Читать книгу Financial Security For Dummies - Eric Tyson - Страница 30

As a young teenager, I first began my investing experiences back in the mid-1970s when my father was laid off from his job and was handed a modest balance that he had to direct. Back then the Dow Jones Industrial Average was vacillating between 800 and 1,000 if you can believe that!

I remember 1974 well. That time period made a major impression on me. Stocks got hammered and experienced a waterfall decline as they did during the height of the 2008 financial crisis. From a peak of 1,000 in late 1973, the Dow plunged under 600 by the late summer of 1974. The country and economy had many problems. Folks were highly disillusioned with government after Vice President Agnew resigned (due to an income tax evasion scandal) and then so did President Richard Nixon (due to Watergate).

There was a war raging in the Middle East, and oil supplies were being cut off due to the Arab Oil Embargo (drivers back then remember the long lines at gas stations). Inflation was surging and broke 10 percent annually. The unemployment rate was surging to 9 percent.

The 1970s was a bad period for stocks and the economy. President Nixon instituted wage and price controls and oversaw a sagging economy with rising inflation. After Nixon resigned and his vice president, Gerald Ford, took over, he ended up losing the next presidential election to Jimmy Carter, who continued many of the same problematic economic policies of the Nixon years.

With rising and stubbornly high inflation, the Federal Reserve finally raised interest rates to double-digit levels to stop the cycle. Those actions, combined with the pro-growth economic policies of President Ronald Reagan, who was elected in 1980, finally ushered in a sustained period of lower inflation, lower interest rates, consistently strong economic growth, lower unemployment, and rising stock prices.