Scream 7: fun, nostalgic and plenty of jump scares
I’d like to think that my readers have watched one too many movies or perhaps that they follow some arbitrary rule-based system when thinking about equity markets. Scream 7 continues as a murder mystery sequel to a 30-year franchise. Unfortunately, the villain is rarely simply motivated with the movie leaving you guessing at every corner who the killer may be.
In 1979, BusinessWeek published its cover story on the “death of equities”. At least seven million shareholders had defected from the stock market since 1970 and more young people than ever had followed this trend. In this apparent crime scene institutional investors had rerouted their money through high-grade bonds, shares of small companies, real estate, commodity futures such as gold and diamonds. A Labor Department ruling that changed the definition of what constitutes a prudent investment was just one more event in a nearly endless string of consequences affecting the stock market during that decade.
For more than 40 years, total stock returns averaged about 9% annually. Bonds rarely paid more than 4%, despite their reputation for safety. Suddenly bonds were yielding up to 11%, while stocks were limping along with less than 3% returns throughout the decade.
At that point, it could no longer be dismissed as a simple stock-market jump scare. The trend persisted for more than ten years, through market rallies, business cycles, recessions, recoveries and booms.
In the new sequel, Wall Street had learned something: that there are more profitable things besides stocks to sell among them options, futures and real estate that it did not have in the 1950s.
Overall, I give Scream 7 a 6/10 rating.
CREDITS
- Author, G. (1979). BusinessWeek: The Death of Equities - The Big Picture. [online] The Big Picture. Available at: https://ritholtz.com/1979/08/the-death-of-equities/