The Corner for Aug. 23, 2013

{The following is a reprint of this column written Dec. 9, 1999 – just before the dotcom bust}

The world is a changing! The new millennium is a coming! This time things are truly different with new technologies abound and the “information age” replacing the “service age” which replaced the “industrial age.” Internet commerce will make malls obsolete and the great bull market will have most leaving their jobs to become professional day traders!

Hogwash, I say! The battle cry consensus of every giant speculative bull market is that it is built on changing times, new technologies and “it’s different this time.” And every time those in the consensus were wrong!

During the canal boom of the 1820s and 1830s every town of size was building canals. New issues of canal companies were regularly being floated. “Nobody” could see the end in sight. Then, as the great bear market from 1835 to 1842 set in, canal stocks were among the most devastated groups in the overall list of stocks that traded on the exchanges. By the time the recovery came, railroads were replacing canals. Today, you can buy those old canal stocks to paper your walls with.

By the end of the 19th century, Sears was supposed to be threatening to put town merchants out of business with their catalogs.

The century was turning, transportation was changing with the railroads and the horseless carriage and communications were international with the laying of the transatlantic cable. Yet, the bear market that began the 20th century took a lot of steam out of the speculative bubble that ended the 19th century and the “gay ‘90s.” By the way, Sears recently got out of the catalog business and there are still plenty of merchants on Main Street America. If you are nostalgic, you can paper your walls with the pages of their old catalogs.

During the giant bull market of 1920s, it was radio stocks that led the list, with RCA at the top. Newer, better, more powerful radios were driving consumers to the stores in droves. “Radio” was the call, “things were a changing” and the U.S. was more powerful than ever. New issues of radio companies were the rage. When the great declines of late 1929, ‘30, ‘31 and ‘32 came about, it was RCA that led the list lower. Yes, people continued to buy radios and new stations were created, but radio stocks crashed to the downside. Today, many of the stock certificates of those radio companies that went defunct make interesting wall paper.

In the early 1960s, Wall Street pumped out new issues and encouraged new companies to start their names with X or Z. All the while, some were warning of an overvalued stock market that was loaded with new electronic startup companies and new inexperienced investors. The bull market of the time was led by the stocks of the “nifty fifty.” When the crash of 1962 came about, it ushered in an era where eventually only two of those companies that started with Xs and Zs survived – Xerox and Zenith. The rest you can paper your walls with their stock certificates.

Getting back to my opening paragraph, I wonder what stocks we will be able to paper our walls with when this “new era” is over and we find out once again “that there is nothing new on Wall Street, except unlearned history” and a whole lot of new issues that end in “dot com.”

Quote of the week: “Nothing is so admirable in politics as a short memory.” – John Kenneth Galbraith

Bart Ward is the chief executive officer of Ward & Co. Ltd., an Anoka-based registered investment adviser – specializing in the management of stock and bond portfolios in companies which are listed on the NYSE.

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