Barefoot Investor Scott Pape has urged Australians not to shift their superannuation into cash out of fear, after AustralianSuper members moved $1.27 billion into cash in just one month.
Pape said the September total was 51 per cent higher than the previous month, blaming “totally unhinged” social media algorithms for repeatedly promoting predictions of an imminent sharemarket crash.
He said some readers had contacted him convinced the market could plunge by 80 per cent, as Japan’s market once did, while others believed the global economy was heading back to the gold standard.
“They get fed more of those stories every day because the algorithm knows that fear works,” Pape said.
“Some people end up selling out of their super and eating baked beans in a bunker, waiting for the reckoning.”
According to Pape, anyone who moves their super into cash expecting a crash must make two difficult decisions: when to leave the market and when to return.
“They’re on the sidelines, waiting for the algorithm to tell them when it’s safe to go back in — hint: it never does. The problem is they need to be right not once, but twice: they have to get out before the market falls and get back in before it rebounds. As my wife tells me, I’m not even right once, let alone twice.”
Scott Pape, known as the Barefoot Investor, urged Australians to tune out social media when seeking financial advice
He criticised influencers, including Andrew Tate, for giving young people misleading messages about money
“The algorithm is how a diesel mechanic who recently worked on my farm went from saying, ‘Nice spot of rain we’re having,’ to delivering a 10-minute monologue that began with Albanese and ended with Muslim gangs and civil war.”
“You’ll be at Christmas lunch soon, and Uncle Wally will be explaining how the entire financial system is about to collapse. At least you’ll know exactly where he heard it.”
In the same column, Pape answered a question from Luke, a 15-year-old reader seeking guidance on investing.
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“I’ve got $3,500 in shares, yet once you go online it gets overwhelming fast,” Luke wrote.
“Everyone’s getting rich overnight through crypto while long-term investing feels boring. If you were 15 today, what would you focus on over the next 10 years?”
Pape again warned about the powerful influence social media can have on young investors.
“You said that going online becomes overwhelming quickly. Damn right it does. That’s because the algorithm pushes you towards the issues most 15-year-old boys are trying to understand: how to be a man, attract girls and get rich,” he said. “The loudest voices in that space are cartoon characters such as Andrew Tate and influencers who appear convincing and successful on social media.”
“But they’re not. Their real business is selling overpriced courses or, worse, promoting a crypto scheme that makes them money.”
A 15-year-old asked Pape about investing in Bitcoin, but the financial expert encouraged him to read more books instead
Pape encouraged Luke to read several books, including Atomic Habits by James Clear, and to spend more time experiencing life away from screens.
“The truth, Luke? Nothing life-changing happens while you’re staring at a screen.”
“You asked what to focus on over the next 10 years. Ultimately, you need to focus on doing things — not simply reading or watching videos about doing them, but actually taking action.”
“Most people never make that leap. This book will help you build habits. Just as compound interest can grow your money exponentially, positive habits at 15 — including reading, exercising and treating others well — can completely change the direction of your life.”
Earlier this year, Pape also urged Australians to review their superannuation funds to ensure they were not paying excessive fees or missing out on stronger returns.
