President Harry S. Truman once said that “the only thing new in the world is the history you don’t know.” Today’s theme will illustrate the relevance of his comment to our current experience in 2023, and how understanding historical patterns can lead to building effortless wealth over time.

First let’s travel back about 50 years to circa 1970 for some context. Some bullet points about that messy time that mature adults will remember vividly but that younger investors may not have learned:

• In 1970 President Nixon invaded Cambodia without notice to our allies or Congress
• College campuses erupted, four college students at Kent State University were killed by our national guard, and the country was severely torn apart.
• Fear of depletion of our national resources grew in response to popular theories of a population explosion.
• Rampant inflation meant the end of the gold standard, which had pegged the world’s currencies to the US dollar.

Perhaps coincidentally, 1970 also marked the beginning of 50 years of incredible technological innovation. One example to which all of us can relate will illustrate this point: today’s latest and greatest iPhone15 is not only orders of magnitude more powerful than the IBM mainframe of that day but also does things that I’m sure were unimaginable even to the geeks of that day.

How does all of this relate to effortless wealth building? For starters, let’s see how much wealth an investor could have created by investing in the S&P 500 index during these 50 years: in 1970 the index stood at $92 (not a typo) and today the index is around $4400—that’s an increase of 45x (versus inflation of about 8x).

So, even though an investor endured 12 different Bear Markets (i.e., declines of at least 20%) a $10,000 investment would have grown 45x. This may be enough to convince you that you can build effortless wealth by just buying, holding, and ignoring all the potential news that can derail your financial plan and strategies.

But there is also a logical underpinning to a strategy that buys, holds, and ignores everything else; a logic that gives reason to the long-term equity investor’s optimism.

One element of the logical underpinning is that almost everyone (or every company) goes to work every day with the goal of increasing sales, profits, productivity while decreasing unnecessary expenses. This results in an ever- expanding economy in which companies tend to become more valuable over time.

The other element is that investors have an opportunity to become owners of shares of these companies, some of which grow to become great companies. The shares of these companies tend to increase in price over time along with their respective increases in value. Owning potentially great companies is what we strive to achieve through our investment vehicles (whether mutual funds, Exchange-Traded funds, or individual stocks).

Note that, although it is conventional and easy to think you are “playing the stock market” or “investing in the stock market” you aren’t doing that at all. You are owning pieces of companies that are always doing their best to navigate and work around the obstacles that government or competitors or life itself present.

And, to not belabor the point, your participation can and should be effortless: deposit your money, make a good investment decision, and get out of the way. Getting out of the way means that you recognize that (1) the economy cannot be forecasted consistently and (2) the market cannot be timed consistently.

True, you will endure many down cycles along the way, which are terrifying without a long-term perspective. Riding out the temporary declines should be thought of as the price of obtaining effortless wealth.

Today, circa 2023, we face circumstances that rival those of 50 years ago: war in Ukraine, war in the Middle East causing division once again, huge interest rate spikes, major cities in decay, a post-pandemic economy, and a presidential election next year that is destined to continue or exacerbate our cultural divide.

What is an investor to do about the messiness of life in 2023? Stay the course, trust that companies you own to do what they have always done: reward long-term investors with effortless wealth.

Until next month, JR