QAV 450 Transcription

Cameron  00:11

Well we’re back with QAV. This is episode I think 450, 450. We’re recording this on the 14th of December 2021. TK is down in Cape Schanck again. How are you Tony?

Tony  00:34

Yeah, good thank you. Really, really well. Enjoying Cape Schanck.

Cameron  00:37

How’s the golf?

Tony  00:38

Good. Near perfect weather down here, it’s lovely. Had friends staying with us and they just left. Ruddy’s still here with me, though, we’re planning again tomorrow.

Cameron  00:45

Lovely. Well pass on my regards.

Tony  00:48

Christmas time is just incredibly busy with catch ups and things at the moment. Yeah.

Cameron  00:52

Yeah. And you used to live down there, right? So, you’ve got a lot of friends down there I imagine that you want to see and…

Tony  00:58

Correct.

Cameron  00:59

… Daughters down there, and…

Tony  01:00

Yes.

Cameron  01:01

And with us also today on the show, very special guest coming to us from, I don’t know where, Perth, I think, is that right? Luke Gibson? Luke The Gibonator Gibson.

Luke  01:12

Yeah, that’s correct.

Cameron  01:13

How are things in WA? You’re gonna open your border up to the world in February, I hear, Luke.

Luke  01:19

Yeah, supposedly February. Looking forward to it.

Cameron  01:23

We’ll be able to come over and do a QAV event. Now, Luke, how long have you been a QAV member?

Luke  01:29

Well, to be honest, I’ve listened from the first episode. I’ve always listened in batches. I had a long drive, about 40 minutes. But to become a premium member, I started that in September. I finally splashed into my pocket.

Cameron  01:43

Oh, so only a few months, you’ve been a QAV club member. Right? Okay. And at what point did you have the idea of doing your own YouTube series? So, Luke, people probably know, because we’ve talked about him, I think, on last week’s episode, Luke, a while back, couple months ago, I think started his own YouTube investing show, which we’re going to talk about, let’s stop a bit. Let’s tell us about yourself first, like I told you, I’m a professional at this. I know what I’m doing. You’re in good hands. So, you live in WA, you just told us off air that you’re born in 1990, which is, I can’t even begin to get my head around people born in 1990. Tell us about yourself. What do you do when you’re not investing, Luke?

Luke  02:23

Well, I’ve got two companies on the go at the moment. So, I have a machining and fabrication workshop, which takes up most of my time, a small crew, there’s about five of us. And other than that, I have a temporary fencing company, which I’m slowly winding out, but I still do it a little bit. And other than that, I’m reading and learning about investing and working around the house, I guess.

Cameron  02:49

Is a temporary fencing company a fencing company that you don’t plan to run very long, or you’re just, it’s temporary, the fencing itself is temporary. I have no idea I’m an idiot.

Luke  03:02

The fencing itself is temporary.

Cameron  03:04

What’s the point of temporary fencing? Like construction sites?

Luke  03:09

Yeah. Construction and…

Cameron  03:11

And events, stuff like that?

Luke  03:12

… Events. Yeah, yeah. So, it was like my, one of my main first companies have probably had it open for three to four years. And yes, it’s very hard work though.

Cameron  03:23

Really? Because what, you have to load fences on and off trucks and set ’em up and a lot of running around?

Luke  03:30

Yeah. All the blocks weigh about 25-30 kilos each, so carrying those around and slugging them around, it’s a bit hard yakka.

Cameron  03:37

Yeah, right. When people say to me “you’re working hard” I go, “Dude, I sit in front of a computer all day,” it’s people who do that kind of stuff that are, that are really working hard. And machining and fabrication again, I’m going to show my ignorance here. I hear people use those words like it means something. I have no idea what that does. Tell me, tell me what that’s all about.

Luke  03:59

Okay, look at it as in you get a steel billet.

Cameron  04:02

I don’t – nah, see, I’m lost. What’s a, what’s a steel billet, Luke?

Luke  04:07

Heavy metal.

Cameron  04:08

Like Judas Priest? I mean, Judas Priest, Metallica. Is that what we’re talking here? I know that.

Luke  04:14

Nah, more material side. So, yeah, so, so we get raw billets of steel and then we pretty much sculpt them using CNC machines into whatever the customer requires.

Cameron  04:25

What’s a CNC machine?

Luke  04:26

I should know this. I think it’s Computer Numeric Control. So it’s, it’s like an – do you know what a lathe is?

Tony  04:30

Mm, to lathe. Yeah.

Cameron  04:31

Yeah, vaguely.

Luke  04:31

Or a milling machine. So, we have computerised ones of those. So, they’re, they’re automatic, and they can work overnight and it’s quite fascinating. I’ll send you some information on them. Some on my channel, actually.

Tony  04:49

My brother in law does that, Luke, up in Tully. He has a computer lathe and he makes replacement blades for harvesters in the main.

Luke  04:57

Beautiful. Yep.

Cameron  04:58

So, you just have, like, a digital blueprint and you just put in the computer and it just – does it use water? Because I have seen like one that uses high pressured water filled with nanoparticles, diamond particles or something to slice through metal. Is it something like that? How does it chop away the steel? Lasers?

Luke  05:17

That’s a water jet cutter. So, we have more of the ones where we use carbide tooling. So we remove the chips with carbide. But it is full of coolant to keep everything cool, and yeah, a video tells, tells a million words.

Cameron  05:32

That’s good. So, you’ve, you’ve got a couple of businesses. When did you start your first business? As a young fella?

Luke  05:38

Yeah, I worked with the same company when I was 16. So, my mother told me, I could either get an apprenticeship or I could go back to school. So, I had the choice of the two. I chose apprenticeship at 16. I was with the same company for I think it was like fourteen-fifteen years. But, during that, maybe my eighth, ninth year in, I’ve always been in leadership roles as well post apprenticeship. But um, I started a vending machine business, was my first one. So, I used to go out, site a machine, put the chips in it, the Coke in it, and then just go in every week, and then just take the money and just repeat. Was pretty fun. But I sold that when I moved over to Perth. And then I’ve had a handyman business over here, which I wound down and turned into the temporary fencing business, and then started the machine shop. So, yeah.

Cameron  06:27

Where we from originally?

Luke  06:28

So, Newcastle, New South Wales, by Dave.

Cameron  06:32

Shout out to Dave from Newy, who’s the, I think sent us some questions today, too. Don’t know, maybe it’s for next week. Good stuff. All right. So, that’s a little bit about you. And tell us about your investing background pre QAV, Luke.

Luke  06:50

Yep. So, as I started jumping on everything, like the news, the emotions, like all that kind of stuff that comes with investing really got me at the start, but I pretty much started investing in 2018, towards the end of it. And the reason behind that was because the banks tightened credit policy and I wasn’t allowed to invest in the housing market anymore. So, I wanted somewhere else where I could start putting my savings. So, I started reading all the books, I just got obsessed, I listened to all the podcast, shout out to Phil Muscatelo as well, I was listening to all his ones, episode after episode. And yeah, I bought my first shares in November 2018, which was my, my favourite, which was FMJ at $4.21 each.

Cameron  07:36

Woah!

Luke  07:37

Yeah, that was, that was, that was…

Cameron  07:38

I hope you rode that all the way.

Luke  07:40

I did. But then I bought a couple of others, like ANZ and, and then I just kind of noticed that I was emotional with investing. So, I took a more passive approach as I was learning. So, I’m not sure if you’re aware of the CommSec Pocket app with the seven ETFs that it comes with. So, I started every month putting 10% of my income towards that. I’ve built up a portfolio of I think about $10,000 in those and just watched it. And then I tried to start active investing. And the moment that the light bulb went off was when I was, when I was jumping into these, these growth stocks, like when you spoke about, I think TK, with A2 Milk, how everyone jumped on the bandwagon? Well, I was unfortunately one of those. And I watched it come down and I think I ended up losing about 42% in it in a $10,000 stake. And the second light bulb moment was when FMG was in discussion and the three-point trend line sell for the iron ore. I kept holding that on for the dividend, I thought it was crazy to sell before and then I just watched that just plummet. And I was like, I’m QAV from now. That’s what got me.

Tony  08:55

Good. Always the university education you have to have at the start, isn’t it, the mistakes you make?

Luke  09:00

Yeah.

Tony  09:01

Before you get wise. Yeah, we’re all, we’re all thinking it. We all have our own versions of those stories, I think. Well, I do anyway. Yeah. 100%. Yeah. So, tell us about your podcast, you’ve got a plan to turn your savings into a million dollars. What’s the story there?

Luke  09:20

Yeah, so, initially when I started YouTube, it was more so for to keep in touch with the Eastern states with my friends, family, etc., over there, and try and show videos of the hustles of life that I do do with my companies ‘n that. But I found that was too hard. So, to kind of record that whilst also doing all the work and then the editing like, hands off to you Cam, there’s a lot of work in it. But then I thought, “well, I’m really passionate about this investing and I’m really passionate about the QAV methodology, and why not recorded if I’m already doing it anyway.” And yeah, that’s kind of where it branched out. But the goal is to take my initial investment, which was 50k, which was selling off all those other poor investments and then taking a full stake. And to grow that into a million dollars over the next ten years, it’ll kind of fund towards retirement as well, I guess in one sense.

Tony  10:16

You’re too young to retire.

Cameron  10:20

I know a lot of QAV club members have told me that they, they’re sort of are a little bit shy about talking about investing and what they’ve learned on the show with friends and family, because it’s kind of a, kind of a weird thing in Australian culture to talk about investing. But I guess on the flip side of that is, there’s all of these FinTech people now, including the guy that just got slapped by ASIC, I saw in the Financial Review this morning, some guy is being investigated by ASIC for giving stock tips without an AFSL. That obviously doesn’t bother you, you’re not scared of putting your journey out there?

Luke  10:58

I was a little bit hesitant at the start, and I started to research what you can and you can’t get away with. So, I put my disclaimer on at the front and I’m hoping that’s enough, I probably should look into it more. But it’s not really more of giving stock tips that’s kind of like to share my journey, and kind of also, like really teach people it’s not as scary as, as the professionals and all that kind of make out that it is. That if an average Joe like me can do it, then those guys can, too, as well. So.

Cameron  11:33

But that’s what I meant, like a lot of people are just like, little bit, I don’t know, shy about talking about investing. Because it may not go well, there’ll be mistakes. And I know like I’m a lot older than you, I’ve made more mistakes then you’ll probably ever make in your life and ten times as many. So, I’m well beyond caring what people think about me making mistakes, and I also know that Tony is gonna guide me in the right direction. So, that’s cool, I can be the idiot. But I think it’s just great that you’re comfortable putting your journey out there. Obviously, you’re not worried about, you know, how people view it, if it goes up, it goes down – I saw one of your ones recently where I think your portfolio had gone backwards a little bit, like all of ours have in the last month or two. And you were just laughing it off “eh, it’s part of the journey, you know, doesn’t matter. It’s long term.” Which was great.

Luke  12:24

And that’s, that’s exactly what’s so good about this, like, all jokes aside, I was nervous about putting a monetary value live for everybody to watch. And in the back of my mind, I was like this could either work, or I could fail and look like a fool. But the thing about it, if you’re doing it public, you kind of, you have to be true to the methodology because people will pull you up like people that understand it and they like, if I start going outside of it, someone could bring me back in. Like I get asked questions all the time about the methodology and it makes me have to go back and research and then make me understand a bit more. And then, because well, what’s the saying? To learn something to perfection, go and teach it? That’s not the saying, I butchered that. But I hope you know it.

Tony  13:15

Definitely, yeah.

Cameron  13:16

Yeah. Well, if you really want to understand something, teach it. Yeah. And I know that even Tony’s been through that journey while we’ve been doing the podcast, right Tony?

Tony  13:24

Yeah, no, correct. So, there’s that, that part of it: how do you explain it to people? Because, after twenty-thirty years of doing it myself, without talking to anyone, it’s all second nature. Right? But you’ve got to actually then explain it in a way that makes sense to people who haven’t heard about it before. So, you have to start from scratch and have everything documented. And, but you’re right, Luke, it’s the process of teaching makes you understand it better, because a lot of times, I’ll just whiz through it quite quickly. I mean, I’m just, that’s my personality. I’m an 80/20 guy; I’d rather get a lot of stuff done in a day and have 80% of it go right rather than spend all day doing one thing and making sure it’s perfect. So, having to stop and talk about it and document it and all the rest has made the system much more robust than what it was when I was using it, when I was just whizzing through based on my own experience without having to worry about the finer points of it.

Cameron  14:20

So Luke, the title of your YouTube if people want to go find it is the Gibson Hustle. Is that what they search for on YouTube?

Luke  14:29

Yes, correct. Gibson Hustle.

Cameron  14:32

And you’re doing episodes how often at the moment?

Luke  14:36

So, I’m doing one episode a week at the moment as it grows, like I kind of set my own little milestones. If I reach a hundred subscribers, I’ll try and put a little bit more effort into it. I might start trying to show my, my beard and my mug again. And then if it keeps growing then I’ll, I’ll try and do two videos a week and yeah, just hopefully just grow it over time.

Cameron  14:58

That’s great. And how is your portfolio going this week?

Luke  15:02

This week? I’m going to pretend that I haven’t looked but it’s been two very nice day so far.

Cameron  15:10

Yeah, the market’s been a little bit buoyant, more buoyant this week. Anyway.

Tony  15:14

So, a couple of questions about your portfolio, Luke, and your approach.

Luke  15:17

Yep.

Tony  15:18

Why five stocks and not more than five stocks in the portfolio?

Luke  15:22

So, I set a little trading plan to kind of enter my portfolio in. So, the goal is to get to twenty stocks. I was trying to be a bit, a bit tight towards the CommSec’s brokerage. So, it’s like $19.95, up to $10,000 investment. So, to keep myself true, I was trying to do a 10,000-10,000-10,000 all the way until I get to 200,000. And every time I do reach 10,000, from owner contributions, and capital gains from when I sell, then I put another stock in there. And it was kind of, kind of to, to kind of make it smaller and grow it out. So, I could really hone in on the process and really understand it as well.

Tony  16:06

And that was my next question. So, if you, you’re really trying to get from a portfolio of $200,000 to a million rather than $50,000 to a million, because doing that in ten years would be a really high annual return, wouldn’t it?

Luke  16:19

Right, it’s kind of to grow, it is to grow from $50,000 to a million, but each kind of month that it should compound on itself every time I do the owner contributions, and then introduce the extra stocks. And yeah, I didn’t really have a few hundred thousand of capital to start off with the twenty stocks.

Tony  16:40

Okay. One last question, and that is, I noticed I was going through your video casts preparing for this, and one of the episodes I think you had Medusa mining, MML, and it had dropped by more than 10% but you didn’t sell it. So, what was the reasoning behind that?

Luke  16:58

I was a naughty boy. But that’s, that’s exactly what I was saying. Like, is, you have to be so true when you’re doing it live so, people pick you up on things that you think you’re doing it the proper way and then as soon as someone picks you up, you’re like, “I need to be more true to the thing” because it keeps you, it keeps you honest. Keeps you honest.

Cameron  17:28

Well, yeah, I think you have to do penance, Luke, you have to say five Hail Tony’s before you go to bed tonight.

Luke  17:35

Five Hail Tony’s.

Cameron  17:37

Luke, fantastic work. I really do like your, your style, no bullshit, sort of tradie – what’d I call it last time – “tradie with a Ute” approach to it.

Luke  17:49

Yeah.

Cameron  17:51

It’s great. I love it. And I think there’s, you know, there’s a whole market of guys that, and girls, that you’ll be able to reach with that and get them on the right path and send them to QAV. Good stuff, Luke, good luck with it. And you’ll have to keep coming back on and giving us updates.

Luke  18:10

Yeah, for sure. But yeah, thank you to you guys. You’ve really, it’s so good that you’re, you’re teaching everybody on a broader scale that everyone can do it themselves and everyone could do it with their own Super and you don’t have to rely on the big man to cash his own checks. And yeah, kudos to you guys.

Cameron  18:28

Yeah, thanks. Well to Tony. All right. Cheers, mate. That’s the Gibson Hustle on YouTube. Look it up, folks.

Luke  18:36

Awesome. Thank you very much, guys.

Cameron  18:39

All right. Well, we’re back. Me and Tony, Luke’s gone. That was great, lovely chap, and we wish him all the best with his YouTube show. All right. Well, it’s been a big week, Tony, last week, obviously, you and I prerecorded a bit of 2021 wrap up, which seems to have been very well appreciated by everyone. They seem to have enjoyed that episode. But there’s been a lot of stuff going on in the last week. So, we got a lot to cover. I guess I’ll start with we sold MML. We did a rule 1 sell of MML out of our QAV portfolio. You mentioned the MML drop when we were chatting with Luke, and we replaced it with GAP. G-A-P. I think that was on the seventh of December. Anything to say about that? Or, that’s just, that’s how we do it, rule 1 sells.

Tony  19:30

Yep. That’s the way it goes. Yeah, I think I don’t know when you bought GAP because I’ve been travelling, but I did get a report from Navexa this week saying that GAP was the best performing stock for the week.

Cameron  19:41

There you go, seventh of December according to my notes is when I bought it.

Tony  19:45

Okay, so probably didn’t get all that increase then.

Cameron  19:47

Well, if they’re saying we did then they would be marking it from when we bought it, right?

Tony  19:52

It’s up 11.94%, yeah. Should be.

Cameron  19:55

Yeah, that’s not bad for a week. Good on you, GAP.

Tony  19:58

Yeah, good thing we swapped out.

Cameron  20:00

Yeah, exactly.

Tony  20:01

Yes, I’d owned GAP, I owned GAP many years ago because it’s only a small cap stock but it’s Gale Pacific which make shade cloths and the like.

Cameron  20:09

Right? Well, it’s been a hot summer. I guess its good time to be in the shade cloth business.

Tony  20:14

It’s been a wet summer.

Cameron  20:15

Yeah, hot and wet.

Tony  20:16

La Nina.

Cameron  20:17

Yes.

Tony  20:20

Sounds like a Chevy, Chevy Chase film, a Hot Wet Life.

Cameron  20:24

I keep thinking of Robin Williams “hot and wet!” I do that every time we say hot and wet. So, I won’t do it again. Copper sell. Copper breached, so for anyone holding SFR, C6C, AIS, they all became sells under the commodity sell at some point last week. Hope everybody was paying attention to that.

Tony  20:47

Yeah, like I don’t, it has a sell. It’s, the copper price seems to be trending sideways. So, if you have missed it, just keep checking it each day. It’s going up and down. Yeah, it’s a sell at the moment.

Cameron  20:59

Yeah. And on the flip side, iron ore became a buy again last week.

Tony  21:05

It did. Yeah. I mean, I think people were getting into iron ore stocks again earlier than we, we have, but it’s definitely got… the graph now has the highest peak and then the second peak, which means we can draw our buy line, and it’s above the buy line, for sure.

Cameron  21:21

The confusing thing for me on that, I think it was Lee who first asked the question on Facebook last week, “is iron ore a buy again” – paying attention, Lee – and I pulled up the last graph you and I did and I saw the fudged sell line and it was well below the fudged sell line. But you’ve ditched that now, you’re looking at the ridgy-didge sell line which is down like at $20, and it’s obviously well above that. Tell us why we’re ditching the fudge sell line now and looking at the real sell line again.

Tony  21:53

Well, I think the fudged sell line was there for the sell, because the iron ore price has that very sort of tends to have a very short sharp cycle, not five years, but probably two. And to be honest, I can’t recall another situation like this because most times commodity stocks you can use the five-year graph for. But I did ditch it because it is above its five year sell price and it’s now back into a buy situation. So, I think it’s worthwhile putting them back on the buy list. But yeah, I can’t point to other examples to say this is the way to go, but that’s my logic. It’s that it was a good fudge for the sell, and now we’re going to just ignore it for the buy.

Cameron  22:29

Yeah, I know GRR, which is one of our stocks of the week, has already spiked up massively since it sort of reached its bottom. It’s not far from where it was at its peak. I think it’s about back to where it was when we sold it. That was our number one stock as I think you said last week, last year. But I had one of our new listeners call me actually this morning and he said “I’ve been looking at this iron ore line, I get the, I get the buy line, I get the sell line. I can’t work out the science behind the fudge line.” And I said “uh, don’t even try. There’s no science. It’s just Tony.” I said “it’s just Tony’s gut feeling after thirty years of how to do this stuff. There’s no science behind it. It’s just, It’s Tony science.” It’s like…

Tony  23:16

Yeah, Tony science. That’s a good term, isn’t it?

Cameron  23:18

Uri Geller, it’s Uri Geller bending spoons science.

Tony  23:23

Hey, don’t laugh, Uri Geller owns an island in the Bahamas.

Cameron  23:30

Anyone under the age of fifty probably has no idea who Uri Geller is, but look him up. Look up some Uri Geller YouTubes from the 80s.

Tony  23:39

And look up James Randi who debunked him.

Cameron  23:41

Yeah, just passed away a year or two ago.

Tony  23:45

Yeah, he did. There is some science behind the fudge for iron ore, and as I’ve said, it’s got to do with the iron ore cycle. So, I was looking at – because a lot of these commodity stocks, you can apply the five-year monthly trend to; gold, for example, copper, all those, they have longish cycles. But iron ore in particular tends to move up and down very, very quickly. And so, I didn’t want to, I fudged it using a two year graph. I didn’t want to get caught out if it dropped suddenly, which it did.

Cameron  24:15

Right. But I guess by science there’s nothing in the Bible that says “here’s where you should fudge and the timeframe you should use.” It’s just you know, that these are the sorts of things that we just rely on your ancient wisdom from, that you learned from monks in Tibet to teach us these things. When you went up to the cave and did the meditation for six years and all that stuff.

Tony  24:39

Yeah, I wasn’t allowed to leave until I could steal the three pebbles from the old guys hand.

Cameron  24:45

Were they iron ore pellets? Is that where they were? Speaking of iron ore pellets, serious question for you: BHP. When I was doing my buy list yesterday, it’s obviously, they do a lot of things but in a big way, iron ore and copper. Now we’ve got iron ore’s a buy, copper’s a sell. Is it a commodity sell or not, BHP, right now?

Tony  25:10

Actually, there’s a bit of copper in there, isn’t there? So, revenue by division for BHP: $45.86 billion is in iron ore, and then there’s $20.9 billion in copper. So, yeah, it’s a bit of a mixed bag. Dunno, Cam, I’d probably be keeping it on the sidelines at the moment.

Cameron  25:29

Oh, well, I had it in the buy list. So that’s…

Tony  25:33

I did too, until you’ve asked the question. If it was like some of the other things that BHP do, they’ve got $6 billion of revenue on coal, and $5 billion in petroleum. If copper was down around that sort of 5-10% of their revenue I wouldn’t worry about it. But it’s up there.

Cameron  25:50

It’s a big chunk, mm.

Tony  25:51

Total revenue. Yeah, it’s a big chunk. So, I think we should just call it and we should bench it for the moment.

Cameron  25:56

Bench BHP. Okay.

Tony  25:58

Yeah.

Cameron  25:59

All right. Well, what else? Trent on Facebook. Now, last week, when we were having a chat you were talking about this company Nufarm and you were talking about the chemicals. And you wanted to see if anyone out there knew what commodities we should be looking at. Trent, who knows a thing or two says, “this article gives some info in relation to the Nufarm chat, and what’s in the chemicals. The graph’s in the article tell you the active chemical and the types of products. The article itself gives some insight to the underlying commodity/supply chain.” And it was talking about glyphosate and gluphosenate, did you have a chance to have a look at that?

Tony  26:44

I did, and they were the, particularly glyphosate was the chemical I was thinking of, and I couldn’t find any graphs on it. But those, those links were helpful. So, I don’t think there was a five-year monthly graph, but you can pretty much see from the graphs that were provided that it’s generally in an uptrend at the moment. It’s a buy.

Cameron  27:03

Thanks for that, Trent. Good work. I was out at lunch with Lee the other day, we were having a bit of a chat, and we were talking about the CEO of Magellan suddenly resigning – Magellan Financial Group – last week. And Lee was telling me he holds some Magellan and in the middle of lunch his phone dings and he looks down and goes, “oh, Hamish Douglas is getting a divorce.” Apparently, he’s on Hamish Douglass’s, you know private distribution list and he got the text update. So, I wanted to ask you, our condolences to Hamish Douglas and his wife Alexandra and the family, but serious question: bad news sell when Hamish Douglas – I know we don’t own Magellan. I don’t do you own Magellan?

Tony  27:55

No, not at all.

Cameron  27:57

Okay. But if the CEO suddenly resigns, and the chairman announces that he’s getting – now I don’t know if these two things are connected. I’m not suggesting for the record, any way shape or form that these things are at all connected. I’m not suggesting that, don’t say that I am. Don’t, I’m not even hinting at it, seriously. Or am I? No, I’m not. Is this a bad news sell, Tony, if you were holding Magellan?

Tony  28:23

Yes, particularly with the CEO resigning unexpectedly and he’d been there for a long time. Usually you’d want to see the CEO give you plenty of notice that they were leaving, and then a handover process put in place and properly enacted by the board. But this has all been very sudden, so, I think it is a bad news sell. There, there was a, I’m just trying to think who it was, maybe Jack Bogle, there was a US investor who, a very famous one recently who said that whenever a fund manager got divorced, it was time to short the stock. So, there’s, there’s also that I guess, but the only other case I can think of is Kean Nelson who ran platinum and he got divorced and the share price was tumbling, but I think it was going down before that. And the same with Magellan, it’s been going down for a while. So, perhaps, perhaps you need to know the CEO is having, or the chairman in this case is having difficulties with his marriage when the share price starts going down and make a call. But definitely the CEO resigning unexpectedly was a bad thing to happen.

Cameron  29:20

Yeah. All right. Let me ask you about the DSK chart. Now, this is Dusk Group. We’ve talked about this chart half a dozen times in the last couple of years. They – well not couple of years – since they floated which was late 2020, so about a year ago. The Brettelator crapped out on this, this week, it couldn’t find a sell line, and I emailed Mr. Brettelator himself and he said, “yeah, it’s because there’s no sell line. You just can’t draw a sell line with this. There’s not enough troughs.” So, I wanted to ask you about this. I can’t remember if you passed this on your buy list or not this week, can you?

Tony  30:01

I put it back on my buy list, it was off for a while, and purely based on the fact that we’ve got an H1 and an H2. So, the Brettelator’s drawing those as a red line, but I’m drawing them as a yellow. So, my H1 is May 2021 and H2 is October 2021 and its above the buy line. In terms of the sell line, you can’t – there’s not two troughs, but I’ve been using, well you can if you want to, you don’t need to I don’t think in this case, but you can if you want to use, I was using January 2021 as L1 and then November 2021 as L2, just on the basis that that was a point. The L1 in January 2021 is a point it’s not a trough, but it’s deviating below what the trend line has been before that.

Cameron  30:56

Then what are you using for L2?

Tony  30:58

L2 I’m using November 2021.

Cameron  31:01

Yeah, right. The recent one. Okay.

Tony  31:04

Yeah. Well, I wouldn’t quibble about, I tend to see what Brett saying and agree with him. There’s there is no L1 as such, I was using a point, but even if, even if I can’t find the L1 or L2 sell line, then I think it’s fine to still use the H1-H2 buy line and call it in.

Cameron  31:19

Yeah. Like I passed it as well, this week when I looked at it, and it was more of a gut feeling thing. I mean, I think I need a sell line somewhere and it’s, it was picking up and I think I was looking at August 21 as L1 even though it’s not the lowest point, but it was slower than… so you’ve got really in terms of real troughs, you’ve got March 21, you’ve got August 21, and you’ve got November 21. But, and it, the price is currently above, you know, all three of those. So, yeah, it’s a tricky one.

Tony  31:59

Yeah, so because the lowest trough is actually November 2021, so, you can’t draw a sell line.

Cameron  32:05

And if you do start from there, and then you can draw it up through its current price, and you get that straight line thing, like we had, you know, coming out of the COVID cough that, which isn’t really that helpful, either, but, okay, thanks for explaining that. Oh, getting back to commodities. I should have added this earlier. Platinum is a sell again. Yeah, we had ZIM back on our buy list for a few weeks, and then it fell off again.

Tony  32:30

Yes, I agree. I took it off, too, this week.

Cameron  32:33

Mm. So, it’d be nice to have some sort of an alert system for commodities really, wouldn’t it?

Tony  32:40

It would, yeah, Stock Doctor can, we can look at the graphs, but we can’t raise alerts, unfortunately. So if someone out there out there is using a different service and knows how to do it, it’d be great to know.

Cameron  32:50

Yeah, I think that’s something Mr Brettelator later could do, really. He’s smart. Someone – he’s done his bit for QAV. There’s got to be somebody out there. One of our subscribers who’s smart enough to ride a commodity alert system for us. Get on that smart people. Would you mind? That’d be great. Thanks.

Tony  33:11

Hey, I saw, I saw Mr Brettelator in a photograph of all the Melbourne crew getting together at a brewery and I thought “gee”, yeah, I was very jealous.

Cameron  33:20

Well, bit of luck, assuming the end of the world doesn’t happen in the next few weeks, we should do an event in Melbourne. Mid to late January, I think we should stick with that plan. I’m long overdue for a trip to Melbourne. My last thing before we get into your things and stock of the week. AJL, wanted to ask you whether or not this qualifies as a qualified audit. AJL I think are back on the buy list this week, they peeked their head. I don’t think you had them on yours and I don’t think Alex did either, but I wanted captain’s call – is that what Tony Abbott used to call it? Captain’s call on it, even though I’m not a captain of anything, but I ran it through the three PTL calculator and it was about two cents above it’s sell line. So, I gave it the nod, but I did go looking for this and I wasn’t sure if this qualified or not.

Tony  34:14

Yes, I’ve had it as a qualified audit for a long time and that was thanks to James, our, our celebrity chef slash auditor who said that yes, it was a qualified audit. We checked with him when the report came out.

Cameron  34:27

Yeah, he specifically said AJL was

Tony  34:29

Yes. In fact, I think he called it out on the Facebook group after the results came out.

Cameron  34:34

Ah, dang it. Have it in mind, I’m stupid. Because I read through their note 2C material uncertainty relating to going concern, “we draw attention to note 2C in the financial report.” I read through it and can’t remember the details now but it didn’t… then they go on to say at the end of this “our opinion is not modified in respect to this matter.” And I still got confused by that, and I know we talked to James over this and I went up and looked at the wording because it’s in the Bible now what James actually said, I got the transcript and I throw it in there. So, if their opinion is not modified, is that a good thing? Or a bad thing?

Tony  35:13

I’m not sure, and you’d have to ask James, he’s the expert, but whenever I see material uncertainty about going concern, I don’t have to go any further.

Cameron  35:21

That’s it?

Tony  35:21

Worry about whether the audit’s been qualified. Yeah, if someone’s, if an independent person is even asking the question, that’s a red flag for me.

Cameron  35:29

Right. Okay. I’ll take that out of the buy list along with BHP, thanks for clarifying that. Okay, what do you, what do you got on your talky list this week, Tony?

Tony  35:41

My talky list. What have I got, I’ve got, just wanted to do some updates on the buy list that I saw when I was putting mine together. So, I’ve got AX1 coming off the buy list, the shoe company. I’ve got GMA, the mortgage insurance company going on to the buy list and that’s got a QAV score of 0.31, and a large annual daily trade, 1.8 million, so that might be of interest to people to have a look at. I’ve got CTP, Central Petroleum coming off. SWK coming off. ALK coming off, I put Dusk on as we just discussed, I’ve got Chorus coming back on, CNU, was just above it’s buy price, and I’ve got Kathmandu, KMD, coming off. So, people might want to just check those out if they’re of interest to them.

Cameron  36:34

Before you go on, I was, I was just gonna say you mentioned SWK. I’m just bringing up their chart. This is the one I’m thinking of – it is – I had look at this chart when I was doing my buy list. I hope some of our subscribers got into SWK. It’s had a corker run! At 30th of April, it was down at 14 cents. It’s currently trading at 36.5 cents, was as high as 38 cents at the end of last month. It’s up to nearly three times, two and a half-three times since April. Swick Mining Services. SWK. Well, I think it’s too expensive, now its price has gone up. It’s probably not getting a good score.

Tony  37:20

Yeah, but we don’t sell for that reason.

Cameron  37:22

You just said it came off the buy list. You didn’t say it was a sell.

Tony  37:25

Oh, sorry, that’s the reason. Yes. My mistake. You’re right. It’s kind of like just dropped off the buy list because it’s risen up in value so much, yes. Sorry.

Tony  37:33

Yeah. Yeah, had a big spike.

Tony  37:35

I’ve just, I’ve just made a note here saying SWK off. I thought it meant it’s breached its three-point trend line, but no, it hasn’t. You’re right. Yep.

Cameron  37:43

Yeah. I mean, I’ve never really paid any attention to it before. I think it’s always been fairly low on the buy list, it’s never really got my attention, but it’s had a great little run. So, if anyone out there bought it, well done.

Tony  37:55

Yeah. Yeah, good, happy days. What else did I have? I owned some stock of AMO, Ambertech, which was allocated to me by my stock broker. But I’ve had to rule 1sell that recently, so. It was going up nicely and then they made an announcement they were taking over a toy importing company of all things, and the share price dropped through the floor. So, I’ve had to sell that one so I’ll just make that as a declaration. Another one I want people to be aware of is the natural gas commodity trend line, three-point trend line. So, a couple of our stocks like Santos on the buy list, even though it’s an oil company, most of its income is coming from natural gas, and that’s getting pretty close to a sell. Hasn’t quite crossed yet, but I’ll just call that out for people who are holding gas stocks to watch. Beach Energy would be another one that comes to mind. And I’m using NG# in Stock Doctor, Natural Gas Futures Current. It’s still a fair way off its sell line, so the sell price for me is around $2.40, maybe $2.50, and the price is currently $3.80. But, you know, looking at it again, it’s one of these, it’s a potential fudge because it’s, it’s got a sort of, hit its low price in March 2020 and it’s high price in October 2021. And it’s dropped from 566 for natural gas down to 379 in the last two months, so it’s dropping quickly. So, it’s one to watch, and we may have to make a fudge call.

Cameron  39:31

And if you did fudge it you’d probably do L1 at March 21 and L2 at May 21, in which case it would have crossed at the end of last month.

Tony  39:43

No, I’d probably, I’d probably use something like July 20 al L1, so coming out of the trough.

Cameron  39:50

Oh okay.

Tony  39:51

And then L2 at March.

Cameron  39:53

Right.

Tony  39:53

And so, the, the buy price, sorry the sell price is going to be sort of 330 I guess, just looking at it, just eyeballing it on the graph, and a current price is 380. So, yeah, just wanted to make that observation to people to keep an eye on it.

Cameron  40:09

Okay. Speaking of STO, I think their deal went through. They’re now dual listed, is it in PNG or where’s their second thing, yeah, with Oil Search?

Tony  40:21

Yes. So, Oil Search and Santos have merged and Santos, sorry, Oil Search had a listing in PNG. Correct.

Cameron  40:28

Has that been a good thing for STO this week or a bad thing? I haven’t noticed. I think I think I do have STO shares.

Tony  40:36

I think it will be a good thing in the long term, yeah.

Cameron  40:38

Yeah. It spiked up a little bit this week, but nothing big happening with it.

Tony  40:43

No, and the oil price is, is still, it’s bouncing around but it’s been coming down of late, after a big run. And certainly, the gas price as I said has come off too. That’s probably having a bigger impact on Santos than the Oil Search merger I would have thought.

Cameron  40:59

Well, I hold STO and BPT, Beach, so I’m gonna have to, you know, that person that’s going to do the automated commodity alerting system for us just get on that quick smart. Thank you.

Tony  41:13

And put some overrides in there for fudging, too.

Cameron  41:16

Yeah, the Tony, what’d we call it? The Tony magic.

Tony  41:26

I’m gonna bend a line. I’m gonna bend the line everybody.

Cameron  41:33

God, good times. All right, what else you got,

Tony  41:40

Okay. Stock of the week.

Cameron  41:41

Right.

Tony  41:43

Stock of the Week I’ve got GWR, these are both iron ore stocks, GWR which is the small cap one. It’s, it’s not just iron ore, it’s also gold and tungsten. It’s a miner, obviously, that’s come up to, back onto the buy list now with our change of iron ore sentiment. QAV score of 0.79, so it’s the second highest stock on the list. The other stock of the week I want to talk about is the large cap stock, which is Grange Resources, which is back on the buy list and it’s got an ADT of one point, just under 1.4 million, so it’s plenty big enough for most people. And GRR is also an iron ore miner. Largely Tasmanian, but it does have a, an iron ore mine now in WA, but largely in Tasmania, which is a strange place for an iron ore miner but apparently, it’s one of the purest iron ore miners on the planet. So, it’s, it’s good. And to run through the numbers for our QAV score, it’s got a, I’m doing this with a share price of 74.5 cents, which it was on the 12th of the 12th when I did this analysis. It has a dividend yield of 5.37%, which is quite high, the Stock Doctor financial health is strong and steady. For people who are interested, the ROE is 46%, again, which is very high. The price to operating cash flow is 2.3 times so we’re buying it very cheaply, and the PE is 2.5 times. So, again, very cheap on both those metrics. We don’t have an IV 2 score for it, because we’re not getting enough coverage from brokers to give us some, some future projections on this one. But IV 1 on this stock is $1.50 and it’s currently trading, or it was trading on the 12th at 74.5 cents, so it’s quite cheap compared to its IV 1. Net equity per share is 77 cents, so its trading below its book value, and certainly below its book value plus 30%. It also is trading at the record low of its last three years of PEs, and has consistently increasing equity. And this is one of the few stocks that we come across where the PE is less than the yield, so that the PE is, what’d I say? 2.5 and the yields 5.4%. So, we see this every now and again, particularly in mining stocks, but I’ve always found a really good sign of a stock to buy from a value perspective. All in all, if you add all those up, we have an unbelievable quality score of 108% which sounds strange but it scoring on all the metrics that we can score it on and one of them is a two so we’re getting higher than 100%. And then the QAV score is 0.47 so it’s quite high the up the buy list as well for a large cap stock.

Cameron  44:31

I think GWR had a quality score of 100%, too. So, yeah, two good stocks for us this week. Of course, I actually published the stocks of the week yesterday, both of them.

Tony  44:46

Sorry.

Cameron  44:48

No, I picked the same two that you picked because yeah, but GWR is down 8% since I put it out there yesterday, of course.

Tony  45:00

That’s our Uri Geller and you working in tandem again, isn’t it?

Cameron  45:03

Yeah, exactly. Alright, good stuff. Iron ore. Yeah, hopefully GRR, is, does as well this time as it did last time for us, although it’s, as I said earlier, it’s almost back to where it was. I just wanted to throw in something that I just remembered. So, as of this Thursday, the 16th of November, which is probably the day after this episode comes out, the lovely folks at Stock Doctor will have a QAV stock filter built into their product, which is very nice of them, something I’ve been asking them to do for nearly three years. And they’re doing it, which is nice. Actually, two years, how long we’ve been doing this show? Yeah, nearly three years, actually. Yeah, like February.

Tony  45:54

Three years February.

Cameron  45:55

February. Yeah right. Now, here’s the catch. It’s only available to QAV subscribers. I’d like it to be available to everyone, but it’s only available to QAV subscribers, so it’s baby steps, and it’s only available if you sign up through the QAV offer on Stock Doctor. So, like the Christmas ads that we’re running today. And even if you’ve signed up for it they said, they asked me like, “do we need to make it available to everyone who signed up before we launched it?” And I said, “well, probably not. I figured those people have probably already built their own filter in there, I don’t really see the advantage of them having access to this one, it’s exactly the same thing as what people have already got if they’re following the bible.” It just means that when people sign up to Stock Doctor via the QAV link moving forwards, the filter will be there ready to go up and running. Boom, chicka boom, boom. You don’t need to fart around building your own filter. So, that’s nice. It’s, it’s a little step, but it’s an exciting step, I think. What do you think?

Tony  47:03

Yeah, well done Cam for organising that and well done to Stock Doctor for facilitating it. It’s, it’s good. It’ll be an easier process to onboard people as they come onto QAV now.

Cameron  47:13

Yeah, that’s what I argued to them; easier for us to get people on to Stock Doctor and to get them getting value out of their Stock Doctor subscription if they can start using QAV quickly and etc. So, that’s nice.

Tony  47:26

Yeah, good.

Cameron  47:28

I would love them to start promoting QAV to all of their Stock Doctor members. But, you know, baby steps,

Tony  47:37

Baby steps, yeah.

Cameron  47:42

I still think we should just buy Stock Doctor and take it over and just make it QAV Doctor?

Tony  47:48

Oh, well, maybe one day.

Cameron  47:52

Okay.

Tony  47:53

We better find out whether Stock Doctor is a profitable business first.

Cameron  47:58

Well, it will be after we take it over. What else you got?

Tony  48:02

Nothing. I’ve got some after hours, but we can save that till the end. So, let’s do some questions, hey?

Cameron  48:06

All right. Got a lot of questions this week. Eric says “firstly, I’d like to say I thoroughly enjoyed your podcast this year. I wish you and Tony a very Merry Christmas.” Well, thank you Eric. Or as we now celebrate in our household, Dr Whomas. Chrissy figured the only way to get me on board was if we made it Doctor Who themed and I like the idea of The Doctor coming and visiting me on Christmas Eve so that’s good.

Tony  48:33

That’s a great idea. I agree. It’s better than, what was the one you used to celebrate? Anthrax day or something?

Cameron  48:39

Anaxagoras day, not anthrax day. Anaxagoras is history’s first recorded atheist, got himself in a lot of trouble about 400 BCE. I think they cut his tongue out and burned his eyes out for saying that there were no such things as gods and that the sun was just a big ball of fire in the sky. Anyway, back to Eric’s question: “over the last month or two with the choppy market there’s been a lot of discussion about always being in the market. I’ve had a lot of 10% rule 1 stocks sold over this time as do others I speak to in QAV Melbourne.” Well, you can’t listen in to anything that bunch of alcoholics and their bloody distillery tours say down in Melbourne, Eric. “From what I get from the discussions of always being in the market is that we are looking at our portfolio as a whole and to keep trying to have the balance ticking forward. Swapping an underperforming stock that hits a 10% loss with one that is rising is one of the processes we adopt. If we’re doing this with stocks, which we have just bought and drop why aren’t we selling stocks which dropped 10% from their recent highs? These contribute to the portfolio balance at the same value as the stocks we just buy, potentially a big drop you stand to lose much more than 10%, as we saw when iron prices plunged. Appreciate your thoughts. Cheers, Eric.”

Tony  50:03

Yes, good question, Eric, I think, well, I approach this as a way of protecting the initial capital. So, if something goes up 50%, and that drops 10%, that’s less worrying to me, because I’ve made money along the way. And I’ll use the three-point sell lines and the other rules to sell for that, like CEO resigning or whatever. But for money I’ve just put into a stock if it drops 10%, I’m saying to myself, “okay, I’ve got that one wrong, I’ve made a mistake.” And the other example of this’s, “I’ve got it right, the stocks gone up. And, and therefore, I’m not putting a 10% stop gap on it I’m using the three-point sell line.” So, it’s really about just protecting initial capital, which that’s more important to me, I guess. And it’s probably also, I tend to find that things are the most riskiest when I’m getting into them for the first time, especially if they, if they’re just turning up, for example, any sort of bad use can have them turning down again, so there’s that as well. If I did put a 10% stop loss in general across everything I had the portfolio would be a lot more volatile. It would look a lot like our initial outlays have looked over the last couple of months, so like you, Eric, I’ve been buying and selling, buying and selling, buying and selling. So, it’s not much fun, and the market is very choppy. But I take that as being insurance to try and protect my, my capital as I get into things. If you have a look at say a Fortescue Metals Group graph or something like that, that would often go up and then come back 10%, then go up and then come back 10%. So, I wouldn’t want to be selling out of that. And then when do you buy back in? If it goes from 10% from its highs to 9%? Is that when you’re selling? But it could drop to 11%? So, yeah, the rules, the rules I have in place are mainly around three-point trend lines. But I’ve just put this one in there to protect myself from initial investments rather than from investments overall.

Cameron  51:54

Yeah, I think you gotta think of it like dating Eric, like you got to date a lot of people just to see how it works out. You know, it’s the suck it and see approach. You don’t, you don’t want to get, you don’t want to marry everyone that you take a fancy to. But then when you do get married, you got to, you got to ride the ups and downs a little bit more, you know, once you’re committed long term. I mean, I’ve been married lots of times, but don’t take, don’t follow. Do what I say not what I do, that’s what I tell my kids.

Tony  52:23

And you would have had 10% drops in your wealth every time you got married and then got out.

Cameron  52:28

Oh, much more, much more than 10%, Tony. Much more.

Tony  52:34

Yeah, look, I think, I think it’s also fair to say to Eric, that a 10% retracement of the, of the entire portfolio is just par for the course in the stock market. We’ll certainly have many of those events happening over our investing lives. And I wouldn’t want to sell out and try and tie my coming back in using a 10% stop loss on the, on the total portfolio either.

Cameron  52:55

Yeah, so that’s how I explain it to people like, we’re protecting our capital but the profit, were easy. We’re more than happy to give up a little bit of profit to see if it comes back, you know, so because we don’t want to be too volatile. Thank you, Eric. Paul: “hey Cam, just to continue your comic asides, I noticed ATL jumped 26% today on merger news.” I said to Paul, that’s lovely, but you watch it drop 40% tomorrow, Paul, and then we’ll see who’s laughing. “And perhaps Tony may have a few thoughts on the merger/dual listing with NZ Company Tourism Holdings and the process existing ATL shareholders should follow to work out if they should hold on to their new shares in the merged entity.

Tony  53:39

So, I don’t have an opinion about the APL merger, or the dual listing in New Zealand, there are stocks which are dual listed, not just in New Zealand, but all over the place, like we spoke about before Santos and PNG. So, my, my general rule about this is, first of all, use the three-point trend line. So, sentiment will be a guide, the analysts who follow ATL will work out long before we could ever do it whether it’s a good deal or not. So, I can, I can see that the price is still going up slightly, so I think it’s getting a tick from the people who watch it. And if it drops off, then you’ve got a three-point trend sell line to protect us. But if you wanted to do the work, you could look at the announcements that they’ve been making about the merger and they generally will publish a pro forma p&l and balance sheet to show you what the merged entity will look like and you could use that or even construct it yourself based on those two companies. Add them together and put them through the checklist and see what you want to do. But generally, what I do is just continue to use all my current rules with three-point trend lines and other events. If they’re bad, bad enough to cause a sell to cause me to sell otherwise I’m staying in.

Cameron  54:51

I think ATLs, didn’t we decided it still had a qualified audit the last time we looked at it?

Tony  54:58

Yeah, so there was, again it was a grey area. There was the auditors again, I think it was in one of the notes, rather than in the audit, there was a note talking about whether it continued as a material, sorry, whether it can continue as a going concern. And I think it may, it was either the auditors or the directors drew attention to the fact that coming out of like, they were very reliant on what was happening with COVID, because they’re a tourist-based company. So, if they come out of COVID, and they’ve been able to survive on government subsidies, then they’ll be fine. But that’s, that’s a crystal ball projection. So, the directors weren’t prepared to make any sort of forecasts about how they were travelling, and they did call it out as a potential issue. So, I did make them a qualified audit, even though the audit did go through, or the audit didn’t call it out as a qualified audit.

Cameron  55:46

And then obviously, this New Zealand company’s come along and thought it was a good deal so they’ve snapped it up, share price’s gone up as various people pointed out, including Paul having a laugh at me. So, does that mean that we maybe should have had it on our buy list and ignored the qualified audit thing? Or maybe because it made them a good acquisition opportunity? Well, not the qualified audit, but the tough times that they’ve been having and I guess they’re all sort of connected, somehow?

Tony  56:16

Well, as I said, at the time, when we talked about APO, when the results came out, this is a risk and reward trade. If you want to take the risk of, of there being no phase three COVID lockdowns, of government support continuing based on, you know, free money being printed by the central banks. And sure, it was a good investment, it was cheap, it was a good buy. However, I just didn’t want to risk the money. So, the people who did look like they’d been rewarded and good luck to them, but it was, it was a very high risk they were taking. And you know, with Omicron, who knows what’s gonna happen, we could still be facing risks with this one.

Cameron  56:51

Yeah. Congratulations to the people that ignored you and bought it anyway. May your luck always be that good.

Tony  57:01

Well, a market always needs two sides, doesn’t it? A buyer and a seller?

Cameron  57:05

That’s true. Yeah. Paul, I’m happy for people to have some fun at my expense. Tony, it’s all good. Nick asks, “Hi, Cam and TK, a couple of questions. One, what’s the strategy when you can’t find anything to buy at 0.1 and better, ie you are limited to ASX 300 stocks? I’ve already taken larger individual positions inside super than I otherwise would have based on holding twenty total stocks inside and outside super in an effort to reduce the number of ASX 300 companies I need to find. What’s next? Wait for the Josephine’s to turn and/or wait for something new to come along? Would you wait in cash or pick up a large cap/liquid ETF?”

Tony  57:54

Yeah, these are all good questions, Nick, these are the questions I find myself facing as well. So, the first thing I do is to make sure that all of my holdings are topped up to at least 5%. So, in other words, one twentieth of the portfolio because sometimes, you know, over time, I’ve bought things a couple of years ago when I was buying smaller parcels, like something may have retreated but hasn’t become a sell yet. So, I’ll use cash to try and balance up the portfolio so I’ve still got fifteen to twenty stocks. Failing that, I’ll hold cash. So, the other, other options, which I look at from time to time is, and you may not be able to do this, Nick is to buy small stocks. So, sometimes I’ll say I’ll have twenty-five stocks in the portfolio, but five of them are small ones, if I feel that confident about those stocks, and sometimes I’ll look below the 0.1 threshold, but I very rarely do that. I think I’ve done it about once and that was to buy Mineral Resources during the iron ore boom. But no, generally, if I can’t find anything else to buy, I’ll buy cash. And that’s kind of like a self-serving mechanism, it’s telling me that if I can’t find something to buy, it’s probably a good time to sit with some cash on the sidelines. So, yeah, I wouldn’t be too worried about having some cash on the sidelines at the moment while you’re waiting for the Josephine’s to turn around.

Cameron  59:15

Right. But you’re not, you don’t like sitting on cash, it’s just, you do that if you can’t find anything to buy?

Tony  59:22

Yeah, correct.

Cameron  59:24

Okay, part two of Nick’s question; “price to operating cash flow. Is this a strong rule? For example, FMG scores well in the QAV score, 0.2 something, has good sentiment but very poor Pr/OpCaf versus our target. If iron ore turned around,” which it has since Nick sent me this question, obviously, “would FMG stay off the list until Pr/OpCaf came good, particularly if scratching for some large cap options?”

Tony  59:52

I think the Pr/OpCaf of FMG is very good. I have its as 3.3 times.

Cameron  59:58

Right.

Tony  59:59

And it wouldn’t, wouldn’t – we put it back on the buy list this weekend – It wouldn’t be on the buy list if it had bad Pr/OpCaf.

Cameron  1:00:04

Well, depending on what’s bad because we’ve talked about this recently, there are some things with Pr/OpCaf above seven that still score well and we end up buying them, or they end up on the buy list.

Tony  1:00:15

Yeah, but they’re very rarely above eight.

Cameron  1:00:17

Yeah. Right, yeah.

Tony  1:00:18

Yeah. So, and FMG is 3.3 according to my checklist.

Cameron  1:00:24

Well, if you can tell us, shoot me an email, Nick and tell me what Pr/OpCaf you have for FMG and we’ll see why you have a different one to us. Luke: “hey, Cam question from a friend for the show.” Alright, Luke, Luke was supposed to ask this when he was on the show. We obviously all forgot. He says, “I’m keen to understand what constitutes a bull market and a bear market? And does the QAV concept change anything depending on the market? I’m also hearing of this new market term called a roo market, as in kangaroo, but I think it might be more tongue in cheek.” Luke then says, “I believe the answer will be somewhat along the lines of we just follow the numbers and process through any market conditions whilst trying to stay fully invested.” Was he right, Tony?

Tony  1:01:11

He is, correct. Absolutely. Yeah, so I think there are technical definitions. I think a bear market occurs when the, the ASX drops 10%, then they call it a bear market. And I guess a bull markets the reverse if it goes up 10%. But means nothing to our process, we should be able to make money in both.

Cameron  1:01:31

“Good times, bad times.” All the same to us. Alice: “do you check the iron ore sentiment for a steel company such as BSL? BlueScope Steel, I think?

Tony  1:01:43

No, I check the steel price. So, I don’t think Stock Doctor has a commodity graph for steel, but you can certainly find them, and I look at Index Mundi and it has a number of different graphs for steel but none of them were actually showing us a five-year graph and I had a look when I was prepping for this. But if you go to Trading Economics, Alice, there’s a five-year monthly steel price chart for there. And it has come off a bit, so it’s getting close to a sell, but overall, it’s in an upward trend at the moment. So, just like the iron ore miners sell iron ore, and we look for the iron ore commodity price for steel for BlueScope Steel, they’re selling steel and so we’re looking at the steel price chart for that.

Cameron  1:02:29

Okay, thank you, Alice. Last question is from Mark. Mark says “hi Cam, God once said it is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Yes, he did. Mark. Tony did in fact say that.

Tony  1:02:47

I didn’t say that. I said Warren Buffett said that.

Cameron  1:02:51

Mm, but you said that Warren Buffett said that, so, you know the same thing. Yeah.

Tony  1:02:56

That’s as good as me saying it?

Cameron  1:02:57

“What does Tony think is a fair price as a multiple of an historical metric, particularly with reference to Berkshire acquisitions. Six times last year’s operating cash flow, *inaudible*. In 2016, Buffett bought Apple at around ten times trailing operating cash flow. Merry Christmas, Mark.”

Tony  1:03:18

Well, I still think six times cash flow is a wonderful price, so I guess a fair price might be ten times. I haven’t really thought about what the fair price is, but I think the important point here is to say that Buffett isn’t really a value investor anymore. And he hasn’t been for decades, probably ever since he met Charlie Munger. He’s much more focused on predictable cash flow, and his secret to predictable cash flow is what he calls “the moat”. So, he’s looking for businesses like Apple which can churn out a new product every year, put the price up slightly, not be affected by any sort of cost pressures from competitors or anything like that. And so, an investor like Warren Buffett can say, “well, okay, I can, I can project Apple’s earnings forward with some kind of confidence, then I can discount them back to a fair price to pay for them today.” And that’s what he’s trying to do, so he’s a bit different to us. We’re- I mean, you couldn’t operate Berkshire Hathaway the way we’re operating things where you’re getting in and out of stocks quickly, that just wouldn’t happen, because he’s putting billions and billions, tens of billions of dollars into a stock like Apple. And therefore he’s, he’s trying to say “if I’m going to deploy that large amount of capital, can I be sure that Apple is a good company? And can I be sure that I can predict their cash flows into the future and discount them back to see that the price is fair?” That’s what he’s doing. It’s very different to what we’re doing now.

Cameron  1:04:43

And am I right in thinking that the Apple purchase wasn’t really Warren’s call in the first place?

Tony  1:04:53

Yeah. You’re right, exactly. So that was one of, I think it was Todd Wexler, one of his – he’s brought on a couple of fund managers, Todd and Ted from memory, to eventually take over that side of Berkshire Hathaway, the investing portfolio side of Berkshire Hathaway when Warren and Charlie finally pass on. And they might already have passed on and we could be dealing with some robots that replaced them. I don’t know, they seem to be living for a long time. But yeah, certainly Todd or Ted brought Apple to his attention, but he has been buying it since then. It is a quality company undoubtedly.

Cameron  1:05:28

Yeah. When you say he’s not a value investor, too, that’s, I mean, that probably needs some qualification, though, right?

Tony  1:05:34

Well, he would say that all investing is value investing. So, to that extent, he’s a value investor. But he’s no longer buying what he used to call the “cigar butt” stocks. He’s not he’s investing in the way that Benjamin Graham taught him. So, Benjamin Graham taught Warren Buffett at Columbia University, and then Warren went off and set up his, his own fund, and invested in deep value stocks and he famously called them cigar butts. So, he would walk down the street, find a cigar that had had been almost used up and take the last puff and make some profit out of that and then discard it. And in fact, the most famous cigar butt stock was Berkshire Hathaway itself, it was a, was a cotton mill in, in the northeast of the US and it was going broke but it was still throwing off lots of cash, and, and it was selling at a very cheap price. And so Warren kept buying stocks, and eventually turned it, took it over, and used the cash that the cotton business was throwing off. But he wasn’t redeploying it back into the cotton business he was buying stocks with it, and eventually the textile mills that Berkshire Hathaway was running was closed down. But what Warren had used the money for was, was like Coca Cola, and Gillette and Washington Post was going really well. And so, that’s how he started off. But then when, when Charlie Munger came along, he convinced Warren it was better off buying a quality company at a fair price, especially if you’re deploying large amounts of capital. And so they started to buy into stocks like Disney, and Procter and Gamble, I think, and, in the last little while, tried to buy, tried to buy Heinz and failed. But they’re the kind of stocks that he likes. So, the kind of Walmart stocks which are – and Berkshire Hathaway owns a large chunk of the company, the part of Walmart that does the wholesale supplying back to Walmart, they spun it off, and Berkshire Hathaway owes a fair bit of that. So, like I said, he’s finding companies that have a moat, so they are, they have a product which is largely impervious to competition. And the classic example of that is a monopoly. And Warren got into a lot of trouble years ago, when he bought The Buffalo News, because he liked buying newspapers that were we’re the only newspaper in town. And even though there were two newspapers in Buffalo, at that stage, Warren started dropping the price on the Buffalo News until it put the other paper out of business and then they sued him for monopolistic behaviour. So, he is trying to find stocks that exhibit monopoly characteristics and the main reason he’s doing that is so that he can say, “I can predict their cash flow into the future.” And you know, in terms of when he’s talking about the future, he’s talking long term, twenty-thirty-forty years in advance, and then discount that back and work out what’s a fair price to pay for them to day. Then you can put them into Berkshire Hathaway, and he can set and forget, because they may not, you know, get the sort of returns that he was getting when he was a value investor. And if you look at the history of Berkshire Hathaway in the early days, he was making as much as 50% capital returns, when he was a value investor, that slowed right down in the last ten years. Berkshire Hathaway, from memory hasn’t – maybe the last five years – hasn’t beaten the index. So, but what he has done is put together a very large investment company, which he can sleep at night with and will still make decent returns but not outsized returns. And he says that himself openly as well.

Cameron  1:08:56

Yeah, so I guess you could say that he is, Berkshire still are value investors, but how they define value has had to change based on the size of the investments that they’re making. They don’t approach it in the same way you approach it, and they don’t approach it in the same way that Benjamin Graham approached it. But it’s still value investing.

Tony  1:09:18

Yeah, it’s fair value investing, I think, it’s much more focused on the quality of the company and the moat it has and the predictability of it’s cash flows. So, they can buy a railway company because they can predict the cash flows out into the future and know what the company’s worth now and that if they put it into Berkshire Hathaway, it’s not going to fluctuate wildly and upset their p&l.

Cameron  1:09:39

I guess, I mean, correct me if I’m wrong, but if my back of the envelope definition of value investing would be trying to buy something for less than you think it’s worth, which is pretty much all investing, I guess, as you said before. Well, and you know, they’re able to calculate that if you look at- I just found an article in CNN from May 2016, Berkshire Hathaway just bought it’s first trench, I think, 9.8 million shares in Apple. Apple’s share price at the time was at a fifty-two week low when they bought in, and I think they’ve had a couple of splits since then. But looking at the stock chart here, May 2016, it was trading around, you know, in today’s prices post split’s $24 a share. It’s currently trading at $175 a share, so that was a good investment.

Tony  1:10:46

Yeah. They’ve done very well out of it, for sure. Yes.

Cameron  1:10:49

Whatever calculations they were looking at, they did work out that that was a good value by buying it at $24 a share.

Tony  1:10:57

Yeah, but it could have been fair value is my point, rather than, rather than discounted value. So, the value investor tries to buy a buck for 50 cents, which is what we’re doing with our, with our investments. And we put a quality overlay on that to try and stop us from buying the stocks which are duds, and you’re, you’re buying 50 cents or 50 cents rather than $1. So…

Cameron  1:11:18

So, Mark’s, Mark’s question is, you know, what do you think a fair price is?

Tony  1:11:23

Yeah, I don’t have an answer for that. I’ve never thought about it. I’ve tried to, I try to approach the problem from a, from a point of view of when do I sell? Like, do I, when do, I know when I buy cheap because the price to cash flow is less than seven. But when do I sell? What price to cash flow is a sell? And we spoke about that last week, and you know, I looked at when the QAV score got to be 0.05, so basically half of what our threshold is, but I’ve held stocks which have continued to go lower on the QAV score, but they’ve been great investments. And, and I think trying to time when to get out is as hard as if not harder than trying to decide when to buy. So, I guess fair value is going to be somewhere in the 10 range. The market, well, in terms of PE the long-term market average is around 16, a 14 to 16 type range, and our Pr/OpCaf is going to be slightly less than the PE, so maybe the average Pr/OpCaf then for the market might be 10 to 12 if the PE is, is a bit higher than that. So, yeah, 10-12 could be fair value, but I don’t really have enough analysis to back up that statement.

Cameron  1:12:30

Well, wouldn’t you say that fair price is whatever the price is when it has a good QAV score?

Tony  1:12:40

Well, that’s the value price.

Cameron  1:12:42

Not the fair price. Okay.

Tony  1:12:45

Yeah. So, I take what the, what Mark’s going on about, and he’s, and it’s a valid way to invest is to find quality companies and then pay a fair price. So, if he, I guess that what he’s trying to say is, are there stocks on our checklist which are below 0.1 but are good quality companies? And what’s a fair price to pay for them and the way that Buffett’s doing it now? And undoubtedly there are stocks in that criteria, I just haven’t built my investment strategy around those. I tend to find that the quality stocks, and I guess it’s a timing thing, I mean, Apple, we all without having to do analysis, we know Apple’s a quality company. I could do the analysis to point out why it’s a quality company, but we kind of know it is. And if Buffett’s buying it when it’s at a low point, that’s smart investing, right? Whether you call it value, whether you call it fair value, whether you call it quality, it’s still smart investing. So, even though you may not be a value investor, he’s still a good investor. And if that’s what Mark’s alluding to, then, then I agree with him. It’s just not how I do it. But I can find my hit rate is much better if I’m looking at the value under the market and trying to find all these stocks at reasonable prices. I think, I think that game is pretty saturated with people in the market, working out what stocks are good and then waiting for them to drop in value and then buy them up.

Cameron  1:14:00

When Steve Jobs passed away, the Apple share price was around $14 on today’s pricing metrics. Tim Cook’s done an alright job. Well, Steve, Steve left him a great legacy, I guess, is the other way of looking at it.

Tony  1:14:16

Well, probably both are right and as Charlie’s always said, “try and find a company which can be run by an idiot because one day it will be”, so Apple might well be that company, not saying Tim Cook’s and idiot, of course.

Cameron  1:14:27

Tim Cook, look, he’s not Steve Jobs either. He’d be the first person, I think to admit that, has done since day one and after Steve died, like “I’m not Steve Jobs.” Has to run his own race, but he does that very well.

Tony  1:14:43

But also, that kind of, that kind of analysis is, is Harry hindsight, right? When Steve Jobs died, there was a lot of head scratching and angst in the market about whether Apple would survive, first of all, and whether it would thrive so yeah, so it was in hindsight, that was the time to buy it. But it was still a very high risk trade back then.

Cameron  1:15:05

And you know, the funny thing is that it really hasn’t done a lot of innovation since Steve died. In the ten years and Steve died, they’ve come out with the watch, which is meh. They’ve come out with the air pods, which are great. I love the air pods. And then everything else is just upgraded, is just upgraded, everything else gets a little bit better, a little bit better, a little bit better.

Tony  1:15:25

And worse, like they made the batteries fail after two years, they make you buy a different dongle every time they release.

Cameron  1:15:30

No, they fixed the battery thing. That’s all good. They introduced optimised battery charging to make sure your batteries don’t to wear out as fast. Dongles, don’t give me your dongle problems, you’re a dongle. But alright, well, that’s the show.

Tony  1:15:52

Well hang on, there was sorry, before I, before we forget, there was a, there was another question on Facebook last week. I don’t know if you saw it or not. I didn’t want to answer on Facebook because I think it was worthwhile exploring in the podcast, a listener or a subscriber asked a question about CDD, Cardno. You recall that question at all?

Cameron  1:16:11

No, I don’t. I think someone asked it again today. I think Petra might have asked it again today. I’ve got a CDD question in next week’s show notes. But what was the one that you saw?

Tony  1:16:21

Look, it’s probably too late now. I’m just looking at the share price today, it’s down 64% today. Actually, it’s down sorry, at 87% today. So, basically what happened was Cardno had sold off a large business unit and was going to make a return of capital to the shareholders and the share price when that became public went up from, gee, what did it go up from? Around sort of 47 cents up to as high as $1.60. And now it’s dropped back again down to, what’s it today? 21 cents. So, and someone was asking what do they do in that situation, and it might be too late now, I didn’t know it was gonna happen today, but it’s a bit like a dividend. So, you’ve got to work out the share price increase went up because of the capital return and it’s dropped off again now. So, the share price now is representing the true value of the business going forward. The share price prior to this was basically the true value of the business before the sale plus the capital return. So, lots of people piled into the stock hoping to get the capital return and that would suit some investors who would prefer to have their income that way rather than necessarily as a capital gain. And certainly, I’m thinking what happened also was that the sale of that business unit indicated to people that Cardno was undervalued, according to the market. Went up quickly, steeply, and it’s come off now the capital return has happened. So, if the person asking that question checks their bank account, and sees that they’ve got a large deposit, they could perhaps add it back to their holding in Cardno and see if it’s still a hold for them – or a sell, it could be a real 1 sell now it’s dropped back quite a lot.

Cameron  1:18:07

Right. Well, that answers Petra’s question too, she had the same sort of question. Good. After hours.

Tony  1:18:14

Yes, well, I’ve been playing golf, Cam. I came down for a golf trip with Ruddy, we spent the weekend in Wagga, last weekend we played Royal Melbourne West, which is a great course often rated the best in Australia. We played Metropolitan, another good course, and we played Woodlands, a good sand belt course, where we had a charity day and raised about $3,500 for leukodystrophy – not just the two of us but part of the, we were part of the group that did that. So, I mean lots of, lots of good golf. We played at, we’re back down at The National, we played there Sunday, day before yesterday. We’ll play there again tomorrow. So, that’s been great. The funny thing was, I was listening to, getting ready to do the the interview with Luke before and checked his podcast and it starts with a – or his videocast – it starts with a, the sound of a wring pull on a beer can happening, which I thought was quite, quite funny. I meant to ask him about that. And it reminded me of one of my favourite tracks from the 90s by a band called Dinosaur Jr. called Feel the Pain, and I know the YouTube video doesn’t start that way but the track I used to have on the CD I had of theirs starts with a cork popping and then a wineglass filling with wine. It was always a great, great sound, I thought. So, I’ve been getting into Dinosaur Jr. if anyone’s interested. They’re largely, you know, you know who Dinosaur Jr. is, Cam?

Cameron  1:19:32

I know, I know the name. Yeah.

Tony  1:19:35

I was a big fan back in the 90s and they were going since the 80s. And they’re often cited by people like Kurt Cobain when he was alive and Billy Corgan from the Smashing Pumpkins as being their biggest influence but they were a three-piece part-grunge part-indie lots of tempo changes but really interesting stuff with a sort of a singer who sounds a bit like Neil Young. Anyway, people can look at that, I’ve been getting back into their music. And then in terms of movies, we started watching Get back again. It’s been so much fun watching the six hours of that and great to see the full live concert on the roof when the police turned up to shut ’em down and Paul went, “yay, they’re here” and went “woo!” and started playing even faster.

Cameron  1:20:15

Now that Jenny’s worked out that they’re not actors playing the Beatles. Yeah, we finished that as well a few days ago, and we haven’t stopped talking about it. And we haven’t stopped listening to the album too, particularly the Glyn John mix, which is up on Apple Music too, I don’t know if you’ve heard that. The original mix that never, never saw the light of day except for bootleg copies, which is really rough and raw, but great. But yeah, what a great, great documentary, just blew all my expectations away.

Tony  1:20:47

Same, I agree. We haven’t stopped talking about it as well. It’s fantastic. And then on Disney + when we finished watching that one night, we watched a movie called The Dual. Have you seen that?

Cameron  1:20:58

The old one with Harvey Keitel?

Tony  1:21:00

No Ridley Scott’s. It’s just come out. Jodie Comer and Adam Driver and Ben Affleck and Matt Damon.

Cameron  1:21:08

I think Ridley Scott directed the original one, too that I was talking about, didn’t he? I think with Harvey Keitel and…

Tony  1:21:16

That was a Dualist wasn’t it, I think from memory?

Cameron  1:21:19

Oh, the new one? Yeah, I have seen the trailer for that. Is it any good? It looks a little bit kind of Hollywoody for my tastes.

Tony  1:21:25

I thought it was brilliant. It reminded me of, I mean, you’ve got to get past Matt Damon’s acting and all that, but Ben Affleck’s a lot of fun. But it reminds me of those great movies from, oh, I don’t know, the 80s like the French Lieutenant’s Woman and Betrayal, where they have those great scripts that take different points of view and take different timings and all the rest. So, it’s the one story, very straightforward story, which I won’t bore you with, but it gets told first of all from Matt Damon’s point of view, then from Adam Driver’s point of view, then from Jody Comers point of view. And it’s about a rape, the three different points of view and it’s just brilliant. Great script, great directing, and really good. I recommend it thoroughly.

Cameron  1:22:09

The Last Dual, it’s called. I just looked it up. Yeah.

Tony  1:22:13

Okay, thank you.

Cameron  1:22:14

And he did direct The Dualists in 1977.

Tony  1:22:18

Yeah, okay.

Cameron  1:22:19

With Keith Carradine and Harvey Keitel, and Albert Finney.

Tony  1:22:25

So, I wonder if it’s a remake? I can’t recall what that one was about.

Cameron  1:22:28

Oh, no that, The Dualist was set in Napoleon’s army. It was a couple of Napoleon’s soldiers who had this blood feud that went on over years and years.

Tony  1:22:40

Yeah, right. I remember that now. No, this is about two squires in the French army. And Matt Damon plays the sort of straight up and down you know, do the right thing by the King, loyal to everyone type person and Adam Driver plays another squire who just, just keeps out witting him and is very apologetic about it. But he takes his land. he takes his captaincy, takes his castle takes, and then rapes his wife, and Matt Damon’s just like “I’m over this. I want a dual.” But, yeah, it’s set in 1300s, late 1300s in the plague times. And the king of France I think is Louie VI who’s like a Dauphin, he’s a, he’s a kid, fourteen-year-old kid who gets very excited and clapped his hand because there’s going to be a dual. But yeah, lots of, I really enjoy it. And just the, just the structure of it and the script of it was fantastic. And you remember back in those sort of French Lieutenant’s Woman type scripts, where you have those stories about the making the movie, so it’s about the actors as well as the movie and then you have betrayal where Harold Pinta wrote one of the best scripts ever, where the movie plays out backwards. Long before Momento was ever written by Christopher Nolan. Just brilliantly theatrical, literary scripts, and this is one of those, it’s really good.

Cameron  1:24:01

Well crafted. That’s great.

Tony  1:24:03

Very well crafted. Yeah.

Cameron  1:24:04

I haven’t, I didn’t watch the finale of Succession last night. So, if you’ve seen it, don’t tell me about it.

Tony  1:24:11

I haven’t watched it either. I’ve had friends down here, we’ve been eating and drinking at night.

Cameron  1:24:16

But you saw last week’s episode?

Tony  1:24:18

I have not. No.

Cameron  1:24:19

Oh my god. Okay, I’m not gonna spoil that one for you then.

Tony  1:24:24

Okay, thanks.

Cameron  1:24:25

I have been reading Robert Forster’s book the 10 rules of Rock and Roll, you ever read that?

Tony  1:24:31

No. Robert Forster being the Go Between?

Cameron  1:24:33

Yes. Really great book, I just stumbled across it. Sort of he, he for many years and he may still do I don’t know, he wrote a music critic column for The Monthly magazine. And this is just a collection mostly of his reviews on music and books and maybe some film I think, but he’s such a great writer. Just every, every review that I’ve read is ranging from Bob Dylan through to Delta Goodrem and Franz Ferdinand, wide spectrum of bands of musicians. He just, he has a really engaging way of bringing a lot of heart warmth, even when he’s critical of the album. He’s, like, supportive of the artist, and what they’re trying to do and say, “yeah, this doesn’t really work. And that doesn’t work. But they’ve got so much talent and potential and this is really great. And if they could just like, trim the tracks down by this much or do that, or they need new production,” and it’s really, it’s just, he’s obviously just a deep, deep music lover/nerd and that comes across. It’s really great writing. I’m thoroughly enjoying it.

Tony  1:25:47

Oh good, I’ll look out for it. I like Robert Foster’s music too, it’s really good.

Cameron  1:25:51

Mm, well, you’re gonna like his new album.

Tony  1:25:54

Oh, good. Are you going to announce why?

Cameron  1:25:59

No, I’m not allowed to.

Tony  1:26:02

Anyway, he does write good albums. The preacher was a fantastic album that I can recall straightaway. That was out about five years ago. Yeah.

Cameron  1:26:08

Did you know him? You guys would have been growing up around about the same time in Brisbane, I think.

Tony  1:26:13

I did not, no, I must have seen the Go Betweens play about twenty times but I didn’t know him, not personally.

Cameron  1:26:17

Right. Very good. Well, yeah, I haven’t read his book Grant and I, his sort of biography of him and Graham McLennan. I’m gonna read that as well after, when I’ve finished this one because I’m just really enjoying it.

Tony  1:26:31

Yeah, I’ll look out for that too, thanks.

Cameron  1:26:34

That’s about it, that’s all I got to talk about. Oh, The Great is back, I don’t know if you’ve gotten into The Great?

Tony  1:26:40

No, what’s that one about?

Cameron  1:26:42

So good, it’s a, it’s a series about Catherine the Great taking over Russia.

Tony  1:26:48

Oh, I’ve seen it. Yeah, okay. I haven’t caught it yet.

Cameron  1:26:51

Yeah, new season of that. And it’s just I mean, it’s silly, but the performances are so great. I think she and Nicolas Hoult who plays Peter both got nominations for Golden Globes this week for their performances. It’s a, it’s a lot of fun, stupid but fun and as it says very loosely based on historical events.

Tony  1:27:12

Sounds like that movie about Marie Antoinette that Sofia Coppola did.

Tony  1:27:15

Yeah, well done.

Cameron  1:27:15

It is similar to that but, very similar in style, but I, this is done better, I think. I love Sofia Coppola’s stuff, but I think this is just… and it’s actually, it started as a, as a theatrical production in London. It’s by an Aussie, an Aussie wrote it and produced it in London, big hit on stage. And he’s also the showrunner and writes most of the scripts for the TV show. So he’s done a good job. Don’t know him, can’t remember his name, but good for him.

Cameron  1:27:48

I’m trying to go see Dune, the new Villeneuve, it’s out now, it’s in the cinemas. But can’t, you’d think I could get Taylor to babysit his half brother for a few hours while Chrissy and I go to a movie?

Tony  1:28:02

Well, he’s probably as busy as I am with all that Charity Exchange stuff.

Cameron  1:28:06

Busy shmizzy. Take a few hours out on a night or a weekend. Nah. Neither him nor his brother. No takers. So anyway, anyway, that’s my plan for this week is to go see that.

Tony  1:28:19

Oh, good. And apparently it’s only part one.

Cameron  1:28:21

Yes. Good. As it should be. I mean, it’s a massive book and you don’t want to shortchange it and stuff it in to ninety minutes.

Tony  1:28:31

He’s doing a Peter Jackson. They’ll do the part one then part two. Yeah, like The Hobbit, like what the Lord of the Rings was, yeah.

Cameron  1:28:37

Man, I just wish you know, I wish Peter Jackson would just show us the other hundred hours of The Beatles footage. Like I actually said before when the cops come up on the roof and Paul turns around and sees them and he just laughs, and then Mal Evans turns George’s amp off and George walks over and turns it back on.

Tony  1:28:58

And Ringo’s looking over his shoulder and just being Ringo. What do I? Do I drum, do I stop?

Cameron  1:29:04

I tell you what, the thing that Chrissy and I haven’t stopped talking about the most is Billy Preston.

Tony  1:29:10

Ah, impressive wasn’t it?

Cameron  1:29:11

Well, you just realise when he comes into it that this is what they’ve been missing all along is just Billy Preston. He just, like he sits down and within like, yeah, you know the songs are still sort of half crafted, he just sits down and boom. That all just comes together with Billy on the keys.

Tony  1:29:30

It does, it does, doesn’t it? And he must be so musical because he doesn’t, unless Peter Jackson cut out all the false attempts, but he just sits down and plays the riff just like it appears on the record.

Cameron  1:29:40

Yeah. Well, he’s, he was a child prodigy going and playing in Ray Charles band when he was fourteen I think and, yeah. He was like, I don’t know how old he was in ’69, but I’m guessing mid-late twenties, probably the same age as the Beatles were. They knew him in Hamburg, I think, he was playing with Ray Charles’s band with Aaron Hamburg and they used to hang out together then, so they’ve known him a long time, a lot of trust. But yeah, fabulous musician and it just brings that level of groove and r&b to those songs that is just fantastic.

Tony  1:30:14

Yes, I agree. And even, even Let it Be, you know, a slow song, he just, the organ in the background of that really gives it some oomph and power.

Cameron  1:30:24

Yeah and the organ solo and everything that kicks in before Phil Spector came and did his stuff, which was more, I think Long and Winding Road really than Let it Be anyway. But anyway, what a gift. What a just, like, I think for Peter Jackson too, he must be an uber fan, but to take four years out of his life to put that together, what a gift.

Tony  1:30:45

Yes.

Cameron  1:30:47

Here’s the thing, too. I mean, I know, people probably bored shitless, but this is just what Tony and I talk about when no one around. I went back and I watched A Hard Day’s Night after it too. And, and then I read up on A Hard Day’s Night, and there’s so much about the Beatles that I never really thought about or appreciated. Like, there’s a lot of stuff out there talking about how they, how much they changed society, not just music. But, you know, when they, when they first hit the scene over there, you know, early 60s, Britain was still obviously trying to, you know, claw back some sense of relevance. I saw David Bowie say, what people don’t realise about the Beatles is it gave Britain a reason to be proud again, for the first time in, you know, since World War Two, because they’d lost the Empire, they, you know, their economy was, you know, destroyed for decades.

Tony  1:31:41

Well we all said that when we watching the first episode, again, like it starts off with a brief history of The Beatles. And it’s like, they started playing less than ten years after World War Two.

Cameron  1:31:50

Yeah. But it was this whole thing too about, a bit like James Dean and his films, like The Beatles, in this very conservative British society where people were either, it was still class based, and the lower classes wanted to be the upper classes, and they wanted to have the manners and the, you know, they wanted to aspire to the upper classes, the Beatles came along and just sort of laughed in their faces. You go back and watch, I don’t know how long it is since you’ve seen A Hard Day’s Night, but there’s this great scene in the beginning when they get on the train, and they get into a train carriage, and there’s this rich white businessman in there, and he’s like, “I fought the war.” And they just, they’re just making, they’re just taking the piss out of him, they don’t care. They don’t care about all of that they’re just having a good time, scruffy, wearing suits, but a little bit scruffy with the long hair, just, they just sort of had this sense of effervescence and permission to just be yourself and not care about, you know, the mores of British society, the whole thing. But then watching the film, too, I really realised that in ’69, okay, Zeppelin’s out, Black Sabbath, you know, The Doors, Velvet, all this stuff’s going on, which is so ,it’s like the next generation after them. They had no idea that they were going to be relevant fifty years later. They had no idea – couldn’t have known – that they were how the Beatles would be remembered 50 years later, and beloved, and that it would still be the biggest selling band of all time fifty years later. They had no, they could not have really understood their role in late 20th, early 21st century, culture and society, they’re just a band that’s been scrambling away for a few years. Had some success, but back then bands disappeared overnight as they do today, and they must have known that that could happen to them; they could be totally irrelevant. Then I was watching Bowie being interviewed, this is in the mid 90s, and he was saying he first met John Lennon in ’74 or ’75, and he said, you know, it was very uncool then to say that you like the Beatles, no one would admit to liking the Beatles in the mid 70s.

Tony  1:33:57

Yeah, right. It was all heavy rock, like The Who and all those people.

Cameron  1:34:01

Exactly, all heavy rock, and then disco and all this kind of stuff. And then Van Halen and metal and punk and all that kind of stuff. So, you know, you try and put yourself in their shoes, and Paul’s obviously trying to figure out how to stay relevant. What can they do? And then the whole thing about Brian Epstein dying and they don’t have any adult supervision, there’s no adult in the room, then they kind of don’t really have any sense of direction and, Paul, you can tell he doesn’t want to do it. But he’s like, “well, somebody’s got to do it. I don’t want to,” you know, he even says that, right? “I don’t want to do it. I don’t want to be the leader, John, you’re obviously the leader. But somebody’s gotta set a direction here or we’re just going to faff around forever.” Just the human – their place in society and the human side of it I just found really, really engaging,

Tony  1:34:50

Mm, yeah, I mean, I read a book a couple of years ago, someone gave it to me for a Christmas present, I think it’s called Shout by Philip Norman I think from memory. It goes almost day by day through the lives of the Beatles, like just as four stories about, you know, their lives in in Liverpool and the poor parts of Liverpool, what their parents did. McCartney’s father was a musician. Talks about Lennon and his father dying and all this stuff. And it goes right up to the date of their first recording, how Epstein discovers them, because kids keep coming into his record store asking for Beatles records. And it’s just an amazing story that the, the trip to Hamburg day by day with that it’s a great, great read. And yeah, they were just these guys though, it started – I mean George Harrison, I think was thirteen when he joined the Beatles. So, you know, like, just when they were recording for Let it Be they must they must have been playing music for more than half their lives

Cameron  1:35:47

Together. And they still treated George like the little brother. That was why he walked out right? They just still couldn’t take him seriously.

Tony  1:35:55

Yeah.

Cameron  1:35:55

And also that line that I think you told me about a while back, where Paul’s not there and he says to John, you know, “I’ve got all these songs, I might just put out a solo album. And then we can come back and do the Beatles thing.” And I was saying to Chrissy I don’t think that had never happened before. Like, I think by the late 60s, no one had done that, you don’t go off and do a solo album and then come back and do another one with the band. So, it was really, it was out – must have been crazy thinking that he could even do that, and you know, as Paul said recently, like how it would have changed if, if they’ve talked about that more. Maybe they could have done that and stuck together and done a solo album every year and then a Beatles album every off year or something.

Tony  1:36:37

Yeah, right, yeah.

Cameron  1:36:39

Anyway, we should wrap this up. But yeah, really, really the highlight, one of my highlights of the year that documentary, seriously.

Tony  1:36:46

I agree. I agree 100%. Yep.

Cameron  1:36:49

All right, mate. Well enjoy, enjoy your golf and talk to you next week.

Cameron  1:36:59

QAV Podcast is a production of space craft publishing Proprietary Limited authorised representative of AFSL 520442 AFS representative number 001292718. 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.

What? A free weekly investing newsletter? Oh yes please.

Every Monday we publish a newsletter with updates on our podcast and portfolio activity. Sign up now to get your copy completely free!