Dimensional Fund Advisors’ vice president Weston Wellington found something awfully familiar about a recent article in the Financial Times. Although unremarkable at first glance, as it was one of dozens of such pieces about a loss of investor interest in equities, its tone and key phrases jogged his memory.
“We dug out our copy of the ‘Death of Equities’ article appearing in BusinessWeek on August 13, 1979, to have a fresh look,” he writes. “Similar?”
Listing key paragraphs of each article, he quips, “You be the judge.” A sampling:
1) BusinessWeek, 1979: “This ‘death of equity’ can no longer be seen as something a stock market rally—however strong—will check. It has persisted for more than ten years through market rallies, business cycles, recession, recoveries, and booms.”
Financial Times, 2012: “Stocks have not been so far out of favor for half a century. Many declare the ‘cult of the equity’ dead.”
2) BusinessWeek, 1979: “Individuals who are not gobbling up hard assets are flocking to money market funds to nail down high rates, or into municipal bonds to escape heavy taxes on inflated incomes.”
Financial Times, 2012: “The pressure to cut equity exposure is being felt across the savings industry. … In the US, inflows to bond funds have exceeded equity inflows every year since 2007, with outright net redemptions from equity funds in each of the past five years.”
3) BusinessWeek, 1979: “Few corporations can find buyers for their stocks, forcing them to add debt to a point where balance sheets seem permanently out of whack.”