Transcription
50 years ago, Americans saw the perfect storm of high inflation mixed with high oil prices mixed with a slowing economy. And while, yes, this did cause economic pain, it also created a whole new wave of millionaires who saw this opportunity and took the right action. Well, it's happening again now in 2026. History doesn't repeat itself, but it does rhyme.
In this video, I want to go over which investors became wealthy through this perfect storm 50 years ago. That way you can learn from history because we're going through a very similar shift happening today in 2026 because most people ignored it, but it created opportunity for those that were financially savvy.
Now, just so we're on the same page, let me briefly talk about what happened about 50 years ago and compare it to what happened today. That way you can see the similarities and differences because in 1971, then President Richard Nixon took the United States dollar off of the gold standard.
"I have directed Secretary Connley to suspend temporarily the convertibility of the dollar into gold or other reserve assets."
And when he did that, that allowed our central bank, the Federal Reserve Bank, to essentially print an unlimited amount of money, and the government could spend an unlimited amount of money. This created a boost in government spending, but that also created an inflation problem.
Then in 1973, there was a conflict in the Middle East that the United States got involved with, which then spiked oil prices. So, this was the Yom Kippur War that the United States got involved with, which caused oil prices to rise, which made the inflation problem worse. And then, in response, the Federal Reserve Bank raised interest rates aggressively in the '70s and the '80s, which caused the job market to get hurt, which caused the economy to slow down.
Fast forward about 50 years, and what we saw happen was the pandemic led to a lot of money printing by the Federal Reserve Bank and a lot of government spending, which led to an inflation problem. Then in 2026, the United States got involved in a conflict in the Middle East, which led to very high oil prices. And now the question is, what is this going to mean for the job market? What is this going to mean for the economy? Already, our job market has been facing a shakeup because of AI.
But the Federal Reserve Bank that we have today is very different than what we had in the '70s because right now, there's still a lot of pressure on the Federal Reserve Bank to cut interest rates. But because of the concerns about inflation, because of the concerns about oil prices, there is a chance that the Federal Reserve Bank could begin raising interest rates again to help cool down inflation. Again, we don't know what's going to happen, but then the concern is, what is this going to mean for the economy? Of course, only time will tell.
But what we saw happen was in this situation in the '70s, this created a whole new wave of millionaires for the people that invested their money in a specific way. And I'm going to break this down into three different characters. Character number one is the person that invested in the S&P 500 through this transition. Person number two is the one that saved money. And person number three is what I'll call the "quote opportunist," which has invested their money into different industries.
And by the way, for my male followers, I drew a mustache, which in my native language, Punjabi, we call a "mush." For my female followers, I drew a braid. In my native language, Punjabi, we call that a "gut."
So, let me break down what happened for each one of these three investors during these eras. So, let's start by taking a look at 1971 to 1981. And I'm going to assume that you're putting aside $100 a month to invest into the S&P 500 here, to save here, or to invest in the opportunist opportunities here.
Well, if you put aside $100 a month to invest, that means you would have put aside $13,200, but the money would grow because the stock market grew over that period from 1971 to 1981. In this case, your money would have grown to around $21,500, which I am rounding up. But you might feel good because your money grew from 13 grand to $21,000, except this is a growth of around 60%. But inflation was around 124%. Which means, yes, your money grew, but the cost of living grew even faster than inflation.
In scenario number two, where you just saved that money, well, now in this instance, you would have again put aside $13,200. And in the 1970s, when interest rates went up aggressively, well, now you were getting a real rate of return in the bank because now you were paying 20% on a mortgage. So, your bank was paying 8%, 10%, 12% a year in interest, as well, which means now your $13,200 grew. In this instance, it grew to around $20,000, which means, yes, your savings grew, but it was still less than what you would have got in the stock market, and you still did not beat inflation, which means you also lost money here because your money only grew by around 53%.
And, and remember, when we talk about the stock market, we went through a couple of recessions during this period, which is one of the reasons why the stock market has such a rough time in the '70s and '80s.
Now, for the opportunist, let's just start by talking about gold because that was a big opportunity in the early 1970s. And let's assume that you invested the same $100, which is $13,200 you put aside, into gold. Well, after 1981, your $13,200 that you invested into gold would have turned into about $45,500, which means you crushed the stock market. You crushed the savings account because now your money grew by 245%.
Now, at this point, you might say, "Well, Jasp, this is clearly the best option." Well, not necessarily. Stick with me.
By the way, if you're an investor and you want to stay up to date on what's happening in the markets when it's happening, my team puts together a free daily report called Market Briefs every morning. You can read it in less than 5 minutes. It breaks down what's happening in the economy, housing, stocks, crypto, and global markets into a fun, witty, and easy-to-read newsletter. And as an added bonus, when you sign up for Market Briefs, you're also going to get my free investing master class that will walk you through how you can get started as an investor and find hidden investment opportunities before they hit the headlines. So, if you want to get Market Briefs and this investing master class all for free, all you have to do is sign up and click the link down in the description below.
Now, the reason why I say you don't want to jump the gun is because now you want to take a look at what happened over the next decade as well because we're talking about long-term investors. So, instead of looking at the gains over a 10-year horizon, let's take a look at a 20-year horizon as a long-term investor between 1971 to 1991.
Now, inflation was around 236%, which is more than what we saw here. Now, let's assume that you continue investing the $100 a month from 1971 to 1991 and the S&P 500. Now, your money would have grown to over $133,000, which means you grew your money by around 430-some percent, which means now you're beating inflation over this longer period of time.
If you saved your money, your money was growing when you had the high interest rates, although not as fast as inflation. But then as interest rates started to fall, your rate of return also started to fall. Which means in this case, I'm going to round up here. Your money would have grown to around $60,000, which means you grew all of your money by approximately 115%. Not bad, except you still lost a lot of value to inflation.
And then this is the most important part you want to pay attention to. If you continued to invest into this booming asset, gold, you continued to invest about $100 a month into gold, after 1991, your gold investment would have grown to around, I'm going to round up here, $52,000, which means your money grew by approximately, I'm just going to round it here, 100% overall, which means in the first decade, gold was number one. After you combined two decades, gold was in last place. You would have gotten a better return if you just saved your money in the bank over investing your money in gold.
Why? Because people buy gold when they're worried about the dollar. And when those worries about the dollar went away, as interest rates went up, gold prices crashed. When you save your money in the bank, you never see red in your account. Because when you're saving your money in the bank, well, you feel that security that my money is growing. Although you're losing value to inflation, you don't see that concern of losing money. You lose value, you don't lose actual dollars.
When you invest your money in the stock market, yes, you're taking a risk. You're going to see recessions. You're going to see market crashes. But what we've seen throughout history is if you keep investing your money year after year, decade after decade, it has been proven to win, assuming that you are a long-term investor.
And this is where what you want to understand is what are your goals and where's the opportunity? Because if you bought gold and then sold it at the peak, well, you'd be doing great. And that's why it's so important for you to understand your goals as an investor. The mistake that so many people make today is they have no idea what their strategy is. They chase what's hot on CNBC. They chase what's hot on Reddit. You chase what's hot on ChatGPT. And then you buy that after it's already seen these huge gains. And then maybe it goes up a little bit more, but once it starts going down, that's when you sell. And this is not a strategy.
And when it comes to investing, what you want to think about is not what stock you're investing in, but rather what business you're investing in. What asset are you investing in? Where is the money moving? And that's where the opportunity is. Because a lot of people make the mistake of just thinking, "I'm going to invest in the stock to get rich." But you're not thinking about what you're actually buying. And Warren Buffett, the greatest investor of all time, said it best: "If you don't understand what you're buying, you probably shouldn't be buying it to begin with." And that's the way you want to be thinking as an investor. You need to know what it is that you're buying. That way you know when you should buy it and if it's still a good investment, then when do you keep buying it?
And that's why I say a lot of times when I think about gold, for me, gold is an inflationary hedge. I don't think of it as an investment. I think of it as an alternative way to save money. I own some gold, but it's a small piece of my portfolio. But I also understand that when worries about the dollar go away, gold doesn't do good. When people are concerned about the dollar, when they're worried about a recession, when they're worried about a war, that's good for gold. And so you have to understand the game that you're playing and what is your investing strategy.
So now, when we think about the opportunist, this is where the opportunities are if you can understand what it is that you're investing in because it's not just gold. There are certain industries that are going to benefit more than others when money is moving in the direction. When you have concerns about oil crises, guess which stocks benefit? Energy stocks. When you have concerns about a war, do you know which stocks benefit? Defense companies and military companies. When you have concerns about a chip shortage, which are going to be coming in the next couple of months because of the helium shortage, which companies benefit? It's the semiconductor companies. It's the companies that are producing the helium.
When you have concerns about AI taking jobs, do you know which companies benefit? It's the companies that are producing the AI technologies. I'm not talking about the Nvidias, which, yes, of course, Nvidia has done very well, but I'm talking about the companies that are powering the AI tools because there are data centers, there are semiconductors, there are cooling companies, there are energy companies that are all needed regardless of who wins the AI race, whether it's ChatGPT, Cloud, Perplexity, or Gemini. This backbone of AI all has to exist for any AI to exist.
And so your job now as an investor is to understand which lane are you playing in. Are you an opportunist? If so, you have to be willing to put in the research because the mistake that a lot of people make here is they buy what's hot after it's already gone up and then they sell when it starts to go down because they have no idea what they're buying.
If you're just a saver, understand you're going to lose. You're taking on the least risk. You're going to lose to inflation. This is not just something that happened in the '70s. It has been happening every decade since then and it's going to continue happening because inflation is still a problem. The interest rate that you get at your bank, even if it's a high-yield savings account, is not going to actually beat the real inflation.
If you're going to invest your money into the markets, great. But the other part you want to think about and understand now is because of inflation, sometimes just getting the return of the markets isn't going to be enough. And you have to be a long-term investor. We're talking about two decades here. We're not talking about two years in order to really see that win. You have to be a long-term investor, investing every month when markets are going up and down in order to be able to win. And that's the mistake that so many people make. They just blindly invest what's hot, but have no idea why they are investing in that thing.
Again, when you sign up for Market Briefs, you're going to get my free investing master class, which will show you how you can find better opportunities to get better returns, to be able to identify where money is moving before the headlines. That's what investing with research is all about. But you have to have a strategy. And ultimately, we know that inflation is not going away. It's been happening. It is going to continue happening. Well, if inflation is there, you have to have your money grow faster than inflation that we're actually building wealth. And that's why investing strategy is so important.
Again, this economic system is designed to benefit investors. And you have to know what it is that you're doing. Otherwise, you're competing against people with all the knowledge and the money. And now, when you lose, you're the one that's just making them rich. So, you want to be investing in your own financial education. You want to be learning how to invest. You want to be learning how to invest better. That way, you have a better chance to be able to grow your wealth and grow your wealth faster.
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