1968-1969: Buffett and Price Agreed

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Dear fellow investors,

We’ve recently been making the case that the current circumstances in the stock market are most like the late 1960s and 1970s. Euphoric enthusiasm for the most aggressive stocks and an economic/national security spending explosion are held in common. However, the most interesting thing about 1968-1969 was the agreement about the stock market future between the greatest growth investor at that time, T. Rowe Price, and the greatest value investor of all time, Warren Buffett.

Let’s start with what T. Rowe Price said and did back then:

“Given the unpopular, increasingly expensive, out‐of‐control war in Vietnam, the huge costs of the Great Society program, and the large ensuing budget deficits, Mr. Price’s sensitive antennae were up. His concerns began to increase about the country’s future and the outlook for the stock market. He believed that economic history continually repeated itself because it was driven by human nature. As he had written in the 1937 pamphlet Change: The Investor’s Only Certainty: “The basic social, economic, and political currents flow as long as human beings remain in control.”

Price reacted by adding oil and gas stocks to his T. Rowe Price Growth Fund and started a brand-new fund called the T. Rowe Price New Era Fund. He loaded it with oil and gas shares, gold and other inflation-beneficiary stocks. Both of these funds are in operation today, and the firm T. Rowe Price has been one of the most successful firms in the mutual fund industry.

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