On November 14, 1972, a few notable events occurred: actor Josh Duhamel was born, Johnny Nash topped the charts with “I Can See Clearly Now”, and the Dow Jones Industrial Average (DJIA) closed above 1,000 for the first time.*

That moment was seen as a milestone - yet over the next decade, the DJIA hovered around that same 1,000-point mark, leading many to label the era a “lost decade” for the stock market. The conventional wisdom says the market went nowhere. But as one of our core values is challenging conventional wisdom, we think this narrative deserves a closer look.

What the Headlines Missed

First, let’s talk dividends. In 1972, dividend yields were significantly higher than they are today. When reinvested over time, dividends create a powerful compounding effect. From December 1972 to December 1982, the DJIA’s total return - including reinvested dividends - was actually 5.58% annually, or 72.24% cumulatively.* That’s far from zero.

The Power of Diversification

Second - and more significantly - is the impact of diversification. We’ve long advocated for spreading investments across different company sizes, sectors, and regions. The DJIA, after all, consists of just 30 large U.S. companies. Simply choosing the broader S&P 500 index would have yielded a 7.10% annual return over the same period - effectively doubling your investment.*

If you had invested outside of this country, the MSCI EAFE index (which includes companies from Europe, Australasia, and the Far East) returned 7.19% annually, with a cumulative return of 101.53%.* That’s another doubling of investment - during a so-called “lost” decade.

And the standout performer? U.S. small companies. The S&P 600 index returned a remarkable 19.74% annually, turning a $10,000 investment in 1972 into more than $60,000 by 1982 - a cumulative return of 516.27%.

Rethinking the Narrative

Blindly accepting conventional narratives can be dangerous - especially when it comes to your financial future. What many consider a “lost decade” was, in reality, a period of solid returns for investors who reinvested dividends and embraced diversification.

As for the DJIA, it never closed below 1,000 again after December 17, 1982 - the same week Hall & Oates topped the charts with “Maneater.”

The takeaway? Markets may stall, but timeless strategies don’t. We believe in questioning the status quo.


*Dow Jones Industrial Average Return Calculator, Dividends Reinvested 4/13/2025
*MSCI EAFE 72-82
*S&P 500 (1970)
*Hypothetical Illustration for IA SBBI US Small Stock TR USD (USD)(IDX) 11-14-1972 to 12-17-1982