Talk Investing Podcast
The Talk Investing Podcast & Blog discusses investment advice from our previous podcasts and radio shows by Remo Greco & Marco Mellado. Learn all things around retirement and investing.
Talk Investing Podcast
What Is the September Effect?
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September has a habit of spooking investors, and not always for silly reasons. We dig into the “September effect” and why share markets have often struggled from late August into September, then talk honestly about whether it’s causality or just a pattern we love to repeat. From US tax-year dynamics to the way people position portfolios after a strong run, we walk through the real-world forces that can push markets lower and ramp up volatility.
From there, we zoom out to what we’re seeing underneath the headlines: a change in market tone. When momentum tech cools off, money can rotate into defensive shares and high dividend names. With an election cycle in the US, a slowing global economy, and interest rates moving offshore, we explain why “rigging the boat for heavy weather” can be a sensible mindset, especially for Australians managing a self-managed super fund or a long-term investment portfolio.
We keep it practical: how to think about buying during weakness without trying to pick the bottom, why reinvesting dividends matters, and how ETFs can be a simple entry point. We break down ETF basics in plain language, run through examples like SFY and A200, and tackle listener questions on investing for kids and grandkids, diversification including equal weight ETFs, transferring shares with capital gains tax in mind, and the tricky maths of mortgage versus investing. If you want a clearer, calmer way to think about market seasonality, portfolio diversification, and ETF investing on the ASX, this one’s for you.
Subscribe so you don’t miss the next chat, share it with someone who’s worried about market dips, and leave us a review if it helped. What’s the one money decision you’re trying to make before the year is out?
DISCLAIMER: This podcast contains general financial information only. That means the information does not take into account your objectives, financial situation, or needs. Because of that, you should consider if the information is appropriate to you and your needs, before acting on it. If you’re confused about what that means or what your needs are, you should always consult a licensed and trusted financial planner. Unfortunately, we cannot guarantee the accuracy of the information in this podcast, including any financial, taxation, and/or legal information. Remember, past performance is not a reliable indicator of future performance. The Rask Group is NOT a qualified tax accountant, financial (tax) adviser, or financial adviser. Access The Rask Group's Financial Services Guide (FSG): https://www.rask.com.au/fsg
Welcome And General Disclaimer
SPEAKER_01The Talk Investing podcast and blog discusses investment advice from our previous podcasts and radio shows by Remo Greco and Marco Melado. Learn all things around retirement and investing.
SPEAKER_03On the money.
Defining The September Effect
SPEAKER_02Share market specialist Remo Greco joins you to look at the September effect. What does it mean for you? And just remember that anything shared here is general in nature, doesn't take into account your personal circumstances, financial situations, or needs. Good morning, Remo.
SPEAKER_00Good morning, Lisa.
SPEAKER_02What is the September effect?
SPEAKER_00Wow. There are quite a lot of historical incidences where the share markets tend to perform pretty poorly, generally late August and into September. And then it tends to have a bit of a washout towards the end of September, early October, and then October tends to be the takeoff month into what we call the Santa Claus rally.
Why September Can Turn Ugly
SPEAKER_02What do you think causes the September effect? Okay.
SPEAKER_00So it it we think that a lot of it relates to the fact that in the United States the tax year for investment funds is end of September. And so traditionally those funds would sell the losing stocks in September to take the tax loss. We tend to do it in Australia in May and June. Take your tax loss, clean up your portfolio before the end of the financial year. So what happens is that you have this acceleration of selling in September in the United States, and it happened sort of with sort of monotonous regularity. And this is sort of over the last sort of 50 to 60 years. And so being humans and we love to uh to anticipate and predict, and we do it poorly, but we love analogues because we think it'll happen again. That we think a lot of those will wash out because today passive investments through ETFs means that people tend not to be a seller in September. This year we've got weakness already coming through.
SPEAKER_02Because it's not the knee-jerk reaction.
SPEAKER_00Correct.
SPEAKER_02When you say passive, so what do we mean by that?
SPEAKER_00So passive is where people have an exchange traded fund that just owns the stock long term, and that doesn't need to rebalance, it doesn't need to sell losses. And so we think those those influences are washing out. Part of it is also psychological. End of Northern Hemisphere summer, people come back to work after Labor Day, which was last week. They've all got bills to pay, they sell some stock. That's that's sort of maybe a bit I don't know if that's really uh a strong influence on the markets. But also we just find that we've this year we've got an election coming up in the United States. And so there's a bit more volatility. Also, markets have had a pretty good run this year. So position-wise, going into this period.
SPEAKER_02Just need to rectify a little bit. So we are seeing something happening in the markets. What's
Market Mood Shifts To Defensive
SPEAKER_02been happening?
SPEAKER_00Okay, so we've seen a couple of things which I think are really important for investors to think about. One is the September effect might be just correlation or causality. We don't know, but it just might be that it happens this way. But it also the underlying tone of the market has changed, whereby the high-flying technology stocks, those that have had the momentum, we call them Momo stocks, okay, they've all really slowed down the last couple of months. And what has taken their place? What we call defensive stocks. So things like in the U.S., um Colgate Palm Olive, for example, or in some of these companies that are in supermarkets or household goods that just chug along. Those stocks have done really well. The Momo stocks have all been weak. In Australia, we've seen things like high dividend stocks do particularly well, the boring ones. So maybe Telstra's done a little bit better, for example, or we've seen supermarkets do better, Endeavour, which is Dan Murphy's, has done a bit better. There's this underlying tone that says, right, we're going to an election. September's pretty lousy. Um, we've got a slowdown in the global economy, interest rates are being cut in most places around the world. Doesn't seem like it's going to happen in Australia just yet. All of those things means just rig the boat for heavy weather. And the way we do that is just to be a bit more defensive.
SPEAKER_02Remo Greco, financial advisor with Sandlam Private Wealth, is with you for On the Money. It is 11 past ten on ABC Radio. You're with Lisa Leong. We're talking about the September effect. So this is where the market generally there's been a trend, a trend that it's had historical underperformance during this month. And we're teasing out what might have happened. Now to the important point, what should we be doing whether or not there is really a September effect? There's been
Practical Moves During Weak Markets
SPEAKER_02some change to the market. So what are we doing, Ramon?
SPEAKER_00Yeah, so I think in Australia, where um on average the market falls about two to three percent, we're down already one percent already. I think people, uh particularly maybe people that run self-managed super or have investment portfolios, or for those that are thinking about investing for the first time, a bit of stocks on sale, you know, the uh the the stock take sale is about to start, maybe consider adding a little bit here or there within reason. The other thing is a lot of dividends get paid this time of the year. So people that perhaps see a little bit more income coming into their bank account, maybe you should reinvest some of that. And how do you do that? Well, maybe add to some of the existing shares that you own. If you already own them and you like them, add a little bit more. Um and we don't like to time the market. So if you've got the cash, do a little bit now within reason, within your investment profile. So you could do that. For first timers, isn't it nice that if the markets are weak, this is what you really want. If you are young in your superannuation fund, now is the time to make some contributions of being a bit more aggressive. In fact, if you're young, you would pray that share markets allow you for the next thirty years so that you can get all these stocks really cheap and then.
SPEAKER_02That would be selfish, wouldn't it? That would be selfish.
SPEAKER_00Well, you've got to give the young people a bit of a helping hand, they need it. So you've got those sorts of things happening. And then you've got perhaps those that perhaps, well, what should I buy first up? What are the sort of things?
ETFs Explained With SFY And A200
SPEAKER_00So I was just thinking about this. There are some exchange traded funds that are really good at the moment. One is um just uh an exchange traded fund called SFY.
SPEAKER_02Should we just go through what's an exchange traded fund for the first time? Exchange traded fund is listening for the first time.
SPEAKER_00It's a bucket that's listed on the share market, and within that bucket are certain stocks for a reason.
SPEAKER_02And they're grouped together.
SPEAKER_00The SFY is the top fifty Australian companies, all in one bucket. So if you don't want to go and search the companies that you should be owning, then how about just buy SFY and you own the top fifty companies, so you're right at the pointy end of the quality end of the market.
SPEAKER_02And why would someone do that rather than buying individual shares just to let people know?
SPEAKER_00Well, some people might not know what to buy, they just might not have experience, so you want to get started. Trevor Burrus, Jr.
SPEAKER_02And it's kind of diversifying aren't you? Trevor Burrus, Jr.
SPEAKER_00Diversify. I can tell you how the big end of Town and does it and how we do it. If you walked in with $100,000 and you wanted to start an investment program with us and you were reasonably knowledgeable, don't have to be fantastic, we might say, look, I'm not sure about the market now. Let's buy SFY, put the $100,000 in the market today, and then over time we'll look at stocks that you particularly like. So you go to bed that night knowing I'm in the market, good or bad, but you're in the market and you're in really cheaply, right? So you're in there and then over the next three to six months your advisor might sell a bit of SFY and buy some BHP or Commonwealth Bank, and therefore you start to build your portfolio. But at all times, you're in the market, which is essentially what you're trying to do.
SPEAKER_02If somebody is coming in for the first time and want to pick up an ETF, where do they go to?
SPEAKER_00Well, you can just go to any of well, Google, the ASX I suppose would be the first place I would go to. That would give you a really good indication. There's a referral system there to get you to talk to an advisor if you want. You can go online and do it direct. There are lots of ways. ETFs are just a simple, straightforward uh investment that doesn't do your head in. That's the key, right? You you want to venture into this unknown. Let's keep it simple. There's one other ETF that I would say people should think about. It's called the A200. That's the code A200. It is for what I would say all the Scrooges out there, those people that are really tight or don't want to spend too much money. This thing gives you the top 200 companies in the Australian market, the ASX Index. So you get 200 companies, you buy one security called the ETF, and in that bucket are the 200 companies. The cost of doing that is 0.04 percent, which means if you invest $100,000 in that ETF, it costs you $40 a year for someone to collect the $200 dividends, vote at the annual general meetings, collect your mail. It's like having a personal butler for $40 a year. How cheap is that?
SPEAKER_02And Nikki has called three on one three hundred triple two seven seven four. Hello,
Investing For Kids With Simplicity
SPEAKER_02Nikki.
SPEAKER_06Oh, good after uh good morning.
SPEAKER_02You have a question for Remo.
SPEAKER_06Yes, thanks for taking my call. I have two very young grandchildren and I'm interested in setting up some sort of investment fund so that for birthdays and Christmas, etc., I can just keep adding to it. Uh but without having tax implications either for myself or for their parents. And I just don't quite know where to start.
SPEAKER_00Look, I think you could uh perhaps Google uh a couple of things. One would be uh you could do the ASX, but I would look at, and this is not a recommendation for this particular product, but I think it's a good starting point. Stock Spot is an interesting platform that provides the sort of simple avenues for mums and dads and grandparents to set up investment accounts for kids. The first ten thousand dollars has no fees or charges. The it it's an easy way to say I want to get um a high growth portfolio for my kids, or my grandkids. You go through about seven or eight questions, uh then you can then it's all online. You'll tick a box that says I'm happy with high growth, and it selects three or four exchange traded funds that mirror a high growth portfolio. So you don't have to do too much. It's pretty vanilla, but behind that platform is good videos and some really good content that helps you navigate not only today but in the future for your kids or grandkids. Um, and there are some really interesting things there that allow you to give you advice, give you some suggestions about what happens when the children uh become of age, when they're 18, and how to navigate the tax side of that. So it's worthwhile having a look at stocks.
SPEAKER_02Can the kids go and look at their portfolios of the city?
SPEAKER_00They can, yeah, all of those things. So it's really clever, gets them involved, but it's really cheap and simple. Um and uh I think they've done a really good job of it.
SPEAKER_02Is it set up for this type of scenario?
SPEAKER_00No, it's set up for people that want to start in the markets but just want to take a passive approach and get their feet in the door. But for children, they set up an idea that said for the first $10,000 of investment, um, it's f it's free, there's no fees, it reinvests all the income, and it does have some savings plans, so you can say, hey, every month take twenty dollars out of my account and put it into the kids' account. It's quite clever and simple. Stock spot is the name of the product.
SPEAKER_06Thank thank you. Are there any tax implications with that?
SPEAKER_00Yes, there are. So you that that platform goes through a little bit about how to do that. So I I encourage you to have a look at it. It's fairly straightforward and simple, but essentially you're holding the shares as uh uh on behalf of the grandkids, but essentially you need to account for that for tax.
SPEAKER_06Okay, thank you. And um do they have a a varied risk profile with what they're investing in?
SPEAKER_00They do. You can s you can say I want to be conservative, I want to be medium, and I want to be um hot and hot and heavy. So yeah, there's lots of ways to do it. I think there's four or five choices, and you can change them and flip them around. So but I think the uh the important thing is there's a bit of content behind there just to help you navigate things. I think that's yeah, it's a bit of an educational process. So I think that's not a bad way to start.
unknownGood. Thank you.
SPEAKER_02Thanks, Nikki. All the best um with researching that and potentially setting up something, and how generous of you, Nikki. That's a wonderful thing to do for your two grandkids. Uh thanks for calling ABC Radio. This text star, anon. My 30-year-old daughter saves five thousand dollars every so often and buys ETFs. She can't buy banks because of her work. So what ETFs are good growth options?
SPEAKER_00Well, in fact, most of the other ETFs that we would suggest out there would would not include banks anyway. So you could have technology ETFs, you could have those. We've talked about them on here. Those that are relate to cybersecurity, or they might relate to green energy, um, they might relate to uh to robotics, all sorts of things. Bitcoin, you name it. There's a stack of them out there that uh that don't have any financial exposure at all. Two reasons. One is they're already big stocks anyway. So if you buy the SFY or one of those big ETFs, you're gonna get cop a lot of banks anyway. So why do that? Number one. And number two is there's just so much else out there in the growth space that you can have a look at. So I would argue any list of ETFs, the majority of them probably don't have banks in there.
SPEAKER_02Thank you. And Ann in Oakley's got a great question, Remo. Hi there. If you already have some, say, CBA shares, so Commonwealth Bank, and you then invest in SFY, which also has CBA as part of the mix, can you peel off certain stocks from your SFY and merge with your existing parcel of CBA?
SPEAKER_00Good question. So SFY we said was the bucket for the top 50 Australian companies, right? So you buy that that little investment called SFY and you get the top 50, and in there are banks like CBA. What we're saying here is that I'm going to double up if I already own physical CBA. You can't peel off the CBA inside the SFY or inside that bucket. In America, there are ways you can do that for some of the ETFs. It's called direct investing or direct indexing. We don't do it here yet. I think the important thing is just to understand that you have got some commonality between the two and then manage it that way.
SPEAKER_02Thank you for that great text. Great question, Ann. Um we've got Owen here on the line. Hi, Owen. Good. Now you've got a tricky one for Remo. Well, let's just see what happens. Um okay, Owen, what's your question for Remo?
SPEAKER_03Um I've got an account to say home. But it says inactive because my contributions haven't been paid over a series of time.
SPEAKER_02Ah, so do you know whether you can help here or is that a super question for Marco, maybe?
SPEAKER_00It's probably a super question for Marco, but it's it's an interesting question and something you need to get on top of. So yes, um may want to leave his details with uh and and we'll get Marco to give him a call later in the week.
SPEAKER_02Owen, stay on the line and we'll get your details and Remo can answer the call.
SPEAKER_00Yeah, let's see if we can help, I'll be right back.
SPEAKER_02Okay. Uh
Diversification Tricks Like Equal Weight
SPEAKER_02Charlie in Carlton writes, it's worth noting that equal weight funds can give a bit more diversification rather than just buying BHP in the banks.
SPEAKER_00You know, we've got some fantastic listeners here, Lisa. That's exactly right. So when we talk about index funds, not all of them are index, i.e., index funds means that if CBA is 10 percent of the Australian index, then 10 percent is what goes into that bucket. But there are other funds that say, hey, I don't really want to have 10 percent of my money in CBA. Why don't we just get the top 50 companies and put 2 percent in all of them equally? And we call that an equal weight exchange traded fund. That just means that not one stock will have a big impact on your performance. They all all have the same sort of impact. And in some cases that's really, really important, and in some cases they outperform. The other side of it, though, is is that because bigger gets bigger, i.e., if Combank is already at 10 percent and someone puts more money into that ETF, Combank gets a disproportionate share of that. So what happens is the bigger just gets bigger as the flows come in. And so that's also a problem that we need to deal with. But for people who just want to uh mitigate the problem of size, then an equal-weighted exchange traded fund where in the top fifty, two percent is in each of them, is a very clever way to do it. That's a great question.
SPEAKER_02Always great questions, thank you, Charlie. Again, and here's David. Good morning, David.
SPEAKER_05Good morning.
SPEAKER_02You had a suggestion, didn't you, for the grandma who wanted to invest.
SPEAKER_05To invest for a grandchild or whatever is you can start a superannuation fund for a one-day old child if you want to, and I know because I've done it. And the advantage is there's no tax implications for anyone, and whatever money you put into superannuation um is available later on to use as a house deposit up to some certain limit. I think it might be 30,000, but it's ever increasing. And in the long run, it's a good thing, and they can't spend it.
SPEAKER_00Wow, that's fantastic. That's brilliant.
SPEAKER_02So starting up and contributing to the super account, that is a wonderful thing to do. Congratulations, David, and good on you for your generosity, and that is a good thing. And we might even explore that, I think, with Remo as well. Just this idea of if you want to start putting in money um for other people like your grandchildren, how might you do that through your super? So, David, good prompt there. And we've got Sheila here as well.
Gifting Shares And Capital Gains Tax
SPEAKER_02Good day, Sheila. Hello. Hello. You have a question for Remo.
SPEAKER_04Yes, we've had CBA um shares for a long time and we want our son to have them. And I was wondering, do we have to wait until we die to for him to get them? Or can they be can they be transferred to him?
SPEAKER_00I don't think you want to know the answer to this, Sheila, but yeah, probably. Uh look, if you if you gift them to your sons now, that is a disposal of the shares, and there'll be some there may be some tax implications you'll need to deal with. And if you're like my family that still has their Combank at $2.50, there's a big tax implication. So that's an issue. That's an issue there. I think that's probably why Combank shares are really tight and are doing so well, is because there is a whole cohort of people who just don't want to sell them or can't sell them for tax reasons.
SPEAKER_02Right.
SPEAKER_00So at some point in the next ten or twenty years there'll be an avalanche of transfer of CBA shares that will then go to the next generation. And it's an interesting thing about how that how the markets will deal with it. We think around fifty-five percent of the Commonwealth Bank shares are owned by what we call retail investors, and I would argue that the bulk of them are probably people that took up the stock at $2.50 when I was selling them in 1992. Boy oh boy.
SPEAKER_02Wow. So, Sheila, that's your answer. Thanks for calling through though, Sheila. I have about
Mortgage Versus Shares Plus ETF Income
SPEAKER_02$950,000 left on my mortgage and to parents on a decent income. I was told by an ethical investor that I shouldn't be buying shares until I've paid off my house. I can't help but think it was only because we had fifty thousand to start with. Is this true?
SPEAKER_00Don't know what ethical investors got to do with that, really. It's just a mathematical equation. We speak about this a bit. What's better? Buy shares which are which we think is a growth assets or pay down your mortgage. And the simple mathematics are that the mortgage is a is not a ta sorry the interest on your mortgage is not tax deductible. So it just becomes an out-of-pocket after-tax uh payment that you need to make. And so when interest rates are six or seven percent, that interest component is really, really high. And that's the problem. So then you say, okay, well, I'll continue to pay the interest and let's just go and buy some shares. Well, are the shares going to grow more than six or seven percent per annum? Well, they actually have to grow more than that, because if but if you earn six or seven percent on the shares, you may have to pay a bit of tax on that. So you don't earn six or seven, you might end up paying you might end up only making three or four percent. So there's that bit of a gap. So this is l this is just a constant problem we have at the moment about what's better to do. The same issue is do I put it in super or not? And so these are the sort of things. So it's not an ethical issue technically, I don't think. Is it true or not? It's not a question of truth, it's a question of what your circumstances are, and for someone to sit down with you quietly and say, these are your options, Corey. And and then you can see what suits you. Also your ability to save. So there's some psychological impacts around your ability to save, and go to bed at night having a mortgage, or go to bed at night not having a mortgage?
SPEAKER_02Now I want to handle this one because this um was a previous texter who has now sort of said, Look, I have these star shares um because they took over from the previous company. What's the best way to sell, please? I'm an inexperienced.
SPEAKER_00Yeah, so you do have to look at opening up a share broking account online. And sometimes if you're not experienced, it's difficult to wade through that online. But there are plenty of platforms that can help you do that. Alternatively, you can go to the ASX website and ask for a referral to a caring broker who can hold your hand and help you sell those. So it's not too daunting, just need to go online.
SPEAKER_02Plus text, this is from Jenny. Um what when is income paid on an ETF, please?
SPEAKER_00Okay, so if you've got ETFs which are linked to, say, shares, so ETFs that invest in other shares, they tend to pay dividends like shares. So you get them twice a year. They'll probably pay a dividend in something like February and August, September. So those six month periods. If you're in other ETFs like ETFs that pr that are fixed interest ETFs, so they they look at maybe owning bonds or term deposits, a lot of those pay them monthly. And they're fantastic because for people who are retired or need a good income stream, monthly income is terrific.
SPEAKER_02Thank you so much, Remo. Some good questions this morning.
SPEAKER_00Thanks, Lisa.
SPEAKER_02Keep you on your toes.
