Misery Loves Company

“Mis­ery loves com­pa­ny, so in light of the lat­est Bit­coin dump and our return to the 50% draw­down mark, I thought I’d reach out to the oth­er suf­fer­ers.” That’s from a post this week by Andrew Page, CEO of Straw­man (who was our guest on QAV #355). He want­ed to “pour one out for the poor fools among us hold­ing stuff well below recent lev­els.”

His list: WiseTech down 75%. Pro Medicus down 45%. ARB down 54%. CSL down 58%. Xero down 63%. Cochlear down 60%. Cat­a­pult down 50%. Even gold is down 25% from its peak.

Andrew’s point, fair enough, is that these aren’t meme stocks or joke coins. They’re good com­pa­nies. Real earn­ings, real prod­ucts, real mar­ket lead­ers. And he’s not wrong about that.

What makes the list sting more is the tim­ing. This isn’t a crash. The index as a whole is still up for the year and only around 5% off record highs. So while the mar­ket par­ties on, a grave­yard of blue-chip growth dar­lings is qui­et­ly get­ting car­ried out the back door.

Mean­while, over on our side of the fence, it’s been the best finan­cial year in QAV’s his­to­ry. The mod­el port­fo­lio fin­ished FY26 up 28.95%, against 6.61% for the SPDR 200 accu­mu­la­tion index. Bet­ter than quadru­ple the mar­ket. Every sin­gle one of our four Light port­fo­lios beat the mar­ket too, one of them by almost ten times. The stocks doing the dam­age have names most pun­ters have prob­a­bly nev­er heard of: South­ern Cross Elec­tri­cal up 508%, Genus­Plus up 330%, Duratec up 267%, SHAPE Aus­tralia up 134%, and Kor­vest up 460% since we bought it years ago. Bor­ing, for­get­table, cash-gen­er­at­ing busi­ness­es that most of our own lis­ten­ers could­n’t tell you what they actu­al­ly do.

Two port­fo­lios of ASX-list­ed com­pa­nies. One full of house­hold names hyped up on every invest­ing forum over the last few years. One full of names even we for­get. Guess which one just had its worst year and which one just had its best.

This isn’t real­ly a sto­ry about bad com­pa­nies. It’s the same old sto­ry about price.

When Tony talked through the WiseTech-and-friends list on the show this week, he made the dis­tinc­tion plain­ly: “I don’t dis­agree with his the­sis that they’re good com­pa­nies… but be a lit­tle bit more self-reflec­tive and realise you’re pay­ing way too much for them.” Then the line that’s real­ly the whole arti­cle in a sen­tence: “As it always does, always, every sin­gle time, if you over­pay for some­thing, it comes back to bite you in the end.”

We wrote about this exact mechan­ic back in May with Microsoft. Buy the great­est soft­ware com­pa­ny on Earth in Decem­ber 1999 and you’d have wait­ed sev­en­teen years just to get your mon­ey back, while the busi­ness itself quadru­pled its rev­enue under­neath you the whole time. Same law of grav­i­ty. Dif­fer­ent decade, dif­fer­ent post­code, dif­fer­ent set of tick­ers. WiseTech, Pro Medicus, CSL, Cochlear and the rest are this cycle’s Microsoft: busi­ness­es that did­n’t need to do any­thing wrong to hand their share­hold­ers a hor­ror stretch, because the price already had years of flaw­less per­for­mance baked into it before a sin­gle thing went wrong. A stock priced for per­fec­tion does­n’t need bad news to fall. It just needs nor­mal news.

This is the whole rea­son the QAV check­list puts a hard ceil­ing on what you’re allowed to pay, regard­less of how good the sto­ry is. We don’t care how great the busi­ness is if the price to oper­at­ing cash flow is 20 times. It’s off our list well before that. It means we miss the euphor­ic run-up on the way past. It also means we’re not the ones explain­ing a 60–75% draw­down to our spous­es while the index sits near all-time highs.

Tony made the same point anoth­er way a few min­utes lat­er, talk­ing about our own good year: “I don’t want to get too hubris­tic either, because we’ll have a bad year at some stage, and we’ll be in the same boat. But it’ll be for a dif­fer­ent rea­son.” When QAV has a rough year, it’ll be because the whole mar­ket fell over… Ukraine, the Strait of Hor­muz, what­ev­er the next thing is. It won’t be because we paid 200 times earn­ings for some­thing we were con­vinced was going to take over the world.

Our 2019–2026 per­for­mance table tells the sto­ry about how QAV achieves long-term dou­ble mar­ket per­for­mance. One ter­rif­ic year, fol­lowed by a hand­ful of aver­age years (some a lit­tle above, some a lit­tle below the bench­mark)… and then anoth­er ter­rif­ic year. Rinse and repeat. Stick with the dis­ci­pline of buy­ing good busi­ness­es and obey­ing the sell trig­gers.

Good busi­ness­es can still be bad invest­ments. It has noth­ing to do with the qual­i­ty of the com­pa­ny and every­thing to do with what you hand­ed over for a piece of it. Andrew’s list isn’t a list of bad com­pa­nies hav­ing a bad run. It’s a list of good com­pa­nies that got bought at prices that assumed noth­ing would ever go wrong again.

Some­thing always does.

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QAV Myth Killers is a week­ly col­umn in the QAV newslet­ter, tak­ing apart a piece of
invest­ing con­ven­tion­al wis­dom. Read the series, or
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