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Quote of the Day

“You can only fool people for a while. When you are old, you get the reputation you deserve.”

 

-Charlie Munger

 

November 20th – This Day in Stock Market History

 

November 20th, 1923 – Inflation in Germany hits its peak. On this day in 1923, the exchange rate for the US Dollar to the German Mark reached 1:4.2 trillion, the inflation rate in Germany is 3,250,000% per month. Prices were doubling every 2 days, workers were being paid twice a day so that they could go out and buy things before storekeepers increased their prices by the evening.

Below, a 50 billion Mark bill:

50_Billion_Mark

 

The halt in inflation after this day was due to the Germans issuing a new currency, the Rentmark, which Germans could exchange 1,000,000,000,000 old Marks for 1 Rentmark. Inflation would remain a problem for years in Germany, but never quite as bad as this day in 1923.

 

Source: German Hyperinflation 1922/23: A Law and Economics Approach

 

November 20th, 2001 – The day after Enron files its 10-Q quarterly earnings report, Enron stock falls 23 percent and closes around $7 per share.

enron stock chart

 

The report was bad. The company was insolvent, with only $1.2 billion in cash to cover $2.8 billion in immediate liabilities. The accounting fraud, the lying, the coverups…it was all catching up to Enron and its executives. Congress was beginning to entertain the idea of a hearing on Enron, bill collectors were calling, and analysts were bombarding the company with questions.

By November 23rd, executives at Enron were discussing bankruptcy, before finally being forced to declare bankruptcy on December 2nd.

 

Source: Conspiracy of Fools: A True Story




Best November 20th in Dow Jones Industrial Average History

1929 – Up 3.08%, 7.21 points

 

Worst November 20th in Dow Jones Industrial Average History

2008 – Down 5.56%, 444.99 points

 

 

Read/Watch of the Day

There are several fascinating books and documentaries on Enron’s collapse. Besides conspiracy of fools linked above, there is also: The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron

The Smartest Guys in the Room has also been made into a video documentary. You can buy it on Youtube for a few bucks, or at the time of writing is was available on Netflix as well. Here is the preview: