This week in trading history we saw lots of financial landmarks; the California Gold Rush started in Sacramento; the South Sea Bubble began its inflation; the first women-run brokerage firm in history was opened; the first Apple Mac Computer was unveiled... and so much more…
Bentley Motors was established in London by founder W. O. Bentley. In 1931 Bentley was acquired by Rolls-Royce. From then on, the Bentley gained more and more distinct Rolls-Royce features, until the cars were almost indistinguishable. Volkswagen then acquired Bentley in 1998 and remain the current owners.
Silver reached an all-time high of $49.45 per ounce. The rise in Silver was all down to Hunt brother’s attempt to corner the silver market. It was said that on this day the Hunt brothers owned a third of the world’s silver supply. However, if you know, you know… this didn’t end particularly well for the Hunt brothers.
Airbus unveiled the A380, which is the largest passenger airplane ever built. Competing with the Boeing 747, the A380 can carry more than 500 passengers 8,500 miles at a speed of mach.85. However, Airbus have said that the A380 production will end by 2021 due to the demand for more frequent direct point-to-point flights with smaller more fuel-efficient aircrafts.
Peter Lynch was born on this day. Lynch became one of the most successful mutual fund managers in history. Within 13 years as manager of the Fidelity Magellan fund, the fund averaged a 29.2% annual return and beat the S&P 500 11 out of the 13 years he ran things. The AUM of the fund also went from $18m to over $14bn under his tenure. Lynch put his success down to his idea that you “buy what you know”.
Shares of Yahoo Japan were traded over the counter on the Japanese and managed to hit a high of 100 million Yen per share, which was equal to around $947,800 U.S dollars at the time. Shares continued to rise for several days longer.
Victoria Woodhull and Tennessee Claflin opened Woodhull, Claflin & Co., America’s first women-run brokerage firm. In 1870 the sisters released a publication, Woodhull and Claflin’s Weekly, that voiced their beliefs in free love and women’s suffrage and was also the first venue for the English translation of the Communist Manifesto. In 1872 the Equal Rights Party nominated Woodhull as their candidate for the president of the nation. Later in life, Victoria left America to go to England to marry a British merchant. Her sister followed suit.
The Dow Jones Industrial Average dropped 565 points, resulting in one of the worst starts to a year in U.S. stock market history. This day meant that the Dow was down more than 1,600 points on the year.
Shares in the South Sea Company began to rise and so the bubble inflated. Within the following weeks shares rose from 128 to 187, by March they were over 300. By June shares traded as high as 1,050, however the bubble finally burst in September and the South Sea Company was down 90%.
The price in silver continued to rise so on this day the commodity exchange market, in attempt to slow the rise in price, put a ban on all silver orders except liquidation orders. On hearing the news, the price of silver plummeted as low as $34. The fall continued through March until “Silver Thursday" on the 27th March when silver prices fell to $10.
A Superbowl commercial announced the first ever Apple Macintosh computer.
State Street’s Standard & Poor’s Depository Receipts, or the SPDR S&P 500, began trading on the American Stock Exchange. This was the first Exchange Traded Fund to trade in the U.S. Over 1 million shares were traded on this first day, however daily volume dropped to as low as 17,000 in March. It wasn’t until June that a daily volume of 100,000 shares was maintained.
Mosaic web browser was released for the first time. 21-year-old Marc Andreessen, who created the Mosaic programme, changed the way the world wide web entered the lives of the casual computer owner.
The Nikkei index fell more than 1,000 points as a result of panicked traders reacting to the Hanshin Earthquake that hit nearly a week earlier. The Nikkei had dropped 7.6% since the earthquake and was a leading factor the failure of Barings bank. By this day Nick Leeson, trader for Barings bank, had made big bets that the Nikkei would remain between 19,000 and 21,000. As the market continued to sink, Leeson added to his positions, in total accumulating 60,000 futures contracts. Within a month he had quit the bank and was on the run, although not for long. He was caught and sent to jail for three years.
James Marshall, a mechanic from New Jersey, discovered gold at Sutter’s Mill in Sacramento Valley, California. This was the start of the California Gold Rush. Over the next eight years 30,000 people moved to California in search of gold. Before this, California was widely unpopulated and relatively poor, this mass surge of habitats changed the landscape forever.
Steve Jobs officially unveiled the first Apple Mac Computer at the market price of $2,495, this equates to around $6,000 today. In five months, Apple sold around 70,000 computers.
Sun Microsystems submitted a bid to buy Apple Computers for $2.76bn, or $23 per share. Apple had recently announced a near $70m loss and was seeking a buyer. According to Sun Microsystems the deal was just hours away from being closed until it fell through. The board members of Apple fired CEO, Michael Spindler, and replaced him with Gil Amelio. Amelio would go on to purchase NeXT Computer - the company founded by Steve Jobs - and so reunited Jobs with Apple once again.
Disney announced that it would be purchasing Pixar for $7.4bn. Steve Jobs ran Pixar for 20 years and saw its value grow from $10m to $7.4bn, an average annual compounded return of 39.15%. The purchase meant that Jobs was one of Disney’s largest shareholders and got a seat on the board.