In 1979, BusinessWeek published a cover story declaring the death of equities.
Stocks had gone nowhere for a decade. Inflation was running above 10%. Interest rates were headed to 20%. The idea that anyone would voluntarily put money into the stock market seemed absurd.
Within three years, the greatest bull run in American history would begin.
$100 invested in the S&P 500 in 1970 became $4,607 by 2000. Forty-six times the original investment. 13.6% annualized for 30 consecutive years. Even after adjusting for the severe inflation of the 1970s and early 1980s, the real return was $1,033 — still a 10x increase in purchasing power.
The pain came first. The 1970s delivered stagflation, oil embargoes, and a market that went sideways for years. Investors who bailed missed what came next: Paul Volcker broke inflation with unprecedented interest rate hikes, triggering the 18-year rally from 1982 to 2000 — the longest sustained bull market in modern history.
Reagan-era tax cuts accelerated it. The fall of the Soviet Union expanded it. The internet revolution supercharged it. But none of it would have mattered to the investor who sold in 1979 because a magazine told them stocks were dead.
The market's greatest runs begin when nobody believes they're possible.
