The Wall Street Waltz: 90 Visual Perspectives, Illustrated Lessons From Financial Cycles and Trends, Revised and Updated Edition

Chart 20

“Wake Up, Folks”

My competition said that—well, sort of. My Forbes columns are in every other issue of the magazine. When I'm not in, David Dreman is; when he's not, I am. David's financial commentary is among the most insightful and thought-provoking anywhere. This chart came from his March 11, 1985, column, in which he urged folks to “wake up” and notice the bull market, which he successfully predicted would continue despite having already had a 10-year run. The chart's implications and David's wisdom in analyzing it are worth noting. The chart compares the 1975 to 1984 performance of stocks against antiques, bonds, U.S. Treasury bills, gold, and copper.

It probably doesn't surprise you that stocks did better than bonds and T-bills. As Chart 10 shows, stocks have done better than fixed-income alternatives for decades. But it's rare to see stocks compared with “hard-money” alternatives. David railed at the doom-and-gloomers who sold millions of books and newsletters during these 10 years based on buying gold and other hard-money inflation hedges. As he pointed out, unless you were among the 1 in 1,000 who sold at the top, gold would have earned you only 4.8 percent per year—less than your bank account. But if you've seen Chart 57, you probably aren't surprised. Throughout most of history, gold has left investors short. Copper did worse. Interestingly, fine art, as shown here by Sotheby's Composite Art Index, is the one hard-money asset that came close to matching the ...