2020 vs. 1968: This Too Shall Pass
2020 vs. 1968: This Too Shall Pass BY WHITNEY GEORGE, CHIEF INVESTMENT OFFICER for Sprott
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2020 has been a challenging year. With the COVID-19 pandemic, increased social unrest, fires engulfing the West coast, a record number of hurricanes exhausting the naming alphabet, and high tensions surrounding the upcoming U.S. presidential election, 2020 will go down as an exceedingly nerve-racking year.
However, looking back in history, 2020 isn’t so unique.
With gratitude for a career on Wall Street that has spanned more than 40 years, I have experienced plenty of history. Looking back for an analog to this past year, in many ways, 1968 was a year on par with 2020. It’s worth pointing out several of the major historical events that occurred in 1968.
1968: The Year the World Caught Fire
The Tet Offensive, which suddenly raised U.S. awareness of the Vietnam War, kicked off the year (the war would not end for another seven years). Unrest plagued Czechoslovakia, which tried to break away from the Soviet Union only to have it intervene and re-impose a Stalinist regime, ending the “Prague Spring.” North Korea seized one of our naval surveillance ships, the Pueblo, and imprisoned 83 U.S. sailors in a concentration camp; this was 15 years after the Korean War had ended.
Figure 1. 2020 vs. 1968
On April 4, Martin Luther King, Jr. was assassinated, leading to social unrest and protests exceeding those today in their fury. In the spring, student anti-war protests erupted around the world. On June 5, Robert Kennedy was assassinated as he campaigned for the U.S. presidency. In late August, thousands of students, antiwar activists and other demonstrators poured into Chicago and disrupted the Democratic National Convention, which resulted in the nomination of VP Hubert Humphrey. Athletes at the Mexico Olympics protested on the award stand, raising their fists in support of “Black Power” during the playing of The Star Spangled Banner. There was also a highly volatile election season, which eventually led to Richard Nixon’s presidency. And to cinch the comparison with 2020, a virus spread across the globe in 1968 (the “Hong Kong” flu), ultimately causing the death of 100,000 people in the U.S.
“Sock it to me!”
There was also good news in 1968. Apollo 8 was the first human spaceflight to successfully orbit the moon. Launched on December 21, the astronauts returned to earth on December 27. The crew orbited the moon ten times, and at the time, their Christmas Eve TV broadcast was the most-watched TV program ever. Contrast that to today, when we now measure “eyeball” success through numbers of Tweets, Instagram likes and Facebook friends. Creativity abounded in 1968 with the likes of Rowan & Martin’s Laugh-In, the films 2001: A Space Odyssey, and Planet of the Apes. Mrs. Robinson, by Simon & Garfunkel, was the number-one smash hit song on the radio.
I bring up 1968 to suggest two key lessons that should apply to 2020.
Lesson #1: The World Did Not End
First, the world did not end in 1968. As a society, we survived and were able to move forward and grow from the experience. It’s essential to keep this in mind and not let the anxiety of this past year cloud our judgment. This too shall pass.1
The decade of the 1970s that followed 1968 ushered in a new wave of investment options for investors that were quite different from what had worked in the 1950s and 1960s. The 1970s were characterized by rising interest rates and stagflation, where hard assets investments, especially gold, silver, energy and real estate, provided some inflation protection and positive returns. 1968 was a setup for this shift, given the extreme budget deficits, the impact of Lyndon Johnson’s Great Society — which sought to lessen poverty and racial injustice — and the escalation of the Vietnam War. These events put us in a position in the early 1970s that is not dissimilar to where we are today.