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Quote of the Day

“I will say this about gold, if you took all of the gold in the world it would roughly make a cube 67 feet on a side. So if you took all the gold in the world, we could have a cube that went down there 67 feet….67 feet high and that would be the whole thing. Now for that same cube of gold it would be worth at today’s market prices about $7 trillion. That’s probably about a third of the value of all the stocks in the United States. So you could have a choice of owning a third of all the stocks in the United States or you could have a choice of owning that little block of gold, which can’t do anything but kind of shine there and make you feel like Midas or Croesus or something of the sort.

Now, for $7 trillion, there are roughly a billion acres of farmland in the United States. They’re valued at about $2 1/2 trillion. It’s about half the continental United States, this farmland. You could have all the farmland in the United States, you could have about seven ExxonMobiles, and you could have $1 trillion of walking around money. And if you offered me the choice of looking at some 67-foot cube of gold and looking at it all day, you know, I mean touching it and fondling it occasionally, you know, and then saying, you know, `Do something for me,’ and it says, `I don’t do anything. I just stand here and look pretty.’…call me crazy but I’ll take the farmland and the ExxonMobiles.”

-Warren Buffett on an interview for CNBC March 2nd, 2011

March 2nd – This Day in Stock Market History

March 2nd, 1933 – Despite pressure, the Federal Reserve refuses to recommend a guarantee on banking deposits, setting up the most significant banking crisis in American history.

New York Times coverage of the events that led up to the banking holiday in 1933
New York Times coverage of the events that led up to the banking holiday in 1933

At the same time, 2 senators recommend closing of the New York Stock Exchange until the banking crisis can be sorted out.

By March 4th, banks in New York would be closed and the NYSE would not open for trading. By March 6th, FDR would close every bank in the nation to stop the panic, and the NYSE would remain closed as well.

Source: Manias, Panics, and Crashes: A History of Financial Crises, Seventh Edition

March 2nd, 2000 – Shares of Palm, Inc. becomes trade-able on the NASDAQ at an initial price of $38 after they are spun off by 3Com Corp. Shares would trade as high as $165, before closing the day at $95.06.

But the IPO created a very strange pricing situation between 3Com and Palm.

3Com retained 532 million shares in Palm, or 1.5 shares for each 3Com share. Since Palm stock closed the day at $95.06, 1 share of 3Com should have been valued at at least $142.59 (1.5 x $95.06). Instead, 3Com closes at a price $81.81, pricing 3Com’s non-Palm assets at negative $60.78 per share,  a total capitalization of minus $23 billion!

As Jason Zweig reported: “Wall Street creates what may be the most worthless company of all time.”


Palm would be sold to HP for $1.2 billion, or $5.70 per share in 2010

Best March 2nd in Dow Jones Industrial Average History

1932 – Down 5.39%, 4.41 points.

Worst March 2nd in Dow Jones Industrial Average History

2009 – Down 4.24%, 299.64 points.

Read of the Day

More details on the Palm/3Com spinoff from the New York Times: Offspring Outweighs Parent As Offering Hits the Market

TheStreet.com – Palm’s IPO Tempts Investors With Arbitrage Ideas

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