Two the Point — The More Things Change, the More They Stay the Same

An Intriguing Comparison to the 1940s

Although we aren’t huge fans of analogue stock charts like the one below, similarities in the fundamental backdrop between the mid- to late- 1940s and today make it an interesting comparison. In a recent publication, Chris Verrone of Strategas Research Partners made the following observation:

“One is reminded of the very volatile inflation backdrop in the immediate years after the War and a persistently strong economy that defied expectations of a widely expected slowdown. The long-forecasted recession would ultimately come, but not until very late-1948… stocks bottomed in mid-1949 ahead of the recession’s conclusion, but only fractionally undercut the 1946/47 lows.”1

This sounds similar to what we are facing today – a long forecasted recession that has yet to arrive, a stronger than anticipated economic backdrop driven by pent-up demand created by a war-like period, higher inflation, tighter policy to combat that inflation, and a choppy stock market trying to digest various pieces of often conflicting fundamental data.

Ultimately, the bear market of 1946-1949 can be broken down into two sub-cycles. Here is a timeline with comparisons to the current market cycle:

  • Investors cheered the end of WWII, with the S&P 500 returning nearly 40% from August 1945 through April 1946 – similar to the nearly 29% return in 2021.
  • Investors started to fear a recession as economic growth cooled and corporate dividends stagnated. With clear memory of the post-war recession of 1921, stocks fell sharply from May through November of 1946 – similar to the 25% decline during the first six months of 2022.
  • Recession fears lingered but failed to materialize, and the S&P 500 fluctuated within a 15% range through February of 1948 – similar to the most recent 10 months.
  • Ultimately the recession did come in the summer of 1948. The stock market again declined, but only just undercut the lows of 1946, bottoming about halfway through the recession in June of 1949. – time will tell, and no period is ever the same, but we wouldn’t be surprised if the current cycle evolved in a similar fashion.
Source: Strategas Research Partners (Red = Current; Blue = 1940s)

1 Chris Verrone, Strategas Research Partners. “Exploring the 1946-1950 Analogue”. April 11, 2013.


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