The chronicles of commerce, when examined with sufficient detachment, reveal a curious periodicity. Like the tides governed by unseen celestial bodies, or the recurring dreams of a sleeping city, certain patterns manifest. We observe, with a degree of inevitability, that disturbances in the flow of black gold – a substance both vital and treacherous – are frequently echoed in the mirrored surfaces of the exchanges. Five times since the 1970s, the abrupt ascension of oil prices has preceded a descent into what is colloquially termed a ‘bear market’ – a phrase which, if one considers the animal’s behavior, is remarkably apt.
Now, a sixth such perturbation appears to be taking shape, born of conflicts in regions whose names resonate with ancient prophecies. This occurs at a moment when the economy exhibits the unsettling symptoms of ‘stagflation’ – a condition wherein growth stagnates while prices ascend, a paradox that would have intrigued even the most dedicated of scholastic theologians. Recent reports indicate a contraction of 92,000 jobs in February, a figure that, while not catastrophic, suggests a slowing of the economic engine. Furthermore, the growth of the gross domestic product has been revised downwards, and core inflation persists at levels that challenge the mandates of the central bank.
The Labyrinth of Shocks
Each of the five prior instances – the embargo of ’73, the Iranian upheaval of ’79, the Gulf conflict of ’90, the crisis of ’08, and the more recent disturbance of ’22 – has left its imprint upon the market’s memory. However, the severity and duration of these declines have varied, as though each shock encountered a different resistance within the economic fabric. The episodes of 1990 and 2022, while painful, proved relatively brief – mere ripples in the grand currents. The years 1973 and 1979, by contrast, ushered in a decade of diminished returns, a prolonged twilight for investors.
The S&P 500, during that lost decade, yielded a mere 17% over ten years. And even that modest gain was largely illusory, consumed by the relentless erosion of inflation – a phantom that devoured three-quarters of its value. Only through the austere measures of the Federal Reserve – a series of rate hikes and successive recessions – did the market finally regain its footing. The year 2008 presents a peculiar anomaly; the oil shock was not the primary cause of the crisis, but rather an exacerbating factor, a secondary tremor following the initial quake.
Echoes in the Present
One detects, in the current situation, echoes of each of these past episodes. The good news, if one can call it that, is that present inflation levels are considerably lower than those witnessed in the worst of times. The world, emerging from a recent pandemic, experienced a surge in prices in 2022, but it was a temporary phenomenon. Similarly, the recent loss of jobs, while concerning, pales in comparison to the 700,000 monthly losses of 2008. However, the simultaneous occurrence of stagnation and inflation – a rare and unsettling confluence – evokes the crises of the 1970s. A strategist, Yardeni, now estimates a 35% probability of a full-blown stagflationary period, a figure that has risen since the recent geopolitical disturbances.
The Inevitable Descent?
History, viewed as a vast and intricate tapestry, suggests a further decline in the markets. The extent and duration of this descent, however, remain uncertain, dependent upon the disruptions to the flow of oil and the persistence of elevated prices. Recent attempts to stabilize the market – the coordinated release of emergency stockpiles – have yielded limited results, as prices have continued to rise. This suggests that the underlying forces are more potent than any temporary intervention.
If these forces persist, the twin specters of stagnation and inflation could take hold, ushering in a period of diminished returns. Yet, even in the darkest of times, history offers a glimmer of hope. Every bear market, without exception, has eventually ended. Those investors who maintain a long-term perspective – who view the markets not as a source of instant gratification, but as a slow and deliberate accumulation of value – will ultimately prevail. Even the lost decade of the 1970s was followed by a twenty-year bull market, with the S&P 500 yielding nearly 17% annually – a figure that rises to 20% when dividends are included.
Therefore, this may be a propitious moment to reaffirm one’s commitment to companies with enduring value – those that prioritize long-term growth over fleeting trends, and that are not burdened by excessive debt or unrealistic valuations.
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2026-03-18 01:36