Robert John Welch (1859-1936), official photographer for Harland & Wolff / Public domain

This Week in Trading History: World Wars and the Titanic

This week in trading history sees world wars affecting the markets, the Titanic sets sail and Yahoo! goes public...

5th April

President Franklin Roosevelt prohibited the hording of large quantities of gold in America. As a result, those with large amounts of gold were forced to sell at $20.67 per ounce. The punishment for not handing your gold over was a $10,000 fine or imprisonment. After the forced selling, the treasury of international transactions increased the price of gold to $35 an ounce. The profit this created funded the Exchange Stabilization Fund that was put in place as an emergency fund.

6th April

After a German U-boat sunk an American liner, the US entered World War One. From this point the stock markets began to fall - once the year was over the Dow Jones had dropped more than 31%. The war lasted until November 1918.

Dow Jones closed above 9,000 for the first time in trading history.

Pacific Gas and Electric went bankrupt on this day when they were unable to sell electricity for more than they bought it on the open market. Luckily for PG&E the state of California bailed them out and they are still running to this day, marketed at $7.92 per share (as of 2020).

7th April

Great Britain became embroiled in what is now referred to as the South Sea Bubble, centred around the South Sea Company, who had been granted a government monopoly on trading in South America. Having offered to take over the national debt, stock in the company boomed when they began selling their shares publicly on this day in April. Within the first week they sold 2 million pounds worth of shares at £300 per share, but by September the market had collapsed, ruining investors and highlighting instances of insider trading among some ministers and officials. The South Sea Company continued until 1853.

8th April

The Dow Jones reached its peak prior to World War Two at 151.29. During the war the Dow Jones dropped as low as 92.92 in April 1942. It wasn’t until December 1944 that it would again close above 151.29.

9th April

Bethlehem Steel’s business was booming. Amidst World War One the company’s stocks rose from $88 to $117 per share as a part of a 10 day rise that eventually rose as high as 70 points. Bethlehem Steel's success came from the fact that they were in the business of building ships and manufacturing guns and ammunition.

If you read last week’s trading history, you’ll remember that Martin Luther King was assassinated on the 4th April. On this day the market closed for his funeral.

10th April

The Titanic set sail. The cost of ‘The Unsinkable Ship’ was $7.5 million, which would equate today to around $174 million. As we all know, 5 days later the ship hit an iceberg causing it to sink in the Atlantic Ocean.

Vanguards founder John C. Bogle submitted his master’s thesis titled “The Economic Role of the Investment Company”. This thesis became to base of Vanguard's strategy. In 1976 bogle launched Vanguard's first index fund with $11 million in assets. Today Vanguard holds the largest mutual fund in the world; Vanguard 500 Index Fund, and the group has a total of $5.6 trillion in AUM.

Apple shares reached $644, making them the second company in history to be worth $600 billion (behind Microsoft, who reached this milestone in 1999). Apple and Microsoft are now both worth over $1 trillion, with Apple winning this race a year earlier than Microsoft.

11th April

Japanese car manufacturers; Toyota, Honda, Nissan and Mazda recalled 3.4 million vehicles due to a defective part in their airbags…

…exactly a year later BMW recalled 165,000 vehicles that were sold in the United States due to a defective bolt that could loosen and damage the engine.

12th April

France's Euro Disney opened its doors. The $4 billion theme park became the second of its kind, after Disneyland Tokyo. In 2019 the Walt Disney Company reported that the parks and resorts generated a huge $26.7 billion in 2019 alone.

Yahoo! went public on this day. The IPO was originally at $13 per share but due to an increase in demand they started their first day of trading at $24.50 per share. Yahoo sold 2.6 million shares and the stock had a volume of 17 million, implying the average share was traded more than six times in this one day. Stock was closed out at $33, reaching as high as $43 during the day. The company ended the day with a market cap of $848 million, 120 times the company’s revenue. Most of Yahoo's assets have been sold off today and what is left now trades as Altaba.