Newsletter October 2026

Your Financial Guardians

Important information and general advice disclaimer 

The information contained in this material is general in nature and has been prepared for educational and informational purposes only. It does not take into account your personal objectives, financial situation or needs and should not be regarded as personal financial advice. 

Before making any financial or investment decision, you should consider whether the information is appropriate to your circumstances and, where appropriate, seek professional financial advice. Where a financial product is referred to, you should consider the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD), where applicable, before making a decision. 

While reasonable care has been taken in preparing this material, information may change over time. Any taxation, superannuation, Centrelink or other legislative information is based on our understanding of the relevant rules at the time of publication and may be subject to change. 

Tony Regan is an Authorised Representative (No. 243492) of Professional Investment Services pty ltd, Australian Financial Services License No. 234951.

Volatility is the Price of Your Ticket to the Game of Growing Wealth, But the Long-Term Trend is Clear.

Staying the Course when the Going Gerts Rough

This month’s newsletter draws on a 2024 article by Katana Asset Management. Its message remains timely and highlights several enduring investment principles.

Investing in shares and other growth assets has always involved volatility. At times, market falls can feel gut-wrenching and frightening. Yet over the long term, growth assets have historically helped investors build wealth and keep pace with inflation—something defensive assets such as cash and fixed interest have not consistently achieved.

Short-term market movements are impossible to predict, but the long-term pattern is clearer. Markets have good years and bad years. While past performance does not guarantee future returns, the dominant trend over time has been upward. That perspective can be difficult to maintain during a downturn, when uncertainty feels most acute.

Katana Asset Management’s series covering 1876–2024 spans 149 calendar years. Dividends plus capital growth were positive in 119 years and negative in 30. In other words, the market rose in 79.9% of calendar years and declined in roughly one year in five.

Source: Katana Asset Management

In the same series, positive years averaged 16.0%, negative years averaged −10.1%, and the arithmetic average across all 149 calendar-year returns was 10.8%. These are nominal total returns before inflation, tax, fees and transaction costs.

Katana also reports an arithmetic average annual return of 13.0% for the 45 calendar years from 1980 to 2024—the accumulation-index era. That period included the 1987 crash, the Asian Financial Crisis, the global financial crisis and the rapid COVID-19 sell-off.

Important data note: the official All Ordinaries and accumulation indices began in 1980. Returns before then are reconstructed from predecessor market series and methodologies vary between sources, so the pre-1980 figures and rolling-period results should be described as Katana’s historical series rather than as independently verified official ASX index data.

Volatility is the price of long-term participation

Year to year, markets can be volatile. That volatility is uncomfortable, but it is also part of investing for long-term growth.

The distribution below may look familiar. Its most important message is easy to overlook:

Sharp falls are not unusual surprises that can simply be predicted away. They are risks investors should expect, prepare for and accept as part of long-term investing.

Source: Katana Asset Management

Market falls are inevitable, but a sound plan can help you avoid making a permanent decision in response to a temporary decline.

The 2008 calendar year was the only year in Katana’s 149-year series to 2024 when the Australian share market’s total return fell by 30% or more. Selling in panic would have locked in those losses and missed the recovery. The market gained 39.6% in 2009 and rose in 12 of the 16 calendar years from 2009 through 2024, including gains of 18.8% in 2012, 19.7% in 2013 and 24.1% in 2019. Investors who moved to defensive assets during the GFC risked turning a temporary market loss into a permanent one.

In roughly one year in five, investors may question why they entered the market at all.

Knowing your tolerance for loss—and understanding how markets have recovered in the past—can make those periods easier to navigate.

Time in the market changes the odds

Rolling returns show how outcomes changed as the investment horizon lengthened. A rolling five-year return measures the cumulative total return for each successive five-calendar-year period, rather than relying on a single start date. This is why, at your annual review, we examine rolling returns over one, three, five and ten years.

This provides a clearer picture of whether your portfolio is tracking towards your goals.

Portfolio decisions can then be based on objective data rather than subjective, emotional reactions to short-term bad news.

The pattern is striking:

Historically, longer holding periods have reduced the likelihood of a negative outcome.

Source: Katana Asset Management

Across Katana’s 145 rolling five-year periods, the average cumulative total return was 64.9%, with seven negative outcomes.

Across the rolling seven-year periods, the average cumulative total return was 100.4%, with two negative outcomes.

Across the rolling eight-year periods, the average cumulative total return was 120.0%. In Katana’s historical series, there were no negative eight-year outcomes once dividends and capital growth were combined. History cannot guarantee the future, but it shows why patience and a sufficiently long time horizon matter.

The power of compounding—and a small extra return

Source: Katana Asset Management

This table highlights an important lesson:

Time is powerful—and even a modest improvement in annual returns can make a meaningful difference.

At an assumed constant annual return of 10.8%, reinvested each year, one dollar would grow by about 179% over 10 years—the equivalent of roughly 17 separate one-year gains of 10.8%. Over 20 years, the cumulative gain would be about 678%, or roughly 63 such one-year gains. These are mathematical illustrations, not forecasts.

The practical message

No one can control when markets fall, but you can control how you prepare and respond:

·       Choose an appropriate time horizon, understand your capacity for loss, remain diversified and avoid impulsive decisions when markets are under pressure.

·       As your adviser, we have built these principles into a plan designed to be both financially sound and personally sustainable for you.

Past performance is not a guarantee of future performance. Sharemarket returns can be volatile, particularly over shorter periods.