Saturday, September 19, 2026
I wrote a year ago the RBA should not cut rates. It did, but now has to correct its mistake- again!
I give the RBA 4 crosses out of 4 for inflation control. More than a year ago (before the RBA rate cuts), I wrote that it had no reason to cut (aside from political pressure). Rates were already too low (inflationary), so when it cut rates, inflation rose as expected. The RBA now has to correct its mistake (again!) The problem was that the RBA raised cash rates later, slower, and lower than the rest of the world in 2022-3, leaving inflation stickier here. Plus we have our unique centralised wage fixing system, cozy monopoly / oligopoly structures in most domestic industries, and governments running inflationary deficit spending sprees. What it means for portfolios – and how I positioned for this. Will the RBA hike rates next week? Will that be the end of it?
Annual Return Pyramid for US Share market. Leads Australia, but US will lose lead when boom ends
By popular demand, following my recent ‘annual return pyramids’ for the Australian share market, here are the equivalent annual return pyramids for the US market. 2025 was another very good year of well above average nominal and real returns from the US market. Five out of the past six years have been well above average for the US market – higher than Australia. US has posted lower overall average Nominal returns than Australia, but higher average Real returns, because inflation has been higher in Australia than the US. US real return pyramid is much ‘lumpier’ than Australia because of higher volatility in the US market. The US market is currently ahead of Australia, but that will reverse when (not if) the current tech boom ends.
REAL Return Pyramid for Aussie Shares. Longest period of consistent historical average CPI+ Returns
Here’s my annual Real return pyramid for the Australian share market to go with the Nominal return pyramid in my last story. Real returns are even more important than Nominal returns because we need our wealth and withdrawals for living expenses to keep growing ahead of inflation. As with Nominal returns, 2025 was another good year of spot-on historical average Real returns from the broad Aussie share market, despite endless scare mongering from media and so-called ‘experts’. That's three years in a row of historical average Real returns – the longest period of consistent historical average real returns. So much for all the nonsense about ‘volatility’. The broad Australian share market has been one of the best inflation hedges.
Aussie Share Market Annual Return Pyramid. Where did 2025 rate in the scheme of things?
Here’s my updated annual return pyramid for the Australian share market. It’s one of my go-to charts to illustrate the overall shape and spread of returns over time. 2025 was another good year of spot-on historical average returns for the broad Australian share market, despite seemingly endless scare mongering from media and so-called ‘experts’. That makes it three years in a row of good/boring/average returns – the longest period of consistently boring/average returns in history! If you were an astronaut away from the planet for the past three years, you would wonder why all the fuss about Trump, tariffs, government shutdowns, bank failures, government deficits/debt crisis, and endless nonsense about unprecedented ‘volatility’ and ‘uncertain times’. You can’t use this chart to predict the future of course. But it does ill
4 out of 5 on my Cancer Surgery goals. Could have been worse, but could have been better!
I went in for colorectal cancer surgery on 8 January after receiving a positive cancer screen a month earlier and tests/scans/colonoscopy in December. 4 out of 5 of my surgery goals were achieved, but post-surgery tests revealed the cancer was ‘Stage 3’ (‘Advanced Localised’), meaning it has progressed at ‘advanced’ levels into surrounding areas. With Stage 3 cancer, the initial surgery is not the end of the problem, but probably just the beginning of a whole new journey. It will certainly mean big changes to how I prioritise my time, energy, focus.
2025 returns – third straight year of double-digit returns for lazy, passive diversified investors!
2025 was a third straight year of double-digit returns for lazy, passive, diversified long-term investors. Almost every major asset class/segment posted positive returns ahead of inflation despite the dramas of Trump, tariffs, wars, political unrest across the world, mounting deficits and debts everywhere, the ‘cost of living’ crisis, and endless predictions of imminent recessions and crashes. This chart of returns from 26 asset classes/segments each year since 2000 is one of my go-to charts to illustrate the value of diversification and patience, rather than piling into last year’s winners, and/or chasing the latest hot themes / stocks / funds / fads. The far-right column shows my up-dated league table of overall average long-term returns. Which were the big movers in 2025?
Visual snapshot of 60+ share markets over 35 years. 2025 = third year into broad global boom
2025 was the third straight year of good returns on most share markets. Although the US had another above-average year, most other countries did even better than the US in 2025, busting the common myth that this is a narrow US-led boom. Australia lagged the US by a big margin again for a third year running. I outline the reasons why. Three-year booms are not unusual. There have been plenty of examples of longer booms before a bust. The higher and longer the boom, the deeper and longer the bust. The US is beating Australia in the current boom, but will suffer worse in the bust to follow. Pricing is currently very expensive – not just US tech stocks but everywhere including and especially Australia. Share markets do not collapse because or when they become expensive. Over-priced booms can keep running
My Life in Weeks: 83% done but there’s a nasty new twist this year. Life’s like a box of chocolates!
It’s the start of another year, so it’s time to update ‘My Life in Weeks’. I have now lived 3,453 weeks, which is 83% of my estimated expected ‘useful life’. Will I make it to 80? or perhaps even longer, into ‘bonus time’? 99% of humans throughout history had much shorter lives than ours, but somehow they managed to build the modern world and prosperity we enjoy today. I have been thrown a curve ball this year that may upset my grand plans. Time to re-focus and make sure I make the most of every day.
2025 snapshot: Boom continues but backed by profits. Expensive, sure. But no more than a year ago
Here's my global markets wrap-up of 2025 for Aussie investors. Contrary to popular media nonsense, the current boom is not just confined to just a few US tech giants. It has been a widespread boom across industry sectors, countries, and stocks. Share markets are vastly over-priced of course, but the big share price gains in 2025 did NOT stretch pricing further as they were underpinned by strong growth in profits. For bond markets it was the 4th straight year of poor returns. Why I have been out of bonds. Plus inflation, interest rates, currencies, commodities, crypto, and more.
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