Carry It Like Makybe

The race that ‘stops a nation’.

Today, maybe we’re the nation that stops itself?

Musings aside…

By now, the punts are tallied and someone at work has pocketed the sweep.

The bets have been paid out (or not), and the pint glasses are stacking up on sticky pub tables.

Maybe somewhere at Flemington, a punter in a lopsided fascinator (silly hat) is telling anyone who’ll listen how close she came.

Perhaps, though, you might be on to a more serious game.

A quick furtive glance at the portfolio and the market today…see how bad it is.

So I have to ask, especially if you’re in Victoria…

What on Earth are you doing reading an investment newsletter right now?

Oh, that’s right.

If the bookies/money market got it right, the cash rate rose to 4.85% today.

That would make it five hikes this year and the highest cash rate since 2008.

If they got it wrong, well, it’s just a brief reprieve.

For mortgage holders, it’s either grim now, or certainly more grim later.

It lands on top of a petrol bill that already wounds your wallet every time you fill up.

Canberra’s handicap

I’m not much of a horse betting type.

(The Broome Cup as a child was a highlight though.)

But I do love history and learning new things.

So I did some digging into how today’s race works, and casual racegoers often forget this one fact.

The Melbourne Cup is a handicap, where the best performers get loaded with extra weight to even up the field.

Even savvy Australian investors might feel the same as the poor steeds right now.

Rates have gone up four times this year, possibly five, and that’s only half the load.

And if your investments perform strongly, the taxman could soon take a bigger slice.

Canberra is the handicapper.

Every few months, it seems to find a bit more lead for the saddlebags of anyone trying to get ahead.

It’s enough to make you tear up your ticket and head for the car park.

Please don’t.

So for the race history buffs, here’s one…

There was once an indefatigable mare, Makybe Diva, that won her third Melbourne Cup in 2005 lugging 58 kilos.

She remains the only horse in the past 35 years to win the race carrying that much.

Through sheer willpower despite the extra burden.

So here’s the good news.

There has never been a better time to become a more informed punter in the market.

Stressed markets also throw up mispriced opportunities.

As I wrote yesterday, miners have been dumped even while copper trades near record highs and uranium contract prices push further upwards.

Building wealth against these odds takes a tougher mindset than it did five years ago.

It means doing your own homework and having the stomach to back certain companies while the crowd runs scared.

It also means sizing your bets so one bad race can’t send you broke.

Patience matters too, because being early on a good idea can feel a lot like being wrong, right up until it pays out.

The Cup is done for another year.

The race to build real wealth runs a lot longer, and, in my experience, the persistent tend to win it.

Tomorrow, you’ll hear more about what you can do with your investments in the wake of the latest rate decision.