This week in financial history runs up against up one of the pivotal points in history in the broadest sense – the assassination of President John F. Kennedy. Although Kennedy's assassination did impact markets around the world, it would be wrong to do a purely financial take upon it. So we'll stick to what we know and look at what else happened this week, starting with comparably good news.
IN PICTURES: 5 "New" Rules For Safe Investing

The Ghost of 1929
Although it was over 25 years in the making, on November 23, 1954, the DJIA finally closed above its pre-1929 crash peak of 381.17. The peak occurred on September 3, 1929. Of course, we've recently had our own crash, topping out at 14,164.53 on October 9, 2007.

If this housing/mortgage market crash really is the new millennium version of the Great Depression, then we won't be seeing Dow 14K again until 2032. However, considering we are already at Dow 11,000 a mere three years later, this seems unlikely. Three years after the 1929 crash, the Dow was still in the sixties. That's not to say we are in good shape, but as far as percentage declines in the Dow, this one doesn't come near to 1929. (Learn about the series of events that triggered the Great Depression. See The Crash Of 1929 - Could It Happen Again?)

Ghosts of 1987: Price Ceilings
On November 23, 1987, the Chicago Board of Trade (CBOT) introduced price ceilings that limited the index futures within a range of 40 points for the 20 stocks making up the Major Market Index future and 25 points for the Institutional Index future. This was a direct reaction to the 1987 crash.

Although futures were not singled out as program trading was, traders and institutions were buying beaten down futures and selling stocks on the NYSE in hopes of profiting from the arbitrage created by the out-of-sync markets. This selling drove stock prices down even more sharply, triggered more automated stop-losses, and on and on. The new price ceilings were meant to lock the futures into a range that limited the arbitrage opportunities.

And Circuit Breakers
Interestingly, November 24, 1997, saw the circuit breaker system that also grew out of the 1987 crash come under fire. Because the breakers were placed at point drops – in this case 350 and 500 points – rather than a percentage of the Dow, they naturally represented a lower percentage move in the Dow as the index grew. (It is impossible to avoid them completely, but there is a systematic method you can use to control them. Check out Limiting Losses.)

In 1997, the NYSE moved towards percentages of 10% and 20%, meaning changes of around 800 and 1,500 points for the Dow at that time, but settled for changing the breakers to trading pauses of a half hour rather than a complete lock out. Now, following the flash crash this year, circuit breakers with five-minute pauses for individual stocks rising or falling 10% have been proposed. Most market purists are, of course, wholly against the idea.

A Tale of Two Philanthropists: Andrew Carnegie
On November 25, 1835, Andrew Carnegie was born in Scotland. Carnegie came to the states and, through charm, hard work and some hard-nosed tactics, built the Carnegie Steel Company. The company would eventually be sold to the JPMorgan backed U.S. Steel, making Carnegie one of the world's richest men. Carnegie then turned his energies and attentions to philanthropy.

Following the same naming guidelines that led to the Carnegie Steel Company, Carnegie founded the Carnegie libraries, Carnegie Institute of Technology, the Carnegie Institution, Carnegie Hall, the Carnegie Hero Fund and numerous other organizations that are equally recognizable as his work. In his "Gospel of Wealth", Carnegie said it was the responsibility of the wealthy to be generous and charitable – if not necessarily humble – and he backed up those words with one of the world's largest fortunes.

IN PICTURES: 8 Tips For Starting Your Own Business

And Alfred Nobel
On November 25, 1867, Alfred Nobel – another philanthropist not shy about throwing his name out there - received the patent for dynamite. It is dynamite, originally intended to aid in mining, that built Nobel's fortune. Of course, dynamite proved as good at blowing up people as it was at clearing rocks, giving Nobel an unfairly harsh image in the public mind. After an obituary referring to him as a "merchant of death" showed up by mistake, Nobel is reported to have come up with idea of funding the Nobel Prizes to save his legacy from infamy. Since his death, Nobel Prizes have been given out in chemistry, medicine, literature, physics, peace and the somewhat disputed area of economics. (Before you try to profit from their theories, you should learn about the creators themselves. To learn more, read Nobel Winners Are Economic Prizes.)

That's all for this week. Next week, we will get into the Christmas spirit with some bankruptcies and buyouts.

Find out what happened in financial news this week. Read Water Cooler Finance: GM's Dramatic Return.

Related Articles
  1. Economics

    The History of Stock Exchanges

    Stock exchanges began with countries who sailed east in the 1600s, braving pirates and bad weather to find goods they could trade back home.
  2. Economics

    How Warren Buffett Made Berkshire A Winner

    Berkshire Fine Spinning Associated and Hathaway Manufacturing Company merged in 1955 to form Berkshire Hathaway.
  3. Economics

    The 2007-08 Financial Crisis In Review

    Subprime lenders began filing for bankruptcy in 2007 -- more than 25 during February and March, alone.
  4. Investing News

    What Does the Fire Monkey Mean for Your Portfolio?

    The Chinese new year this year corresponds to the monkey, a quick-witted, playful, tricky figure that means well but has a penchant for causing trouble.
  5. Investing News

    How China's Economy is Now Like America's

    China's economy could take the global economy down with it; why that might be good news in the grand scheme.
  6. Economics

    Lehman Brothers: The Largest Bankruptcy Filing Ever

    Lehman Brothers survived several crises, but the collapse of the U.S. housing market brought the company to its knees.
  7. Economics

    Economic Indicators: Reading Between the Lines

    On the surface, economic indicators are sending mixed signals, but what's brewing beneath the surface?
  8. Investing News

    Feeling Bearish? If So, You're in Good Company

    These investing practitioners and pundits earned notoriety for their accuracy; they're sending a dire warning about the global economy.
  9. Mutual Funds & ETFs

    Why 3x ETFs May Be Too Dangerous for Portfolios

    Whether you’re bullish or bearish, if you want broad diversification, lower volatility and limited risk, here's what leveraged ETFs you should look into.
  10. Stock Analysis

    Worried About a Recession? Consider These 5 Stocks

    If you're worried about a recession, consider these five stocks that offer resiliency potential.
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Do negative externalities affect financial markets?

    In economics, a negative externality happens when a decision maker does not pay all the costs for his actions. Economists ... Read Full Answer >>
  3. What is the difference between disposable and discretionary income?

    According to the Bureau of Economic Analysis, or BEA, disposable income is the amount of money an individual takes home after ... Read Full Answer >>
  4. What are the major laws (acts) regulating financial institutions that were created ...

    Presidents George W. Bush and Barack Obama, in conjunction with Congress, signed into law several major legislative responses ... Read Full Answer >>
  5. What are the similarities and differences between the savings and loan (S&L) crisis ...

    The savings and loan crisis and the subprime mortgage crisis both began with banks creating new profit centers following ... Read Full Answer >>
  6. What measures could the U.S. Government take to prevent another crisis similar to ...

    Some of the measures that the U.S. government can take to prevent another crisis similar to the savings and loan (S&L) ... Read Full Answer >>
Hot Definitions
  1. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  2. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  3. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  4. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  5. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  6. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
Trading Center