100 Years Ago Today

Think your portfolio is having a tough time. Well, buck up. Today marks the 100th anniversary of the beginning of the Panic of 1907.
On March 13, 1907, the Dow CRASHED from 86.53 to 83.12. That may not sound like a lot, but it was a fall of 3.94%, which beats our wimpy 3.29% drop from two weeks ago. The next day, March 14, saw the really big action. The Dow plunged to 76.23, a drop of 8.29%. That’s a two-day drop of 11.9%. Today, that would be like the Dow losing 1,500 points in 48 hours. The drop of March 14 still ranks as the seventh-worst day in the Dow’s history.
The index shot up 6.69% on March 15, but all was not safe. The Dow fell 6.23% on March 25. Here’s a look at Dow during March 1907:

That was only part of it. In 22 months, the Dow fell by half. Here’s how the market did in 1906 and 1907:

J.P. Morgan helped end the panic by providing a loan to the U.S. government. This led people to think that it really might not be a good idea to have the government dependent on one guy’s terms. Soooo, in 1913 Congress passed the Federal Reserve Act.
And we haven’t had any trouble since.

Posted by Eddy Elfenbein on March 13th, 2007 at 11:34 am

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.