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Quote of the Day

 

“Invention is not enough. Tesla invented the electric power we use, but he struggled to get it out to people. You have to combine both things: invention and innovation focus, plus the company that can commercialize things and get them to people.”

 

-Larry Page, Google Co-founder. On this day 1996, one of the first internet search engines (It wasn’t Google!) would go public. Despite beating Google to the punch, Google dominates search today. As Page said, invention is not enough – an important lesson for investors to keep in mind as well!

 

February 2nd – This Day in Stock Market History

 

February 2nd, 1929  – The Federal Reserve tries to cool off speculators as the 1920’s bull market reaches historic heights. They announce a new policy to try and prevent the re-loaning of Reserve funds to brokers.

In their statement: “A member bank is not within its reasonable claims for re-discount facilities at its Federal Reserve Bank when it borrows either for the purpose of making speculative loans or for the purpose of maintaining speculative loans.”

Stocks suffer a brief decline as speculators fear the bull market is on it’s last legs. But would be buoyed the next day by banks coming forward to lend despite the Federal Reserve’s backing.

Banks continuing to lend to speculators would keep the bubble inflated until September 3rd, 1929 when stocks would peak before the Great Depression.

 

Source: Eyewitness to Wall Street: 400 Years of Dreamers, Schemers, Busts and Booms

 

 

February 2nd, 1996 –  Open Text, at the time a search engine company, goes public. The success of Open Text’s IPO persuaded other search engine companies to go public, leading to search engines becoming one of the major fascinations with the tech bubble. Within the next 4 months Lycos, Excite and Yahoo would all have their IPOs.

open_text_screenshot

Open Text company is still around today, and trades on the NASDAQ under the ticker symbol OTEX.

OTEX_stock_chart_since_1996

Open Text was volatile during the tech bubble, which saw its share price (adjusted for future splits) go from $1.19 to $6.67 and then back down to $2. But that action looked calm next to one of the dot com bubble’s darlings, (and Open Text competitor), Yahoo:

OpenText_vs_Yahoo_stock

Source: Panic, Prosperity, and Progress: Five Centuries of History and the Markets



Best February 2nd in Dow Jones Industrial Average History

1915 – Up 3.0%, 1.67 points.

 

Worst February 2nd in Dow Jones Industrial Average History

1932 – Down 2.27%, 1.81 points.

 

 

Read of the Day

Despite Open Text being the first public search engine, the most famous search engine today, Google, would be incorporated September 4th, 1998 and would not IPO until August 19th, 2004.

Today the company does much more than just run a search engine, as told by the book: In The Plex: How Google Thinks, Works, and Shapes Our Lives

The book gives the reader a history of Google, and a look into the minds of Sergey Brin and Larry Page:

“While they were still students at Stanford, Google cofounders Larry Page and Sergey Brin revolutionized Internet search. They followed this brilliant innovation with another, as two of Google’s earliest employees found a way to do what no one else had: make billions of dollars from Internet advertising. With this cash cow, Google was able to expand dramatically and take on other transformative projects: more efficient data centers, open-source cell phones, free Internet video (YouTube), cloud computing, digitizing books, and much more.

The key to Google’s success in all these businesses, Levy reveals, is its engineering mind-set and adoption of such Internet values as speed, openness, experimentation, and risk taking. After its unapologetically elitist approach to hiring, Google pampers its engineers—free food and dry cleaning, on-site doctors and masseuses—and gives them all the resources they need to succeed. Even today, with a workforce of more than 23,000, Larry Page signs off on every hire.

But has Google lost its innovative edge? With its newest initiative, social networking, Google is chasing a successful competitor for the first time. Some employees are leaving the company for smaller, nimbler start-ups. Can the company that famously decided not to be evil still compete?

No other book has ever turned Google inside out as Levy does with In the Plex.”

 

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