April 8th – This Day in Stock Market History – Pre World War 2 Market High

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Quote of the Day

“The world learned what happened after World War I, when we demanded that Germany repay. It was chaos and hyperinflation. The result, of course, was the rise of Hitler. And Hitler could have been more successful than he was; his kids or family members could still be in power today, had things gone just a little differently. You don’t ever want to do anything to push an economy to collapse. Terrible things result.

Now think about this. During World War II, Japan tortured our soldiers to death. They marched them around. The Germans put people in ovens. Just awful. And what did we do after the war? We gave them money to rebuild. We said, ‘Let bygones be bygones.’ The result was a magnificent global economic system and a win for human rights.”

-Charlie Munger

April 8th – This Day in Stock Market 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 Industrial 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

Chart courtesy of macrotrends
Chart courtesy of macrotrends

The onset of World War 2, the fear that America would get involved, and the inevitable declaration of war after Pearl Harbor, led to a significant decline is stocks. From this day in 1940 until the World War 2 stock market low in April 1942, the Dow Jones Industrial Average would fall nearly 40%.

The decline and ramp up in government spending during the war would also lead to a very strong rebound in the stock market. From early 1942 until early 1946, the Dow Jones Industrial Average would rise 228%!

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

Read of the Day

Wealth Management – “Investing During Wartime” – Which talks about a book from Wealth, War and Wisdom by Barton Biggs:

“But what are the takeaway lessons? For protecting wealth, stocks are a better bet than bonds (real property only gets confiscated). While gold and jewelry can raise a little “mad money,” as Biggs says, they are still “problematic.” Over the long run, equities are the place to be — even in countries that are losing a war, because historically, even they have managed to beat inflation.”

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