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Quote of the Day

(A longer one, but worth it)

“Then there’s another model from microeconomics which I find very interesting. When technology moves as fast as it does in a civilization like ours, you get a phenomenon which I call competitive destruction. You know, you have the finest buggy whip factory and all of a sudden in comes this little horseless carriage. And before too many years go by, your buggy whip business is dead. You either get into a different business or you’re dead ‐ you’re destroyed. It happens again and again and again.

And when these new businesses come in, there are huge advantages for the early birds. And when you’re an early bird, there’s a model that I call “surfing” ‐ when a surfer gets up and catches the wave and just stays there, he can go a long, long time. But if he gets off the wave, he becomes mired in shallows….

But people get long runs when they’re right on the edge of the wave ‐ whether it’s Microsoft or Intel or all kinds of people, including National Cash Register in the early days.

The cash register was one of the great contributions to civilization. It’s a wonderful story. Patterson was a small retail merchant who didn’t make any money. One day, somebody sold him a crude cash register which he put into his retail operation. And it instantly changed from losing money to earning a profit because it made it so much harder for the employees to steal….

But Patterson, having the kind of mind that he did, didn’t think, “Oh, good for my retail business.” He thought, “I’m going into the cash register business. “And, of course, he created National Cash Register.

And he “surfed”. He got the best distribution system, the biggest collection of patents and the best of everything. He was a fanatic about everything important as the technology developed. I have in my files an early National Cash Register Company report in which Patterson described his methods and objectives. And a well-educated orangutan could see that buying into partnership with Patterson in those early days, given his notions about the cash register business, was a total 100% cinch.

And, of course, that’s exactly what an investor should be looking for. In a long life, you can expect to profit heavily from at least a few of those opportunities if you develop the wisdom and will to seize them. At any rate, “surfing” is a very powerful model.”

-Charles Munger. On this day in 1883, the first patent would be issued for the cash register, enabling Patterson and NCR to “surf”. You can read the rest of Munger’s speech at the link below in our ‘Read of the Day’ section.


January 30th – This Day in Stock Market History

January 30th, 1883 – James Ritty receives the patent for the first cash register.

Source: Wikipedia

The history of Ritty’s invention, starts the history of one of America’s earliest company, the National Cash Register Company which has become today’s “NCR Corporation” (A public company with ticker symbol NCR).

A year after investing the cash register, Ritty sells the patents and the company that manufactured the cash registers to John Patterson (who Munger is talking about in the quote above) for $6,500.

Patterson would grow the cash register into one of America’s largest companies by his death in 1922. In 1925 the company would go public by selling $55 million in stock. The largest IPO at its time.

January 30th, 2003 – AOL Time Warner announces a net loss for fiscal year 2002 of $98.7 billion, the largest loss ever reported by a company. The loss was a result of write downs from AOL and Time Warner’s merger which was announced January 10th, 2000.

Wall Street Journal Coverage of AOL's record loss
Wall Street Journal Coverage of AOL’s record loss

Best January 30th in Dow Jones Industrial Average History

1900 – Up 2.50%, 1.18 points.

Worst January 30th in Dow Jones Industrial Average History

2003 – Down 2.04%, 165.58 points.

Read of the Day

An “Oldie but Goodie” – Charlie Munger’s “The Art of Stock Picking” speech (as quoted above)

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