by Gary Alexander

June 11, 2024

A century ago this week, June 10-13, 1924, Cleveland hosted the first of its three Republican national conventions. (The others were 1936 and 2016, when Trump was first nominated). The 1924 event had two notable firsts – the first convention with female delegates, pictured below, and the first convention covered by a national radio broadcast. The rest of the 1924 campaign was also the first time that major candidates reached voters in all 48 states, as radio exposure spread exponentially during the 1920s – something like high-speed Internet in the 1990s, smart phones in the 2010s, and now “AI” in the 2020s.

RNC Convention Picture

Another hallmark of radio exposure came two years earlier, when President Warren G. Harding became the first president to address the nation on live radio. On Flag Day (June 14, 1922), he used radio to dedicate the Francis Scott Key Memorial in Baltimore, but not many could access his voice in 1922 until a Russian immigrant named David Sarnoff made his dream come true, of turning RCA – the Radio Corporation of America – into a voice linking America. Sarnoff rose from the youngster who manned the telegraph during the 1912 sinking of the Titanic to become the visionary behind the top stock of the ‘20s.

  • In 1920, RCA owned only two stations, both in New York City, reaching just a 30-mile radius.
  • The number of radio stations rose to 30 in 1922, then to 556 in 1923, then to over 1,000 in 1924.
  • The number of home radio sets was only 5,000 in 1920, but that number soared to 100,000 in 1922, to 500,000 in 1923 and five million by 1926, with nearly every home sporting a set by 1929.

(Source: “Forbes Greatest Business Stories of All Time” by Daniel Gross, et al)

In 1927, Forbes gushed that radio “is a new dimension of human life. It must be compared not with mere inventions, such as the automobile and the flying machine, but with the discovery of fire or… language.”

As for the elections, today we have an over-surfeit of 24-7 cable TV coverage. Perhaps we wish for a cease-fire of electronic coverage now, but in 1924, citizens were hungry for election news. As Sarnoff said in April 1924, about the convention: “For the first time in the history of an American Presidential election, rival Presidential candidates will appeal through the forum of the air to the American electorate,” further noting that radio “made it possible for millions to follow every move in the convention hall.”

Radio continued to grow in popularity in the 1920s, through sports broadcasts, news, music and dramas, expanding well into the 1940s, but Sarnoff saw the end early when he began his 20-year $50 million drive to re-position RCA as a television leader, starting in 1929, when RCA stock crashed. His belief in TV kept the company alive (until 1986) and kept him at the top of the company until 1970. Sarnoff was born on a farm near Minsk in 1891, son of a house painter, but he still ran RCA when man landed on the moon.

RCA Victorola

The birth of television actually happened 99 years ago this week, on June 13, 1925, when the first telecast of a moving object was broadcast. It showed a model windmill with rotating blades. This first telecast was sent by a radio station in Washington, DC, to a laboratory in the same city. Within three years, the first regularly scheduled television programs would be broadcast, but radio dominated the airwaves for another 20 years, until about 1948. The better technology doesn’t always win the profits game right away.

Government was slow to regulate radio. A decade after the 1924 convention radio broadcast, on June 19, 1934, the Federal Communications Commission (FCC) was finally created, to oversee radio. (As a bit of trivia, I have been a radio broadcaster for 22 of the last 40 years and have had my FCC license since 1993).

Tech Stocks Rise (and Fall) Faster Than “Normal” Stocks

Beware hot technology stocks. They can rise like rockets and then fall like the Saturn V first-stage booster after its massive liquid oxygen fuel tank runs dry. RCA stock grew 200-fold during the 1920s, in a time of deflation, so those were “real” gains. Here’s a look at RCA’s rise from 1920 to 1929, then its collapse:

RCA Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

After the mania reached a peak in September 1929, RCA shares fell from $114.75 to $2.625 in May 1932, a 97.7% decline in under three years. That’s clear on this log chart, above, but due to CEO Sarnoff’s long-term bet on TV, plus his purchase of Victor (records) and continual radio sales, RCA gradually recovered and topped its 1929 highs – but not until 1965 – and the stock was flat until GE finally bought it in 1986.

RCA could only keep alive in those long, lean decades by acquisitions, first buying Victor (the recording company), then acquiring Random House (publishing), Gibson (greeting cards) Hertz (rental cars), Banquet (frozen foods), Coronet (carpeting) and some other unrelated firms in the go-go merger era.

RCA 2 Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

According to “RCA and the Roaring Twenties” (November 20, 2023) by Bryan Taylor, Chief Economist of Global Financial Data, “Radio was the internet and AI of its day. All you had to do was include ‘radio’ in the name of your company and the price of your stock would shoot up, even if there was very little behind the company. A stock like Kolster Radio, which manufactured radio receiving sets, rose from 10 to 95 between 1927 and 1929, then crashed down below one by 1930, when it filed for bankruptcy.”

Technology is wonderful, and we should all own some – while it’s hot – but very few tech stocks have a “buy and hold” long-term growth stock life cycle. They tend to shoot up like rockets, plateau, and fall.

In 1999-2000, many NASDAQ stocks traded out of all connection to the reality of their earnings. In February 2000, NASDAQ rose 19.2% while the Dow fell 7.4% and S&P fell 2.0%. It took seven years for the Dow and S&P 500 to reach new highs, but NASDAQ took 16 years to reach new highs. Then in 2023, NASDAQ topped the other two indexes, when the AI craze (the radio of the 2020s?) lifted technology stocks.

Three Indicies Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

You never know when the peak might come, but if you have some technology stock 10-baggers, it seldom hurts to take some chips off the table. Technology is important to mankind’s future, but technology also requires the replacement of one leader with another from time to time, and that means new leaders always emerge.

All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.

Please see important disclosures below.

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Fresh All Time Highs, Now What?

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Why Do You Invest? To Hoard Wealth, or Spend It?

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Read Past Issues Here

About The Author

Gary Alexander

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander

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