We're forever blowing bubbles
History is full of stories about investments that dropped spectacularly, taking fortunes and futures with it. One famous example is the tulip bulb craze in the mid-seventeenth century United Provinces, known today as the Netherlands.

According to the most popular version of the story (historians and economists are divided on the exact details and historical impact), tulip bulbs were imported from Turkey. Due to the tulip's increasing popularity, prices for bulbs began to rise, eventually to ridiculous levels, which prompted a wild rush of investment.

Tulips were traded on local stock exchanges, with some fetching fabulous prices. Their increased value led to speculation. Large returns were made, but eventually the bubble burst and prices took a nose dive, no doubt leaving the Dutch sadder but wiser.

Although we like to think we're savvier than past investors, looking at the cyclical nature of investing, it's easy to see that the dreaded bubble is inevitable. From tulips to railroads to real estate, we're always finding something to binge on and that leaves U.S. investors facing the aftermath of their own "burst" bubbles.

They're not making it any more
Buying real estate is a sure thing. Not only does a real property purchase come with its own collateral, it will never lose its value.

Uh, not exactly. While it's true that real estate is generally a good investment, there's no such animal as a sure thing. That's where a lot of would-be investors got into trouble when the recent housing bubble burst.

"Residential real estate composite values are down about 8 percent and they're not through yet," says Ben Jacoby, Certified Financial Planner and senior adviser with Brinton Eaton Wealth Advisors.

Jacoby says there is a four-year cycle of excesses. "Every four years or so the people who loan money do something stupid," he says.

In this case, investors made real estate loans to people who couldn't afford them, including speculators. Investors purchased run-down property, renovating and reselling or flipping it, acquired property for rental units and made pre-construction purchases -- all in hopes they'd have a big return for their investments.

Problem was, most of the property purchased was overpriced in the first place, and when values tumbled, speculators in general couldn't get their money back, much less the mammoth profits they'd anticipated. But even though real property investments can't really be taken to the bank, Jacoby says property has always been an investment target in good times or bad. Individuals like the idea of owning something they can actually put their hands on, but it's a much bigger gamble, even when prices are rising, for the uninitiated.

"Real estate is a great game for pros and a not-so-great game for amateurs," Jacoby says.