Under relentless inflationary pressures, President Nixon had been forced to abandon the gold standard in August 1971. That gave vent to a cascade of stagflation that wouldn’t be arrested for ten years. Inflation pushed Americans into higher and higher tax brackets, even as their real incomes declined. It was the ultimate vicious cycle. 

The S&P 500 peaked in early 1973 at 120 points and all but halved thereafter; it wouldn’t reach that level again until 1980. Efforts to end the quagmire of the Vietnam War dragged on*. The US Government was also soon enveloped in the two-year agony of the Watergate scandal, ending with the president being driven from office.

*(There is a fascinating Netflix documentary on the Vietnam War, as an aside, I recommend it - one takeaway for me was that this was the beginning of the erosion of trust in governments, which we are seeing play out increasingly today). 

War broke out in the Middle East in October 1973; when America supported Israel, the Arab states embargoed the sale of oil to the U.S. By the time the embargo was lifted some months later, the price of oil had quadrupled. After the Iranian revolution in 1979, it tripled again. In August of that same year, Business Week magazine published its infamous cover essay “The Death of Equities.” Like the 1930s before them and the 2000s after, the Sombre Seventies were a lost decade.

Or were they?

Only a few months after America abandoned the gold standard, Intel introduced the first commercially produced microprocessor—the entire computer on a chip— and ushered in the modern world. It was like Gutenberg’s printing press to the nth power. Personal computing simply exploded. 

On April 4, 1975, Bill Gates and Paul Allen founded Microsoft. On April 1 of the following year, Steve Jobs and Steve Wozniak started Apple Computer. 

Fast forward to the present moment…

…The market capitalisation of Microsoft today has just reached $4 trillion; that of Apple about $3 trillion. Thus, two American companies, barely 50 years old, are worth a total of $7.5 trillion. 

Staggeringly, this means just two US companies are worth more than twice the combined total of all the hundreds of listed businesses in the UK. I have to say it again as I almost cannot believe it - two US companies are valued today at twice all UK companies. (I just triple checked the figures, and there are 1,646 listed companies in the UK, equating to a total value of approximately $3.5 trillion). This shows you how far behind we have fallen. 

What would you guess the gross domestic product (GDP) of the United States was in 1976? I’ll be happy to tell you. Adjusted for inflation: $6.5 trillion. 

I know; at first, I couldn’t believe that figure either. And I’ll never know what made me look it up. But in one anecdote, this juxtaposition confirms for me everything I believe about human ingenuity, and especially about the value that may be created when that ingenuity is captured in equities. 

It may be argued that this comparison represents some or another species of apples and oranges. Or perhaps that these two companies’ stocks—along with others in the so-called Magnificent Seven—are currently overvalued. That’s as may be; to me, the overarching point stands: 

The current value of two companies, which had barely been formed 50 years ago—companies employing a technology that had come into existence only five years before that—is about equal to the value of all the goods and services that were produced in the entire USA the year the latter company was born. 

I’m reasonably sure that if anyone had stood up in the middle of the Sombre Seventies and predicted anything remotely like this, they’d have been dismissed as a crackpot. But the great thing about innovation in general—and technological innovation in particular—is that it doesn’t stop when the stock market goes down. 

At times, quite the contrary. And the greatest thing about the several seemingly intractable crises of the Seventies is that, in every particular, they ended. The Communist government of a unified Vietnam eventually gave way to a vibrant free-market democracy that was just recently admitted to the BRICs group of major emerging economies. 

Paul Volcker’s monetary regime at the Federal Reserve broke the back of inflation for 40 years. From abject dependence on foreign oil, America—by means of technological innovations in horizontal drilling and hydraulic fracturing—reclaimed its (and the yanks would say rightful) position as the world’s largest oil producer. 

And mainstream equities—declared dead by financial journalism at 108 on the S&P 500—have recently traded above 6,000. 

You can’t get anywhere near these epiphanies through the medium of today’s news. 

With dividends reinvested from August 1979 (the date of the Business Week piece) through this May, the Index compounded at 11.8%. 

Ten thousand dollars invested in the S&P 500 Index that month would have become $1.6 million by end of June 2025, assuming taxes were paid from another source along the way (or if you’d invested via the UK in a PEP or ISA, you’d have tax-free gains - and although PEPs and their successor ISAs did not exist in 1979, you get the point!) 

Again, you can’t get anywhere near these epiphanies through the medium of today’s news. In that sense, the news always serves to block out the great truths of successful investing—all of which become clearer when you take a long-term perspective. 

If you’re like most serious investors, you’re not investing for what happens next. You’re investing for what will ultimately happen over the balance of your investing lifetime—and beyond, to the extent you care about legacy. 

To that end, as Churchill is reported to have said, “The farther backward you can look, the farther forward you can see.”

Sources: S&P 500 levels: Standard & Poor’s, Yahoo Finance. Current market caps of Microsoft and Apple: Investopedia. CAGR of the S&P: S&P 500 Historical Return Calculator on the website “Of Dollars and Data.” Real (adjusted for inflation) 1976 GDP: Federal Reserve Bank of St. Louis (FRED)