Stories From This Week In History

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This is the best time of year.

Houses are decorated, schools are closed, fireplaces are lit, and everyone’s got that holiday spirit.

Wishing you and yours a great holiday. Be safe, keep warm, and stay bullish.

Let’s take a look at some of the biggest market events from this week in history.

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December 23, 1913: Federal Reserve Act Signed 📅

President Woodrow Wilson signed the Federal Reserve Act into law which created what is now known today as the Federal Reserve System. The act was passed in response to a series of financial crises, including the Panic of 1907, where the collapse of the Knickerbocker Trust Company caused nationwide instability. The Federal Reserve Act established 12 regional Federal Reserve Banks, each serving a specific district, and created a Board of Governors in Washington, D.C. to oversee the system's operations. The new system was designed to reduce the power of private banks while increasing government oversight of the economy.

The Federal Reserve System was given the authority to regulate interest rates, manage inflation, and act to stabilize the economy in times of crisis, a major shift toward centralization of banking. The act also introduced the concept of a "discount rate," at which banks could borrow from the Federal Reserve, and set up a system of reserve requirements for commercial banks. Although initially controversial, the Federal Reserve Act ultimately paved the way for the modern American financial system.

For historic government stock certificates like this New York State Housing Authority Bond from 1973, check out the Ticker History Shop.

December 23, 1988: US Department of State Warns Pan Am 📅

On this date, the U.S. Department of State issued a security warning to Pan Am due to terrorist threats to U.S.-bound flights during the holiday season. Just two days prior, Pan Am Flight 103 from London to New York had exploded over Lockerbie, Scotland, killing all 259 passengers and 14 people on the ground. A passenger had smuggled a bomb hidden inside a cassette player and triggered it from the cargo hold.

During the busiest travel days of the year, flights were suspended or cancelled, and stricter baggage screening and passenger vetting procedures were put in place.

Despite being the first airline to operate transatlantic flights and use the Boeing 747, Pan Am’s damaged reputation and customer hesitancy caused revenues to plummet. Once a prestige airline worth over $2.5 billion at its peak in the 60’s, Pan Am would go bankrupt two years later.

For historic airline stock certificates like this Pan Am World Airways Red Stock Certificate, check out the Ticker History Shop.

December 23, 1973: The Oil Crisis Begins 📅

The Organization of the Petroleum Exporting Countries (OPEC) raised the price of crude oil from $5.11 to $11.65 per barrel overnight- a 128% increase. The price of oil had already risen from $2.90 per barrel in October 1973, marking a 300% increase in less than three months. This hike had major ripple effects, triggering inflation, slowing economic growth, and exacerbating energy shortages across the world.

Earlier in the year, OPEC had already cut oil production and banned oil some shipments to the United States in retaliation for the United States’ support of Israel during the Yom Kippur War.

OPEC’s decision sparked what would become known as the Oil Crisis or Oil Shock, with strict rationing in place across America and cars lining up for hours to get fuel. Energy independence became a national priority, and the creation of the U.S. Strategic Petroleum Reserve and investments in alternative energy were immediate outcomes.

For historic energy stock certificates like this Uncle Sam Oil Company Bond Certificate, check out the Ticker History Shop.

More Events From This Week In History 📅

Santa Claus Is Coming To Town? 📅

Each year in the week between Christmas and New Year’s Eve, investors look forward to the so-called “Santa Claus Rally”, where the market supposedly finishes with a year-end bump.

Is this real, or just make believe?

Looking at the data, it would appear so. Stocks do tend to go up in that final week, making up about 13% of the year’s gains in just 2% of the trading days.

What could be the cause? The festive holiday spirit means less selling, higher consumer spending and confidence, and possible fund managers adjusting their portfolio to show better performance for the year.

For you data nerds, there’s a correlation of r = 0.65 between the Santa Claus Rally and the overall yearly gains. Think of it like a tip at the end of a meal; bigger yearly gains means bigger presents from Santa.

If trends continue, expect a Santa Claus Rally of 1.46% in the next week.

Blasts From The Past 📅

This Just In 📅

Looking Forward 📅

That’s old news- what can we look forward to this week?

-Christmas and the first night of Hanukkah fall on the same date for the first time in 19 years. It won’t happen again until 2035.

-Nike (December 23), FedEx (December 24), and Accenture (12/27) release their quarterly earnings reports.

-If trends continue, expect a Santa Claus Rally of 1.46% in the next week.

-Markets closed on Christmas.

As always, remember that true wealth comes from friends and family. Whether you celebrate Christmas, Hanukkah, Kwanzaa, some combination, none at all, or another holiday, wishing you and yours a great next few days.