Welcome & Housekeeping
3 minutes
General Advice Disclaimer — Read Aloud
This webinar and any associated materials are provided for general information purposes only. The information discussed does not take into account your personal objectives, financial situation, or needs.
Before acting on any information, you should consider its appropriateness having regard to your specific circumstances and consult with your adviser.
Talking Points — click any point to expand
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Why we're here — thick and fast
In my earlier note I suggested 2026 would be a year where events flow thick and fast. That prediction appears to be holding. This series exists because some of what's happening deserves more serious discussion than is generally found in mainstream media — and I'm increasingly aware of the expansion of misinformation, even within mainstream sources.
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Privacy — Perth is a small place
Your identity is hidden from other attendees by default. You can see me; you cannot see each other. If you'd like to join the discussion on-screen, raise your hand and we'll bring you in. Otherwise you're very welcome to remain an anonymous observer — this is a small city, and that is a completely reasonable choice.
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Recording notice
Following several requests from those balancing tight schedules, today's session is being recorded. The recording and any underlying data will be made available shortly after we conclude.
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How this series works
I'll have prepared points to cover, but there may be last-minute news we simply work through on the day. I'd like these sessions to be interactive. Questions submitted in advance are welcome — the more the better. Future sessions will deepen into specific themes as they emerge throughout 2026.
Today's Market Snapshot
5 minutes
S&P / ASX 200
8,726
↓ 5.2% — two weeks
Sharp pullback from all-time highs. Domestic volatility returning.
Dow Jones (DJI)
48,739
↑ 1.2% — two weeks
Recovered from a 900-pt intraday plunge on Monday.
BHP (ASX)
$71.85
↓ 11.9% — two weeks
Global commodity & energy sentiment driving the fall.
CBA (ASX)
$172.60
↓ 1.1% — two weeks
Near 52-week highs despite broader index softness.
RBA Cash Rate
3.85%
Cut from 4.35% · 4 Feb 2026
22% probability of a further move on 17 March.
AU 10-Yr Bond Yield
4.82%
↑ Rising from 4.09%
Higher yields = stronger future income base.
Key Observations
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The AU / US divergence is visible today
The ASX is down 5.2% while the Dow has recovered its losses. This reflects structural differences between our resource-heavy market and the US technology-heavy index. We'll return to this theme in detail in future sessions.
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Monday's session — a case study in noise
On Monday, oil briefly touched $120 a barrel before retreating sharply to $90 in a single session. The Dow dropped 900 points intraday, then finished higher. The headline and the outcome were completely different stories. This is exactly the kind of "distorted perspective" I mentioned in my note — and a good reason not to make investment decisions in response to daily news.
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BHP as a sentiment barometer
A 12% fall in a blue-chip resource company over a fortnight tells us something about how global markets are reading geopolitical uncertainty. This is not a BHP-specific story — it is a global anxiety story that happens to be expressed through BHP's price.
Valuations & Extended Markets
7 minutes
Market Valuation Spectrum — Broad Assessment, March 2026
▲
Historically cheap
Fair value
Stretched
Historically extreme
Current broad assessment: Stretched to Extreme — across multiple indicators
Buffett Indicator — US Market Cap / GDP
~195–200%
Historically Extreme
Buffett's preferred broad valuation measure. Readings above ~100% historically indicate overvaluation. Previous peaks: ~145% in 2000, ~105% pre-GFC. Current level has no modern precedent.
US CAPE Ratio (Shiller PE)
~34–36×
Stretched
Cyclically adjusted PE ratio — smooths 10-year earnings. Historical average ~16–17×. Only exceeded current levels briefly around 2000. Not a timing tool — but a measure of the cushion available.
Perth Median House Price
~$780,000
Record Territory
REIWA data: record low stock for sale, days on market around 7–10 days versus a long-run average well above 30 days. Both supply and time-to-sale measures are at or near historical extremes.
ASX 200 Forward PE
~18–19×
Elevated but less extreme
Australia's market trades at a premium to its historical range but is less stretched than US markets. The resources weighting provides some valuation anchor. Still above long-run averages.
Talking Points
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What "extended valuations" actually means — and what it doesn't
Extended valuations do not mean markets are about to fall. They never have been a timing tool. What they measure is the cushion — the margin between current prices and reasonable long-term value. A highly valued market can stay highly valued for years, and can go higher. What changes is the expected return from here, and the severity of the correction when it eventually comes. The Buffett Indicator at 195% does not say "sell everything today." It says the risk-reward calculation has shifted materially.
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The Buffett Indicator — and why not everyone can invest like Buffett
Buffett himself has noted that when this ratio moves well above 100%, you are "playing with fire." But it's worth understanding the limits of the analogy — Buffett operates with permanent capital, tax advantages, and influence that most investors simply don't have. The metric remains useful as a broad barometer of how much future growth is already priced into today's US market. Our WSP Beyond Buffettism infographic covers this in detail — useful to pull up if the question arises.
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Perth property — record lows, record prices, record speed
The REIWA data is striking. Days on market at around 7–10 days versus a long-run average well above 30. Stock for sale at record lows. Median price at or near record highs. This is a market operating in a state of acute supply shortage — and acute shortage always eventually resolves, one way or another. The question for any property holder is whether they understand the difference between the price they could get today and the long-run fundamental value. Our Australian Housing Affordability infographic covering 1907–2024 provides a sobering historical context here.
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Extended valuations across asset classes simultaneously — this is the unusual part
Historically, when equities were expensive, bonds and property often provided some cushion. Today, all three are simultaneously expensive by most historical measures. This is the consequence of over a decade of low interest rates — money flowed into every asset class, lifting prices everywhere. The return of meaningful interest rates has begun to test this, but it hasn't fully unwound it. That is the broader context for why the base of the Wealth Pyramid — cash and bonds — has become more interesting, not less.
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WSP resources available for deeper exploration
The WSP Information Hub (button in the sidebar) has several resources directly relevant to this discussion — including the Beyond Buffettism infographic, the S&P 500 Valuation Analysis, the Australian Housing Affordability deep-dive, and the Investing Into Expensive Markets presentation. These are designed to be shared directly with clients and can be opened in a new tab during the session if a particular question warrants it.
Valuation measures are not clocks. They do not tell you when. They tell you how much cushion remains between where we are and where long-run value sits — and right now, that cushion is thin across almost every major asset class simultaneously.
The Wealth Pyramid
8 minutes
Speculative & Alternatives
Apex · Smallest allocation · Highest risk
Direct investments, private equity, crypto, highly speculative positions. The apex is where outsized gains and permanent capital loss both live. Only appropriate when every lower tier is stable and well-funded.
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High Growth
Concentrated equity · Individual shares · Sector ETFs
This is where ten-baggers live — and where regression to the mean eventually arrives. WiseTech, Pro Medicus, Life360 are worth examining here. Outstanding performance by the time you've identified it may already be past its peak.
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Growth
Broad equities · Diversified ETFs · VAS, VGS
The engine of long-term compounding. Volatile in the short term; reliable over a decade or more. The place where patient investors are rewarded and impatient investors are punished.
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Diversified / Balanced
Mixed assets · REITs · Infrastructure
Designed to smooth the ride — less upside than pure growth, less downside than pure defensives. Multi-asset funds and infrastructure sit here. A useful middle layer for those who need income and growth simultaneously.
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Fixed Income & Bonds
Government & corporate bonds · BOND ETF · Hybrids
Currently offering yields not seen in a decade. Today's session focuses heavily on this tier — why bonds lagged cash, why that is changing, and what the "graduation" from cash into bonds actually means.
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Cash & Foundations
Base · Always funded first · Non-negotiable
Day-to-day accounts, cash reserves, term deposits, high-yield cash ETFs (AAA, BILL, ISEC, MMKT). Investment decisions should not be made until this tier is in order. The cash reserve is not the boring part — it is the part that gives you the freedom to be patient.
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The Cash base is not the boring part of your strategy. It is the part that gives you the freedom to be patient — and patience is the single most underrated advantage an investor has.
Cash, Bonds & The Graduation
7 minutes
| Metric | High-Yield Cash (AAA / BILL / ISEC) | SPDR Bond ETF (BOND) |
|---|---|---|
| Current Yield | 3.90% – 4.20% (to Dec 2025) | 4.09% |
| Yield to Maturity | Floating — drops with RBA cuts | 4.91% — committed ~5 years |
| Duration Risk | Near zero | 4.82 years |
| 1-Year Total Return | ~4.30% – 4.50% | 3.76% (to Jan 2026) |
| If RBA Cuts Rates | Your yield falls immediately | Price rises · capital gain potential |
| Liquidity | Same-day | ASX-traded · intraday |
Talking Points
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The return of the Base — first time in over a decade
In 2021, the RBA cash rate was 0.10%. Bond yields were around 1.60%. Cash was earning almost nothing. Today, cash vehicles are earning 4%+, and bonds are offering yields to maturity of nearly 5%. For the first time in a very long time, the base of the pyramid is genuinely competing for your attention.
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Why bonds lagged cash last year — the duration drag
The BOND ETF returned 3.76% last year — less than a simple term deposit. This happened because as interest rates rose, the capital value of the underlying bonds fell, dragging down total return. This is duration risk — not a failure of the investment, but a feature of how fixed income works in a rising rate environment.
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The graduation argument — reinvestment risk
If the RBA cuts rates later in 2026 or into 2027, your cash ETF yield will drop immediately and silently. The BOND ETF's 4.91% yield to maturity is already committed. Moving some allocation from cash to bonds is not abandoning safety. It is securing today's higher rates for longer. That is what I mean by graduation.
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The income engine: 2021 versus 2026
RBA rate: 0.10% → 3.85%. Bond ETF yield to maturity: ~1.60% → 4.91%. Management fee on BOND ETF: 0.24% → 0.10%. We are being paid roughly three times more to hold defensive assets than we were three years ago — and the cost of accessing them has fallen. That is a structural improvement, not a short-term blip.
The 1-year return of 3.76% is the rear-vision mirror. The 4.91% yield to maturity is the road ahead.
Cycles & Active Management
7 minutes
Core Principles
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Always fund the cash reserve before making investment decisions
This is one of the basics of financial planning that gets conveniently forgotten 80% of the time. The cash reserve is not the cost of being cautious — it is the permission structure that allows rational investment decisions when markets are volatile. Without it, every market fall becomes an emergency that forces a bad decision.
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You cannot time markets — the rear-vision mirror
Imagine driving a busy highway using only what's behind you. After a few successful days you'd feel skilled. A financial analyst would call you very, very lucky. Each successive win in market timing does not improve your odds on the next attempt — it may reduce them by building false confidence.
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Regression to the mean — the Babe Ruth principle
Babe Ruth struck out 1,330 times. That record stood for 29 years. He is remembered for 714 home runs. LeBron James holds the record for the most missed field goals in NBA history — and is also the all-time leading scorer. Outstanding performance in markets works the same way. By the time you've identified a winner and committed capital, the regression is often already underway.
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Ten-baggers and the transition point
WiseTech, Pro Medicus, Life360 — extraordinary performers. But the question for each of them is the same: are we still in the underlying theme that drove the performance, or are we approaching the transition? Disruption eventually reaches all entrenched players. The uncertainty is whether "eventually" means two years or twenty.
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Active management — what the data actually says
Professional active managers target a success rate of around 60% in beating the market. On average, net of fees, they do not beat it. Index funds and passive ETFs exist precisely because active management's aggregate results are disappointing. This is not a criticism of skill. It is a statement about the structural difficulty of consistently beating a market that already reflects the combined intelligence of every other participant.
Average is not average. In markets, as in sport, the exceptional result you've just identified is probably closest to its moment of regression.
Q&A & Close
5 minutes
Questions Submitted in Advance
Address any questions received by email before today's session.
Open Floor
Raise your hand to join on-screen, or submit questions via the Q&A panel.
Closing Remarks
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What's coming in future Musings
Future sessions will go deeper into the AU/US market divergence and the historical parallels from the 1929 and 2000 cycles. We'll also examine the equity layer of the Wealth Pyramid — ETFs, individual shares, and the question of how much active tilt is appropriate given where we sit in this cycle.
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Recording and materials
The recording will be available shortly after we conclude, along with any underlying datasets referenced today. Follow-up questions are welcome — please reply directly to the original invitation email.
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A personal note
I have always preferred individual meetings — they allow me to focus on individual circumstances, which is what financial planning is ultimately for. This series is not a replacement for that. It is an attempt to give shared context, so that our individual conversations are better informed and so that you are not relying solely on sources I consider unreliable.
Final Reminder
The information discussed today was general in nature and has not taken into account your personal objectives, financial situation, or needs. Please contact your adviser before acting on any of the information presented.