Global financial markets are red right now. Green means profit, red means loss. Green good, red bad. To understand why this is incorrect, let's look at it from another perspective.
Warren Buffett's classic line: be fearful when others are greedy, and greedy when others are fearful.
In Australia, residential real estate, owner occupied or investment, still carries that greedy crowd energy. Forecasts for 2026 show solid but moderating growth, ranging from 5 to 10% nationally with higher exceptions in certain suburbs in many outlooks. Yet affordability remains brutally stretched: historic highs in price to income ratios, first home buyer repayments eating half of incomes in capitals, and recent rate hikes adding pressure. Buying now often means entering at elevated levels after years of strong gains, chasing momentum rather than value. It's true that it can continue to rise, and I could be wrong about it, but there are too many red flags for me to like real estate as an investment at the moment.
Contrast that with share markets, especially global and US shares, where fear is more evident amid recent volatility, geopolitical noise, rate uncertainty, and pullbacks from highs.
When looking at the Australian share market in general, I'm not a fan. I've held this opinion for several years, with the outlook worsening in light of global events. The ASX 200 has seen corrections implying discounted prices, but my concern is its concentration: heavy in banks, miners, and resources, tying performance tightly to Australia's economy and commodity cycles.
This is where global exposure shines, particularly the US market. Broad indices like the S&P 500 and Nasdaq offer access to thousands of world leading companies across tech, healthcare, consumer, and more, far broader than the ASX's narrow sectoral makeup. Many quality US firms trade at reasonable or discounted prices after recent dips, with strong earnings growth potential, especially in innovation-driven sectors.
Buffett himself has long favoured the S&P 500 for most investors since it delivers superior long term compounding without needing heavy international bets for everyone. Shares provide low costs via index funds and ETFs, diversification across industries and geographies, and historically higher returns when bought during fearful periods such as the ones we're experiencing now, without the leverage risks or ongoing expenses of property.
Bottom line: Australian property might mean slow and safe gains, but at current stretched valuations and affordability walls, it's buying after the crowd's greed phase. Global and US shares, conversely, reward the contrarian in fearful times.
Value is found where the sentiment is sour. It's about compounding over time, and investments bought at a lower price over that same timeline have further to go.
Financial Disclaimer. This content is general in nature and has been prepared without taking into account your personal objectives, financial situation, or needs. It does not constitute financial product advice under the Corporations Act 2001 (Cth). Before acting on any information contained in this post, you should consider whether it is appropriate for your circumstances and, if necessary, seek independent financial advice. References to specific companies, markets, prediction tools, or investment strategies are for informational and educational purposes only and do not constitute a recommendation to buy, hold, or sell any financial product. Past events and probabilistic frameworks discussed are not reliable indicators of future performance.