Welcome to my column, Young & Invested, where I discuss personal finance and investing for Gen Z and Millennials.

This column aims to be a resource for young investors navigating an ever changing financial, political and social landscape as they try to build wealth. Tune in every Thursday for the latest edition.

Edition 66

At 27, I like to think I’ve evolved past making decisions that my future self would describe as a learning experience.

And yet, here we are.

For someone who has built a reputation on preaching the gospel of broad‑based ETFs, it feels almost poetic to admit that I deviated from this strategy and paid dearly for it.

As investors, we often strive towards perfection. But I’m actually not sure this exists for any of us. In the spirit of honesty, I’ll be looking at how a small allocation to an individual stock ended up turning into the financial equivalent of stepping on a rake and why it reminded me exactly why I invest the way I do.

Sticking to the strategy

Picking winning stocks, locking in a great return, rinse and repeat intuitively aligns with the way many people imagine investing works. But it actually starts much broader than this. The point of investing isn’t simply to chase an elusive return. We invest to build wealth and achieve financial goals with a strategy that aligns with what we’re trying to achieve.

My high-level investment goal is pretty simple: build a $100,000 portfolio (excluding super) by the age of 30. As someone who has been in the workforce since I was 15 (and lived at home for most of this time), this target is well within reach. Assuming I stick to regular contributions and the general principle of not lighting money on fire, this goal requires returning an average of 6% p.a. in real terms.

The way I get there is by dollar‑cost averaging my paycheque into a handful of low‑cost, broad‑market ETFs and letting compounding do most of the work. The returns from my core holdings are the definition of accepting the average (or the market) and I am largely okay with this outcome.

I spend very little time poking at my portfolio and mindlessly looking for the next big stock, but that wasn’t always the case. After a string of unsuccessful individual company picks, I eventually accepted that ETFs were the only reliable path to hitting this goal. Turns out I haven’t quite learned my lesson.

Enter WiseTech. At my time of purchase, it was trading on an earnings multiple north of 100x. Because if I was going to betray my own investing philosophy, it was never going to be with something sensible. Since my purchase, the shares are down 60%, the ASX All Technology Index has fallen roughly 11% and the ASX 200 is up 10%. In other words, I managed to turn this decision into a learning experience.

The WiseTech story

To be clear, I still believe WiseTech is a solid business. For those readers less privy of its operations, the business is a global leader in logistics software for international freight forwarding. I’d like to think my decision to buy wasn’t a coin-flip or moment of delusion. I built a decent thesis, understood what I was buying and its competitive position.

Leveraging our abundance of research also gave me the confidence to know I was buying with a reasonable margin of safety. The due diligence process was thorough and time-consuming, but enough to convince me to add a small allocation to an individual stock into an otherwise ETF-exclusive portfolio.

Surviving the SaaSpocalypse

One large driver of WiseTech’s decline has been the broader ‘SaaSpocalypse’, which refers to a sector-wide reassessment of software businesses after advancements in AI began raising genuine uncertainty around the defensibility of software features and workflows. The result was a structural reset in valuations across the sector.

WiseTech has been caught in the crossfire of this turn in sentiment. AI is simultaneously a tailwind and a threat, in that it expands what software companies can build, but also compresses competitive advantages by lowering the cost of replication. In other words, features that once justified premium multiples can now be reproduced quickly and cheaply.

Investors have responded by demanding evidence of defensible business models such as switching costs, genuine pricing power and unique data. A history of revenue growth is no longer enough. As it turns out, many large SaaS names have failed this test. In a recent reassessment of our moat ratings, we find that a subset of companies still possess durable advantages even in an AI-driven environment. WiseTech is one of these and our fair value estimate of $138 per share still stands.

However, to avoid this devolving into a stock pitch, I want to stress that the actual point is simpler. My strongest investing edge has always been behavioural. I can (usually) stick to a process, avoid impulsive decisions and stay invested through volatility. None of this gives superior insight into how AI will reshape software economics or how markets will reprice risk.

As investors, we tend to view uncertainty as a temporary inconvenience, when it is actually a permanent feature of markets. And it’s worth acknowledging that I’m evaluating this investment over a rather short window. Regardless, uncertainty doesn’t disappear just because you did your due diligence. Even a well-researched thesis can be overwhelmed by forces outside any individual investor’s control.

Know thy founder

It’s well documented that only a handful of companies generate significant returns whilst the majority fall into the abyss. This success ratio is the core challenge of building a portfolio of individual equity holdings.

There’s no shortage of strategies that claim they can consistently pick winners. From factor exposure to concentrated bets on thematics, deep value plays – the list goes on. A more uncommonly cited attribute that may lead to long-term success is the strong presence of a founder.

Founder-led companies can be loosely defined as businesses where the founder retains a significant stake and holds an executive position with the ability to influence long term strategy. They’re thought to succeed due to an emphasis on long-term thinking, higher investment in innovation, risk tolerance, strategic decision-making and alignment.

But it isn’t all roses in the garden of founder-led companies. A founder can just as easily derail a company’s progress.

The same concentration of control that can drive exceptional outcomes can also amplify governance risk, entrench poor decision‑making, and reduce internal challenge. Many high‑profile blow‑ups over the past decade share the same pattern of a charismatic founder, rapid growth, weak oversight and a board that was either sidelined or asleep. Such is the case of WiseTech.

WiseTech’s founder issues stem from the company’s unusually high dependence on Richard White, whose influence and decision‑making authority create a level of key‑person risk. After coming under fire over personal dealings and flimsy governance structures, the market has shifted from viewing White as a potential source of strength, to treating his influence as a potential vulnerability.

More on the founder effect here.

The maths behind investment success and why we deviate

A large part of this experience comes back to the maths of investing and what actually drives long‑term outcomes. My portfolio is built around low-cost, broad based ETFs for a reason. They remove the need to predict winners by owning the entire playing field (which is usually pretty hard to beat over the long run). Introducing a single stock was a departure from that framework.

There is an abundance of data underscoring how difficult it is to consistently outperform the market, given how narrow stock leadership is becoming over the years. But people still buy individual stocks. For some investors, the primary goal is to earn the highest return possible. But I think that is where the tension begins. Stock picking offers the possibility of an outsized win, whilst broad-market funds offer us something far less dramatic. Nobody wants investment advice from the guy who returns 8% p.a. We’d rather talk to someone who claims to have found the next 100-bagger.

One of the biggest motivations is the belief that we can be the exception. In investing we refer to this as overconfidence bias aka the tendency to overestimate our abilities. Even when the statistics say that most individual stocks underperform, many investors assume they’ll be the ones to find the rare winners. However, by definition, we can’t all be the above-average investors. That gap between what we know statistically and what we believe about ourselves creates a clear cognitive dissonance.

What I plan on doing

I currently have little reason to sell my position at a loss. Fortunately, it is small enough that it doesn’t threaten my broader goal. That’s not to say we should hold every underperforming investment in perpetuity. Has this derailed my entire strategy? Not really. If anything, it has pushed me back toward it. The whole point of building a portfolio around broad-based ETFs was to avoid situations exactly like this.

Investing is always a trade‑off. Keeping the position means accepting the opportunity cost of capital tied up in something that may take years to recover, if it recovers at all. Selling in the absence of offsetting capital gains elsewhere, means accepting that I deviated from my strategy and paying the full price upfront.

The point of this article wasn’t to speculate on the company’s prospects. The takeaway isn’t that WiseTech is a bad company. If the stock had doubled, this article wouldn’t exist. But I need to acknowledge a large part of that outcome would have likely been luck rather than skill. As investors we tend to attribute losses to the market and gains to our process, even when neither conclusion is justified.

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