A Warning from History About Large-Cap Stock Booms

Fifty years ago, the U.S. stock market was in turmoil. Between January 1973 and September 1974, the S&P 500 Index fell by nearly 50%. With the benefit of hindsight, this decline was the second leg of a bear market which commenced in late 1968. However, stocks had rallied from the summer of 1970, led by a small group of large, high-quality companies, before suffering a more severe collapse.