A not-so-distant mirror: the '70s

My latest piece for Research magazine, on "The Sideway Seventies," is now up. Excerpt:

After two decades of generally rising stock markets, the sideways motion of share prices in the age of Watergate and disco came as a rude shock to many investors. The Dow Jones Industrial Average opened on January 2, 1970 at 800.36, and closed on December 31, 1979 at 838.74, a gain of less than 5 percent over the course of the decade.

In the intervening years, the index closed above the fabled 1,000 level for the first time, but was unable to stay there on a sustained basis. And at its nadir for the decade, on December 6, 1974, the Dow ended at 577.6, having lost a frightening 45 percent from its peak of 1,051.7 on January 11, 1973, which was the market’s highest close of the 1970s.

The decade’s economic and financial troubles offer some uncomfortable resemblances and cautionary notes for the present. A weakened dollar, surging commodity prices, a shaky stock market and the possibility of stagflation are familiar subjects in 2008. One cause for optimism, though, is that awareness of the ’70s just may prevent some unsuccessful economic policies from being tried a second time around.