Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: wooden ships who wrote (3706)	3/1/1998 9:24:00 AM
From: Boca_PETE	Read Replies (2) of 42834

Truman: re: < the market from 1966 to 1982 disappointed even the most Panglossian of investors by staying comfortably below DJIA 1000 for most, if not all, of that time period.> Perhaps there were good reasons for the market ceiling of 1966-82: * Guns and butter policies during the Vietnam War. * Civil unrest from war protestors and civil rights protestors. * Assassinations of political and civil rights leaders. * Currency tensions building from the Bretton Woods fixed exchange rate system that lead to Nixon barring Gold redemptions by the US. * Price controls, then wage controls, then spiraling inflation and interest rates beyond anyone's imagination. * Oil shocks in the early and late 1970's resulting in gas lines and a FED that overinflated the money supply. * Russia's invasion of Afghanistan.. * The fall of the Shah of Iran and rise of extremism is Iran (our former close cold war ally where many oil investments were expropriated) that culminated in the hostage crisis with its failed rescue attempts by President Carter. * Nixon disgraced ending in the first presidential resignation, after his Vice President resigned pleading "Nolo contendra" to corruption charges. Followed by two weak presidents (Ford and Carter). * The major bear market of the mid 1970's and a few recessions along the way. I'm sure I've omitted items from this recounting of a very grim period in American economic and political history. Reviewing these items makes one REALLY appreciate the much calmer and positive times we are living in now. I believe the absence items such as listed above removed the market ceiling and permitted investors to value stocks base on fundamentals (Earnings per Share, and, P/E ratios). If we were to return to an environment similar to the period you describe, I'd expect the stock market to react in a similar manner. Also during the 1966-82 time frame, I would think that one needs to note that a rise in the market from 577 to 1000 represented a large percentage gain. Unfortunately, a tumble from 1000 to 478 also represented a large percentage loss if you were unfortunate enough not to get out near the top. P

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