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Quote of the Day

Investing on paper is like reading a romance novel vs. doing something else. You’ll soon find out whether you like it. The earlier you start, the better.

-Warren Buffett, 2007 Berkshire Hathaway Annual Meeting.

October 25th – This Day in Stock Market History

October 25th, 1923 – As inflation in Germany runs wild, on this day alone the Reichbank prints 120 quadrillion marks.

The exchange rate between the US Dollar and the German Mark would rise for another month, before topping out at 1 US Dollar for 4.2 trillion Marks on November 20th, 1923.

German_Mark_1922

Source: Panic, Prosperity, and Progress: Five Centuries of History and the Markets

October 25th, 2007 – Merrill Lynch reports $2.24 billion loss on the quarter as financial crisis requires banks to write down value of mortgage backed securities.

CEO Stan O’Neal would resign shortly thereafter.

ML_loss_announcement
ML stock price chart 2008

The company would continue to struggle for another year, and eventually be purchased by Bank of America on September 14th, 2008 for $29 per share (more than a 50% decline from where it was on this day in 2007!)

October 25th, 2010 – TIPS (Treasury Inflation Protected Securities) auctioned for a negative yield for the first time in history.

The auction was for $10 billion in five-year Treasury Inflation-Protected Securities at a yield of -0.55%.

Source: Treasury Direct


Best October 25th in Dow Jones Industrial Average History

1937 – Up 5.73%, 7.28 points.

Worst October 25th in Dow Jones Industrial Average History

1982 – Down 3.52%, 36.33 points.

Read of the Day

While the public was panicking in 2008 and 2009, Buffett was putting money to work:

We’ve put a lot of money to work during the chaos of the last two years. It’s been an ideal period for investors: A climate of fear is their best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance. In the end, what counts in investing is what you pay for a business – through the purchase of a small piece of it in the stock market – and what that business earns in the succeeding decade or two.

Berkshire Hathaway’s 2009 Letter to Shareholders

See More: We have a list of our favorite Buffett quotes here: 41 Years of Berkshire Quotes

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