investmentyoo

Investment History Episode 11: The 1970s Stagflation Era, Why Did the Stock Market Lose Its Way? The 1960s Go-Go market created a powerful belief in growth stocks, mutual funds, star fund managers, and large-cap quality companies. Investors believed that if they bought great companies and held them for the long term, they would eventually be rewarded. Many also believed that high valuations could be justified as long as the companies had strong future growth. But as the 1970s began, the market showed a completely different face. The U.S. stock market of the 1970s was not simply a weak market. It was a market trapped between rising inflation, slowing economic growth, higher interest rates, and falling confidence in equities . This period is commonly remembered as the age of stagflation, a painful combination of economic stagnation and inflation. Before this era, many investors assumed that when the economy weakened, inflation would naturally cool. They also believed that if inflation wa...