The Year the Stock Market Died

Jim Gust's celebration of his 30 years at Merrill Anderson prompted a browse in The New Yorker's archives. Like to see what ads offering investment services looked like back in 1979?

Sorry. No luck! It was a fool's errand.

As Business Week famously declared that year, in 1979 the stock market was dead – cold and stiff, deceased as that Monty Python parrot.

The only Merrill Lynch ad in view was this one, promoting tax shelters.

Citibank, in the ad below, delivered an early pitch for private banking, with trust and investment-management services buried in the small print.

The malaise of 1979 is almost impossible to grasp today. Inflation was rampant, taxes were high, and anyone lucky enough to make more money fast enough to keep up with inflation ended up in even higher tax brackets.

"Every Investor Has 20-20 Hindsight," to quote the most noted Merrill Anderson ad for U.S. Trust. Looking back we can see that 1979 was about as close to heaven as a long-term investor is likely to get in her lifetime. In November of that year the Dow Jones Industrial Average stood a bit above 800. Ten years later – over 2,600!

In 1979 runaway inflation pushed long-term Treasury yields into double digits, and yields continued rising. Anyone who bought 30-year bonds in 1979-81 and kept them must feel like crying as the issues mature. No more golden eggs.

There are those who feel like we're reliving the 1970's. Not quite. We certainly haven't arrived at the equivalent of 1979. Investors would need to suffer much, much more to reach the same depth of despair. Let's hope we muddle through less painfully.

But if we don't, the youngest Boomers and the Generation X'ers will have awesome wealth-building opportunities before the next stock market boom.