Dear Reader

As we approach the August Bank Holiday weekend, Ireland is preparing to slip into summer’s version of Christmas, when the professional world slows down and many of us finally step away from our desks.

Unplugging rarely comes naturally, but its importance should not be underestimated. Counterintuitively, taking time away from work is essential to sustaining our energy, perspective and productivity. I hope you find time over the coming weeks to properly switch off, recharge and enjoy some well-earned downtime.

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Gardening, Financial "Advice" & Inception

Everything that is now big was once small. A gardener sows seeds; a financial planner sows ideas. Both create the conditions in which something small can take root, grow and eventually bear fruit.

People are naturally wary of what they do not understand, and nobody likes being told what to do without understanding why or what is in it for them. Effective financial advice is therefore not simply an answer or instruction. It makes an idea understandable and relevant, supports it with evidence and gives someone the confidence to act.

This is where financial planning shares something with the movie Inception: an idea takes root, develops over time and gradually influences future decisions. The crucial distinction is that good advice is not manipulation. It is influence through education and coaching, enabling people to make informed choices, taking ownership and responsibility of these choices into the future.

Those rare moments when I hear a client repeat an idea I once introduced, now in their own words, are among the most quietly rewarding parts of the job. It is the moment the advice stops being mine and becomes theirs.

Personal finances left unaddressed remain dormant. Given purpose, time and the right conditions, they can come alive.

Rewiring Your Money Brain

The way a financial decision is framed can completely change how we feel about it. An investment can be described as either “high risk” or “high return potential.” Insurance premiums can be viewed as “money wasted” or as the price paid for protection that, thankfully, was never needed. The facts have not changed, only the frame through which we interpret them.

Financial literacy remains poor, reflecting shortcomings in both the traditional education system and the personal finance industry. Faced with unfamiliar products, complicated language and uncertain outcomes, people naturally play the game that appears to make the most sense to them. If cash feels safe, investment volatility feels like danger. If insurance never pays out, the premiums feel wasted. Yet cash carries inflation risk, volatility is often the price of long-term growth, and unused insurance may mean that life went according to plan.

The distance between our subjective perception and objective reality can help determine our level of personal, financial and professional success or failure. The wider the gap, the greater the likelihood that our decisions will be guided by misunderstanding, emotion or false certainty rather than evidence.

Rewiring our money brains begins by narrowing that gap: moving from avoiding short-term discomfort to managing long-term risk; from seeking certainty to understanding trade-offs; and from asking, “What did this cost me?” to “What purpose did it serve?”

We cannot choose every outcome, but we can improve how accurately we see the decision and better framing often leads to better behaviour.

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Roger Federer & Finding Needles In A Haystack

A new study by Hendrik Bessembinder examined the lifetime performance of 29,081 publicly traded US companies between 1926 and 2025. Collectively, they generated almost $91 trillion of shareholder wealth above the return available from one-month US Treasury bills. Remarkably, all of that net wealth creation came from just 1,082 companies or 3.72% of the market.

Nearly 60% of companies destroyed wealth relative to Treasury bills. The gains produced by the next 37% merely offset those losses. The remaining 3.72% generated the market’s entire net gain.

The narrowness of that margin calls to mind Roger Federer. Across the 1,526 singles matches played during his career, Federer won almost 80% of his matches despite winning only 54% of the individual points. His extraordinary success rested on an advantage of just four percentage points above 50:50.

The similarity is striking. In tennis, a four-percentage-point edge helped make Federer one of the greatest players of all time. In investing, an almost identical proportion of exceptional companies transformed the collective result of the entire US stock market. Neither success required winning everywhere. Federer lost almost every second point, just as a diversified portfolio will inevitably contain ordinary companies and some outright failures. What matters is capturing the relatively small number of decisive winners and remaining in the game long enough for their disproportionate contribution to determine the overall result.

The lesson is not simply to buy great companies. The businesses responsible for most long-term wealth creation are exceptionally difficult to identify before their success becomes obvious. An investor must find them while they are still buried in the haystack, distinguish enduring businesses from fashionable stories, buy them at a price that still permits an attractive return and then hold them through years, sometimes decades, of uncertainty.

That final requirement may be the hardest. Many of history’s greatest wealth creators suffered extraordinary declines along the way. Amazon lost more than 90% of its value following the dot-com bubble, while Apple, Microsoft and Nvidia have each endured falls of 50% or more. Owning a future winner is of little benefit if fear, valuation concerns or a convincing economic narrative persuades an investor to sell before the long-term compounding occurs.

Identifying an exceptional business is therefore only part of the challenge. An investor must also avoid paying an excessive price, tolerate severe volatility, distinguish temporary adversity from permanent deterioration and resist the temptation to take profits simply because a holding has already risen substantially. Each decision must be made in real time, without the clarity that hindsight eventually provides.

Bessembinder’s findings help explain why broad diversification is not merely defensive. It is a practical way of ensuring that a portfolio owns the small number of exceptional companies responsible for a disproportionate share of market wealth creation. A diversified index does not require us to predict which businesses will become the next Apple, Amazon or Nvidia. It allows the winners to emerge, grow and gradually become more influential within the portfolio.

The objective is not to avoid every disappointing company. That is impossible. It is to avoid missing the remarkably small number of companies that ultimately matter most.

Sources: Roger Federer, Dartmouth Commencement Address (2024); Hendrik Bessembinder, “One Hundred Years in the U.S. Stock Markets” (2026).

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Oil, Inflation and the Shock That Wasn’t

The Iranian oil shock of 1978–80 followed the collapse of Iranian production during the revolution and was amplified by strong global demand and precautionary stockpiling. Oil prices more than doubled, feeding an inflationary cycle that was already well established: US inflation eventually approached 15%, forcing the Federal Reserve under Paul Volcker to raise interest rates as high as 19%. Many homeowners now in their 70's will remember paying double-digit mortgage interest rates during the early to mid-1980s.

Today’s US–Iran war initially appeared capable of producing an even larger supply shock. The effective closure of the Strait of Hormuz disrupted a route normally carrying approximately one-fifth of global oil consumption, prompting forecasts of $150–$200 a barrel. Yet those estimates did not materialise.

The world entered the crisis with a two-million-barrel-per-day surplus; China reduced imports and drew on it's substantial reserves; Western countries released emergency stocks; non-Gulf producers increased output; and Saudi Arabia and the UAE redirected some exports through bypass pipelines. Most importantly, higher prices compressed demand, particularly across Asia, before an outright bidding war for scarce oil could develop:

Oil remains an important leading indicator of inflation because it passes rapidly through transport, food, manufacturing and household energy costs. However, unlike in the 1970s, the price spike did not persist long enough to become embedded in wages and wider inflation expectations.

Inflation rose, but not by enough to require a Volcker-style interest-rate response, while the subsequent retreat in oil prices gave central banks greater room to wait. The danger has been deferred rather than eliminated: global reserves are lower, alternative routes have limited capacity, and simultaneous escalation in the Middle East and Russia could deliver a second supply shock from a weaker starting point.

With the US midterm elections only three months away, the price of oil is therefore more than an economic signal. It is also a political constraint as rising petrol prices, inflation and interest rates could quickly translate a distant war into an immediate cost-of-living issue for American voters.

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Woods, the Trees and One Investment Cycle

The annual returns are interesting, highly visible and frequently distracting. Leadership changed repeatedly. In 2018, only 5% of the asset classes shown delivered a positive return; in 2022, just 10% did. By contrast, almost everything rose in 2016, 2017 and 2019. Diversification cannot eliminate difficult years, but it reduces the consequences of repeatedly guessing which asset class will lead next.

The current year offers another reminder that leadership rotates. Commodities lead in 2026 with a return of 34.6%, while US value and small companies have both gained 18.8%.

The cumulative and annualised columns reveal significantly more. The Nasdaq 100 compounded at 18.7% a year, US growth equities at 15.7% and US large caps at 14.1%. US value, small and mid-sized companies returned approximately 10%–11% annually. Developed international equities delivered 6.9%, gold 6.5% and emerging markets 4.0%, while bonds, cash and commodities produced considerably lower returns.

Fifteen years feels like a long time, but in investment terms it may represent little more than a single secular market cycle. The period since 2011 has been unusually favourable to US equities particularly growth and technology but it followed the S&P 500’s “lost decade” from 2000 to 2009, when investors earned virtually nothing over ten years. Much of today's out of favour asset classes outperformed during the 2000's.

The deeper lesson is neither to chase the most recent winner nor abandon an asset class following a disappointing cycle. It is to maintain exposure to the asset classes offering the strongest long-term expected returns, diversify broadly within them and remain invested through inevitable changes in market leadership allowing compounding, rather than prediction, to do the heavy lifting.

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From 15 Years to 50 Years

Context and perspective are essential to securing long-term financial security, freedom and independence. The Dimensional chart below illustrates the growth of €1 invested between 1975 and 2024 across different dimensions of risk and return. Over that period, €1 broadly invested in global equities grew to €146, compared with €307 in global large-value companies and €638 in global small companies. In ending-wealth terms, the broad global index produced less than half the value portfolio’s outcome and less than one-quarter of the small-company outcome.

Those higher returns were not free. Value and smaller companies exposed investors to additional risk, volatility and potentially prolonged periods of underperformance. The lesson is not simply to chase whichever investment performed best historically, but to understand how accepting different forms of risk within a suitably diversified portfolio can increase expected long-term returns.

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Andreas Gebhardt argues that “what feels risky today becomes tomorrow’s safety.” This apparent contradiction is particularly relevant to investing. Holding cash may feel safe because its value does not fluctuate, but over time it introduces quieter risks: inflation, insufficient growth and the likelihood of outliving your savings.

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Financial security does not come from avoiding risk entirely, but from taking appropriate risks while building the capacity to withstand them. Emergency savings, manageable debt, adequate insurance and broad diversification create the resilience required to remain invested. The greatest long-term risk may be avoiding short-term volatility so completely that your money never has the opportunity to secure your future financial independence.

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Financial Freedom Framework

“I’ve come into a few bob.” “I have surplus savings.” “What should I do with it?”
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A generic question requiring a specific answer. Without knowing you, your circumstances or what the money may eventually be needed for, any immediate guidance is largely being given in the dark.
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However, a generic question can be answered with a generic framework. If you know where you currently sit within the framework, you can focus on the next sequential step towards financial security, freedom and independence:

If you don’t, you risk completing one or several steps ahead before your personal finances can sustainably support them. Some play the get rich quick game and swing for the fences:
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Gambling.
Trading.
Speculating.
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Others skip ahead to the more exciting steps:
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Investing.
Property.
Pensions.
Paying down the mortgage.
Transferring wealth.
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This often results in backtracking when the rubber meets the road because the foundations beneath those decisions were never properly established, for example:
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1) Investing while carrying high-interest debt.
2) Investing without a defined objective, appropriate time horizon or sufficient liquidity and being forced to sell to fund lifestyle spending or life milestones.
3) Making pension contributions without considering accessibility.
4) Ignoring tax efficiency when deciding how, where and through which structure to save or invest.
5) Gifting wealth before securing your own financial independence, the financial equivalent of putting on someone else’s oxygen mask first.
6) Failing to have mature conversations, as parents and adult children, about structuring gifts and inheritances to minimise unnecessary tax liabilities and family acrimony.
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The framework is not intended to prescribe the same journey for everyone. Its purpose is to help answer three questions:
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Where am I now?
What should come next?
Are my financial foundations strong enough to support it?
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Financial progress is not simply about doing more. It is about doing the right things, in the right order, at a sustainable pace.

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If you’d like support across personal finance education, coaching, advice, or technology, I’d be happy to help. Depending on what you're looking for you can schedule a meeting through the Vantage website: https://vantagefp.ie/​

Please find useful marketing material resources below:

​Successful Investing in Pictures.pdf​

​Vantage Investment Policy Statement.pdf​

​Vantage A-Z of Financial Planning.pdf​

​Vantage How We Can Help.pdf​

​​​Vantage What We Believe.pdf​

​Vantage Business Owner's Guide.pdf​

If you found this month’s newsletter useful, please feel free to share it with family, friends, or colleagues who might also benefit. Constructive feedback is always welcome. If there is a personal finance topic you would like covered in a future edition, just let me know.

Until next month.

Kind regards,

Ken Mason CFP®

Certified Financial Planner™

Tel: (01) 539 2670

Mobile: 083 803 2008

Email: ken.mason@vantagefp.ie

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