Historical Thought for the Day
March 15, 2010
Thought for the day:
Since I've become a central banker, I've learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said.
Alan Greenspan, before Congress; quoted in USA Today, Feb. 23, 1999
This day in financial history:
1817: The New York Stock Exchange officially prohibits the "fictitious sales," or wash sales, that had enabled speculators to manipulate individual stocks without even owning them. But in defiance of the ban, the practice continues for decades. Typically, two brokers agree loudly in public to trade shares between themselves at a price significantly above or below the market price. (They have already built a large but secret position in the stock.) Then, when the market moves toward their price, the brokers dump their secret holdings at the newly favorable level and disallow their one public trade.
1933: The New York Stock Exchange reopens after closing for two weeks during Pres. Franklin D. Roosevelt's bank holiday, and pent-up investors bust loose in a bullish stampede, whooping and hollering as they propel the Dow Jones Industrial Average to its biggest one-day percentage gain yet on record, a 15.3% leap, to close at 62.10. The Standard & Poor's Composite Index of 90 stocks soars 16.6%. Even so, stocks are trading at roughly 87% below their 1929 highs, share prices average just 0.65 times book value, and the average dividend yield (among those companies that can afford to pay one) is 8.7%. Stocks are trading at an estimated 10 times their earnings for the coming year.
1999: Less than three months after breaking the 1200 barrier, the Standard & Poor's 500-stock index closes above 1300 for the first time, finishing the day at 1307.26.
Source: Jason Zweig
