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Quote of the Day

The essence of business to me is great people run great companies. Mediocre people don’t do a very good job.

– Ken Langone, co-founder of Home Depot, which would open its first store on this day in 1979. (It turns out, he was a pretty great businessman himself, and ran a pretty great business!)

June 22nd – This Day in Stock Market History

June 22nd, 1775 – U.S congress authorizes the issuance of continental currency, the first official paper, or fiat, currency of the United States.

Initially, Congress authorized just $2 million continentals to be issued. However, as the revolutionary war raged on, more than $280 million continentals would eventually be issued.

The currency would be worth just 1/40th of its face value in 5 years due to large issuance to help fund the war, and massive British counterfeiting.

By 1781 the currency would be nearly worthless.

Holders of Continentals were eventually able to exchange the currency in exchange for treasury bills at 1% of the continental’s face value.

June 22nd, 1979 – The home improvement store MB Associates (named after the names of its founders, Bernie Marcus and Arthur Blank) opens its doors.

The home improvement store would later become Home Depot, worth more than $230 billion today.

Home Depot’s first location, on Memorial Drive in Atlanta, Georgia.
Source: Home Depot’s Corporate History Page

Home Depot started from very modest beginnings.

The company was founded with the idea to be some of the largest hardware stores. At a time when the average large hardware store was 20,000 square feet, the first Home Depot was more than 60,000 square feet. Home Depot’s goal was to house the largest collection of merchandise possible.

However, initially funding the purchase of all that merchandise was impossible. So the first store was filled mostly with empty boxes to give the impression of a store packed full of merchandise. In reality, the store held very little inventory.

To get people in the store, the owners paid visitors $1 to walk through the store.

Their strategy worked. Home Depot would go on to be very successful and grow rapidly. Today, Home Depot is the largest home improvement chain.

Source: Built from Scratch: How a Couple of Regular Guys Grew The Home Depot from Nothing to $30 Billion

June 22nd, 1988 – Dell Computers has its IPO at $8.50 per share, valuing the company at $85 million.

Dell’s stock would be one of the best performing stocks through the 90s tech bubble, averaging an annual gain of 97% from 1990-2000.

One share purchased at its IPO on June 22nd, 1988 would be split 7 times, and eventually become 96 shares.

At Dell’s peak on March 22nd, 2000 – The company was worth $100 billion. One share was worth $58.13, a rise of 64,488% from its IPO price! After factoring in stock splits, one share purchased at the company’s IPO was worth $5,490 at this time.

The company would be taken private in 2016 in a $23 billion deal, or $13.25 per share.

Best June 22nd in Dow Jones Industrial Average History

1931 – Up 4.94%, 6.86 points.

Worst June 22nd in Dow Jones Industrial Average History

1933 – Down 3.11%, 2.98 points.

Read of the Day

Culture, Enculturation and the Cult of Home Depot:

Have you heard the story about the two guys who were fired from their jobs running a US hardware chain, who then went on to build a hardware powerhouse that delivered investor returns that made the S&P500 and even Buffett’s Berkshire Hathaway look pedestrian? That’s right, I’m talking about Home Depot, which since inception has been an astounding compounding machine.