TMM · Signals & Noise · Episode 141 · 26 June 2026
In Praise of Randomness
Most investors crave predictability. Markets refuse to supply it. This week: superannuation after the tax changes, why randomness is an asset rather than a threat, and the two biases that quietly cost investors the most.
01 · This Week's Signals
War talks drag on, the property party winds down, and the bulls keep buying yesterday
The war negotiations continue
Talks carry on. A managed pause is not the same as a resolution, and nothing is settled yet.
Stocks and short-term thinking
The majority is still bullish, applying yesterday's paradigm to tomorrow's market. Recency bias in plain sight.
Albo's tax changes go through
The changes have passed. The property party is over, even if the celebrations have not noticed.
Inflation, steady
The numbers hold steady. The commentary, less so.
02 · Superannuation
Don't panic
Unlike the property crowd treating the SMSF changes as apocalyptic, we still like superannuation and still consider it a worthwhile investment, especially after the recent tax changes. The real issue is timing of attention: most investors ignore super until they are 50 or older, then panic when they realise they should have been watching at 30. The decisions you make in your 30s tend to show up in your 60s. Four things worth working through:
Check your super
A monthly contribution does not have to be invested the moment it lands. Consider the potential return across the whole market cycle, not just the next statement.
Check your allocation category
Conservative leans on cash and bonds, balanced on local and global stocks, growth on stocks with a growth tilt. At a CAPE of 42, ask which category best serves long-term returns given what compounding rewards, not just time in the market.
Consider your exposure to US stocks
Recent fund performance has leaned heavily on US stocks, and tech in particular. The future is not the past. You may well own some SpaceX already, via your fund manager's allocation.
Consider the impact of a large US decline
US and other markets are strongly correlated. If the US market falls, other markets may fall with it, and the combined effect can mean large losses.
A CAPE of 42 against a long-run average near 17. Booming markets make this feel stable. History says these levels have preceded large losses.
03 · We Like
Randomness
Humans spend a lot of time normalising things. We crave predictability. Take the daily finance pages, rule out every article guessing at future events, and you are left with very little.
Most of us do not really like volatility, at least not the falling parts. We enjoy it on the way up and resent it on the way down. You cannot have one without the other. The more experienced investors understand that volatility can be a friend: if you know what you are doing, fluctuations bring opportunities.
Markets can go up or down, so in one sense investing is simple. It is not complete chaos, even when it feels like it. That is why we like some randomness. If you understand hedging, cash and uncorrelated asset classes, you want randomness, because it is what lets you take advantage of price fluctuations.
US stocks are extremely overvalued right now. Opportunities still exist, and if you know what you are doing, you look at volatility differently. You look at time differently, because you understand mean reversion and momentum. You apply asset allocation to improve returns over time, rather than getting stuck in the present moment. Study randomness and it will improve your results. You will be among the few who benefit from volatility and see the opportunities it provides.
04 · What's Your Edge?
Two biases that quietly cost the most
Charlie Munger once asked: if economics is not behavioural, then what is it. Warren Buffett put it plainly: if you cannot manage your emotions, you cannot manage your money. Behavioural investing took off about 20 years ago as a push back against the theory that everyone is rational. Humans never were rational decision makers, and in many decisions it is not even possible. Two biases matter most.
Recency bias
We are influenced by recent events rather than the bulk of history. Up last week and last month, so probably up this month. There is some truth here, and it is called momentum. We use the 200 day simple moving average as one tool to help avoid large losses. But markets reach turning points, and there history is the better guide than the recent past. A CAPE of 42 alongside booming markets makes everything feel stable. The history of CAPE at 42 says otherwise.
Priming bias
The "I'm primed for outperformance" trap. The financial media primes investors to act, usually with projections and emotive language, and it sells stories rather than numbers. AI will take all your jobs. We are going to put data centres in space. Neither claim stands up to scrutiny, but many investors skip second-level thinking and accept it as truth, partly because they want it to be true. Media companies and individuals have incentives, and the incentive is your attention. Numbers are the solution. Put the biases aside and look at the figures to judge whether any investment is viable.
This newsletter is for informational purposes only and does not constitute financial advice. Total Money Management | AFSL 568642.
