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Quote of the Day
Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.– Warren Buffett
This day in 1976 taught that lesson to many investors after a surprise devaluation of the peso. As Ben Graham said: ““have an adequate idea of stock market history, in terms, particularly, of the major fluctuations. With this background he may be in a position to form some worthwhile judgment of the attractiveness or dangers…of the market.”
September 1st – This Day in Stock Market History
September 1st, 1976 – Mexico devalues the peso an astonishing 50% overnight as the country struggles to repay debts with a currency fixed to the U.S. Dollar.
The value of a Peso would go from 8 cents to 4.9 cents overnight and eventually drift even lower. Source: Eyewitness to Wall Street
Best September 1st in Dow Jones Industrial Average History
1998 – Up 3.82%, 288.36 points.
Worst September 1st in Dow Jones Industrial Average History
2015 – Down 2.84%, 469.68 points.
Read of the Day
The crisis Mexico faced in 1976 paled in comparison to the crisis it would face in the mid 1990s.
In an age where international investing is now commonplace, its important for investors to have a basic understanding of how these crises can effect them.
Tim Geithner does an great job giving an overview of the peso crisis from his point of view (along with the 2008 U.S. crisis) in his memoir Stress Test
Former Federal Reserve chairman Alan Greenspan also covers the subject in his memoir: The Age of Turbulence
<– Go To Previous Day: August 31st, 1976 – Vanguard launches the first index fund for retail investors.
Go To Next Day: September 2nd, 1998 – Long Term Capital Management sends out letter to investors notifying them of 45% loss last month. –>