What Share Market Dips Do to Your Brain... and What History Says is Coming Next

the Order Kerni Whaltbury and a waddery woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on a wondery country, acknowledging the elders, the ancestors and the next generation coming through as this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow.

So he is making in the next twenty four hours from when we're recording this a very big announcement where he's going to potentially announce a whole heap of like a new round of tariff information and so that will actually significantly impact the economy. So right now we're talking about what has happened, and you know, I'm going to talk about Trump's new tariffs when they come in, but we don't have that information right now. But I didn't want to like hold off on this episode to wait

for more information. So we'll talk about it and then we'll probably talk about it again. But I don't want you to think, oh, VS not taking into consideration X, Y and Z babies because I don't live in the future. I would love that, but it's so fair. Yeah, So some of what I'm about to say might actually already be playing out. And if so, guys, I am the oracle, Like you can refer to me as the oracle. If it's not playing out, pretend you never heard this, Like,

we are not living in the in between. So Trump might have actually changed his mind entirely and just called the whole thing off because that's actually an option for him, and it wouldn't be the first time. It wouldn't shock me because remember when he was like, oh, TikTok ban whatever, We'll just not do that anymore. Yeah, just his rogue. Honestly, there's something about American politics that just cheeks me hooked. It's like watching reality TV. For me is like I'm obsessed,

it is. But I think it's really important that at the time of recording, there has been over the last few weeks a lot of global uncertainty swirling around and it's hitting investor confidence, like I'm seeing it in our community a lot a lot of people are asking, what's going on? Why are the market's down, Victoria, how does

this work? So Wall Street, which is the American ASX, has been sliding for weeks, and the ripple effect has definitely already made its way to Australia, and so we are starting to see that the changes in Australia are not nearly as dramatic as America, but that is usually

what happens. So something big will happen in the US, their share market plummets, ours will dip, so like we are often replicating the American markets, but in a softer way, I would say, And that usually happens because the Australian economy is held up in a different way than the American.

But when it comes to confidence, Beck, if you see your American friend going through something, you're probably going to get a bit worried too, right, or I've always been confused by this because I know people do say that, like it's like the American I didn't really understand it. So forgive me if I'm but the American dollars week so the Australian dollar, Like I've just never understood the link there because there's trade agreements between the countries I see.

And ultimately, when we're talking about investor sentiment, we are talking about how confident someone is in something. Right, So if you're seeing your friends and right now, we are seeing a lot of what is happening in America translating to Australia much quicker than it has historically because of social media, because you're able to learn much quicker what's going on in the US and get really worried about it like historically, Beck, I'm just going to make a

broad brush stereotypical statement. I'm pretty sure you're not sitting down every morning with the newspaper reading through all of the information about the economy. That's correct. No, so you're not doing that, But historically that's how you would have gained your information on what's going on economically. Now you jump on TikTok and people are like, what the hell Trump's tear marfs are crazy, and you're like, oh, wow, that is crazy. I wonder how that impacts me, and

your confidence is going to be knocked. So Australia is responding a lot quicker to what's going on in the US because our confidence gets knocked whenever we think that there's something negative going on with money. Sure, so it's not to say that that means that we are significantly impacted. I don't know what these tariffs are going to mean for US, but it does mean that, you know, I get a bit worried when I see what's going on in the US. I go, oh, well, what does that

mean for me? What does that mean for my investment portfolio? I own international shares, my international company is okay, and you know when that happens, I go, oh, maybe I'll just hold off and investing for a little while, and if lots of people do that, the market goes down. Yes, So that's kind of like I'm not saying that that's the only way they're linked, but in the way that

you're talking, that is how they're linked. Okay, But ultimately, investors are worried that Trump is going to spark a trade war, which is terrifying, and that typically means slower global growth. It means that there are going to be higher costs and more pressure on company earnings. And when the US is a little bit wobbly on its feet,

especially inspectors lack tech and manufacturing and commodities. Australia tends to feel that too because we trade with them on those things and also Beck to put into the middle of this. Yesterday, the RBA has decided to hold interest rates, which I wasn't surprised about. A lot of people were asking MeV do you think that they are going to drop interest rates again or do you think that they

are going to increase them. No, I just thought that they were going to hold because we just want to see what's going on with the economy for a little

bit longer. The RBA are being quite cautious, and they've only just started cutting rates, right, they can't just set the expectation that they'll do this every month because the economy might get too confident that we need to just slow and steady wins the race, and they don't want to jump the gun with another move until there's a little bit more clarity on what this means for inflation and spending and the Australian's economy in a broader sense. So right now, I would say, and I feel like

I'm just waffling. I hope it's interesting, but right now I would say the market is a little bit on edge. We're not panicked, but we're definitely a little bit nervous, like we're being a little bit more cautious. And as always, whenever anybody is uncertain, that actually leads to volatility in the market. So volatility is I feel like it's a very fancy word for just saying that the market goes up and down, Like volatility is how quickly it ebbs

and it flows. But in saying that, at the time of recording, investors are we're just waiting to see what Liberation Day brings. Okay, I'm just so interested to know what they hell Trump? Like, why why does that have to be called Liberation Day? Trump?

this is going to happen seven times. And if we look back at history and go, well, what happened in previous market crashes, we know that the market has gone down and then it's gone back up and some so we do not have experience where the market has crashed and it stays crashed, right, And I think that that's good to understand here, because I think a lot of the time we go, well, what does it mean if

the market crashes, are not going to lose all my money? Yes, you will lose all your money if you take it out of your investment portfolio and accept the lower amount that your portfolio is currently valued at. But if you stayed invested and waited until it crept back up, long term investors are winners. So back to correction. A correction is or it's called a correction because it's basically the market giving itself like a little bit of a reset.

I would say, it's kind of like, well, maybe we got a little bit of ahead of ourselves, Like maybe we got a little bit too confident. We're going to peg ourselves back a little bit. And that's not necessarily a bad thing. So both the SMP five hundred in the US, which is essentially the top five hundred companies in the US, and the ASX here in Australia have dropped into correction territory this month. So if you're seeing that on the news and people are talking about a

market correction, that's essentially what's happened. There has been a peak and it's a minimum of ten percent down. That's all that means, so what does that mean? At the moment, we're seeing hopeful his short term volatility play out across global markets corrections. I think that they feel very uncomfortable because you've logged into your investment portfolio, Like Beck, if you logged into Charesis right now, I can always guarantee yeap,

she's gone down. She's gone down. Does that feel good? No, it's scary. I've been. I think it's really comforting to know. It's really comforting to talk about how these things actually happen quite often. And like, yes, your portfolio right now, Beck, it's valued at less. That doesn't feel good only if you yes, exactly. I have taught you everything. But at the moment, it doesn't feel good. But it means that we can ride it out and it's going to come

back up. How good is that to know? Because you're not accepting a loss, and so many of us, if we don't have that level of education or that level of confidence in understanding investing, we kind of week out and go, I'm just going to take my money out. I feel like I've lost enough. I don't want to lose more. But you're accepting less. In this house, Beck, we don't accept less in any part of our life,

do we know, especially when it comes to investing. Yeah, so, on average, sorry to tell you this, a correction is going to happen on average about every two years. Okay, well, David, it's not a sign that something in our system is broken, but rather the market's just do and what the market does, And that doesn't mean it's always exciting.

when the market actually gets a little bit scary. So I'm hearing a lot of terms.

bear market. Essentially, a bear market is when the market falls by twenty percent or more from a recent high and it tends to stick around for a while. We're talking months. It can even stick around for years or even a couple of years, depending on what's driving it. Like the global financial crisis, bear market COVID bit of a bear market. Bear markets usually come with what do you say, like broader economic issues, things like rising unemployment,

slower growth, or bigger global shocks. So they're more than just like a bit of volatility or like a little bit of a dip. They're actually a deeper downturn that takes much longer to recover from. So slight. Yeah, And I like to think of the bear as kind of like the market's going into hibernation mode because that feels much more comfortable than saying it's dropped to pick. So I'm like, all right, yeah, it's red, but it's in hibernation.

Now's the time. What do you do in hibernation? You stockpile, you save all your nuts. Get cozy. Yeah, you get cozy, You get comfy, You do what you need to do because you're going to come out of hibernation at some point, right like some's coming baby.

they love to cause a little bit of panic. I've spoken to you guys about the emotional journey of investing before at the peak, like when people are like, it's like Bitcoin, My favorite example is Bitcoin. Remember when people were like, if you're not investing in bitcoin, you're an idiot, like, and every man in his dog was like investing in bitcoin, and then you had fomo oh yeah, because everyone was doing it but you and you thought you were going

to miss out. But that's actually the point in time that is maximum risk. And then on the opposite of that, when people are being really dramatic and they're like, the stock market sucks, great, that might actually be an opportunity for me to invest, because you're trying to knock my confidence. And when you're trying to knock my confidence, you are being successful with a number of people, which means they're not investing, which means maybe I've got an opportunity to

buy some discount shares right, love to see it. Yeah, keep on being dramatic market, and keep on being dramatic media, because I actually love when my shares are undervalued because I'm stocking up for winter baby. Oh yeah, we're reaping the rule war exactly. So this is where if we look at history we can kind of like help calm the panic. Because every bear market we've ever been through, Yeah, twenty percent drop sounds like it sucks, but we've always recovered.

There's not been one time in history where a bear market hasn't come back to be a bull market. And if we look at the last one hundred and twenty four years here in Australia, which is exactly how long the Australian share market has existed, the market has ended

the year down just twenty four times. Out of one hundred and twenty four times that the market has ended in Australia, just twenty four times, it's ended down a one hundred times it has ended up, and that's only nineteen percent of the time, which is not that bad. So that means that more than eighty percent of the time it's ended up. Even when we've had some psychotic wild years including wars and financial crisis and pandemics, like, we've only ended down a few times. Right, Oh, that's

not that bad, that's pretty good. That's boring for the front of a newspaper. That's so boring, Beck And some of the best years, honestly came after the worst years. And I'm not saying it just recovered and got back to where it was and we're going to take credit

for that. But like in two thousand and eight is when the global financial crisis happened, and I think that's you know, if you're listening to this podcast, you have an idea of that, but you're very likely to have not experienced that individually, because in two thousand and eight, a lot of you were in school, or you were just coming out of school, or you weren't investing at that point in time. But in two thousand and eight, beck the market dropped by forty percent. That would have

made anybody run for the hills. That's scary as the scary number. In two thousand and nine, it bounced back with a thirty nine zero point six percent game. Okay, when all the way back and then came all the way forward and now it's grown and some. And then after COVID, so remember the COVID crash, everyone was absolutely spitting it like unemployment was at its peak because obviously everyone was working from home. Every man and his dog

was being made redundant. The market then returned by seventeen point one percent in twenty twenty one. She thrivees so like she comes back. She's a redemption queen. She's always trying to reinvent herself and it's worked every single time. And then if we go back to a time when you and I weren't alive Beck in nineteen eighty three, right after the recession. I remember, yeah you do, I have heard of it. I've told you about the recession

before I was probably like twenty twenty eight. Yeah, yeah, yeah, I think so. Yeah, yeah, the market actually surged by sixty six point eight percent. WHOA like imagine those returns? Like, imagine during the recession, obviously, lots of people were struggling. Please don't get me wrong, it's not what we're talking about.

We're here to talk about investment. But imagine during the recession if you saw the markets dropping and you bought a whole heap of shares because you were like, this is an opportunity, and then the market the year after surged by sixty six point eight percent. We love laugh baby, you would be cheering exactly. So, while history doesn't repeat itself exactly, I think these examples show that what recovery periods can be incredibly strong. Yeah, and that happens even

after significant dips. And like, my job is to help you feel confident about your investing journey, because lots of you are freaking out right now, being like what the heck? They like my investment portfolio is down, so I think that makes me feel confident. And when I'm looking at my investment portfolio and I'm like, oh my goodness, this feels like trash. Reframing it and being like, well, actually, this is what history has said. Yep, maybe I should

be investing more. And you're doing a great job, because this is very, very comforting.

a human that is not inherently emotional? And also, I guess we're thinking what if this time it doesn't come back exactly because we are, if not anything super dramatic, ourselves like unfortunately, the market when it comes to investing might be very logical, but people are deeply emotional and at a very primal level, we are hunter gatherers and we are anxious about these things, and we want to stockpile our resources to make sure we don't have a

time where we don't have enough. Makes sense, And then overlaying our money story. If you've been through you know, financial hardship that is going to hit even harder. We are emotional like, and that is okay, But our brains they're not built for the share market. Our brains are built in a very linear way, and the share market works in a very compounding way. And that is actually I'm not saying the concept is hard to comprehend, but actually making that happen is very hard for our brains

to wrap it around. Like, at the end of the day, we are wired for survival. So when we see our investments drop, our brain just goes threat. That is a threat that is very scary, and we go into fight or flight. It's just going to happen the same way that if you heard like a smoke alarm or something go off at two am. It kicks off a fear response that tell us to do something, do anything, beck, do anything you need to stop the perceived loss. I don't want my house burning down. Like that is exactly

what is happening. And because of something called loss aversion, psychologists have actually found that a loss feels twice as painful as anything good we gained. Huh, how annoying that sucks. So a ten percent drop to your portfolio feels much more dramatic than if you've got a ten percent game. If you got a ten percent game, you're like, yeah, cool, you got a ten percent loss. You're like, what the heck, I didn't sign up for this?

Live love, laugh, Like that is going to work for me. It's actually your brain trying to protect you. And that's so nice. That's thanks your brain. Yeah, turn off. Yes, that's cute, but you can chill out. Yeah, just stop, just stop. You are being overprotective right now, and that often leads to the exact kind of decisions that hurt

your long term performance. One out of ten, don't do that to me, Like we need to be able to reframe it and be like, thanks for you actually being a little bit overbearing right now, and I don't align with that as an investor.

percent on average? Like okay, cool, So if we had a return of four percent or nine and a half percent, which is better. Oh, that's a good way to look at where are you putting your money? Ah in the share market?

thing we're going to do. You're not going to be surprised here, baby, when in down zoom out, Yeah, long term charts show that recovery is normal and today's drop is just it's just one part of the story. There's a whole other story. Zoom out, baby, yep, stop refreshing. Maybe let's not check our portfolio every single day that's maybe just a reminder for me, not necessarily for everybody else. But if you're doing what I'm doing, cut it out.

It is not helpful unless you're logging in to invest more. We don't need to be checking our portfolio consistently because you know what that does, fuels anxiety. We don't need that in our lives. We're going to stick to the plan. So you know how I hop on and on about having an investment strategy and having a plan. This is why, because we need to stick to that plan right now to make sure that future us isn't impacted. So we're

going to remind ourselves of our goals. If you're investing for the future, you're not investing for this weekend and be so don't let short term fear change the strategy that you've set up for future success. And then, honestly, paper losses aren't real. Like this is probably silly but makes sense to me. You log into your investing app and it says you've lost money. You haven't lost money. Yeah, you actually haven't lost a bloody thing, just numbers on

a screen. You still have the same amount of shares, right, did you lose any shares? Right? Did you lose actually any assets? No? No, But what does that number say? That number says that if you sold your assets today and you still have those same ten assets that you

had yesterday, they're just going to pay you less. Like if I came to you and beck you owned a house and you said my house is worth five hundred thousand dollars, and I knock on your door and say, hey, beck On to buy your house and you go, great, I'm on the market anyway, I go four hundred thousand dollars. What are you going to do? I want to say, no, no, it's worth more. That's me. Yeah, that's nasty. You are undervaluing me. I'm not accepting that loss. So I'm not

going to be accepting that. Thank you. I'm going to wait for a better buyer. That is such a good way to I'm going to wait for someone else, and I'm going to wait until they're confident that this is as sexy a our set as I think it is. I'm going to wait for my five hundred thousand dollars value. Right, such a great paper. Losses are not real. You only lose money if you sell your assets and then lock in those losses. Which to be a little bit fancy.

In investment world, that's called crystallizing a loss. So if we crystallize a loss, we've accepted less for something that is worth more. Yeah, okay, that's not that she's on the money vibe. No, that's not how we ask spirit. So that's exactly why I literally say, don't invest money that you're going to need in the next couple of years, because you know, if you're like, well, be I need it, well, you're going to have to accept some losses to get

that money back. Yeah, that's not the life we want to live, which is why we always have to have an emergency fund to access some cash. So we're never

selling our portfolio at a less than good time. So yes, for example, if you're like thinking of investing your house deposit, which a lot of people in our community are, like, I'm saving up for my first home, you're thinking, oh my gosh, I'm just gonna pop it in the share market because love me some sexy returns and I'm going to try and get a little bit of a boost that could backfire. Like imagine if you've done that at

the start of this year. Yeah, and then you're planning on buying in like June, Are you pulling your money out now at a loss? Like unless you're planning on riding the wave and you're like very happy to go, Okay, well the market's down, I'm going to put off buying for another year. Yeah, Like I would never be investing that amount of money because investing only works when you give it time. It's a long term game, not a quick term win. Yeah, that's a great I could harp

on and on about that. I mean, I'm happy to listen, but I do you want to buckle in?

no major company specific drama in the headlines. So remember when After Pay was going through all of that, like it was all in the media, made sense that it might be down. The business still seems strong overall, So if they still have like solid leadership or decent revenue or product people are still using, it's probably just part

of the dip. Or if it has a history of bouncing back from past volatility, I would say that it's just part of the dip, but it might be more dramatic or like something that's maybe not a good investment, if it's like falling real hard when the rest of the market is not falling, or if there's like lots of media about it and every man in his dog has an opinion on them, like there's profit warnings or there's a big scandal, or like the executives are walking out,

or it's part of a trend, so like maybe it's been sliding for a little while and this is just speeding it up, or it was driven more by hype than fundamentals. So we see this a lot in bitcoin and cryptocurrencies, where people got so excited and bought heaps of it, but it wasn't actually a valuable asset. It was just more expensive because of the hype around it.

And now people have gotten board of it and they're like, oh, this isn't actually all it piped out to be, right, So that's probably what I would be thinking.

made up of ETFs. When you invest in an ETF, and this isn't a recommendation, this is just like my investment strategy. You're essentially buying like a tiny slice of a really big basket of companies and assets. And behind that basket is a team of very intelligent professionals who

are watching it like hawks. And I kind of like the idea of that, because I used to be someone who had a maximum of I think at one point I had twelve different individual shares and I was checking that every week and revaluing things and rebalancing and you know, making lots of changes and tweaks and having to deep dive on every single individual company. I just don't have time for that. Like, the performance on an ETF was literally comparable, if not better, and I was like, I'm

just trying to be a fancy here. I'm going to go back to ETFs. I still play with individual shares because I love the idea of a company that I believe in, and like, I do want a deep dive into your annual reports. I do want to read your CEO report, like, but more on an interest level than my future wealth is dependent on this level so I think you know, at the end of the day, if a stock within an ETF starts slipping, somebody else is

like checking in on it. And if it's not part of a wider dip, a fund manager is literally going to go in and evaluate if that share needs to get kicked out of your portfolio or not. And they're going to do it for you. You don't have to lift a finger. And I like, if you buy an ETF and then it has a crappy share in it, they're going to get rid of it beck and replace it with something that does perform. And I love that for me. Yeah, okay, So I like having a team

of money nerds doing the work for you. Yeah, that's really sweet. And even this money nerd has that in place. Well, every money nerd needs the money nerd exactly, so I don't have to obsess over every company in my atmory, that's not your responsibility. If you're buying an ETF, it is no longer your responsibility, And like that's the whole point. You're not expected to be a stock picker at that point.

You're leveraging the expertise of these fund managers who are working like dogs behind the scene because they always, like fund managers are inherently competitive. I've never met a fund manager who is not deeply in competition with every single other fund manager on LinkedIn. Yeah, like they want to be the best fund manager ever, So they're always looking at other ETFs and trying to outperform those and looking at what their strategy like their nerds. I love it. Yeah,

I don't have the capacity for that. Taking my money, please manage it. It's like having a team of money nerds who are like doing the work for you. And of course I think it's always good to understand what you're investing in. But the beauty of ETFs is that they can help you stay diversified and take some pressure off managing every single detail yourself. God, that's good. I want to go out for my oatla Tebek. Yeah, for sure.

getting a little bit loud. We all get anxious. We are deeply emotional as human beings, and you know what, that can be a value, just not when it comes to our share PORTFOLIOO. And if this episode Beck has helped you feel a little bit calmer about everything that's going on, I want you to send it to a friend who's currently freaking out about their portfolio right now. And you know what, every single one of us who is employed in Australia has a superannuation fund. You all

have portfolios. You all need to be caring about that, and we need a friend to tell us don't hit the panic button, girlfriend, do not change your risk profile just because you're worried. Yes, anyway, I'm done here.

obtain appropriate financial advice tailored towards your needs. Victoria Divine and She's on the Money are authorized representatives of Money Shoper Pty Ltd ABN three two one six four nine two seven seven zero eight AFSL four five one two eight nine