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Quote of the Day

 

“Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small.”

 

-Royal Bank of Scotland analyst Andre Roberts, on January 8th, 2016 after the stock market fell 6% in a week. How did the call play out? Read our ‘This Day in History’ below:

 

 

January 8th – This Day in Stock Market History

January 8th, 1982 – After coming to a settlement with the Justice Department, AT&T agrees to breakup, divesting itself of 22 “baby bell” companies (which would form 7 “regional bells”).

New York Times Coverage of the AT&T ordered breakup on January 8th, 1982
New York Times Coverage of the AT&T ordered breakup on January 8th, 1982

 

The companies would officially be spun off January 1st, 1984.

The Wall Street Journal had a great chart showing the evolution of the “baby bells” since the breakup. Many of the spun off companies have made their way back to “mama bell”.

ATT baby bell companies

The breakup certainly did not ruin AT&T. Since the 1984 breakup, its shares have done very well (The chart below is split and dividend adjusted):

Chart of AT&T stock since breakup
Chart from MacroTrends of ATT stock

 

January 8th, 1987 – The Dow Jones Industrial Average closes above 2,000 for the first time.

The milestone came after one of the worst decades in American stock market history. Investors during the 70s and early 80s saw a nearly flat return. The breaking of the 2,000 point barrier on this day in 1987 was just the beginning of what would become the tech bubble and one of the largest and longest bull markets in American history.

DJIA_chart_1987_above_2000_for_first_time

January 8th, 2016 – After the U.S. stock market falls 6% in the first week of trading for the year (the worst starting week to a year in history), RBS bank issues a letter to clients saying – “Sell Everything”.

Specifically, the letter said:  “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,”

The Dow Jones Industrial Average would rise 25% over the next year.

RBS_sell_everything

 

 

January 8th, 2017 – As the crypto bubble rages on, CNBC launches its “crypto desk”.

 

2017 - cnbc_launces_crypto_desk

 

As the bitcoin and blockchain bubble engulfed the nation, CNBC joined in on this day in 2017.

Over the next year, the price of Bitcoin would decline 73%, from nearly $15,000 to $4,000:

bitcoin_price_january_8th_2017

 

Best January 8th in Dow Jones Industrial Average History

1932 – Up 4.83%, 3.77 points.

 

Worst January 8th in Dow Jones Industrial Average History

1988 – Down 6.85%, 140.58 points.

 

 

Read of the Day

Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.

-Warren Buffett, in his 1992 letter to shareholders.

 

We have a huge collection of our favorite Warren Buffett quotes from every shareholder letter in an article here:

Best Warren Buffett Shareholder Letter Quotes
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