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As I write this, I'm just wrapping up a short holiday.
My wife and son are asleep, and the sun's not quite up, but I'm awake in the still of the early morning.
The holiday? It's been great, thanks for asking. We drove up to Moreton Island and had a ball. We're halfway home, now, hoping for another 48 hours of good weather, and some fish on the bite. (My young bloke has taken to fishing with a vengeance. Of all of the things an 11 year-old can become obsessed with, I'll take fishing any day!)
Seriously, though, Moreton was fantastic. It was something of a last minute decision, and we didn't know what to expect. The swimming, sight-seeing and general vibe were all wonderful, and we'd happily go back. If you're a local, you probably know all about it. If you're not, we'd highly recommend it (and in this age of Insta-influencers, no-one's paying me to say that, for the record!).
But back to Friday morning.
As you might know, some Fridays I write about things I'm loosely terming 'Friday Fundamentals' – the things I reckon investors need to know. Maybe they're new to you. Or maybe, like a Sunday church sermon, they're reminders of things you know, but which are worth hearing again.
This time, I want to talk to you about sloth, inactivity, laziness and neglect.
No, really.
See, I do a few regular media appearances on behalf of The Motley Fool. Some TV (mostly Channel 9), radio (usually 2GB, 4BC, 3AW, and Triple M), and some writing (Money Magazine). Other times, I get a call asking for a one-off chat – like this week when ABC NSW Drive asked me to explain 'Return on Equity', which I did from the hotel room!
My point? I usually keep across the latest news and events in business, finance and investing.
But this week? Not so much.
Yes, I noticed the aforementioned brouhaha when Greens Senator Nick McKim asked Woolworths Group Ltd (ASX: WOW) CEO Brad Banducci a question for which the Senator clearly already knew the answer… and which the CEO did his level best not to answer. Usual bread-and-circuses, unfortunately. More on that, below.
Other than the parliamentary silliness, I've not taken much interest in the ASX while I've been away.
(In case you're wondering, I have some fantastic colleagues minding the shop while I'm on leave, and they have my number if they need me. I'm not leaving our members in the lurch!)
A quick check a few minutes ago told me that the S&P/ASX All Ordinaries Index (ASX: XAO) (a measure of the share prices of around 500 of the largest ASX-listed companies) is down by a little more than 2% over the past 5 days.
My portfolio? No idea how it's performed over the same time period. Literally no idea. I mean, I'm pretty certain it's down, but I'm not sure by how much.
How could I not know? Easy. I don't pay that much attention.
I hope that surprises at least a few of you. After all, I'm in finance. I'm an investor. Aren't I supposed to live and breathe that stuff?
Nope.
If I was a trader, I might. But I can't think of anything worse.
Instead, I'm an investor. That means – or should, if we're using the word correctly – that I focus on the long term, not on short-term share price gyrations.
And the past 5 days?
Well, the US economy is going well, and some bond traders have speculated that US interest rate cuts might be delayed. Maybe that'll mean Australian rate cuts are delayed, too.
Maybe.
I don't know. And, other than a keen interest (if you'll excuse the pun) in mortgage rates, I don't care.
Not because I wouldn't love to know when rates will fall. It's just that, well, it's unknowable. So why tie myself in knots trying to guess? Or worrying about the guesses of others?
Instead, I've built a portfolio (personally, and on behalf of the members whose investment advisory services I run) that I hope will outperform the ASX over 5, 10 and 20 years.
Yes, years.
And if that was your timeframe, would you worry about short-term volatility?
You know the answer, right?
I don't blame you if the 2.2% fall over the last week has you a little concerned. It's natural. I've been there.
But I've learned – partly through theory, partly through experience – that those worries are incredibly unproductive. You can't do anything to stop the volatility, even if you wanted to. And that volatility is part and parcel of the market that has – here, in the US, and elsewhere – generated extraordinary long-term wealth for patient investors.
It's why I've made my peace with the roller coaster of the share market. It's why I don't worry about my portfolio when I go on holidays.
Maybe shares will gain 2% next week. Maybe they'll fall 2%. Maybe they'll be flat.
If I knew, you bet I'd do something about it. But I don't. Neither do you.
But you know what I do know?
That over the three decades to June 30 last year, the ASX gained an average of 9.2% per annum.
That a 9.2% annual return compounded $10,000 into $138,000 over that time.
That a return of that magnitude happened despite the COVID crash, GFC, and dot.com crash.
I don't know what the future will bring. But I do know that worrying about a 2% fall, at any point during which my money was on a 30-year compounding journey to an almost 13-fold gain, would have been incredibly counterproductive.
And that's why I holidayed peacefully, not worried in the slightest about any volatility that my portfolio happened to encounter while I was away.
Because I'm in it for the long term.
I hope you are, too.
(I promised a quick aside on the circus in Parliament this week. I'm kinda sick of some of our politicians aiming for either their 15 second sound bite on TV by being mean to the bad man from Woolies, or asking gotcha questions they already know the answer to, just so they can make a social media post, posing as Robin Hood. I'm also sick of the spin from Corporate Australia, in this case, the ducking and weaving to avoid answering a simple question, and more broadly trying to spin every earnings release to obscure the real information in favour of putting results in the best possible light.
A genuine parliamentary inquiry would seek genuine answers about some of the real issues in our grocery market. And it should get those genuine answers. A show trial is, well, just that.
No, I don't own shares in any Supermarkets – my son has 0.8451 shares of Woolies… I don't think that counts as a conflict! I just reckon that the voting public is poorly served by this sort of inquiry that owes far, far more to electoral politics than to public policy.)
Have a great weekend. And wish me luck with the fishing!
Fool on!
