Original and Current RCA: A Cautionary Tale.
This is a chart of the current RCA and inlayed is a chart of the 1929 RCA.
Firstly, we should take a moment to establish just how incredible and innovative a company the original RCA was. If you're not interested in this, jump the line break where we'll cover the infamous RCA pump and dump (Perhaps the famous pump and dump in history).
Who Were RCA and What Did They Do
The year 1929 marked a significant milestone in the history of technology and broadcasting with the introduction of the Radio Corporation of America (RCA) and the launch of its groundbreaking products. RCA, a conglomerate of several radio-related companies, played a pivotal role in shaping the future of communication and entertainment during the early 20th century.
RCA was founded on October 17, 1919, as a subsidiary of General Electric (GE), Westinghouse, AT&T, and United Fruit. However, it wasn't until 1929 that RCA made a historic move by acquiring the Victor Talking Machine Company, a major player in the phonograph and recording industry. This strategic merger allowed RCA to expand its influence in both radio broadcasting and recorded music.
One of the most notable achievements of RCA in 1929 was the introduction of the first commercially available television set. The RCA TRK-12, unveiled in April 1929, marked the beginning of a new era in home entertainment. Although television technology was still in its infancy, the TRK-12 laid the foundation for the development of television sets that would become common in households across the world in the decades to come.
In addition to its advancements in television, RCA also played a crucial role in the standardization of black-and-white television broadcasting. The National Broadcasting Company (NBC), a radio network owned by RCA, began experimental television broadcasts in 1930, further solidifying RCA's commitment to the burgeoning television industry.
Furthermore, RCA's acquisition of the Victor Talking Machine Company paved the way for the development of high-quality sound reproduction technology. The company continued to produce innovative phonographs and gramophones, contributing to the growing popularity of recorded music.
The year 1929, with the formation of RCA and its subsequent developments in television and sound technology, stands as a watershed moment in the history of communication and entertainment. RCA's influence continued to grow, and its contributions to the world of broadcasting laid the groundwork for the multimedia landscape that we are familiar with today.
TLDR: "The tech is disruptive". "The industry will grow". "An innovative company". "Going no where ..."
=================================================================================
The Pump and Dump
First thing you have to understand is in the 1920's there were no laws against organised pump and dumps. Cartels would form and they would pump and dump stocks. They'd quietly position in the stock while it was trading relatively flat. Then once they had their position they'd start to hype it up to the public.
The pump and dump team would initially be involved in bidding up the market to get the frenzy of buying to start but once the public was jumping in with great enthusiasm, the people who they were buying from where the same people who bought earlier and induced the whole pump stage.
These people had bought a lot more of the shares, a lot cheaper and then acted in a coordinated manner. This ensured their trading volume was what was actionable to the market. When the pumpers started to sell, price capitulated.
It was like crypto alts, basically.
The Technological Advancements and the Crash
People in the modern age dismiss the risk of major crash like events and often they do it by citing how far everything is advancing.
Which has always been a fallacy. The late 1920's was probably the very most innovative time in history up to that point. The car was born. Forms of long range communication and entertainment were being invented. Real things that would reshape the world were happening. The groundwork for many of the things we take for granted today was laid in the 1920's.
Access to the market was opening up to retail investors for the first time. "Bucket shop broker" were springing up allowing people who could not access the stock exchanges (Which was most people) to place bets on stocks ... and usually with very high leverage. Only a small amount of margin was required*.
(*The bucket shop wasn't putting the trade on, anyway. People were that likely to get blown up with the high leverage the bucket shop would take their order for stock throw it in the bucket and if the investor won they'd have to pay out the win from their own pocket - this is where the name came from).
One could say we've recently went through a similar phase of reaching retail. Investing has been gamified. Glamorised. Become easy for everyone to get involved in. The apps, the fractional shares, the easy auto-invests and the great public belief that if you're willing to take enough risk you are certain to become rich.
Indeed, if you want to avoid taking large risks, you should enjoy staying poor.
Throughout the ages we've seen the same thing over and over again with technological advances. The fallacy that something being likely to be an important industry in the future means you can invest it in risk free today at any price. Almost invariably, this has failed. The obvious example to cite would be the dot-com boom.
While the broad industry does end up doing well and while the better stocks do recover (Usually after losing 80% or more) the reality is most people who invest into the hype cycle of a new developing technology end up losing out. Most companies go to zero or do not bounce a lot. The ones that do well, you should have bought 5-10 times more if you'd just waited.
Let's take a moment to put that into context, because the "It's only a loss if you sell myth" is strong. Think about how much is missed if something drops 90% and then returns to the high. Let's say you buy 10 shares of a stock at $100. Put in $1,000 and this is the high. Then the market drops and if it comes all the way back, you have $1,000.
However, if you'd been patient. Less greed. More discerning. When the stock traded at $10 you could have bought 100 shares. When it was back to the high you'd have $10,000 - rather than having waited multiple years to just breakeven. The idea it's not a loss if you don't sell completely ignores opportunity costs.
As a side point, most people who say it's not a loss unless you sell are lying to themselves and it's easy enough to prove it. Next time someone says this, ask them this question - "Okay, and how much profit have you made in the [Insert thing]" and if the thing is up, they'll very proudly tell you how much they are up.
You will almost never get the answer that is logical as per their way of looking at a market, "I have made nothing at all because I've not sold. It's not a win unless you sell".
In times when we're promised exponential growth on already extremely far developed bull markets. When we're told we can safely buy and hold this or that because of the blockchain, or the AI revolution or the invention of the what will become the new dominant monetary system - I urge you to remember one thing.
The people who tout this would have almost certainly went broke if they were alive and investing in any of the previous times this has happened.
Firstly, we should take a moment to establish just how incredible and innovative a company the original RCA was. If you're not interested in this, jump the line break where we'll cover the infamous RCA pump and dump (Perhaps the famous pump and dump in history).
Who Were RCA and What Did They Do
The year 1929 marked a significant milestone in the history of technology and broadcasting with the introduction of the Radio Corporation of America (RCA) and the launch of its groundbreaking products. RCA, a conglomerate of several radio-related companies, played a pivotal role in shaping the future of communication and entertainment during the early 20th century.
RCA was founded on October 17, 1919, as a subsidiary of General Electric (GE), Westinghouse, AT&T, and United Fruit. However, it wasn't until 1929 that RCA made a historic move by acquiring the Victor Talking Machine Company, a major player in the phonograph and recording industry. This strategic merger allowed RCA to expand its influence in both radio broadcasting and recorded music.
One of the most notable achievements of RCA in 1929 was the introduction of the first commercially available television set. The RCA TRK-12, unveiled in April 1929, marked the beginning of a new era in home entertainment. Although television technology was still in its infancy, the TRK-12 laid the foundation for the development of television sets that would become common in households across the world in the decades to come.
In addition to its advancements in television, RCA also played a crucial role in the standardization of black-and-white television broadcasting. The National Broadcasting Company (NBC), a radio network owned by RCA, began experimental television broadcasts in 1930, further solidifying RCA's commitment to the burgeoning television industry.
Furthermore, RCA's acquisition of the Victor Talking Machine Company paved the way for the development of high-quality sound reproduction technology. The company continued to produce innovative phonographs and gramophones, contributing to the growing popularity of recorded music.
The year 1929, with the formation of RCA and its subsequent developments in television and sound technology, stands as a watershed moment in the history of communication and entertainment. RCA's influence continued to grow, and its contributions to the world of broadcasting laid the groundwork for the multimedia landscape that we are familiar with today.
TLDR: "The tech is disruptive". "The industry will grow". "An innovative company". "Going no where ..."
=================================================================================
The Pump and Dump
First thing you have to understand is in the 1920's there were no laws against organised pump and dumps. Cartels would form and they would pump and dump stocks. They'd quietly position in the stock while it was trading relatively flat. Then once they had their position they'd start to hype it up to the public.
The pump and dump team would initially be involved in bidding up the market to get the frenzy of buying to start but once the public was jumping in with great enthusiasm, the people who they were buying from where the same people who bought earlier and induced the whole pump stage.
These people had bought a lot more of the shares, a lot cheaper and then acted in a coordinated manner. This ensured their trading volume was what was actionable to the market. When the pumpers started to sell, price capitulated.
It was like crypto alts, basically.
The Technological Advancements and the Crash
People in the modern age dismiss the risk of major crash like events and often they do it by citing how far everything is advancing.
Which has always been a fallacy. The late 1920's was probably the very most innovative time in history up to that point. The car was born. Forms of long range communication and entertainment were being invented. Real things that would reshape the world were happening. The groundwork for many of the things we take for granted today was laid in the 1920's.
Access to the market was opening up to retail investors for the first time. "Bucket shop broker" were springing up allowing people who could not access the stock exchanges (Which was most people) to place bets on stocks ... and usually with very high leverage. Only a small amount of margin was required*.
(*The bucket shop wasn't putting the trade on, anyway. People were that likely to get blown up with the high leverage the bucket shop would take their order for stock throw it in the bucket and if the investor won they'd have to pay out the win from their own pocket - this is where the name came from).
One could say we've recently went through a similar phase of reaching retail. Investing has been gamified. Glamorised. Become easy for everyone to get involved in. The apps, the fractional shares, the easy auto-invests and the great public belief that if you're willing to take enough risk you are certain to become rich.
Indeed, if you want to avoid taking large risks, you should enjoy staying poor.
Throughout the ages we've seen the same thing over and over again with technological advances. The fallacy that something being likely to be an important industry in the future means you can invest it in risk free today at any price. Almost invariably, this has failed. The obvious example to cite would be the dot-com boom.
While the broad industry does end up doing well and while the better stocks do recover (Usually after losing 80% or more) the reality is most people who invest into the hype cycle of a new developing technology end up losing out. Most companies go to zero or do not bounce a lot. The ones that do well, you should have bought 5-10 times more if you'd just waited.
Let's take a moment to put that into context, because the "It's only a loss if you sell myth" is strong. Think about how much is missed if something drops 90% and then returns to the high. Let's say you buy 10 shares of a stock at $100. Put in $1,000 and this is the high. Then the market drops and if it comes all the way back, you have $1,000.
However, if you'd been patient. Less greed. More discerning. When the stock traded at $10 you could have bought 100 shares. When it was back to the high you'd have $10,000 - rather than having waited multiple years to just breakeven. The idea it's not a loss if you don't sell completely ignores opportunity costs.
As a side point, most people who say it's not a loss unless you sell are lying to themselves and it's easy enough to prove it. Next time someone says this, ask them this question - "Okay, and how much profit have you made in the [Insert thing]" and if the thing is up, they'll very proudly tell you how much they are up.
You will almost never get the answer that is logical as per their way of looking at a market, "I have made nothing at all because I've not sold. It's not a win unless you sell".
In times when we're promised exponential growth on already extremely far developed bull markets. When we're told we can safely buy and hold this or that because of the blockchain, or the AI revolution or the invention of the what will become the new dominant monetary system - I urge you to remember one thing.
The people who tout this would have almost certainly went broke if they were alive and investing in any of the previous times this has happened.
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