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Posted on 28 August 2011 | 5,704 views

The Secular Bear Market of 1966 Through 1982

From a historical perspective, the 1966 through 1982 Secular Bear Market was the third one we have had since 1900 and was not overwhelming in terms of loss, it simply meandered sideways virtually going nowhere for 16.5 years.

The Dow Jones Industrial Average lost 1.18% per year over the course of this secular bear market and to put this into perspective, a CD (Certificate of Deposit), made a more attractive investment than the “Blue Chip” stocks of the Dow Jones Industrial Average.

The 1966 through 1982 bear market would see a total of nine separate cyclical phases — four bullish and five bearish. The Dow would attempt to rally above the 1,000 level but each time it would fall back into a tight trading range between 600 and 1,000 — enduring an extended sideways trading range throughout the bear market. A buy-and-hold stock strategy over the course of this prolonged secular bear market was devastating to investors.

Stock Market Timeline: 1966 through 1982

  • 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 the United States 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 Richard Nixon resigns and the Dow sells-off by (17.6%) from 8/7/1974 through 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 experienced 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 Ronald Reagan is shot.
  • The Dow Jones completes the last cyclical bear phase in July 1982.

At the end of the 1966 though 1982 secular bear market the Dow Jones Industrial Average had lost over (17%) — it had traded in a tight trading range for over 16 years.

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