Section A
Questions 47 to 51 are based on the following passage.
Tulips were introduced into Holland before the 17th century but it did not take long for the flowers to gain popularity among the upper classes. Flowers of such beauty and rarity soon be came symbols of power and prestige and the rich tried their utmost to lay their hands on some to display in their gardens.
By 1634, the whole country was so fascinated by tulips that all other activities almost came to a stop. People were trading in tulips and even buying and selling unsprouted flowers. It was similar to the futures market today, where traders are buying and selling crude oil or cotton which they will never see. As the tulip trades increased, regular markets were set up on the Stock Exchange of Amsterdam and other towns. That happened in the year 1636 when the craze was reaching its peak.
The bubble finally burst in 1637. For some unknown reasons maybe a group of people suddenly realized the madness tulips failed to command the usual inflated prices in a gathering. Word spread and the market crashed. As in all asset bubbles, it took time to propel prices to such extraordinary levels, but it only took a single pierce to burst the bubble. When confidence was destroyed, it could not be recovered and prices kept falling until they were one-tenth of those set during the peak. Soon the nobles became poor and the rich became paupers (贫民). Cries of distress resounded everywhere in Holland.
Why do investment professionals like to bring up this story that happened centuries ago This is because greed is part of human nature and short memory is an investor trait, we just never seem to learn from past mistakes. Recently, many have pointed to the American investors’ madness over Internet stocks as another "tulip craze". Whether these are really "Internet tulips" remain to be seen. However there are tell-tale signs that the buying is overdone.
There is no denial that the Internet is an important development in this century, but it is madness when every Internet stock jumps in multiples and every company that announces con ducting their business over the net witnesses their stock prices going up. Not to mention that some of these Internet stocks are trading at hundreds times PE (本益比) and some will not report any profit for the next few years! What does the author think about the age when the price of every Internet stock skyrockets