Bear Tracks – Perspective on Uncertain Times


To borrow a jingle from the Farmers Insurance commercials, “At MLA, we know a thing or two because we’ve seen a thing or two.” In these highly uncertain pandemic times, it may be helpful to remember that America has been through a variety of difficult downturns before.

I graduated from law school 38 years ago in May of 1982. The unemployment rate was higher than it was in 2009, at nearly 11%. To squeeze inflation out of the economy, Fed chair Paul Volcker had raised the Fed’s funds rate to 21%. Yes, you read that correctly. The S&P 500 index had reached a bear market in February 1982, dipping to 111, and by August, it was down 27% to 102 from a peak of 143 in November of 1980, shortly after Reagan was elected president. Why put money in the stock market when you could get double-digit returns in a savings account? Inflation had peaked at over 13% in 1980. So even if you got a 13% raise, you were no better off financially than in the prior year. Crazy right? Certainly, uncertain times.

And yet America is a resilient country with smart, hard-working and creative people of all political persuasions. By November of 1982, the S&P had recovered to its November 1980 peak. Five years later, the S&P 500 index had tripled to 335 in August of 1987 (right this minute it stands at 3146). The Fed funds rate was down to 6%. Inflation had largely been tamed and was down to 4%. Reagan and Gorbachev had met in Iceland a year earlier foreshadowing the end of the Cold War.

So, you might be wondering, how did I job hunt and move forward with my life in the deep 1982 recession? Despite being in the top half of my class, law firm jobs were hard to find in the uncertain times. After passing the bar and literally hand delivering resumes to every law firm in Atlanta (the irony, right?), I went to work in a business role for a healthcare computer company for a salary of $18,000—highest salary in my law class was $26,000.

There I secretly dated and fell in love with a co-worker, stunning our colleagues later by announcing our engagement. We were married in 1983 and still are. We bought our first house in 1984 and felt great about the remarkably low interest rate of 13.625%. I was excited to lock in a fixed rate of 10% a few years later. The first of our three children was born in July 1987. Americana. Despite starting adult life in the middle of a deep recession and Bear market, we were blessed in so many ways. America was enjoying the best economy since the 50s and 60s. America always bounces back.

We don’t know what the recovery from the COVID-19 pandemic will look like. Recovery from the 1982 Bear market was a classic rapid “V” – here’s hoping 2020 will be similarly speedy. However, we do know America will recover from this pandemic. We have always overcome our uncertain times and we always will.

In the next posting of Bear Tracks we will look at the 1987 stock market crash, which still holds the record for the largest single day percentage decrease in the Dow at -22.61%. This is almost double the worst percentage losses on any day in 2020 (-12.9%). This would be followed by the longest bull market ever. More uncertainty—and another successful American recovery.


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