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Quote of the Day

“It is clear that the Street is going through its greatest disaster in history. No fair words can gloss over that fact…How can any cool head fail to agree with Professor Irving Fisher’s declaration that standard American stocks have gone so much too low as to be crying to be bought?”

-New York Evening Post, on October 30th, 1929

Of course, little did they know that stocks would decline for another 3 years, and not bottom until July 8th, 1932 with a decline of more than 90%.

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

October 30th – This Day in Stock Market History

October 30th, 1929 – Stocks stage a huge one day rally after “Black Monday – October 28th, 1929” and “Black Tuesday – October 29th, 1929” sent stocks down 12.8% and 11.7% respectfully.

On this day, the Dow Jones Industrial Average would rise 12.34%, at the time the best day in stock market history (and still the 3rd best today). As a result of the volatile price swings and massive volume, the New York Stock Exchange announces that trading will only be open for 3 hours the next day, and would be closed 2 days after.

New York Times coverage of October 30th, 1929 stock rebound
New York Times coverage of October 30th, 1929 stock rebound

Of course, the bounce in the stock market would hardly last. The Dow would continue to decline for another 3 years:

Chart from Macrotrends
Chart from Macrotrends

October 30th, 1988 – In an effort to diversify away from tobacco, Philip Morris (now known as Altria) purchases Kraft Foods for $13.1 billion. The deal would be the second largest in American history at the time, just behind Chevron’s $13.3 billion take over of the Gulf Corporation in 1984.

New York Times coverage of Philip Morris' purchase of Kraft on this day in 1988
New York Times coverage of Philip Morris’ purchase of Kraft on this day in 1988

Kraft would be spun off to once again become its own company in 2007.

October 30th, 2012 – Disney purchases Lucas Films, the owner of the Star Wars and Indiana Jones franchises, for $4.5 billion.

DIS_lucas_buyout

The deal was Disney’s fourth largest deal ever at the time; behind the $19.7 billion buyout of Capital Cities/ABC on July 31st 1995, the $7.6 billion buyout of Pixar in 2006, and the $5.2 billion buyout of Fox Family in 2001.


Best October 30th in Dow Jones Industrial Average History

1929 – Up 12.34%, 28.40 points.

Worst October 30th in Dow Jones Industrial Average History

1933 – Down 3.89%, 3.58 points.

Read of the Day

The Great Depression was a huge reason that today’s most famous value investors acted the way they did. Ben Graham lost all of his money in the great crash of 1929, which resulted in him being incredibly conservative in his investments in the future.

My favorite biography of Ben Graham is here: The Einstein of Money: The Life and Timeless Financial Wisdom of Benjamin Graham

Warren Buffett was younger during the depression, but he saw the impacts on his family first hand:

“Buffett’s childhood took an abrupt turn when his father returned home one night to inform the family the bank where he worked had closed. His job was gone and their savings were lost. The Great Depression had finally made its way to Omaha. Buffett’s grandfather, the grocery store owner, gave Howard money to help support his family. While his father soon pulled himself up and got back on his feet and co-founded Buffett, Sklenicka & Company, the experience had a profound impression on young Warren.

“He emerged from those first hard years with an absolute drive to become very, very, very rich,” wrote Roger Lowenstein, author of Buffett: The Making of an American Capitalist. “He thought about it before he was five years old. And from that time on, he scarcely stopped thinking about it.”

<– Go To Previous Day: October 29th, 1929 – Black Tuesday, stocks fall 11% on record volume

Go To Next Day: October 31st, 1932 – Nevada declares a state-wide banking holiday, the first of many states to do so in 1932 –>