Most people under 40 cannot remember what it was like during 1979. As I read the headlines today, I see a striking similarity to events which took place thirty years ago. As the saying goes, "If history doesn't repeat itself, it sure rhymes." See if you agree:
1. The gold price was on its way to record highs.
2. Demonstrations were taking place in Iran which ended in the overthrow of the Shah.
3. Chrysler was on the verge of bankruptcy. Calls were being made for a government bailout.
4. Oil prices were escalating.
5. The dollar was under seige.
6. Major legislation had been passed which made the old "gas guzzlers" from Detroit out-of-favor and the focus was shifted toward improving fuel efficiency standards and overall vehicle quality.
7. There was an increasing call for development of alternative sources of energy.
8. The economy was in throes of a recession.
Of course, interest rates today are much lower than they were in '79-80. The stock market logged a 27% return from its recessionary low in January 1980 through June 1980. According to JennisonDryden, "the average post-recession return for the stock market S&P 500 is 36%... recession fears and market volatility make investors skittish..with many pulling money out of the market after having experienced much of the decline... Typically stock market declines begin prior to the arrival of a recession and a rebound begins while the recession is still underway."
Note: The above is for informational purposes only. Any decision to buy, sell, or hold a specific investment for a portfolio should be reviewed by your personal financial advisor.
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