This week in Trading History sees the beginning of the biggest financial crisis to the US Banking system, Martha Stewart's infamous conviction and the formation of the S&P…
This day marks the start of the most significant banking crisis to ever occur in American financial history. The Federal Reserve refused to recommend a guarantee on banking deposits, sparking a chain of events that unfold throughout the rest of the week. While this is going on, two senators recommended the closing of the New York Stock Exchange until the crisis could be resolved. Well, they do say history repeats itself...
On this day, as Wall Street Journal reporter Jason Zweig so candidly reported, is the day “Wall Street created what may be the most worthless company of all time”. Shares of Palm Inc traded on the NASDAQ at an initial price of $38, though the IPO created an unusual pricing situation between 3 Com Corporation and Palm Inc.
3 Com retained 523 million shares in Palm, or 1.5 shares for every 3 Com share. By the end of the trading day Palm stock closed at $95.06 (reaching as high as $165 during the day), which would have meant each 3 Com share would have been valued at $142.59. However, 3 Com closed at a price of $81.81, pricing 3 Com's non-Palm assets at negative $60.78 per share. This resulted in a total capitalisation of minus 23 Billion Dollars. Ouch.
Britain rejected Hilary Clinton’s offer to help Britain and Argentina out of a feud. The dispute started after Britain decided to drill for oil in the Falkland Islands. A government spokesperson said that while they welcomed her comments, they did not think her involvement was necessary. A very British way of saying "f*ck off Hilary".
Happy birthday to the brilliant Alexander Graham Bell, the man who made beards sexy.
Oh, and he also invented the telephone and would start the American Telephone and Telegraph Company, now more commonly known as AT&T.
A Liberian registered tanker, Ocean Eagle, snapped in two in Puerto Rico creating an oil slick that was four miles long and a mile wide.
Harry Hemsley was born today in 1909 and went on to become one of the biggest names in real estate, at his peak owning 27 Hotels, 50,000 apartments and... the Empire State Building. In 1996, Forbes estimated his net worth at $1.7 billion. But no matter what poor Harry did, he was often overshadowed by the infamous behaviour of his wife. Nicknamed the “Queen of Mean” - which is never a good sign - Leona Hemsley was convicted of federal income tax evasion in 1989 and sentenced to 19 months in prison. A former housekeeper testified that she had heard Hemsley say “we don’t pay taxes, only the little people pay taxes”.
The S&P500 Index was expanded to its current 500 companies and renamed, closing its first day at 44.06%. Since then, the S&P has returned 5907%.
In an attempt to aid the banking crisis that began on the 2nd March, new President Franklin D. Roosevelt announced a four-day “bank holiday” effective the 6th March. All banks across the US would close to help stop Americans withdrawing their money in panic. Roosevelt reassured the country with his famous speech: "The only thing we have to fear is fear itself."
American TV personality Martha Stewart was convicted of obstructing justice and lying about her trading activity on her ImClone Systems Inc stocks. Stewart sold about $230,000 in ImClone shares the day before the price plummeted to an all time low, after their drug Erbitux failed to get its Food and Drug Administration (FDA) approval. Coincidence? We think not! And neither did the US legal system for that matter, sentencing Stewart to five months in prison.
Roosevelt’s order for all banks to close for four days goes ahead, but instead lasts for nine days, as the worst of the great depression nearly brings down the whole US Banking System. A big whoops moment in American Financial History.
Anyone who tuned into last week's edition of This Week in Trading History will remember Nick Leeson’s almost single-handed destruction of the 223-year-old Barings Bank. Well, on this day that same year, ING bought Baring Brothers and Company for the large sum of £1.00. In 2001, ING sold the operation to another Dutch bank for $275 Billion. That's what you call return on investment...
The financial history books seem to be missing a page for March 7th - there really is little of note to report. So instead, let's tell you about Goldie the Golden Eagle, who escaped from Regents Park Zoo in London, it wasn’t until a whole 12 days later he would found living it up in Regents Park dining on Muscovy Duck in true London fashion.
For the first time ever, Daytona beach in Florida wasn’t just for partying spring breakers, but the first race was organised specifically for stock car racing participants. This is now considered the forerunner to what became the legendary Daytona 500.
Nineteen million dollars’ worth of jewellery was found in a Parisian suburb drain on this day. The jewellery had been stolen from a Harry Winston boutique in 2008 in an armed robbery. Imagine that find on your trip to the sewers.