Introduction
Inflation is back in focus for Australian investors — and the question isn’t whether it matters. It’s how to respond as a long-term, fundamentals-driven investor without getting caught up in the macro noise that fills the financial media.
In Episode 9 of Teaminvest Wealth Builders, Andrew Coleman (Teaminvest) sits down with AMP economist My Bui and John Burkhold from TWC Invest to work through exactly that question. Three segments, each standalone, each directly relevant to investors who own real businesses for the long term.
Segment 1: The State of Australian Inflation
AMP economist My Bui opens the episode with a grounded picture of where Australia sits in the current inflation cycle. Trimmed mean inflation is running at 3.3%, headline at 3.6%, and both measures are well above the RBA’s 2–2.5% target band. Services inflation — health, education, housing, travel — is widespread. And supply-side pressures from Middle East disruptions are now filtering through to input costs at levels not seen since late 2023.
But Andrew Coleman brings the essential historical context: Australia’s 100-year average inflation rate is 4.7%. This environment isn’t unprecedented. It simply feels that way because of our 18-month attention span. Investors who remember that cycles are normal — and who’ve done the work to understand their companies before a crisis hits — are the ones best positioned to act when volatility creates opportunity.
The RBA’s toolkit is limited. Interest rates are its only lever, and using that lever means driving down economic growth to suppress discretionary spending. The risk of a more prolonged inflationary spiral, or worse, a recessionary response, is real. But for the patient investor, neither scenario is catastrophic if the right businesses are owned.
Segment 2: Winners, Losers, and the Pricing Power Test
This segment is where the investment framework gets practical. Andrew Coleman and John Burkhold from TWC Invest identify which types of businesses structurally benefit from inflation and which are most exposed.
On the winning side: businesses whose revenue is tied to the nominal value of goods (‘ticket clippers’) — think REA Group, Jumbo Interactive, Car Sales — benefit directly from inflation because they clip a percentage of a transaction that has just gone up in price, with no increase in their own operating costs. Software companies with high margins and low fixed costs, healthcare businesses with price-insensitive demand, and companies whose competitors are more leveraged and poorly positioned all tend to emerge stronger.
On the losing side, Andrew’s five-category framework is essential. Fixed-price work (construction, mining services, REITs), thin-margin businesses with strong competition, regulated industries that can’t pass on costs, cyclical businesses hit by consumer downturns, and debt-heavy companies facing rising refinancing costs are all structurally disadvantaged.
John Burkhold adds the global dimension: real returns — after inflation — matter far more than nominal profitability. In higher inflation environments, accounting statements can flatter returns significantly. The best businesses are those earning genuinely high real returns on capital, not just nominal ones.
The debate on commodities and gold is characteristic of the episode’s intellectual honesty. Andrew is sceptical of both: gold, he argues, hasn’t actually tracked inflation well since the Bretton Woods breakdown in 1976, despite widespread investor belief that it does. John pushes back, arguing gold serves as an arbitrator of central bank competence and that fiscal deficits make a long-term case for it. Both views are worth understanding. Neither is presented as certain.
Segment 3: Viewer Q&A — Why Teaminvest Avoids Big Banks
This week’s viewer question came from Jennifer in Sydney: does Teaminvest avoid big banks entirely, and what about Macquarie specifically?
Andrew’s answer covers three distinct layers of risk. First, the structural model of banking: banks borrow short and lend long, use leverage to amplify returns, and are therefore extremely sensitive to credit cycles. Across every major economic crisis in modern history, equity holders in large banks have suffered severe losses. Credit Suisse — where Andrew worked — ceased to exist in three months.
Second, the Australian-specific risk: almost all major Australian bank funding comes from offshore money markets in New York and Europe. When those markets freeze — and they do — Australian banks face acute liquidity crises. This nearly took down ANZ and Westpac in 2008 and did destroy several state government banks in the 1980s and early 1990s.
Third, the mortgage concentration risk: Australian banks are now primarily mortgage books, with progressively lower deposit requirements and a growing proportion of higher-risk borrowers. This is fine while house prices rise and unemployment stays low. It becomes catastrophic if either reverses.
Macquarie, Andrew notes, is a well-run business and historically the most defensible of the big banks if you had to own one. But it carries all the systemic risks of the sector, plus investment banking and commodities exposure that adds complexity. His verdict: not attractive for the long-term investor who demands near-certainty on a 10–20 year horizon.
The Teaminvest Takeaway
The consistent message across all three segments is one of the clearest expressions of the Teaminvest investment philosophy: you don’t own the economy, you own individual businesses. Research deeply, know your companies before the market gets nervous, and be ready to move decisively when quality meets a fair price. If you miss the window this time, it will come back — markets cycle, and patient investors win.
Watch Episode 9 in full on the Teaminvest Wealth Builders YouTube channel.
