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Uncovering the Promise and Peril of Intelligent Computing

http://www.fool.com/investing/general/2013/01/12/promise-and-peril-of-intelligent-computing.aspx

Alex Planes
January 12, 2013

On this day in economic and financial history ...

Investors are used to seeing the Dow Jones Industrial Average (INDEX: ^DJI) register five-figure values. The Dow has consistently closed above 10,000 points since the end of 2003, except for a few months during the darkest days of the global financial crisis. However, until the 1980s, Dow-watchers were most familiar with three-digit index values. The history of the three-digit Dow is far more extensive than the four- or five-digit Dow, and this history began on Jan. 12, 1906, the first day that the Dow closed with a three-digit value since its 1896 creation.

The Dow's closing value of 100 represented a 144% increase in the decade since Charles Dow first published it. In those days, the Dow had only 12 components, two of which were the preferred shares of U.S. Rubber -- now part of Michelin -- and U.S. Steel (NYSE: X). The Dow's impressive rise with such limited variety is even more striking considering the woes of Tennessee Coal, Iron, and Railroad, a component that The New York Times  derided as one "advertis[ing] the fact that it is virtually cornered" and said that "the position of the stock is so well known that even the bucketshops are afraid of it." The moribund company merged with U.S. Steel, its largest rival, in the aftermath of the Panic of 1907.

The Dow couldn't sustain its hold on 100 for very long. By mid-February of 1906, the index again slipped beneath the three-digit level, vindicating the brokers who told the Times on Jan. 12 that "we got as many of our people as we could to sell out their stocks." The Dow wouldn't recover to 100 points again until 1909, and even then it maintained that level for just four days. It wasn't until the end of 1934 that the Dow put 100 points behind it permanently.

The hack is back
The relationship between Google (NASDAQ: GOOG) and China took a turn for the worse on Jan. 10, 2010, when the search-engine company revealed that it had been the target of a massive, sophisticated, and extremely persistent hacking attack originating from that country. The attack, which Intel (NASDAQ: INTC) subsidiary McAfee dubbed Operation Aurora, had persisted to that point for more than half a year and had targeted a number of major corporations, including those in tech, finance, defense, and chemicals. Juniper Networks (NYSE: JNPR) and Rackspace Hosting (NYSE: RAX) confirmed that they had been targeted, and reports also identified defense contractor Northrop Grumman (NYSE: NOC) and Dow Chemical (NYSE: DOW) among the prime targets.

Google's investigation  found that intellectual property had been stolen, and that the Gmail accounts of a number of human-rights advocates had been illicitly accessed. As the investigation unfolded, both corporate and political reports began to claim that the intrusions were directed and supported by the Chinese government. Further digging traced the source  of the hacks to a massive Chinese vocational school whose computer network was operated by a company linked to Baidu (NASDAQ: BIDU), China's leading search engine.

Operation Aurora's masterminds suffered no apparent repercussions in the aftermath of Google's announcements and the subsequent public debate. The hacking group continued to actively attack the computer systems  of major American corporations more than two years after their initial exposure. Google moved its Chinese operations to Hong Kong  shortly after the news broke, where