This Time Isn’t Different

“Quite simply the cry of “This time it’s different” in times of crisis has always been narrowly correct. But that the fear-stricken investor’s corollary— “And so it’s imperative that we get out of the market”—has always, in the fullness of time, proven tragically wrong.”

Nick Murray

The above quote is from the author’s recent article, The Day the Great Postwar Bull Market Died.  In the note he draws parallels between today’s landscape and the 21 month period between the start of 1973 and October of 1974 – when the stock market dropped by 48% – to remind us that as bad as today’s investing landscape may feel, as a nation, this isn’t our first rodeo.  Send us a note if you would like a copy of the original article but the condensed version is below:

• Inflation – In 1972 inflation was 3.2%.  By 1974 it had risen to 11.03%

• Oil Shock – In 1973 the Arab nations embargoed the sale of oil to the US.  By the time it was lifted in 1974, the price had quadrupled.

• Recession – The increase in prices created a 16-month recession that started in October of 1973 with unemployment reaching 9% and GDP contracting 3.2%

• Watergate – A political crisis that threatened to upend our democracy until Nixon resigned in August of 1974.

Does any of that sound familiar? The punchline, of course, is that as terrible and scary as those years were, things turned out quite well for those that stayed the course. $10,000 invested in the S&P 500 in January 1973 and left to compound (dividends reinvested, taxes paid from another source) has grown to around $1,250,000 today.  There continue to be no facts about the future, but if history is any indicator, which I believe it is, this too shall pass.