Courage! We have been here before

By: Martin Romo & Jim Fullerton

It’s déjà vu all over again. With inflation higher than it has been since the 1970s, interest rates rising and the economy slowing, many have grown fearful of investing.

The last time it felt this way was the start of the COVID-19 pandemic. I remember sharing with my colleagues a classic speech from former Capital Group chairman Jim Fullerton. This speech, delivered in November 1974 amid a prolonged bear market, provided us with much-needed historical perspective and a dose of optimism when it was in short supply.

The “Fullerton letter” as it has come to be known, has been recirculated among Capital Group’s investment team at least five times in my career. My former colleague, retired equity portfolio manager Claudia Huntington, shared it in 1987, saying, “I have been saving this speech, one of my favorites, for a time like today.”

I think it’s been shared so often because Jim captured so well what we all know: It is always darkest before the dawn. Over time, and in time, the financial markets have demonstrated a remarkable ability to anticipate a better tomorrow even when today’s news feels so bad.


The stock market has overcome past bear markets and unsettling news

The chart shows how U.S. stocks, as measured by a hypothetical $100 investment in the S&P 500 Index as of March 31, 1936, have navigated through numerous bear markets from 1936 to 2022, highlighting World War II price controls, the Cuban missile crisis, the 1973–74 oil embargo, the Black Monday stock market crash in October 1987, the bursting of the tech bubble, the global financial crisis and the COVID-19 outbreak. The ending value of the hypothetical investment as of October, 31, 2022, would have been $576,052.

Sources: RIMES, Standard & Poor’s. As of October 31, 2022. Chart shown on a logarithmic scale. Past results are not predictive of results in future periods.

We are once again in uncertain territory. It feels scary and terrible. It is exactly those feelings that make this speech so timeless. It’s precisely when the backdrop has looked so difficult that the markets have begun to recover. It’s hard to know when that turn will happen this cycle. But, based on prior experiences the market will turn eventually — and that should provide some solace.

In November 1974, few people thought it was a good time to invest. The Dow had lost more than 40% from its high in January 1973. In his letter, Fullerton recalled an even darker period in our nation’s history — April 1942. His remarks follow, and you can download a copy of the letter:


“We have been here before”

 One significant reason why there is such an extreme degree of bearishness, pessimism, bewildering confusion, and sheer terror in the minds of brokers and investors alike right now, is that most people today have nothing in their own experience that they can relate to that is similar to this market decline.

My message to you, therefore, is: “Courage! We have been here before. Bear markets have lasted this long before. Well-managed mutual funds have gone down this much before. And shareholders in those funds and we the industry survived and prospered.”

I don’t know if we have seen the absolute bottom of this prolonged bear market, (although I think we’ve seen the lows for a lot of individual stocks).



The S&P 500 Index is a market capitalization-weighted index based on the results of approximately 500 widely held common stocks.
The S&P 500 Index (“Index”) is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Capital Group. Copyright © 2022 S&P Dow Jones Indices LLC, a division of S&P Global, and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part is prohibited without written permission of S&P Dow Jones Indices LLC.

Ready to take the next step?

Advisory services are offered through Worthen Financial Advisors, Inc.; an investment adviser domiciled in the state of Texas. This communication is not to be directly or indirectly interpreted as a solicitation of investment advisory services to residents of another jurisdiction unless the firm and the sender of this message are registered and/or licensed in that jurisdiction, or as otherwise permitted by statute.
Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by Worthen Financial Advisors, Inc[“Worthen”]), or any non-investment related services, will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. 
Worthen is neither a law firm, nor a certified public accounting firm, and no portion of its services should be construed as legal or accounting advice. Moreover, you should not assume that any discussion or information contained in this video serves as the receipt of, or as a substitute for, personalized investment advice from Worthen. Please remember that it remains your responsibility to advise Worthen, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. A copy of our current written disclosure Brochure discussing our advisory services and fees is available upon request. The scope of the services to be provided depends upon the needs of the client and the terms of the engagement.


— or —