BI > JULY 2003

Hope Springs Eternal

Thanks for the Memories

Bob Hope was born in Elfham, England, on May 29, 1903. A few days ago he celebrated his 100th birthday. In his words, "You know that you're getting old when the candles cost more than the cake."

Bob Hope's relationship with America's military service personnel is quite simply the stuff of legends. For nearly six decades he has been a globe trotter, spending many a Christmas away from home with our troops. Although the 1972 trip to Vietnam was billed as "the last Christmas show," each year that followed found Bob and his wife, Dolores, at military bases. In 1983 Beirut was the venue. In 1990 Saudi Arabia was the site for entertaining the men and women of Desert Storm.

"I love to go to Washington, if only to be nearer my money."

His longevity spans several key periods of technological development. It is here that he has been most remarkable. Keep in mind that he grew up with silent movies. Radio began to flourish when Bob was a young man. He joined with Pepsodent to host an enormously successful radio show. When the time came to embrace television, he made the transition flawlessly.

Born before the advent of automobiles, Bob has personally witnessed the evolution of several technologies and the disruptions they have all delivered to Wall Street. His prominence in radio just might provide a reminder that history does repeat itself.

On Evolution and Investing Disruptions

"[It] has helped to create a vast new audience of a magnitude which was never dreamed of. This audience, invisible but attentive, differs not only in size but in kind from any audience the world has ever known. It is in reality a linking-up of millions of homes."

These words were not spoken about computers or the Internet. They're not from the late 1990s. The reference is to radios and comes from a 1929 report prepared for Radio Corporation of America (RCA) by Owen Young, then chairman of General Electric.

RCA was Wall Street's darling highflyer stock of the 1920s. It made many investors and speculators millionaires. The RCA ticker was known by bankers and barbers from New York to San Francisco. It had a virtual monopoly on wireless communications for the masses. In 1920 the formation of RCA sowed the seeds of a radio future. Bob Hope was 17. The Roaring '20s provide the backdrop to illustrate some striking parallels between the early days of radio and the late 1990s experience with computers and the Internet.

Until 1919, radio had concealed its promise and did not appear to have much of a future. There were fewer than 5,000 radio sets in the United States. The first radio broadcasting stations were opened in 1920. Within a year eight more stations were created, and within two years there were 564. Organized broadcasts took shape, paving the way for advertising revenues. The success of this concept enabled RCA to become America's largest U.S. radio manufacturer.

By the end of the 1920s, three out of every four radio sets were turned on every day, and the average listening time was 2 hours and 25 minutes. Radios now incorporated loudspeakers, so the average audience per set was three persons, adding up to 38 million American listeners. Sales of radio sets rose from $60 million in 1922 to $350 million in 1924, and $843 million in 1928. RCA's earnings increased from $2.5 million in 1925 to nearly $20 million in 1928, and its stock climbed from $1 1/4 in 1921 to $85 1/2. From there it was propelled to a stratospheric 1929 high of $549. In 1929, RCA was the most heavily traded stock on the NYSE.

In February 2000, Francois Sicart, founder of Tocqueville Asset Management presciently wrote that our infatuation with technology, the Internet revolution and New Economies should not make us forget that, as John Kenneth Galbraith once said, "Financial genius is a rising stock market." Sicart wrote warnings using the comparisons between radio and the Internet as a platform.

I can imagine that Bob Hope sees the similarities between the histories of radio and the Internet and how they influenced the world of investing. His outlook includes a few observations that are good advice for investors. "I grew up with six brothers. That's how I learned to dance -- waiting for the bathroom." "I don't feel old. I don't feel anything before noon. That's when it is time for my nap." "I have seen what a laugh can do. It can transform almost unbearable tears into something bearable, even hopeful." Patience, periodic hibernation and an optimistic perspective.

Thanks for the memories, Bob. Happy Birthday!

Mark Robertson is director of online resources and senior contributing editor for BetterInvesting. He serves as a member of BetterInvesting Magazine's Editorial Advisory & Securities Review Committee. Mark can be reached at Robertson_Mark@comcast.net.