A Century of Investors

Today's investors are more rapidly informed than their predecessors a century ago, but they are neither better informed nor better behaved. In this article, a picture of individual investors during 1906–1918 drawn from investor questions to World's Work magazine is compared with a picture of investors of the 21st century as reflected in today's media. The investors of a century ago, like today's investors, wanted to be secure while they aspired to be rich, wanted to save while they were tempted to spend, wanted to feel the joy of pride and avoid the pain of regret. Today's investors are more rapidly informed than their predecessors a century ago, but they are neither better informed nor better behaved. This article presents a picture of investors in the 1906–18 period from questions to World's Work magazine and compares investors then with today's investors.The financial markets were as turbulent during the early 20th century as they are today. The period included substantial stock market declines and increases. Investors in the early 20th century hoped to make their fortunes from mines, automobiles, and wireless telegraphs; they could hardly imagine today's Internet. Yet, investment warnings then are similar to warnings today, and lessons that should have been learned then need to be repeated today.Viewed from the distance of time, the debate about stocks in the early decades of the 20th century appears as a shouting match between people promoting all stocks and people completely opposed to stocks. In fact, however, attitudes toward stocks a century ago were nuanced, very much like attitudes today. The World's Work distinguished between stocks of established companies and stocks of new companies and between “business men,” who understood the risks of business, and “inexperienced people,” who did not. The magazine did not oppose investment in new industrial companies by the experienced investor or investment in established businesses by the small, inexperienced investor but was unalterably opposed to the investment of savings by inexperienced people in new, poorly backed, or wildly financed enterprises.Mining enterprises constituted a large portion of the “poorly backed and wildly financed” enterprises of a century ago. Recently, a large portion of such enterprises was the dot-com companies.Investors want income as well as growth; they want safety as well as riches. That was true a century ago, and it is true today. The World's Work was emphatic in warning investors against unrealistic aspirations. The magazine noted that bond dealers receive numerous requests for investments that are sure to pay the returns at all times—without regard to market or price movements. The lack of wisdom by bond buyers is demonstrated, the magazine noted, when trustees come to settle up estates and nearly always encounter bonds for which no quotation is even obtainable.Some investors want more than income and safety; they want riches. An investor wrote to the World's Work in 1910 asking for securities that would turn her thousand dollars into a million dollars. Such desires can lead to speculation. In this case, the World's Work was emphatic that speculation based on tips from strangers—whether stock market operators, financial editors, or pundits of any sort—is almost certain to bring the investor to grief.The investors of a century ago, like today's investors, wanted to be secure while they aspired to be rich, wanted to save while they were tempted to spend, wanted to feel the joy of pride and avoid the pain of regret. As the World's Work concluded, “Human nature is human nature.”