TigerSoft News Service 5/17/2010 www.tigersoft.com
The San Francisco Earthquake of 1906
Led To The Stock Market Crash of 1907
Is This Why Professionals Are Now Selling to The Public?
by William Schmidt, Ph.D.
(C) 2010 www.tigersoft.com
All rights reserved.
Will The Gulf Coast Oil Spill Lead To A New Bear Market in 2010 or 2011?
What if A Hurricane Spreads The Oil even More this Summer?
Great 1906 San Francisco Earthquake
5:12 AM - April 18, 1906
How The Stock Market Reacted
To News of The Earthquake
The stock market had been in a bull market before the Earthquake The DJI was in a consolidation and
pull-back phase. It had ranged between 93 and 103 from December 11, 1905 to the day of the quake,
April 18. 1906. The day before the DJI closed at 96.84. It then fell steadily to 86.45 over the next two
weeks as full reports of the damge came in. After that, it repeatedly tried to rally over the next 8
months but could not take get past 96.75. We can imagine that insurance companies were heavy sellers
of stocks on sttrength, raising cash for the claims that were starting to come in. See these studies
for more details.
Odell, Kerry A.; Weidenmier, Marc D. (2004), "Real Shock, Monetary Aftershock:
The 1906 San Francisco Earthquake and the Panic of 1907", The Journal of Economic History 64 (4): 10021027,
"San Francisco's $200,000,000 ash heap involves complications which will be felt
on all financial markets for many months to come [and] the payment of losses sustained
represents a financial undertaking of far-reaching magnitude .
(Source: The Financial Times, London July 6, 1906.)
"In April 1906 the San Francisco earthquake and fire caused damage equal to more
than 1 percent of GNP. Although the real effect of this shock was localized, it had an
international financial impact: large amounts of gold flowed into the country in autumn
1906 as foreign insurers paid claims on their San Francisco policies out of home funds.
This outflow prompted the Bank of England to discriminate against American finance bills
and, along with other European central banks, to raise interest rates. These policies
pushed the United States into recession and set the stage for the Panic of 1907."
Eleven months after the Crash, on March 13, 1907, the DJI broke below the low closing of
July 13, 1906 at 85.18. This startred the financial panic of 1907, which took the DJI down to
50 8... The
Panic of 1907
Will The Gulf Coast Oil Spill
Lead To A New Bear Market in 2010 or 2011?
( http://www.nola.com/news/gulf-oil-spill/index.ssf/2010/05/gulf_oil_spill_could_result_in.html )
Law suits and insurance claims related to the BP Oil Spil will surely keep rising.
Who will pay for all the damges?
Gulf Oil Spill Disaster: The Trigger of American Economic Collapse
Ten-mile oil plume found beneath surface of Gulf of Mexico
Only two insurance stocks show bearish head and shoulders
They are often rally at the end of a bull market.
What if Gold stocks turn down and there is little left to lift the market?