THE MARKET’S WEAKNESS over the last two years has been chalked up to everything from election jitters to energy prices, the economy to Enron (ENRNQ). Likewise, in the early 1970s, there was an equally daunting list of fundamental factors, from Vietnam to Watergate, Cambodia to communism that got blamed for dragging stocks down.
On May 21, 1973, U.S. News & World Report featured an enthusiastic cover story called “Brighter Days Ahead for Stock Market?”
“Conditions are shaping up for a sustained rise in stock-market prices,” the magazine suggested, citing analysis from a number of then well-known pundits, who almost universally expected better times ahead. “The market is ready to move up” predicted Ian Cramer of Kohnmeyer and Co. “We are buying stocks.” Pundits, it turns out, have been missing the boat for years.
The Dow, which at 900 had already been in a trading range for the better part of six years, went on to drop another 35%, hitting new bear-market lows and, for a period, trading at levels that hadn’t been seen since the late 1950s. The recently introduced Nasdaq went on to drop 50%. (more…)