An Anniversary of Infamy

November 09, 2022

Inflation has been the dominant narrative in the markets of 2022. Inflation is up and everything else is down. Equities? Down. Bonds? Down. Gold? Down. Bitcoin? Down.

I believe a well-diversified portfolio of equities is the greatest inflation hedge on this earth. But inflation is up, and the stock market is down this year. Sure. It would be nice if we had an asset class that immediately appreciates when inflation increases. That kind of immediate feedback does not exist. And I’m concerned with the long-run anyways. Over the long-run, stocks are an unequivocally marvelous inflation hedge. Those who say otherwise have forgotten their history.

The history I reference is an article published in Businessweek on August 13, 1979 – exactly 43 years ago this past Saturday. Here is the cover:


The Death of Equities. Pretty bold pronouncement. Sounds scary. Note the subheading: How inflation is destroying the stock market. That sounds… familiar.

I imagine folks were pretty tired of inflation by 1979. The average inflation rate for the entirety of the decade was 7.25% per year.[ii]We haven’t yet dealt with high inflation for one full year. They dealt with it for a full decade. The stock market was languishing as well. From the beginning 1970 to the date that article was published in 1979, the S&P 500 index returned 1.51% per year.[iii] That’s a -5.74% real annualized return in equities in the 1970s.

So The Death of Equities probably felt like a prudent headline at the time. A reflection of the generation’s inflation-induced malaise. A fitting eulogy of a decade of debility. A lot of people gave up on the stock market in the 70s. Look how folks have responded in 2022 after dealing with high inflation and a languishing stock market for only eight months.

Most notable about The Death of Equities cover article is how it aged. It is perhaps the most infamous article of financial journalism of all time. Here is the S&P 500 index from the date The Death of Equities was published to present:

8.9% annualized growth. $10,000 invested the day that article hit the printing press would be worth over $391,000 now. Note that you cannot invest directly into an index, so one’s performance would have some variation from the above chart after factoring in trading fees and expenses. Nonetheless, the S&P 500 index provides a useful illustration of the compounding power of equities after Businessweek’s infamous publication. Additionally, the above data does not include dividends only because we don’t have data on S&P 500 dividends going back that far. Accounting for dividends would show even more outsized returns in equities. I should probably also note that the average annual inflation rate since the article was published to the present day is roughly 3%.[iv] The death of equities, huh?

While we’re on the topic of inflation hedges, I do wish to make one comment about gold. King Midas’ favorite metal has the reputation for being an effective inflation hedge. In January 1980, the Dow Jones Industrial Average stood at about 800 and the price of gold was ~$800/ounce.[v] Here are the numbers today, 42 years later:

One ounce of gold:


Dow Jones Industrial Average:


A better title to Businessweek’s 1979 essay would have been The Birth of Equities. But they wouldn’t have written that. It wouldn’t have scared anyone.

Sean Cawley, CFP®

*If any of you happens to find a copy of the “The Death of Equities” issue from Businessweek for sale online, please send me the link to purchase it. I would like to frame it and hang it in our office.

The report in this article is NOT an investment performance report. Do not rely on this report as portraying or containing performance of an actual account. This report does not intend to and does not predict or show the actual investment performance of any account. An investment cannot be made directly in an index.

Neither asset allocation nor diversification guarantee against investment loss. All investments and investment strategies involve risk, including loss of principal.

Content here is for illustrative and educational purposes only. It is not legal, tax, or individualized financial advice; nor is it a recommendation to buy, sell, or hold any specific security, or engage in any specific trading strategy. Results will vary. Past performance is no indication of future results or success. Market conditions change continuously.

This commentary reflects the personal opinions, viewpoints, and analyses of Resolute Wealth Management. It does not necessarily represent those of RFG Advisory, clients, or employees. This commentary should be regarded as a description of advisory services provided by Resolute Wealth Management or RFG Advisory, or performance returns of any client. The views reflected in the commentary are subject to change at any time without notice.

[i]Death of Equities cover -

[ii] “Average Annual Inflation Rates by Decade.” Tim McMahon. 01 January 2021.

[iii] YCharts, ^SPX Level Chart, 01/01/1970 – 08/13/1979.

[iv] US Bureau of Labor Statistics, CPI for All Urban Consumers (CPI-U), 12 Month Percent Change.

[v] YCharts, ^DJI & Gold Price Level Fundamental Chart, 01/01/1980 – 02/01/1980