Transcript #447

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.