by Gary Alexander
January 10, 2023
The personality of each decade often comes clear in the year ending in 3: For instance, grandfatherly Ike took office in January 1953, with Lucy and Uncle Miltie defining our TV life after the end of wars abroad in Korea and civil war at home with McCarthy. The 1960s began starkly after the shocking assassination of President John Kennedy on November 22, 1963, and the Beatles musical invasion the next week. The inflationary 1970s began with the Yom Kippur War in October 1973 and Arab Oil embargo that followed.
I could expand such scenarios, but let me demonstrate by focusing on this week in 1923 and 1973 and ask – Are we on the verge of another Roaring Twenties, or another Staglationary Seventies? (Or neither?)
A New Dawn in America: Thursday, January 4, 1923
Everybody knows the story of the Jazz Age and the stock market mania of the 20s. Jazz, prohibition, and radio were born together, with the first great recordings by Louis Armstrong, Jelly Roll Morton, the New Orleans Rhythm Kings, and many other jazz pioneers in 1923, abetted by records but supercharged by radio. On Thursday January 4, 1923, the first radio network in the U.S. was created when the original AT&T company used special lines to broadcast the same programs simultaneously on New York City’s WEAF and Boston’s WNAC. That included jazz music, sporting events, politics, and vital news events.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
But on the same day, two spiritual prophets and an Irish “investor” signaled that Americans were ready for a sea change of growth after World War, global pandemic, hyper-inflation, and market crash.
On that day, a starry-eyed French immigrant, Emile Coue, arrived in New York harbor, with his popular new secular Gospel, “Every day, in every way, I’m getting better and better.” It was a form of self-hypnotism that took America by storm. The “Miracle Man of France” began a three-week lecture tour of America, with one of his final stops speaking before thousands in Chicago, where he apparently made a paralyzed man rise and walk. Coue found Americans more accepting (gullible?) to his message than Europeans. “The French mind,” he wrote in 1923, “prefers first to discuss and argue on the fundamentals of a principle before inquiring into its practical adaptability to everyday life. The American mind, on the contrary, immediately sees the possibilities of it, and seeks… to carry the idea further…”
On that same day, evangelist Aimee Semple McPherson held her first service in the 5,300-seat Angelus Temple, or the Church of the Four-Square Gospel in the Echo Park neighborhood of Los Angeles. By 1925, she had 30,000 members and eventually a radio audience of millions, rivalling the popularity of Babe Ruth or Jack Dempsey. She was conservative but radical as she opened her revivals and services to black and brown races. The Ku Klux Klan once came to protest, but her message of love was apparently so convincing that the only evidence of the klan’s protest was their discarded white robes and hoods.
Which brings us to the Irish “investor,” Boston’s Joseph F. Kennedy, Sr., who opened his New York brokerage office in the Waldorf Astoria, using several telephone and telegraph lines to contact the stock room floor. Within a decade, he made a $2 million fortune trading stocks (through insider trading, price manipulation, then “shorting” stocks in 1929), before becoming the first head of the SEC. He made another fortune in bootleg hooch, although this evidence is sketchier, as its bottom line is off the books.
Throughout this all, Calvin Coolidge’s Secretary of the Treasury, Andrew Mellon, cut taxes and business regulations and basically allowed business leaders the run of the nation, as the Jazz Age grew jazzier.
Speaking of which, the #1 most popular song of the week of January 6-12, 1923, was George Gershwin’s hit for the George White Scandals of 1922, with words by his brother Ira (using a pen name), and Buddy De Sylva: “I’ll Build a Stairway to Paradise,” which fit the message of Aimee and Emile like a glove:
I’ll Build a Stairway to Paradise (#1 Song, January 6-12, 1923)
Verse (in part)
It’s madness, to be always sitting around in sadness,
When you could be learning the steps of gladness.
Begin today! You’ll find it nice,
(It’s) the quickest way to paradise.
Chorus (in part)
I’ll build a stairway to Paradise
With a new step ev’ry day!
I’m gonna get there at any price;
Stand aside, I’m on my way!
Thursday January 11, 1973 – The Day the Market Peaked (for a Decade)
Tomorrow’s date marked the absolute peak of the stock market in the 1970s, a mark it would not exceed for nearly a decade in nominal terms, and not for over a decade in “real” (inflation-adjusted terms).
On January 11, 1973, the Dow reached a then-record high of 1051.70. Following that peak, the Dow fell by nearly half (-45%) by the end of 1974, the worst bear market for the second half of the 20th Century.
Looking at that specific date in context, what caused the market to peak on this day and then go down?
(1) President Richard Nixon ended the wage and price control program he began in August of 1971. In less than 18 months of this misguided program, the national debt, inflation, and unemployment were all rising steadily, despite controls, and soon were rising even faster, after the artificial controls were lifted.
(2) Also on this date in 1973, the trial of the Watergate burglars began in Washington DC with the first convictions coming by month’s end.
(3) As hard-core, baseball fans know, January 11, 1973, is also the beginning of the decline of Western Civilization: That’s the day the American League adopted the “designated hitter” rule, where pitchers did not have to take a turn at bat – the end of well-rounded athleticism in The Great American Pastime.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Seriously, January 1973 marked the end of the fruits of one era of bad leadership (the Vietnam War under LBJ) and the beginning of another (Watergate under Nixon), with several other crises, plus inept economic leadership from two clueless Fed chairmen, Arthur Burns and G. William Miller.
I’m open for suggestions, but it seems like 2023 is a near match for 1973, and a polar opposite of 1923, but nothing is set in stone. We can learn from history by reading more about the 1920s and avoid the mistakes of the 1930s or 1970s. These swings are avoidable by reading and heeding the lessons of history.
And, by the way, the #1 hit songs in January 1973 were far from Building a Stairway to Paradise:
- For the weeks of January 6 and 13: the #1 song was “You’re So Vain,” by Carly Simon
- For the weeks of January 20 and 27: #1 was “Superstition” by Stevie Wonder
All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Which Stocks Will Win (or Lose) This Earnings Season?
Income Mail by Bryan Perry
The Market Seems Ready to Pivot Higher on an Inflation Epiphany
Growth Mail by Gary Alexander
Which Will it Be – Another Roaring 20s, Or Stagflationary 70s?
Global Mail by Ivan Martchev
As January Goes, So Goes the Year (Sort of)
Sector Spotlight by Jason Bodner
Low-Volatility and Large Spreads: Who Could Like That?
View Full Archive
Read Past Issues Here
About The Author
Gary Alexander has been Senior Writer at Navellier since 2009. He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks. For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.
Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s. He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division. Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander
Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not a solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.
Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report. Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.
None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and the reader should not assume that investments in the securities identified and discussed were or will be profitable.
Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for every investor. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.
One cannot invest directly in an index. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.
ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:
- ETF shares may trade above or below their net asset value;
- An active trading market for an ETF’s shares may not develop or be maintained;
- The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
- The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities; and
- Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.
Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.
Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.
This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at www.adviserinfo.sec.gov or by requesting a copy by emailing email@example.com. All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.
FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.
IMPORTANT NEWSLETTER DISCLOSURE:The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades. Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.
Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.
Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report.
FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.