Late 1973 Market Performance:
I'd have to disagree with you re the significance of the Mideast conflict in '73, although you're certainly entitled to your own view. I don't recall if the Arab Oil Embargo started that early - I would agree that had a significant negative impact on the U.S.
At any rate, here's my take on it:
I've found that the country's demographic profile goes a long way toward predicting and explaining secular Market trends. In the 70's, the prime new investors were those born in the 30s, and the 30s birth rate was extremely low. At the same time, the primary "divestors" were those born around the WWI era, and there were more of them. Additionally, Harry Dent has pointed out, accurately, that the inflation rate correlates quite closely with the trend in the # of 20 yr olds, and there were a growing # of them in the 70s. Essentially, you had a growing inflation problem, rising interest rates, and an unfavorable demographic profile. That's what caused the vicious '73-'74 Bear Market, with an assist from the Nixon troubles as I recall, IMHO. |
