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Quote of the Day

“For those who glimpsed the front pages of The Wall Street Journal or New York Times on the morning of October 22, 1907, it may have seemed as though there was little reason to panic. Both their front pages trumpeted that the New York Clearing House had the situation under control and that New York’s financial sector was sound.”

-Bonnie Kavoussi, The Panic of 1907: A Human Caused Crisis or a Thunderstorm?

Studying stock market history teaches you invaluable lessons, and here is just one more example. We now refer to the events that took place between October 15th, 1907 and October 24th, 1907 as the “Panic of 1907”. But as we can tell, no one was calling it a panic at the time. On this day, October 18th in 1907 prominent investors were blaming the previous day’s sell off on “bear runs” and short sellers (See below in the “This Day in Stock Market History” section). Even days later, there were no tales of panic in the newspapers, but the nation’s stock markets were less than 24 hours away from shear panic.

Just one more lesson on how hard it is to predict the markets.

 October 18th – This Day in Stock Market History

October 18th, 1907 -The Panic of 1907 is into its 4th day. Newly IPO’ed Westinghouse sees its shares fall from 103 to 79 and 3/8th before shares were halted. Shares would begin trading the next day at 35, causing the collapse of two Wall Street brokerages.

Source: It Was A Very Good Year

New York Times coverage of the continuing panic of 1907.
New York Times coverage of the continuing panic of 1907.

The panic of 1907 was a large factor in the creation of the Federal Reserve system a few years later. The panic was also another moment where J.P. Morgan proved his power to New York Financiers. On October 24th 1907,  Morgan would help organize a $25 million deposit into New York banks and brokerages to keep them solvent. Morgan would emerge from the panic as one of the world’s most powerful businessman.

Best October 18th in Dow Jones Industrial Average History

1990 - Up 2.72%, 64.85 points.

Worst October 18th in Dow Jones Industrial Average History

1937 - Down 7.75%, 10.57 points.

Read of the Day

The Panic of 1907: Lessons Learned from the Market's Perfect Storm

"Before reading The Panic of 1907, the year 1907 seemed like a long time ago and a different world. The authors, however, bring this story alive in a fast-moving book, and the reader sees how events of that time are very relevant for today's financial world. In spite of all of our advances, including a stronger monetary system and modern tools for managing risk, Bruner and Carr help us understand that we are not immune to a future crisis."
—Dwight B. Crane, Baker Foundation Professor, Harvard Business School

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Go To Next Day: October 19th, 1987 – “Black Monday” on Wall Street as the stock market experiences its worst day in history. -->