2015 marks 30 years since Jim Elliott founded Elliott & Associates, now Peloton Wealth Strategists. In one sense, the year 1985 doesn’t seem very long ago to most of us. But when you stop and think about what’s different now, it’s clear that the slow annual changes have summed up to a different world. We thought it would be fun to look back at a few of the differences between the beginning of 1985 and the beginning of 2015.
At the end of February 1985, the 30 year U.S. Treasury bond yielded 11.8%, having declined from its peak of 14.7% in the Fall of 1981. Investors seeking the supreme safety of long US Treasury bonds today are rewarded with a promise to receive 2.7% per year for the next three decades. The Dow Jones Industrial Average – the widely cited, never terribly relevant stock market measure – stood at 1,275 near the end of February 1985. Had you simply remained proportionally invested in Dow stocks, you would have received a 9.2% average annual return over 30 years – and that includes the 1987 market crash, wars in the Middle East, and the 2008 financial crisis. The companies making up the Dow have changed as well: while Merck, Procter & Gamble, and IBM have been constant members, American Can is barely a memory. Microsoft’s initial public offering didn’t even occur until March 13, 1986.
1985 doesn’t seem that far in the past, until you look at some of the pop culture events and prices from 30 years ago. It’s hard to remember the last time gas was $1.09/gal, but that was the case in 1985. Sugary pop music from Madonna and Wham! were on the airwaves and postage stamps cost 22 cents. If you wanted a night out at the movies, you were paying $2.75 for a ticket, perhaps to see The Color Purple, Out of Africa or The Breakfast Club, all of which were released that year. 1985 was also the year that underwater explorers located the Titanic.
We hope this trip down memory lane was fun – we certainly enjoyed ourselves as we took an opportunity to look back. While the stock and bond markets have been rewarding places to invest over the last three decades, there have also been times when market dynamics have made us want to pull our hair out! Through it all, managing money for our clients has remained a very rewarding way to spend a career. We look forward to seeing what the next 30 years holds.