Interim Archives
Aftermath
In January 1975 , with the DJIA just over the 600 level and the S & P 500 creeping back toward 80 , New York Magazine featured a cover story entitled “ Wall Street Refugees : Survivors of the Crash and How They ’ re Making Out .” Chronicled were 10 former analysts , traders and partners of securities firms that either downsized , were acquired or liquidated beneath the grinding , nearly two-year stock decline . For most , the next act involved entrepreneurship : a bicycle shop and a steakhouse , among others . For one , a $ 1,500 investment in a screenplay resulted in the seven Academy Awardwinning film The Sting ; another went back to school to pursue a medical degree . ( A quick internet search of one endeavor , a delicatessen in Brooklyn , suggests strongly that five decades later the eatery endures , at least in name .)
Decades later , Wall Street veterans recall the period with exasperation and disgust . From January 2001 to September 2002 , US equities were in the midst of another bear market , drifting down 27 % during the period . In January 2002 , Martin D . Sass of MD Sass , LLC recalled :
Believe me , having started my firm — as an equities-only special situations manager — right at the top , in March 1972 , with the Dow at 1000 heading to 577 in October ’ 74 , I really know what a bear market is like . It was gruesome , it didn ’ t matter how much work you did or how cheap an equity looked , it got cheaper … Try coming
1970s trading desk at Merrill Lynch , New York City .
in every day for 18 months , like I did from March ’ 72 to Oct ’ 74 , and watching the market fall practically every day . It seemed to me that it did drop every single day ; it was brutal . Even being in cash , it was horrible , and the one-third of the portfolio that was invested — because you had to have something on the table — got beaten up daily . It was tough . Even the people who are lionized now as the era ’ s greatest investors , people like [ Warren ] Buffett , were having bad problems . There just weren ’ t a lot of places to hide .
In May 1973 , small cap trailblazer Chuck Royce took over management of Pennsylvania Mutual Fund , which lost 48.5 % of its value in 1973 and 46 % in 1974 . In 2016 , he recalled , “ For me , it was like the Great Depression . Everything we owned went down . It seemed as if the world was coming to an end .”
Contrary to James Dines ’ s forecast , few books were written and no films produced about the early 1970s bear market , but accounts have carried forward in other ways . The economic crises of the 1970s left indelible marks on cultural landmarks , manifesting in various forms of artistic expression echoing the anxieties and uncertainties of the time . The era ’ s pervasive sense of economic instability gave rise to dystopian science fiction , epitomized by films like Mad Max , depicting a world spiraling into chaos following the exhaustion of oil in a direct reflection of the 1973 embargo . The rise of punk rock amid stagflation ( high unemployment , rising prices and falling standards of living ) channeled the visceral hardships and disillusionment faced by the working class into a raw , unfiltered commentary on social problems . Moreover , the period saw a resurgence of interest in speculative fiction , with works like John Brunner ’ s The Sheep Look Up exploring malaise and environmental degradation as consequences of an allegedly unchecked capitalism . Even in architecture , stagflation contributed to the spread of Brutalism , a style characterized by stark , unadorned concrete structures that mirrored the austerity and alienation felt by many during this turbulent decade .
With “ buying the dip ” and bargainhunting now deeply ingrained in the ethos of investing and trading , future declines may be shorter-lived as market participants swiftly capitalize on opportunities . Another bear market undoubtedly lurks somewhere over the horizon , but it seems likely that lessons learned over the past 50 years will lead to more tempered downturns ahead .
Dr . Peter C . Earle is a senior economist at the American Institute for Economic Research ( AIER ). His research focuses on financial markets , financial market history , monetary policy , cryptocurrencies , the economics of games and problems in economic measurement . He has been a member of the Financial History editorial board since 2022 .
Sources “ Alternative Investment Guru .” Traders Magazine . January 2002 .
Brooks , John . The Go-Go Years : The Drama and Crashing Finale of Wall Street ’ s Bullish 60s . John Wiley & Sons . 1999 .
Vartan , Vartanig G . “ Why This Bear Market Is Different .” The New York Times . September 1974 .
“ Wall Street Refugees : Survivors of the Crash and How They ’ re Making Out .” New York Magazine . January 27 , 1975 .
Wells , Wyatt . “ Certificates and Computers : The Remaking of Wall Street , 1967 to 1971 .” Business History Review . Volume 74 , Issue 2 . 2000 .
Zweig , Jason . “ Learning from the Bear Market of 1973 – 1974 .” December 11 , 2016 . https :// jasonzweig . com / learning-from-the-bear -market-of-1973-1974 /
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