It is noteworthy how few of the companies covered in 1946 survive today - in many cases acquired by the monolithic corporations that now dominate global markets, just as the many local stock exchanges we covered were gobbled up. But there are also striking parallels. "The 'cheap money' influence has been at work in nearly all sections of the market this week, and prices have risen substantially", wrote Austin Friars (a pseudonym, of course) in his Stockbroker's Diary. "The general rise in prices... has been almost entirely a monetary phenomenon, due to the lowering of interest rates." Those sentences could just as easily have been written in the past few years - and it is no surprise that, as a result, the search for yield was just as intensive back in 1946 as it is now (a clue to why I am delving into forgotten back issues).
Flicking through the pages, and many other aspects of the 1940s market should resonate strongly with today's reader. Miners were, like now, a prominent group, and "troubled by labour difficulties and the trend of mining costs". There is discussion of efforts to rebalance Britain to an export-led economy, disappointing foreign trade figures that point to an uphill struggle in getting there, and complaints of under-investment in capital stock by UK firms. Investors themselves were making the same mistakes as they do today, not least that some shares were too lowly valued on a yield basis because investors overestimated the risks of holding them (another clue).
Given the sobering events currently taking place in Iraq, I also thought I’d also take a look at what we said in 1973, the year of that decade's first severe oil shock, triggered by the Arab-Israeli conflict and subsequent Opec oil embargo. "Fifteen years supply of oil is all that the Earth can guarantee," we said, adding that "a few Arab governments could cause a shortage much sooner than that if they wished".
Even if the susceptibility of oil supply to Middle Eastern political instability remains, the continual reassessment of peak oil points, in some respects, to the pointlessness of predictions. So while, as Mark Twain said, history does not repeat itself but does rhyme, it is still the best guide we have. Even if the names and stories change - or in the case of cheap money, the scale - there are plenty of proxies and huge amounts of data from the past that can help us divine future trends. It’s why every investor should be part historian, and head down to the Guildhall library themselves to peruse our archive.
