December 2, 2014

The Last Bear Market in Oil Paralleled a Bull Market in Everything Else

The following shows the secular decline in oil prices from 1980 to 1998. Remember what stocks did during that time? "Greatest bull market in history" ring a bell?

There were a number of factors (e.g. globalization of trade, liberalization of markets, credible monetary policy, telecommunications and computing revolution) behind the secular stock bull market that occurred during the 1980s and 1990s, but declining energy prices undoubtedly provided a tail wind by decreasing the cost of production and transportation.