This week I’d like to coddiwomple through the financial market reality that buy and hold doesn’t always lead to gains, writes Landon Whaley Tuesday.

“Coddiwomple” is not a word many people are familiar; it means to travel in a purposeful manner towards a vague destination. I can’t think of a single word that better describes investing in financial markets. Markets are headed toward vague destinations, we don’t know where they’re headed. Despite this reality, if we want to be successful investors, you and I must remain purposeful in the way we approach markets as they move towards their vague destination.

With last week’s closing price of $2,760.16, the S&P 500 (SPX) is unchanged (on a cumulative price return basis) from where it was trading on January 3 of this year. The S&P isn’t the only market that’s been trading sideways for most of 2018—many others have seen similar fates.

This sideways action has many investors struggling to find their footing and generate a decent return. Unfortunately for the vast majority of investors not adept at trading a sideways market, the next decade will prove to be much more wrought with career risk and portfolio risk than the last. The financial market reality is that equity markets can go “unchanged” for long stretches of time.

In 1980, just as the Japanese bull market was getting started, you could have paid 6,995 for the Nikkei 225 equity index. In December 1989, someone paid 38,957 for the Nikkei 225, which remains its all-time high. A few weeks after Lehman’s collapse in 2008, the Nikkei fell to 6,995 (revisiting the price you paid in 1980), which now marks a 38-year low.

Today, the Nikkei trades for 22,930, unchanged from where it traded 31 years ago in 1987.

In 1996, just as the Euro Stoxx equity index bull market was starting, you could have paid 1,765 for it. Four years later in 2000, someone paid 5,432 for the Euro Stoxx, which remains its all-time high. In March 2009, the Euro Stoxx index returned to 1,765, the price paid in 1996, which also happens to be the 22-year low. Today, the Euro Stoxx index trades for 3,573, unchanged from where it traded 20 years ago.

In 1999, the Shanghai Composite equity index was also at the beginning of a major bull market, and you could have paid 1,665 for it. Two short years later, a high of 2,245 was paid in anticipation of China’s admission into the World Trade Organization. Over the next four years, the Shanghai Composite fell to a bottom of 998 in 2005, then rocketed to an all-time high of 6,124 in 2007. Less than 12 months later in 2008, the Composite fell back to 1,665, where it sold in 1999. Today, the Shanghai Comp trades for 2,777, unchanged from where it traded 11 years ago.

But global equity markets aren’t the only markets to experience multi-year stretches with nothing to show for it. The U.S. equity market has had similar runs in the past.

The S&P 500 peaked at $1,552 in March 2000, only to spend the next seven-and-a-half years underwater before getting back to that price in October 2007. After posting a brand new all-time high of $1,576, the S&P spent the next six-and-a-half years underwater before breaking through to a new all-time high in June 2013. The bottom line is that after peaking in early 2000, the S&P went unchanged until June 2013. Though it gave investors a wild ride for those 13 years, the S&P went nowhere cumulatively.

Since then, the S&P has absolutely ripped, posting only three negative quarterly returns in the last six years and working on its fourth as I write this.

I can’t even begin to express just how unprecedentedly bullish U.S. equity market conditions have been for the last nine years and especially the last two.

And while I have no idea if the S&P 500 will make another run at its all-time high, it wouldn’t surprise me in the least if I’m coddiwompling in 2025 about how the S&P has finally rallied back to its September 2018 high of $2,940, unchanged after seven years.

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Watch Landon Whaley’s 3 Ideas for Investing and the meaning of coddiwomple in a short video here.
Recorded: MoneyShow Dallas Oct. 5, 2018.
Duration: 6:42.

Watch Landon Whaley discuss When Markets Cycle  in a short video here.
Landon Whaley: We have a generation of investors and asset managers who know only one market. The reality is markets and economies cycle and catch people off guard.
Recorded: MoneyShow Dallas Oct. 5, 2018.
Duration: 5:51.

Landon Whaley interviews Adrian Manz: How I approach stocks here.
Recorded: MoneyShow Dallas Oct. 5, 2018.
Duration: 7:48.

Landon Whaley interviews trader Jackie Ann Patterson: How I got started trading and how I approach it with my Truth about ETF Rotation here.
Recorded: MoneyShow Dallas Oct. 5, 2018.
Duration: 6:14.

Landon Whaley interviews John Carter: How I started trading here.
Recorded: MoneyShow Dallas Oct. 5, 2018.
Duration: 5:37.