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

 

1986_microsoft_ipo_cover2

 

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.

 

fdr-NYT

 

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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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For any fans of stock market history, the next couple weeks marks some significant anniversaries for the 1933 banking crisis. Today’s event starts a series of events that would bring on nationwide banking holidays, a presidential radio address, landmark legislation and use of government power. Check back daily as we highlight these events in our “Today in Stock Market History” series.

Quote of the Day

“When the two largest banks of the fourth largest city of the United States closed their doors in the last week of February 1933, tying up half a billion dollars of depositors’ money, there seemed to be only one thing for the people of Detroit to do, and they did it.

They laughed.”

– W.K. Kelsey in an article in Barron’s – 1936

This Day in History:

March 3rd, 1933: The NYSE shuts down at close as the banking crisis sweeps the nation. [click to continue…]

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buffett-and-munger

Continuing an annual tradition here on Begin To Invest, I added Buffett’s 2015 letter to the compilation of quotes from each year of his letters.

My selection includes some words of wisdom, stories of success and even a joke or two. In the end just these selected quotes make up over 5000 words!  It is amazing to watch history unfold from year to year and just think of what he has seen over the last 50 years….wars, inflation, stock market crashes etc. And yet, his first letter in 1977 could easily be mistaken for something you heard him say on the TV today. [click to continue…]

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CNBC had Warren Buffett on this morning (The first business day after his latest Letter to Shareholders), and he did not disappoint. Here was one of my favorite clips I saw:

 

Warren Buffett’s 5 tips for long term investors (Quotes below):

 

[click to continue…]

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Quote of the Day

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

– Jeffrey Skilling 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 History

Feb. 19th 2004 – Former Enron Corp. chief executive Jeffrey Skilling was charged with fraud, insider trading and other crimes in connection with the energy trader’s collapse.

 

Enron, once the darling of Wall Street and declared “One of American’s Most Innovative Companies” 6 years in a row by Fortune Magazine is now known for one of the biggest accounting scandals to come out of Wall Street. At the time, Enron was the largest bankruptcy in American history.

Enron employed bogus accounting gimmicks, recording non-existent assets on its balance sheet and recording revenue prematurely.

By August 2001, Enron’s share price (see chart below) was over $90. But company executives were selling – an estimated $1.1 billion in shares were sold by company executives between October 1998 and November 2001.

The Enron scandal is depicted in an excellent documentary and book : The Smartest Guys in the Room

 

Best February 19th in S&P 500 History:

1959 – Up 2.21%

 

Worst February 19th in S&P 500 History:

2002 – Down 1.89%

 

 

Best February 19th in Dow Jones Industrials History:

1931 – Up 1.86%, or 3.36 points.

 

 

Worst February 19th in Dow Jones Industrials History:

1946 – Down 2.73% or 5.5 points

 

 

 

 

Chart of the Day

Enron’s Stock Chart:

enron stock chart

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Quote of the Day

”I’ve thought the whole thing over, and if we are going bust, we will go bust big.”

– Charles M. Schwab of Bethlehem Steel on his plan to build a new steel mill to produce steel beams in the shape on an “H”. The design would later turn into the “I” Beam.

Hence, the company’s logo:Bethlehem_Steel_logo

 

This Day in Stock Market History

 

Charles_SchwabFebruary 18th 1862 – Birthday of Charles M. Schwab (2/18/1862 – 9/18/1939)
American entrepreneur who started his career with Carnegie’s steelworks and who later pioneered Bethlehem Steel. ( He is unrelated to the Charles W Schwab of the brokerage today.)

The company would become a major name on Wall Street as WW1 and WW2 produced massive steel orders. One such run up is featured in the book “It Was a Very Good Year” in which the price of Bethlehem steel shot up over 70 points in 10 days, and rising from 88 to 117 on April 9th.

 

With his leadership Bethlehem steel would become the second largest steel company in the world, and his idea of the “H” Beam would revolutionize the building of skyscrapers.

He would amass a wealth of nearly a billion dollars (adjusted for inflation), before dying in debt in 1939. He was an avid gambler, was known for his extravagant parties and extra-marital affairs.

A great, short biography of Schwab is available here.

 

 

 

Best February 18th in S&P 500 History:

2003 – Up 1.95% or 16.28 points

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Quote of the Day

Once in the dear dead days beyond recall, an out-of-town visitor was being shown the wonders of the New York Financial District. When the party arrived at the battery, one of his guides indicated some handsome ships riding at anchor. He said,

“Look, those are the bankers’ and brokers’ yachts.”

 

“Where are the customer’s yachts?” asked the naive visitor.

-Opening to Where are the Customers’ Yachts by Fred Schwed

 

 

This Day in History

Best February 17th in S&P 500 History:

1987 – up 2.07%

 

Worst February 17th in S&P 500 History:

2009 – down 4.56%

 

Best  February 17th in Dow Jones Industrials History:

1987 – up 2.48%, or 54.14 points

 

Worst February 17th in Dow Jones Industrials History:

 1932 – down 4.09%, or 3.51 points

 

 

 

Picture of the Day [click to continue…]

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Quote of the Day

 

“Value is destroyed, not created, by any business that loses money over its lifetime.”

– Warren Buffett in 2001 in response to the tech bubble collapse. 

 

This Day in History

Best February 15th in S&P 500 History:

1974 – S&P 500 up 1.45%

Worst February 15th in S&P 500 History:

1980 – S&P 500 down 1.12%

 

 

1990 – Cisco System Inc. (Ticker: CSCO) has its initial public offering at $18 per share, or about 0.06 split and dividend adjusted today! By the peak of the tech bubble Cisco stock rose over 95,000% from its IPO price and on March 25th,  2000 Cisco passed Microsoft to become the most valuable public company in the world, with a market cap of $579 Billion.

In the midst of the tech bubble Cisco’s share price reached as high as $82. Immediately after the tech bubble burst shares fell as low as $10. Shares have never recovered their tech bubble highs.

Today Cisco has a market cap of $127 billion with shares around the mid 20’s.

 

Chart of the Day

Even buy and hold has its limitations when you buy at astronomical prices. Cisco is still a long ways off from its highs 16 years ago:

csco_chart

 

 

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