If you've spent some time reading about investing, odds are you've occasionally run across a reference to tulips. Ever wonder why tulips seem to be the favorite flower of financial raconteurs? Read on.

Hundreds of years ago, while the Pilgrims were settling down in Massachusetts, people in Holland were bidding higher and higher prices for tulip bulbs. This great "tulipmania" episode of the mid-1600s is one of the first documented cases of speculative investing frenzy. Incredibly, people were taking out loans on their homes to buy bulbs they didn't even intend to plant, but to resell. Prices soared to the modern-day equivalent of tens of thousands of dollars per bulb. Eventually, the proverbial bubble burst, wiping out many investors.

Today, whenever the stock market is deemed to be getting way ahead of itself, it's often referred to as a "bubble" (about to burst). Likewise, when some people see a certain group of stocks surging higher and higher in value, they may murmur something about how it's just like what happened with tulips. There was a lot of talk of tulips in the late 1990s, for example.

If you think this kind of frenzy doesn't happen anymore, just look at CMGI (NASDAQ:CMGI), recently trading for around $2 per share. In December 1999, it was trading around $138 per share, and only a year later, it was down to the $5 range. Even Oracle (NASDAQ:ORCL), which closed 2006 around $17, went from a split-adjusted $3 or so in 1998 to more than $45 in 2000. Some would argue that Google (NASDAQ:GOOG) is a more recent example of a bubble itself.

To learn more, read Mike Dash's book, Tulipomania: The Story of the World's Most Coveted Flower & the Extraordinary Passions It Aroused. Charles Mackay's book, Extraordinary Popular Delusions & the Madness of Crowds, and John Kenneth Galbraith's A Short History of Financial Euphoria will introduce you to even more instances of speculative frenzies -- they're quite instructive and often amazing.

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. The Fool has a disclosure policy.