In today’s Roaring ’20s video, Jeff Yastine discusses…
- An amazing stock that soared more than 800% in the 1920s.
- How great stocks tend to stand out through good markets and bad ones alike.
- Why owning just one stock can make all the difference to your family’s fortunes.
To watch Jeff’s new video, click the play button below…
Before the 1920s, Palm Beach, Florida, was a sparsely populated island of sand and swamp on the Atlantic Ocean.
During the boom of the 1920s, though, it became America’s wintertime playground for the rich and famous. They built huge mansions, some of which still stand today.
One was owned by one of Wall Street’s most famous traders of the era — Jesse Livermore.
He’s perhaps best known for being a bear — someone who hopes to make lots of money betting against a stock and reaping big gains as it goes down in value.
In a time when few people studied stock charts, or the fundamentals of a company’s balance sheet for that matter, Livermore did both. And became rich.
What does that have to do with today’s stock market?
Well, great stocks tend to stand out. They grow through good markets and bad ones and make fortunes for those who own them. Those are the kinds of stocks my newsletter, Total Wealth Insider, specializes in identifying and recommending to readers.
Livermore might have been most famous for being a bear. But through some research, I found out that there was one stock he loved to own. You won’t believe it when I tell you.
The Right Stock
This item in the August 15, 1924, edition of the Brooklyn Daily Eagle tells us all we need to know about his favorite stock:
“‘Jesse L’ may be still bearish on general business conditions,” the newspaper reports. But “gossip around the ticker would indicate that he has taken a bullish position on at least one stock. … International Business Machines.”
So there’s Livermore’s favorite stock: IBM. International Business Machines.
It’s important to remember that in 1924, IBM was still largely unknown. It wasn’t the iconic company we know today.
In 1924, the company had just changed its name. Before that, the name was the Computing Tabulating Recording Company, because that’s what its machines did.
But even in 1924, it was clear that IBM was a fast-growing company destined for big things.
The article in the Brooklyn Daily Eagle notes how IBM’s income for the last six months “showed a satisfactory gain” compared to previous years. And it grew “while earnings of almost every other company was declining.”
In short, there was a lot for Livermore to like in owning IBM.
And in the boom of the 1920s, a generation of investors learned to love the stock just as much as he did:
(Source: Brooklyn Daily Eagle archives)
Near the start of 1924, IBM was trading at $96 a share. A year later, the stock had risen to $119.
The company split the stock 3 for 1. By the middle of 1927, adjusting for that split, the stock was trading hands for $258, then $350 and then $450.
IBM shares even prospered through the tougher times of the 1930s.
Why? Well, the government created the Social Security program. It needed advanced machines like IBM built in order to keep track of who received benefits and to send them checks in the right amounts.
My point is … IBM had the right products at the right time. And clearly it was the right stock for anyone to own for the rest of the 20th century.
Not every stock turns out as successful. But it shows how owning just one stock — the right stock — can make all the difference to your family’s fortunes.
That’s what we’re hunting for on the pages of my newsletter, Total Wealth Insider.
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Jeff L. Yastine
Editor, Total Wealth Insider