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1-Page Summary of Business Adventures

Overview

After reading this, you will know why Bill Gates claimed that Business Adventures was his favorite book. He learned about the launch of the world’s ugliest car, a wink from an executive at General Electric, and more in this book. These events led to things like the end of insider trading and workers’ rights.

In this article, you’ll find twelve interesting case studies that will teach you how Wall Street almost killed off Piggly Wiggly grocery stores. You’ll also learn why shareholder meetings of large corporations are usually a waste of time and what happened when one CEO misinterpreted another’s wink.

Big Idea #1: As the 1962 Flash Crash showed, investors are irrational and the stock market is unpredictable.

How much can a person miss in three days? If you’re a stock market investor who falls into a three-day coma on May 28, 1962, you might wake up to no noticeable change in your investments but also missed the chaos of the 1962 Flash Crash.

A three-day turmoil in the stock market illustrates how strange Wall Street bankers can be. Investors are guided more by their mood than facts.

In 1962, the stock market was going down for six months. On May 28th, there were a lot of trades and the office was running late in updating prices manually. Investors panicked because they thought that by the time they knew what price their stocks really were at, it would be too late to sell them off before they lost value. They rushed to sell off their shares which created a downward spiral in prices. Their expectations became self-fulfilling and caused massive amounts of damage to people’s investments.

The crash was caused by emotions. The recovery from the crash, however, also had some emotional factors involved. People believed that the Dow Jones Index could not go below 500 points and as a result bought more stocks when it came close to hitting that limit. Three days after the crash, market prices recovered completely.

After the stock market crash, everyone was looking for answers. However, all of the officials could come up with was that the government needed to pay more attention to how people were feeling about the financial market.

The market is unpredictable because it’s irrational. The only thing we can predict about the market is that it will change and fluctuate.

Big Idea #2: The story of the Ford Edsel is the epitome of a product launch gone wrong.

Have you ever heard of the Ford Edsel? It was intended to be a flagship product in the 1950s, but it ended up being one of the most spectacular failures. It is also frequently cited as one of the ugliest cars ever made.

Ford was once a successful company. They failed, however, because they didn’t understand their market and what consumers wanted. In 1955, the American auto industry was booming due to high demand for medium-priced cars. Ford had trouble producing those types of vehicles and decided to create a new car called the Edsel that would be more appealing to customers.

The Edsel was a car that was launched in 1958. Unfortunately, the market had changed by then. People no longer wanted big cars like the Edsel and were more interested in smaller ones.

A second reason for the failure of the Edsel was that consumers had unrealistic expectations. Ford promoted it heavily, which led to a lot of buzz around the car. Therefore, when customers finally saw it, they were expecting something revolutionary. However, all they saw was another four-wheeled automobile after all.

Ford’s Edsel was a flop. The company spent all its money on psychological research to try to make the car appealing, but it neglected technical details. Customers found that the brakes were unreliable and that acceleration was jumpy when they bought it.