Why predicting the future isn't enough
Money Magazine Australia|August 2021
Thanks to the work of Mr Market, big investment themes – such as a travel recovery – are already reflected in prices
STEVE JOHNSON

Like many people, I’m itching to go on an overseas holiday again. I’m writing from a lonely room in locked-down Sydney. My phone keeps tormenting me with “remember this day” notifications. Midnight meals in Milan with my work colleagues. Aperitifs in Cape Town with my wife’s South African family. Once Australians are allowed to travel again, I will be on one of the first planes out of here. And I won’t be alone.

As a fresh-faced uni graduate, I worked on Macquarie Bank’s bid for Sydney Airport. We had a beautiful chart that showed historical airline travel growing at 1.5 times the economic growth rate in almost every country around the world. That relationship has held up nicely in the two decades since, and it’s a fairly safe bet that the trend continues after the world puts Covid-19 behind it. As humans get richer, they travel more.

That’s a bet we are explicitly taking in our Forager Australian Shares Fund. Its investments include three listed tourism stocks that we expect to do well when inbound tourism returns to Australia and New Zealand.

But, unfortunately, successful investing isn’t quite that simple. If all we had to do was identify a fairly obvious theme and invest in it, our lives would be a permanent holiday. Investing is not about what you know. It’s about what you know that others don’t.

Mr Market isn’t stupid

Investing legend Ben Graham introduced Mr. Market to investors in his 1930s classic The Intelligent Investor. His personification of the stock market illustrates how the rational, sensible investor can take advantage of irrational, emotion-driven moves in market prices. Some days Mr. Market is depressed and wants to sell you his stocks at absurdly low prices. On other days he is wildly optimistic and wants to buy your shares for a fortune.

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM MONEY MAGAZINE AUSTRALIAView All

The Reserve Bank lifts interest rates earlier than expected

Property has boomed, thanks to cheap money, but rising inflation in the US means that may change sooner rather than later

5 mins read
Money Magazine Australia
September 2021

Take the bite out of vet bills

Buying cover for your furry friend can cut the cost of pet care and avoid heartache

8 mins read
Money Magazine Australia
September 2021

Staying aware of hidden threats

MONEY TALKS

3 mins read
Money Magazine Australia
September 2021

Spread the love

For a nation hooked on real estate, investment trusts provide valuable diversification and liquidity

7 mins read
Money Magazine Australia
September 2021

Retail's rollercoaster ride

As lockdowns change the way we shop, some surprising winners are emerging from the battle for the consumer dollar

5 mins read
Money Magazine Australia
September 2021

It's a big stretch to get on the housing ladder

Many young adults are living at home for longer or getting parental help so they can buy their first home

6 mins read
Money Magazine Australia
September 2021

7 Steps To Building A $100k Income

The commercial sector is seen as too intimidating by many investors, but you can start a portoflio with $100,000 in cash savings

7 mins read
Money Magazine Australia
September 2021

Prepare For A Green Future

It’s not just the big polluters that will have to change their ways. The carbon-conscious movement is catching up with investors too

8 mins read
Money Magazine Australia
September 2021

9 Tips For Buying And Selling Property

1.The Buyers Agent 2.The Budget 3.Lenders Mortgage Insurance 4.Recurring Payments 5.Joint Ownership 6.Valuations 7.Bridging Loans 8.The Real Estate Agent 9.Auctions

10+ mins read
Money Magazine Australia
September 2021

Key roles in the money game

Within a relationship, we tend to slip into doing tasks that may not match our skills

3 mins read
Money Magazine Australia
August 2021