Thus was born The Radio Corporation of America (RCA). Source: Robert Sobel, RCA (Stein and Day, New York, 1986). Indeed high by today's standard. Before 1917, nearly all the top advertising men had come up by way of writing newspaper ads for new pharmaceutical drugs, and advertising was still “a marginal, grubby business.” This changed rapidly in the 1920s, however. And well they should. "This stock... typified that market more than anything else. The stock market has been cleaned up substantially. All of this, of course, was legal in the Twenties and none of this behavior is legal today. Watch the Program | The first round of bank failures, however, was touched off in the agricultural sector, where continued low prices and drought forced many farmers into bankruptcy. Radio Corporation of America (RCA) was Wall Street's darling high-flyer tech-stock of the 1920s. Tracking the Stock. Even when economists offer the proper solutions, it is far from assured that the political leaders will accept them. They had potential to grow fast and were considered “recession resistant.” This relatively small sample did temporarily outperform the economy and especially the stock market, hence their nickname of the “Nifty Fifty.” (They were also known as the “Vestal Virgins” because analysts could find no fault in them.). On 10/26/29 it closed at $58. Note (1): All Microsoft prices reflect the 2 for 1 stock split in 1997. Dow Jones - 1929 Crash and Bear Market. They would trade among themselves and you'd see these big prints in R.C.A. But, frighteningly enough, although the 10-year worldwide depression is probably the most thoroughly studied economic event in history, the answer to both questions 50 years later is: No one knows for sure. In 1929, RCA was the most heavily traded stock on the NYSE. In the six years between 1922 and 1928, sales of radio sets rose from $60 million to $843 million! Why? Other loans became uncollectible. Countries, the United States included, are being swept by waves of protectionism, as workers and industries fight out foreign competition. As Mark Twain is reputed to have said: “History does not repeat itself but it rhymes.” My own explanation of the shape of History is illustrated in the following graph. The new medium’s initial development could not depend on advertising as much as Internet does today, because advertising itself was only a budding industry. I hope the following graph will awaken in our readers some memories of how history often rhymes: What triggered the current article was my watching the stock market performance of many of the new industries, as illustrated by the so-called FANG stocks (Facebook, Amazon, Netflix and Google) as well as those of some other “disruptors.” The chart below of the performance of the S&P 500 information technology index relative to the total S&P 500 index gives some idea of the disparate performances of the “disruptors” against the overall index. Reynolds Tobacco traded at $1.46 for every $1.00 of book value, with a dividend yield of 11.11%. If you use our chart images on your site or blog, we ask that you provide attribution via a link back to this page. Also unbelievingly incredible was the fact it never paid a cash dividend! Starting in 1926, a Federal Radio Commission, predecessor to the FCC, was charged to apportion wavelengths. Stock prices haven fallen sharply in recent weeks. stock in the Twenties. Mr. Francois Sicart is the founder of Tocqueville Asset Management. Because his shoeshine boy was giving him stock tips. Politicians, even Roosevelt, strove hard to balance the budget. The first one is excerpted from a 1929 report prepared for RCA by Owen Young, then Chairman of General Electric. And they would make the stock look exciting. The “Nifty Fifties” in the 1970s were such a sample, which few of today’s investors can remember first-hand. This represented a 96% drop from the 1929 peak. Those actions drained even more buying power from the economy. And it has a tougher time with the future. Both of these episodes were initiated by smart and sophisticated people, expert at articulating the case for the companies or the industries they were promoting. It compared the 1920s bubble in the shares of RCA to the stock performance of AOL in the late 1990s: As a preface, I quoted from a report prepared for RCA in 1929 by Owen Young, then Chairman of General Electric, about radio in the 1920s: “[It] has helped to create a vast new audience of a magnitude which was never dreamed of… This audience, invisible but attentive, differs not only in size but in kind from any audience the world has ever known.