 2004 or many bitcoin buyers in 2024.
Back in the spring of 1720, Sir Isaac Newton owned shares in the South Sea Company, the hottest stock in England. Sensing that the market was getting out of hand, the great physicist muttered that he ‘could calculate the motions of the heavenly bodies, but not the madness of the people.’ Newton dumped his South Sea shares, pocketing a 100% profit totaling £7,000. But just months later, swept up in the wild enthusiasm of the market, Newton jumped back in at a much higher price — and lost £20,000 (or more than $3 million today). For the rest of his life, he forbade anyone to speak the words ‘South Sea’ in his presence.
The great scientist was chasing hot performance as desperately as a day trader in 2004 or many bitcoin buyers in 2024.
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