Lindy Strategy for Wealth

What if the secret to long-term investing isn’t chasing the next big thing—but trusting what’s already stood the test of time? In this cover story, we explore the Lindy Effect and how pairing two of the most enduring financial assets—gold and blue-chip stocks— can help you build a portfolio that’s not just profitable, but resilient [EasyDNNnews:PaidContentStart]

Picture this: It’s the end of 2008. The world is knee-deep in the wreckage of the Global Financial Crisis. Lehman Brothers, a 150-year-old Wall Street titan, has just collapsed. Headlines scream panic, and investors scramble to figure out who’s next. On Dalal Street, the Nifty 50 has been sliced in half from its peak, and mid and Small-Cap investors are licking wounds as losses surpass 70 per cent. But somewhere in the chaos, one investor—let’s call him Ramesh— is sleeping peacefully. While others were consumed by red screens and sleepless nights, Ramesh’s portfolio wasn’t melting down. Why? Because Ramesh had something most investors overlooked: a substantial chunk of gold alongside his equity holdings. In rupee terms, gold soared over 26 per cent in 2008, acting as a cushion when stocks crashed. And by the end of 2009, as both gold and equities rebounded, Ramesh’s annually rebalanced portfolio was worth ₹1,32,345—compared to ₹81,310 for an equity-only investor. That’s a staggering 62 per cent difference. This wasn’t luck. It was the Lindy Effect in action—the idea that the longer something that is not perishable has survived, the more likely it is to continue thriving. Gold has withstood 5,000 years of human history; blue-chip stocks like those in the Nifty 50 have weathered decades of economic cycles. 

In this issue, we explore why a 50:50 portfolio split between gold and the Nifty 50 isn’t just conservative—it’s incredibly smart. Through a data-rich journey from the gold rush of the 1970s to the pandemic plunge of 2020, we uncover why time-tested assets offer something few strategies can: resilience, reliability, and real returns. We revisit multiple market crises, drawing insights from legends like Warren Buffett, Charlie Munger, and Peter Lynch, who’ve long advocated for quality and longevity over speculation. Their philosophies resonate now more than ever. Whether you're a first-time retail investor or a seasoned wealth builder, this story will challenge conventional wisdom and prove why ‘old is gold’ isn’t just a saying—it’s a strategy. Buckle up as we retrace decades of financial history to discover the investing sweet spot that delivers not just growth, but peace of mind. 

The Lindy Effect: Investing in What Stands the Test of Time 

Ever noticed how some things just… last? Like Coca-Cola in the U.S. or Tatas in India, they have survived multiple business and economic cycles? That’s the essence of something called the Lindy Effect. It may sound like a term pulled out of a fancy textbook, but it’s actually rooted in simple, time-tested logic: the longer something has been around, the more likely it is to stick around. The name comes from Lindy’s Deli in New York, where showbiz insiders used to bet on how long a Broadway play would run. Over time, the term took on a life of its own, especially after author and thinker Nassim Nicholas Taleb gave it a spotlight in his work. He put it like this: if a book has been in print for 40 years, chances are it’ll survive another 40. The idea? Non-perishable things—like ideas, technologies, or asset classes—age in reverse. Each year they don’t fade, their future gets brighter. 

So, What Does That Mean for Your Money? 

Think about companies. Studies show that in India over 50 per cent of businesses collapse within 20 years. In the U.S., half fail in just 5 years; 80 per cent don’t make it past two decades. Brutal. But here’s the twist—if a company does survive that long, its chances of lasting even longer go up. Survival becomes a stamp of quality. Coca-Cola is a textbook example. Born in 1892, it has outlived depressions, recessions, two world wars, and entire economic eras. It hasn’t just survived—it has thrived, raising dividends 61 years in a row. Based on Lindy thinking, Coke is statistically more likely to be around in 100 years than a newer tech darling like Google. Warren Buffett certainly thinks so. Look at Berkshire Hathaway’s portfolio— on average, the top 10 holdings are over 113 years old! Seven of them are century-old companies. Buffett puts it best: ‘Time is the friend of the wonderful company, the enemy of the mediocre.’ 

Why Investors Should Care About Longevity 

Here’s the real kicker: the Lindy Effect doesn’t say old is always better. It just reminds us to be cautious about chasing what’s new and shiny. Every few years there’s a hot IPO or ‘the next big thing’—but as Peter Lynch, the man behind the legendary Magellan Fund, used to say: ‘In the long run, the market is a weighing machine.’ That means real value shows up over time. Not in social media buzz, but in earnings, dividends, and staying power. Lynch often backed ‘stalwarts’—companies that weren’t always exciting, but were rock solid. Think toothpaste makers, consumer goods giants, or logistics firms. Boring? Maybe. But they’ve quietly built wealth for decades. Charlie Munger, Buffett’s right-hand man, agrees. He said, ‘The big money is not in the buying or selling, but in the waiting.’ His advice? Bet on companies with real, long-term advantages— brand strength, distribution scale, loyal customers—and avoid flashy trends. As he warns, ‘When the crowd moves on, large losses often follow large gains.’ 

In Short: Invest in Survivors
Whether it’s a century-old company or a 5,000-year-old metal like gold, their continued existence is proof of resilience. They’ve passed nature’s financial stress test. They’re Lindyapproved. And that brings us to a powerful idea for Indian investors: pairing two of the most battle-tested assets—gold and blue-chip stocks (think Nifty 50 or Sensex). In the next section, we’ll break down how this combo not only balances risk and reward but could also give you the peace of mind that every long-term investor dreams of. After all, in the world of investing, durability is underrated—and survival is a superpower. 

Gold: The 5,000-Year-Old Champion Asset
If there’s an asset that epitomizes the Lindy Effect, it’s gold. Gold has been valued by humans for millennia – as jewellery, money, or store of wealth – and its enduring allure suggests it will remain valuable for millennia to come. Empires have risen and fallen, currencies have come and gone, but gold’s lustre – both literal and figurative – persists. From an investment standpoint, gold’s long-term record is fascinating. Consider its global performance: in 1920, gold was $20.68 per ounce; by 2025, it neared $3,000 – a 14,328 per cent total return over a century, albeit translating to a modest ~4.85 per cent annualized (CAGR) in USD terms. The real action came after 1971, when the U.S. ended the Gold Standard and gold was free to float – since then it’s delivered ~8.4 per cent annual USD returns. In India, the story is even more striking due to rupee depreciation. Gold priced in rupees has never had a losing decade in the last 50 years, whereas in dollars it saw two down decades. In the 1980s and 1990s, gold languished globally (a 20-year bear market where it fell over 60 per cent in USD), but Indian gold investors were shielded by a falling INR – gold in rupees kept chugging upward, showing positive returns even when global gold faltered. In essence, for Indians, gold benefitted not only from global price gains but also the rupee’s decline – a double tailwind over time. 

The chart below shows the performance of Gold in USD and Indian Rupee terms since 1978

The chart clearly shows gold has proven to be a resilient asset, delivering a CAGR of approximately 6.11 per cent in USD terms and a remarkable 11.79 per cent in INR terms since 1978. For Indian investors, gold has not only served as a hedge against currency erosion but also as a strong store of value, outperforming many traditional asset classes over the decades. Why bother with gold at all, then, if equities clearly deliver higher long-term returns (as we’ll see in a moment)? Because gold shines when everything else is dark. It is the ultimate hedge against crises – economic meltdowns, market crashes, wars, pandemics, you name it. History provides plenty of evidence for this. In the 2010–11 Eurozone debt crisis (when global markets wobbled), gold climbed +35 per cent as Sensex sank –24 per cent. Fast forward to the recent COVID-19 pandemic aftershocks (2021–23): Inflation spiked and recovery was uneven – gold delivered +24 per cent whereas Sensex basically flatlined (≈ –3 per cent). And even amidst geopolitical crosswinds in late 2024 – a period marked by war tensions and oil price spikes – gold gained 24 per cent while Nifty lost 6 per cent. Time and again, when equities suffer, gold zigs upward. Over the past 20 years, gold has 'consistently acted as a natural hedge during major equity market downturns'. 

From the Lindy perspective, gold’s 5,000-year track record as a store of value is unmatched. It has literally been currency since ancient kingdoms. That survival through countless crises – from the collapse of Rome to modern hyperinflations – gives confidence it will still hold value when future crises inevitably hit. Gold may not pay interest or dividends (Buffett famously critiques it for this), but its resilience is the payoff. And because its price often moves independently of stocks and bonds, adding even a small allocation of gold can significantly reduce a portfolio’s volatility and tends to have better risk-adjusted returns (higher return per unit of risk) than all-stock portfolios. In short, gold is the Lindy asset extraordinaire – ancient, still valuable, and likely to remain valuable. It won’t make you rich overnight, and it can test your patience, but as a permanent fixture in a portfolio, it’s a powerful stabiliser. 

Stocks: Blue-Chips, Broad Indices, and the Survival of the Fittest
Now let’s turn to the other half of our duo: stocks, particularly the well-established leaders represented in indices like India’s Nifty 50 or Sensex. Equities are a much 'younger' asset class than gold in historical terms – stock markets have been around for only a few centuries (the Bombay Stock Exchange since 1875, the NYSE since 1792). Yet stocks have a phenomenal long-term record of wealth creation. They’re not Lindy in the sense of millennia-old, but within the realm of finance, equity investing has accrued plenty of history – enough to identify what kinds of stocks tend to last. Let’s start with the big picture. 

In India, an investment in the flagship indices decades ago has grown to astounding sums today. The BSE Sensex, for example, was set to a base value of 100 in 1979; and is currently at 83,500. That’s a CAGR of about 15.9 per cent over four and a half decades (and over 17 per cent if we include reinvested dividends) – truly an exponential trajectory. To put it in perspective: ₹10,000 invested in a basket of Sensex stocks in 1979 (rebalanced along with the index) would have grown to about ₹64.3 lakh by now (July 04, 2025). The same ₹10,000 in gold over that period became roughly ₹5.3 lakh. 

Equities vastly outperformed everything else in the long run – by 10x relative to gold, and even more vs bank deposits. This has been called the triumph of the optimists – stocks reward believers in economic growth. However, those spectacular average returns came with wild ups and downs. The stock market’s journey is a roller-coaster in its own right. The Sensex’s history shows periods of boom – and brutal bust. It took off in the late 1980s, only to be rocked by the 1992 scam crash; it roared in the mid-2000s, then cratered 54 per cent in 2008 during the global crisis. Investors who stayed the course eventually made it to 30,000, 40,000… and today the Sensex is near 84,000+, but many who didn’t understand the volatility were shaken out during downturns. 'Buy and hold' rewarded only those with the fortitude (and liquidity) to hold through crashes. This is where Lindy thinking within equities becomes important: which stocks are worth holding onto for decades? The broad index itself has Lindy-like characteristics, because it periodically replaces fading companies with rising ones (survival of the fittest). 

For instance, the Sensex and Nifty today include companies that barely existed or were tiny 30 years ago (like Infosys or HDFC Bank), while many original members have been dropped. By design, indices evolve to reflect the current economic landscape, thus having a form of built-in longevity. An index that’s survived decades is essentially a self-cleansing portfolio of survivors – it won’t hold a failing business forever, it swaps in new winners. This makes indices like Sensex and Nifty 50 robust as long-term investments. Still, not all stocks are equal. Some firms weather storms far better than others. 

Blue-chip companies – typically large, profitable, and often leaders in their industries – have better odds of surviving and compounding over time. Many such stalwarts in India have corporate histories stretching back decades, even to the colonial era. Take Tata Group companies: Tata Steel was founded in 1907; Tata Motors in 1945; these giants have seen world wars, independence, license-permit raj, liberalisation, and globalisation, yet remain central to the economy. Or Hindustan Unilever, tracing roots to the 1880s (as Lever Brothers in Britain, operating in India since 1931) – over 90 years selling soaps and tea to Indians. These firms illustrate Lindy principles: their products and brands have been around so long that they’re deeply entrenched in consumers’ lives. 

Every year they endure, their probability of enduring another year increases, because they build brand loyalty, distribution muscle, and institutional knowledge that newcomers can’t easily replicate. In India, one could argue the Nifty 50 or Sensex itself is a collection of many Lindy-style companies. While new sectors have emerged (IT, telecom) and some newer firms have entered, a significant number of Nifty constituents are household names that have been around for decades (Reliance Industries started in 1966, State Bank of India traces back to the 19th century through Imperial Bank, ITC was founded in 1910, etc.). These firms have survived all manner of local crises – the License Raj, political upheavals, the 1991 balance-of-payments crisis (when India literally had to airlift its gold reserves to stave off default), sanctions, recessions, you name it. Survival through adversity is a hallmark of companies that dominate indices. So, when you buy a broad index, you are indirectly betting on Lindy survivors and on the mechanism that replaces the failures with new winners. That provides a measure of resilience. However, pure equity investing, even in blue-chips, can test the strongest nerves. The drawdowns can be severe (as noted, –50 per cent type crashes have occurred multiple times). This is where combining stocks with gold can create a powerful synergy. Gold often thrives precisely when those blue-chips are in freefall. In the next section, we’ll see how blending these two Lindy-approved assets – one that preserves wealth, another that grows wealth – results in a portfolio greater than the sum of its parts. 

The Combined Portfolio: Old-School Alchemy of Gold and Stocks 

If gold is the ultimate preserver and stocks are the ultimate grower, what happens when you simply hold both? You get a portfolio that, historically at least, captured much of stocks’ upside while avoiding the worst of stocks’ crashes – a portfolio that is steadier and generates better risk-adjusted returns over certain long periods. This is the magic of diversification and rebalancing, powered by the negative correlation of two Lindy assets. Let’s ground this in hard data. We did a study based on the monthly average price of Sensex and Gold since 1979. 

We compared the long-term performance of portfolios invested in Sensex and Gold using various asset allocation strategies. It begins with average monthly data for Sensex and Gold price, which is then converted into yearly averages to calculate annual returns. After that, we computed how ₹100 invested grows over time under different asset allocations— such as 40:60, 50:50, and 60:40 between Sensex and Gold— while rebalancing the portfolio annually to maintain the chosen ratio. We also tracked the growth of 100 per cent Sensex and 100 per cent Gold portfolios for comparison. 

Finally, we compiled the result into a single chart, and the Compound Annual Growth Rate (CAGR) is calculated for each strategy to evaluate long-term performance. This allows for a visual and statistical comparison of diversified versus concentrated investment approaches. The chart below illustrates this vividly. Starting around 1980 (indexing each asset to 100), we can see the growth trajectories of gold alone, Sensex alone, and an annually rebalanced 40:60, 50:50, and 60:40 mix, of gold and Sensex. 

It’s worth noting that for very long horizons (like 30-40 years or more), a higher equity share historically yields a bigger end wealth (as seen with the Sensex vs gold from 1979–2025). Thus, a young investor with a multi-decade runway might still lean predominantly into equities. 

The performance analysis from the above table shows various investment portfolios from January 1, 1980, to January 1, 2025, comparing three annually rebalanced portfolios (40% Sensex/60% Gold, 50% Sensex/50% Gold, 60% Sensex/40% Gold) and two single-asset portfolios (Sensex Only and Gold Only). The Sensex only portfolio achieved the highest total return of 59,603.77 per cent and a CAGR of 15.26 per cent, reflecting its strong long-term growth but also the highest volatility, with a maximum drawdown of -29.33 per cent (it can differ from the actual drawdown due to average monthly and after that yearly average taken of Sensex level), an average drawdown of -12.28 per cent, and a recovery period averaging 730.75 days. Its risk-adjusted metrics were the weakest, with a Calmar Ratio of 0.52, a Yearly Sharpe Ratio of 0.7, and a Yearly Sortino Ratio of 3.16, alongside the lowest win year percentage (73.33 per cent). In contrast, the rebalanced portfolios demonstrated better risk-adjusted returns, with the 40−60 Rebalanced portfolio leading in risk efficiency, posting a total return of 20,708.59 per cent, a CAGR of 12.59 per cent, the lowest maximum drawdown (-8.64 per cent), and the highest Calmar (1.46), Sharpe (1.04), and Sortino (7.84) ratios, as well as an 88.89 per cent win year percentage. The 50−50 Rebalanced and 60−40 Rebalanced portfolios followed, with total returns of 26,270.77 per cent and 32,487.21 per cent and CAGRs of 13.19 per cent and 13.72 per cent, respectively, but showed increasing drawdowns (-11.08 per cent and -13.94 per cent) and declining risk-adjusted ratios as equity allocation rose. The Gold Only portfolio had the lowest total return (6,032.95 per cent) and CAGR (9.58 per cent), with a maximum drawdown of -15.72 per cent and the longest recovery periods (1,369.75 days). 

Overall, while Sensex Only offers the highest long-term growth, for risk-tolerant investors, the 40−60 Rebalanced portfolio provides the best balance of returns, risk efficiency, and consistency, making it ideal for those seeking stability and resilience during market downturns. Human nature being what it is, an investor is more likely to stick with a strategy that doesn’t put them through extreme gut-wrenching drawdowns. What’s the point of a 100 per cent equity plan promising 15 per cent long-term CAGR if you panic and sell during a crash? The balanced portfolio, by reducing volatility, helps investors stay the course and thus actually realise those long-term gains. 

As we see, historically gold was the hero when stocks were the villain. The divergence is sometimes dramatic – e.g. late 2000s: +56 per cent vs -45 per cent – almost inversely correlated. The balanced portfolio in that instance would have been roughly flat to slightly up. This pattern repeated in smaller crises as well (2011, 2022, etc.). It’s important to note that the inverse relationship doesn’t always hold in short-term moves (for example, in the initial March 2020 COVID crash, gold also sold off briefly as investors scrambled for cash, before rapidly recovering). But in the full cycle of a crisis, gold tends to shine as a hedge. It’s often said that ‘gold takes the stairs up and the elevator down’ – slow gains, sudden drops – whereas stocks are the opposite – they climb slowly but can plummet in a panic. When rebalanced together, the gold stair-climb can offset the stock elevator drop. In essence, the masters of investing all emphasise endurance – whether it’s the business’ ability to endure, or the investor’s ability to endure. The Lindy Effect captures both: invest in things built to last, and structure your strategy so you can last through the tough times. 

Conclusion: Longevity as the Ultimate Life Hack for Your Portfolio Markets will always surprise us. There will be exuberant booms and heart-stopping busts. New technologies will emerge and old ones will fade. No one can perfectly predict the future. But as we’ve seen, one can take solace in a simple principle: the future is likely to rhyme with the past, at least when it comes to human nature and economic cycles. Assets and businesses that have proven their worth over decades or centuries have something almost akin to genetic fitness in the marketplace. They have survived competition, disruption, inflation, deflation, and disaster – and that which has survived many cycles can often survive one more. 

Such an approach is accessible (you can do it via index funds and gold ETFs these days, with minimal cost) and humble (you’re not claiming to outsmart the market, just aligning with ageless truths of it). It aligns with human behavioural quirks too – because you’ll always see something in your portfolio doing okay, and you’re less likely to panic-sell everything. That helps you stick with the plan, which is half the battle in investing. 

In closing, let’s recall the tale of Ramesh from 2008. While his friends chased exotic derivatives or fled to cash at the worst moments, Ramesh calmly held on to his 50:50 portfolio. When stocks crashed, his gold cushioned him; when gold eventually cooled, stocks picked up the slack. Ramesh wasn’t a financial wizard – he simply respected the wisdom of what’s endured. The Lindy Effect guided him to trust the old. And in investing, as in life, those who harness the power of time and endurance often find that slow and steady not only wins the race, but does so with a lot less stress. 

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