Page 2 - FWP Wealth-Adviser-Issue-120 (FWP)

ISSUE 120
SEPTEMBER 2025

dislocation. IGCC’s “Road to Resilience” highlights that reserves and demonstrated that “doing nothing” is an active
“a resilient investment approach considers systemic decision when the environment isn’t right. This concept—
risks—climate, economic, social—and adapts over the patience as a form of action—is reflected in financial edu-
long haul, not just reacting to short-term turbulence”. For cation across Australia: “Building wealth is no longer just
Australians—who may not have lived through such extended about ensuring a comfortable retirement...understanding
market malaise—the lesson is that resilience is not just about how to build wealth effectively is essential for long-term
surviving, but actively preparing to seize opportunity when financial security and freedom”. The recommendation is
the tide eventually turns.igcc often to “automate savings, avoid panic buying in down-
turns, and wait for opportunities aligned with long-term
Lesson One: Quality First, Process Always goals”.scionprivatewealth+1
Warren Buffett’s discipline during the dot-com bust Buffett’s patience is never passive; it rests on constant
is legendary. Rather than respond to falling prices with preparation. He studies markets, businesses, and macro
indiscriminate buying, Buffett insisted on strict standards: risks so that when opportunity presents itself, action is
“Despite three years of falling prices, which have significant- swift, confident, and calculated. This view is echoed in the
ly improved the attractiveness of common stocks, we still Australian practice of regularly reviewing financial plans,
find very few that even mildly interest us. That dismal fact rebalancing as necessary, and building buffers for both
is testimony to the insanity of valuations reached during market and personal setbacks: “Financial resilience isn’t just
The Great Bubble”. This commitment reflects the essence of about enduring losses, it’s about positioning for recovery
value investing as taught by Benjamin Graham—scrutinising and growth”.financialmappers+1
each company for true intrinsic value, favouring those with Moreover, Buffett’s approach confronts the behavioral
robust fundamentals, and standing by the rule: “Price is challenge of boredom. Many investors feel compelled to
what you pay, value is what you get”.investopedia+2 act, fearing that inactivity means missed opportunity. Yet
Australian guidance further elaborates on these princi- Buffett, and the Australian advisers who follow in his foot-
ples. Specialist wealth-building strategies for professionals steps, know that “sometimes building a bigger cash position
stress the need for “tailored asset selection, careful due and waiting for truly exceptional opportunities still counts
diligence, and process-driven decision making to shield as ‘doing something’ for future me”.morningstar
portfolios from emotional reactions during periods of
volatility”. Scion Private Wealth recommends “building a Lesson Three: Diversification, Resilience,
diversified investment portfolio of high-quality assets suited and the Broader Investment Universe
to your goals and risk profile while avoiding trend chasing”. Buffett’s activity in bear markets reminds us that wealth
Drawing on Buffett’s rule—“Never lose money. Never forget management extends beyond listed shares. During lean
rule one”—the combined wisdom is clear: prioritise quality, years, he pursued private companies, corporate debt,
ignore the daily swings, and focus on a robust process for and later, groundbreaking investments such as the Apple
long-term results.investing+3 position. This multidimensional strategy is summed up in:
Buffett’s approach is highly selective. He studies return “He is a CEO and allocator of capital—a role that sometimes
on equity (ROE), low debt-to-equity ratios, and seeks “eco- happens to involve stock market purchases”. His pragmatic
nomic moats”—sustainable competitive advantages such flexibility—adjusting allocations when public markets
as brand, distribution, or technological leadership. As one aren’t attractive—ensures resilience regardless of external
Australian adviser puts it, “There’s no shortcut: real, lasting events.investopedia+3
wealth is built asset by asset, with discipline and careful Australian frameworks urge investors to build resilience
evaluation at each turn”.pearler+2 through disciplined diversification: “Spread your invest-
ments across shares, property, fixed income, and alterna-
Lesson Two: The Power of Patience tives...optimise superannuation, consider managed funds
—Sitting on Cash and Waiting for True Value and ETFs for cost and access benefits, and regularly review
Perhaps Buffett’s most counterintuitive lesson is that your allocations in response to changing conditions”.
enduring periods of inaction is a virtue, not a failing. During ETFs provide a familiar solution. “Buffett has advocated
2000–2002, despite a halving of the S&P 500, he noted: using broad-based index funds for most investors—ninety
“We love owning common stocks—if they can be purchased percent in low-cost funds, the remainder in liquid fixed-in-
at attractive prices...unless, however, we see a very high terest,” notes BetaShares, reinforcing the importance of
probability of at least 10% pre-tax returns, we will sit on the simplicity.betashares+2
sidelines”.morningstar Yet true resilience means more than diversification.
Instead of rushing to “buy the dip,” Buffett grew cash The IGCC’s “Road to Resilience” suggests that, particularly

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