3 pieces of investing wisdom that need to be chucked out (and 1 that should stay)

This wire critically analyses some of the foundational investment beliefs that experts believe are either misunderstood or simply wrong, and also highlights one that investors should start implementing.

Some are more contentious than others, but the most important takeaway is that investors should rethink the rules they are following.

Just because it is a widely held belief, does that make it true? How did you arrive at your investment philosophy, and have you ever really interrogated it?

Whether you ultimately agree with all or any of the opinions below, hopefully they spur some reflection about the way you invest.

Timing the market beats time in the market

Time in the market beats timing the market is likely the most foundational and widely held investment belief, but Padley says people have got it all wrong.

“The assumption that you don’t trade but that you buy and hold for the long term is terribly wrong,” he says.

“Any website, any article, any commentator, adviser or fund manager that promotes long-term investment should turn a real life investor cold – they clearly don’t understand the job. You can tell who they are from the Buffett quotes and the references to Benjamin Graham.”

Despite the almost ubiquitous nature of the maxim, Padley says it doesn’t hold up because markets are constantly changing and this provides “enormous opportunity”.

“Successful investment requires you to exploit prices by acting and reacting. If you aren’t doing that you have no value. If you have been told this is how to succeed, stop,” he says.

“Investing requires work, not hope and faith. If you have fallen for the industry serving brainwashing about long-term investment being clever and ‘trading’ (investing over any other time periods) being reckless then you need to re-educate yourself – you can time the market.”

It’s a bold claim, but Padley says he can back it up - and has put his money where his mouth is.

“We have been teaching how to time the market since 1998, doing hypothetically in the newsletter since 2018 (20.99% pa return since inception) and in real life with a fund called the MT20 fund since February 2025,” he explains.

“That fund is designed for Australian retirees, contains my own super fund, and it has grown from zero to $155 million since February 2025 (performance chart below). The return since February 2025 is currently 35.9% after all costs.

“That compares to the ASX 200 up 2.9% and the ASX 200 accumulation index up 7.9% over the same period – and those indices have no costs. Our return is net of all costs. We have done that more recently by (for instance) selling in the tariff tantrum (went to 100% cash), buying back on the day of the 90-Day Pause, selling again (went to 100% cash) in October 2025 (Big Tech peak) and buying back in on the war induced lows in March 2026.”

Importantly, he adds, the faith that many have in the long-term performance of the market is effectively just a way to avoid activity - something he argues is “not only stupid, but vastly more dangerous than acting and reacting to market changes”.

“They sell it as being safer. It’s not. It's far more risky for the investor to do nothing all the time than to do something at some times,” Padley says.

“As you can see, being active works. If you think long-term investment is the way, you put yourself in the hands of the market. That cost you 11 years of average returns in the GFC, one of the greatest market opportunities in our lifetimes. As was the COVID collapse (we timed that), the Tariff tantrum and the Middle East war. Disaster in the stock market is not a disaster it’s an opportunity, but not if you do nothing.

“So do yourself a favour, stop listening to people quoting Warren Buffett and start exploiting prices rather than ignoring them. And by the way – Buffett does time investments. Not that you know it from the fools that quote him.”

Equities

“The world has gone mad”: Marcus Padley goes 100% cash

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Volatility is not the biggest risk for investments

Risk is an important factor for many investors, but what exactly does it mean?

Thabojan Rasiah, principal adviser at Rasiah Private Wealth, says the way investors are thinking about risk is too focused on volatility and misses the forest for the trees.

“The reality is firstly, volatility isn't the right measure of investment risk. There are so many other elements to it, including illiquidity risk. But even more than that, the biggest issue is that we focus on investment risk when really, investment risk isn't the most important thing to focus on,” Rasiah says.

“The most important thing to focus on is what is the risk of not achieving what you want from that money or that money not achieving its purpose.”

Portfolios, he explains, are about a lot more than just the investments themselves. What the money is for plays just as big of a role.

“The conventional wisdom is you want to get the highest possible return at the lowest possible risk, we think about things like Sharpe ratios and things like that. You think a good investment is one that delivers a good return,” Rasiah says.

“However, that is not the case because it depends what the money is for. If we don't define the purpose of the money, then we run the risk, pardon the pun, of not assessing the outcomes correctly.

“So for example, if we have superannuation money and you're 30 years old, then your purpose is to make sure that your balance is as high as possible in 30 years time. It's as simple as that.”

In this scenario, volatility simply doesn’t matter because over 30 years, inflation is your biggest risk.

“That's all that matters, you can't touch the money even if you want to. Liquidity, access, none of that's important. It's purely making sure that you're getting the best return possible over that time.”

On the other hand, if you’re a younger investor looking to buy a house in three years’ time, Rasiah says chasing returns is actually the “completely wrong thing to do”.

“The most important thing is that the amount that you've set aside is still there in three years, so return is less important and certainty of your capital is the thing that's most important,” he says.

“Putting your money in the share market to try and get a good return in three years, that's the wrong risk to take, because there's a chance that it might be lower when you need the money.”

Cash is not king

Another misunderstood saying is the classic of “cash is king”, according to Viola Private Wealth adviser Alex Thompson.

Long before it was used to fight back against fees to pay with a credit card at the shops, the phrase extolled the virtues of liquidity in times of turmoil.

“It’s an old business proverb famously said by the former Volvo CEO Pehr Gyllenhammar in the aftermath of the 1987 market crash and has now become a staple saying among modern investors,” Thompson explains.

“I think it’s been poorly interpreted. It is derived from periods of market turmoil when liquidity dries up and forced selling occurs. I cringe when I hear it these days, because the nuance has been lost and I see people use the phrase to justify holding large static cash balances as a default investment position.

“Cash is only king if you know what to do with it when the time comes.”

What is lost on people throwing the phrase around, he says, is that is was never really about cash itself.

“It was about liquidity and creating resilience to provide optionality. Cash is a depreciating asset. Over time, holding excess cash comes with a real cost, after inflation and tax, it typically erodes the purchasing power of the portfolio and drags on long-term returns,” Thompson says.

“Liquidity should always be managed at the portfolio level and it doesn’t come from just cash sitting in a bank account. The issue has become that investors end up holding too much cash for too long, anchored back to this phrase that was never intended to justify the behaviour in the first place.

“When you view 'cash is king' as a reason to hold a heap of cash permanently, it will end up costing you over the long run.”

A better framework for investors is to replace it in their lexicon with “cashflow is king”.

“Cashflow is what actually makes a portfolio functional. It funds lifestyle, supports reinvestment, and reduces reliance on selling assets at the wrong time. In times of market stress, you want to be a provider of liquidity and not a seeker of it,” Thompson says.

“A well-structured portfolio should be designed to generate cashflow consistently, while maintaining enough liquidity to stay flexible and resilient. Within that, cash absolutely still has a role but it should be used more deliberately and specifically, such as dry power for buying opportunities, a short-term funding pool or an emergency buffer, but sized appropriately in the context of the overall asset allocation.

“Outside of that, liquidity should be managed across the portfolio not just from idle cash balances.”

Past performance really isn’t indicative of future performance

Probably most famous as the disclaimer on industry super fund TV ads, the maxim is certainly among the most wide spread and well understood rules for investors.

The only problem? No one actually follows it.

“It's a truism that past performance is not indicative of future performance. However, everybody uses past performance to tell you whether an investment is a good investment or not,” Rasiah says.

“The reason people use performance as an indicator of future performance, even though we know that we shouldn't, is because we don't know how to assess investments properly.

“So because we don't know how to assess investments, we use past performance.”

The reason it holds true, he adds, is that anything less than 20 years when it comes to investing is short term and doesn't carry any statistical significance.

“We use these short-term numbers to determine future performance rather than understanding the underlying drivers of the performance itself,” Rasiah says.

“It should be less about the product, less about the person, it's the underlying strategy that needs to be understood. You could have a product or a person that has changed their strategy over time and that tells you even less about the future.

“if they've been changing it, then they haven't been using the same strategy. Therefore, their past performance has got nothing to do with the future because they keep changing their strategy.”

If you can find a consistent strategy and a consistent process over long periods of time, then and only then can you assess the strategy and the approach.

Instead, he says, investors need to ensure they are sceptical and interrogate the data.

“Data can be manipulated, it doesn't tell the full story. Understand it at a deep level to the point where you can actually draw conclusions from it.

“Don't make such important decisions on something as important as your wealth based on fickle, superficial, short-term marketing.”

It would be interesting to get Padley and Rasiah in the same room to discuss whether their ideas are compatible.