I’ve written before about one of the most useful questions in economics and investing.

It’s only three words:

And then what?

Warren Buffett has used the phrase in exactly that context. The point is simple: the first consequence of a decision is usually obvious. The second, third and fourth are where things get interesting.

One Nation’s new Superannuation proposal is a near-perfect example.

(Please put your political views – for or against – aside for a minute; this is about economics.)

The policy would allow eligible renters and mortgage holders to redirect 3 percentage points of the 12% compulsory Super contribution into take-home pay for up to three years.

First-order thinking says: more money in your bank account.

And, yes, that sounds good. Particularly when households are dealing with high mortgage repayments, rents and grocery bills.

But: and then what?

Some, probably most, of that money gets spent. More money chasing the same amount of goods and services adds to demand, and therefore to inflationary pressure.

And then what?

If inflation is stronger than it otherwise would have been, the Reserve Bank may have to keep interest rates higher for longer – or raise them further – eating into some (more) of the benefit.

And then what?

Three years later, the extra take-home pay disappears. But prices probably don’t fall. (When was the last time prices – other than maybe petrol or fruit & veg – fell?) 

Remember: Lower inflation doesn’t mean prices fall – just that they rise more slowly. So when that 3-year period expires, prices will be higher, but your take-home pay would be lower.

Oh, and the money diverted from Super wasn’t invested and compounding during that period!

The pollies aren’t wrong that people are doing it tough. It’s tempting to think a hand-out would solve that. But unfortunately, it’s not that easy. Because you have to ask and then what?

And the same is true in investing.

Imagine someone told you in 1974 that global air travel was going to increase roughly ten-fold over the following half-century.

They’d have been spectacularly right.

Global passenger journeys rose from about 421 million in 1974 to 4.27 billion in 2023.

You might reasonably have thought: “Bingo! I’ll buy shares in airlines.”

Except airlines have historically been terrible businesses.

They require enormous amounts of capital. They have high fixed costs. They’re exposed to fuel prices, recessions, wars, pandemics and regulation. And fierce competition has often meant much of the benefit from increasing demand has gone to passengers through cheaper fares rather than to airline shareholders through higher share prices and dividends.

Even today, peak body, the International Air Transport Association, expects the global airline industry’s return on invested capital to remain well below its cost of capital!

The prediction that more people will fly was right.

The investment results were… not good.

And then what?

We’ve seen something similar with lithium.

The first-order thesis was compelling: electric vehicles and battery storage are going to grow rapidly, therefore the world will need vastly more lithium.

Again, totally accurate.

But markets respond.

High lithium prices encouraged miners to expand existing projects, develop new ones and spend more on exploration.

Supply surged.

By 2024, lithium demand was around six times its 2015 level. Yet lithium prices had fallen back to around 2015 levels. The International Energy Agency says the huge increase in supply drove lithium prices down by more than 80% from their recent highs.

The demand thesis wasn’t wrong. It just ignored the subsequent actions and reactions.

“This technology will change the world” is interesting, but not an investment thesis.

“This industry will grow rapidly” is a forecast, not an investment thesis.

“This commodity will be needed in much greater quantities” is a good insight. But, no, not an investment thesis.

They’re very good starting points.

But you still need to ask what competitors will do. What suppliers will do. Whether new capacity will be added. Whether prices will fall.

Whether customers, suppliers or shareholders capture the benefits.
(And that’s before asking what the share price already accounts for!)

In other words:

And then what?

And then ask it again.

And again.

Because in economics, public policy and investing – in life in general, really – the first-order consequence is usually the easiest one to see. It’s the second, third and fourth that tend to get you. Or, more positively, that can provide opportunities.

Either way, the task is to think past just the initial impact.

To ask ‘And then what?’.

Fool on!

The post The most important question for investors appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

South32 Ltd (ASX: S32) shares have climbed around 1% on Wednesday to a fresh 52-week high of $5.26 a piece.

It’s been an incredible success story for the ASX mining stock over the past two months, with the shares flying 34% higher since mid-July alone. 

There have been several peaks and troughs, with the share price fluctuating anywhere between $2.55 in early September last year to today’s high of $5.24. But overall, South32 shares have been among the strongest performers on the ASX so far in 2026.

They’re now up 48% for the year to date and an enormous 101% higher than 12 months ago.

What is driving the latest share price rally?

Late last month, South32’s announced a substantial jump in its ore reserve estimate at its Sierra Gorda mine. The update extends the mine’s reserve life by another five years, to 2045.

The Sierra Gorda copper mine, in which South32 holds a 45% stake, is a large, open-pit operation in northern Chile. This major jump in ore reserves and resources comes after significant drilling to better define the orebody, providing more certainty over future production.

The announcement was shortly followed by South32’s standout FY26 earnings result. The miner posted a 1% increase in revenue from continuing operations, a 28% increase in EBITDA, and a 55% increase in underlying earnings.

The strong earnings result meant management was able to declare a final fully-franked dividend of 5.4 US cents per share for FY26. That’s almost double the miner’s final dividend for FY25 when it issued a final dividend of 2.6 US cents per share.

Investors were clearly thrilled with the rally of good news and many have rushed to snap up the shares.

What do brokers tip next for South32 shares?

Going forward, it looks like brokers are divided about where the shares could go next.

Market Index data shows the majority have a buy rating after a recent rally. The $5.12 average target price now implies a downside of around 3%.

On TradingView, sentiment is a little more mixed. Out of 13 analysts, six have a buy/strong buy rating and another six have a hold rating.

Again, the average target price of $5.26 implies the shares are now fully priced. 

The team at Morgans downgraded South32 shares to a hold after reviewing its FY26 numbers, and increased its price target to $4.90. The broker said it thinks the earnings upcycle is now reflected in the latest price. It also noted the stock has outperformed even the pure copper producers.

Elsewhere, RBC Capital recently upgraded South32 shares to a buy recommendation and raised its price target to $5.50.

The post South32 shares reach fresh 52-week high: Can they keep climbing? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Shares in Echo IQ Ltd (ASX: EIQ) have fallen 48% to after the company failed in its bid to get US Food and Drug Administration (FDA) approval for its heart failure decision support software EchoSolv HF.

Company to regroup after knockback

The medical technology company said in a statement to the ASX that the FDA had issued a Not Substantially Equivalent determination for the application, rather than approving it for use by clinicians.

Echo shares fell as low as 47 cents, however have since rebounded slightly. At the time of writing, they are trading for 69.5 cents.

Echo IQ said it was now considering its options.

The company said:

Upon receipt of the FDA’s determination, Echo IQ, together with its US regulatory and legal advisors, its study partners, and independent statistical experts, has commenced a detailed review of the regulatory matters raised. The Company believes there is a pathway forward for clearance under the 510(k) route and intends to engage with the FDA to further clarify the matters identified in the determination and assess all administrative and regulatory options available to Echo IQ. This process will inform the most appropriate and efficient pathway to progress EchoSolv HF towards US regulatory clearance.

Echo IQ said it remained confident in the clinical rationale underpinning EchoSolv HF, “and the significant unmet clinical need in the identification of patients with heart failure”.

The company said it also planned to continue its broader US commercial strategy, which involved other products.

The company added:

This determination does not impact the FDA-cleared EchoSolv AS platform or its ongoing commercialisation in the US. Echo IQ will continue to advance its US commercial infrastructure, reimbursement pathway, customer pipeline and strategic relationships, providing a platform to support the future commercialisation of EchoSolv HF, subject to obtaining required regulatory clearance. In parallel, Echo IQ will continue to invest in its broader R&D pipeline, including the development of solutions targeting additional disease states and new clinical modalities.

Management to reassess the company’s position

Echo IQ Managing Director Dustin Haines said that while the company was disappointed in the decision, the determination provided the company with detailed feedback, which could be used to potentially take the program forward.

He added:

Our immediate priority is to understand the matters raised in full and determine the most efficient pathway forward. We remain confident in the underlying technology, the clinical rationale for EchoSolv HF and the significant opportunity to improve the identification of patients at risk of heart failure.

The company said it remained well-funded with more than $105 million in cash.

Broker Morgans recently had a speculative buy rating on Echo IQ with a price target of $1.85.

The post Why has this ASX biotech fallen nearly 50% today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.