T. Rowe Price

Chapter FourteenDARK NEW ERA, 1971–1982

After retiring his positions at the New Era Fund, Mr. Price disappeared from the financial stage to take care of his beautiful roses, enjoy being free of the constraints of business, and explore new countries with Eleanor. What became of his gloomy forecast?

The day he retired – April 30, 1971, as he noted in his journal – the Dow Jones Industrial Average was 942. It rose irregularly until January 11, 1973, when it closed at a high of 1052. This level was not exceeded for the next ten years, during which the market stayed most of the time well under 700, creating one of the worst bear markets since World War II. At this level, the stock market had shown no progress since October 1962. Mr. Price's conservative position, with 50 percent of his assets in highly liquid short‐ and intermediate‐term Treasuries, turned out to be well justified. The Treasury notes produced more than an 8 percent yield throughout this entire time period.

He was also correct that the long postwar business boom was over. It came to a slow grinding halt during the decade following his retirement, in concert with the market. There were two official business recessions in the 1970s. The major expenses of establishing a home and raising the huge number of baby boomers were now behind the army of young men and women who had come marching home from World War II. Their outlays were no longer boosting the economy. As Mr. Price pointed out as early as September 1964 in “Notes ...