Riding the South Sea Bubble

  title={Riding the South Sea Bubble},
  author={Peter Temin and Hans Joachim Voth},
  journal={FEN: Behavioral Finance (Topic)},
  • P. Temin, H. Voth
  • Published 21 December 2003
  • Economics
  • FEN: Behavioral Finance (Topic)
This paper presents a case study of a well-informed investor in the South Sea bubble. We argue that Hoare's Bank, a fledgling West End London banker, knew that a bubble was in progress and nonetheless invested in the stock; it was profitable to "ride the bubble." Using a unique dataset on daily trades, we show that this sophisticated investor was not constrained by institutional factors such as restrictions on short sales or agency problems. Instead, this study demonstrates that predictable… 
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