John Oliver hits it out of the park with his segment the other night on retirement plans. Specifically he covers the effect of high fees, conflict of interests with your financial advisor and even gives some pretty good tips to get you on the right track. Check it out:

 

 

 

 

 

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Want to learn more about Health Savings Accounts? Read on below: [click to continue…]

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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

 

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Quote of the Day

“Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.” – Warren Buffett

 

Today marks the anniversary of an event that would prove pivotal in America’s entrance into WW1 – The sinking of the Lusitania, which had immediate and long term implications to the U.S. stock market. Eventually the war would cause the stock market to close for 4 and a half months.

 

This Day in History

1901 – E.H. Harriman and J.P Morgan’s bidding war for Northern Pacific stock continues. The shares, trading at $110 a few days before vault as high as $149 before closing at $143. Source: Eyewitness to Wall Street

1915 – German submarines sink the Lusitania, the same ship that had brought $7 million in gold to help restore the U.S. financial system in 1907. As investors begin to doubt that the U.S. will be able to stay neutral stocks decline, The Dow Jones Industrial Average falls 4.5% and would decline 9% over the next 4 days. Source: It Was A Very Good Year

 

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Best May 7th in Dow Jones Industrial Average History [click to continue…]

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Quote of the Day

 

“Every once in a while, the market does something so stupid it takes your breath away.” – Jim Cramer

A fitting quote for a day in history that would start the meteoric rise of Northern Pacific Railroad stock. The stock traded around $117 on May 6th 1901, before advancing to $1,000 on May 9th.

 

This Day in History

 

1901 – E.H Harriman, who ran the Union Pacific railroad empire is led to believe that he has accumulated a majority position in Northern Pacific stock. But due to a technicality was still just short of majority. At this time, J.P. Morgan (also a railroad tycoon) has become privy to Harriman’s plan and begins buying shares to prevent Harriman from gaining a majority. The action over the next 3 days is some of the most spectacular in Wall Street’s history (Now known as the panic of 1901) as Northern Pacific stock, now trading at around $117 per share climbs to $1,000 by May 9th. Source: Eyewitness to Wall Street

 

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Best May 6th in Dow Jones Industrial Average History [click to continue…]

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Quote of the Day

 

Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.

–Warren Buffett

Buffett’s famous quote seems fitting on a day that would usher in one of the worst economic declines in American History – The Panic of 1893. The panic would result in 14,000 business failing (4,000 of those banks) and an unemployment rate of 20%. It would take the country more than 4 years to dig itself out of the depression.

 

This Day in History

1893 – The Panic of 1893 is underway as stocks suffer their worst intra-day decline in history, a record that would stand until 1929. 1 day after Nation Cordage declares bankruptcy, stocks start the day in what can only be described as a panic. General Electric shares fell from 80 to a low of 58 (nearly 28%!). But bargain hunters, bankers and possibly even foreign investors come to the rescue and the market recovers nearly as fast as it fell earlier. General Electric almost completely recoveres by the market close, closing at 78 1/2. Sources: New York Tribune May 6, 1893 page 1, and Panic Prosperity and Progress

 

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Photo courtesy of The Library of Congress

 

Best May 5th in Dow Jones Industrial Average History [click to continue…]

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This Day in History

 

1893 – National Cordage Company declares bankruptcy after a failed attempt to corner the hemp market.  At the time, National Cordage was the most traded stock and the selloff of shares quickly spread across the market. National Cordage was assumed to be a healthy, prosperous company, so it’s failure was a surprise to Wall Street. The stock opened at 39 but fell to 20 and the general market dropped in panic as well. General Electric fell from 88.5 to 79.5 (a decline of about 10%), Union Pacific railway fell equally, from 34 3/8 to 31 7/8. The fear would spread into the next day, May 5th 1893 which would become the worst day in stock market history, and remain so until 1929. Sources:  New York Tribune May 5, 1893 page 1, The Evening Star May 5 1893 page 1 and Panic, Prosperity and Progress

The Panic of 1893 would turn into one of the worst economic depressions in the nations history. 14,000 business would close and unemployment would rise to 20%. The depression would last 4 years before the country began to recover.

Best May 4th in Dow Jones Industrial Average History

1906 – Up 3.04% or 1.93 points.

Worst May 4th in Dow Jones Industrial Average History

1970 – Down 2.60%, or 19.07 points.

 

Image of the Day

Hard-Times-1893

The panic of 1893 would lead to massive strikes, marches on the capital, mass unemployment and stock market declines. The panic would produce what would become the worst economic depression in history, and remain so until 1929.

 

 

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Quote of the Day

 

“I can calculate the motions of the heavenly bodies, but not the madness of people.” – Iasac Newton

 

This Day in History

 

1720 – Iasac Newton sells his shares in South Sea Company for a profit of 100%, or about 7,000 pounds. However he couldn’t resist the urge to make more when soon after he would buy back into the South Sea Company Stock and eventually lose 20,000 pounds, leading Newton to state: “I can calculate the motions of the heavenly bodies, but not the madness of people.” – Source: Manias, Panics and Crashes

1933 –  U.S. stocks continue their rally after the U.S. officially abandons the gold standard the day before. After a rise of 9% on the 19th, April 20th the Dow rises another 5.8% – Source: It Was A Very Good Year

Best April 20th in Dow Jones Industrial Average History

1933 – Up 5.80%, or 5.66 points

 

Worst April 20th in Dow Jones Industrial Average History

2009 – Down 3.56% or 289.6 points

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Quote of the Day

 

“You…you…you. Well, uh…thank you very much. We appreciate it. Asshole.”

– Jeffrey Skilling on April 17th, 2001 – in response to analyst Richard Grubman after he asked why Enron does not produce a balance sheet or cash flow statement with their earnings.

 

This Day in Stock Market History

1991 – The Dow Jones Industrial Average closes about 3000 for the first time. Despite closing at 2999.75 on July 17th 1990, it took the market some time to finally close over the 3000 mark after fears about the Gulf War took the Dow down to 2365 in October 1990. It wasn’t until the spring of 1991 and the U.S. overwhelmingly defeating Saddam Hussein’s forces that the market would regain confidence to climb higher.  (Source: The Market’s Measure)

2001 – Jeffrey Skilling, CEO of Enron calls Richard Grubman an asshole on a public earnings conference call. [click to continue…]

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Ben Graham Value Screens Image

 

Looking for potential investments? With thousands of stocks to research, getting started can seem a bit overwhelming. Here are a couple screens (and the companies that made it through) using sets of criteria utilized by the “Dean of Wall Street” and “Godfather of Value Investing”, Ben Graham.

 

The significance of Ben Graham’s Wall Street career cannot be overstated. His investment partnership averaged 17% annual returns over its existence. He created and mentored some of the most successful investors ever to live and has been responsible for the education of more investors than almost anyone with his 2 best-selling investment books, The Intelligent Investor and Security Analysis. He had a very disciplined, rule-based approach to investing that focused on only one thing: A company’s intrinsic value.

 

The following comes from the book, “Einstein of Money”, a great biography of Ben Graham that is also focused on his investment work. Every other chapter breaks from the life story of Graham to detail a main concept in his investment philosophy. Whether it is his concept of Margin of Safety, Fundamental Analysis or advice on dealing with “Mr. Market”, the author does a great job mixing in the life of Benjamin Graham and the ideas behind his work. [click to continue…]

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Quote of the Day

“The great stock market bull seeks to condense the future into a few days, to discount the long march of history, and capture the present value of all of the future.”

– James Buchan (Source: Devil Take the Hindmost)

This Day in History

 

  • 1996 – Yahoo! Goes public with (at the time) the 3rd highest first day gain of any stock, 154%.  Yahoo! IPOs at $13 per share, and closes the day at $33, going as high as $43. Shares would reach as high as $118.75 in 2000, and as low as $8.11 in 2001.

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This Day in History

1915 – Bethlehem Steel vaults from $88 to $117 per share, part of a 10 day rise that would see its share price rise 70 points. The World War 1 boom is underway. (Source: It Was A Very Good Year)

 

Best April 9th in Dow Jones Industrial Average History

1938 – Up 5.25%, +5.75 points

 

Worst April 9th in Dow Jones Industrial Average History

1943 – Down 3.17%, -4.30 points

 

Best April 9th in S&P 500 History

2009 – Up 3.81%

 

Worst April 9th in S&P 500 History

1987 – Down 1.48%

 

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This Day in History

 

April 8th, 1940 – The Dow Jones Industrial Average closes at 151.29, which would come to represent the market’s peak prior to World War 2. The Dow Jones Industiral Average would hit a WW2 low of 92.92 on April 28th 1942. The Dow would not close above 151.29 until December 29th 1944. (Source: The Market’s Measure)

 

Best April 8th in Dow Jones Industrial Average History

1938 – Up 3.93%, +4.14 points

 

Worst April 8th in Dow Jones Industrial Average History

1932 – Down 4.98%, -3.30 points

 

Best April 8th in S&P 500 History

1986 – Up 2.14%

 

Worst April 8th in S&P 500 History

1996 – Down 1.77%

 

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Quote of the Day:

 

“More than 1,600 years ago, St. Augustine was converted to Christianity when a voice came to him chanting, “Take up and read.” In a short-term world, that’s righteous advice for long-term investors, too.”

-Jason Zweig (link to article below)

 

 

This Day in Stock Market History:

 

April 7th, 1720 – The South Sea Bill receives Royal Assent, allowing South Sea Company shares to be sold to the public. Within a week, 2 million pounds worth of South Sea shares would be sold at 300 per share. The shares sold out within an hour. (Source: Devil Take the Hindmost)

 

Best April 7th in Dow Jones Industrial Average History:

1904 – Up 1.38%, 0.50 points.

 

Worst April 7th in Dow Jones Industrial Average History [click to continue…]

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Quote of the Day

“Come at once to the Federal Reserve Board!”

-Order given to James Stone, then Chairman of the CFTC, by Federal Reserve Chair Paul Volker in order to discuss the news that the Hunt Brothers owe more than $100 million, potentially causing brokerage failures and a financial crisis.

 

This Day in History

March 27th, 1980 – The Hunt brother’s attempted cornering of the silver market fails spectacularly as the price of silver falls 33% in one day, from $16.25 to $10.85 per ounce, topping off a decline of more than 50% in just 4 days. March 27th is now commonly known as “Silver Thursday”.

Starting in mid 1979 Nelson Hunt and William Hunt (Then some of the richest men in the world) teamed up with a coalition of wealthy arab shieks to attempt to corner the silver market and create a private, silver backed currency to rival the U.S. Dollar. (Remember – this was taking place as inflation in the U.S. was running rampant, inflation was around 17%!) The price of silver would rise from $6 per ounce to more than $48 as they eventually accumulated more than 200 million ounces of silver, equivalent to half the world’s deliverable supply at the time.

But they failed to realize the implications of the price of silver rising so fast. People rushed to sell any silver they owned, from jewelry to coins, flooding the market with supply. At the same time, India’s government abolished a ban on silver exports, leading to additional silver supply. On top of that, exchanges changed rules for investing in commodities on margin.

The Hunt brothers had borrowed heavily in their attempt, and when prices of silver dropped due to excess supply, they were given a margin call from their broker for $100 million. In order to come up with the money the Hunt brothers were force to sell not only their silver, but also stock investments and government bonds, sending the prices of nearly everything down. (The S&P 500 closed down only 0.50% to 98.22, but had declined nearly 20% in the past month. This day would also mark a long term bottom in the stock market – in fact March 27th 1980 would be the last day the S&P 500 ever closed under 100.)

 

The Hunt brothers ended up with losses of nearly $4 billion.

Sources: Eyewitness to Wall Street, Devil Take the Hindmost

 

Best March 27th in Dow Jones Industrial Average History:

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Quote of the Day

“I went down to the street and found the financial district so quiet it seemed like a ghost town. Many brokerage firms had closed down; the rest functioned with skeleton staffs. Just before the opening bell at 10am I entered the board room of one of the leading firms founded by members of one of America’s ‘Sixty Families’. A younger scion of that family, whom I had known for some years, was now managing partner of the firm. He greeted me good-humoredly as an ‘early bird’. In a spacious room that could have held a hundred or more persons, I saw only two or three gloomy customers, who watched the opening in silence. I had brought with me some government bonds…and asked the broker to sell…The broker looked at me as if I were quite a brave fellow.”

-Matthew Josephson on the re-opening of the New York Stock Exchange on March 15, 1933. (Source: Eyewitness to Wall Street)

 

This Day in History

 

1933 – The New York Stock Exchange reopens after being closed since March 3rd. The reopening of trading releases pent up demand after the country has been comforted by FDR in his first ‘fireside chat’ and new banking legislation (The Emergency Banking Act). The Dow Jones Industrial Average rockets up 15.34%, still standing as the largest 1-day percentage gain in stock market history. This rally would continue and produce the best year in stock market history. (Sources: Eyewitness to Wall Street, It Was a Very Good Year)

 

1915 – The World War 1 bull market starts a major leg up. Over the course of the next 30 days, stocks rise 19% (Source: Manias, Panics, Crashes) [click to continue…]

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Quote of the Day

“Believe me, there are eternal investment principles, and technology doesn’t alter them: Time is your friend. Impulse is your enemy. Buy right and hold tight. Cost matters. If you aren’t sure, diversify. Invest for the long-term. Stay the course.”

John C. Bogle , “Reinventing Mutual Funds,” speech, June 11, 2001, http://www.vanguard.com/bogle_site/june112001.html

Also be sure to look in our links at the bottom of this post for an interview with Mr. Bogle and Barry Ritholtz published this weekend.

 

This Day in History

 

1907 – For the second day in a row, stocks fall sharply as stock market fundamentals degrade, eventually leading to the panic of 1907 in October. The decline is lead by railroads, the Dow Jones Railroad index falls from 107.52 to 99.71 (and was at 112.53 just 2 days prior). Dow Jones Industiral Average has also fallen sharply over the same period, down 12% over the last 2 days. (source: It was a very good year)

 

Best March 14th in Dow Jones Industrial Average History

1898 – Up 3.33% or 1.05 points

 

Worst March 14th in Dow Jones Industrial Average History

1907 – Down 8.29% or 5.04 points

 

Best March 14th in S&P 500 History

1986 – Up 1.44%

 

Worst March 14th in S&P 500 History

2001 – Down 2.58%

 

Chart of the Day

Dow Jones Industrial Average around the Panic of 1907: [click to continue…]

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Quote of the Day

“By the end of the first day of trading, some 2.5 million shares had changed hands, and the price of Microsoft’s stock stood at $27.75. The opportunity to take a quick profit was too great for many institutional investors to resist. Over the next few weeks they sold off roughly half their shares.” – Fortune on the Microsoft IPO

After making a quick 40%, almost half of the original shares purchased at the IPO were sold. Over the next 30 years Microsoft stock would rise another 75,000%!

 

This Day in History

 

1907 – The Panic of 1907 is still a few months away, but cracks are appearing in the confidence investors have in American companies. Stocks break lower, led by the once coveted railroads. The Dow Railroad index falls from 112.53 to 107.52. (Source: It was a very good year)

1986 – Microsoft Corp (Ticker: MSFT) goes public with an initial offering price of $21 per share ($0.07 today adjusted for splits and dividends). Every $100 invested at its IPO is worth a little more than $75,000.

 

Best March 13th in Dow Jones Industrial Average History

2003 – Up 3.57% or 269.68 points

 

Worst March 13th in Dow Jones Industrial Average History

1907 – Down 3.94% or 2.48 points

 

Best March 13th in S&P 500 History

2003 – Up 3.45%, 27.71 points

 

Worst March 13th in S&P 500 History

2007 – Down 2.04%

 

Picture of the Day

 

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Bill Gates was on the cover of Fortune Magazine after the successful IPO of Microsoft. The original article published July 21st 1986 can be found here.

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This Day in History

March 6th, 1933 – The banking crisis that has plagued various states now effects the whole nation. At 1am, Monday March 6th, Franklin Denanor Roosevelt closes every bank in the nation in a shutdown that was planned to last 4 days, along with banning the export of gold and all foreign exchange transactions.  The next couple weeks would become many of FDR’s defining moments preventing the nation’s banking system collapse in the great depression. Banks nationwide would remain closed until at least March 13th. (Source: It was a Very Good Year)

 

Best March 6th in S&P 500 History:

 1998 – Up 1.99%

 

Worst March 6th in S&P 500 History:

1980 – Down 2.23%

 

Best March 6th in Dow Jones Industrials History:

 1902 – Up 1.83% or 0.87 points.

 

Worst March 6th in Dow Jones Industrials History:

1931 – Down 2.69% or 4.96 points.

 

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This Day in History – March 4th

 

March 4th, 1957 – The S&P 500 index is introduced. Although Standard and Poors introduced its first stock index in 1923, today marks the anniversary of the S&P 500 index as we know it today. It closed the day at 44.06.

 

Best March 4th in S&P 500 History:

 2009 – Up 2.38%

 

Worst March 4th in S&P 500 History:

 2003 – Down 1.54%

 

Best March 4th in Dow Jones Industrials History:


1926 – Up 4.38 %, or 6.32 points

 

Worst March 4th in Dow Jones Industrials History:

 1897 – Down 1.88% or .57 points

 

 

 

Chart of the Day

The S&P 500 since its creation in 1957:

SP500_chart

 

Since March 4th 1957 the S&P 500 has returned 4424%, not counting dividends.

Or,  a compounded annual growth rate of 6.67%, not counting dividends. [click to continue…]

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