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Quote of the Day
“when the interests of the salesmen and promoters differ from those of the client, the client had better look out for himself.”
December 23 – This Day in Stock Market History
1913 – Federal reserve system established.
Many do not know that our current Federal Reserve is the nation’s third central bank. The first operated from 1791-1811 and the second from 1816-1836 (when Andrew Jackson refused to continue its charter). America was hit was a very bad financial crisis in 1837, which was known as the Great Depression until 1929’s depression came along.
In between 1836 and 1913 the United States operated with state run banks creating and issuing their own currency in the 1860s, and then nationally chartered banks operated from 1863 on. However the economy and currency remained very volatile, and when the panic of 1907 hit, it took cooperation between private banks, notably J.P Morgan to organize a bailout of the financial system.
When J.P Morgan died in 1913, many realized that without the world’s most powerful banker the United States needed another authority of the financial system, and the Federal Reserve was born (again).
1947 – Bell labs tests the first transistor.
The device was made of germanium (silicon would not be used until later), and was the size of “the end of a shoelace” according to Bell Labs’ press release months later.
Bell Labs management could not come to a conclusion on what the device should be named, so the decision was put out as a vote for Bell Lab employees. Leading contenders were the “triode”, “Iotatron” and “transistor” which was a combination of transconductance and varistor. Transistor was the clear winner after the vote.
Bell Labs kept the discovery quiet while they perfected the design and filed patents. They would first demonstrate the device to the public on June 30th, 1948. Coverage of the unveiling would be delegated to a paragraph on page 46 of the New York Times:
Of course, the device would quickly replace the vacuum tube, and proved invaluable to Bell Labs and AT&T’s devices. Compared to the vacuum tube, the transistor was more efficient, had no moving parts, gave off less heat, and was cheaper to produce. The three scientists who discovered the transistor would be awarded the Nobel Prize.
Best December 23rd in Dow Jones Industrial Average History
1920 – Up 3.89%, 2.61 points.
Worst December 23rd in Dow Jones Industrial Average History
1931 – Down 4.44%, 3.53 points.
Read of the Day
Another Bell Labs scientist that became famous was Claude Shannon, “the father of the information age”. Despite being an incredible scientist, he also influenced Wall Street. He was on the board of Teledyne when Henry Singleton ran the company and helped Ed Thorpe’s Newman-Marcus fund achieve their 29.5% compounded annual returns from 1957 to 1969.
His new biography out this year is a great read, and a great look into the mind of a genius:
A Mind at Play: How Claude Shannon Invented the Information Age