Secular Bear Market 1966 - 1982

The Times They Are A-Changin':

Bear markets come in all shapes and sizes. The 1966 - 1982 secular bear market was not overwhelming in terms of loss, it simply meandered sideways virtually going nowhere for 16.5 years. The Dow Jones lost (1.18%) per year over the course of this secular bear market. It of course pales in comparison to the devastation caused by the Crash of 29', but nonetheless long-term investors did lose money. Put into perspective, a CD (Certificate of Deposit), made a more attractive investment than the "Blue Chip" stocks of the Dow Jones Industrial Average. During this secular bear market the nation would have to endure the Vietnam War, continued Civil unrest, Watergate break-in, OPEC oil embargo, Nixon's resignation, Stagflation and the attempted assassination of Ronald Reagan (see Market Timeline).

The 1966 - 1982 bear market would see a total of nine separate cyclical phases; four bullish and five bearish (see Table 1). The Dow would flirt with the 1,000 level again and again but each time it would fall back into a tight trading range between 600 and 1,000. The feeling of investors following a buy-and-hold strategy over the course of this prolonged secular bear market could be summarized in a single word; frustration. Given the extended sideways trading range, an actively managed and fully diversified portfolio would have provided investors with a better opportunity to profit during this secular bear.

The chart, tables and timeline below will provide a complete overview of the 1966 - 1982 secular bear market.

Chart 1: Dow Jones Secular 1966 - 1982 Bear Market:

Table 1: Secular/Cyclical Market Review:

Market Timeline 1966 - 1982:

By the mid 60's the U.S. was embroiled in a war that was quickly becoming very unpopular. Protests and riots helped to spur on a new stage for the markets that was very different than the recent secular bull that ended on January 1966. To quote Bob Dylan "the times they are a-changin." The new secular bear market had formed in the Dow that would last for the next 16+ years.

• The beginning of 1966 saw the continuation of the Vietnam War and increased civil unrest helping to propel the Dow Jones lower by 21% through September 1966.
• Israel wins the Six Day War, capturing West Bank, Gaza in 1967.
• 1968 saw the assassination of Dr. Martin Luther King and Sen. Robert F. Kennedy.
• On July 20, 1969 man lands on the moon.
• Student anti-war protesters killed at Kent State in May 1970. The Dow drops by 6.7% over a two week period.
• Watergate break-in at Democratic headquarters occurs in 1972.
• The bubble surrounding the Nifty Fifty stock selection strategy bursts headed into the 73 -74 cyclical bear phase that lost over 40% in less than two years.
• OPEC oil embargo hits in late 1973 fueling a continuation to the cyclical bear market slide.
• President Nixon resigns and the Dow sells-off by (17.6%) from 8/7/1974—8/29/1974. A few short months later the Dow Jones puts in a cyclical bottom.
• The end of the Vietnam war in 1975 sees the Dow begin a quick 60% recovery over the next 2 years.
• The Dow flirts with the 1000 level multiple times in 1976 before beginning an extended cyclical bear phase.
• The remainder of the Carter administration in the late 70's saw sideways action on the Dow brought on by Stagflation (1978 - 1979), Three Mile Island (March 1979), and the Iran hostage crisis (November 1979).
• Ronald Reagan elected president in 1980 beginning the first of his two terms in office.
• March 30, 1981 Reagan is shot.
• The Dow Jones completes the last cyclical bear phase within the longer-term secular bear market in July 1982. The Dow had lost over 17% over the past 16+ years. The market was ready for the next move.

At the end of the 1966 - 1982 secular bear market the Dow Jones had lost over (17%). It had traded in a tight trading range for over 16 years and it was ready to explode to the upside. Government deregulation, corporate greed and new technologies would lead the Dow higher in the next secular bull market.

>>> Click to view the next secular market in the Dow Jones covering the 1982 - 1999 period.

Table 2: Annual Returns by Year:

Detailed Timelines for Other Secular Markets:

Secular 1929 - 1949 Bull Market
Secular 1949 - 1966 Bull Market
Secular 1982 - 1999 Bull Market
Secular 1999 - Present Bear Market

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