Sep
9
In 1979, Business Week declared equities “dead” due to inflation. Of course, equities started one of the longest bull markets soon after this point, and as always, provided a good long-term hedge against inflation.
So what’s the lesson here? Maybe:
- There are fundamental reasons why stocks lose to inflation over the short-term, beat inflation over the long-term, and outperform bonds. A few years of boom or bust doesn’t mean the game has changed - either with the soaring P/E ratios of 1999, or the current bear market. It isn’t different this time.
- The financial press needs to fill pages and sell magazines. Controversial but irresponsible content does this just fine.
- Predicting the future based on the past is hard.
