Financial History Issue 112 (Winter 2015) | Page 36
Collection of the Museum of American Finance
Using the idea of reversion to the mean
and assuming a balance about the duration
and magnitude of movements in the indicators above and below the mean, Babson
released numerous publications with his
predictions for business cycles. As much
as he was a forecaster, Babson was first and
foremost a businessman. Brilliant salesman that he was, he was able to market his
publications to 20,000 subscribers by 1920.
A number of other forecasters, including
economists like Irving Fisher, developed
their own methods of predicting movements in the economy and published their
findings for the investing public as well.
John Moody’s foray into forecasting
came in a rather peculiar way. As his
father before him, Moody was prone to
speculation. He also branched out from
publishing just his Manual and founded
the Moody Publishing Company in 1903.
This company oversaw new ventures,
such as a specialized financial library that
researchers could access, as well as the
publication of various books on economics and finance, some of which were written by Moody himself. Other business
ventures, such as Moody’s Magazine, followed soon after.
When the Panic of 1907 hit, Moody lost
subscribers, and some of his other businesses produced little profit or lost money.
He sold Moody’s Magazine and, shortly
thereafter, sold Moody’s Manual to his
competitor, Roger Babson, in 1908.
Despite his losses, Moody desired to
re-enter the business information industry. However, he could not simply make
another version of Moody’s Manual
because the agreements he signed with
Babson prevented him from replicating
his prior success with the same model. He
needed to come up with something new,
so he moved into the investment advice
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