tried to contain hyper-inflation. Annual inflation peaked at 14.6% during the early stages of 1980 but cooled to around 5% starting in 1984 and remained in that range for the remainder of the 1980s. Meanwhile, interest rates would remain well above 5% during the second half of the 1980’s (April 1984 – December 1989) - and we thought we have it tough today. Despite all of the headwinds, which included Black Monday and the savings & loan crisis, the S&P 500 index (+19.24%), Bloomberg U.S. Aggregate index (+13.29%) and MSCI EAFE (+29.55%) produced strong returns between April 1984 and December 1989.
After spiking to 6.35% in 1990 annual inflation subsided and remained around 3% for the remainder of the 90s, which allowed the Fed to cut rates from 8.25% to 3% only to raise them again to above 5%. The 90s was a great economic environment for equity investors as the S&P 500 index soared +18.21% during the decade. Meanwhile, the S&P 500 Information Technology index spiked 52.32% between January 1995 – December 1999.
The irrational exuberance and the speculative dot-com trade from the late 90s unwound at breakneck speeds as the S&P 500 Information Technology index fell a staggering -80.26% from its high during the first three years of the 2000s. It didn’t get much better for investors during the 2000’s as 2007 marked the beginning of Great Financial Crisis (GFC) and the deepest bear market since the Great Depression. After strong decades of equity performance, the 2000s were a struggle as the S&P 500 index posted a -0.95% return
