Is this the most volatile market in 70 years? By some measures it is. The ups and down in the stock market have been hard on investors. They play havoc with people’s expectations, and lots of people are wondering if the system is broken.
While the present challenges are serious, they pale in comparison to crises of the past. For example, in the mid-‘70s we were facing accelerating double-digit inflation, a domestic political crisis, and an aggressive Communist enemy. No wonder the S&P traded at only 8 times earnings!
By contrast, we’re worried today about an increase in top-line inflation from 3% to 4%. Our financial concerns are significant, but the only serious failure so far has been Bear Stearns. And our geopolitical enemy doesn’t carry the weight that the Soviet Union did.
If we could get through the ‘70s, we can get through today’s issues. My advice to the whiners on Wall Street is to get some perspective.
Douglas R. Tengdin, CFA
Chief Investment Officer
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