Diversification Can Fail When You Need It Most | Ted Hicks (Evidence-Based Investing)

Surviving the short term is often the price of admission for long-term success. In this episode of the Market Misbehavior podcast, Dave is joined by Ted Hicks—portfolio manager, wealth manager, founder of Hicks & Associates Wealth Management, and author of Evidence-Based Investing—to unpack what “evidence-based” decision-making looks like in practice, especially in a choppy market environment.

We discuss why many popular investing myths persist, how historical context can improve your market awareness, and why diversification can fail right when investors need it most. Ted also shares how he uses a simple, “stoplight”-style composite indicator to communicate risk and opportunity with clients—and why process matters more than predictions.

You can check out Ted's book at https://theodorehicks.com/.

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00:00 Restaurant investor vs. stock investor: the short-term exit problem
00:32 Introducing Ted Hicks + Evidence-Based Investing
01:52 “Survive the short term” vs. long-term investing reality
03:04 File the news: process over headlines and geopolitical noise
05:45 Economic data vs. the market as a leading indicator
07:19 Technical analysis as a history lesson + learning from past regimes
08:14 Why 1965–1979 matters (and why many investors never lived it)
09:44 Dot-com + GFC: “once-in-a-career” crises…again
11:19 Military history lessons for portfolio management
13:51 “Diversification fails you when you need it most” (and why)
15:22 2022: correlations to 1 and the limits of modern portfolio theory
17:21 Diversifying by strategies and positioning (not check-the-box allocation)
20:20 Aviation checklists and “fly the airplane” in investing
24:14 The VSSI “stoplight” indicator: simplifying signals + client communication
26:52 2026: key areas to watch (commodities, energy) + why outlooks are irrelevant
29:49 Raising cash as positions hit objectives (process, not prediction)
31:04 Late-cycle leadership awareness without forecasting
34:06 Closing thoughts + why this framework matters now

The content in this presentation should not be considered as a recommendation to buy or sell any security. All information is intended for educational purposes only and in no way should be considered as investment advice. Some of the links in this description and in the video may be affiliate links, which means you pay nothing more and it helps me to make Market Misbehavior awesome! As an Amazon Associate, I earn from qualifying purchases. For full disclaimer, please see our website: https://www.marketmisbehavior.com/dis....

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