40th Anniversary of "The Death of Equities"
It has been 40 years since Business Week published it’s famous “The Death of Equities” cover story!
Despite the article being published as I approached my 4th birthday, I read it today and I found it fascinating.
What have we learned since August 13th 1979?
A few takeaways:
1. Equites do not die, and the world does not end. The S&P 500 closed on August 13th 1979 at 107.42; as I write it has closed over 3,000.
2. The S&P 500 annual dividend in 1979 was $6. The 2018 S&P 500 annual dividend was $53.61. Inflation is up barely 3 ½ times.
3. The Business Week article, condensed to four words: This time is different. In point of actual (long term) fact: this time is NEVER different. It just looks different – indeed as it did 40 years ago.
4. Financial journalism’s error is that it always extrapolates: “This is how things are right now; therefore this is how they’ll remain into the distant future, if not forever.” This is wrong.
Joseph M. Feldman, CFP®
Certified Financial Planner™ Professional
1Historical valuations are from www.bigcharts.com
2The raw data was obtained from Bloomberg (and from S&P) and organized by NYU.
*The Standard & Poor's (S&P) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization U.S. stocks. Indices are not managed and do not incur fees or expenses. It is not possible to invest directly in an index. Past performance is not a guarantee or indicative of future results.