fbpx Remembrances Of The 1973-1974 Bear Market (Preview) | Option Strategist

Remembrances Of The 1973-1974 Bear Market (Preview)

By Lawrence G. McMillan

At the beginning of 1973, the Dow (no one paid much attention to $SPX back then) made a new all-time high, trading up to 1067.  The Barron’s Roundtable, a survey of top money managers and brokerage firm analysts, was published at the beginning of 1973 under the (now infamous) headline, “Not A Bear Among Them.”  They were all bullish.  President Nixon declared that the Vietnam War was over (although it didn’t wind down completely until 1975).  However, stocks had a mind of their own (then, and now), and the Dow began to immediately decline. 

That was the first market I traded seriously, and I was short1.  Please refer to the accompanying chart of the Dow while reading this article.

The market immediately became quite volatile.  There were no implied volatility measures at that time, because the CBOE had not yet started trading (that would come a few months later, in April 1973).  But realized volatility jumped from 10% to 23% over the first six months of 1973.  The market was declining steadily and fairly rapidly over that time period, but the counter-trend rallies were large, too.  By late June, the Dow was at 875.  After a brief rally, it fell to 845 by late August.  That was a decline of 20.9%...

Read the full article, published on 5/27/2022, by subscribing to The Option Strategist Newsletter now. Existing subscribers can access the article here

The Option Strategist Newsletter $29 trial

Share this

Option Strategist
Blog Search

Trading or investing whether on margin or otherwise carries a high level of risk, and may not be suitable for all persons. Leverage can work against you as well as for you. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. The possibility exists that you could sustain a loss of some or all of your initial investment or even more than your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and investing, and seek advice from an independent financial advisor if you have any doubts. Past performance is not necessarily indicative of future results.
Visit the Disclosure & Policies page for full website disclosures.

-->