What can we look forward to when the post 2000-secular bear is over and some big bull market of the 2020s could be long in the tooth? This is a quick post relating to boom, bust and our desire to travel faster and farther.
On July 4, 1828, the last surviving signer of the Declaration of Independence, Charles Carroll, at age 91, would be at the shovel opening ceremony for the first railroad chartered in the still New New thing known as the United States. The Baltimore & Ohio Railroad raised $4 million dollars(!) in 12 days and would also become the first railroad company to transition from horses to steam-powered locomotion with a train called the “Tom Thumb”. (You can also thank Tom Thumb inventor Peter Cooper everytime you have Jell-O, he got the first patent for gelatin.)
The new new tech of railroads would face opposition by wagon and canal operators, by threatened merchants, and by clergy claiming man was not meant to travel at such great speed, but it was only a matter of time before the need for speed would attract more capital.
Canal companies could not hope to compete against transport technology that didn’t rely upon waterways and good weather, and eventually trains became an accepted part of history. (In 1831, one rail company called Mohawk & Hudson, reduced what would have been a day long canal trek to one hour by rail.)
First there would be the effusive investment acceptance and commensurate pricing of this hot new new transport thing, extreme optimism, the willingness to pay a premium for the future, drawing more capital but also late “adopters”, followed by disillusionment and busts. Despite the early busts of the 1800s, trains were not derailed and we continue to rely upon them in the 21st century.
You can still invest in B&O Railroad today, via it’s merger descendant CSX.
In 1927, Charles Lindbergh, helped to trigger the next big transportation investment boom, in wake of the 1926 Air Commerce Act. (Lindbergh’s future father-in-law, J.P. Morgan partner Dwight Morrow was recruited by President Coolidge to chair a board that developed the beginning of Federal aviation policies leading to the 1926 Act.) Lindbergh’s landing of the “Spirit of St. Louis” in Paris would open the floodgates of investment and public enthusiasm for aviation. The 1928 Aircraft Year Book noted “money, everywhere, seemed available for aviation…” to the tune of $1B USD during the 20 months that followed Lindbergh’s success, resulting in a 1929 $1B USD aviation industry valuation versus 90M USD in actual earnings.
During those early years, even with the public embrace of commercial aviation, it was seen as a mere complement to the “old” standby, railroads, by then a very mature industry, having gone through several boom bust and innovation cycles. In fact, here’s a 1927 stamp commemorating the old “B&O”, celebrating its centenary.
(We won’t get into happened in 1929. Anyone remotely interested in this post knows what followed, but airlines and aircraft were here to stay.)
So, here we are, almost 100 years after Lindbergh.
This post was inspired by the past year’s stock market and public awareness that an automobile unicorn, the electric car, could become a mainstream transportation technology and eclipse a century of petroleum powered vehicles. At this point, just about everyone knows about Elon Musk assuming leadership at Tesla, which has invited other automakers to push forward with more “hybrid” offerings. Tesla’s stock price has raced from post-IPO disappointment to great enthusiasm to some disappointment yet again.
So, no matter what happens to TSLA shares, the electric battery platform looks very promising, just as trains, planes (and hydrocarbon powered) automobiles became a part of daily economic life.
You know what I’m suggesting. We already can invest in the prospect of a century of automobiles that will be powered by electricity, which might even drive themselves, powering our homes when they’re parked in the driveway/garage (charged by panels we might have bought or leased from another Musk-associated enterprise, Solar City but that’s a separate post, watch out utility companies.)
What can we hope to expect circa 2027 from either Elon Musk or someone else like him? Shall we celebrate the Lindbergh Landing Centenary and invest in an IPO of SpaceX?