13 · Financial History

The previous twelve chapters taught you how to "read the market, build a system, and manage risk"; this chapter teaches you to read the scripts that replay throughout history. Learn from history: centuries of bubbles and crashes are one and the same "textbook of human nature" — only the props change each time (tulips → real estate → the internet → Bitcoin), while the script never does. Trading masters and schools of thought are your "method library": they spent their lifetimes proving which roads work and which potholes can never be filled. After reading this chapter you will truly understand: "This time is different" is the most expensive six-word sentence in financial history.

What's in This Chapter

01 · A History of Financial Bubbles

From Dutch tulips in 1637 to the crypto winter of 2022, eight great bubbles followed the same script: new narrative → leverage amplifies → everyone joins in → first cracks appear → panic and crash → regulation catches up. This article dissects each bubble's background, evolution, peak, and collapse, then distills five common rules shared by every bubble — learning to recognize a bubble is worth far more than learning to ride one.

02 · Famous Crashes and Black Swans

Black Monday's -22.6%, the Swiss franc's instant 30% gap, WTI going negative, thousands of stocks limit-down... These extreme moves that "textbooks barely dare to describe" are the final exam for your risk control. This article reviews eight famous crashes — what happened and how markets reacted — and answers with one checklist: in a crash, what actually keeps an ordinary person alive?

03 · Trading Masters

Livermore proved four times over the price of leverage and emotion; Buffett proved the power of compounding and patience across half a century; Soros proved in a single day that reflexivity can be cashed in for a billion dollars. This article collects eight masters — their lives, core methods, famous quotes, and lessons from wins and losses — ending each with one takeaway ordinary traders can apply directly.

04 · Trading Schools and Philosophy

Technical, fundamental, quantitative, event/macro — all four roads can make money, and all four can lose it. Beyond comparing schools, this article digs into five philosophical questions: Is the market efficient or not? Which matters more, prediction or response? How do you use probabilistic thinking? Why do profit and loss share the same source? It closes with a template for writing "your own trading philosophy", turning scattered experience into one sentence and one set of rules.

05 · A Brief History of China's Stock Market

From the "Old Eight Stocks" and subscription warrants when the Shanghai and Shenzhen exchanges opened in 1990, to full registration-based IPO reform and the September 24 policy package of 2024, the A-share market compressed two centuries of mature-market history into thirty-five years. This article walks through ten key stages on a timeline (freeing share prices, price limits, state-share reduction, 6124 and 1664, the leveraged bull and crash, the slow bull in blue chips, the trade-war bear market, the structural bull, institutional change), unpacking background, landmark events, market characteristics, and lessons for each — and closes with three distinctly Chinese patterns: how the policy-driven market shapes tops and bottoms, the brutal odds of short bulls and long bears, and the behavioral consequences of high retail participation. Understand these, and you understand every "wolf is coming" prelude in the A-share market.

06 · Crypto History

From a nine-page white paper in 2008 to Bitcoin breaking $100,000 in 2025 and being written into national strategic reserves, crypto completed a full cycle of "birth → darknet → bubble → collapse → rebirth" in under twenty years. This article breaks down eight key milestones on a timeline: Pizza Day, the fall of Mt.Gox, Ethereum and the ICO frenzy, DeFi Summer, the institutional bull, the Luna and FTX collapses, spot ETFs, and compliance legislation — then distills the operating law of four overlapping cycles: halving, leverage, regulation, and technology, the underlying framework behind every crypto boom and bust.

Suggested Reading Order

① A History of Financial Bubbles (first see how human nature deceives)
   ↓
② Famous Crashes (then see how extreme markets kill)
   ↓
③ Trading Masters (then see who survived, and how)
   ↓
④ Trading Schools and Philosophy (finally, settle your own worldview)

• ① and ② are the "horror films": watch them before trading with real money — many people lose big precisely because they never studied history.
• Read ③ before Chapter 07 - Trading System↗: know how the masters died first, then study their methods.
• ④ closes the chapter and completes the knowledge base's final leap from "technique" to "philosophy". If you cannot write your own trading philosophy, your system isn't finished yet.

Conventions

• Years, figures, and key numbers in historical events are compiled from public records; different sources differ slightly on individual figures (such as bubble peaks or returns), which does not affect the conclusions.
• Historical events are described to extract lessons, not as investment advice. "History repeats" refers to the repetition of human nature, not the repetition of prices.
• Sections involving leverage, derivatives, and crypto assets include "Risk Warning" boxes.
• Anyone claiming that "understanding history lets you precisely buy bottoms and sell tops" should be blocked on sight.

⚠️ Risk Warning

Everything in this chapter is for learning and research only and does not constitute investment advice. The scale of losses shown in these historical cases — from personal bankruptcy to a nation losing three decades — is stated as teaching fact. Leveraged trading can wipe out your capital and even leave you in debt (negative balance); participate only with money you can afford to lose, and fully understand margin and forced-liquidation mechanics before trading live (see Chapter 03 - Futures↗).

Chapter Contents