This Day in History: The Dow Jones Industrial Average closes above the 10,000 mark for the first time on this day in 1999, which eventually led to the dot-com bubble. The Dow is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States which is considered to be an adequate representation of the overall U.S. stock market. The 30 Large Cap companies right now consist of 3M, American Express, Apple, Boeing, Caterpillar, Chevron, Cisco, Coca-Cola, Disney Company, DowDuPont, ExxonMobil, GE, Goldman Sachs, Home Depot, IBM, Intel, Johnson & Johnson, JPMorgan Chase, McDonald's, Merck, Microsoft, Nike, Pfizer, P&G, Travelers Companies, United Technologies, UnitedHealth, Verizon, Visa and Wal-Mart. Other market indices may be more accurate such as the Wilshire 5000 or Russell 3000 as they take into consideration the whole of the market.
This Day in History: Benito Mussolini starts his Fascist political movement on this day in 1919. While it is fashionable to state that Fascism is right-wing, Mussolini was a Socialist and he was immersed in socialism by his father. Fascism and Communism (Socialism) were (and are) so similar that they had to define themselves in opposition to each other in order to survive. As an economic system, says Sheldon Richman, fascism is socialism with a capitalist veneer:
"Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly, by requiring owners to use their property in the “national interest”—that is, as the autocratic authority conceived it. (Nevertheless, a few industries were operated by the state.) Where socialism abolished all market relations outright, fascism left the appearance of market relations while planning all economic activities. Where socialism abolished money and prices, fascism controlled the monetary system and set all prices and wages politically."
This Day in History: Banks in the U.S. begin to re-open after the three-day national "bank holiday" on this day in 1933 when all the banks were closed. This is to prevent a run on the banks and cool down emotions. This is similar to the 2 market halts this past week. The Stock Market circuit breakers works in three stages. The New York Stock Exchange will be halted for 15 minutes if there is a 7% drop in trading because of panic selling (of the S&P 500). To be shut down a second time for 15 minutes on the same day, there has to be a 13% decline in trading once trading has resumed. After this, when trading takes place again and there is a 20% decline, the stock market is shut down for the remainder of the day.
The stock market was closed for a entire week when Lincoln was shot and killed in 1865. The stock market was also closed for about a week after 9/11. The market halted for a whopping four months at the outbreak of World War I.
These stock market panics come with great opportunities. Tesla stock (TSLA) was trading over $900 a month ago...now it is $560. Apple stock (APPL) is below $250, Ford stock is in the $5 range. Norwegian Cruise Lines (NCLH) is now trading at $9.61, but in December that stock was almost $60. Royal Caribbean (RCL) is now trading for $30, back in December it was $133. These industries will all bounce back.
This Day in History: Adam Smith's The Wealth of Nations was published on this day in 1776. This book taught the world the beauty of self-interest. "It is not from the benevolence of the Butcher, the Brewer or the Baker that we expect our dinner, but from their regard to their own interest." When wealth is created, it is done by fulfilling a need that at the same time makes society better. When the wealthy Walton family opens a store in the neighborhood, they intend to make money. Because of this act food prices drop 15 percent which then helps the poor. Most wealth is actually active business assets. It's the value of the assets that are actively producing and employing people in production.
I hear young people talk about "unchecked wealth" with words like "every billionaire is a policy failure." There have been many countries that didn't have wealthy citizens...you don't want to live there. Some want to adopt a wealth tax. Almost all "European countries that adopted a wealth tax have since repealed it, citing low revenues, high administration costs, burdensome effects on entrepreneurship, and capital flight." ~Christian Britschgi
This Day in History: The first Kmart store opened in Garden City, Michigan on this day in 1962. By 1981, there were 2,000 Kmart stores across the country. At the time Kmart bought various retailers, including Waldenbooks, Borders, and Sports Authority. In the mid-90's Kmart sold off Office Max, Sports Authority, and a number of other retailers it had acquired. What happened? Walmart happened. The company filed for Chapter 11 bankruptcy protection in early 2002. Later on Sears merged with Kmart to create Sears Holdings. At the time, it was the largest retail merger ever. On October 15, 2018, Sears filed for bankruptcy.
Walmart may be surviving, and it is, at least for now, holding its own against its greatest competitor...Amazon. 20 years ago, the top 10 companies were General Motors, Ford, Exxon Mobil, Walmart, GE, IBM, Chrysler, Altria Group, Mobil and AT&T. Today only Walmart, GM and AT&T are still on that list.
Amazon stock ($AMZN) is at around $2000, Walmart's stock ($WMT) is $107 to $118, and Kmart-Sears (SHLDQ) is a pink sheet stock worth only 20 cents.
This Day in History: Economist Julian Simon died on this day in 1998. Known as the Doomslayer, Simon argued that "over-population" was actually a good thing. More people means more brains to help solve our problems. To prove this he entered into a famous wager with Dr Doom Paul Ehrlich who wrote the Population Bomb. The bet was that with more people commodities would become rarer and thus more expensive. That didn't happen and Julian Simon won the bet. You can read Simon's great work "The Ultimate Resource" online at http://www.juliansimon.com/writings/Ultimate_Resource/ Another scientist, Bjorn Lomborg, set out 20 years ago to debunk Julian Simon who he viewed as a "simple American right-wing" nutjob: "Three months into the project, we were convinced that we were being debunked instead," Dr. Lomborg said. "Not everything he said is right. He has a definite right-wing slant. But most of the important things were actually correct." As a result, Lomborg went on to write "The Skeptical Environmentalist." "The increase in the world's population represents our victory over death." JS Julian Simon Was Right: A Half-Century of Population Growth, Increasing Prosperity, and Falling Commodity Prices ------------------------------------------ This is my long-run forecast in brief: The material conditions of life will continue to get better for most people, in most countries, most of the time, indefinitely. Within a century or two, all nations and most of humanity will be at or above today's Western living standards. I also speculate, however, that many people will continue to think and say that the conditions of life are getting worse.~Julian Simon The humour of blaming the present, and admiring the past, is strongly rooted in human nature, and has an influence even on persons endued with the profoundest judgment and most extensive learning.~ David Hume, "Of the Populousness of Ancient Nations" By a process of contraction, distance in space makes things look small, and therefore free from defect. This is why a landscape looks so much better in a contracting mirror or in a camera obscura than it is in reality. The same effect is produced by distance in time. The scenes and events of long ago and the persons who took part in them wear a charming aspect to the eye of memory, which sees only the outlines and takes no note of disagreeable details. The present enjoys no such advantage, and it always seems defective. ~Schopenhauer
This Day in History: The colony of Massachusetts issued the first paper money in the Americas on this date in 1690. The earliest paper money originated in China, and even they succumbed to the dangers of over-printing and inflation. In fact, the Chinese suspended the use of paper money for hundreds of years until paper money was printed again in 1890. Andrew Jackson in his farewell address warned of the dangers of paper money:
"The Constitution of the United States unquestionably intended that gold and silver would be the nation's currency. But the establishment by Congress of a National Bank, a similar legislation in the states, has driven silver and gold from circulation, and substituted a paper currency in its place...Because paper currency has no value in and of itself, but rather is a system which is based upon public confidence, it is susceptible to large and sudden fluctuations, which results in a risky property market and unstable and uncertain wages for workers. The entities which create the paper money cannot be relied upon to keep the right amount of currency in circulation."
Paper money used to be backed by gold, but Nixon stopped that back in 1971 and since then all government paper money (fiat money) is backed only by your faith in that money...much like bitcoin.
