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Quote of the Day

“Few investors realize how much dividends have contributed to the stock market’s performance, nor does the public realize that this century, there have been three separate periods, ranging from 16 to 20 years when inflation-adjusted capital gains on the S&P have been negative.”

— Gail Dudack

August 18th – This Day in Stock Market History

August 18th, 1947 – Bill Hewlett and David Packard incorporate their business, Hewlett-Packard, now known simply as HP. 

picture_of_HP

Their work together started in 1934, with $538 and a small garage. Today the combined value of HP and HP Enterprises is over $62 billion. The company has achieved a 24.7% compounded annual growth rate since Bill and David began their work together!

August 18th, 1982 – One day after the Dow Jones Industrial Average rose 38.81 points, the largest point gain in its history at the time, the New York Stock Exchange see 132.7 million shares trade, shattering the old record and making the first time that over 100 million shares traded in a single day.

nyse_volume_record

August 18th, 1987 – Alan Greenspan chairs his first Federal Reserve meeting. After hours of discussion, Greenspan addresses the board:

“We spent all morning, and no one even mentioned the stock market – which I find interesting in itself.”

ALAN-GREENSPAN

Greenspan’s quote set the tone for the Federal Reserve’s policies for the rest of his tenure, which would oversee one of the longest and strongest bull markets in history. From now on, Wall Street would be the center of the American economy.

Source: Bull: A History of the Boom and Bust, 1982-2004


Best August 18th in Dow Jones Industrial Average History

1906 – Up 2.01%, 1.44 points.

 

Worst August 18th in Dow Jones Industrial Average History

2011 – Down 3.68%, 419.63 points.

Read of the Day

Bull: A History of the Boom and Bust is one of my favorite Wall Street history books. I have a post “3 lessons from the tech bubble” where I review the book, and discuss some of its most important points:

“Of course I knew what happened during the tech bubble, at least on the surface. But to read the details of how AOL fluffed their accounting, how Dell was making more money selling options on their own stock than selling computers, how CEOs were selling millions in stock, and how bearish analysts were getting death threats, that was a level of detail I had not read before.

Mahar does an amazing job building up the bull market. In fact, the crash is only covered in the last couple chapters. Most of the book covers 1990-2000, when the modern day CNBC was born, when stay at home day traders were making $20,000 a day, when top stocks on the NASDAQ would trade at triple digit P/E ratios. She makes you feel like you are there, surrounded by euphoria. Of course, we all know how this was going to end.”

<– Go To Previous Day: August 17th, 1998: Russia defaults on its debt, sending worldwide stock markets into a decline.

Go To Next Day: August 19th, 2004: Google IPOs at $85 per share –>