Quote of the Day
[Sir John] Templeton’s sometime partner, Vance, then an elderly man, used to enjoy lecturing about investments. Part of his kit was a huge chart plotted on a roll of wrapping paper… This chart plotted the market for the previous twenty years. Then there were different squiggly lines representing the various factors that influence it—industrial production, money supply, and so on. One squiggly line was best of all. It worked perfectly. Year after year if you had followed it you could have known where the market was headed and made a killing. When the audience, fascinated, demanded to know what it represented, Mr. Vance told them. It was the rate his chickens were laying, in the chicken coop behind his house.
–John Train, The Money Masters
Today in Stock Market History
1901 – The attempt to corner the market of Northern Pacific Railroad by E.H. Harriman reaches its climax as J.P Morgan is also desperately buying shares to avoid Harriman’s attempt to own the majority of shares outstanding. The shares which traded at a high of $180 the day before are over $400 within an hour of the market opening. By noon shares trade at $700 and by 2pm shares are at $1,000. As shares rose, the general stock market collapses as all other securities are being sold to raise cash, The Dow Jones Industrial Average would close down more than 6%. Due to then current rules, short sellers of the shares had to have share certificates in hand at 2:15. A few minutes before 2:15, in an attempt to avoid panic, brokers announce plans to not enforce that rule on Northern Pacific shares that day. Shares of Northern Pacific then collapse to $300 by the market close. At 5pm J.P. Morgan conceded and announced that would would provide shares to short sellers at $150. E.H. Harriman would be given control and board seats on Morgan owned Burlington Railroad. Source: Eyewitness to Wall Street