She's On The Money - Trillions Wiped From the Share Market… What’s Actually Going On?

Starting point is 00:00:00 My name is Natasha Bamblett, I'm a proud First Nations woman, and I'm here to acknowledge country. Tii, gilinyan ganya, nianakaka yao yambina waka, nianakai nianbina yakarumja, duminyagumiga dumiga ithawaka nirawamundamun imalan, mumubangaraboma ininyalan waka, gaunonyakarumja, wutunarana. Hello beautiful friends. We gather on the lands of the Aboriginal people. We thank, acknowledge and respect the Aboriginal people's land that we're gathering on today. Take pleasure in all the land and respect all that you see. She's on the Money podcast acknowledges culture, country, community and connections,

Starting point is 00:00:41 bringing you the tools, knowledge and resources for you to thrive. She's on the money. She's on the money. Hello and welcome to She's on the Money, the podcast that's here to show you investing is not just for the rich. it's for you too. If you've opened your phone recently or scrolled literally any news app, you've probably seen headlines like, trillions wiped from the share market. And if you're a normal human, that sounds pretty terrifying. It makes it feel like money is just

Starting point is 00:01:12 literally disappearing overnight. And naturally, people start asking the same question, should I be selling? I'm Bec Syed, and with me is the woman who has seen enough market cycles to know that panic headlines and good investing decisions rarely go hand in hand. Hi, Victoria. Hello. This is really, really, well, topical, of course, but I think it'll be very helpful for a lot of people who are maybe panicking right now. You and I were talking about it off air before, and I just, I feel so proud of your investing

Starting point is 00:01:40 journey because you're just like, oh, no, I know that like if I logged into my Sharesies app and it was down, I just hold on. And I was like, yes, queen, that's what we want to hear. Yes. But before we get into this episode, I want to do a little financial advice disclaimer because I always just get so anxious talking about this stuff. Not anxious because I don't know what I'm talking about, but I'm like, oh, I don't want to get in trouble for like giving financial advice.

Starting point is 00:02:03 So this is not about telling you whether you should buy or sell your shares right now. It's actually about understanding what happens when the market falls and then how investors think in these moments and how that might impact the decisions that you're making. because the reality is if you have a plan to invest for the long term, it will not be the last time the market, quote, drops and is really dramatic. We've got to understand that these are market cycles. And during somebody's lifetime, there's going to be on average seven market drops. Okay. So V, let's start with what everyone is talking about right now. We're seeing headlines saying things like $10 trillion has been wiped from the stock market. So what's actually going

Starting point is 00:02:46 on oh well we've clearly lost all of our money damn it's gone it's gone it went down the bin oh well that's really nice while it lasted well i think that's where we need to i don't know sound like a broken record when in doubt zoom out yes headlines like that are literally designed to grab your attention like can you imagine if headlines were another boring day in the share market nothing dramatic happened i know you're not going to click on the article you're not going to read it. I'd like to see it though. Media's not going to make money. Even you and I, Bec, when we're sitting down and thinking about what are we going to call this episode that people are going to want to consume? How do we name this episode? Obviously, I'm like, okay, well, people are going

Starting point is 00:03:28 to think it's real dramatic if we say $10 trillion wiped out, as opposed to, hello, please come with me and I'll teach you how to understand the emotional rollercoaster that is the share market so it's a grabby headline for good reason but that doesn't mean that it explains exactly what's happening yes and what we're seeing at the moment is a really big mix of a few things that are happening globally trump psychotic yeah like there's a lot going on there and there's been a lot of uncertainty coming out of the u.s we've had ongoing conversations about the interest rates staying higher for longer periods of time and we also know that they got increased recently to 4.1 percent that is making people cack their dacks cack their dacks that's something that maybe it's

Starting point is 00:04:14 a Tasmanian thing I don't know I like it but there's been I would say a lot of political noise political changes policy changes and a lot of uncertainty around trade and government spending and how many times have you seen oil in the media recently yes everyone's talking oil prices oil prices what does this mean well we don't even get all of our oil from the places that are currently impacted beck right so like how much does that actually impact us yes it impacts the economy as a whole but like as a general consumer yeah we don't have the visibility and the backstory to go oh they're being quite dramatic about that or oh that's actually really serious yeah they're right like we don't get that backstory and in their articles they're not gonna give us backstory

Starting point is 00:05:01 I know that doesn't help and it's crazy because it looks identical like actual breaking news that we need to be scared of like sometimes I'll come into the studio and be like Bec did you see this thing in the media and you'll be like is that good or bad and I'll be like all right backstory so and then you'll be like oh that's trash V and I'll be like exactly exactly like exactly but I think it's the general consumer why would you know anyway the thing that I'm getting to here is that markets, share markets in particular, hate uncertainty. It gets real anxious. The share market is also just a girl. So what happens is investors are going to start reassessing what companies are worth. They get a bit anxious and they're like, oh, I don't know if you're as good

Starting point is 00:05:42 as you say you are. You're not that girl right now. And that then leads to the prices moving because the share market, as much as it's built on all of the formulas and the ratios that I've taught you it's actually also really built on emotion unfortunately humans are emotional creatures and even if the math maths if you get a vibe and the vibes are off you're not going to put your money in are you no totally so there's like a very big human element to this as well got you got you got you just really quickly is oil the same as petrol yeah oil is petrol oil why do i call it oil well crude i could i could do a whole podcast on this for you but crude oil is the thing that we mine and then crude oil gets broken into lots of different things so it gets

Starting point is 00:06:29 broken into petroleum it gets broken into gas it gets broken into like a whole heap of things do you know even like bitumen comes from crude oil yeah so so when we're talking about oil yeah it's not just going to impact fuel prices got you it's going to impact lots of different prices of lots of different things in the economy even beauty products but because you're a general consumer mainly the biggest oil product that you would purchase back is petrol that you put in your car totally crude oil makes petrol and diesel got you yeah oh my god so it gets broken down you're so smart i don't know how you know that because i'm a psycho i have adhd and like i can't not know things if someone says what's crude oil i'd be like well obviously i've done a 3am google of

Starting point is 00:07:12 that and did you know that they they like store it in really big silos and like that's how it separates. So they put the crude oil into a big silo and then it separates at different levels because it's all different densities. And then it gets siphoned off. And then, yeah, I could do a whole podcast on crude oil if you wanted. Yes, please. Crazy how people figure this stuff out. Okay. Back on track. So one thing I do keep seeing in the news at the moment is oil prices going up. And that could be exactly as you say, petrol, et cetera, et cetera. So does that actually impact the share market? Yes, it does.

Starting point is 00:07:47 Yes, I see. It absolutely does. Again, it's the emotional side of things, but also it's a really good example of how global events then flow through to the share market. So when oil prices rise, what it does is it increases the costs for businesses across things like transport and production, which then puts pressure on profits, right? Because if you're spending more money on getting your item to your customer, are you just copying that on the nose or are you passing it on to your customer? Like, am I going to charge Beck more for shipping? Like, or am I going to charge Beck more for the item because it now takes more energy to make that item?

Starting point is 00:08:24 And then what that does is it can push inflation higher, which then impacts interest rate expectations. So when investors see oil prices moving, it can add to the broader uncertainty that is currently in the market because they go, oh, well, if oil prices are increasing, it doesn't mean that your product is more expensive right now. but investors and people who are making bigger decisions and even you and I go hold on if petrol is more expensive surely to you know order that product in Queensland it's going to cost me more to get it to Victoria because the drive's going to be more expensive yeah simplified so I think

Starting point is 00:09:03 that's putting a lot of pressure on the markets at the moment because people are like how are these businesses going to be paying for the oil that they use so when we hear something like $10 trillion wiped out. That's not actually money disappearing. No, it sounds very dramatic, but you're exactly right. It's not money disappearing. It's literally one of the biggest misconceptions. But as I've said before, the media makes a lot of money from their headlines. And instead of saying $10 trillion worth of value that people were willing to pay has been lost, is not as as grippy as 10 trillion dollars worth of cash right yeah so when headlines say the amount that's been quote wiped from the market what they're really talking about is a drop in market

Starting point is 00:09:52 value not physical cash leaving the system sure there was no physical cash in that system at that point in time to actually be lost so for example if our company is trading at a hundred dollars per share and then like the sentiment around it changes and people are then like well v i'm only willing to pay 90 for that the company's value is going to drop yeah but nothing's actually been taken out of your bank account it's just the price that someone's willing to pay has changed so like you could have you know 10 100 shares in your bank account right now beck or in your share trading account and they're worth a thousand dollars and then tomorrow you log in and it's worth 900. You've still got 10 shares. You've still got 10 shares. Yeah. And it's basically saying,

Starting point is 00:10:35 Bec, if you sell today, I'll give you 900 bucks. You're going to go, bad deal. Don't want to do that. I'm going to wait until the market recovers and get my thousand. Yes. Does that make sense? Absolutely. So we need to understand that the market does historically recover. There's never been a point in time where the market hasn't recovered. We just have to ride the rollercoaster. Yes. Okay. In fact, it might be a very good time to start buying cheap shares. Exactly.

Starting point is 00:11:02 They're on sale, Bec. They're on sale. That's a really good way to look at it. They're on sale. Not going to lie, maybe I have been investing a little bit more as the market has been dropping. Maybe. Exactly. So that does feel very different to how it sounds in the headlines.

Starting point is 00:11:18 Absolutely. And I think a really helpful way to also think about this and like another example is property. so like if your house and like in this market this isn't an astronomical number but if your house was worth 1.5 million dollars today and then the market softened and someone came and knocked on your front door and said hey beck nice house give you 1.3 that doesn't mean you've lost 200 grand cash that's just someone giving you a lower ball offer and you can go oh actually beck or actually V, I need the cash. I'll take 1.3. Like I'll just cut my losses. Or you could be like, no, sorry, get off my front door. This house is worth 1.5. I'm not selling for less than that.

Starting point is 00:12:01 It's your choice. You haven't lost anything. The opportunity that's just being put on your table right now, or the offer that's on your table, not what you want. And shares work exactly the same. Okay. So if this is happening right now, is this unusual? No. No, this isn't unusual at all. In fact, I think we're feeling like it's a little bit dramatic because it's maybe one of the first times that a lot of our community has been properly invested in the share market. And obviously that's quite stressful if this is your first market drop. But historically, this has happened so many times. Global financial crisis, the recession, COVID, it happened. All of these things have happened. The market has dropped. It has then recovered. In fact, when it

Starting point is 00:12:45 has dropped and you never know when the like full drop drop is. Like I can't tell you, hey, Bec, today we're at the very, very, very bottom of the market. Like it starts to go down and people start investing. They're the ones that make a lot more money. But it's actually one of the most important things that you understand as an investor. Markets go through periods literally like this all the time. Like I can't stress that enough. And what we're feeling right now, I think it feels really big because it's happening in real time and it's all over the news and social media is so involved in our investing journeys at the moment like not even at the moment just now like historically global financial crisis it was in 2008 2009 wasn't really on social media

Starting point is 00:13:29 and if it was it was the finance bros like you and I weren't feeling stressed about it in the same way because we're like not my circus not my monkeys kind of things like okay typically what happens first is volatility. So volatility is a complex word that literally just means up and down. So if I say, Bec, the market's being volatile, I just mean the market's going up and down at the moment and it's probably doing it. It's a little bit more wavy. Like when the market's a little bit more stagnant, it's just like, oh, the share prices haven't really changed today. But like sometimes when people are starting to feel uncertain, one day it'll drop down and then they go oh no I was just being a little bit stressy and it goes back up and then next day

Starting point is 00:14:12 they're like oh I'm a bit stressy yeah it just starts to be a bit bumpy sure sure and that's what happens first so you'll see the market swinging up and then down quite aggressively as investors they're just trying to process new information that's what's going on that doesn't mean that it's good or bad it just means that people are trying to work out what the hell's going on and then quite often that turns into what we call or finance professionals call a market correction, which usually is a fall of around 10 to 20% of the recent highs. So that's what kind of signals a market correction. And that actually happens more often than people realize. Okay. So is this technically a market crash?

Starting point is 00:14:55 No, but the media would love you to think that it's a market crash because that makes good headlines, right? You're not going to be like, oh yes, it's a market correction. You'll be like, A market what? A market doing not a lot. And there's a very important distinction between a market correction and a market crash. A correction is a very normal function of a normal share market, right? Happens often. A crash is usually tied to something more structural happening in the economy or in

Starting point is 00:15:27 a financial system. So at the moment, this looks much more like markets adjusting to uncertainty rather than something fundamentally breaking. Like nothing's broken, Bec. We're just anxious girlies and the share market is being anxious. Nothing has officially broken yet. But if there is a market crash, something's going to break. A fear of abandonment. Yeah, exactly. And that's what the share market's going through. And if you contextualize it like that, it's not that deep, is it? No. Well, that's exactly right. Okay. So here's where I think people start to panic if they open their investing app and things are down

Starting point is 00:16:05 the instinct is to just pull everything out and go to cash yeah exactly and I feel like that was old Beck old Beck would have been like oh my god this investing thing not worth it no what's new Beck gonna do new Beck is gonna hold but also buy while they're on sale oh you are speaking dirty to me and that instinct to sell though yes it's a human instinct we just cavemen we just want to keep our stuff right like if someone came and was like hey I really like that bear you killed can I have it you'd be like no I want to keep it like I don't want to lose anything like humans inherently don't want to lose their stuff yeah we like stuff and that's where people tend to make I would say bigger investing mistakes because we're like I want to keep my stuff like I'm anxious

Starting point is 00:16:52 because when you sell during a downturn you're effectively locking in loss yeah like if you sell you are getting rid of it because you think I'm going to convert this back to cash and therefore I'll have the cash and I'll be able to like sleep it under my bed and it'll still be there tomorrow yeah because the other thing is feeling really uncertain but that's not benefiting you and then you're going to be faced with a second problem because if you hoard your cash and you sell out when are you getting back into the market yeah when are you going to rebuy those shares when they're back up high again normal price exactly and then what do you have less less you have less do you want less probably not no I don't want less like that seems like a really bad deal and

Starting point is 00:17:36 the tricky part is that markets often recover before things feel better yeah so like there will be a lot of animosity like if we go back to the global financial crisis in 2008 2009 and i often go back to this because it was arguably one of the most dramatic like it was a global financial crash it wasn't just like oh the u.s market crashed it impacted the entire world right and when that happened the market crashed and people were still struggling people were still like working out what's going on people were still like companies were being wrapped up companies were being liquidated like stuff was still happening but the market was increasing so that often happens before you've cleaned up the mess yeah so like it's kind of like spilling

Starting point is 00:18:22 a glass of milk you spill the glass of milk you're like oh my god what is going on but then you like chill out and you just go on and get the paper towel and you know it's going to be better and you're cleaning it up mess is still there it's not finished cleaning up but you're not anxious anymore yeah yeah yeah i see so the market's feeling a little bit better before the mess is gone. Does the market like depend on the people investing in it? Like does it go up and down? Yes. I see. So if people aren't investing because they're anxious, the market's going to go down. Yeah, I see. I see. Exactly. And I guess the tricky part is you just don't know when that's going to happen. So people sit on the sidelines and they're just waiting out for things to feel

Starting point is 00:18:58 safe again. And by the time they do, the market's already moved. Yeah. Okay. Well, I really like the idea that if you have X amount of shares, you sell them because you're panicked and then you go to buy them again, you have less for the same price. Okay. It's a lot to sit on. I think it's a really good time to go to an ad break if you like. And when we come back, we're going to talk about why moments like this, the ones that feel, I would say, the most uncomfortable are often the ones where long-term investors are actually leaning into them and making a lot of money. So don't go anywhere. And we're back. Before the break, we were talking about those trillions wiped headlines, what's actually going on behind them and why everyone suddenly feels

Starting point is 00:19:38 the urge to panic sell. So now let's get into what you should actually be thinking about instead. So V, if people shouldn't be panic selling, what should they actually be thinking about during this time? Oh, getting a snack, putting their feet up, not doing much. Let your hair down. Exactly. Just chill out, babe. No, the biggest shift I think is understanding that market drops and opportunities go hand in hand. Our favorite investor Warren Buffett would say, be greedy when people are fearful and fearful when people are being greedy. And when price is full, you're effectively buying the same assets at a lower price, as you said before. Right. They on sale. Yeah. And if you tell me that stuff is like 20% off at Coles, I'm like, well, maybe I'll

Starting point is 00:20:18 get an extra one because it's 20% off and that's a good deal. And now that doesn't mean trying to perfectly time the market though, because you don't know how long that's going to last. You also don't know if you know today you bought it at 10% off tomorrow it's going to be 12% off and you'll be like oh I wish I'd gotten that. I know. But it could also be the opposite. Yeah. You could buy it at 10% off today and then tomorrow there's no discount because the market's recovered so you just never know and that's why we talk about investing consistently and regularly. So personally and obviously this is not financial advice over the last few months I have been investing a little bit more than usual because I'm like, oh, the market's starting to like cool off. A few of the

Starting point is 00:20:59 ETFs that I hold have been down and I'm kind of like, well, I'll tip a little bit more in this month and then the next month I'm doing the same because I'm like, well, I don't know if it's going to be off this month, next month, the month after that. Maybe it'll recover. Maybe it won't. Who knows what Trump's going to do? Essentially, you need to just understand that you can't time the market. That's really, really difficult. We'd all be so rich if we could though. So when you work it out, let me know. But it does mean recognizing that volatility is a very big part of your long term investing journey. And historically, some of these strongest returns have come from people who have stayed invested when they're feeling a bit uncertain. Even if you're not investing more,

Starting point is 00:21:38 Bec, you're just not pulling your money out. You're letting it do its thing. Yeah. Okay. Trust the process. So it's less about reacting and more about staying consistent. Exactly. And long-term investors, they tend to focus on a few things. So good long-term investors, they focus on the amount of time they have in the market. They know that over a long period of time, the returns are better. Diversification. So not just holding one asset type. They're probably looking at different ETFs or having a really diversified portfolio. Maybe not 30 plus individual shares like Beck, but you do you. And then they are focusing on consistency. so they're not dumping all of their money in on one day.

Starting point is 00:22:22 They're going, I'm going to create a consistent investment plan and I'm going to invest every month or every quarter or every period of time that works for me because over the long term, markets have historically trended upwards and even though their path is not very smooth, that's the whole journey. Like it might look like this, but when we zoom out, it looks like this.

Starting point is 00:22:46 Yes. Right? And it's not that little distortion. be on. Well, it is about the destination. It is about the destination. But also you've just got to hold on during the journey. You can't like get to the pit stop and then like get out of the car and be like, well, guess I'm done because I'm not at Queensland yet. Okay. So I feel like this is also where like mindset comes in. Absolutely. And because investing, it's not just about the numbers. It's about behavior and it's about emotion and the biggest risk to investors.

Starting point is 00:23:12 It was never the market. It was you, baby. The call is coming from inside the house. It is how you personally respond to seeing what the market's doing. Like it's you. You're going to be your own biggest enemy in this situation. Periods like this are going to test your ability to keep calm and carry on and just stick to your strategy. Because I'm telling you right now, nobody likes logging into their share portfolio and being like, oh, that's down.

Starting point is 00:23:42 Oh, I feel sick. I'm going to get rid of it. You've got to go, okay, that's down. not nice why oh i understand a little bit more because it's x y and z i'm just gonna maybe not look at my share portfolio tomorrow absolutely don't even look at it don't look at it also it's a really useful life skill to practice staying calm in situations like this i haven't mastered it yet no no me either i love i love a panic absolutely like i am so dramatic yeah and you You know what? Even me, I would say, Bec, I'm a pretty good investor. I look at my portfolio,

Starting point is 00:24:18 I'll log in and it will be down and I'll be like, excuse me? Like, what? She's crying, tears are running down her face. I know. But she knows what's going on. I do, but I have to remind myself because I'm like, ew, what? No. And like the other day, one of my favorite ETFs was off and like I logged in probably like 11pm just to like check what's going on the market's not even open then back like you can't you can trade technically it'll trade the next morning but like I was looking at it and I was like oh my god what if my ETF is

Starting point is 00:24:49 is off and like this is a really big like it's a vanguard ETF thinking oh my god and like you know when it's like late and you're just tired and you're totally how embarrassing like I'm Victoria I'm meant to be good at investing is this not a good ETF and then I'm like pull your head in I think it's so comforting. I was like questioning myself and then I'm like, I'm so dumb and like clicked on the five-year return. So I'm like, yeah, she's doing good. She's doing good.

Starting point is 00:25:15 She's doing good. She's doing good. But right now, what are you doing? Yeah, seriously. Stop it. She'll come back. She's being a naughty child. I know.

Starting point is 00:25:25 I think especially for like I guess women around finance in general, like maybe it doesn't feel like a safe space, but there's already like this hesitation around investing. yeah I think that that can certainly play into it a little bit whether we're like conscious of it or not exactly and I feel like it's never been a space for us but guys Beck and I are here it's for you yeah it's like we're here we're doing it join the conversation exactly exactly you might feel like an imposter in this space and be like this isn't for me it's for you it's for everyone how hard can it be men do it exactly everything's made up at the end of the day isn't it exactly like

Starting point is 00:25:57 how hard can it be yeah exactly and I think that's a very important point because women are often more cautious investors, which makes us a little bit angsty, but also it makes us better investors because we make more well-rounded decisions and it can actually be a strength. It also means that headlines like $10 trillion wiped from the share market can push people to going, oh, that feels not very good. I'm just going to sit and have cash in my account, maybe investing's for me, but not right now. And then you miss out on long-term growth. So understanding what's actually happening is going to be really important for your financial literacy, for your education, but also to help you make decisions from a place of confidence

Starting point is 00:26:47 rather than fear. Yeah. Okay. I think that's a really helpful way to look at it. And I also think that's probably the biggest takeaway that I want people to have from today. And that's when you see headlines about millions or billions or trillions being wiped from something, like it doesn't mean that your money's disappearing. It just means that the prices have moved. It could be an opportunity. And while that arguably feels very uncomfortable in the short term, it's also a very completely normal part of how share markets work. So don't panic is basically the long and short. Keep calm and carry on.

Starting point is 00:27:21 Absolutely. Put that in your kitchen. Put that in your kitchen. Don't put it in your kitchen. Put it in the kitchen, put it in the hallway, put it on the front door. I just feel like that's a sign of terrible interior design. Like, absolutely not. Like, that's the first thing that you see.

Starting point is 00:27:36 You're like, okay, this isn't going to be pretty. Yeah, you're like, oh, so, yeah, that's beautiful, honey. But keep calm, carry on, zoom out, stay focused on your long-term goals and try not to let the short-term noise derail your strategy because investing is not about avoiding every dip. It's about just kind of like driving through the rain. You know it's not that good. You feel a little bit out of control, but you're still on the way to your destination

Starting point is 00:28:01 because we've got a good GPS. It's about staying invested for the long term, and then you'll benefit from that recovery. That's it. I love that. Learn how to surf. Exactly. Exactly. And if you want more investing content, we have a full investing hub on the She's On

Starting point is 00:28:16 The Money website with free resources and then courses and tools. we even have a whole podcast playlist of all of our investing episodes to help you feel more confident and don't forget to subscribe so you never miss an episode and we'll be back again on friday see you guys bye guys the advice shared on she's on the money is general in nature and does not consider your individual circumstances she's on the money exists purely for educational purposes and should not be relied upon to make an investment or financial decision if you do choose to buy a financial product read the pds tmd and obtain appropriate financial advice tailored towards your needs victoria divine and she's on the money are authorized representatives of money

Starting point is 00:29:01 sherpa pty ltd abn 321-649-27708 afsl 451-289 I'll see you next time.

She's On The Money - Trillions Wiped From the Share Market… What’s Actually Going On?

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