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Panic, Prosperity, and Progress: Five Centuries of History and the Markets


An enthralling journey through five centuries of market history and the people and events that shaped it

Traversing five centuries of financial market history--from Tulipmania in 16th century Holland to the Great Depression, from the Panic of 1893 to the Savings & Loan debacle of 1989, all the way through to today’s sovereign debt crisis--this book brings to vivid life some of the most fascinating and important episodes that have had an impact on the behavior of the financial markets since 1600.

"Entertaining and fair minded towards the craziness of Wall Street and financial markets, Tim Knight takes a historical journey into the conflicts and quirkiness of five centuries of investing. Tim delivers a homerun with insider-like perspective and fun stories."
--Tom Sosnoff, CEO, tastytrade

"The names and places may be different and the investments in question may be unique--but the two ineluctably human variables that never change are basic fear and greed. Tim Knight takes this fact of market history and turns it into an investing lesson you cannot afford to miss."
--Joshua Morgan Brown, author of The Reformed Broker blog and the book Backstage Wall Street

"In an era of high-frequency trading and flash crashes, it might seem impossible that today’s traders have anything to gain from studying history. Yet Tim Knight’s Panic, Prosperity, and Progress makes a compelling argument that just as generals can still win battles by studying ancient wars, today’s traders can profit from the past."
--Alex Soojung-Kim Pang, PhD, Senior Consultant, Strategic Business Insights

"Greed unleashed in speculative bubbles; fear rampant during a market panic; opportunities emerging from technology innovation; valuation shifts created by political and social upheavals--these qualitative impacts on market movements have one characteristic in common: the repetition of history. Investors who are unaware of these predictable market moving trends are damned to suffer from them in the future. Tim Knight’s Panic, Prosperity, and Progress is a must read for investors at a time of historic and previously untested market interventions resulting from one of the most severe economic downturns in modern history. As documented by Tim in his latest book, these current historic market shifts will create opportunities and risks just as similar events have done repeatedly throughout history. Panic, Prosperity, and Progress is an investor guide to identifying and profiting from current market risks that every investor can take advantage of today."
--Lee Barba, Former Chairman and CEO, thinkorswim Group

Timothy Knight is a money manager and founder of, a popular trading blog started in 2005 that is one of the most active forums for discussion among traders on the Internet. Previously, he was founder of Prophet Financial Systems, a web-based service that was bought by Ameritrade and was consistently rated the number one website for technical analysis by both Barron’s and Forbes. Prior to starting Prophet, Knight was vice president of technology products for Montgomery Securities and worked at Apple in Strategic Planning. Knight has traded for over 25 years, primarily using technical analysis and price charts as the basis for his decisions, and he owns and operates a short-bias hedge fund from his home town of Palo Alto, California.

Preface ix

Chapter 1 Tulip Madness 1

Chapter 2 The Mississippi Scheme 9

Chapter 3 The South Sea Bubble 29

Chapter 4 American Revolution in the Colonies 37

Chapter 5 The Panic of 1837 49

Chapter 6 California Gold 63

Chapter 7 The American Civil War 75

Chapter 8 The Panic of 1893 97

Chapter 9 The Rich Man’s Panic of 1907 113

Chapter 10 Billion-Dollar Bread--The Weimar Hyperinflation 131

Chapter 11 The Roaring Twenties 145

Chapter 12 The Great Depression 157

Chapter 13 Postwar Prosperity 189

Chapter 14 Energy, Politics, and War 199

Chapter 15 Precious Metals and the Destruction of a Billionaire 219

Chapter 16 Latin American Debt Crisis 245

Chapter 17 The Reagan Revolution and Crash 255

Chapter 18 The Rising and Setting Sun of Japan 269

Chapter 19 The Savings and Loan Debacle 295

Chapter 20 Fall of the Soviet Union 309

Chapter 21 The Asian Contagion 321

Chapter 22 Russian Crisis of 1998 339

Chapter 23 Captured by the Net 353

Chapter 24 The Great Recession 415

Chapter 25 History in the Making 443

About the Author 449

Index 451