Should you sell your stocks now?

‍ ‍We were somewhere over Malaysia, wedged into economy with four kids, when the fighting started.

It was hot. It was cramped. And the chicken satay I’d wolfed down in Singapore was staging a violent protest somewhere south of my belt buckle.

“Just shut up, the lot of you”, I thundered.

My five-year-old burst into tears. “Daddy said the F-word!”

“Shut up is not an F-word”, I protested.

“We don’t speak like that in our house”, he sobbed, like he was reading me my rights.

Liz just glared at me.

We were on our way to Cambodia. I figured the trip would teach my kids a thing or two about how good they’ve got it back home.

Little did I know the biggest lesson was waiting for me.

But it wasn’t some big temple or ancient ruin that did the teaching. It started three months before we even landed in the country.

A mother gave birth to a little baby boy.

She placed him in a plastic bag. Then she tied it shut and, for reasons only she will ever know, tossed him onto a rubbish pile to die.

Yet he wouldn’t die.

This tiny baby, only a few days old, no bigger than a footy, screamed through the plastic and the garbage until a rice farmer walking past heard him.

Now, this farmer had nothing. Dirt floor, hungry kids of his own, crops that barely fed his family. But he still took that baby home, and he and his wife fed him and held him for three weeks, until they simply couldn’t anymore.

So they carried him to a hospital and prayed someone could give him the life they couldn’t.

That someone was Geraldine Cox, an Aussie expat in her eighties who has spent the last 33 years running Sunrise Cambodia, an orphanage for kids nobody else wants. The kids call her Big Mumma.

My wife did a story on the place years ago for the 7pm Project and has sponsored a kid ever since. When we said we were coming, Geraldine invited us out.

As we arrived, my kids bolted off to play soccer with the Sunrise kids. Geraldine showed us around.

Walking into the nursery, I noticed a woman cradling a little baby.

I looked closer. The baby was staring straight at me.

‍It was the little baby in the bag.

His nickname is Sok, which means strong in Khmer. (Sunrise later gave him a proper name, which for his privacy I won’t share.)

And he is strong. He’s a fighter. After all, by rights, he shouldn’t be here. There is no trace of his parents. No birth certificate. No record he was ever born. No past for this boy in a bag.

So what becomes of him? What’s his story going to be?

That his mother wanted him dead?

No.

His story will be that, amid all the cruelty of this world, there are kind, caring people everywhere.

Like that dirt-poor farmer who pulled him out with his bare hands.

Like Big Mumma.

Like me.

And like you.

I’ve made a donation to help cover Sok’s costs, which are around eight grand a year (Sunrise gets no government funding – it all comes from donors).

Look, everyone has a lot of bills, too much work, and not enough time. But if you’ve got a Give Jar, consider sending a few dollars to Sunrise Cambodia. It’s tax deductible, and you can ask them to direct it towards Sok if you like. Every dollar makes a real difference.

You see, one day Sok will learn his story. But it won’t just be about a plastic bag. It will be about thousands of ordinary people on the other side of the world who decided this little fighter was worth fighting for.

Here’s the link: www.sunrisecambodia.org.au/donate

Tread Your Own Path!

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Your Questions & Answers

• Billionaire’s WARNING: I’m SELLING. The Crash Is Already Here! 

• My Heartbroken Son

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‍Billionaire’s WARNING: I’m SELLING. The Crash Is Already Here!

Hi Scott,

I’d love your thoughts on billionaire investor Jeremy Grantham’s interview on Diary of a CEO this week. He reckons you should get out of US stocks and into emerging markets and bonds. He manages $78 billion, so he seems to know a thing or two, and his arguments sound logical. Is it time to move my super and share portfolio out of Aussie and US index funds? I’m 42 and want the best bang for my buck over the next 20 to 30 years.

James

Hey James,

I watched the interview ... and felt kind of dirty by the end of it.

Grantham believes the US market is wildly overvalued, crypto is mostly worthless, and the AI boom smells a lot like the dot-com bubble wearing a chatbot costume. I agree with a fair bit of what he says.

So why did I feel dirty?

Years ago I put a ring on my share portfolio. I made a vow to stick with it through the good times and the bad. History shows shares deliver the best long-term returns of all investments, even though they scare the living daylights out of you sometimes.

Every crash has eventually been followed by new highs. So I keep a few months’ cash in the bank and accept that happily ever after only exists in fairy tales. 

Good investments (like good marriages) go sideways sometimes. Stick around long enough and they compound into something that changes your life.

That podcast felt like the financial version of a married bloke on Tinder. The whole thing is designed to make you restless and think “Maybe I should ditch my boring old index funds for some sexy emerging markets”. Heck, the episode is literally called: “Billionaire’s WARNING: I’m SELLING. The Crash Is Already Here!”

That’s a rubbish way to invest your money.

You don’t throw away a solid relationship because some hot selfie on the internet looks like a better trade. You remember why you committed in the first place.

Now, Grantham might be right. The market could crash next week. But to make money from that, you’ve got to be right twice. First, you’ve got to sell before everyone else. Then you’ve got to decide when the coast is clear and buy back in.

Even Grantham has struggled with this. He’s been calling the US market a bubble since 2021. Meanwhile the market has climbed over 100 percent higher.

James, at 42 you’ve got your greatest advantage: time. Decades of pay packets ahead of you. Every market wobble is a chance for those dollars to buy more shares and compound.

My advice?

Stay married to your diversified share portfolio. Keep some cash aside so a crash never forces you to sell. And stay off the spicy dating apps.

---

My Heartbroken Son

Scott,

My 20-year-old son signed a 12-month lease with his high school girlfriend, against my gentle judgment. Four months in, she broke up with him via text as he drove to work at 6am. Now she’s out looking at new rentals, and he’s left with $600-a-week rent he can’t possibly afford on a part-time student’s wage. I’m offering support and advice, but he’s reluctant to act. Short of handing over cash, what’s the best way to help my son through this?

Concerned Mum

Hey Concerned Mum,

Right now your son is heartbroken. Humiliated. And broke.

He’s also 20.

Which makes this the cheapest life lesson he’ll ever buy ... but only if you let him buy it.

So here’s my advice, and you probably won't like it: Don't fix it for him.

Don’t hand over cash. And definitely don’t move him back into his childhood bedroom. That teaches him that whenever adult life kicks him in the guts Mum will always make it better.

The truth is he’s in a stronger spot than he realises. His ex is still legally on that lease, text-message break-up or not. Her name is stuck there, same as his.

That gives him three options: they break the lease together (in this market it might only sting for a few weeks’ rent plus advertising), they find a new tenant to take over, or he gets a mate to move in and cover her share.

Your job isn’t to rescue him. It’s to point him at the tools. Tell him to ring the tenants’ union in your state (it’s free). Warn him not to go quiet and stop paying the rent, or he’ll end up on a tenancy blacklist that follows him for years.

Then step back and let the learning begin.

One day, in 15 years’ time, he’ll be telling this story at a barbecue. You’re deciding right now how that story ends: the time he sorted out his own mess at 20, or the time Mum rode in and saved him.

Thanks for reading,

Scott.

The trouble with Trump

Less than fifty days ago, my inbox was chock-a-block with emails like this one:

“HELP! My share portfolio is getting smashed! On the news last night Alan Kohler said that Trump’s Liberation Day tariffs are much higher than the Smoot-Hawley tariffs that caused the GREAT DEPRESSION! Is it time to sell?”

At the time the share market was 16% off its highs, and it suffered its biggest one day drop in five years.

What happened next?

Well, as I predicted, Trump folded like a cheap Aldi table, pausing the tariffs for 90 days. This caused the market to roar back as if nothing had happened.

And all those worried emails?

They stopped coming. 

Do you know what this reminds me of?

Actually, the Great Depression. 

Black Monday, October 1929, is etched in world history. You’ve probably seen that iconic photo of the poor bloke trying to flog his luxury car for $100 on the streets of New York. The sign on the bonnet read: “Lost all on the stock market”.

Yet here’s what most people don’t know:

By April 1930, the stock market had bounced back … it was up 48% from the October lows.

US President Herbert Hoover boldly declared to the world that “the worst is over”. 

Phew!

Yet, as soon as those words left his lips, the market began puking.  

Violently. 

And it kept chundering for the next two long years. When it finally lifted its head from the toilet bowl, the share market had dropped a staggering 89% from its 1929 peak.

Now let me be very clear: I am not saying we are on the verge of the greatest crash in history.  What I am saying is that humans have short memories. (Okay, and that US presidents cannot be trusted.) 

Arguably the world’s shrewdest banker, JP Morgan chief Jamie Dimon, agrees. He’s worried about the Trump tariffs, even in their reduced form, arguing that the US hasn’t felt their effects yet. “The market came down 10 per cent, it’s back up 10 per cent. I think that’s an extraordinary amount of complacency”, says Dimon.

The fact is that Trump has three more years in the Oval Office, and what about this guy says, “I’m just going to go about things quietly, diligently and make no waves”?   

My guess is that he’ll get even crazier as the days tick down.

Now, if you’re like me and you got through the Trump tariff tantrum without checking your portfolio, you’re probably good to go with whatever comes next. However, if you were one of those people sending me anxious emails fifty days ago – consider this your ‘do over’.

As Warren Buffett warned investors last week, while the long-term trend is up, “you will see a period in the next 20 years that will be a hair curler compared to anything you've seen before”.

Plan accordingly.

Tread Your Own Path!

Why Warren Buffett inspired me to sell my shares

 “Warren Buffett announces plans to retire this year in shock to shareholders,” read the ABC headline.

Seriously?

The bloke is 95 years old! If I were his age, I’d be shocked if I could even get out of bed without sounding like a busted whipper snipper.

All jokes aside, this really is the end of an era: there will never be another Warren Buffett.

I’ve flown to Omaha, Nebraska, more times than I care to count for his legendary ‘Woodstock for Capitalists’ meetings. I’ve interviewed him. I’ve spent time with his kids.

And over the years he’s taught me three lessons that I still live by.

1. Investing My Money

I was in the crowd at Omaha in 2016, notebook in hand, when Buffett casually mentioned he’d instructed his estate to put his money into a simple Vanguard index fund when he dies.

Now, this is the greatest investor of all time. Since 1965, Berkshire Hathaway has grown in value by more than 5,500,000% (not a typo!). The index returned ‘just’ 39,000% in that time. Yet even he said it was smarter to bet on the index.

Why?

Because, as he got older, Buffett realised what most of us eventually do: that simplicity is the ultimate sophistication.

Rather than play the game, he set his family up with low-cost, no-fuss index funds.

That made me rethink everything. Over time I sold all my individual shares and moved to a set-and-forget portfolio. 

More time with the kids, and less stressing over share prices. Best move I ever made.

2. Spending My Money

The media love talking about how much Buffett is worth (around $US169 billion). 

But they always miss the real story:

He’s never sold a single share in his company Berkshire Hathaway, which doesn’t pay dividends.

In other words, he’s basically held a $180 billion lottery ticket in his pocket for decades … and never cashed it in. 

That’s what Buffett’s done. He lives in the same modest suburban house he bought in 1958. Still drives himself to work. In fact, his son once told me that, as a kid, he didn’t even know his dad was rich. 

Is that a bit weird?

Hell yes! 

But, in a world obsessed with more, one of the richest men in the world chose enough.

3. Working for My Money

When I interviewed Buffett, I asked him the secret to a happy life.

He didn’t even pause: “Find a job that makes you want to tap-dance to work every morning.” And he meant it. While the world calls him the greatest investor of all time, he told me that he’s always seen himself as a teacher.

So, as my great teacher gets set to leave the classroom, let me ask you:

Could you see yourself doing your job at 95?

And if not … what could you be doing that would make you tap-dance to work?

Tread Your Own Path!

Stoned on Weed Stocks

Hi Scott,
 
Do you know what is happening with the medical cannabis companies? I had shares in AC8 and CGB and both have been delisted. Others are only worth 1/100th what I paid for them! Should I be freaking out?
 
Andrew
 
Hey Andrew,
 
Dude, it sounds like you’ve been well and truly smoked.
 
A few years ago it felt like everyone was getting high on cannabis stocks. I vividly remember a mate of mine – a comedian – trying super-hard to persuade me to have a toke on his favourite pot stock.
 
No joke!
 
Now I don’t doubt for one second that there’s a huge market for medicinal marijuana, as well as for plain old Mary Jane. Case in point: more Americans smoke dope each day than drink alcohol, according to data collected by the National Survey on Drug Use and Health.
 
Still, the reality is that traders blew up the valuations of these start-up businesses way too much. Now the market has come off its high, and there are a lot of marginal businesses that aren’t worth anything like the prices investors paid for them in the boom.
 
Should you be freaking out?
 
I think the time to freak out was a long time ago. I’ll leave the rest to you, Scooby-Doo.

Scott.

Why is the smartest investor in the world ... selling?

Strap yourself in … the Trump trade is on, and everything is going up.
 
The day after Donald won the election, the US stock market surged 1,500 points – the biggest post-election gain in 128 years.
 
Even better, Trump says we should be preparing for a ‘golden age’ of investing returns as he slashes corporate taxes and loosens up those annoying rules and regulations for his billionaire buddies.
 
MAGA!
 
However, there’s another billionaire who’s been doing the exact opposite … he’s been selling down his holdings as share prices climb.
 
Even worse, that billionaire just so happens to be none other than Warren Buffett, the greatest investor in history.
 
What’s going on?
 
Well, Buffett famously doesn’t try to time the market, and he pokes fun at anyone who believes they can. However, he does have a valuation yardstick that lets him know when the market is out of whack.
 
It’s called the ‘Buffett Indicator’, and it takes the total capitalisation of US stocks and divides it by US gross domestic product (GDP). The idea being that if stock prices rise faster than the economy grows then it may be a sign of a bubble.
 
The Buffett Indicator flashes warning signs to investors when it surpasses 100%.
 
As it did at the height of the Dot.Com bubble.
 
… and before the Global Financial Crisis.
 
… and at the beginning of the Covid crash.
 
So where is it sitting today?
 
208%.
 
That’s the highest it’s ever been (“HUGGGE” in Donald Trump language).
 
In other words, the Buffett Indicator is screaming “SELL”.
 
And that’s what Buffett has been doing. He’s been stockpiling record amounts of cash, presumably to allow him to once again be “greedy when other people are fearful” (which is how you become one of the richest people on the planet).
 
Okay, so by now I’ve probably thoroughly confused you.
 
Which billionaire should you believe?
 
Well, I’m inclined to believe both of them … though I think Buffett will win out in the end, if for no other reason than he generally does.
 
Let me be clear: stocks could (and probably will) rise from here.
 
However, in the long run share prices always revert to their long-term averages, which means there’s a possibility that returns over the next 10 years are not as likely to be as good as those of the last decade.
 
Right now, few investors are thinking about what may be lurking around the corner.
 
 Case in point: The share market is not only at record highs, but the latest US Consumer Confidence figures show that investors strongly believe that stocks will continue powering ahead. In fact, investors haven’t been this confident that stocks are a no-brainer since (checks notes) …
 
 … since 1987, when stocks savagely plummeted 25% in a single day.
 
Still, as I said a few weeks ago, history has proven that it doesn’t matter who is in the White House. What matters is that you hold through both the good ride (like today) and the inevitable crash.
 
 Buckle up!
 
 Tread Your Own Path!

A warning to all investors

Last week I watched my share portfolio get hammered as markets plunged across the globe.
 
And in response I’m doing something I rarely do …  I’m issuing a warning to all investors:  
 
It’s time to play dead.
 
Seriously.
 
I’ll have more on the how and the why in a moment, but for now let’s dip our hat to the headline writers, who well and truly earned their peanuts last week. Take this one for example:
 
“Bloodbath strikes Australia’s sharemarket … $102 billion wipeout!”
 
Scary stuff.
 
However, you could rewrite that headline as:
 
“Shares fall to levels not seen since January.”
 
Not so scary.
 
However, if I was allowed to write the headline last week, here’s what I’d have written:
 
“Investors rejoice: shares go on sale!”
 
Most people are still working and are therefore still adding to their superannuation, so they should be cheering on the chance to buy at lower prices.
 
No one ever does, of course. Instead, they totally freak out!
 
And that’s why, many years ago, I made the decision to put my investing plan on autopilot. Each month I automatically buy the same index funds.
 
It’s what I call a ‘one and done’ decision, and it works in my favour: you see, the truth is that, on average, the share market has a drop of 10% or more almost every year. And it’s also true that shares have never failed to recover and hit new highs.
 
So, finally, why do I think it’s time for investors to play dead?
 
Well, Fidelity, one of the biggest asset managers on the planet, did a study on their top-performing client accounts. Guess what they found? Over 10 years, the best returns came from clients who had either forgotten about their investments, or were dead!
 
Tread Your Own Path!

I Turned $15,000 into $8 Million

Hi Scott,

I don’t have a money question to shock you, but more a story you’ll probably shake your head at. Many years ago, I turned $15,000 into $3.2 million in crypto. It took just over two years, and when I got there I was clueless as to what to do with that much money. I had every opportunity to turn it into real goods and services here in country Victoria. But, because it was the start of a bull run and YouTubers were saying it was going to go way higher, I held on to make more money. In fact, I locked the funds away in a smart contract where I could not access them.

Then the ride really began. The feeling was incomprehensible when it hit $8 million … saddening back at $6 million … sickening at $4 million … total denial at $1 million … and I stopped looking below $500,000. I felt embarrassed. Ashamed. I went on an emotional rollercoaster I never knew existed.

Over time I forgave myself for not being content with $3.2 million and for getting caught up in FOMO. Today, I rarely recommend crypto to people I know. I feel like my experience is similar to the time I got pummelled by the ocean thinking I was better in the surf than I actually was.

John

Hey John,

As they say in therapy, thank you for sharing.

It shows real insight and wisdom that you were able to forgive yourself.

So here’s another way to think about it: if you wrote to me saying you’d turned $15,000 into $200,000 (or however much the crypto is worth now), I’d say you were the luckiest man around.

And I’d focus on the big jackpot you’ve got sitting in your lap right now … in 25 years’ time, you’d give up all your money to wake up and be the age you are right now.

It’s time to create your own luck.

Scott.

2024 Will Bring The Biggest Crash of Our Lifetime

Hi Scott
 
A question for you if you wouldn’t mind commenting – is there any truth to economist Harry Dent’s latest dire warning of doom for shares and property in Australia? 
 
Jenny
 
Hi Jenny,
 
So I watched Harry on the Today show. He predicted that “2024 will bring the biggest crash of our lifetimes”, and suggested that the value of both Aussie shares and property could more than halve this year.
 
It was frankly … weird.
 
 The folks on Today are supposed to be journalists, but the hardest hitting question they asked wasn’t even a question. All the interviewer said (with a giggle) was, “Geez, that’s a bit depressing”.
 
So here’s a question I would have asked Harry:
 
“Harry, you’ve been incorrectly predicting that Australian property prices will crash for years.
 
“You said they’d be down by … 55% in 2009, 65% in 2011, 55% in 2014, 50% in 2016, 40% in 2018, and 40% in 2020. You have been ball-tearingly wrong for so long, why should we believe you today?”
 
And because he’s a savvy sausage, Harry would no doubt have a well-rehearsed rebuttal that would sow enough doubt in the minds of viewers eating their cornflakes to let him wriggle out of that question. So then I’d then follow it up with my final question:
 
“Harry, if you have all the answers, why don’t you set up an investment fund and make billions profiting from your predictions?”
 
Because, once upon a time he did. Except it was a dud, reportedly losing 80% of its assets before it was merged and closed down.