The seventies were unique. It was a period marked by disco, Watergate, an oil embargo, stagflation, and bell-bottom jeans. It was a challenging decade for most Americans.
The Yom Kippur War in 1973 led OAPEC to enforce an oil embargo that brought our country to its knees with long gas lines and high prices at the pump.
We witnessed the horrific terrorist acts of the Munich Olympic Games, as Jim McKay reported on the events as they unfolded and told us, "They're all gone." A tragedy.
Politically, it was a brutal decade because of the resignation of Richard Nixon, the Iran Hostage Crisis, and the fall of Saigon.
The 1970s had excellent music like Stairway to Heaven, Joy to the World, and Hotel California. The Sting, Rocky, and The Deerhunter won an Oscar for Best Picture, while Jaws kept most people out of the water. The Sony Walkman and Jogger rollerskates were the hot items to own.
The Oakland A's, New York Yankees, and Cincinnati Reds dominated baseball. The Miami Dolphins, Dallas Cowboys, and the Pittsburgh Steelers ruled the NFL. Magic and Bird launched their NBA careers with contradictory styles of basketball.
Hank Aaron hit his 715th home run, and Muhammad Ali was the reigning heavyweight champion of the world. Billie Jean King beat Bobby Riggs in the Battle of the Sexes; Secretariat won the Triple Crown by thirty-one lengths in the Belmont Stakes.
Our great country celebrated its 200th anniversary on July 4, 1976, and we welcomed the return of the Apollo 13 astronauts. Saturday Night Live debuted in 1975, and Star Wars took over the universe a year later.
The Sears Tower and Twin Towers reigned supreme over our country's infrastructure. Margaret Thatcher, The Iron Lady, became Prime Minister in 1979, and Mother Teresa won the Nobel Peace Prize that same year.
For investors, the seventies were complex because of stagflation. The S&P 500 returned 5.86% annually, underperforming T-Bills and inflation. The one-month US T-Bill averaged 6.31% yearly, with inflation returning 7.36%, so investors posted negative returns after taxes and inflation. It was a lost decade, and it was not until 1982 before stocks and bonds started climbing again.
Investors who ignored the headlines and bought stocks and bonds during the dark days experienced decades of superior growth. Since 1970, the S&P 500 has averaged 10.47% annually; T-bills generated an annual return of 4.42%, while inflation averaged 3.98%. A $1 investment in stocks grew to $212.42 compared to $10.25 for T-Bills.
According to some experts, the outlook for stocks and bonds is dire, and they're predicting low stock returns and rising interest rates. Should you pay attention? If your time horizon is three to five years or more, focus on your financial plan and keep investing. If the stock market falls, use it as an opportunity to buy quality investments because the long-term trend of the stock market will reward you in the future, just like it did for investors in the seventies.
And a new day will dawn for those who stand long, And the forests will echo with laughter. ~ Stairway to Heaven
November 10, 2023
Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level.
Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren't suitable for every investor. Prices and yields are for today only and are subject to change without notice. Past performance is not a guarantee of future performance.
 Dimensional Fund Advisors Returns Web – 1/1/1970 to 10/31/2023