On this day in economic and financial history…
After more than a decade of research and $3 billion in expenses, the Human Genome Project finally presented its early success to the public on Feb. 15, 2001. A special issue of Nature magazine published that day contained multiple feature articles on the human genome’s potential for humanity, which all built to a big reveal: the first working draft of a fully sequenced genome.
Originally conceived as a way to use newly developed gene-sequencing technologies of the 1970s and early 1980s to identify and combat the effects of radiation, the Human Genome Project grew to become a search to understand the structure and purpose of the genome itself. Thanks to the contribution of passionate researchers around the globe — and a sudden influx of competing genomic-focused commercial ventures in the late ’90s — the working draft arrived two years earlier than expected. Under pressure from Applied Biosystems, which both manufactured early sequencing machines used in the project and sought to sequence the genome on its own (via subsidiary Celera), the Human Genome Project raced to finish its working draft in order to head off possible patent claims on the sequenced genome itself. President Bill Clinton declared the genome unpatentable in early 2000, and the working draft was announced to the public (though not published) in June of the same year.
Clinton’s declaration nearly destroyed Applied Biosystems, but the power of its machines was undeniable. Its revolutionary ABI 3700 sequencing machine, released in 1998, was said to decode in a single day the amount of information that had previously taken labs a year to produce. This machine proved instrumental in the Human Genome Project’s late-game sprint to the finish line, and although Applied Biosystems’ stock would crash with its peers in the great tech bubble-bursting of 2000, it remains a force in genomics technology to this day. You know it today as Life Technologies Corp. (NASDAQ:LIFE), which it became in 2008 after merging with Invitrogen.
A wild month for the Dow
On Feb. 15, 1932, the Dow Jones Industrial Average (INDEX:.DJI) posted an impressive gain of 4.6%, less than a week removed from two massive pops in excess of 9%. This occurred in the midst of an incredibly volatile month: February of 1932 saw an average daily move of 2.8%, although the net result was only an average daily gain of 0.4%. An editorial published in The Washington Post that day said everything about the attitudes of investors in early 1932, starting with its title: “Eager for Prosperity.”
The stock market last week made as sudden and sensational a start upward from rock bottom as its precipitate drop from the clouds in 1929. For weeks it has been evident that standard stocks and bonds were selling at prices that were not justifiable except upon the theory that the country would never recover from the depression. Never before has the Nation, at the end of more than two years, been in a condition where only one element was lacking for recovery — confidence.
It was but 28 months ago that dividends, earnings, book values were all swept aside and the price of stocks inflated threefold beyond the normal level of “ten times earnings.” Stocks were boosted ten points a day that were already on a dividend basis [yield] of less than 2%. Buying on future values was the order of the day. It was as futile, during that orgy of speculative enthusiasm, to preach caution and overinflation as it has been during recent months to point out unjustifiably low prices of securities.
In nominal terms, the marketwide P/E ratio was then about 14.3, but as calculated by Robert Shiller in cyclically adjusted real terms (the CAPE), the market had fallen from a P/E of 32.6 at the height of the bubble to 9.3 in February 1932. Compared to the past, market prices were cheap — but they would get far cheaper still. Cyclically adjusted valuations didn’t bottom out until that June, with the Dow another 50% lower and the CAPE at just 5.6. Investors might have been eager for prosperity, but they weren’t ready for it quite yet.