23 Years Ago Today

On August 12, 1982, the Dow fell 0.29 points to close at 776.92, marking a two-year low. At that time, stocks had been lousy investments for over a decade. In fact, this was only slightly above where the Dow was when President Kennedy was assassinated 19 years before.

On February 9, 1966, the Dow reached 995.15. So in 16-1/2 years, the Dow fell 21.9%. By the summer of 1982, the country was sliding into the worst recession since the 1930s. Before the end of the year, the unemployment rate would reach 10.8%, more than twice what it is today. On August 13, 1979, Business Week published its famous “Death of Equities” cover.

Despite all the gloom, we now know that this was one of the greatest buying opportunities in history. With a few months, inflation would subside, and except for a few minor outbreaks, it hasn’t been a problem since.

On Friday, August 13, the Dow began its remarkable bull market by soaring 11 points. Believe it or not, 11 points was big money back then. In today’s terms, that’s over 150 points.

By the way, Fast Times at Ridgemont High opened in theaters that day. The movie made about $2.5 million dollars that weekend, one of the poorer showings that summer. Thanks to the miracle of movie rentals, it would become a cultural milestone for my generation.

The following Tuesday, the Fed cut interest rates to 10.5%. The Dow jumped nearly 40 points. Then on the following Friday, the Dow added another 30 points. The rally was on, and it would never look back.

Posted by on August 12th, 2005 at 10:05 am


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