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Quote of the Day

“Speculators did not buy bubble company shares as long-term investments; they bought them with the intention of selling them on to greater fools. In a very short time, however, they were to discover that there were no greater fools in the market but themselves.”

-Edward Chancellor, from his book Devil Take the Hindmost

May 21st – This Day in Stock Market History

May 21st, 1720 – As the South Sea bubble rages on, many other questionable companies pop up hoping to tap into the public’s euphoria. Many of these “bubble companies” pop up, but none were more blatantly looking to steal money than that which was featured in an ad on May 21, 1720 in the Daily Post offering investment into a: “Proposal for raising the sum of 6 million sterling to carry on a design of more general advantage… End of more certain profit… Than any undertaking yet set on foot.”

What was it exactly? Likely a scam.

Within a month South Sea shares, and shares of other “bubble companies” would reach their peak. But the end of September, most were gone. Only 4 of the 190 bubble companies founded in 1720 survived. Several were genuine (though flawed), most were fraudulent ventures whose only purpose was to capitalize on speculator euphoria.

Source: Devil Take the Hindmost: A History of Financial Speculation

May 21st, 1940 – Nazi Germany’s army advances rapidly towards Paris after allied forces fail to repel attacks by the Germans. The news causes a strong sell-off on Wall Street as stocks fall more than 6.5% on the day.

1940_-_nazi_advance
1940_-_stocks_fall_on_ww2_concerns

Also, rumors of the New York Stock Exchange closing begin to appear in the New York Times. World War 1 resulted in the stock exchange being closed for 4 months, and traders seemed fearful that World War 2 would result in the same action. However, the rumors proved false as the stock market would never be closed due to World War 2.

1940_-_rumors_to_close_NYSE

Best May 21st in Dow Jones Industrial Average History

1915 – Up 1.88%, 1.2 points.

Worst May 21st in Dow Jones Industrial Average History

1940 – Down 6.78%, 8.3 points.

Go To Next Day: May 22nd: 1991 – Soloman trader Paul Mozer attempts to corner the U.S. Treasury market –>