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Quote of the Day
“In 1905 the Wright brothers enjoyed a complete monopoly on heavier-than-air aviation. They had the world’s only working airplane, were the only two pilots able to fly it, and had applied for a formidable patent that would cover any plane with three-axis control. Yet within five years they would regularly be surpassed by competitors at home and abroad, and before what was remembered as the Golden Age of Aviation arrived in the 1920s, they would be out of the aircraft business entirely. What happened?
The answer lies in the series of business decisions the brothers made once they had developed a plane that was suitable for the market.”
-A quote from a Forbes article “How the Wright Brothers Blew It”, which is our read of the day (at the bottom of the page below). On this day in 1903, the Wright brothers would accomplish the world’s first sustained flight of a heavier-than-air machine under the complete control of the pilot.
December 17th – This Day in Stock Market History
1903 – Airplane age is underway as Orville and Wilbur Wright make their first successful flight at Kitty Hawk, NC.
The first flight lasted all of 12 seconds, covering 112 feet, and was done in front of only 5 spectators. By the end of the day, their 4th flight would cover more than 850 feet and last nearly a minute.
It would take Wall Street some time to catch on to the potential of aviation. In 1903 the market was still fighting “The Rich Man’s Panic” (which would reach a peak in panic on November 9th), as the Dow Jones Industrial Average would close the year down more than 23%, though well off the lows from November 9th, when the market was down 34% for the year.
By 1927, particularly after Charles Lindbergh’s flight, stocks such as Wright Aeronautical, United Aviation, and Boeing were soaring higher.
Wright Aeronautical would have a brief stint in the Dow Jones Industrial Average from October 1st 1928 to September 14th 1929.
Boeing would make it in the Dow (as part of United Air and Transport, a partnership with Pratt & Whitney) on July 18th, 1930.
Best December 17th in Dow Jones Industrial Average History
1930 – Up 5.14%, 8.09 points.
Worst December 17th in Dow Jones Industrial Average History
1931 – Down 3.53%, 2.7 points.
Read of the Day
We talk a lot about competitive advantages when looking for investments. Investors are usually very excited about a “first to market” company, a company that beats everyone else to a certain product. The Wright brothers certainly had that advantage in the early 1900s. However, they did not maintain it. Buy 1915 other companies had sprung up and were taking away market share from the Wright brothers. Forbes has an excellent look at the early aviation industry in their article:
How The Wright Brothers Blew It
Are you new to the idea of looking for stocks with a competitive advantage? Here’s a few of our articles as a starting point: