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Quote of the Day
“There are no relationships or equations that always work. Quantitatively based solutions and asset-allocation equations invariably fail as they are designed to capture what would have worked in the previous cycle whereas the next one remains a riddle wrapped in an enigma. The successful macro investor must be some magical mixture of an acute analyst, an investment scholar, a listener, a historian, a river boat gambler, and be a voracious reader.”
-Barton Biggs, in his book Wealth, War and Wisdom
April 6th – This Day in Stock Market History – The U.S Enters WW1
April 6th, 1917 – The U.S. Enters World War 1, stock markets fall.
New York Times coverage of U.S. entering World War 1
The Dow Jones Industrial Average would fall more than 31% by the end of the year.
The start of World War 1 lead to stock markets around the world closing for months, or years. The New York Stock Exchange was closed from July 30th, 1914 until December 12th, 1914. (London’s stock exchange did not open until 1915, and Russia’s until 1917!)
The U.S. markets sank in 1914 as the war escalated, but unlike many European markets, U.S. stock markets rose during the last few years of the war:
The Dow Jones Industrial Average performance around world war 1:
Compared to London’s stock market performance during world war 1:
Both charts come from an article on Global Financial Data: “August 1914: When World Stock Markets Closed”
April 6th, 1998 – The Dow Jones Industrial Average closes above 9000 for the first time.
New York Times coverage of the dow closing above 9000
The milestone came 8 months after the Dow surpassed 8,000 for the first time, and as the world was recovering from the downturn known as the “Asian flu”. The Asian flu would be responsible for the stock market circuit breakers “tripping” for the first time in American history on October 27th, 1997 when the Dow fell 7.2% in a single day.
Source: The Market’s Measure: An Illustrated History of America Told Through the Dow Jones Industrial Average
Best April 6th in Dow Jones Industrial Average History
1988 – Up 3.21%, 64.16 points.
Worst April 6th in Dow Jones Industrial Average History
1939 – Down 3.08%, 4.02 points.
Read of the Day
Our quote of the day comes from a book I recently discovered on the history of the stock market around World War 2. The book is a great read for any history buff, and a must-read if you are a stock market history fan!
Wealth, War and Wisdom
“In Wealth, War & Wisdom, legendary Wall Street investor Barton Biggs reveals how the turning points of World War II intersected with market performance, and shows how these lessons can help the twenty-first-century investor comprehend our own perilous times as well as choose the best strategies for the modern market economy.
Through these pages, Biggs skillfully discusses the performance of equities in both victorious and defeated countries, examines how individuals preserved their wealth despite the ongoing battles, and explores whether or not public equities were able to increase in value and serve as a wealth preserver. Biggs also looks at how other assets, including real estate and gold, fared during this dynamic and devastating period, and offers valuable insights on preserving one’s wealth for future generations. With clear, concise prose, Biggs
- Reveals how the investment insights of truly trying times can be profitably applied to modern day investment endeavors
- Follows the performance of global markets against the backdrop of World War II
- Offers many relevant lessons-about life, politics, financial markets, wealth, and survival-that can help you thrive in the face of adversity
Wealth, War & Wisdom contains essential insights that will help you navigate modern financial markets during the uncertain times that will increasingly define this new century.”
Also, we have linked to this article in other ‘This Day in History’ posts, but in case you have missed it, it is another good one:
CFA Institute: What Happens to The Markets if America Goes to War?
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