Transcript for QAV #447 

Cameron [00:00:07] Here ek

e are! No, I shouldn’t say, I start the podcast the same way every time. I’m going to do something different this time, just get into it. No welcome back, none of that. This is it, we’re talking. How are you, Tony? 

Tony [00:00:21] Good, nice and relaxed, thank you. 

Cameron [00:00:25] You’ve been out of the office this week. 

Tony {00:00:27] Playing golf, on a trip up to the Hunter Valley. 

Cameron [00:00:29] No, don’t say that. I’m trying to hide the fact you’re playing golf…

Tony [00:00:36] Oh, okay. 

Cameron [00:00:36]… I want people to think that you’re, I don’t know, handling affairs of state or something like that. 

Tony [00:00:42] Don’t you want people to think that QAV is so successful that I can go and play golf for three or four days? 

Cameron [00:00:47] I think everyone knows, well not QAV the podcast is so successful, but your investing is. Yes, okay. So you’ve been playing golf, and you got rained on? 

Tony [00:00:57] Oh, it was shocking, yeah. Drenched. First day drenched, second day half drenched, third day a little bit drenched. But, yeah. 

Cameron [00:01:05] And was your liver drenched as well during this trip? 

Tony [00:01:08] Oh, absolutely. Yeah. Yeah, lots of goof Hunter Valley Wine which we tried. We had a dinner at Lindemans, the famous wine makers, and got stuck into their Pyrus which is their nice red. That was lovely. 

Cameron [00:01:23] Lovely. 

Tony [00:01:24] It got to the stage where people were buying bottles, in like, twos and fours rather than just going up and getting another bottle, so…

Cameron [00:01:30] Right. 

Tony [00:01:31]…It was a good night.

Cameron [00:01:32] Well that’s good. Need to look after yourself though Tony, we need you. You can’t, don’t go giving yourself sclerosis of the liver now. 

Tony [00:01:40] A big shoutout to Andrew, one of our subscribers who was on the trip! I wouldn’t know anyone there besides the usual people, and he came over and introduced himself, which was lovely. 

Cameron [00:01:49] That’s great. 

Tony [00:01:50] It’s nice to meet a listener. 

Cameron [00:01:51] I know that you sort of cut back on the booze during COVID, you know, in your lockdown, you’re making up for it now. 

Tony [00:01:57] Yeah, definitely. 

Cameron [00:01:57] You gave your liver a break and now you’re… 

Tony [00:02:00] Created some space, did a detox. Whatever they call it. 

Cameron [00:02:03] Yeah, the COVID detox. 

Tony [00:02:05] Yeah. 

Cameron [00:02:06] Alright, well let’s get into investing stuff. Oh, by the way, I did- Chrissy and I did – our first Wing Chung grading on the weekend and we passed. So, we got our white belts. We’re feeling good about that. 

Tony [00:02:17] Oh, good. Congratulations. 

Cameron [00:02:19] It’s nice to actually pass a milestone, pass a test. Work hard, pass something. I think we need QAV milestones. Like there should be little certificates that we give people for, you know, acknowledging that you’ve – maybe when they’re fully invested and they’ve got twenty stocks in a QAV portfolio we give them a coffee mug or a certificate. A certificate I think would be nice. 

Tony [00:02:47] Coffee mug. One coffee mug, two coffee mugs, three… I think Andrew Flitman should get a number of coffee mugs this week. 

Cameron [00:02:54] Yes, absolutely. 

Tony [00:02:54] Helping out when Stock Doctor changed it’s filters. 

Cameron [[00:02:58] Well that’s the first talking point. So, I’m sure everybody – at least our club members – are aware of this. Stock Doctor out of the blue, no warning, just changed their filters on Monday and I did send them an email thanking them for giving us no advanced notice…

Tony [00:03:16] No, they did. They did. 

Cameron [00:03:17] When? 

Tony [00:03:18] I got an email saying that they weren’t going to use the Stock Doctor valuation anymore last week. 

Cameron [00:03:24] Yeah, but like on Friday or Saturday or something, and then they changed it on Monday out of the blue. Anyway, I said a little bit of advanced notice would have been nice to your strategic partners, whatever we are. Anywho, apologies to everyone who had problems with their checklists this week, trying to accommodate that. I think it was another Andrew, an Andrew, on Facebook on monday was like: “ah, I can’t get the checklist to work, what’s going on?” I said, “send it to me and I’ll take a look,” and I just said “I don’t know man, your data seems to be one column over for some reason. I don’t know what’s going on.” And then somebody else on Facebook worked it out, so big cheers to whoever it was who figured that out. So, Andrew  Flitman and I did work together on putting out – mostly his work – putting out a new version of the Flitman spreadsheet, and I think you’ve got a new version of the Master Spreadsheet that I will be putting out today. 

Tony [00:04:18] Correct. Yeah I fixed that up today. Yeah, took out the column for Stock Doctor but had to change all the references, et cetera so it works now. 

Cameron [00:04:25] So I asked Joanne Barrow, who’s the head of marketing at Lincoln Indicators now, why they stopped doing the Lincoln Valuation as they call it. I said to her, “why did you take out the SDIV?” And she came back and said, “I’m not exactly sure what you mean by the SDIV, but if you mean the Lincoln Valuation…” I went “yeah yeah yeah, that.” She obviously doesn’t listen to the show. She said, this is her proforma response, “while Lincoln Valuations have always tracked closely to consensus valuations, we’ve decided that by focusing on consensus price targets we can leverage the expertise of leading global research houses and enable our analysts to focus on what they do best: optimising and applying our quantitative methodology, and assessing the active risks facing companies. Importantly, we believe the consensus price target should, on its own, not be a primary reason for an investment decision, but rather in conjunction with our nine Golden Rules for investing, help investors evaluate an investment based on blah blah blah blah blah…” 

Tony [00:05: 29] Yeah.

Cameron [00:05:29]  Anyway. So basically saying that they’ve decided to downsize, I guess? I don’t know. 

Tony [00:05:36] Yeah, well I think further on when you said blah blah blah blah, they say we believe investors should always be prepared to pay a premium for a quality Star Stock. 

Cameron [00:05:45] Yeah. 

Tony [00:05:45] It’s like, yeah, that’s always been the problem I’ve had with Stock Doctor, is that they do recommend you pay up for quality stocks. And, you know, they still get good results so it’s not necessarily a downside. But I remember my whole journey into my checklist kind of started when I was a Stock Doctor member very early on and started to say, “well, you know, maybe we shouldn’t be buying any stock above what it’s worth, even if it’s a quality stock” and started to work out IV calculations to apply and I got a slight bump in my performers compared to Stock Doctor because of that. 

Cameron [00:06:20] Yes, she goes on to say “however unhealthy low quality businesses trading at a discount to consensus price targets could demonstrate a value trap.” 

Tony [00:06:30] Mm-hmm. 

Cameron [00:06:31] For new listeners, what’s a value trap again, Tony? 

Tony [00:06:34] Something’s cheap, but it’s cheap for a reason. So, you might be able to buy something very cheaply – it’s like, you know, your classic example of going and buying a knockoff anything, a knock-off Apple watch or a knock-off pair of sneakers; even though they’ve got a Nike swoosh on the side, you take them and go for a run and they’re done after a use. That’s a value trap. And in the share market, it just means that a share is way below what you would expect it to be priced at given the numbers, but it’s that low for a reason. And so, if you bought it on a value basis you’d find that you’d probably lose money. 

Cameron [00:07:07] Which is why we look at value and quality. 

Tony [00:07:11] Yeah, and sentiment as well. 

Cameron [00:07:13] And sentiment, yeah. Sorry its 65% humidity in my office and my glasses are fogging up. 

Tony [00:07:20] Feels the same here, too. 

Cameron [00:07:22] More news, NAB breached its sell-line last week but it also went ex-div on the 15th of November. I nearly sold it, jumping at shadows as I do, until I remembered to check for dividends, and I had to remember how to do that and ran through the analysis in our Facebook group. But, I think it’s continued to go down. I haven’t looked today, do you know what it’s at today? 

Tony [00:07:51] No, I thought it was good today. I had a look this morning. Because one of my other stocks I need to sell, which is Super Retail Group…

Cameron [00:07:59] No! You just bought into them.

Tony [00:08:00] Curse of the stock of the week, I know.

Cameron [00:08:02] Yeah.

Tony [00:08:03] They’ve fallen below their sell line. 

Cameron [00:08:05] Yeah. 

Tony [00:08:06] And, uh, I was just going through my list looking at things to buy and I checked on NAB and I’m pretty sure it’s okay. 

Cameron [00:08:12] Back up to $28.54 today. When I factored in the dividend stuff the other day, I figured out that the sell price was probably more like $28.20 and it did get down to that maybe Monday or Tuesday this week, but it’s back up above that so it’s all good for now. 

Tony [00:08:31] Yeah. 

Cameron [00:08:31] That’s a shame about Super Cheap Auto – Super Auto – Super Group, whatever they are. 

Tony [00:08:36] Super Retail, yeah. 

Cameron [00:08: 37] Yeah. 

Tony [00:08:38] Uh, yeah it is. And, you asked the question on NAB about the franking credits and how to take that into account, yeah. So basically if you added back the franking credit with the dividend you received you get the company’s before tax profit, which is the whole idea. So, you should check what the dividends are franked at, because sometimes you don’t get a full tax benefit but most companies, the vast majority of companies, pay 30% tax and so you take the dividend and divide it by 7 which grosses it up to the total amount. And then the difference is the franking credit value. 

Cameron [00:09:15] Did you say you multiply? 

Tony [00:09:19] No, divide.

Cameron [00:09:20] Divide the dividend, by…

Tony [00:09:24] Yep, so if a dividend is 10 cents you’d divide it by 0.7.

Cameron [00:09:27] Mm-hmm. 

Tony [00:09:28] And it means that before the company paid tax they made 14.2, and then the dividend is the 4.2 difference – sorry, the franking credit is the 4.2 difference between the before-tax profit the company made and what they paid out after tax as a dividend. 

Cameron [00:09:46] So if the dividend is 100% fully franked, you have to calculate – look at the dividend, calculate the franking credit, add that back, and then add both of them back to the current share price.

Tony [00:09:58] Yes. 

Cameron [00:09:59] And that’ll tell you…

Tony [00:10:01] If it’s above it’s sell line. 

Cameron [00:10:03] So you take those off.

Tony [00:10:04] No, add them back. 

Cameron [00:10:06] Yeah, I think we did this last time. Let me… When I was looking at this last week, the Brettalator said the sell price – it was trading at $28.66. The Brettalator said the sell price was $28.87. So $28.66 was below the sell price. But I took the sell price and then took the dividend off of that, which was 67 cents to give me $28.20…

Tony [00:10:32] Mm-hmm.

Cameron [00:10:033] And said that was the real sell price. 

Tony [00:10:36] Yeah, you can take it off the sell price, add it back to the share price. 

Cameron [00:10:39] Right. 

Tony [00:10:40] Either way, yeah. 

Cameron [00:10:41] Either way, right okay. So yeah, I was just trying to work out what the real sell price is. So in my way of doing it you take the dividend plus the franking credit, take them both off the sell price according to the Brettalator. That’ll tell you the real sell price. Or you can conversely add them to the current price, and then just see how that compares to the Brettelator sell price. 

Tony [00:11:00] Correct, yeah. 

Cameron [00:11:02] Okay. 

Tony [00:11:03] Easy. And you can also, you’ll get that information in Stock Doctor too. It’ll have what they call a grossed up yield. 

Cameron [00:11:10] Grossed up yield in Stock Doctor is the total amount. I should build a spreadsheet for this, I know I said this last time but build a spreadsheet for it so I can – everyone can look at it next time. 

Tony [00:11:23] Another spreadsheet?  

Cameron [00:11:24] Yeah, what’s another spreadsheet? Get Andrew Flitman to build it for me. 

Tony [00:11:29] Sure. 

Cameron [00:11:29] He’s got nothing better to do. Alright, so hope everyone else understands that better than me. That’s why I post these things on Facebook, so people can tell me why I’m wrong. 

Tony [00:11:40] Yeah.

Cameron [00:11:41] CLX, a stock that we’ve got in our dummy portfolio but I think it’s a rule number 1 sell, we’ve got to get rid of it? 

Tony [00:11:48] Yep. I checked that today, we do. It’s dropped 11% I think since we bought it. 

Cameron [00:11:53] Know what we’re going to replace it with? 

Tony [00:11:54] I think it may even be a sell. I think it’s a sell on the Brettelator too, I looked at that earlier, so it comes out. And, yeah, what did – I sent you an email, what did I say to replace it with? 

Cameron [00:12:03] Oh okay, let me see my email. You said KIL. 

Tony [00:12:07] KIL, yeah we don’t have it. 

Cameron [00:12:07] Really? 

Tony [00:12:08] Yeah. 

Cameron [00:12:09] Kangaroo Plantations, aka “Kailand” or “Kiland” or something. 

Tony [00:12:14] That’s right. It’s been going up nicely too since we talked about it. 

Cameron [00:12:18] Oh that’s nice.

Tony [00:12:19] Mm. 

Cameron [00:12:20] How are our stock tips going today? 

Tony [00:12:23] Think they’re about 3.5% up since we started recording it. 

Cameron [00:12:28] 4.27% cumulative, it says. It says SUL hasn’t moved since we recommended it last week. Oh, no sorry everything just refreshed. 3% we’re up.

Tony [00:12:42] Yeah. 

Cameron [00:12:43] Had SUL as down 7% since we recommended it. So, 3%, is that good or bad? 

Tony [00:12:51] Oh, I think – well look it’s probably not much better than the market at the moment. 

Cameron [00:12:56] Yeah, right. 

Tony [00:12:57] But you can’t – yeah I’ll have to compare it month to month with the market. And it’s difficult to compare because we’ve held stocks over different periods. 

Cameron [00:13:05] Yeah.

Tony [00:13:05] I’m not even sure it’s a valid comparison really, I think it’s better to look stock by stock. 

Cameron [00:13:09] Yeah. And, as I keep pointing out to people in our emails each week, you know, some of them have done really well, some of them haven’t done well but the ones that haven’t done well if you obey rule 1 or the three point trend line you would’ve ditched them quickly – relatively quickly – and uh then you’re left with the ones that are doing well and some of them are still, you know KRM’s up 60%, CVW’s up 41%, IMA’s up 15%, KIL’s up 12% since we recommended it. Some have done particularly well. 

Tony [00:13:38] And we’re not taking out stocks, so we’re not removing Super Cheap from that list, are we? 

Cameron [00:13:43] We’re not running it like a portfolio. 

Tony [00:13:45] Correct. 

Cameron [00:13:45] MHJ is up 41% since we recommended it, so some have done well. 

Tony [00:13:50] Mm-hmm. 

Cameron [00:13:51] Okay, what do you want to talk about? Coal

Tony [00:13:54] Yeah, so I had a look at NHC today and it’s actually turned back up again – they had a bit of a drop there. And I just wanted to talk about the coal price chart, because it’s a little bit tricky to find one. So, Stock Doctor doesn’t have it, and I actually emailed them last week and they said they’d look into getting it for us, but it’s not there yet. Index Mundi, as someone pointed out last year, can lag. So the Index Mundi coal graph was about 2 months out of date. I think it was showing a September end of month figure. And the coal price fell off a cliff at the start of this month. It’s dropped quite significantly. It still hasn’t breached its sell line, but you’d certainly call it a Josephine, it’s down a lot. So, I just wanted to point that out. You’ll have to go searching for it on the internet. Index Mundi didn’t have a useful graph, but if you Google five-year thermal Australian coal price you’ll find one to use. But just be careful of that, because I know when I was doing research into NHC, and I went to Index Mundi, I went “oh, coal price looks fine” but it’s old data. 

Cameron [00:15:00] Right. Okay. 

Tony [00:15:02] And it’s interesting, there’s a bit of a – New Hope’s going up, even though the coal price is going down, and FMG’s going up even though the iron ore price is going down; there’s a bit of a disconnect with some of these companies, so I’m not sure what else is going on. In FMG’s case I think it’s the fact that people are buying into the lithium play, and the new green hydrogen facility and all the things Andrew Forest is talking about doing with 10% of profits every year. But yeah, the iron ore price is looking anemic. The underlying commodity is, I think, always a good trend to watch. And, I think coal’s still a Josephine, and I think iron ore’s still a sell even though some of the shares, some of the companies that mine and sell those commodities are actually turning the corner. 

Cameron [00:15:50] So coal, you say it’s Josephine… 

Tony [00:15;53] Mm-hmm. 

Cameron [00:15:53] I’ve got it up here in Trading Economics. 

Tony [00:15:56] That’s the one I was just going to say, that’s the one I found data on today. 

Cameron [00:15:59] XAL1. 

Tony [00:16:01] And if you look at it in November, the coal price’s dropped from $218, i guess its a tonne – yep US dollars a tonne – down to $157 US dollars a tonne, so it’s dropped off quite considerably. 

Cameron [00:16:14] And if you three point trend line that chart, it looks like it’s still way above it’s sell line. 

Tony [00:16:23] Mm. Correct. 

Cameron [00:16:25] The sell line – the sell price for coal as a commodity would be around about $110 bucks, $115? 

Tony [00:16:33] Well is it, is it lower? Let me just have a look. Uh yeah, the low, a low in January 16 of $48.80, and then the next one is August 2020 at $49.80 but that might be within 8% i think, So I’m going to use this L1, August 2020, and then L2 is going to be October 2020. So yeah, the sell price is going to be…

Cameron [00:17:02] January 16 would be off a five-year chart anyway. 

Tony [00:17:05] Right, okay. Good point. 

Cameron [00:17:06] It’s outside of the five years. 

Tony [00:17:07] Yeah, it’s gonna be around $120 a tonne and it’s currently $157.

Cameron [00:17:13] Yeah, so it’s got a fair way to go before it breaches it’s sell line as a commodity. 

Tony [00:17:16] Yeah, correct. But the coal price is definitely dropping, like a Josephine. 

Cameron [00:17:21] Dropping like a Josephine. Not tonight Josephine, as we say… Alright, I’m going to take a screenshot of that to put up on the blog post. Right, what else have you got for me TK? VTG?

Tony [00:17:38] Yeah. Just a couple of stocks to talk about for the week. VTG, which is Vita Group, was back on the buy list last week – I checked it today, it’s back off the buy list today and the reason for both of those things is that Vita Group, which is predominantly a Telstra reseller and I’ve owned the shares many years ago and they did really well and then they dropped quickly because Telstra restructured a contract with them because Telstra thought they were making too much profit and wanted some back. And now finally, many years later, maybe ten years later, Telstra has bought the stores back from VTG. So, there’s going to be a very large capital return, but to receive that you had to be on the books last week. So that’s why the share price has dropped now, it’s starting to reflect the fact that the capital return is happening. So, the business itself is pivoting to another channel that they’ve developing around wellness, health and wellness, so they’ve got a chain of um, I’m not sure what they are, spas I guess, and, you know, claim that’s the way of the future for Vita Group and they’ll take the Telstra money and give it back to customers and continue to be a health and wellness business. So, it dropped off the buy list again today because of that big drop when it went ex-dividend, which is a special dividend, we’ll wait and see if it comes back on when the health and wellness business continues. 

Cameron [00:19:00] Every shareholder gets a free day spa, I think that’s how they’re going to market it. Yeah, I owned them for a while. I sold them back in September, I think they were a rule 1 sell for me back then. Alright…

Tony [00:19:13] That’s VTG, um, yep, sorry? 

Cameron [00:19:15] I was just going to say better luck next time VTG. Yes, what else you got? 

Tony [00:19:19] Eclipse has new results in Stock Doctor because they’re one of these companies that have a September reporting date. Their QAV score dropped from last time I looked it was 0.41 down to 0.33. I haven’t checked what they were today, but the new results made the score drop. And there’s something funny going on with Eclipse because they’re still doing their buy-back but the share price is dropping. So, I’ve been trying to search for any other information. My first thought was the annual results had a problem, but they were well received by the market and the share price went up when they were announced, and they’re still good results as far as QAV’s concerned, but the share price is dropping a bit, about 10% in the last few weeks. 

Cameron [00:19:58] Mm-hmm. Yeah, I’m slightly underwater with my ECG – I think, oh, a bit over. I paid $2.13 for them back in June and they’re $2.15 I think today, so yeah, hasn’t been great. 

Tony [00:20:12] That was ECX, by the way. 

Cameron [00:20:14] Sorry, what did I say? ECG, ECX I meant. They were our stock tip too a while back, end of October.

Tony [00:20:21] Yeah, so probably the curse of the stock tip.

Cameron [00:20:24] That’s what it was, that’s why the price is going back – has nothing to do with fundamentals. 

Tony [00:20:28] No. I’ll just tap the microphone here and let the Chinese people know that we acknowledge their presence. 

Cameron [00:20:38] Haha, we acknowledge their power. What else we got? 

Tony [00:20:45] The other sort of move I noticed last week, Hawthorn Resources is now in the iron ore business. It’s getting close to it’s buy price, but of course iron ore is still an underlying commodity sell. But I just thought it was interesting. Hawthorn I think from memory was an oil company when we first owned it, and now it’s in the iron ore business so there you go. 

Cameron [00:21:05] Yeah, I was doing my checklist on Monday with Taylor and I was like “oh no, Hawthorn – they’re good” and then I went “oh, hold on, no. They’re a commodity sell.” I went and relooked at them and saw iron ore is a big player. Alright, well should we get into questions, Tony?

Tony [00:21:21] Or stock of the week, first. 

Cameron [00:21:23] Oh, thank you. Stock of the week. 

Tony [00:21:26] Should we, we need to do a Mafia racket here and go round to companies and say “look we can talk about your company as stock of the week, or you can pay us.” 

Cameron [00:21:35] Yeah, yeah yeah. How much is it worth to you to keep us quiet? 

Tony [00:21:40] Yeah. So small-cap stock of the week is YOW, Yowie. 

Cameron [00:21:47] Really? That’s a contentious call! 

Tony [00:21:51] Why’s that? 

Cameron [00:21:52] Oh, ‘cause their chart is like the flatline from hell. I hate looking at the Yowie chart every week. I’m like “uh, not this one again. I’ve gotta get my, gotta get the magnifying glass out, I gotta look at the line is you know trickling along there,” it’s like Scott Morrison trying to take a position on something, it’s just is it for or is it against, is it above, it’s a down? What’s going on? 

Tony [00:22:21] Maybe it needs to do a focus group and work out what it needs to position itself as. Yeah, but you know you gotta use the three-year chart for this one. 

Cameron [00:22:31] Even with the three-year chart it’s still like getting out the old jeweller’s magnifying glass there. It’s a dodgy one. You think? Yeah, that’s it. 

Tony [00:22:43] Yeah. No it is, it’s fine, have a look, do a three-year chart. 

Cameron [00:22:47] I’m just bringing up my checklist from Monday because I can’t – actually I did a new one yesterday because I thought I was going to buy something. 

Tony [00:22:53] Yeah, it doesn’t look good in the Brettelator because it’s one of those small decimal place stocks. 

Cameron [00:22:56] It’s a tiny one. 

Tony [00:22:57] Yeah. But yeah, I’ve got – okay, I’ve got L1 back in July 2020, and then it kind of hits a number of L2’s all the way along: one in December 2020, one in June 2021 and October 2021, and it keeps above those all the time. So, yeah it’s not going up fast, but it is going up. L1…

Cameron [00:23:22] Yeah, it was on my buy list this week. QAV score of 0.34 so I must’ve given it a pass. 

Tony [00:23.29] Mm. Yeah. I think it is too, but just be aware people, it’s a very small stock. ADT’s only $4,000 so it’s not going to suit everyone. Might suit the millennials. 

Cameron [00:23:43] Even the millennials, really? I don’t know, that’s a low stock. 

Tony [00:23:48] Well that can be our, that can be our Yahoo Finance series: Stocks for Millenials. 

Cameron [00:23:54] Yes.

Tony [00:23:54] Yowie Group. 

Cameron [00:23:57] Yeah, dunno, some of the millennials have probably got more money than I do to invest. 

Tony [00:24:01] Yeah. Anyway, so that’s a, that’s the small cap one that I won’t go into the nitty-gritty on, but the big-cap one I did want to talk about in detail was Perseus Mining. PRU

Cameron [00:24:11] PRU

Tony [00:24:13] Yeah, and I, I was going through today trying to work which one to make it, and normally I’ll look at the next large-cap down the list and there was a couple ahead of PRU, but I notice PRU’s getting close to dropping off the list. It’s QAV score is only 0.11, so I thought we should talk about it today in case it’s share price keeps appreciating, it’ll drop off soon. So yeah, so Perseus Mining, it’s a West African gold miner, much in the vein of West African Resources. It owns mines, it’s a gold miner, and it owns mines in Ghana and Cote D’Ivoire and they’re both in West Africa obviously, and it came out with some good news in its last quarterly report recently, and the exploration that we’ve talked about before on the show that these gold mining companies do around their current mines literally struck gold, and so they’ve been able to upgrade their projections and ths share price has been rising since then. So that’s a bit of background about Perseus. The other thing to talk about is the gold commodity price itself, and it’s been drifting sideways for a while but it’s still $100 US dollars above it’s sell price at the moment, but I think what might happen if the gold price keeps, sort of, going up and down but largely in a left-right holding pattern, eventually the sell price will catch up to it because it’s a rising line, in about probably three-four months. So just, sort of, keep that in mind as a risk with gold miners at the moment, but Perseus still has a great set of numbers. To go through them, we have a QAV score of 0.11 as I said, large ADT, so $6.5 million and a quality score of 77%. Oh, and I should say I own this stock as well, just wanted to declare it’s a stock I own. It’s a large-cap stock on the buy list which pretty much guarantees I’ll have a stake in it. It’s a Star Growth stock, which also means it’s got strong financial health and steady financial health. The share price when I did my analysis today was $1.68, and today being the 24th of November. It’s less than it’s consensus price target, but it is getting fully valued. The PE for this company is 18 times, which is high, and price to cash flow is 6.83, so it’s very close to coming off the buy list from a price to cashflow point of view. It’s greater than its book price and book plus thirty, it’s greater than our IV one, it’s listed as an IV 2 but it’s share price is not half of IV2 so it doesn’t get the extra point. It’s got really strong EPS growth, and if we do the EPS growth over the PE rating we get a score of 5.1 which is very high, our threshold for a good stock is 1.5. Director holdings is small, which surprised me, there’s no founder-owner and in aggregate the director’s are holding less than half of 1% of the company, which is interesting. The PE isn’t the lowest or the highest, so it gets a 0 for our PE score, the equity has been increasing consistently which is good, but then it’s having a down day today. It’s doan a couple of percent today, so people might just want to hang off if they’re thinking of buying it and just check it for an update. But yeah, have a look at Perseus Mining, another gold miner in West Africa. 

Cameron [[00:27:43] Thank you, Tony. Very good. I’ll be shorting that as soon as we are finished the show. 

Tony [00:27:51] I’ll be sending Alex Hay a text saying sell it all today, too. 

Cameron [00:27:55] Joking, people, we’re just joking.

Tony [00:27:56] Yes, no we don’t do that. We don’t game the system. 

Cameron [00:27:59] Our published trading policy is we don’t trade anything that’s our stock of the week for twenty four hours after the show, for twenty four hours after the show comes out. You can find that on our website. I saw somebody jumped on our Facebook page, the free, non-club page, the other day in response to one of our stock tip posts and said “oh, what are you pumping and dumping this week?” Yeah, I just sent a link to our trading policy. Obviously this person’s never listened to the show and doesn’t know us from Adam, but I understand that that’s their instinctual, instinctive reaction. 

Tony [00:28:35] Absolutely.  

Cameron [00:28:36] ‘Coz there probably are a lot of people pumping and dumping. 

Tony [00:28:38] Yeah, and look, you know, people should be dumping our tips ‘coz they tend to go down.

Cameron [00:28:44] We’re pumping, they’re dumping.

Tony [00:28:46] That’s right, yeah. 

Cameron [00:28:48] I was gonna say, look all the pump and dump’s in Crypto right now. It’s not in stocks, it’s all in Crypto. Alright, can we get into questions. 

Tony [00:28:56] Absolutely.

Cameron [00:28:58] Too hot in my office, we’ve got to wrap this up. Stuart, first question this week: ATP, baby you know me. “It would be interesting to hear if TK thought the rule number 1 at 10% for these smaller caps still applies? I’m on the roller coaster and should probably sell it minus 12%, but it would be the shortest stock holding I’ve ever had.” Good ol’ rule number 1 questions. It used to be three point trend line questions and when the Brettelator came out they seem to have mostly gone away…

Tony [00:29:30] Yeah. 

Cameron [00:29:30] Now it’s rule number 1 questions as the flavour, these days. Even though it must be like every week we go “it still applies” and everyone’s like “really? But does it? Really? Does it really? Does it really apply in this case?” And you’re like “yeah, it does.” 

Tony [00:29:44] “But does it apply to me?” 

Cameron [00:29:47] Yeah, yeah yeah. What’s ATP – oh, Atlas Pearls. Yeah, it’s our stock of the week. 

Tony [00:29:53] Mm. And it’s going up, yay! 

Cameron [00:29:56] Oh. 

Tony [00:29:58] Still plenty of time to dump. 

Cameron [00:30:00] How did, how did that happen? Must have snuck through the Chinese. Actually, it’s zero since we recommended it according to my sheet. Hasn’t moved. 

Tony [00:30:12] Okay. Look, it’s a good question. To be honest, I don’t have much experience at buying these small-cap stocks, and ATP’s average daily traded amount is $7,000. I understand the question, because a 10% drop in ATP’s going to be a third of a cent, which may not even register on the stock market, I don’t know, like you could see if someone sells a large, or even a reasonably small but larger than the ADT parcel of stocks it could easily drop by a cent. Which is going to be 33% of the capital for this company. So yeah, it’s going to be hard to get our stop-losses and get your rule 1s worked out for small companies like this. 

Cameron [00:30:55] Yeah, I was talking to Taylor about this on Monday and was reminding him that rule number 1 is don’t lose money, and we have the 10% stop loss. Rule number 1.5 is don’t drive yourself crazy hitting refresh every five minutes. 

Tony [00:31:12] Yes, correct. 

Cameron [00:31:13] And, rule number 2, never attend a banquet held in your own honour. That’s off my other shows. Rule number 3 – because you’ll probably get assassinated is the reason that rule is there – rule number 3 with these things, I know that you’ve said this, is have a look at the average trading range for the stock. And if I look at the daily’s for ATP over the last thirty days it seems to reliably hover between 2.7 cents and 3 cents; sort of goes up and down between those on an almost daily basis. 

Tony [00:31:52] Yeah I don’t recall talking about the average trading range, but that is probably reflective of the fact that you may not be able to sell parcels small enough to not be 0.003 of a cent in terms of change of price for the stock. 

Cameron [00:32:07] Yeah. I think I was working on the QAV book the other day, and um I had a quote from you saying “don’t worry”…”look at the average trading range, and if it usually goes up by x% and down by x% over a period of time, don’t stress out too much if its staying within that range.” But, you disagree with that now? You want to recant that?

Tony [00:32:31] No, no I just don’t recall saying it, that’s all. There’s a lot of things after four bottles of Pyrus I don’t recall saying, so… 

Cameron [00:32:41] Maybe it’s one of the quotes from you that I wrote and just said, sounds like something Tony would say.

Tony [00:32:46] This sounds like what TK would say, yeah. 

Cameron [00:32:49] Yeah. Who’s gonna, who’s gonna argue with me? So getting back to Stewart, rule number 1, smaller caps trading in the cents…

Tony [00:32:7] Mm-hmm. Still applies. 

Cameron [00:32:58] Still applies, but at the same time, only has to go down by one cent in this case, and it’s down by 30% so, I don’t know. That does seem a little bit trigger-fingery. 

Tony [00:33:10] It does, yeah. But look, he’s saying he’s down 12% and should sell, well then he probably should. 

Cameron [00:33:16] Right, so you would just go, “yeah”, you know “sell it”, if it was you. 

Tony [00:33:22] I think, oh look, I think what Stuart’s saying, if you look at the graph for ATP and as you say it goes through a trading range of 0.3 of a cent a lot, then it can breach, you know if you buy it and it goes down 0.3 of a cent you’re out, and it goes up 0.3 of a cent and you’re going “jeez, I wish I had of kept it,” so it’s a hard one. 

Cameron [00:33:44] Yeah. 

Tony [00:33:44] Yeah. Depends, I don’t know when Stuart’s bought it, but the graph is definitely trending upwards. It’s had a few downturn months, but on the whole it’s going up. So I don’t know if Stuart’s saying should he hold because he thinks it’s going up, but certainly rule one at minus 12% would be a sell. Oh, and just a point on this one too, like we said the Brettalator gives a completely different story for this stock. You have to use Stock Doctor and it handles it better. And it’s not the Brettelator’s fault, it’s Google Finance that has a data problem with small share prices. 

Cameron [00:34:18] Yeah. So, I guess for Stuart, this is a classic example where there’s no hard and fast rule for something like this. It’s, you know, you’ve got to make some gut calls sometimes. 

Tony [00:34:30] Yeah, but I think the hard and fast rule for rule 1 still applies if he’s down 12%, Yeah. 

Cameron [00:34:37] Yeah. 

Tony [00:34:37] If he hasn’t sold already though, like he might be okay because it’s turned ‘round. That happens sometimes too. 

Cameron [00:34:42] Hope that helps, Stuart. Dave: “TK recommends buying no more than 20% of the ADT. I don’t wish to overstate the size of the QAV community, but do you think there’s a risk of QAV practitioners causing a run on a particular stock? The QAV process and buy list means listeners will be buying similar stocks. How many listeners own Medusa Mining? And the Brettelator means they will all want to sell out at the same time. I know the QAV community isn’t huge, but if each held something approaching 20% of ADT it wouldn’t take much for a stampede to the exits, and a resultant price collapse.”

Tony [00:35:19] Uh, do we call QAV practitioners “QAVegans?” What do we call them? 

Cameron [00:35:23] Oh, QAVeecazoids is something I’ve been working on. QAVoonies…

Tony [00:35:30] *inaudible* 

Cameron [00:35:33] I’m testing lots of different things. 

Tony [00:35:36] Just send it out to a Scott Morrison focus group, see what they come up with. 

Cameron [00:35:38] Yes, I’ll do that. Send it out to Barry and Stan. 

Tony [00:35:43] Well good point Dave, I just wanted to clarify though that the rule isn’t 20% of ADT, it’s a third of ADT and even up to a half if you’re pretty confident about the stock. So, it’s not 20%. I generally divide the ADT by three and use that as my, my benchline. 

Cameron [00:36:04] No, that’s not the rule. That’s, don’t listen to anything he’s saying people, that’s not the rule as it exists in the Bible or in the QAV book. It was 10% of the ADT…

Tony [00:36:14] No!

Cameron [00:36:15]… and you would go as high as 20, is what it says in the Bible. 

Tony [00:36:20] Well I regularly buy 33% and go as high as a half if I need to. 

Cameron [00:36:26] How many bottles of this Lindemans did you have before we recorded today? 

Tony [00:36:33] None today, a lot yesterday.

Cameron [00:36:35] It’s still wearing out of your system. 

Tony [00:36:37] That’s right. 

Cameron [00:36:38] Alright, so hold on, this is uh, this is new, so ADT 33% up to a half. 

Tony [00:36:49] Mm-hmm. I rarely go to a half, but there’s been some occasions where I think somethings  taking off for a specific reason and I’ll buy upto a half. But yeah, my rules a third, a third of ADT. If that’s changed, I apologise, but that’s what I do. Anyway, back to Dave’s point: it’s entirely possible. It’s entirely possible, and particularly in the small-cap space. It’s not going to have an effect on Fortescue Metals Group or any of those, BHP or whatever. 

Cameron [00:37:18] Well I think this is what, this is what happened to ATP. It spiked, the price spiked on ATP by, like, a third the day after we put it out as our stock of the week, and then it dropped like a day later back to where it was. I think a whole bunch of people on our newsletter bought it at 2.5 cents, it went up to 3.5 cents, they went “you beauty, 33% of my money,” dumped it. Poor Stuart before probably was a day late. He got it at the QAV peak and then it went down. Sorry Stuart, you’ve gotta be quicker on the mark there Stewart is the lesson there. 

Tony [00:37:58] Yeah, but look Dave’s right. I suspect it’s probably not happening, because I doubt if everyone’s checking the, you know, listening to the podcast at the same time, checking their emails at the same time, looking at the Brettalator at the same time. So, there’ll be daily differences because of that. But certainly in the small-cap space it’s possible, yeah. 

Cameron [00:38:17] But, that said, what we do tell people, what I do tell people every week when the stock tips go out is this recommendation was based on it being at a certain price and before you buy it, check the price because the price may have gone up – or down, in which case it could be a Josephine – but check it either way. Because if it’s gone up then maybe it’s not – particularly if it’s a stock like ATP which is, if it’s a 2.5 cents when we recommended it, by the time you buy it is at 3.5 cents – may no longer be a good buy, right? 

Tony [00:38:51] Yeah, no, exactly. Or the QAV score can change with the share price movement as well. So, it could come off the buy list, yeah. 

Cameron [00:38:59] So in terms of us like having this impact on the markets, if people are watching the price before they buy and they’re a bit late and everyone else has jumped on then maybe they should hold off or think twice about it. But, when it comes to everyone selling it at the same time, I think you know, that’s right because everyone’s going to try and get out at the same time. 

Tony [00:39:21] Yeah, so I think it’s right on both sides, it’s potentially the same on both sides, but in reality is everyone going to check the Brettelator on the same day? Or, if they have a stop-loss alert, is it going to come through and be acted upon on the same day, same time? Potentially yes, but in reality, maybe not. 

Cameron [00:39:39] But even if they all get the sell alert within two days of each other and they sell over a period of forty eight hours, the price is going to be plummeting but that’s the stock market. 

Tony [00:39:48] That’s gonna happen, yeah. 

Cameron [00:39:50] But that’s the stock market, right? It doesn’t matter if it’s us telling people what to buy and sell or Roger Montgomery or Motley Fool – Motley Fool has got an audience a hundred times bigger than ours, a thousand times bigger than ours probably, I don’t know – Lee, Lee knows. So, you know, that’s just the nature of the market, right? Not much we can do about that. 

Tony [00:40:19] It is, yeah. And it’s also what’s happening with the meme stocks, right? They’re trying to do this with stocks with low ADTs. They’re getting together and creating a pump and dump where they all buy in at the same time, push the price up, and then the ring leaders get out before everyone else does. So, it is a risk in the market, but um, well I’m certainly not trying to coordinate people doing anything like that. Even though there’s stages it might happen with some of the smaller stocks in particular on the QAV list. 

Cameron [00:40:47] So I guess, in terms of the buy side of it: check the price. In terms of the sell side of it: keep a close eye on your Stock Doctor alerts, I guess. 

Tony [00:40:56] Yeah. As always, whether it’s QAV people selling, or Motley Fool people selling, or Insto selling, it’s going to be-there’s always going to be pressure. 

Cameron [00:41:04] Yeah, if something bad happens, bad news comes out, there’s a huge rush for the exits you want to jump on it quickly, so… 

Tony [00:41:14] Correct, yeah. 

Cameron [00:41:15] Yeah, and you know Dave, Tony and I have talked about this and Taylor, we’ve talked about this a lot over the last couple of years; what happens when, you know, there’s a million subscribers to QAV and we’re, we have the power to make and break these sorts of stocks. It’s a challenge, or a situation that we’ve though about quite a lot and we do take seriously. I don’t think we’re anywhere near a size where we need to worry about it right now, but hopefully one day we will be there and we’ll need to think carefully about how we…

Tony [00:41:45] Well I suspect we’ll have to raise the level of stocks that we talk about, you know, we just can’t talk about the smaller stocks like Atlas Pearls or Yowie Group because yeah, a group even as small as our size might actually manipulate the market. 

Cameron [00:42:00] But yeah, what Taylor always says to me is “well if people are all using QAV to figure out what to buy and what to sell, and when to buy and when to sell, and they all try and sell at the same time, regardless of whether or not we talk about it, if they’re all using the process and blah blah blah…” and I’m like “well yeah, but doesn’t kind of work like that.” Number one, Warren Buffett’s been telling people how to do it for seventy years, and still nobody does it. 

Tony [00:42:26] Yeah. 

Cameron [00:42:27] Secondly, so, I mean, he goes “yeah but Tony’s systems – Tony’s smarter than Warren Buffett” and I go well “that is true” but, well QAV is certainly easier to learn and follow than having to read all of Buffett’s shareholder letters for seventy years and figure out how to turn it into something actionable. But secondly, like, your portfolio is different to my portfolio, and my portfolio’s going to be different from Steven Mabb’s portfolio, and his portfolio’s going to be different from Taylor’s portfolio, because we’re all buying with different ADT requirements on different days at different times, so what’s going to be a rule one sell for Dave today may not be a rule one sell for you even if you hold the stock because you’ve held it for six months or a year. 

Tony [00:43:12] Correct, yep. 

Cameron [00:43:13] The sell line, breaching the sell line yes, the sell line is the sell line is the sell line regardless of when you bought in and we will all want to get out at the same time, but for us that’s because the stock’s already in decline, and usually with the sell line we’re probably getting out earlier than most people are getting out. 

Tony [00:43:32] Yeah, it’s a potential issue. I don’t think it’s an issue at the moment though. 

Cameron [00:43:35] No. 

Tony [00:43:36] Yeah. 

Cameron [00:43:37] Hopefully it will be a big issue one day and we’ll be able to…

Tony [00:43:42] We’ll set up a dark web QAV group to pump and dump Atlas Pearls and Yowie Group and things like that. 

Cameron [00:43:50] Well I think by the time QAV’s big enough that it’s a problem, I don’t know about you but I’m going to be living in a golden palace on a private island somewhere and you know, when one of my bikini clad girls stops fanning me, feeding me grapes for a second, to tell me that – I’ll be like yeah, not my problem. 

Tony [00:44:13] Yeah, certainly something I’ve thought about Dave, and you’re right, and I think the solution will be if we do get evidence that we’re pushing stocks up and making it hard for people to sell we’ll just raise the bar on the ADT and stop reporting on the small ones. 

Cameron [00:44:27] Well, yeah, but still people with small ADT limits will be using QAV to decide what to buy and what to sell, but.

Tony [00:44:34] Yeah, it’ll be on their list, we just won’t mention it. I won’t do any more stock picks with these kinds of micro-caps. Yeah. 

Cameron [00:44:40] Yeah, right. And, for the people, again like our QAV audience will be split between low ADT and high ADT, and the low ADT people will I guess have to be careful. We’ll just have to continually teach people “be careful”. We already say this about ADT stocks, right? Be careful, because, you know, if everyone’s racing for the exits…

Tony [00:45:02] They’re small, they’re illiquid. 

Cameron [00:45:04] Yeah. 

Tony [00:45:05] Yeah. 

Cameron [00:45:05] I’ve been burnt already on low ADT stocks. What was that one we were talking about a while ago where the CFO quit? G-something. Began with a G. 

Tony [00:45:14] Uh, was some store, wasn’t it? G Store or something? 

Cameron [00:45:17] Nah, something with a bunch of Chinese people on the board of directors and anyway, something dodgy went on allegedly. I don’t know. Uh, Leigh. Hey Leigh! It’s time we did lunch, Leigh. I said to Steven Mabb yesterday “it’s time you and me and Lee got together for lunch”, and then Steven and I couldn’t agree on a day to have lunch, so. But you and I should go for lunch. 

Tony [00:45:41] That’s tough, you guys must be busy. 

Cameron [00:45:44] Yeah, yeah. Oh well, I am. I don’t know what Steve’s doing, he’s sort of retired. He’s doing his gentleman farming I think. And ASA, probably ASA meetings. 

Tony [00:45:53] Yeah. 

Cameron [00:45:54] Lee: “As ECX aren’t paying a dividend and buying back shares instead, do we have a situation where the share price decreases initially, eg. similar to when dividend payout occurs, and then re-rate once share buy-back is complete?” 

Tony [00:46:09] Um. Is Lee meaning on a daily basis, or over time? So for ECX they’re buying back about 10% of their stock, so. 

Cameron [00:46:20] And they seem to do it daily or weekly or something? It’s a continual thing?

Tony [00:46:23] Yeah, they do, correct. Yeah. Which is surprising why the share price has dropped in the last couple of weeks, because they are supporting it with a buy-back. But, basically if you buy back 10% of the shares then the remaining profit gets divided into larger chunks for the remaining shareholders. So, the price that the company earns per share goes up, or the earnings per share goes up per share, and that should mean the share price goes up per share. So if that’s – I’m not sure what Lee means – is that what he’s saying? That once the buy-back is fully completed and they finish buying back 10% of their shares, that the company should re-rate. And it should, because earnings per share should go up at least by that amount. 

Cameron [00:47:02] That’s my reading, my reading of his question. But yeah, as you said earlier on with ECX, I don’t understand why it’s going down as it is. You would think the share buy-back is taking shares off the table, and it’s numbers are good, and everyone should be happy about that. 

Tony [00:47:18] Yeah. It could just be a, you know, a gyration in the market, but um it’s something I’m looking to find out whether there’s something going on there. 

Cameron [00:47:27] Somebody knows something we don’t know. 

Tony [00:47:29] Yeah, they don’t tend to put out much in the way of official announcements, but there might be something in the press that we need to watch for. 

Cameron [00:47:34] Keep an eye on it. Tim asks: “would it be possible for you to confirm how TK would draw the buy and sell lines for SUL please on this week’s show.” I think you’ve already told us about that. 

Tony [00:47:47] Have a look at the Brettelator. 

Cameron [00:47:49] Yeah. 

Tony [00:47:50] Yeah, no, the Brettalator’s drawing it properly. 

Cameron [00:47:52] Yeah, so the Brettelator’s saying L1 is COVID cough, March 2020, and L2 was September ‘21 and it just breached. So the sell price is $12.97. And it’s also below it’s buy price. 

Tony [00:48:12] Buy line, yeah, exactly. So it’s a Schrodinger as well. 

Cameron [00:48:17] Yeah. 

Tony [00:48:18] That right? 

Cameron [00:48:18] Uh, no, no. Above the buy price and below the sell – uh sorry, above the buy price and below the sell price. 

Tony [00:48:27] Okay, anyway. 

Cameron [00:48:29] It’s a Schrodinger, so it’s both a buy and a sell. This is neither, this is a don’t go there. 

Tony [00:48:35] Oh true, it’s below it’s, it’s below both isn’t it? Buy line and sell line, yeah, no, you’re right. Yeah. It’s a sell. 

Cameron [00:48:42] Mm-hmm. Well, you did say last week when it was stock of the week it probably won’t last long. 

Tony [00:48:45] Unfortunately. The first thing I did was to see if there was a dividend paid recently, but that was paid a few months ago, so it’s not that. I’m not sure what’s going on. 

Cameron [00:48:57] Yeah. That’s the curse of QAV. Uh, sorry to Mr Reg Rowe, uh for that. Listen, I’ve got a late question if I can throw it in, from John: “at the moment I find I buy stocks from the tip of the week with positive sentiment, the stock falls to the sell line, and then is sold at a loss. Not a huge loss. I’m thinking that there will be months where this happens but need to keep on with the process so I capture the good months where there are sustainable increases in share price. Appreciate anyone’s thoughts.” 

Tony [00:49:27] Yeah, I’m having the same problem John. It’s a good point, the way this markets been going this financial year. It’s been quite choppy and I’ve had the same problem; like Super Cheap or Super Group. You know, I buy it then have to sell out either through a sell line or a rule 1 stop, and buy something else, and it’s a lot more trading going on than what I normally do. Which is not a good sign, I don’t think, I think there’s – who knows what happens in the market, but it’s not the usual way that investments go. Couple of other comments, I’m seeing – you know, one of the things that I look at every day, when they publish it anyway, is the fifty two week highs versus the fifty two week lows for stocks in the Financial Review. And, when the market’s going up, there’s generally a correlation between more fifty two week highs than there are lows, and even though the market’s still going up, at the moment there are more fifty two week lows than there are highs which I think is sort of a trend sign that thing might be turning. But anyway, I’m not changing what I’m doing, but the fact that we are having the problem the same, or that I am having that problem the same that John is hasn’t changed what I do but it’s at least a sign of a bit of a fragile market I think. And potentially, I don’t know, could be an early warning sign that things will get worse in which case we’ll sell and sit in the sidelines waiting for them to get better. But, I’m having the same issue that John is. 

Cameron [00:50:54] Yeah. So, I did point out to John on Facebook that whilst the market is choppy if I look through our recommendations since we started again in September, one two three four five, six seven eight nine ten eleven are above water, and lets see, one two three four five six seven eight nine ten are underwater. So, eleven out of twenty one. A little bit more than 50% are still above water this week. 

Tony [00:50: 35] Yeah, and we’re aiming for, we average 60% so we’re a bit below average. But that’s, I mean, statistically that could happen, it could, we could, you know, get more sells than buys for a period of time, and statistically we settle at six out of ten being right, and we’ll have periods where we’ll have seven out of ten right. So yeah, it’s going to move around. 

Cameron [00:51:53] Yeah, my point though was despite the market being choppy, and despite there being some that have gone backwards, more than half of the ones that we’ve put forward since September have gone up, so there are still winners to be had out there, just depends, maybe John’s just unfortunately just been buying the bad ones. 

Tony [00:52:12] Yeah, same here. And also too of course, you pull the weeds and let the flowers bloom. So, you’ve got to keep doing that because even if you’ve had ten stocks wrong like in the stock tips, if you pull them out 10% of what you pay for them you’re down 10%. Whereas, the upside for some of those stocks is 40 or 50% so it’s making up for the losses. 

Cameron [00:52:32] I also wonder if there’s any trend with the stock tip stocks in terms of performance of small-caps versus large-caps. Because I know with my own portfolio, my small-cap portfolio is doing a lot better than my large-cap portfolio, but I don’t know if that’s just bad luck or if that’s an indication of something. 

Tony [00:52:52] Yeah, I don’t know either. We’ve had this question once before; are you better off buying small-caps or large-caps, and the way that I look at it is that if you go back and Google the large-cap index versus the small-cap index over a long enough period of time you will see that they each have their period of outperformance, but overall they’re performing the same as the ASX

Cameron [00:53:14] Yeah. I just wonder if it’s been a little bit more volatile for large-cap stocks in the last six months than it has been for the small-cap stocks, but…

Tony [00:53:22] Yep, possibly. 

Cameron [00:53:22]…I really don’t know. 

Tony [00:53:24] Yeah, dunno. But they will, they will each have their outperformance times and then they’ll sink back and underperform for a while. 

Cameron [00:53:29] Yeah, no I accept your point that over the long haul, they’re roughly about the same. 

Tony [00:53:34] Yeah. 

Cameron [00:53:36] Alright, well that’s, that’s all I’ve got, Tony. 

Tony [00:53:39] Yeah, I think the only thing we didn’t talk about was our top three stocks from Navexa for the week. 

Cameron [00:53:43] Oh yeah, I still don’t see those emails. I must go to my junk folder. 

Tony [00:53:47] Oh really, I get, I get one a week, but I just go in before the show and do a seven day report in Navexa anyway. 

Cameron [00:53:53] Oh, okay.

Tony [00:53:54] And rank them. 

Cameron [00:53:55] What were they this week? 

Tony [00:53:56] So BFG, Bell Financial Group, and that was our best performing stock for the week and it was only up 2.16%, so uh, the portfolio has had a bad week. CVL was up 1.43%, and SFC, good old Shaffer Corp was up 1.4%. But there were only four positive stocks for the week in the Navexa for us, so it has been a choppy time for us. 

Cameron [00:54:23] Yeah, and that’s going to happen. 

Tony [00:54:25] It does happen, yeah. 

Cameron [00:54:26] As I’ve heard you say many times, that’s investing. That’s the market, you know? 

Tony [00:54:32] Correct. That’s exactly right. And, the worst time to change your process is when you’re in this kind of market which is chopping and changing and you start second-guessing yourself. That is exactly when you need the process the most. 

Cameron [00:54:43] Well that’s what Jim O’Shaughnessy says in What Works on Wall Street, too; the biggest mistake people make is that they get an investing strategy, they follow it for six months, then things start going bad. They go “all shit” and they jump and think of another investing strategy and they keep jumping horses, and yeah, never get any sort of consistency. 

Tony [00:55:02] Yeah, that’s right. Our everyday life measures things in hours and minutes, but the stock market, you know, you’re really measuring things in years and decades so you can go through periods of underperformance and that can be demoralising but you still have to stick to the process because over the long term it works. 

Cameron [00:55:20] Yeah. And again, I keep just looking back at our Navexa portfolio which we’ve been running since September 19 now. We fully invested just before, six months before COVID hit and we went through a really rocky period when COVID hit. Everything was plummeting and we were underwater and underperforming the index, et cetera et cetera. But, if I pull up, just pulling up a report here from the folks at Navexa, let’s see. 2019, September 1st to today, since inception our portfolio’s up 32.37% versus the SPDR200 up 9.99% over the same period. 

Tony [00:56:22] Yeah, three to one. And we have questioned those numbers and how Navexa calculates those, but since September, I guess the more telling figure is that since September 2019 our portfolio’s up 50% in total. So we started with a $20,000 portfolio and we now have a $30,000 portfolio roughly, and the stock market isn’t up 50% over that time period, so we’re definitely outperforming. 

Cameron [00:56:49] And regardless of how they’re calculating it, they’re calculating us and the SPDR200 the same way I imagine. 

Tony [00:56:55] Correct, yes. Yeah. 

Cameron [00:56:56] By whichever calculation method you’re using we should be doing about three times as well as the ASX200, so that’s-uh-it works. And there’s been good times and bad times, “good times, bad times,” just long term hang in there, it works. 

Tony [00:57:18] Yeah. 

Cameron [00:57:18] “It works, if you work it.” That’s a shampoo ad or something? I dunno. 

Tony [00:57:24] Is it? 

Cameron [00:57:24] Women’s shampoo? I don’t know. Well, ah, I went to see the new James Bond film today, so I was late getting to the recording studio because of that. Taylor and I went to see the Bond film. It’s about twelve hours long, not great. Like, not great, honestly. You know, went to see it out of loyalty to Daniel Craig, but ah, yeah. I’ve seen all of his Bond films in the cinema. I always regret it, but, you know, I keep doing it. 

Tony [00:57:56] Well, the early Daniel Craig ones were fantastic, but they have gotten a bit formulaic and a bit silly since then. Yeah. Which Bond always does. 

Cameron [00:58:05] The first one, Casino Royale, fantastic. It still holds up. Gritty, earthy, he was just a guy with a gun and a 007 license, you know, and they’ve just gotten sillier and sillier. At least this one, you know, there’s still no invisible cars like Timothy Dalton or… but there is, you know, just, he somehow gets shot at fifteen hundred times and barely gets a scratch on him and that kind of stuff. Blowing up, and all that kind of jazz. Anyway. 

Tony [00:58:36] Yeah, right. Yeah, well I’ve got nothing to report. I’ve been playing golf and been drinking nice wine, so I haven’t watched a thing for the last week, pretty much. 

Cameron [00:58:46] Not even Succession?

Tony [00:58:46] I haven’t, I’ll have to catch up on that tonight. 

Cameron [00:58:49] How many episodes behind are you? 

Tony [00:58:51] Uh, just the one I think. Monday night’s.

Cameron [00:58:55] You saw last week’s, where Logan was incapassitated?

Tony [00:59:00] Yes, walking along the beach. Or back from the beach, yeah. 

Cameron [00:59:03] No no no no, the one after that, the ah…

Tony [00:59:04] Oh, no I haven’t seen that one then, no. 

Cameron [00:59:07] Oh! That I think is one of the best episodes of television history. 

Tony [00:59:09] No I have, sorry. Yes, when he goes a bit la-la when he’s at the AGM. 

Cameron [00:59:13] Loopy, yeah. I said, it’s like the anti-Aaron Sorkin episode because instead of everyone running around having good ideas they’re just useless. Logan’s out of action and they’re all just “what do we do? What do we say?” Just an hour of them running around like chickens with their head’s cut off was really good television I thought. 

Tony [00:59:36] It was the anti-Sorkin, wasn’t it. It was so much like corporate life. 

Cameron [00:59:40] Yeah! Yeah, exactly, right? They’re not, they’re not the West Wing crew who all had got-you know, they’re all just like “shit”. These are, forget the kids who we know are basket cases, but Jerry and Karl and Frank, these top executives who have been with him for thirty years – as soon as he’s not there, they can’t make a decision because they’re all terrified of what happens if Logan wakes up and they made the wrong decision. Shiv was the only willing to make a decision. 

Tony [01:00:10] Yeah and of course it was criticised as soon as he came around. 

Cameron  [01:00:13] Yes. Yeah yeah yeah, he just tore shreds off her. But, you know, she had the balls to do it. I thought it was such a great episode.

Tony [01:00:22] I noticed there’s a new season of Endeavour coming out on Friday night on the ABC, which I love. 

Cameron [01:00:27] I don’t know what that is, what’s Endeavour? 

Tony [01:00:29] It’s uh, well, Endeavour Morse, it’s the Inspector Morse origin story. It’s set back in the early 1960s in Oxford, so it’s just great to see all the old cars and the old fashion and musicians and things from that time. And, Inspector Morse, it’s a great story. It’s that classic, you know, smart guy becomes the policeman back in the ‘60s, puts up with all the thugs and heavies who solve crimes by going around and knocking heads together, but he’s trying to Sherlock it. It’s quite good. 

Cameron [01:01:02] Well done? What’s that on? 

Tony [01:01:04] It’s on the – it’ll be on iView – it’s on the ABC. 

Cameron [01:01:07] Right, I’ll check it out. 

Tony [01:01:07] On Friday nights now. Yeah, no, it’s good. 

Cameron  [01:01:10] Alright, thank you Tony. 

Tony [01:01:12] Thanks Cam, and sorry we’re a bit late with this episode, but it was good to have a break. 

Cameron [01:01:18] Yeah, and I think we’re going to start recording them a little later in the week anyway, starting next week. 

Tony [01:01:24] Yeah. 

Cameron [01:01:24] Maybe Tuesdays we’ll record them instead of Mondays from now on. Tuesdays or Wednesdays, I think that’s… Now that we’re trying to get the buy list out on Mondays, trying to get the buy list out and the podcast recorded is a little bit too much on my plate, so I’m going to try and split them up. We could do it either way, podcast or buy list, but I think buy list makes sense to get out on a Monday. We get Friday night data, get it out, so we might keep doing that. 

Tony [01:01:53] Yeah, it certainly makes it easy for us to do the buy list. Listener’s don’t know, but we do three or four different buy lists and then compare them to make sure we don’t have errors. And if we do it with the Friday night data we can do it over the weekend at our own time. Whereas, if we do it on a weeknight, we’ve just got that evening to do it all together and that’s too hard, so… yeah, Mondays is good for the buy list and yeah, Tuesdays is fine for me for podcasting. It’s great. 

Cameron [01:02:18] And I need to do the checklist, and then do all of the comparisons, and there’s always – and this is a good learning for people too – there are mistakes every week. You miss stuff, I miss stuff, Alex misses stuff. So… and we also find stuff that the other people don’t find, and so I have to go through every anomaly and go, “okay, why do Tony and Alex have this one and I don’t? What happened?” Or “why do I have it and they don’t? What happened?” and do all of the comparisons. Takes me hours to do that. But, point being that, yeah, humans make mistakes and…

Tony [01:02:53] Especially with Excel. It’s not perfect. 

Cameron [01:02:55] Yeah, which is why we need a software version of this that doesn’t make mistakes. We need, we need an AI version of us soon. 

Tony [01:03:04] Yes. You hear that, Chinese? We’ll have an AI version, thank you. 

Cameron [01:03:10] Premier Xi, if you could get on that, that’d be great. Or President Xi, whatever you are at the moment. Life long President Xi, may he reign, his glorious reign never end. Alright. 

Tony [01:03:22] Okay, thanks Cam. 

Cameron [01:03:23] Thank you. 

Cameron [1:03:29] The QAV podcast is a production of Space Craft Publishing Proprietary Limited authorized representative of FSL 520442 AFC Representative No. 0012927718. Please don’t make any investment decisions based solely on listening to this podcast. This is presented as general advice only, not personal financial advice. We don’t know your personal financial circumstances. Please see a financial planner before making any investing decisions.