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Quote of the Day

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

– Isaac Newton.

Even someone has smart as Issac Newton was unable to outsmart the stock market. Like thousands of others, he would get caught up in the South Sea Bubble. More below:

April 20th – This Day in Stock Market History

April 20th, 1720 – Isaac 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

April 20th, 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, on this day in 1933 the Dow rises another 5.8%. The change was incredibly controversial at the time. Look at how the news was covered on the front page of the New York Times on this day!

The change in U.S. currency would propel the stock market to its best annual return of the century. Stocks would continue rallying, finishing the year with a total return of 53.97%.

To this day, this remains the best year in the Dow Jones Industrial Average’s history.

Source: It Was A Very Good Year – Extraordinary Moments in Stock Market History

 

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

Video of the Day

David Andolfattto, now a Senior Vice President at the St. Louis Federal Reserve, answered some questions about the Gold Standard in a series of videos and a short article on the Federal Reserve site here:

Timely Topics: The Gold Standard

At one time or another, many of the major countries around the world had monetary systems based on a gold standard—currency that could be redeemed, at least in part, for gold. But not a single country does so today.

The U.S. and many other economies abandoned the gold standard more than 40 years ago. Still, advocates of a gold standard periodically call for its return, saying that it would curtail or prevent inflation. St. Louis Fed economist David Andolfatto explains the gold standard and discusses its pros and cons.

<– Go to Previous Day: April 19th, 1897 – The Lowest Close in the History of the Dow Jones Industrial Average.

Go To Next Day: April 21st, 1948 – Polaroid sells its first camera. The stock would rise 1,000% over the next 20 years. –>