Déjà Vu: 1979 and the “Death of Equities” by Jeremy Burri

In 1979, Business Week ran a famous cover story titled, THE DEATH OF EQUITIES.  The article spelled out the case for why stock investing was dead.  The evidence seemed compelling.  From 1966 to 1978, the Dow Jones average had been up & down — but actually was higher in 1966 than in 1979.  Inflation, oil prices, and other issues were a constant worry, and the US economy seemed to be in for years of slow growth.  But, contrary to popular wisdom, stock investing was not dead.  From January 1 1979 to January 1 2012, the average annual return for the Dow was 8.59%,  8.15% for the S&P 500 and 9.88% for the Nasdaq.  What lessons can we learn from this?  First, long-term investing requires discipline.  History is filled with times where the market did not perform up to our sometimes lofty expectations. Second, every time the market slumps, experts will say, “This time is different.”  They were wrong in 1979 and will likely be wrong about this market as well.  To paraphrase Peter Lynch, “I can’t tell you what direction the next 1,000 point move in the market will be, but I can tell you what the next 10,000 move will be.”