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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)

April 7th – 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.

2 million pounds worth of South Sea shares would be sold at 300 per share one week later, on April 14th, 1720. Demand was so strong that shares for the South Sea Company sold out within an hour.

Better yet, in order to make it possible for more “investors” to be able to purchase the shares, the company only required a 20% deposit on the purchased shares. The remaining amount was to be paid in 8 installments over the next 16 months. The combination of public infatuation with the stock and the ability to invest on margin led to the inflation of one of history’s most famous stock bubbles – now known simply as the “South Sea Bubble”

Shares of the South Sea Company would continue to rise for the next 4 months, eventually reaching over 1,000 pounds per share on August 22nd, 1720.

Share price of South Sea Company stock

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

1937 – Down 2.68%, 4.91 points

Read(s) of the Day

  • It’s Time for Investors to Re-Learn the Lost Art of Reading – Jason Zweig’s Intelligent Investor columns are always gold, and this one is no different. What amazed me was just how few people are reading company annual reports and letters:

    “Even General Electric’s annual report was downloaded from GE’s website only 800 times in 2013”

     

  • Some of my other favorite annual reports and letters:
    • Markel Insurance (Ticker: MKL) – Tom Gayner is running the investment and capital allocation of this insurance company, and using the company’s float and earnings to buy up other business, beginning to create a company that is often referred to as a “mini-berkshire”. Gayner’s letters (and other speeches and talks that you can find online) are always educational.
    • JP Morgan (Ticker JPM)- Jamie Dimon has created one of the best long term returns of any CEO.  His letters are always candid and informational.

<– Go To Previous Day: April 6th, 1917 – The U.S. enters World War 1, stocks fall 31% in next 8 months.

Go to Next Day: April 8th, 1940 – The Dow reaches its pre-World War 2 high, would be 5 years before a new high is reached. –>