I was recently fossicking through the archives and tripped over a piece I wrote back in 2018. It was a time when everyone was convinced the market was about to fall off a cliff; the indices had nearly doubled since the GFC lows and tech valuations were being described as “nose-bleed” by the pundits.
With the market again at record highs in 2026, and many stocks trading at higher than average multiples, the vibe feels more than a little familiar.
Of course, the bears of 2018 look somewhat foolish today given what the market has since done. It’s not because the journey was smooth sailing for investors between then and now. With a global pandemic, a couple of major conflicts, and anaemic economic growth in much of the West, it was anything but! It’s just that past market worries almost always look silly with a bit of distance.
The reality is that the market has always climbed a wall of worry. That does not mean you should hand-wave away any perceived risks, but it pays to keep in mind that even if things do take a turn for the worse, the pain you anticipate will very likely look quaint in the fullness of time.
And if there really is some near-term reckoning afoot, it pays to remember Morgan Housel’s observation that all past market crashes look like opportunities, while all future market crashes look like risks. Or, indeed, Charlie Munger’s wisdom that the big money is not in the buying and the selling, but in the waiting.
I also think it is important to separate “the market” from individual stocks. Even the most brutal bear markets provide opportunities, and plenty of people still manage to lose their shirt when the bulls are in full flight.
Whatever might be next in store for the ASX, there are some eternal truths that bear repeating. These will go a long way to ensuring you stay the course, whether or not the index hits some turbulence.
First, a company’s ability to survive a set-back is something you should consider in all parts of the cycle. Resilience is a feature we tend to ignore in the good times and then overthink in the bad. But it’s something that is always important if you hope to avoid the permanent loss of capital that no degree of stoicism and patience can protect you from. Any business with a healthy balance sheet and somewhat dependable cash flows deserves a premium over others that cannot boast the same.
Next, an eye to value will help you avoid the worst of any hiccups. That does not mean only buying low P/E stocks, but rather ensuring the market price is sensible relative to a conservative view of the company’s future growth. Howard Marks really was on the money when he said it is not what you buy; it is what you pay for it.
There is also the ever-important aspect of intellectual humility. Remember, there is no one easier to fool than yourself. Do your best to remain grounded and be honest with yourself in terms of what you can and cannot have confidence in. Be it in investing or life, keeping your ego in check is always a good thing.
Finally, remember that you do not have to be all-in or all-out. Investing is not a binary choice. If the current heights make you feel uneasy, there is no shame in taking a little off the table. Having a bit of dry powder is what enables you to turn a market crash from a tragedy into an opportunity. Just don’t try and get to cute with things, as there’s a good chance your clairvoyance won’t seem so sharp in hindsight.
The markets will do what they do. We cannot control the macro-economic winds, but we can control how we set our sails. It may be somewhat cliched, but if you simply focus on the quality of the businesses you own, and the price you pay for them, the rest is pretty much just noise.
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