investmentyoo

Investment History Episode 12: The 1980s Bull Market, How Did Volcker’s Tightening and the Financial Revolution Transform the Market? The U.S. stock market of the 1970s exhausted investors through stagflation, oil shocks, persistently high inflation, elevated interest rates, and a prolonged period of weak real returns. The growth-stock optimism of the previous decade collapsed, and even the large blue-chip companies represented by the Nifty Fifty could not withstand the pressure of excessive valuations. The belief that investors would eventually be rewarded simply by holding stocks for a long time was severely tested by inflation and the erosion of purchasing power. As the 1980s began, however, the direction of the market started to change again. The Federal Reserve accepted extremely high interest rates in order to bring inflation under control, while the federal government promoted tax cuts, deregulation, and policies centered on private-sector growth. Once interest rates passed thei...