Interest Rates

One of the most important concepts in investing is to remember that everything gradually returns back to the norm.

Follow this link to a list of monthly prime interest rates going back to January of 1949. Isn’t this a great table? Look at the mid 1970’s where you will see rates as high as 12% before they returned to a single digit in 1975. The rate began moving up again in 1977. Now look at the period from November 1978 to June of 1985 where double digit rates were finally seen again for a very long period of time. In 1981 the prime rate was over 20%! In 1984 was everyone wondering if they would ever see single digit rates again? They did only a year later. This table reminds me of an important lesson; in general economic factors such as oil interest rates P/E ratios and gold eventually return to the norm. Keep this table in mind when you make financial decisions.