The Death of Equities: How Inflation is Destroying the Stock Market
-Business Week Magazine, August 13, 1979
In last month’s article, recognizing that one-half of 2023 is already in the books, we took a moment for a Mid-Year review. This month, we announce a new change in our format.
Listening to Your Feedback
We have been publishing our “Great Investors” article series for over 10 years now, and this series has consistently been our most popular content every year. We thank our loyal readers and truly appreciate your comments and feedback over the years.
One suggestion that we have received several times from many of our readers is that it would be beneficial to have a more interactive conversation about our investing philosophy and outlook on current events in relation to that philosophy. Many have suggested that it would be valuable to have an opportunity to ask questions about our topics in addition to just reading our article.
You asked, and we listened!
Announcing Our New Format
Beginning this quarter, we plan to change the format for our “Great Investors” series from a monthly written commentary to a quarterly live-stream webinar format. Our plan is to offer the following:
- Every quarter, we will hold a live event that readers can register to attend, which will be held at a venue local to the Philadelphia Main Line.
- The agenda for the event will be as follows:
- We will deliver a brief talk summarizing our outlook on current events in the same style you have come to appreciate in our monthly article series.
- We will then have ample time for Q&A and discussion in order to address any additional questions you may have.
- Refreshments will be served at the conclusion of our talk.
- For those who cannot join us in person, we will also provide a live stream link so you can watch the presentation and submit your questions online. We will also have a recording of the discussion available for those who might have a time conflict and would like to watch the presentation later.
Our first event will be held on October 11th at 5 p.m., so please mark your calendar now! We will be sending out a registration link with more details soon so you can secure your spot.
In the meantime, we love your feedback, so please let us know what you think of this new format. Please also feel free to write us back to let us know about the investing topics you would like to see addressed in future discussions so we can answer your most pressing questions.
A Quick Tidbit for August
Although we will wait until October 11th to provide a deeper dive into current events of note, we won’t let a month go by without at least providing you with a short tidbit you may enjoy. So, this month, we would like to point out the anniversary of one of our favorite headlines in the history of financial media.
This past August 13th marked the 44th anniversary of this jewel, published back in 1979:
Although equities did experience a difficult period during the early 1980s, the word “death” implies final extinction, which, of course, is a ridiculous prediction for the stock market in any era. In the case of the equity market back in 1979, this claim seems somewhat similar to the announcement of the death of Mark Twain: it was greatly exaggerated.
Interestingly, this headline was inspired by many of the same concerns that pessimists have about the economy today: persistent inflation, leading to higher interest rates, and eventually recessionary conditions. Business Week also made the classically fatal mistake of assuming that these problems are insoluble and will bring about the inevitable demise of the equity market.
On the day this headline appeared, the S&P 500 closed at a level of 107.42. It closed on August 14th of this year at 4,489. If you invested $10,000 in the stock market on that day and reinvested your dividends, it would be worth $1,250,000 today for an average annual compound rate of return of 11.6%.
Greatly exaggerated, indeed.
Helping Those You Care About
Over the last year and a half, the faith of all long-term investors has been severely tested. As must happen every few years, we were basically required to do just one big thing: reject the idea that “this time it’s different” and hew to the belief that “this too shall pass.” We must not doubt that we’ll get many additional opportunities to practice patience and discipline in the years to come.
Successful investing, while always fundamentally simple, will never be easy. You may have a family member, colleague, or friend who perhaps did not fare as well during the 2022-23 bear market and who you feel might have benefited from the sort of advice you were receiving. Should that be the case, we would certainly appreciate your introducing us to them. We very much enjoy working with you and would welcome the opportunity to offer the same level of planning and service to people whom you care about.
You are more than welcome to bring a friend or family member to our event on October 11th or to share the recording of our discussion that night.