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  • Investment Outlook

    What You Should Know about Market History

    Jan van Eck, Chief Executive Officer
    October 01, 2020
     

    As you may know, this summer I grew frustrated with what was not being taught in colleges—namely, what I think is necessary historical background for a career in finance. To address this gap, I taught a 16 unit course to our summer interns on the history of finance. We have a robust summer internship program, and in what was a challenging year, I felt this was a way to offer further value to our global interns. This fall, I am offering a similar course to anyone interested, with five weekly sessions.

    Why history and why these classes?

    First, problem-solving is central to most jobs in finance. Many of the problems have been faced before, especially from a policy perspective, so an array of solutions are available to those who know history. Did we ever have a “free” market separate from government influence? Why were we so slow to have a central bank?

    Further, while technology is all the rage now, many other eras of our development have been driven by disruptive technologies. It can only be helpful to see how that played out.

    Last, a career in business or finance is about predicting the future. Predicting the future is difficult, but articulating potential outcomes and likelihood is a reasonable exercise. History can suggest an array of government policies and economic outcomes that may not be obvious at a point in time. The quintessential insight of VanEck’s founder was that the price of gold, after being fixed to the U.S. dollar since the founding of the country, might de-link. And indeed it did, in the 1970s. Potential scenarios give insights into portfolio construction.

    With this in mind, below are the five classes we are offering this fall. These classes are appropriate for anyone, whether you are in financial services or not. Welcome!

    Class 1: The U.S. Government as a Financial Actor: Who Is Alexander Hamilton? (1780s – 1790s) - Replay Available

    Test to receive CE Credit, Must score a minimum of 70% https://form.typeform.com/to/dhxs05yF


    How was enough power centralized in the U.S. government, through the Constitution, such that the finances of the U.S. could be brought in order? How was a financial system created that could foster economic growth? And, if we have time, how did Hamilton use the same tools in the 1790s that we used in the global financial crisis?

    Class 2: Cotton, the South and Slavery (1800s-1860s) - Replay Available

    Test to receive CE Credit, Must score a minimum of 70% https://form.typeform.com/to/kr1PICLp


    Technology developments along the chain of the textile industry drove an explosion in cotton demand which was met by the South. What was the structure of the textile industry that led to global trade? How did cotton affect slavery? As we revisit the consequences of slavery and racism today, how was finance involved in slavery? How did textile mills affect people’s work lives, and what were the implications for political values?

    Class 3: Canals, Railroads and Chicago (1825-1860s) - Replay Available

    Test to receive CE Credit, Must score a minimum of 70% https://form.typeform.com/to/gvVi0P1j


    This era, I would argue, was when the U.S. became an economic juggernaut and created the basic features of today’s economy—a national market. How did Chicago affect the region, the country and the world economy?

    Class 4: The Depression, FDR’s Bank Act and Financial Regulation (1933-1934)

    The banking system was shut down when FDR took office. What did he do? Most of the financial reforms enacted then are largely intact today. What were the theories behind them? How do those theories explain why no one was jailed after the global financial crisis of 2008-2009?

    Class 5: FDR and the U.S.’s Biggest Debt Default

    The U.S. today has a large amount of debt. Has it ever defaulted? (Spoiler: yes, it has.) What did the Supreme Court decide? What did FDR say about whether he’d honor its decision if it went against him (it did)? How should we think about today’s high debt levels?

    There is so much to cover in US history, and this may not be the perfect list, so your comments and input are welcome.

    Please share with colleagues or family who you think might be interested.

    Registration for the classes is available below:

    DISCLOSURES

    Please note that Van Eck Securities Corporation (an affiliated broker-dealer of Van Eck Associates Corporation) offer investments products that invest in the asset classes or financial instruments discussed in this commentary.

    This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.

    All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.