Poll: It's 1894, which would you rather have?
RYK
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In 1894, a Clapp family member acquired an 1850-D $5 for face value at Warren Saving Bank. This coin was sold to Louis Eliasberg in 1942 and eventually sold as part of the US Gold Collection as an XF-45 (291fifth graded it as F-15 
)in 1982 for $1760. Today, it would likely be graded AU-55 of thereabouts, and would sell for about $6000-7000.
It is the third most scarce Dahlonega $5, trailing the 1861-D and the 1842-D LD.
In 1894, you could have invested $5 in General Electric company stock. GE is among the largest and most successful publicly traded companies in the US.
)in 1982 for $1760. Today, it would likely be graded AU-55 of thereabouts, and would sell for about $6000-7000. It is the third most scarce Dahlonega $5, trailing the 1861-D and the 1842-D LD.
In 1894, you could have invested $5 in General Electric company stock. GE is among the largest and most successful publicly traded companies in the US.
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If we are saying that we are 'in' 1894, we wouldnt know todays rarity of the coin either, but I would probably have taken the coin based on the gold rush of the times.
i chose 5. no cheating folks!
If we are saying that we are 'in' 1894, we wouldnt know todays rarity of the coin either, but I would probably have taken the coin based on the gold rush of the times.
We are stepping back in time, taking either the coin or $5 in GE stock, and coming back to 2006. Buy and hold; no market timing, shorting, hedging, etc. I will add that I embarked on this little exercise to prove a point and ended up learning quite a few things I had not anticipated.
Assumption #1: I emailed GE IR over the weekend for historic price information, and they only had information from 1901 on. I then took an arbitrary low decade estimate for the first decade of the 20th century, as I did not want to underestimate the stock return. The 1907 San Francisco earthquake caused a financial panic and resulted in a significant frop in the stock price in that year. Bottom line: I made a conservative low estimate for the stock price in the first decade of the 20th century.
Assumption #2: As partagas pointed out in the thread, it's how you handled the dividends that really determines whether GE is a winner or a loser in the race. If you assume 6% or lower dividend with 6% compounded return GE actually loses. If you assume 7% dividend with 7% compounded return GE is the winner. DRIP plans did not exist in the early 20th century as they do now, so I do not know how best to handle this issue.
Bottom line: Investing in $5 GE in roughly 1894 would have resulted in a stock worth under $200 in 2006, but with a long stream of dividends, which depending on their rate and subsequent compounding could be worth more than the half eagle. Any way you cut it, picking up the half eagle at the bank for face value should have resulted in a lot of "You Suck™s" from Clapp's coin cronies back then.
Interestingly, inflation at an average of 3.5% would give that $5 of buying power in 1894, $235 of buying power in 2006.
I'm sorry, I don't think the figures here are even close to correct. GE has been one of the great long term investments in history. I don't know the exact figures, but the link I posted above shows a market cap of $100,000 in 1892. Current market cap is $350 billion or 3,500,000 times the value in 1892. The link above also says that if a person had one share in 1926 they would have over 4000 shares in 2006. Taking 5 x 3.5m = $16.5 million -- a bit more than that gold coin is worth. That does not factor in dividends.
Now there are many, many blue chip companies that have gone bankrupt. Anyone owning just about any German, or Russian equity or real estate, would have zip, zero, nada, due to the government changes and wars. Anyone owning any of the other 11 Dow stocks in 1892 would probably have done poorly, unless they knew when to get out. However, if a person was lucky enough to pick the winner, that $5 would probably be worth over $20 million today factoring in reinvested dividends.
/edited for math /
The GE fact sheet shows that the first 50 shares of GE sold at $108 per share.
Fractional shares is a somewhat modern invention.
Also from the fact sheet:
"How many shares would you have today if you bought one share pre-1926 and received cash dividends?
4,608 shares after all the stock splits."
4608 shs x $33.77 (today's price from yahoo) = $155,612
Current quarterly dividends are .25 per share. 4608*.25 = $1152 x4 = $4608 dividend per year.
GE dividends have been growing, so the upper limit (actual dividends is lower) on dividends received over the timeframe is:
112 years * $4608 = $516,096
So in conclusion, I would say you end up with stock worth $155,612, and a pile of cash I would guess around $250,000.
I am not sure you would hit the $20 mil mark if you reinvested the dividends (in whole shares), but it is a respectable sum.
Random Collector
www.marksmedals.com
<< <i>Would $5 have even bought 1 share of GE in 1894?
The GE fact sheet shows that the first 50 shares of GE sold at $108 per share.
Fractional shares is a somewhat modern invention.
Also from the fact sheet:
"How many shares would you have today if you bought one share pre-1926 and received cash dividends?
4,608 shares after all the stock splits."
4608 shs x $33.77 (today's price from yahoo) = $155,612
Current quarterly dividends are .25 per share. 4608*.25 = $1152 x4 = $4608 dividend per year.
GE dividends have been growing, so the upper limit (actual dividends is lower) on dividends received over the timeframe is:
112 years * $4608 = $516,096
So in conclusion, I would say you end up with stock worth $155,612, and a pile of cash I would guess around $250,000.
I am not sure you would hit the $20 mil mark if you reinvested the dividends (in whole shares), but it is a respectable sum. >>
That $250,000 number ignores the first 34 years of the company--usually a time when companies grow fastest. The dividends could be invested, perhaps even in $5 gold pieces
You can buy and sell GE paper any day of the week.
There is only one MS69 $5 Lib. ...........1894-s
Versus 10,000 invested in Harley Davidson in 1986
<< <i>I picked GE as the comparison stock because it has been in business over 100 years as essentially the same core company. >>
I like your thread, but I don't really agree with the above statement. GE is more of a financial services type company than an industrial company (at least the financial services side makes an incredible amount of money, and the tax group isn't too shabby at creating income, either). I don't want to try to calculate the exact numbers, but I think I would take the $5 worth of stock.
Now if I had a choice between GE stock and a piece of the action on the Three Rivers Collection....
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
Another thing to think about is what if someone got a $5 Philly eagle instead. Sigh. It would be like picking one of the other 11 original Dow stocks, or some other stocks--a good many are worth zero today. If someone could pick the best winning stock for the next hundred years, $5 to several million dollars will again play out, however, with over 5000 publicly traded companies, most aren't going to pick the winner.
My initial objective was to show how much more powerful the stock market has been vs. the coin market with a silly and flawed example. My own calculations showed to me, at least, that the numbers were closer than I expected.
By 1894, people were already starting to be interested in branch mint gold, and it was no accident that this date was obtained and kept, rather than spent.
The stock.
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1