Marketers should prepare for long winter in stock market

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What happens if the stock market doesn't go up? The Dow stood at 770 when the bull market began 20 years ago this month. It rocketed 15-fold to its 2000 peak. Even at its current level, the Dow is 11 times its 1982 nadir. This market's not cheap. It could fall further given signs of a double-dip recession. But an even stronger case can be made that market indices are many years away-and in some cases, decades away-from returning to their bull-market peaks. In the marketing world, that's a problem-and an opportunity.

A sideways market is nothing new. In the 20 years before the recent bull market (from 1962 to the summer of 1982), the Dow basically ricocheted between 600 and 1,000, leading to big short-term gains (and losses) but not doing much for the long-term investor. It was in the 700s in 1962-and in 1982.

The Dow briefly surpassed 1,000 in late 1972, only to crash 47% in the recession and energy crisis of 1973-74. The Nifty 50-blue-chip stocks seen as sure bets in the early `70s-came tumbling down. Walt Disney Co., one of the Nifty 50, fell 80% from 1972 to 1974. It took 13 years for Disney to again reach its 1972 price.

In the current bear market, the Dow so far is down 28% from its peak; Disney, a Dow member, is down 68%. The Nasdaq crashed 75%. Certain stocks may never recover to bubble-era peaks. It's hard to see how AOL Time Warner, down 87%, will return in its current incarnation to a price that was supported only by a speculative bubble.

But the bigger issue is that the stock market, like the market of the `60s and `70s, may in the end go sideways for many years.

Millions of investors, new to stocks and mutual funds, have been burned badly in the decline and shocked by accounting scandals. Yale economics Prof. Robert Shiller, author of "Irrational Exuberance," figures it could be 10 years before many investors will be ready to jump back into stocks.

The implications are far-reaching. A sideways market lessens the value of a currency-stock-that's been central to the growth of agency companies and many marketers. It's harder to sell new stock if investors see limited growth for the market. Likewise, stock-swap acquisitions-a favorite of agency companies and marketers-could be more difficult to pull off. Stock options could lose appeal in a stagnant stock market.

But the biggest impact from a languishing market would come in consumer behavior. Without inflated equities, consumers would feel, and be, less affluent. Net worth would grow more slowly over time without the kick from equities. Consumers could be forced to live more within their means (think Toyota, not Lexus). And they could be working longer to make up for their shrunken retirement accounts. (So much for early retirement.)

But there is opportunity, too. The economy in the `60s, despite a fits-and-starts stock market, grew for nine years without recession, thanks partly to wartime spending. In the recession and energy crisis of 1973-74, Japanese auto marketers filled a void with cheap, efficient, reliable cars. Some of today's strongest brands-including Wal-Mart, Microsoft and Southwest Airlines-took root in the `70s. Marketing innovation does not necessarily correlate with stock price; IBM introduced its vaunted Personal Computer in 1981 even as its stock traded at 1967 prices.

No one knows where the stock market is going. But the assumption that each pullback is followed by a stronger bull market may not play out. It's time to think of business opportunities that will work if the market goes into a long-haul stall.

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