Super is under serious, and existential, threat as a retirement vehicle.

No, it’s not the increased tax on large balances.

And no, despite the ridiculousness of the Opposition’s ‘Super for Houses’ thing, it’s not that, either (though we’ll be treading similar ground).

The biggest threat to Super is house prices. And the inexorable push for longer mortgage terms.

You might remember me railing against 40-year mortgages that were being discussed a while back.

You also might have seen that US President Donald Trump is heralding a 50-year mortgage over in the States.

It’s a lovely political bait-and-switch, of course.

See, on day one, the repayments actually are lower. The same loan, paid over 50, rather than 30, years, will cost less, per month.

Except there’s not just one, but two stings in the tail.

First, over 50 years, you’ll pay a lot, lot more interest in total. Something that looks more affordable on day one (the simple ‘dollars per month’ repayment) ends up being a Trojan Horse for paying a motza over a lifetime.

Don’t believe me? Or just want to see it for yourself? Good plan. Here are the numbers:

Let’s pick a $1m loan, with a 5.68% interest rate (the average interest rate quoted on ASIC’s MoneySmart website), to keep things simple.

When I was a kid (yes, I’m going there), the longest regular mortgage was 25 years.

The monthly repayment on that loan would be $6,248.

Over 30 years? It falls to $5,791.

40 years? $5,281

And it’s ‘only’ $5,029 over 50 years.

Much cheaper, right?

Nope. Wait until you see the full numbers for each loan term:

25 years: $847,650 in interest, $1,847,650 in total.

30 years: $1,084,881 in interest, $2,084,881 in total.

40 years: $1,534,752 in interest, $2,534,752 in total.

50 years(!): $2,017,484 in interest, $3,017,484 in total.

I mean, even the first number is extraordinary.

And even if you want to argue that comparing against a 25-year loan is unrealistic, a 40 year loan would still see someone pay $450,000 more over the loan’s life, compared to a 30 year loan, and a whopping $933,000 more if they took the 50-year term!

That should, frankly, be the end of the argument.

But what if your view is ‘hey, at least they can get a house’?

It’s a very good point. But let me tell you (and we haven’t even got to the Super thing, yet!), this is the second ‘sting’.

See, let’s say you can currently afford a $5,791 monthly repayment on that 30 year mortgage.

So can John, and so can Jane.

The three of you are about to go to auction to use your $1m buying power to buy a home.

Except John and Jane have just spoken to their bank manager, who let them know they have 50-year mortgages available.

John says “Beauty! I’ll pay a little less each month and spend the savings on something else”.

That’d be a financially bad decision, as I mentioned above, but it’s a free country.

Jane thinks for a minute, and realises something.

“Umm… if a longer term means lower monthly repayments, doesn’t it also mean I can borrow more at the original repayment?”

Jane’s already thinking about buying a better place, in a better location.

The bank manager’s eyes light up – she’s about to get a nice bonus for increasing the bank’s loan book.

“Why yes”, she says, as she taps away on the keyboard.

“You can afford to pay the originally assessed $5,791 each month… so if you took a 50-year mortgage, you can borrow $1.15m instead of just $1 million.”

That is music to Jane’s ears, and she goes to the auction with another 15% purchasing power.

John gets wind of the same idea, though, and just before the auction, he asks his manager the same thing – and gets the same answer.

As the auctioneer goes through his paces, you drop out of the bidding once the price goes above what you can afford with your $1m, 30-year loan.

John and Jane keep going, though, until Jane finally wins the bid, using the full $1.15m loan.

She feels great until the adrenaline wears off and she realises that she and John ended up just bidding against each other using the extra debt: had the bank only offered 30 year loans, they both would have stopped $150,000 earlier, and Jane wouldn’t be spending an additional 20 years in debt.

Meanwhile, the home seller and the bank manager open a bottle of French bubbly, celebrating their good fortune at getting a higher price and more interest out of Jane, thanks to this new ‘more affordable’ 50-year home loan term.

That echo they hear in the distance? That’s the same thing happening across the country, as buyers, all with increased borrowing capacity, desperately outbid each other, pushing prices ever higher, and doing exactly nothing to improve affordability.

That is where our tale of woe might end. And that would be more than enough for any reasonable Treasurer (or Shadow Treasurer) and regulator to step in and say they’re putting a hard cap on mortgages at 30 years.

(It should also be enough for the Federal Opposition to realise that ‘Super for Housing’ would do precisely the same thing to prices – and they should drop that policy, forthwith.)

Unfortunately, though, it gets worse.

Because, unless you’re taking that 50-year mortgage at 17, you’ll still be paying when you retire.

At which point?

At which point, Joe DiMaggio, a nation turns its lonely eyes to you.

(Kids, ask your parents about the song, Mrs. Robinson)

Or, if not to Mr DiMaggio, the next best thing: the nation’s retirement savings.

Let’s say Jane, having bought the house at 32, gets to 67, with 15 years left on the mortgage.

She could keep working, of course, until it’s paid off.

Or she could open her Super statement and see a nice lump sum which, while supposed to be used for retirement income, might mean she could actually pay off the rest of the mortgage and stop working.

I mean, sure, it might be her whole Super balance. Or a large chunk of it. And sure, that means a poorer retirement than she might have otherwise enjoyed.

But it’s that, or keep working.

Can you see what just happened?

Not only did Jane have to pay a lot more for her home.

Not only did Jane have to pay a lot more in interest to her bank.

But she also had to rob her retirement in the process.

How long, do you imagine, before that becomes the norm, not the exception?

How long until people actually aim to use their Super for that purpose.

And once some do – and push house prices up even further – how long until other people have no choice but to use their Super just to compete to get a roof over their heads?

Super balances are and will increasingly be eyed as ‘get out of jail’ lump sums – something that, if it continues, will turn Super into a ‘Home Loan Extinguishment Program’, rather than a ‘retirement income’ one.

If that continues, it will completely and permanently undermine the wonderful thing that Superannuation is and could be.

We will have stolen defeat from the jaws of victory.

And can you see the ratcheting up, here?

25 year loans have become 30. Some Australian banks are offering 40 already. And the US is (bizarrely) championing 50.

First Home Buyers are being encouraged to buy with only a 5% deposit, adding fuel to the fire.

No, housing availability and affordability is not the only issue we face. But, economically, it is fast becoming the biggest one, if it isn’t already.

It has slowly consumed ever-higher proportions of take-home incomes, as prices have risen.

It threatens to take not only even higher proportions of incomes, but higher proportions of incomes for even longer.

And then to take a chunk of Super on top of that.

If you’re not depressed by that idea, please have another read.

While ever our politicians continue to wilfully ignore the problem – and worse, throw more money at buyers, pushing up prices, with a completely false pretence of addressing the issue – it will continue to get worse.

If they care about our young people, they must cap loan terms at 30 years.

And if they care about our young people – and the stability and continuity of both Super and the cost of the aged pension – they’ll specifically require banks to ignore Super when assessing the ability of a borrower to pay.

Every now and then, someone tells me they’re worried about the government not being able to resist the urge to raid our Super in some way or another.

It may happen. But it’s also possible that we’re not looking close enough to home.

Unless we ask our politicians to set the appropriate boundaries, we might end up – unwittingly – being the problem.

Just possibly, as the cartoonist Walt Kelly wrote, we have seen the enemy, and it is us.

Housing affordability, and a comfortable retirement, might be the victims.

Fool on!

Like me, I suspect you’ve been noticing the newspaper stories detailing Macquarie Group Ltd (ASX: MQG) ’s increasing success in the retail banking market – particularly mortgages.

The most recent article was in the Financial Review, titled “Macquarie hoovers up deposits to back its rapid mortgage growth”.

And that growth has indeed been rapid; impressive in general, but even more impressive given the traditional reluctance of Australians to change banks.

Here are a couple of grabs from that article:

“Macquarie grew its mortgage book and deposits at three times the pace of Commonwealth Bank in September […] grabbing more market share from the four major lenders.”

And:

“Macquarie […] grew home loans at 2.13 per cent over September, or 3.7 times the rate of the market, expanding its mortgage book to $153.7 billion. That’s 22.4 per cent higher compared to a year ago.”

The ‘Silver Doughnut’s mortgage book is now around one-quarter of Commonwealth of Australia (ASX: CBA) – and CommBank is the biggest mortgage lender in the country!

Yes, it’s easier to grow quickly when you’re small; CBA (and the other Big 4 banks) aren’t growing at 22% any time soon!

But trying to grow at 22% when your competitors are the deeply entrenched Big 4 – and when Australians are notoriously (and, in my opinion wrongly) loyal to their banks – is no mean feat.

Turns out, though, that smart people, a well-known brand, huge asset backing and a very carefully chosen business model and product suite, can take you a long way.

Incumbency – being the big dogs when the little guys try to steal your lunch – is a powerful asset… until it’s not.

Let’s start with the ‘asset’ bit, first. The Big 4 have incredible brand awareness, huge balance sheets, reputations for safety, enormous (if slowly contracting) branch networks, incredibl(y misplaced) customer loyalty and are considered ‘too big to fail’. They also have scale to burn; across marketing, administration, technology and more.

If you asked me to start a business, those are some of the very things I’d be aiming to achieve, to maximise my long term success.

And yet…

And yet, for all of the size, scale and success of the Big 4, there are some serious liabilities, most of which stem from those very assets.

Consider the branch networks. They were (and largely still are, at least in urban, suburban and major regional areas) ubiquitous. In my youth, there was a Commonwealth Bank, ANZ Group Holdings Ltd (ASX: ANZ), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), State Bank of NSW (originally United Permanent, from memory, for those who remember that one!) and an IMB branch in our local suburban shopping strip.

As a typical example, the Westpac branch was long and had room for maybe 8 or 10 tellers with the usual security features. If you wanted to withdraw money, you took in your passbook and signed a withdrawal slip. If you wanted to withdraw money on holidays, you had to ask the branch to send your authorised signature sample to another branch so they could verify your identity!

No, this isn’t just a boring ramble through history (though it may very well be that, too!). It’s an illustration of why a large branch network was so powerful.

These days? The banks would close at least 50% of the branches, tomorrow, if it wasn’t politically impossible. Maybe up to 90%, frankly. Why? Because they’ve gone from the heartbeat of any bank to costly ‘service centres’ where the staff do their best to direct you to an ATM or on-site computer.

Don’t blame the banks, by the way – these days, $6 in every $7 we spend is done electronically. Only $1 in $7 is a cash transaction. And that number is falling precipitously.

To wit: Macquarie is branch-less. You can contact them online or via phone, but that’s it. If they thought a branch network was necessary and profitable… they’d have one.

(I know some of you want to use branches, and want to keep cash alive. Those are valid views – they’re just very, very uncommon, and becoming even less common, for better or worse.)

The other liabilities of the Big 4? They include, but aren’t limited to large numbers of staff, legacy IT systems often held together with virtual string, bloated product offerings, organisational calcification, incentives and more.

Essentially, Macquarie has ‘done an Aldi’ – taking on retail banking the way Aldi chose to fight Woolies and Coles.

It has carefully chosen the field on which it wants to fight – a branchless offering, a narrow product range, a specific funding model, and only accepts good credit risks. It has designed its systems either from scratch or from a relatively newer ‘tech stack’ than the incumbents who have decades of ‘spaghetti’ to unravel. And, from all reports, that means a slick user experience for customers who are prepared to work with a branchless-bank.

Essentially, the power of incumbency, for so long the defensive battlements that allowed the Big 4 to thrive while fighting off would-be challengers, has very potentially become a millstone around those banks’ necks, instead.

They are, to use the (somewhat challenged) common analogy, like the guns defending Singapore in World War II, cemented in place to face the sea: effective until the enemy attacked from a different direction.

Maybe Macquarie comes a cropper, for one reason or another. Maybe the bigger banks face down this threat just as they have faced down threats from regional banks and overseas players.

Time will tell.

But The Millionaires Factory has laid down a very credible challenge. To use a martial arts metaphor, it is using its larger opponents’ size and momentum against them – aided by a community that hamstrings those competitors by adding layers of cost and expectation (staffing sizes and branch networks) that Macquarie doesn’t have to bear.

Our politicians might consider that an unfair fight, if they genuinely wanted to promote competition. But if they wanted to buy some votes and keep talkback quiet, they might just demand banks keep unprofitable branches open, thereby giving Macquarie a rails run.

No, no-one will feel sorry for the Big Banks. And that’s fair enough. But it might be our demands that, in part, are their downfall. And we’ll likely end up with fewer branches either way.

(For the record, I think banking services should be considered an obligation, but not bank branches. If it was up to me, I’d make the banks, including Macquarie, commit to making their core products fully available (some already are) via Australia Post branches – that’s much more efficient than branch duplication, likely extends the reach of those banks, and underpins letter- and parcel-delivery services at a time when we’re sending many fewer of the former.)

Whichever way this goes, there’s a lesson for investors: incumbency can be a huge advantage. But if a company stops innovating, that incumbency might be the very thing that brings them down.

Fool on!

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

Mark Twain had a way with words.

Though, ironically – or just appropriately –  it probably wasn’t Twain who said it, despite the people who ‘know for sure’ that he said it.

Regardless of its origins, the phrase has a lot to tell us, in general and particularly as investors.

See ‘common knowledge’ and ‘accepted wisdom’ are really valuable, when they help us compress our learning time and help us leverage what other people have already learned.

We don’t need to, for example, re-invent the idea (or re-create the equations) of ‘discounted cash flow’ to understand and use it.

We don’t have to come up with a way to compare a company’s market value with its ability to create value for shareholders – we already have the price/earnings ratio (and other, similar, metrics) to do that for us.

As I’ve observed before (repeating the observation of others), if we had to make all of our life decisions anew, from first principles, each morning, it’d be midnight before we made it to the kitchen.

So I’m absolutely not suggesting we throw out everything we know, or everything we’ve learned from others.

But I am suggesting that we should be careful to reconsider what we think we know, from time to time.

Or, as musician and comedian Tim Minchin says (and this one is definitely attributed correctly):

“We must think critically, and not just about the ideas of others. Be hard on your beliefs. Take them out onto the verandah and beat them with a cricket bat…. Be intellectually rigorous…”

And you don’t have to go too far in investing circles to find ‘accepted wisdom’ that, well, turned out not to be too wise.

Older investors will remember 1999, when the focus was not on profits, or even on revenue, but on ‘eyeballs’ – the belief that winning the race to accumulate users was all that counted. It was important, for sure, but not worth a zac if you ran out of money before you managed to turn those eyeballs into cash flows and earnings.

‘Everyone knew’ it was about eyeballs. Until it wasn’t.

More recently?

I’d suggest the slavish love of bank shares by many might fall into that category. The businesses – incredibly successful and hugely value-creating in past decades – haven’t been that way for almost a decade, now.

I suspect for many of you that might be a surprise. But let me try these numbers on you.

Over the last decade, the S&P/ASX 200 Index (ASX: XJO) has gained 153%, including dividends, according to S&P Capital IQ.

In comparison, Commonwealth Bank of Australia (ASX: CBA) has gained 121%. And that’s the best of the group.

Rounding out the list, CapIQ tells me that National Australia Bank Ltd (ASX: NAB) is up 27%, ANZ Group Holdings Ltd (ASX: ANZ) has gained 21%, and Westpac Banking Corp (ASX: WBC) is up 20%.

Over 10 years.

But doesn’t ‘everyone know’ that the banks are great investments?

Now, I know that criticising bank returns is a great way to get hate mail, and let me be clear: they have been great investments over the previous few decades. And I’m not criticising bank shareholders for owning them – they may be happy to avoid capital gains tax and just collect the dividends.

But, at least in recent history, that data suggests that it’s worth disregarding – or at least, adjusting – what ‘everyone knows’.

Of course, it’s easy to do in hindsight. It’s a far, far harder thing to do, looking forward.

But it’s something we must at least attempt. After all, as Warren Buffett said:

“If past history was all there was to the game, the richest people would be librarians.”

What does ‘everyone’ know today?

Plenty. Most of it might even be true.

But some of it won’t.

Moreover, here’s the thing: the stuff ‘everyone knows’ is probably already priced accordingly.

So even if they’re right, and we’re right along with them, we might just end up with average returns anyway.

The job of the investor, then, is not to be ‘contrarian’ for the sake of it, but rather to evaluate opportunities from first principles, and then (and only then, unless you’re dollar cost averaging into a low-cost index ETF), buy or sell when your estimate of value is meaningfully different – after allowing for the necessary imprecision of those valuation estimates – from the market.

If that sounds too hard, there’s absolutely nothing wrong (and a lot right!) with simply investing in the abovementioned low-cost, index-based ETFs.

But the spoils of outperformance go to the investor who puts in the work and finds opportunities to be right where others are wrong.

And that starts with putting both what ‘we know for sure’ and the accepted wisdom to one side, and thinking, clearly, for ourselves.

Fool on!

Gold? I thought you’d never ask.

Actually, that’s not true. I’ve been asked about it over and over (and over) on almost every media platform almost daily during the last fortnight.

The price is roaring. The photos of people lining up at CBD gold dealers are in the papers, and on the news.

Gold is having its (glistering) time in the sun.

And when I say time in the sun, I’m not kidding.

The price of the shiny yellow stuff is up 52% so far in 2025, beating every single asset class – most by a hefty margin.

And the gold bugs are celebrating, lauding their own foresight.

Luck? Skill? Circumstance? We’ll get to that.

But it’s not just the goldbugs.

For some confluence of reasons – likely a combination of the strong price rise, FOMO, and the historical and cultural popularity of the metal – people have been piling in, even as the price continues to rise.

But is that… wise?

I mean, sometimes price increases suggest that the underlying fundamentals of an investment are improving. Amazon (I own shares) is a great example of a company whose sales and profits have skyrocketed over the last three decades, and the share price has reflected that fact.

Other times, a rising price says more about the investors and investor sentiment than those fundamentals. The easy example is the 1999 dot.com boom, where prices lost all relationship to the businesses themselves, as investors and speculators just wanted in on the party… to their subsequent chagrin.

Where does that leave gold?

Well, there’s a bit of both of the above at play, I think.

The hardest part of trying to evaluate gold isn’t understanding the respective rationale of the bulls (those who expect it to go higher) and the bears (who think it’ll fall).

No, the hardest part is trying to work out a reasonable price. See, for most other assets, you can use cashflows to make a rough assessment of value. For shares, that’s profits (or dividends). For property, rent.

It’s reasonable to make a case for why gold might be worth more (or less) today than it was in the past.

But how much more… or less?

And how much is gold objectively worth? ‘More’ or ‘less’ might be directionally right, but is $2,000 the right price? $5,000? $10,000?

That’s far, far harder.

And maybe harder, still, when prices move quickly. See, in those circumstances, it’s likely that sentiment is far more dominant than those underlying fundamentals, even if the fundamentals are correct.

To illustrate that point, let’s go back to the dot.com example. It turns out that, 25 years later, we can say almost every single dot.com business model ended up being subsequently successful.

But paying too much, and being too early (the ‘sentiment’ I mentioned, above) turned decent business ideas into terrible investments.

In short: You can be right about the facts, but still get the investment wrong.

Which is important, when we consider gold.

See, there are some very reasonable narratives being discussed as to why investors may want to own gold.

US debt continues to grow. That could become more problematic.

US (and global) inflation may continue to be higher than we’d like.

Governments may continue to ‘print money’.

In any or all of those circumstances, something whose volume increases only slowly (the amount of gold in the world increases by a small percentage, annually) should increase in value.

It may not, of course, but for the sake of argument, let’s say it does.

And it’s also possible that if enough people are worried about those risks, the increase in demand for that fixed quantity could push prices higher again, as demand outstrips supply.

And that could be either a temporary or permanent phenomenon.

Still… it’s ‘up’, right?

The problem is that even if you’re right that prices should be higher, that doesn’t tell you by how much.

And, particularly in this case, it doesn’t tell you how much is too much.

Why do I say ‘particularly in this case’?

Well, as I said above, the price is up 52% this year.

Which is, objectively, well above the impact of any of those issues you might cite (short of, perhaps, a complete collapse of the US economy. But if that happens, who’s buying your gold?)

So am I saying gold is too expensive? No. I’m not saying that, because just as there’s no way to objectively assess the fundamental value of gold today, there was no way to do it on January 1, either.

Maybe it was cheap then, and fairly priced, now?

Maybe it was fairly priced, then, and expensive now?

Maybe it was cheap then, and is still cheap, now?

Or expensive then and now?

I think it’s reasonable to suggest that if the growth in money printing exceeds the growth in new gold being mined, the price should increase, over time.

But that’s a mile away from ‘… and the current price therefore is – or isn’t – reasonable’.

For those more familiar with shares, here’s two scenarios:

Company A is growing earnings per share (EPS) at 20% per year, is likely to keep doing so for a decade, and the share price has increased 52%, taking the price/earnings ratio from 8 times to 12 times.

I’d say that was stupidly cheap in the first place, and likely still very cheap.

Meanwhile, Company B is growing EPS at 3% per year, and faces some economic and competitive uncertainty. Meanwhile the share price is up 52%, taking the P/E from 30 to 45 times.

That looks to me like a company that was already overpriced, and that has simply become even more overpriced.

Now consider those two scenarios, but without any information as to the level of profits, or the historical or future growth.

How would you know whether either was undervalued, fairly valued, or overvalued?

Objectively… you couldn’t.

And that’s always the challenge with gold.

It’s just… more consequential after big price movements!

A final warning: be careful of confirmation bias. There are investors – in all walks of life, not just gold bugs – who see outcomes as justifications of their views.

“The US is printing money… that’s why gold is up 52%” is straight out confirmation bias.

Maybe that’s why people are buying. But maybe it’s not. And even if it is, does it justify a 52% increase? Why not 20%? Or 300%?

If they’re honest with themselves, they’ll realise it’s just confirmation bias.

I’ve seen it on social media. Why are people lining up to buy gold?

Some people are convinced that everyone in the line in Sydney’s Martin Place are reacting to, well, insert reason here.

Thing is, the reason they tend to give is the view they already held, themselves.

How about that, huh?

Okay, but should you buy gold?

I have no idea. It would be disingenuous (and/or dishonest or wilfully blind) for me to say ‘you can’t objectively value gold’ then tell you that today’s price is either too high, too low, or just right.

I think I can objectively say that the size of the movement over the past 12 months is disconnected, in my opinion, from any underlying fundamental changes in the economy that might be used to justify such a move.

Yes, some money has been printed. Yes, the US debt is getting worse. But 52% more money? No. Is the debt 52% worse? No.

Is it possible that the move represents the fact we’ve crossed some sort of economic tipping point? Yes. That would be the strongest justification for the large increase.

As I said, there’s a chance that gold was simply too cheap, and this year’s move is just a ‘catch up’, like Company A in our example, above.

But when people are lining up in Martin Place in Sydney, I think there’s a decent chance that sentiment, not those underlying factors, are at least a decent part of the increase.

Remember, too, that sentiment shifts can persist for a long time. They can also change, swiftly.

I don’t own any gold. I never have. But I can tell you that if I was going to buy, it wouldn’t be when people are spending their lunch hours waiting to get through the front door of the gold bullion seller in the city.

(Warning: Nerd alert for what follows.)

Oh, and by the way, ‘glisters’, in the headline at the top, isn’t an error, or a spelling mistake. As befits a company named after a Shakespearean character – the ‘motley fool’ was the Shakespearean court jester – we’re keeping faith with the original word, and spelling spelling, as chosen by The Bard in The Merchant of Venice. ‘Glistens’ and ‘Glitters’ are modern corruptions (or, more generously, derivations) of the Shakespearean original.

He did also popularise (and perhaps invent) the phrase ‘heart of gold’.

So… all’s well that ends well (another of his), I guess.

Fool on!

I am an inveterate optimist.

Not because I’m blind to our problems, but because the arc of human progress has – for millenia – been towards a better future.

Yes, there are periods of reversal. Yes, there have been some awful things done by some awful people. And yes, progress is unequal and imperfect.

Those things are all completely true.

And yet… things are far better in 2025 than they were in 1975 or 1925.

And extraordinarily better than in 1825 or 1725.

Right now, most of you are nodding along.

Some, though, are saying ‘yeah, but what about…’.

And you’re both right.

The thing is, one doesn’t invalidate the other.

More importantly? It’s the exceptions that prove the rule.

There is poverty. That’s awful. But it’s also true that you’d be objectively better off being poor in 2025 than in 1925. And that there are far, far fewer people in poverty now than there were then.

Again, let me say: I’m not using our incredible progress to say the bad stuff doesn’t matter, or that we shouldn’t fix it.

I’m simply making the point that the progress has been extraordinary, and that humanity is better off today than it was 50, 100 or 200 years ago.

Economically, that’s unquestionable. We’re far, far, more prosperous, with far higher living standards.

As an investor, we have more than a century of stock market returns to back that up, too.

But GDP numbers alone tell the story, in Australia and elsewhere.

Still don’t believe me? Ask yourself a simple question: Would you rather have our problems, in 2025, or their problems, in 1925?

A century ago, electrification was still rolling out.

There were some early labour-saving devices, but they were rudimentary and expensive.

Penicillin, responsible for saving millions upon millions of lives, was still three years away from being discovered.

Refrigeration was usually only available in the cities, and was done with blocks of ice in an ice box.

Infant mortality has fallen by more than 90%.

(More starkly, it was ten times higher back then!)

Life expectancy is around 20 years higher, now.

Medicine can cure, or treat, an order of magnitude more than it could then… and that’s probably a gross underestimate.

Work is, for most of us, less dangerous and less strenuous.

We have far, far more creature comforts, and options for spending our leisure time.

Hang on… the ‘yeah, buts’ are back, aren’t they? I hear you, but don’t let the drawbacks blind you to the progress.

Remember, I’m not asking you to believe there are no problems.

I’m sure as hell not saying we shouldn’t do our best to address them.

But I’m saying they are the exception that proves the rule.

And that, in all but the most extreme cases, they are a ‘better class of problem’ than we had 50, 100 or 200 years ago.

Because that’s the other marker.

Not only have the good things got better, but the bad things have, too.

We don’t have to worry about most of the things our great-grandparents worried about.

We can take for granted that we’ll avoid almost all of them.

Which is great, except when taking things for granted means we don’t notice, or appreciate, the progress we’ve made.

Imagine going back in time and asking your then-25 year old great-grandmother what her worries were.

And then being able to explain to her, through her incredulity, that those worries wouldn’t exist in 2025.

If you wanted to really blow her mind (or just leave her totally nonplussed), try to describe all of the extraordinary things that we have at our disposal in 2025.

Labour saving devices, machines, production lines, medical procedures and medications, democratic participation, leisure time and options, entertainment… the list goes on.

Yes, like you, I think we’ve probably overshot in some areas, too.

But if you’re only seeing the shadow and not the light, I think it might be worth taking another look with fresh eyes.

Why?

Well, life is better if you’re an optimist. Not a Pollyanna; an optimist.

If you think things are likely to be good, and to get better, not only will you be happier but, overwhelmingly, you’ll be right.

And that’s even before we look through an investor’s eyes.

You’ve heard this from me before, but the story of the stock market over the last century and a quarter is one of extraordinary value creation.

And, importantly, that’s despite, not an absence of, all of the bad stuff that happened over that time.

World Wars. Regional wars. Cold wars.

Recessions. A Great Depression. An oil shock or two.

A couple of worldwide pandemics.

Outbreaks of inflation.

Bubbles and booms. Corrections and busts.

Terrorism.

Occasional bad governments, here and overseas.

You get the idea.

But just for effect, imagine if I’d given you, in 1900, that laundry list. And I told you that they weren’t just idle speculations, but guaranteed to happen.

And then told you that, despite all of that, the ASX (and its forerunners) and the US stock market would enjoy extraordinary returns between 1900 and 2025.

You’d have called me crazy. You’d have reiterated my own list, slowly, as evidence of your view.

The good thing is that we know, with hindsight, just what happened.

Optimism won.

Not every battle – those were some terrible things with awful human consequences for many.

But overall, it won. Handsomely.

And when did we reach our economic peak?

In 1918, when the war ended? No.

In ‘45? No.

With the boom in post-war spending?

When we perfected the production line?

When the then-boss of IBM predicted there might be a global market for perhaps 5 (yes, five) computers?

When we put man on the moon?

When we invented the internet?

All ‘no’.

Is it now, in 2025?

I mean, maybe. Maybe you’re a pessimist who can list a dozen reasons the future will be worse than the past.

But the lesson of history is that such a prediction is dangerously -wrongly – pessimistic… and bad for your wealth, to boot.

Maybe you’re already with me, and you’ve been nodding furiously. I hope so.

Maybe you just can’t hear it, and can only see the problems. I hope not.

Or maybe this is just a welcome reminder that, even when things seem dark and uncertain, we’ve been here before, and triumphed.

Me?

You already know.

I’m a born optimist. A trait that meant I could keep investing during the dot.com bust, the GFC, and the COVID crash.

I don’t think it’s bragging to say that. Because it’s nothing I did, other than believe that the story of human progress and human flourishing has many, many more chapters left to write.

That’s as true now, I think, as it was in 1999, 2009 and 2020.

Just as it was in 1725, 1825 and 1925.

Not because there won’t be some dark, scary or depressing times in our future. I’m not that optimistic.

But because if (and I think when), they come, we’ll likely find a way out the other side to an even brighter future.

Sure, maybe ‘it’s different this time’.

But likely? No more likely than it was in 1825, 1925 or 1975.

The best summation? There are various versions of this line, but I quite like ‘pessimists sound smart, optimists make money’.

Feel free to substitute ‘progress’, ‘a difference’ or ‘a better life’ for ‘money’, if you want to broaden it out. It’s all the same.

Which is the beauty of it.

The share market is nothing more than a(n imperfect and obviously incomplete) scorecard for human progress.

Investors win because humanity wins.

Which is a pretty nice way to think about it, I reckon.

I love that there are people who look around and see problems to fix. And then get on with fixing them.

It’s just important to remember that while those problems exist, they are only a small part of the larger human story.

A story of justified optimism.

Long may it continue.

Fool on!

Yesterday was a good day. We had a win.

And by ‘we’, I don’t mean me. Or The Motley Fool. And I don’t even mean our members and readers, though collectively, we made our voices heard.

I mean the national ‘we’: present and future Australians.

See, the Treasurer decided he’d made mistakes in his plans for increasing taxes on Super. And, to his credit (though I’m not sure it wasn’t an electoral, rather than policy-motivated, decision), he’s reversed those mistakes.

And, I’m happy to say, in exactly the ways I’d called for.

See, in May of this year, I wrote pretty strongly about the Treasurer’s plan to increase taxes on larger Superannuation accounts.

And, if you’re new here, no, I wasn’t just sticking up for the fat cats or the big end of town.

At the time, I wrote:

“… let me start by saying, very clearly, that I think it’s reasonable for people with more than $3m in Super to pay more tax on that Super. Not as a ‘punishment for success’ as some people claim, but because if you have more than $3m in Super, it’s reasonable for you to contribute a little more to the national project, particularly compared to the alternative of slugging workers more, for example.

“(There are lots of other ways to raise taxes and/or reduce government spending, by the way, so it’s not as binary as the previous paragraph sounds, but my point stands.)

“If you have $3m in Super, and you’re retired, the returns earned by your first $1.9m worth of assets are completely untaxed, and the remaining $1.1m is taxed at 15%. If you earned 10%, you’d pay no tax on the first $190,000 of earnings and $16,500 on the next $110,000 for a total after-tax income of $283,500, and an average tax rate of 5.5%. A nurse earning $100,000 would pay 50% more tax (almost $23,000) and have an average tax rate of 23%.

“I… don’t think that’s the right balance.

“So, I’m okay with large Super balances having higher taxes levied on their earnings.”

But what I did go on to write was:

“So there we have it. A tax change that is addressing the right issue (in my opinion) but that is doing it badly. The wrong solution to the right problem is still the wrong solution (and there are others available).

The policy was to introduce a new 30% tax bracket for Super accounts worth more than $3m.

But that $3m wasn’t going to be indexed. That was strike one.

Strike two? The tax was going to be levied on increases in asset prices, even if the assets weren’t sold. Whereas we ordinarily pay capital gains tax when we sell, the plan was to send out a tax bill on the basis of a paper gain.

And strike three was that the tax changes were going to be backdated to the beginning of the current financial year.

As I wrote at the time:

This change, if legislated, would be bad for […] three reasons; because it’s retrospective, levied on unrealised gains, and using a threshold that’s not indexed. Each, on their own, would be bad policy. Together, it’s atrocious.”

The great news is that the Treasurer has listened. No, maybe not to me (though I hope I added my voice meaningfully to the chorus), but to all of us who said the policy was a bad implementation of a perfectly reasonable policy objective.

He has backtracked on each of those. And that’s great news.

We will, if his new plan is implemented, have a fairer taxation system, which provides for more reasonable treatment of Super, compared to labour income.

It’s still incredibly generous, though. And even more generous than I originally wrote, because the $1.9m ‘pension phase’ cap is now $2m.

So, even after this change, someone with $3m in Super will pay no tax on earnings from the first $2m, and only 15% on the earnings of the next million.

If they earned a hypothetical 10%, they could draw down $300,000 in income, and pay only $15,000 in tax, for an after-tax income of $285,000.

By contrast, the ATO says that’s the same tax bill paid by someone who earns a gross income from working of… $81,000.

Super was designed to provide for a comfortable retirement, and to lighten the burden on the Federal aged pension.

The mooted changes were bad policy, not because they left Superannuants in the poorhouse, but because the policy implementation was bad.

So, as I said, the good news is that the government has removed the clumsy implementation. That’s a huge win for anyone that cares about good policy.

I was accused of ‘sticking up for rich people’ and for ‘letting perfect be the enemy of good’.

It was neither, of course, and this result is exactly the right outcome, because it improves fairness, but importantly does it the right way.

Those still complaining are just complaining because they want to pay less tax in retirement.

Which… is their right. Just don’t let them tell you that it’s for other reasons.

Super is still a very important policy tool for both retirees and the Federal Budget.

And it’s still a very worthwhile – and even after these changes, very tax-effective – way for individual Australians to save for retirement.

Fool on!

I tend to be a rule-follower.

Partly, I’m just built that way. Partly, it’s just easier. And safer.

I don’t need to make an enemy of the police or the ATO, for example, nor do I want to unduly attract their attention.

When it comes to tax (and rules in general), my approach is ‘if you don’t know where the line is, you’re too close to it’.

Sure, I could push the envelope. But is it worth the time, energy, hassle, and risk of overstepping that line? I don’t think so.

And when it comes to my investing, while I don’t have ‘rules’, per se, I do tend to follow a particular approach that, in my experience and based on what I’ve learned from other successful investors, tends to work pretty well.

That… isn’t the approach taken by the most successful investor at The Motley Fool, who also happens to be one of our co-founders.

David Gardner has an extraordinary record, as a stock-picker.

He bought some of the most valuable businesses on Earth, years and years before they became the household names of today.

And held them. And bought more, even as prices rose.

He did it even though many called them ‘overvalued’.

He’s not so much a contrarian as an independent thinker.

You’ve seen me use the phrase ‘variant perception’ before. In the context of investing, it means looking for situations where we have a different view to the rest of the market – buying shares when you think they’re worth more than other people do, and benefiting when your perspective turns out to be true.

David’s ‘variant perception’ was identifying ‘rules’ that other investors followed that he thought were wrong. 

And breaking them.

Accordingly, he called his approach ‘Rule Breaker Investing’.

And it’s been extraordinarily successful.

Why am I telling you all this?

I mean sure, there’s no harm in giving my boss’ boss’ boss a wrap. But that’s not why.

And he’s got a new book out, but I don’t get a cut of the sales. So that’s not why, either.

But it is to give the book a wrap.

And his style of investing.

Spoiler: I don’t invest that way. But I have learned a lot from him, and his thinking has definitely influenced the way I do invest.

The thing is, he’s a smart guy. A really nice guy. He speaks and writes in a really engaging, interesting and fun way, too.

And I spoke to him for just under an hour the other day, on camera, and posted the interview to our YouTube channel.

My suggestion?

It is well and truly worth your time. I reckon you should give it a watch.

And I reckon the book is worth buying. If it gives you only one new investing insight, that’ll probably pay the purchase price back many times over.

Am I saying that, just because he’s the boss? Not even a little bit.

Because, as I mentioned earlier, his track record is extraordinary.

He doesn’t need me as his hype man (and he’ll sell a truckload of books anyway).

I just really enjoyed the book. And I knew he’d be a great interview subject (and he was).

So… your call. 

But I think you’ll be glad you watched the interview, and glad you bought the book.

Just click on the image below to be taken straight to the interview on YouTube. 

… and the image below to buy the book on Amazon (I own shares, but feel free to buy it wherever good books are sold!)

I reckon you’ll be glad you did.

Fool on!

Investing can mess with your head.

The uncertainty. The volatility. The fear. The headlines. The geopolitics. The predictions of gloom and doom.

It’s why I regularly say that investing well can probably be defined as ‘the ability to successfully subdue parts of our evolutionary biology’.

To keep calm. To think long term. To do the right thing, even if the rewards are uncertain and a long way off.

If you want a microcosm of that very challenge, consider the now-aborted takeover of LNG driller Santos, by a consortium including an American PE mob and the Abu Dhabi national oil company.

In April, Santos Ltd (ASX: STO) shares were selling for as little as $5.34 a piece. By June, they’d rallied to $6.71.

Then, in mid-June this year, the takeover bid was announced, sending the shares to $7.72.

So far, so good.

The offer? $8.89 per share, conditional on certain subsequent outcomes, including due diligence.

What was an investor to do?

Today, we know the answer. But back then?

Well, the shares were trading at a nice premium to just before the offer, and a fair bit higher than the April lows.

But… there was another $1.17 per share on the table, if the deal went ahead.

Greed says “Wait for the extra money!”

Fear says “But what if the takeover doesn’t go through?”

This time, it would have been sensible to listen to the devil on your shoulder.

But at other times, a deal like this does go through.

In the former case, hoping for more was costly.

But in the latter, selling too quickly can be equally costly, at least in terms of foregone profits.

I’ll remind you, too, that you’re probably reading the above words, unavoidably biased.

Because you knew what happened.

“Of course Santos shareholders should have sold at $7.72. Why take the chance?”

Now I want to refer you to a company you might remember from earlier this decade: Altium.

US giant Autodesk offered $38.50 for Altium when the shares were trading at $27.21.

In the aftermath of the offer, shares rose to $38.26.

That’s a nice payday for shareholders. Should they have taken the deal, just as Santos shareholders should have?

Hold your answer.

That initial offer was knocked back by the company.

If you followed the company back then, you’d know a second offer, for $40 per share, which was also knocked back.

The shares fell by more than 10%.

Except, the story has a happy ending. Altium got a subsequent takeover offer, three years later, and it was acquired for $68.50 per share.

No, the two situations aren’t exactly identical, but they’re close enough to highlight the challenge of dealing with takeovers.

In the Santos case, shareholders should – with perfect hindsight – have taken the money.

But investors who sold their shares on market when the Altium share price got close to the initial takeover offer price missed out on a 78% upside.

Did I mention that investing was tough, and that takeovers are a concentrated microcosm of why?

And lest I point the finger only outwards, we’ve had mixed success with takeovers at the investing service I run, Motley Fool Share Advisor – for exactly the same reasons.

Turns out that – and I hope this isn’t a shock – the future is uncertain and humans are fallible.

(Don’t tell my son. He still thinks I’m largely infallible, though that fiction is seemingly unravelling quickly!)

So, I’m not here to give you a prescription for getting takeovers right. There is no formula (and beware anyone who tells you there is – they’re either lying to themselves, or you, or both).

What I am going to tell you is two things:

First, investing is hard. You’ll be wrong sometimes. I am, too.

Second, it’s a game of probabilities. And probabilities aren’t certainties.

Toss a (fair) coin enough times and the more you toss, the closer you’ll get to 50:50 heads to tails.

Do it once, and you’ll get 100% heads or 100% tails.

Do it three times, and you’ll get either 100% heads, 67% heads or 33% heads… even though we know the statistical odds are 50:50.

Even with a loaded coin, you’ll still get results that don’t go your way sometimes.

My point? Even the best investors aren’t right every time. And sometimes it’s hard to distinguish correct from lucky.

(In case you’re wondering, Santos shares fell almost 12% yesterday, after the deal was called off.)

And so?

And so, I want to encourage you to approach your investing probabilistically.

That is, I want you to do the things that put the odds as far in your favour as possible, but to accept that even then, things don’t always work out.

That we shouldn’t kick ourselves, or pretend that “I knew that’d happen”.

Sorry… you didn’t. That’s your emotions talking. And messing with you.

We do it in all walks of life.

“I knew I should have woken up earlier”

“I knew he’d cheat on me”

“I knew I should have bought those shares instead of these ones”

No. You didn’t.

You were worried about those outcomes but, because the future isn’t clear, you made a judgement call and it just didn’t work out.

Now, if you’re late three days in a row, or three partners cheat on you, or if three companies you own shares in go broke, you might want to reconsider your choices!

But one instance? Sorry, that’s just luck. And the same goes for good luck as for bad, too.

And you’re going to have to make your peace with it.

Sometimes you do the right thing, and you still come a cropper.

Other times you get it all wrong… and still come out on top.

That’s just investing. And the sooner you can accept it, the better.

(Oh, some people will offer to ‘fix’ it for you. My. advice? Run!)

As unsatisfying as it sounds, my best advice is to do the right thing as often as possible, knowing that sometimes you’ll be wrong, sometimes you’ll be unlucky but most of the time, it should work out in your favour.

And if you do that? Well, famed US investor Peter Lynch used to say that if you’re ‘good’ at investing, you’ll be right maybe 6 times out of 10… but those six times should be enough to build meaningful long term wealth.

Which… sounds pretty good to me.

Have a great weekend!

Fool on!

Is there just the smallest glimmer of hope that the Federal Government may reconsider the (frankly silly) way they plan to tax large Super balances?

There is, if a story in today’s Financial Review can be believed.

As a reminder, the government has previously announced a plan to increase the tax burden on particularly large Super accounts, which I think is a worthy aim. (I’ll go into why, in a minute.)

(I did a YouTube video on it, here, if that’s more your style.)

The problem is that their announced plan had three components which individually are bad policy and together are atrocious.

They intended to:

1. Tax unrealised gains. That is even if you hadn’t sold an asset, an increase in its market value would have incurred a tax obligation.

2. Not index the level at which it was to apply. Some calculations from AMP Ltd (ASX: AMP)’s Diana Mousina suggested that not indexing it would mean even the average worker in their early 20s today would pay the new tax when they retired.

3. It was retrospective. When legislated, it would apply to the current tax year, which is already 3 months old, hitting investment decisions already made.

As I said, each is bad. Together… frankly indefensible.

Now, before you decide I’m just here to look after the fat cats, let me return to the ‘worthy aim’ I mentioned, above.

See, here’s my take on tax policy:

The first step should be to work out how much tax to collect, based on a chosen level of spending (we can argue about how much we should spend, but that’s a whole other article).

The next step is to work out how the burden is most reasonably shared, based, in part, on the taxpayer’s capacity to pay.

Third, formulate the application based on two broad implementation issues: the efficiency of the tax, and the impact of the tax on behaviour (good and bad).

That’s exactly how we’d design a tax system, if starting from first principles, I reckon.

We don’t have that luxury of starting from scratch, of course, but it should still be the framework for all tax changes.

And Super?

Well, even before those proposed changes, a Superannuant can have $2m in ‘pension phase’, the income from which is entirely untaxed.

Now, the stock market tends to rise about 9% per annum, on average. If a hypothetical Superannuant had their $2m in an ASX ETF that delivered that result, they could essentially draw a $180,000 income, entirely tax free.

Now let’s say their account balance was $4m, instead. The first $2m is tax-free, as I said, above.

Earnings from the next $2m are taxed at 15%. Again assuming the same return, they’d earn another $180,000 and pay only $27,000 in tax.

Which would work out to an average tax rate of 7.5% on a $360,000 income.

By contrast, according to the ATO’s simple tax calculator, a nurse or copper earning $100,000 would pay $20,788; an average tax rate of almost 21%.

Is there anyone, other than the ideologues or the aforementioned Superannuant, who reckon that’s a reasonable sharing of the tax burden?

(And to their credit, almost every Superannuant I’ve spoken to in that sort of situation agrees that they’re getting it too good, and don’t mind a change to the system.)

Now, before some people tell me that Super should be incentivised, I agree.

And before you tell me that it saves money for the Federal Budget, I agree with that, too.

But we’re talking about amounts and degrees, here.

I am a huge proponent of Superannuation. I just reckon we’ve made it too generous.

There is more incentive than required. And the savings to the Budget are less than the value of the tax concessions. In short, we’ve got the idea right, but the settings wrong.

Is it fair and reasonable that someone with more than $3m in Super pays more tax? You bet it is.

If you think ‘they don’t spend it well’ or ‘it’s yet another tax’, I hear you. Government should absolutely be more efficient.

But this, for me at least, is a question of how the tax burden is shared, not one of how much should be raised.

Right now, we have a big and growing Federal Government debt. So I’d be happy to see any additional funds raised go toward paying that off.

After that? I’d love to see taxes reduced for the nurse on $100,000 if we’ve got excess tax revenue.

Both are more justifiable than a sub-10% average tax rate for someone drawing an average income of more than $350,000 annually.

Okay…so that’s a lot.

Unfortunately, because of ideology and self-interest, much of the above has to be communicated each time we talk tax, and I think it’s worth doing so.

Back to Super, then.

If we are to ask wealthy Superannuants to pay more tax, it should be applied reasonably.

That means the threshold should be indexed, to avoid more and more people being caught by it.

It means not sending someone a tax bill just because the price of their (unsold) house, shares or other assets go up.

And it means starting the new regime in a new tax year, so that people don’t get caught out having made decisions about their current arrangements before the law changes.

I don’t think that’s an unreasonable ask. And makes the implementation better, and more reasonable.

(As to why they structured it that way, I don’t want to get too deep into the electoral and political machinations, but I suspect they tried to be tricky and tripped on their own cleverness. I suspect the unindexed threshold was designed to catch more people over time, while starting from a level – $3m – that seemed ‘very high’, trying to make it politically palatable. And I suspect that the unrealised gains thing was intended as a de facto cap on Super, designed to incentivise people to cash out some of their Super, rather than have a tax bill to pay without the associated cashflow. Pure speculation, of course, but if so, they should have just made the appropriate changes, rather than getting too clever by half. They’ve kinda brought this on themselves, I reckon.)

Bottom line? I didn’t expect the government to listen – they’d repeatedly said they’d push ahead – but if the report in the Fin is correct, then good on them for actually considering the feedback.

But so far it’s just that – a report. So I’m adding my voice, once again, to the argument.

It’s not unreasonable to consider asking wealthy Superannuants to shoulder a little more of the tax burden. But Treasurer, please do it in the right way.

Fool on!

The ASX hit an all-time closing high on Thursday.

You might have seen that news. Or not.

See when the market does well, it might make the headline, or a sub-heading, of those ‘Markets Live’-style blogs on the major mastheads.

Which is in stark contrast to the large and loud headlines, when the market falls:

(The subeditors really need to find something other than ‘wiped off’, huh?)

We know why, of course.

Bad news sells.

Fear sells.

We react more viscerally to losses than we do to gains.

None of that is new. But it’s worth pointing out, again, I think.

And it’s worth, now, thinking back to early April 2025, from whence those headlines come.

You might remember it was in the midst of the early tariff dramas.

Donald Trump was threatening to whack a tariff on everything that wasn’t nailed down (and much that actually was), and China threatened to retaliate.

The stock market, well, freaked out.

Which isn’t a new thing.

‘The stock market hates uncertainty’ is one of those cliches that rings very true.

When traders aren’t sure what to think, or what’s coming next, they sell.

Now, fast forward 4.5 months.

That $160bn ‘wiped off’?

In its aftermath, the S&P/ASX 200 Index (ASX: XJO) had fallen to 7,343 points.

And since then?

Well, as of Friday afternoon, that same index was at 8,967.

That’s a… 22.1% increase!

Am I cherry-picking the bottom?

You bet. To make a very important point.

See… there were traders and investors selling on that day. They were getting out of Dodge.

Maybe they thought they could see an ugly future? Maybe they couldn’t stand the pain? Maybe they were going to get back in when the coast was clear?

Newsflash: The coast still isn’t clear.

Here’s the other thing. Let’s say they decided to sit out a month while they waited for things to settle?

Seems sensible, right?

Except that, over the month from the April lows, the ASX 200 gained 11.4%. That’s more than half of the increase between April 7 and today.

Ah, but it’s easy to say that now, right?

At the time it was scary… and anything could have happened, right?

Two things.

First, I wrote in this space on that very day, April 7.

In that article, I said:

“None of those things was enough to stop progress. To stop improvement. To stop long term success.

That’s why I invest.

That’s why I remain invested.

That’s why I’ll be buying more shares, soon.

Because I think the future is just as bright as it’s ever been.

Not in the absence of black clouds, but despite those clouds.”

and:

“We’ve been here before. No, not exactly here. But essentially the same place.

Fear. Uncertainty. Doubt.

And we’ve gone on to better things, long-term, despite that.

Will it be different this time?

Maybe. But I doubt it.

Because we’ve got 100-plus years of history to show us.”

And the second thing?

I’ve been writing similar sentiments in this space for well over a decade now.

Every time, it felt scary. Every time, there have been very good reasons to worry about the economy or the market, or both.

Every time, the market has bounced back to new highs – the latest of which was this week.

My guess?

We’ll have more big falls in future.

And we’ll set new record highs, too.

A promise? No. But that’s my best guess.

Because that’s what the past tells us.

Lest this seem like a victory lap, though, I want to reinforce two things:

One: falls happen and the market has always recovered.

Two: highs happen, and the market has always had falls.

The same thing? Yes, but from two different perspectives.

I want you to reflect on the last 4.5 months next time the market has a big drop. I want you to keep the faith, if you have a well-chosen, sensibly diversified portfolio of quality companies.

But I also want to remind you that, while we’re all feeling good about that high, there will be falls ahead. The time to mentally and emotionally (and financially!) prepare for that is now: while the air is clear and fear isn’t clouding your thoughts.

Sure, enjoy the gains, but be ready for the losses that will come, at some point. And make your peace with them, now.

I’m pretty sure we’ll have more ‘April 7’s. Just as I’m pretty sure that the ASX will set more record highs, both before, and after, the next big drop.

The lesson, I hope, is clear:

Work hard.

Save diligently.

Invest regularly.

Choose your companies wisely.

Diversify your portfolio sensibly.

Ride the waves dispassionately.

Because the ASX has never yet failed to regain, then surpass, a previous high.

If that remains true, and I expect it will, time is the investor’s best friend.

All we have to do is stay the course, and let time do its thing.

…

Or, for a giggle on a Sunday – and if The Force is more compelling than I am – tell ‘em, Yoda (with thanks to ChatGPT):

Clear, the lesson is, I hope.

Work hard, you must.

Save diligently, you should.

Invest, regularly you will.

Wisely, choose your companies.

Sensibly, diversify your portfolio.

Dispassionately, ride the waves.

Failed to regain and surpass a high, the ASX has not.

True, if that remains — and expect it, I do — time, the investor’s best friend is.

Do its thing, let time.

Stay the course, we must. 

On Fool, we must! Hmmm?