By C. Theodore Hicks II, CMT, CFP, CKA
1/ Do You Have the Time?
2/ The 1970s – Not that long ago!
3/ Adjusted for Inflation
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1/
Do You Have the Time
In yesterday’s newsletter, I commented that one of my convictions is that you are likely not a “long-term” “investor”. I’ve got those terms in two separate quotes for a reason. In my book, Evidence-Based Investing I define the term “investor” and conclude that you are likely a Sophisticated Saver, not an investor. For the sake of space, I will not elaborate here. (But feel free to buy my book. 😉)
But I will discuss “long-term” here.
Our first chart today is of the Dow Jones Industrial Average going back to 1900. While the S&P 500 is a better (but not perfect) index, that index wasn’t created until the 1950s. So, we just have more history by using the DJI. On the chart, I’ve got four time periods measured. Each of these time periods is at least 10 years. These types of environments have happened before, and they will happen again. Do you really want to be a “long-term” investor and “hold” during such a time?
2/
The 1970s – Not that long ago!
This is arguably my favorite chart. One of the reasons I like this chart is because the first two time periods measured in the first chart are so long ago. When I mention those time periods, I sometimes here excuses that they were anomalies, or so long ago that they are irrelevant.
Fine. The 1970s were not that long ago.
Our second chart today is of the S&P 500 from 1964 through 1979. This is more than half of a typical working career. Image yourself on the left side of this chart, beginning your working career. Or, better yet, image yourself on the left side of the chart with about 15 years before you retire. If you knew what was ahead, would you consider yourself a “long-term” investor?
In my view, this is a classic example of why you must have a defensive strategy for your wealth management. We simply do not know what is going to happen next.
3/
Adjusted for Inflation
Our final chart for the week is the same data from the second chart. The only difference is that I’ve adjusted it for inflation.
I could make an argument that we could very well find ourselves in a stagflationary environment akin to what the nation saw in the late 1960s and through the 1970s. While I am not predicting that, I am merely suggesting that I could make an argument about why it could happen in the near future. If it does, do you have a well-defined investment management process to help you manage your wealth with wisdom?
I hope you have enjoyed my writing this week. If you have, feel free to connect with me on LinkedIn or Twitter. The links are below. … And I do hope you’ll consider my book. All of the proceeds from my book will be donated to organizations that are helping Western North Carolina recover from the devasting floods from Hurricane Helene.
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25th July 2025
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