Understanding Australian Shares Through the Lens of Relationships

WIF Team
Apr 16
5 min read

You put your phone down. You pick it back up. The mindless cycle of opening and closing your apps continues. Maybe this time you refresh it will summon the notification? You’ve been waiting for an update after hearing nothing all weekend. Nothing. Again, you put your phone down. The clock ticks over to 8am. That sweet ting lights up your screen - the update you’ve been waiting for ….. from Commsec!

Investing in shares can feel all too familiar to dating. Each option offers unique commitment, challenges and communication styles. Just like romantic relationships, investing in Australian shares involves understanding different expectations, risks and controlling emotional responses to the ups and downs. We will use this relatable metaphor to simplify the often-intimidating process of investing in the Australian stock market.

The Casual Flirt - Emerging ASX Companies

Emerging ASX companies are typically smaller, newer firms that offer the potential for significant gains, but this often comes with higher volatility and risks.

These companies are characterised by their unpredictability and rapid growth potential. Investing in them can feel a lot like a casual flirt: exciting, full of promise but risky.

According to the risk-return trade-off principle, there’s a direct relationship between risk and potential reward - “High Risk, High Return” (Chen, 2024). Much like buying a lottery ticket, the ‘Lottery Effect’ is often linked with investors' experience FOMO to new ‘hot stocks’ or ‘trendy startups’ (Blackrock, 2025). Emerging companies effectively draw in investors since they carry high risks due to their limited financial history, smaller market capitalisation and unproven business models. Investors accept this higher risk because they anticipate higher returns if the companies successfully scale or achieve breakthroughs.

Brainchip Holdings Ltd (ASX: BRN) is an example of a “casual flirt” in the current ASX market. The company is recognised as the worldwide leader in edge AI-on-chip processing and learning, having captured investor attention with its innovative Akida technology, an AI processor that mimics neutral structures similar to the human brain.

BrainChip displays high volatility, with a sharp spike around 2022 that likely reflects a surge in investor enthusiasm and speculative interest in the company’s future potential. However, this was followed by a dramatic decline, highlighting the unpredictable nature of emerging tech stocks. Investors drawn to BrainChip and similar companies embrace the excitement alongside uncertainty. Just like falling for a charming flirt, they’re drawn in by the thrill, aware of the chance it might not last, but hoping it turns into something more. While substantial gains are possible if the company’s technology achieves widespread adoption, the path is often turbulent, marked by dramatic ups and downs.

The Steady Partner – Blue-Chip Australian Stocks

If you’re after the investment equivalent of a long-term partner that is steady, reliable and secure then blue-chip stocks might just be your match!

These are large, reputable companies with strong market presence and consistent performance. Known for their stability and lower volatility, blue-chip stocks often deliver dependable returns and regular dividend payments. This is perfect for investors who exhibit higher levels of loss aversion as they are more comfortable taking on calculated risks in pursuit of stable, long-term returns.

The term “blue-chip” originated in the 1920s when Oliver Gingold used it to describe high-priced stocks, borrowing the term from poker where blue chips hold the highest value (Under The Radar Report, 2025). Today, the term reflects the quality of the company, rather than the price of the stock.

Most blue-chip companies reward their shareholders with consistent dividends, reinforcing their reputation for reliability. You’ll find blue-chip stocks across industries and are often household names. As one of Australia’s oldest and most prosperous banks, Commonwealth Bank of Australia (CBA) is a standout example for its consistent performance and regular dividend payments.

The Complicated Ex – Distressed or Turnaround Stocks

We all know the type - the ex who swears they’ve changed, but you're not entirely convinced. Distressed or turnaround stocks embody this uncertainty.

Distressed stocks are the shares of companies experiencing significant financial difficulties, such as default on debts, bankruptcy, or severe financial underperformance.

These are companies that have struggled in the past but are attempting a comeback, whether through restructuring, leadership changes, or new business strategies.

Investing in distressed stocks can be a risky but potentially rewarding strategy for investors who can accurately assess the company's situation and potential for recovery. Investing in these stocks requires a leap of faith. No matter how much therapy your ex has been through – trusting them again is going to take time. Some make an incredible turnaround, rewarding those who believed in them. Others repeat the same mistakes, proving that history does, in fact, repeat itself.

AMP Limited (ASX: AMP) is an example of the "complicated ex". The stock faced significant challenges in recent years including regulatory scrutiny and declining customer trust — undergoing significant restructuring and to address these challenges and improve financial performance. The company has been focused on reducing costs,and re-focusing its business on its core strengths. Investors are optimistic about AMP's ability to be successful in its turnaround, with strong potential for future growth and profitability (Struben, 2025).

Investing: Finding Your Perfect Portfolio 'Match'

Just like in relationships, getting too emotionally attached too quickly can cloud your judgement. When investing in shares, it’s important to think with your head, not your heart to avoid making impulsive decisions based on fleeting feelings. It’s important to look to the long term and adopt an appropriate investment strategy.

Diversification is usually a good idea; investing across asset classes such as shares, property bonds, cash, commodities so that when one goes up and the other goes down, you can smooth out any risks across your portfolio (The Psychology of Investing, 2025). Unlike romantic relationships where we often hold on through the highs and lows, remember that in investing the goal is to ‘buy low’ and ‘sell high’!

Conclusion

Just like in relationships, there’s no one size fits all approach to investing. Some people chase the thrill, while others seek security. The key to financial success is finding a balance that aligns with your goals. Just remember: do your research before you get too emotionally or financially invested, and never put all your financial eggs in one basket (diversify!)

BRN share price and company information for ASX:BRN. (2011, November 9). Australian Securities Exchange. https://www.asx.com.au/markets/company/BRN
Chen, J. (2024, May 15). Risk-Return tradeoff: How the investment principle works. Investopedia. https://www.investopedia.com/terms/r/riskreturntradeoff.asp

Commonwealth Bank of Australia. (2025). The psychology of investing. Brighter Magazine. https://www.commbank.com.au/brighter/magazine/psychology-of-investing.html

Ler, S. (2024, February 15). The turnaround continues at AMP. Morningstar Australia. https://www.morningstar.com.au/stocks/the-turnaround-continues-at-amp
Struben, B. (2025, February 25). Down 23% in February, time to sell this ASX 200 financial stock?. The Motley Fool https://www.fool.com.au/2025/02/25/down-23-in-february-time-to-sell-this-asx-200-financial-stock/
Under The Radar Report. (2025, March 21). What are Blue Chip Shares. Under the Radar Report. https://undertheradarreport.com.au/blue-chips/what-are-blue-chip-shares/