Can we talk about the proposed Superannuation tax for a minute?

I know for many people, Super feels a long way away. And also locked away.

And I know that critiquing a tax that applies only for people with more than $3m in Superannuation feels like sticking up for the rich and powerful, and something that you and I needn’t worry about.

Plus, whenever you criticise something done by one side of politics or the other, things can get pretty tribal, pretty quickly.

But I’m going to make the case, hopefully successfully, that this is an issue we all should be concerned with, both on principle and because the ramifications are unfortunately more widespread than they immediately appear.

The tax change I’m talking about, of course, is the proposed increase in tax on Superannuation accounts over $3m.

And 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.

(One more parenthesis: I’d tax Super very differently, and you can read more about that here if you want, but it’s not the main point of this article.)

What I’m very not much okay with is the proposed implementation of such a tax.

For three reasons.

As things stand, the proposal is for the tax to be applied to increases in the balance of a Super account, whether or not a gain is realised or an income earned. To keep it simple, consider a $1m investment property that gained 10%. That’s a $100,000 capital gain. Even if you didn’t sell it, the government would ask you to pay tax on that gain, if your Super balance was above $3 million. The same would apply to shares, gold… anything in your account, whether or not you had the cash available to pay the tax.

A tax on unrealised gains is a bad tax, primarily because it doesn’t care whether the taxpayer has the liquid assets to pay that tax. In contrast, if you sell the house for $1.1m, you get that realised gain in cash, and can set aside a portion of the sale proceeds to pay the tax.

Second, the tax threshold is not going to be indexed. As AMP Ltd (ASX: AMP)’s depute chief economist Diana Mousina told the AFR:

“A $3 million balance in 40 years’ time is not the same $3 million balance that you have today. It doesn’t affect 0.5 per cent of the population, it impacts a much higher share.”

As the Fin says, “Mousina’s back-of-the-envelope calculations indicate that if this hypothetical 22-year-old were to work until they were 67, by that age they would have $3.6 million in super.”

In other words, the tax that currently only impacts the very wealthy would directly impact the average worker in forty years’ time. And it goes without saying, I hope, that not only would more people be impacted, but $3.6m won’t be worth anything like as much by that time, thanks to the ravages of inflation. Indeed, at 2.5% inflation per year, that’s 130% over four decades, so the then-current $3m should be more like $6.9m just to keep up with rising inflation.

And third, there are reports that the government will legislate this in August, but make it retrospective to July 1, meaning fund members will be taxed retrospectively. The equivalent (though more serious) analogy is a government passing a law to make something you did yesterday illegal, even though it was legal at the time.

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).

This change, if legislated, would be bad for those 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 other options? Tax Super at marginal rates (above a higher tax-free threshold) when it’s withdrawn. Or put an (indexed) cap on Super balances. Or at the very least, index the threshold, only tax realised gains, and tell people what the rules are before the tax change is implemented.

The Treasurer needs to listen, and to take advice on this one. By all means, address the Superannuation system that started as a retirement income scheme and has become a tax shelter. Because it has.

But just don’t do it like this.

Fool on!

In all of the election news over the weekend, I suspect many people might have missed the news that an investing era will draw to a close at the end of 2025.

Warren Buffett, the man known as the ‘Oracle of Omaha’ has announced that he will retire as CEO of investment conglomerate Berkshire Hathaway in just under seven months’ time.

It will draw the curtain on an extraordinary investment career which spanned more than 80 years (he bought his first shares when he was 11), and six decades running Berkshire (I own shares, for the record).

Over that time, Berkshire Hathaway’s share price has risen by an average 19.9% per annum, compounded, compared to 10.4% for the S&P 500 index (the index of the largest ~500 companies that trade on US stock exchanges).

Which is impressive, but kinda hides the really astonishing reality.

Compounding at 10.4% for 60 years results in $1,000 becoming a bit over $390,000.

But doing it at 19.9%… that turns your $1,000 into $5,500,000.

Yes, really.

(Those numbers are as of the end of last year, the most current figures available from the company.)

Buffett, who will be 95 when his reign ends, has not only been a spectacularly successful investor, but also a patient and generous teacher, having written and spoken in many public forums over that career, including holding marathon Q&A sessions at the company’s annual meeting each year, something I’ve been privileged to attend on a few occasions.

He is eminently quotable, and has been singularly responsible for educating generations of investors who chose to take advantage of that opportunity. His annual shareholder letters have been turned into a book, The Essays of Warren Buffett, which I think should be compulsory reading for any investor who wants to better understand business, finance and investing.

Which, along with the extraordinary wealth made for long term shareholders, will be his long-lasting legacy. The common sense approach he has used for all of that time – finding great businesses, paying decent prices and aiming to hold for the long term – stands in stark contrast to the hyper-trading, computerised analysis and short-termism of much of the stock market today. But then… so do his results.

Of course, we must mention his long-time friend and business partner Charlie Munger, here. They were a formidable duo, until Munger died late last year. Buffett, the kind uncle with an iron fist in a velvet glove. Munger, the irascible, straight-shooting one who had no time for velvet!

But both men shared the same investing approach. They had no need for complex formulas, analyst meetings or keeping-up-with-the-Jones’. They just did what they thought made sense, paying scant (well, no) regard to what others thought.

Time and again, Berkshire was criticised as being out of touch, too old-fashioned, and not fit for the modern world. Time and again, well, time proved Berkshire right.

No, Buffett isn’t perfect. He’s made mistakes, most of which he’s characteristically owned up to.

But his investing approach has proved timeless, and his example is publicly available for us to review and, if we choose, to follow. The latter is what I’ve tried to do with my investing, both publicly and privately. To be clear, I am no Warren Buffett – there’s only one of those. But I’ve tried to incorporate his lessons in how I approach my craft. Because, well, why wouldn’t you, given that success?

Oh, some will tell you that ‘this time it’s different’. And the specifics often are.

But the underlying reality? The principles? The value of his approach?

They’re the same as they ever were, as Buffett has shown, over and over.

And if you had that example, and education… and you ignored it, figuring you knew better?

The word for that is, I think, hubris.

That’s not to say you can’t be successful using a different approach. Many have been, for sure.

But that’s different from actively dismissing his style of investing. Again, that’s just hubris.

And so?

And so, we have another seven-odd months of Buffett at the helm of Berkshire. And then, he’ll hand over to long-time operations lieutenant, Greg Abel.

(He’s also committed to giving almost all of his $260 billion wealth to charity, on his death!)

But we will always have access to his words, deeds, and track record, as an investor and as a teacher.

And for all of the famous Buffett quotes, which I’ll share with you at some later dates, perhaps my favourite (and one I have on a t-shirt, because I’m an investing nerd) is a twist on the old Greek proverb “A society grows great when old men plant trees in whose shade they shall never sit”.

Buffett said “Someone’s sitting in the shade today because someone planted a tree a long time ago”.

We are very fortunate that Warren Buffett has spent a career planting trees for the investors who have followed him.

That forest will be his legacy when he finally hangs up the calculator.

Bravo, and thank you, Uncle Warren.

Fool on!

It is hard, now, to imagine the world of 1914.

International leisure travel was almost non-existent, news slowly trickled around the world on ships and via telegram, and motorised transport was rare.

We were barely teenagers, as a nation. Our federal parliament sat between Sydney and Melbourne, with the construction of Canberra having only just begun.

There were around 4.9 million people living in Australia at the time, two-thirds of whom were between 15 and 65 years old, and more than half of the workforce was engaged in primary industries or manufacturing.

It was from this country – recognisable but so different to today – that Australia (and New Zealand) sent troops, as loyal servants of the British Empire, to fight in a growing global conflict that would be initially known as The Great War.

Embarking in Albany, WA in November 1914, the ANZAC forces, as they became known, headed off into a world – and a conflict – that must have been entirely foreign to almost all of them. The soldiers first disembarked in Egypt, before many of them sailed for Gallipoli, landing on the beaches of what we now call ANZAC Cove 110 years ago, today.

The day which would mark Australia’s first major military conflict as a nation, and the day which, thereafter, would be known as ANZAC Day – our preeminent day of remembrance.

And while it may be hard to imagine the world they came from, or for many of us, the horrors of the combat in which they soon found themselves engaged, that is what we must try to do, today.

As we meet at cenotaphs around the country as dawn breaks, we will contemplate the experiences of those ANZAC Diggers. We will remember those who served in the Boer War before the turn of the last century, and those who wore our uniform in the wars and armed conflicts, since.

The War To End All Wars was, tragically, misnamed. Two short decades later, the world would again be at war, and Australian soldiers, sailors and airmen would see service in Europe, Asia and the Pacific.

And then in Korea, Malaya, Vietnam, Iraq and Afghanistan. In peacekeeping missions in East Timor and the Solomon Islands and elsewhere around the world.

Our soldiers, sailors and aviators have willingly donned the uniform of their branches and their country, and have diligently and selflessly served, often risking all. Many, tragically, lost their lives in that service, or suffered injuries, seen and unseen, that left them permanently changed.

Some were professional soldiers. Some joined up because they were asked to. Others were conscripted. They came from all walks of life. They were sons, daughters, fathers and mothers. They had jobs, hopes, and dreams.

They put those things aside, because Australia asked them to.

We asked them to put themselves in harm’s way. And they did.

They did their duty; faithfully and completely.

And on this 110th anniversary of the landing of ANZAC forces at Gallipoli, we will do our duty.

This morning at Dawn Services, and throughout the day at ANZAC marches in cities, towns and suburbs spanning the length and breadth of Australia, we will remember them.

We will honour the fallen. We will pay tribute to those who did not return. And we will acknowledge those who did return, carrying the mental and physical scars of their service. 

We will remember.

They went with songs to the battle, they were young, 

Straight of limb, true of eyes, steady and aglow, 

They were staunch to the end against odds uncounted, 

They fell with their faces to the foe.

They shall grow not old, as we that are left grow old: 

Age shall not weary them, nor the years condemn 

At the going down of the sun and in the morning 

We will remember them.

Lest We Forget.

Yes, it’s me.

Again.

And yes, I’m here again for the reason you think: the US markets fell heavily on Friday night, our time (down about 6%), and the ASX futures suggest that we’ll drop by a bit over 4% here, today.

Sick of me yet? I hope not.

I posted some thoughts about investing in times of volatility on Twitter this morning, and one follower generously replied:

“Thank you. Much fretting re all this. Some reassurance is much appreciated”

I don’t blame them.

It’s hard to see a meaningful proportion of your portfolio disappear, after much saving and investing and waiting.

Especially if you’re near or in retirement.

You wonder if it’ll come back. If you’ll have enough.

Or if it’ll get worse.

But not just for retirees.

I get it.

For me, investing is a passion, a hobby and, yes, a job.

I’ve spent a lot of time reading and thinking about markets, and company analysis, and investor behaviour.

And a lot of time at the coalface, as an individual investor, and as an investment advisor.

But most people have day jobs. Other interests. Other skills.

I couldn’t fix my car to save myself. I don’t have to: I have a great mechanic.

But we all have Superannuation. We’re all encouraged to save and invest.

But we don’t all have the interest, skill or temperament.

Just like me, when it comes to cars.

(I’d like to. I just don’t.)

Which is why, regularly in this space, I try to share my thoughts on saving, investing, business and economics.

I try – hopefully with some success – to share what I’ve learned, aiming to make this stuff accessible to people who aren’t investing nerds.

To the extent I miss the mark sometimes, I’m sorry. But I hope it hits the spot often enough to be helpful.

And I’m back, this morning, trying to be helpful again.

I wrote quite a bit last week on how I’m approaching the recent market falls. And how I think all investors should do it.

We should remember that volatility isn’t unusual.

We should remember that markets rise and fall.

We should remember, though, that they rise far more than they fall.

We should remember that fear is normal.

We should remember that our job is to recognise and make peace with that fear, and to invest anyway.

We should remember that the ASX has historically compounded at around 9% per annum for over a century.

We should remember that it did so despite wars, recessions, a Depression, terrorist attacks, pandemics, market panics and much, much more that we’ve since forgotten about.

We should remember that every crisis feels existential at the time, but looks like an opportunity in hindsight.

We should remember that our investment horizon – even in retirement – should be measured in decades.

We should remember to not invest any money in shares (or anything else) that we need in the next three years, so we can ride out the storms, financially and emotionally.

We should remember that optimism wins. Not because we think it should, but because history tells us so.

We should remember that, right now, people are working on new solutions to new and old needs and wants.

We should remember that human ingenuity, which creates progress, isn’t a function of the share market, but of human nature.

I wish I could promise that today was the end of all of this volatility. But I can’t.

I wish I could call the US President and tell him that not only is he temporarily damaging the value of wonderful businesses, but risking jobs and businesses on an ill-conceived ideological whim.

(It is stupid, on all of those levels, and more. If we’re lucky, it’s a short-term negotiating tactic. If not, they’ll be with us for a while. It is, in either case, economic madness that will result in self-inflicted economic wounds.)

But I wish I could have prevented COVID, terrorism, inflation, irrational exuberance, and a whole lot more, too.

What I know is that the ASX and US share markets hit all-time highs earlier this year, after all of those things happened!

Please read that again.

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.

I get that for many people, it’s scary. And let me be very, very clear: it might get worse. Or it might not.

But remember that the sharemarket has created enormous compound wealth for those who invested, and remained invested, over decades.

(My favourite example? The good people at Vanguard tell us that a hypothetical $10,000 invested in the middle of 1994 was worth $130,000 three decades later, despite all of the bad stuff that happened to the world, and the economy, over that time!)

So… I hope that helps.

I hope you can stay the course. I hope you’ll keep investing, whatever comes next.

(And as a bonus: if you own shares in companies that pay dividends, that can be a nice way to receive some cold, hard, cash even when share prices are volatile.)

One additional point:

There’ll be a phalanx of panic merchants, rubberneckers (and sub-editors!) climbing all over today’s market falls.

That’ll magnify the way you feel about them (if they come as expected).

So please, try to keep it all in perspective.

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 because, as Sir John Templeton famously declared: “The four most dangerous words in investing are: ‘This time it’s different’”.

Now, in case you missed it, or want to watch it again, I spent an hour or so hosting a YouTube Live last Friday at lunchtime.

I went through what’s happened, and the fallout to date. And though it was recorded before Friday night’s falls in the US, if I did it again today, I wouldn’t change any of it.

So… if it helps, I’d encourage you to check it out, by clicking on the image below.

Fool on!

Look, I’m going to keep this short.

Which… is uncommon for me, and might be a relief for you. 

Two things:

First, the ASX is down 1.5% right now, after the US markets fell almost 5% overnight. No, I didn’t predict it, but I did write something yesterday in the wake of the tariff announcement and the fall in the US Futures yesterday afternoon.

In the iconic words of the late Charlie Munger, ‘I have nothing to add’. So, if you’re worried about your portfolio, please have a read.

And second, in some fortuitous timing (an accident, not the return of Nostradamus), we’d already planned a 100% live and free YouTube Live session for 12.30pm AEDT, today (Friday).

Who said dumb luck isn’t a thing?

The original title was ‘Market Update’.

Then it was ‘Tariffs and Market Update’.

Now, it’s ‘Tariffs, Market Slump and Market Update’.

With an hour before we kick off, I hope that’ll be the final time we change the title!

Plus, we’ll do a live Q&A, where I’ll answer as many questions as I can in the time allotted to us. (Or, I’ll sing and dance to fill the time, if there are no questions! Choose carefully.)

So… in short: stay the course.

And if you want some moral support, my thoughts on what the hell is going on, or have other questions… please jump online in an hour’s time (12.30pm AEDT) and be part of our YouTube community.

I hope you’ll join me.

Just click on the image above, or this link (and if you’re early, you can set a YouTube reminder!)

See you there!

Fool on!

Trump. Tariffs. Tantrums from stock markets.

Yes, it feels like Groundhog Day.

It’s felt like Groundhog Day for weeks.

But here we are.

I’ve written about this before.

I called it Russian Roulette with a bullet in every chamber.

But let me cover it again, briefly:

Yes, tariffs are stupid policy.

And yes, for those asking who can’t imagine an economic view divorced from politics, no matter the country or leader in question.

They make things more expensive in the country that’s applying the tariffs.

They harm world trade.

They undermine the benefits of comparative advantage.

And yes, subsidies are equally bad.

I’m sorry if that means I’m being ‘mean’ to your team, but, well… it is what it is.

(And I’m sorry if that sounds harsh. I’m not trying to offend anyone, but I hope you’ll appreciate me calling a spade a bloody shovel.)

But for investors?

Well, the ASX fell 1% today. US Futures are down 2.75% at the time of writing.

It’ll mean volatility, for a while at least.

But in the long term, I expect everything to be just fine.

Why? Well, we’ve been here before.

Yes, specifically with tariffs in past decades. But also with all manner of economic and geopolitical crises – both real and imagined.

The ASX turned a hypothetical $10,000 into over $130,000 over the thirty years to June 30 last year, according to Vanguard.

And that’s not because the last 30 years were calm and uneventful.

We had:

– The Asian Currency Crisis

– The dot com boom and bust

– Terrorist attacks in the US and Bali

– The second Iraq war

– The GFC!

– Grexit fears and Brexit reality

– COVID-19!

– The Russian invasion of Ukraine

And that’s just a few things that actually happened. The number of breathless headlines about things that might happen were probably 10 or 20 times that.

But… the ASX still delivered a 13x return over three decades.

This stuff… happens.

It’s not fun. In the short term, it hurts our portfolios and messes with our emotions.

Always has. Always will.

But here’s something I’ve written quite a bit, in the past: The ASX (and the US markets for that matter) have never yet failed to regain, then surpass, a previous high.

Now, I can’t (morally or legally) promise that’ll always be the case.

But given we have 120 years of history – where you can add recessions, depressions, World Wars, stagflation, oil shocks and more to the list above – it’s my sincere belief and expectation that humanity’s ingenuity and resourcefulness hasn’t yet hit its peak.

I think more people and more companies will find more solutions to new and old needs and wants.

And when they do? They’ll make money in the process. 

The vast bulk of them will likely be publicly-listed companies.

And so I expect the ASX to continue to go on setting new highs for decades and decades to come.

Now, if that’s true, isn’t it likely that some of the best companies on the ASX will also do the same?

I think so, yes.

And if that’s true, doesn’t it seem likely that future share prices will be higher, probably meaningfully?

And that dividends will continue to grow?

Again, I think so, yes.

So… I’ll keep on investing. 

I got some dividends in my bank account today.

I’ll likely invest that money in the next few days.

Not because I know this is the bottom. I don’t even think it’s the bottom. But nor do I think it’s not.

I have absolutely no idea if it is, or not.

I’ll keep investing because I believe that in 5, 10 and 20 years, quality companies (and the ASX as a whole) will be worth more than today. And so investing, today, is likely to be a worthwhile pursuit.

No promises. No guarantees. But I’m eating my own cooking. By regularly buying and owning shares, for the long term.

Now, speaking of which…

In a complete fluke of timing, we’d already planned to run a FREE YouTube Live session tomorrow (Friday) at 12.30pm AEDT.

I’d like to pretend I had it all planned, and was able to see the future perfectly, predicting this week’s volatility, and scheduling it accordingly.

In truth? It was supposed to be last week, but I got busy!

Still, sometimes, we just get lucky.

So… tomorrow at 12.30pm AEDT I’ll be running a one-hour YouTube Live for anyone who wants to come along.

Want to know more about my view on tariffs and the impact on the economy?

Want to know what I expect will happen to markets?

Want to know how I’m approaching my investing as a result?

Or just have questions you want to ask about anything related to investing, business, finance and the economy?

Please come and take part!

Just click here, or on the image above to be taken to the event page on YouTube, where you can set a reminder, and YouTube will give you a nudge on Friday afternoon.

(Or you can just go there directly on Friday, of course… but don’t forget!)

And as a reminder… it’s FREE!

Hope to see you there!

Fool on!

So… it seems that The Motley Fool isn’t about to enter the ‘investment wearables’ market after all.

If you read yesterday’s announcement about FoolFit™ – the wearable that zaps you every time you check your portfolio – and thought, “That sounds… extreme, but also kinda unlikely?

You weren’t alone.

We had dozens of emails. But no orders.

So, let’s set the record straight:

There is no FoolFit™.

We are not developing a behaviour-modifying wrist zapper.

And no, you can’t invest in it.

Happy April Fool’s Day.

Hopefully you enjoyed the gag.

But underneath the joke is a very real truth:

Most investors check their portfolios way too often.

And the more often you look, the more likely you are to:

– React emotionally

– Chase short-term noise

– Panic during volatility

– Make decisions that hurt long-term returns

In fact, one study from Fidelity reportedly found that some of their best-performing customers were… people who forgot they even had an account.

That’s not a joke – it’s behavioural finance 101.

You Don’t Need FoolFit™ – You Just Need a Plan

We’re not going to start shocking people into being better investors (though admit it – part of you kind of wanted one).

But we are serious about helping you stay on track.

So here are some Foolish tips that actually work:

1. Automate Your Investing

Dollar-cost average, by saving religiously and investing regularly. Don’t time the market. Let the market work for you.

2. Hide Your Brokerage App

Yes, I’m serious. Take your brokerage app off your home screen. Delete it entirely. Remove the website from your browser favourites.

Trust me, Woolies doesn’t need you to check the share price a dozen times a day before it can sell more baked beans. And it’s the latter, not the former, that creates value for investors.

3. Set a Portfolio Check Schedule

The best way to overcome psychological biases? Pre-commitment. Choose – in advance – how often you’ll check your portfolio. Once a month. Once a quarter. Once a year. Choose your cadence – and stick to it. 

4. Create a “Why I Invest” Reminder

Write down your goals: Financial freedom, retirement, a house deposit, security for your kids. When the market gets noisy, read that instead of checking your portfolio… again.

That’s what we’re here for: to help people invest better, think longer-term, and worry less.

We hope FoolFit™ made you smile.

But we also hope it made you think about the way you interact with your money.

Because you don’t need to watch your wealth grow every day.

You just need to let it grow.

And if you still want to build a prototype FoolFit™ on your own time, well… we can’t stop you. 

But you’re on your own for liability. And we’ll take a cut for the name!

Before you go, though… here’s something that’s not a joke: I’ll be hosting an hour-long YouTube Live session this Friday, April 4, at 12.30pm AEDT.

I’ll be giving viewers my latest thoughts on the market (and the implications of things like US tariffs and the Australian election), how to deal with volatility, and where I’m looking for new investment opportunities.

But even better, I’m hoping you’ll come along with your own questions because the second part of the event will be a Live Q&A.

I can’t promise that I’ll be able to answer every question – I don’t know every ASX company well enough to give a considered and confident view, and I’d rather say ‘I don’t know’ than make something up! – but no questions or topics are off-limits. I’ll answer as many as I can in the hour we’ll have together.

So… you know the drill by now. Just click here to be taken to the event page on YouTube, where you can set a reminder, and YouTube will give you a nudge on Friday afternoon.

(Or you can just go there directly on Friday, of course… but don’t forget!)

And as a reminder… it’s FREE!

Hope to see you there!

Fool on!

As is sometimes the case, I had already written something to be featured here today.

And then, the US stock market fell 2.7%.

(The Australian market hadn’t opened when I wrote this. Futures suggest a fall of around 0.9% or so. We’ll see, but won’t change anything I’ve written, below.)

Now, to be clear, I don’t really care that the US market fell 2.7%. Not because I’m a masochist, but because these things happen, and I’m used to it.

Moreover, they happen, I’m used to it, and the market has always gone on to set records for new highs, thereafter.

Yes, sometimes it takes days. Sometimes weeks. Rarely, but sometimes, it takes years.

Still, those new highs come.

And they’re worth waiting for.

Because the market has gained around 9% per annum, on average, since the early 1900s.

And that period – as you know – includes a Great Depression, many recessions, two world wars, dozens of regional wars and conflicts, high inflation, ‘stagflation’ (high inflation combined with low growth), currency crises, acts of terrorism, two global pandemics, dozens of US Presidents and Australian Prime Ministers, multiple technological booms, as well as repeated experiences of irrational exuberance and undue pessimism.

But more than that, there have been many, many, many (I think that’s as many ‘manys’ as I’m allowed) times when scary headlines and market volatility has led to… nothing.

Again, for all of that, the market is up around 9%, per annum, on average over more than a century.

Fair warning: this is the part where I reach for a ‘volatility’ example or two.

It might be the car that averages 80km/h on a long drive, even though it spends part of the journey stopped at traffic lights, or slowed by roadworks.

It might be the dog on the leash that doubles back to sniff that tree, but still gets to the destination in good time.

It might be the flip-flopping lead in a game of Aussie Rules but where the best team eventually wins.

Or feel free to substitute your own.

Just don’t be the driver who abandons the car on the side of the road because the wait at the lights is frustrating.

Don’t be the dog owner that expects the dog to walk forwards, in a straight line, for the whole journey.

Don’t be the sports fan who leaves at quarter-time because her team is one goal behind after blowing an early lead.

Or, to bring it back to investing, don’t be the person who expects only gains, and who panics and sells in fear or pain or frustration when the market takes one of its regular dips.

(And don’t be the ‘investor’ who tries to time the market. Spoiler: someone will get it right, sometimes, because, like lotto wins, even low probability events happen occasionally when there are enough people trying. Most will crash and burn – or just miss out on the gains because they were ‘waiting’.)

Here’s the honest truth: the stock market has created extraordinary wealth for the investor who invests intelligently, adds money diligently, and bears the blows patiently.

That’s pretty much all there is, and all you need to do, in my opinion. No, I can’t give you a guarantee that the future will be the same as the past, but given more than 120 years of history, I suspect it’s likely to be a pretty good guide.

Invest. Add. Wait.

There is no ‘time the market’ in there. There is no ‘react to the latest economic or political news’, either. No ‘guess when the next recession will happen’ or ‘predict where the ASX will be by Christmas’.

But what if the market goes lower? Good question. To which I’d reply ‘But what if it goes higher?’.

And given it has always gone higher, over time, which do you reckon is the better bet?

By the way, the answer to ‘What if the market goes lower?’ is ‘You get to buy shares cheaper!’.

Think about it: Something was selling yesterday for $100, and you suspect that in 10 years’ time, it’ll be worth maybe $200. Today, that thing is selling for $97.30.

Do you:

a) Sell in panic because your ‘thing’ is trading in the market for 2.7% less?

b) ‘Go to cash’ in case you can buy it for $96 or $94 or $90 at some point?

c) Think ‘You beauty! I’m getting a discount, now, and I still think the long term future is bright, so it’s a win-win’?

My readers are smart people. I know which one they’ll choose.

See the challenge in investing isn’t really intellectual. Even if you get below-average returns, you’ll likely be just fine if you are investing regularly and have a sufficiently long time horizon.

No, the challenge is almost purely emotional: Putting aside fear and greed. Keeping your ego in check. Ignoring the ‘smart money’ and the ‘fast buck’. Not panicking when the market falls, and not getting carried away when it rises.

Those things are simple to say. But harder to do when your portfolio is volatile and the headlines are stoking those emotions.

But do them, we must.

Remember three simple words:

Invest. Add. Wait.

Fool on!