Cameron  00:06

Welcome back to QAV episode 539, recorded Tuesday the fourth of October, 10:51pm Brisbane time, which would make it 2:51 pm time in the other states that now have daylight savings like Sydney. Hello, Tony.

Tony  00:24

Hello. Yes, we have daylight savings. Spring forward, so we lost an hour of sleep on Saturday night.

Cameron  00:32

How are you coping with that? Are you right?

Tony  00:34

Yeah, not too hard. We had a public holiday on Monday to recover.

Cameron  00:39

So did we, the Queen’s Birthday. Isn’t she dead? Why are we still celebrating her birthday?

Tony  00:44

I don’t even know what it’s for. Is it Queen’s Birthday here or is it Labor Day? I’m not sure.

Cameron  00:49

No, I think it was a Queensland thing.

Tony  00:51

Oh, okay. How can you be celebrating the Queen’s Birthday? Like, if we have it again next year, I’ll get very upset. Not that it matters, I still worked yesterday.

Cameron  01:03

Me too. You know who’s not having a holiday: Liz Truss. Liz Truss, non-stop, just genius. What was it David Letterman used to say? “Genius has no off switch.” That’s Liz Truss’s motto, the new Prime Minister of the UK.

Tony  01:23

I think there’re probably people in the Conservative Party trying to find her off-switch at the moment. She’s not having a good start.

Cameron  01:31

So, she was going to do some big tax cuts. Thought that was a great idea. The market said no, we don’t like that, and now she’s reversed her position on the tax cuts. Been in the job for what, two weeks?

Tony  01:43


Cameron  01:43

And she’s already had to reverse her first major policy decision. So, as you said off-air, who would have thought they could get someone in the job that would make Boris Johnson look good?

Tony  01:56

I know. I reckon next week she’ll be in a harness being ziplined through London waving two British flags, like Boris did. She’s opened the bottom drawer and found the envelopes already.

Cameron  02:08

The three-envelope strategy.

Tony  02:10

She’s come out all guns blazing, pointing at both feet. Not a good start.

Cameron  02:19

No, indeed. But at least when I last looked the market was having a better day today as a result of her reversed decision.

Tony  02:30

Yeah, I mean, it’s interesting, isn’t it? I was going to talk about a bit later, but I’ll raise it now. I mean, the interest rates are rising. We’ve had a lot of money — free money — sloshing around the system for many years since the GFC, in fact, and the interest rates haven’t risen much, and we’re starting to see the chooks come home to roost; or as Buffett says, “when the tide goes out, see who’s swimming naked.” It didn’t take much to just about melt the UK bond market, “the guilts” as they call it. They had the guilts alright last week. Guilts over all the leverage and the hedging they were doing which they shouldn’t have been doing or should have been doing in a much tamer manner. Long story short, there’s a lot of people taking extra risks and using leverage because interest rates have been low and bond yields have been returning not much until recently, and that’s come home to bite them now interest rates are rising. And then something comes out of the blue, like it always does, this proverbial Black Swan, and suddenly we see there’s problems in the bond market in the UK. The government has to raise a lot of money to do what Liz Truss wanted to do, which spooked the bond market as well. And then we find out that there were all these pension funds that still defined benefit, which is, I guess, different to most Australian pension funds — there’s probably a few defined benefit funds left in people who’ve been employed for a long time, maybe in big companies, maybe even in the public service, I’m not sure. But in Australia, they’re a rare breed. I know in Canada they were still being used a lot, and it sounds like the UK, and they were operating on very fine margins. But it seems like a bit of excessive leverage and risk and that’s what caused the bond market to melt in the UK; as soon as there was a bond sell off, that threw all the hedging out. And it just reminds me, we’ve seen two big — I mean, we’ve seen lots of downturns in the share market during my investment lifetime — but two big ones: the ’87 crash, which was before I was investing, but I was certainly in the labour market then, in in the workforce. The ’87 crash was, you know, generally because of hedging, and long-term capital management comes to mind as the poster child that went broke and sent markets into a tailspin. They were taking too much risk and that was meant to be balanced by mathematics, and it wasn’t of course, and as soon as a black swan event came along it through all their maths out the window and they did go broke. People who had lent the money were teetering on the edge as well and had to get bailed out. So, to hear that the British pension funds are doing that again with hedging and those kinds of instruments is a worry, and then to hear that some players in the UK market were also using collateralized debt obligations — CDOs — which was one of the causes of the problems with the GFC… It’s just amazing how a) nothing ever changes, “this time, it isn’t different,” and b) how these things creep back into markets after a few, you know, relatively calm years or up years, and people start taking risks again. And I guess they forced into it; if you’re a defined benefits pension fund, you have to have some kind of back-to-back safe investment, and unfortunately that wasn’t paying enough to cover the payouts to people, so they started trying to eke out better returns, and the only way to do that is to increase your risk. And as the tide goes out, now, suddenly, we see that they’re swimming naked. So, that’s reverberated around the world. And then when they reverse their tax cuts, that’s kind of stabilised Wall Street. So, I think to be honest, I think what the bond traders on Wall Street are thinking to themselves is “hmm, if in the UK, the government has crashed the market, and the Bank of England has been forced into quantitative easing again,” which is bond buying, which is forcing up the price of bonds, “what can we do in Wall Street now to force the Fed to do a U-turn and start buying again.” So, I wouldn’t be surprised if the ultra-smart people who trade bonds in Wall Street come up with something as well to curtail the interest rate rises, but I don’t know what that will be. But someone smart will think of something. But yeah, it’s just, it’s just amazing. And of course, it’s the bond market which can drive the share market, because it drives interest rates which drives the share market. So, yeah, it’s interesting to watch where the levers are being pulled and what moves the markets, but yeah, just a complete mess in the UK at the moment. And Cam, just as an aside, speaking of interest rates, I’ve just seen the Reserve Bank has lifted the cash rate by 0.25 a percentage point today. We’re recording this at nearly three o’clock Sydney time, which is interesting, too, because everyone predicted 0.5, so that might stir a bit of a rally tomorrow in the share market.

Cameron  07:23

So, we’re going to have to change the interest rate in our spreadsheet again.

Tony  07:28

We will, yep. We’ll change it for our IV calculations by adding 0.25 to it, and we’ll need to change it in the bank mortgage rates as they start to rise. Sometimes they lag by a week or so, but they’ll start to rise soon as well. That’s our test for dividend yield.

Cameron  07:44

So, interest rates continue to go up. The market is still up today. About an hour left. It’s up 3.26% today, the All Ordinaries.

Tony  07:56

That’s a huge increase, isn’t it? More than 3%.

Cameron  08:00

It is huge.

Tony  08:01

In one day. That’s one of the biggest rises I’ve seen for a long time.

Cameron  08:06

Well, the Dow Jones was up 2.6%, so, you know, we’re even a little bit better than that. NASDAQ was up 2.91% last night. So, yes, a really good day. But it hasn’t been a good week overall for the market. It’s been doom and gloom yet again in the last week, and that has affected our portfolio of course. But before we get into that, into portfolio updates, let’s talk about coal, Tony. Because when we’re looking at our commodity checks at the beginning of each week, we decided this week that thermal coal was still a buy. It’s roaring upward still. But coking coal, or metallurgical coal, is actually a Josephine. And then I screwed up and went bought SMR for our portfolios today, which is actually coking coal. After selling it last week I bought it again and I shouldn’t have, but I’m an idiot. But I wanted to ask you about companies like Yancoal, YAL. When we’re in a situation where thermals a buy, coking’s a Josephine — or let’s say it was a sell, either way — and we’re looking at a coal stock like a YAL, and I added some YAL to one of our portfolios on Friday, I think. How do we, like, do we have to get down into the nitty gritties and figure out for each coal company what percentage of their coal is thermal, what percentage is coking and…

Tony  09:29


Cameron  09:30

Oh, really?

Tony  09:31

Yeah, it’s what we had to do last year when we were looking at iron ore companies, because they weren’t just single metal companies. BHP and RIO don’t just mine iron ore they, they sell copper occasionally, and gold, and other things as well. So, we had to check that iron ore was the predominant metal. And there were other smaller miners, particularly in the copper sector, which are often copper and gold, and we had cases where the copper price was going up and the gold price was going down, or vice versa. So, we have to check. It’s not always consistent, but Stock Doctor will sometimes, on the front page, tell you the breakdown of sales by type. It doesn’t in Yancoal’s case, so I had to go back to the latest results announcement and scroll down until it told me how much the sales were by type. In Yancoal’s case it was 3.9 billion of thermal coal sales last year, and 0.95 billions of coking. So, it’s predominantly a thermal coal company.

Cameron  10:31

So, in that case, we would say, okay, we will rely on the status of the thermal coal commodity price and discount or ignore the coking coal. Whereas with SMR, it’s mostly metallurgical coal as I understand.

Tony  10:47

Correct, yeah.

Cameron  10:48


Tony  10:49

And I guess just to add too, you know, I make mistakes, you’ve just made one, but it happens with investors everywhere. You’ve just got to decide whether you want to sell it now and reverse it, but I prefer to hold on to it and then just use our normal three-point trend lines and rule one alerts, or stop losses, to sell out.

Cameron  11:08

Well, it’s up, SMR is up 6% since I bought it this morning. Really, I’m a genius is what I’m trying to say here. Yeah, I’m QAVerick of the Week trying to prove that our rules are bullshit.

Tony  11:22

Bending the rules. Well, I mean, the interesting thing about mistakes is we wouldn’t be here if it wasn’t for mistakes. I mean, it was always a key point that I picked up…

Cameron  11:31

Are you saying you were a mistake, Tony? Is that what you’re saying? My Mother always tells me I’m a mistake.

Tony  11:34

Very, very differently. Although I had a loving household, I was definitely a mistake. If you do any reading into evolution, and I love Richard Dawkins’ books, evolution only works because there’s a 5% copying error in DNA when it merges. If you didn’t have that, the gene pool would be so repetitive and small we’d all look like the British royal family, for a start. But you need those errors in the gene pool to allow diversity to eventually creep in, and for some reason, I guess because of evolution, at exactly the right rate to allow us to survive. So, that’s why I don’t think it’s a problem if we make a mistake. It’s only one stock in a fifteen to twenty stock portfolio, and we know how to deal with stocks that, you know, go south, so I’m not too worried about it.

Cameron  11:37

Unfortunately, I told all of our subscribers that I bought SMR. So, they put the price up, now I can get out. No, I’m not going to do that.

Tony  12:35

Gordon Gekko, I’ve got Gordon Gekko on the other end of the line here, fold. Hair slicked back, pinstripe suit. Money never sleeps.

Cameron  12:43

“Because greed, my friends, is good. Greed is right. Greed clarifies. Greed rises up.”

Tony  12:53

What was the famous line from Wall Street? “Go to the phone, dial this number and say, ‘blue heron says Anacott Steel.'” Something like that was the code.

Cameron  13:03

Something like that, yeah. Good film. I love that film.

Tony  13:05


Cameron  13:06

Speaking of Gordon Gekko; Mark sent me an email yesterday to let me know that David Gottesman, one of Warren Buffett’s partners, Charlie Munger’s partner’s, passed away the other day. “Ninety-six years old, he founded the investment house First Manhattan, and after befriending him in the 1960s, pursued enormously lucrative deals with Mr Buffett,” according to The New York Times. Do you know about this guy, Tony?

Cameron  13:37

The New York Times says, “David S. Gottesman, a protege of Warren Buffett who built a powerful Wall Street investment house, First Manhattan, and presided over it for half a century, died on Wednesday at his home in Rye, New York. He was Ninety-six. Though Mr Gottesman credited Mr Buffett with making him a Wall Street billionaire, he could have scarcely been more different from that world-famous investor. Mr. Gottesman did not appear on television, kept his political opinions to himself, and presided over his privately held First Manhattan company with no advertising, no commentary and no touting of favourite stocks. The company manages more than $20 billion for its clients, mostly individuals. ‘The only time a whale gets harpooned is when he surfaces,’ Mr Gottesman said in an interview for this obituary at his firm’s Park Avenue office in 2013.” So, nine years ago, they interviewed him for his obit one day. “After he spent a decade or so drumming up merger and acquisition business for Hallgarten & Company, an old-line Wall Street house, a friend at another firm suggested in 1963 that Mr Gottesman meet Mr Buffett since they had a similar approach to investing. ‘I was buying value stocks, he was buying value stocks,’ Mr Gottesman said, referring to the purchase of shares and companies with substantial assets selling at big discounts. The two hit it off over a Wall Street club lunch and a subsequent golf game, launching a close business and personal association that lasted for decades. ‘Warren was smarter and knew more than anyone I’d ever met in the investment business,’ Mr Gottesman wrote in reminiscences circulated within his family. ‘I vowed to stay close to him from then on.’ The two men began telephone conversations every Sunday evening, in which they discussed investment ideas. Mr Buffett, not yet in the public eye, provided so many profitable suggestions that Mr Gottesman, by his account, found it hard to sleep afterwards.” Anyway, he ended up starting First Manhattan in 1964, invested a bunch of money in Berkshire Hathaway, was a board member. I think he merged his firm with Berkshire Hathaway at some point. Anyway, stayed close to Buffett for the rest of his life and did very well out of it.

Tony  13:37

I don’t, no.

Tony  14:39

Well, thanks for that. That’s interesting. Another value investor, another value investing billionaire.

Cameron  16:03

And living until his mid-90s. So, thanks for pointing that out to us, Mark.

Tony  16:09

It’d be interesting to know what the common denominator is between the lifestyles of all these nonagenarian value investors.

Cameron  16:16

Well, they’re billionaires, for a start.

Tony  16:18

Yep, so good health care.

Cameron  16:19

And lots of See’s Candy, I think is the other one. See’s Candy is the secret.

Tony  16:27

I can do that.

Cameron  16:30

You gotta be a billionaire. It only works, the magical powers of See’s Candy only work if you’re a billionaire. So, you know, another few years to go.

Tony  16:39

And I was also born in 1963, so, magical year for value investors.

Cameron  16:45

You were destined to be a value investor. Portfolio. Just quickly, I had a look at it this morning. Since inception, I think we’re up about 14% CAGR per annum versus the SPDR 200, which is about a third of that. So yeah, that’s the portfolio update; about three times the index over the last three years on average.

Tony  17:19

I just wanted to add something to that, because we talked last week about why, at least for the short term, we were underperforming the index. I did notice that the Small Ord’s, on a one-year basis anyway, is down 22.2%. So, I’m not saying we shouldn’t benchmark against the All Ords like we do, but a large part of our dummy portfolio is actually small cap companies. So, you know, we’re actually outperforming the Small Ords, but on the short term anyway, you know, underperforming the All Ords.

Cameron  17:50

Yeah, good point.

Tony  17:51

That could be the reason.

Cameron  17:52

What have you got on your list of things to talk about today, TK?

Tony  17:55

Oh, we’ve covered some of them. I just wanted to do a couple of implications on where I think we are in terms of the market. What we’ve been seeing recently is the price part of the price earnings ratio contracting. So, stocks have been still reporting decent earnings, but the price of the stock has been coming down, which means that the PE has been contracting. And we can see that in the market overall, it’s back towards average market ratings for PEs, but we haven’t seen the E dropping yet. So, that’s the thing we’ve got to watch for the next little while. If we do go into a recession or a negative environment economically, we will see earnings start to decline, and that will be another leg down in the share market which is not pretty, and we don’t know we’ll get it, but it’s something that we need to be aware of. And if continuance guidance works, and it does mainly, we should start to see companies call out during confession season that they’re having earnings downgrades, which will be an issue for us. Doesn’t change what we do…

Cameron  18:53

Sorry, what’s continuance guidance?

Tony  18:57

Continual guidance, it’s a policy of the ASX.

Cameron  19:01

Okay, you don’t have to laugh. Just… is that what you’re talking about?

Tony  19:08

Yeah, so continual guidance is a policy of the ASX. So, every time the company has material information about its performance, it has to disclose it. Which normally means they do it around confession season because they’re pulling all the numbers together and working out their P&Ls before announcing the whole thing and awaiting audit before announcement. But if they know even a quarter way through the year — in fact, AGM season, which we’re going into now, can often also be a time when we get confessions because the company knows already that they’re having a tough time.

Cameron  19:41

Didn’t seem to work very well in the lead up to the last reporting season, because I was surprised on a handful of occasions in the last reporting season.

Tony  19:49

Yeah, it doesn’t seem like… I mean, the ASX does monitor this, but you don’t hear much in prosecutions for people who don’t do this properly. But yeah, a few lineball cases there, I agree.

Cameron  19:59

All right. Okay.

Tony  20:01

So, that’s one thing to be aware of. The other musing I’ve had about the current market is people do lose sight of the fact that we are focused on inflation, but inflation is a rate of change indicator. So, it’s a price, or the cost, of buying a market of goods, which has been standardised by the RBA, compared to the price of doing it last quarter and this time last year. So, if the basket of goods last year cost a hundred bucks to buy food, groceries, pay your electricity bill, your rent, whatever, and it cost $110 for the same period this year, then inflation is running at 10%. If it cost $110 again next year, inflation is zero, but you’ve still got to bear the cost increase from two years ago, right? So, it’s entirely possible that the RBA can get to a stage where they say, “well, we brought inflation down to our 2% range.” But the economy is still in bad shape. So, again, it gets back to is that the way the RBA should be working? They’ve only got one lever and they’ve got one set of guidelines, but should they have some power to finesse? Because, yeah, I mean, all this inflation can be baked in for a long time and raising interest rates won’t help it. Inflation might be gone in three to six months, but we still could be paying above and probably will be paying above $2 a litre for petrol and paying a lot more for our electricity and gas, and a lot more for our mortgages thanks to the RBA. But if inflation is at 2%, the RBA will just rub its hands and go “job done.” And it’s not. So, that’s something else to be aware of, I think, and hopefully all these things are being taken into account with the review of the RBA that’s going on. What else? I’ve got to say, I’m increasingly pessimistic about our chances of avoiding recession. I’ve always had a heuristic that the basic model for a household economy is based on petrol prices, interest rates and the dollar, and we’ve now had all the legs of that stool kicked out. Interest rates are rising, petrol prices are high, and now the dollar is dropping. So, the dollar dropping is a good thing in some respects, because we’re an exporter of resources. I’m already hearing stories about people leaving the cities and going to work for the mines, and I’ve seen that before, and unemployment remains quite low, which is good. But for a lot of people who, you know, are running a household, buying clothes, white goods, black goods, and they’re all imported because we don’t have much of a manufacturing base here, it’s bad because we’re paying more for it. Now we pay more for an overseas holiday, all those kinds of things. So, basically, every cost on a household is going up at the moment, and that’s got to be recessionary at some stage.

Cameron  22:48

When you say interest rates are high, though, according to historical measures they’re not really high. They’re still quite low, but they’re higher than they were a few years ago.

Tony  22:58


Cameron  22:58

So, when you’re looking at the three legs of your no doubt very expensive, handcrafted stool that you bought in some boutique furniture salon somewhere on High Street, is it high interest rates, or just rising interest rates that’s that leg?

Tony  23:17

It’s the rising interest rates.

Cameron  23:18


Tony  23:19

Yeah. So, you’re right. They’re not high compared to what they were, but as people will know, household debt is much higher than what it was. And in fact, I don’t actually mind interest rates going up as long as it’s done in a stepped measure in a considered way, because I think we do have too much debt around the world at the moment. You know, when interest rates are zero, everyone’s just geared up, and that’s a bubble in the debt markets which has to come home to roost. And we’re seeing it play out in the UK, when a black swan comes along, and things expose all the risk that people were taking when they shouldn’t have been. And we’re seeing it in the property market here as interest rates rise. We’ll see it probably worse over the next twelve months when all the people who took out fixed interest rates when they were 2% for two or three years have to rotate to interest rates which are now more than twice that, so their mortgage doubles. Even though 5% isn’t high historically, it’s still a big cost increase. It doesn’t affect me, like my three-legged stool is ten feet high, right, you can lob a bit off it and it doesn’t change what I do. I’m lucky, but I’m the exception. But if you’re out in Parramatta or Penrith in Sydney, or wherever, and you’re trying to make ends meet on an average salary, you now pay more to drive your car — and you have to drive it because probably transport isn’t great out there. You’re now paying potentially up to twice for your mortgage and 30% higher for your electricity and gas bills. You don’t have much leftover, and it’s usually the discretionary spending which drives the economy. It’s eating out, it’s going to events it’s taking holidays, which keeps the economy moving. When those things all dry up, it’s recessionary.

Cameron  25:06

And before people complain and, you know, they try and cancel us, I just want to point out that when Tony talks about the black swan in the UK, he’s not referring to the Chancellor of the Exchequer, Kwasi Kwarteng, when he says that.

Tony  25:19

Very much not.

Cameron  25:21

No, that’s not what you’re referring to.

Tony  25:23

I just want to point out you went there, I didn’t.

Cameron  25:26

I know, I’m just getting ahead of it.

Tony  25:31

I wasn’t thinking about the colour of anyone, actually. In England all the swans are white, and then the black swan is an unusual event. It’s just a saying.

Cameron  25:39

I know that, and you know that.

Tony  25:41


Cameron  25:42

But you gotta, you gotta be careful these days. You know, you don’t want to end up like Louis CK. Any who.

Tony  25:55

Moving on from there. What else do I want to talk about? No, I think I’ve done everything now. Just pulled pork.

Cameron  26:01

All right, pull that pork, Tony.

Tony  26:11

Yesterday was a public holiday, we probably haven’t switched back into business mode yet, have we?

Cameron  26:14

Hey, you and I worked very hard over the course of our lives to make sure — you more than me — to make sure we never have to be in business mode ever again.

Tony  26:23


Cameron  26:23

That’s why I’ve got the long hair. That’s one of the reasons.

Tony  26:28

Okay, so BFG is my pulled pork this week, Bell Financial Group. And the reason I did that was, we haven’t talked about it for a while, or haven’t talked about it at all, I don’t think. It’s very high up on our buy list, it’s number seven on our buy list at the moment. It’s probably no longer a Josephine, it was just on the cusp when I did the analysis yesterday. But anyway, have a look at it, people, do your own research. I’ve done numbers when the share price on the weekend was for some reason 95 cents when it downloads in Stock Doctor, but today when I had a look it’s back up to $1. So, that’s a big swing. But anyway, it doesn’t make much difference to the numbers, but you might want to check it out based on your own numbers. First of all, ADT for this stock is $84,000, so it’s not gonna suit everyone, but it’s a reasonable size for some people. And a couple things to point out, well, first of all, it’s a stockbroker. It’s not a great time to be a stockbroker at the moment when the markets down, but it’s not a bad time to buy one when the price is down. So, there’s swings and roundabouts with this. Bell Direct Group is a full-service broker. It’s also an online broker, it also offers margin lending products to people, provides stock market research, and retail and wholesale broking. It’s been around for a long time, it’s offering a full suite of stock broking services, well established business. The share price is down 50% from its highs last year, so it has come off a lot — and I’ll go through the risks at the end, there’s a couple of reasons for that. But anyway, I’ll go through the numbers first. A couple of things strike me straight away off the bat: the yield is nearly 9% on this, it’s 8.9%. So, that’s very high. And the ownership, or the CEO which is called the MD executive chairman in this case, holds 40% of the of the market cap. So, huge shareholding for the principal, and he’s been employed by the brokerage since 1983. So, I think this company goes back a long way and was founded by one person called Bell. This person isn’t Bell, but he’s been around for a long time, and he holds 40% of the company. So, he’s probably running it to suit the long-term benefits of the company and the shareholders. But he must be getting along in his career, and so succession planning would be an issue. I have had a quick look at the board and nobody else holds anywhere near the stock holding he does, so it’s not clear who’s coming up the ranks to replace him, but it will be an issue over the next year or two I imagine, or in the coming years. He may be another Warren Buffett and last until he’s ninety-six or longer. Back to the numbers. Stock Doctor has the financial health as satisfactory, but I’ve noticed there’s no trend for Financial Health in Stock Doctor for this company. Not sure why, I don’t know if it being a stockbroker causes a problem or whether there is just a data glitch with Stock Doctor, but no financial trend to score them. Likewise, we don’t have any consensus targets for this company. I’m wondering whether that’s because it’s a stockbroker and the other stockbrokers don’t want to give it any airtime. But anyway, that suits us because we can get in before other people. The Pr/OpCaf for this company is 1.83 times, so it’s very, very cheap in terms of the cash it’s throwing off. It’s just below its net equity per share plus 30%, which comes out to 92 cents, so we can’t score on that. And because of the high yield and low PE, which is 8.8 for this company — and the yields currently 8.9 — this is one of the companies which scores on that unusual metric where the yield is higher than the PE, which I’ve found to be a quick test of a deep value investment. If people want to check that out, and they go down the checklist in detail and have a look at that column, you’ll see that a lot of the companies on our buy list actually score on that metric where the yield is higher than the PE. As I said, the chair holds 40% of the company, he’s the executive chair, so he’s also the MD. It’s currently trading at the lowest PE of the last three years, so that’s scores for us. As I said before, the price is down dramatically over the last twelve months, but it has just started to turn up again. So, we have a new three-point trend line buy signal and a recent upturn for that. We don’t score it for consistently increasing equity, as you can imagine the equity has been dropping back as the market’s declined. Overall, that sums up to a quality score of 11 out of 11, of 100%, and a QAV score of 0.55, and that was when I did the analysis at 95 cents. It’s actually 0.51 based on $1.10 price today. So, it scores really highly for us, but there are risks. And that’s often the case when a company is looking good as a value buy. And the risks are that in February of this year Austrack appointed external auditors, which is PricewaterhouseCoopers in this case, to investigate BFG’s compliance with anti-money laundering laws. There’s been radio silence since then, we haven’t found out what the results of that is. But as we’ve seen with the casino industry, if it comes back with a bad report that could be devastating for the company. But like I said, we’re operating in a void, so we haven’t heard anything about that yet. But it’s certainly a risk. And the other thing is that what I’ll call the weight of money argument, which is when the share market is down stock broking gets lighter. So, 17% decline in the revenue for this company in its latest results compared to last year, and 44% decline in profit. And by weight of money, I mean, when the share markets down, there are less IPOs. There can be less M&A, people can sell things and sit on cash. So, all those things are happening. There’s just less money sloshing around in the share market. And it’s an interesting part of the share market, that if nobody sells anything, so everyone’s decided to buy and hold through this downturn, the share market can still go backwards because there’s no one’s buying anything. One of the headwinds for the Australian share market has been the fact that everyone’s putting 10% of their salary into Super funds who have to invest somewhere, but they’ll be investing less and less in the share market at the moment because it’s dropping — and potentially bonds as well for the same reason. But eventually they’ll come back. So, it’s not a bad time to buy a stock broking company; it’s cheap, and the market will turn eventually, and that money will come back in and find a home in the share market. But do your own research. Not without risks, this one.

Cameron  33:17

I actually sold it from a couple of portfolios last week because it crashed through its 3PTL, I think, or it might have been a rule one sell. I can’t remember.

Tony  33:27

Yeah, it did turn up I think a couple of weeks ago and now it’s turned back again.

Cameron  33:31

Turned up, turned down, but I think it’s above what I sold it at. It’s trading at about 99 cents today by the looks of it. I think I sold about 88 last week.

Tony  33:39

Right, okay. Well done. Thanks for boosting it for the other shareholders.

Cameron  33:45

I tell, you these rules. The rules.

Tony  33:49

I know. It’s a choppy market, isn’t it?

Cameron  33:51

Yeah, thank you for that Tony. BFG. Big Effing Gun, as it is in the gaming community I always have to point out.

Tony  33:59

Is it? Big Friendly Giant in the Roald Dahl universe.

Cameron  34:03

Yeah, yeah. I used to like Roald Dahl when I was a kid, good books. Time to get into some Q&A’s.

Tony  34:11


Cameron  34:15

First one is from Reg, not really a question but more of an insight/thought. He says, “every so often I think it’s not a bad idea to reflect on the investment clock, which seems to me to always give a good idea of the current and expected state of play. I was prompted this morning by a Morningstar article. Sure, if we follow the QAV process there are likely to be some good and maybe not so good buys, but it could be some time perhaps before the markets are rosy again. How long will it take us to get to 8pm?” 8pm on the investment clock that he sent through from Morningstar is sort of the last stage of recovery before you get to rising commodity prices. If you think about a clock, right at 12 is at the top of the boom, and according to this clock we’re currently at about 2:30. Not when you go to the dentist, but it’s when there are falling share prices and some falling commodity prices, and then it goes into recession not long after that. What do you think of the investment clock depiction of where we’re at, Tony?

Tony  35:19

Yeah, look, the investment clock is always roughly accurate. But of course, the economy doesn’t follow a clock, and as we saw with COVID, we can have one month of a dip and then we’re back on the gravy train again. So, it can be a stopwatch, it can be a time dilator and we can spend lots of time on one part of the investment clock and then whizz through the next bits. I agree with you that we’re probably at around 2:30 on the investment clock, which is falling share prices. But we’re also at 5:00 and 6:00, which is tighter money and falling real estate values as well. So, it’s never easy to read the clock, but directionally it’s right. And of course, the next stage of the investment clock, according to this one, is that the recession happens, and we get 3:00, 4:00, 5:00 and 6:00 on the clock to wait for that to run through, and then we get six hours of recovery. According to the clock anyway. From 6:00-9:00 for recovery, then boom from 9:00-12:00. I tend to prefer Colin Nicholson’s view of the market which has three stages, and the stages can take as long as they take but you’re looking for signs. And so, the investment clock is, you know, not too bad here. The signs in the market are falling share prices. We’ve seen some commodity prices fall. Obviously coals still booming, but yeah, we’ve seen oil, iron ore, gold, all falling, so perhaps we are already past three o’clock on the investment clock, and we’re heading closer to recession. And we are certainly seeing real estate values decline, so it’s probably not too far away is my thinking anyway, but who knows? I can’t predict. How long will it take to get to eight o’clock, which was the question. If I knew, I’d sell up and go and play golf and come back at eight o’clock, but I don’t, and nobody does. The famous saying is no one rings a bell when the market bottoms or when the markets at its top.

Cameron  37:07

But would you, though? I mean, isn’t part of the process to invest and look for things to invest in even during recessionary periods?

Tony  37:16

Yeah, so I kind of ignore it, really, the investment clock. To be honest, I remember back to the GFC, and it was March 2009 when the share market had tanked. All the stocks on the ASX, at least the big ones, had been doing heavily discounted capital raises to shore up their balance sheets. And then the results came out in March 2009, and I’m like, “wow, I’ve never seen good results like this and cheap prices like this.” And I just, you know, invested whatever I could. Borrowed money, all the rest of it. And so that was the bottom, you could pick the bottom. So, in that case I could, but I didn’t have an inkling of that in the GFC. Sorry, in the COVID cough. I didn’t know where we would be in the investment clock in the COVID coffee. But follow the process; once the three-point trendline started breaking out on the upside, we started buying bargain. So yeah, there are certainly indicators, but it’s hard to pick the top and the bottom of the market.

Cameron  38:11

So, are you saying that by 2009 you saw that the numbers looked good, and yet the All Ords didn’t get back to pre-GFC levels for ten years.

Tony  38:16


Cameron  38:16

So, how does that make any sense? If the results look good a year later, but it took another nine years or eight years from the from that point, maybe, for the All Ords to get back to where it was?

Tony  38:35

Yeah. So, in 2009, the All Ords was down probably 50% from 2007 — something like that, I’m just talking from memory here. You know, it went up dramatically in 2009 and then it went up in a slower arc until about 2012. Then it came off again, then it went up again, and eventually by about 2017/2018 it had recovered where it was in 2007. So, it never follows a straight line. But my point was in 2009 in March, you know, most of the companies on the ASX had raised capital, their balance sheets were uber strong, and they were producing good results, but their share prices were still depressed because everyone was full of doom and gloom because they were still in the mindset of the GFC. And I just went “wow, this is amazing, the prices we’re paying for such quality earnings.” So, in that sense I could pick it and the share market recovered a lot in 2009, and I made a lot of money back then. But generally following the clock is pretty hard to do, the investment clock.

Cameron  39:36

Yeah, well we’ll just keep doing what we’re doing.

Tony  39:41


Cameron  39:42

Here’s a question from Chris… sorry, back to that. Getting back to something I was telling you about off-air. I had an email from somebody yesterday saying, “oh, I really thought QAV was going to be more ‘buy and hold long-term’ and there’s a lot more trading than I thought I was going to have to do.” And I replied to them saying, “well, yeah, listen, we think it’s buy and hold, too. I mean, in the good times that’s what we do.” I think on average, during normal market conditions, you turn over about 50% of your portfolio every year, or the whole thing every year. Can you remember?

Tony  40:22

I think it was like one revolution a year from memory, on average.

Cameron  40:27

So, maybe one or two stocks a month we’re trading on average during normal market conditions.

Tony  40:34

I think I did the analysis before even with the dummy portfolio. I think some stocks we hold for two years plus. So, the trading isn’t like we’re turning over the whole portfolio every year, it’s like we will have maybe a quarter of the portfolio gets traded a lot, but some stocks are buy and hold. So, yeah, on average it turns over once a year, perhaps.

Cameron  40:54

But when the markets doing what it’s doing, having a conniption like it is at the moment, I mean, you’ve got limited choices, right? You either just go to cash and just wait it out, in which case, you run the risk of missing the turnaround.

Tony  41:09

Sorry to interrupt, but the 3% rise today, you missed out on that, for a start.

Cameron  41:13

Yeah. And we know that, historically, the biggest returns that you’re gonna get over time are usually when the market turns around. It’s coming out of a correction and there’s the exuberance that comes back into the market. That seems to be at least when the market gets the most growth. Or you could cash out and throw your money in an ETF or a LIC or something like that, let them worry about it. But again, if you’re not actively trading it, you’re going to potentially miss out on the turnaround when it comes. If you’ve devolved responsibility to someone else to manage, you’re going to get some upturn, but not as much as you would get if you’re actively trading it in theory.

Tony  41:54

Well, if you’d bought a LIC on the way down in the GFC, it would have taken you a long time to get back to where you started from. You know, because the index took a long time to get back.

Cameron  42:03


Tony  42:03

Well, ten years from the top, but maybe you sold out lower. So yeah, but a long time.

Cameron  42:07

The third alternative is you just buy stuff and just hold it and don’t sell it, don’t actively trade it. Ignore stop losses, ignore your rule one, you ignore your 3PTL, and you’re like, “no, this is a good company. It’s profitable. It’s undervalued, screw it, I’m gonna buy more. It’s going down, I’m gonna double down and buy more,” and you just do that sort of thing, which you can do.

Tony  42:33

Yep, dollar cost average it, for sure.

Cameron  42:35

And just go, “no, this is good. I’m sticking with it.” What’s your argument against that approach, Tony? Why don’t we do that?

Tony  42:43

Because our stop losses are there as insurance, right? So, at this stage, yeah, we have lots of trading because we’re cashing in on lots of insurance and the markets dropping, so it’s working for us. If you look back at the portfolio, say from this time last year, and we just said, “screw it, we’re going to buy and hold,” we would have taken a bath on Fortescue Metals Group, for example, Eclipse, all those stocks that we’ve held, who we were holding back then that we’ve sold, have gone down a lot since then. So, you could say, “well, they’ll come back,” and sure, but aren’t you better off selling them at like a 20% loss and then buying them back when they’re much cheaper than holding them, then having all the stomach churning that goes on when we’re seeing something drop 25/30/40/50% and wait for it to recover? Because don’t forget, if a stock drops 50% it’s got to double in value to recover. So, that can take a long time. I was a buy and hold investor, so I’m not going to criticise it, but I did find during the GFC it was costly and I wanted to try and avoid that risk again.

Cameron  43:50

I wonder if there’s any way of me going back and seeing what our portfolio was a year ago and running an analysis on it?

Tony  43:59

For sure. Just go and grab one of the buy lists from twelve months ago and see what was there.

Cameron  44:03

Not the buy list, our portfolio. I can probably do that in Navexa, think we’ve been using it long enough.

Tony  44:09

You can probably select an end date for last year, I’m not sure. Well, we dumped the transactions and gave them to Ruddy, so we should be able to dump the transactions and look at it for the time. Anyway, you can do that. The other risk, of course, in the GFC as I said just before, is that companies raise capital because things got so tough. That can happen if you’re a buy and hold investor and you’re holding on to companies during a recession. Not only are you holding on to them, but unless you want to get diluted you have to stump up new cash. And then you have to sell something to do that if you want to, and you’re selling in the depths of the recession, not when you would like to sell them when the markets up.

Cameron  44:49

Right. Well, I’m going to, just for shits and giggles, have a look at our portfolio from where it was a year ago at some stage and see if we just held where things would be today. See what it says. All right. Next question. Chris: “could you please describe from a practical aspect how to determine if there has been a recent positive upturn?” That’s a good question, because these are things that we’ve talked about a lot, but for new people I think it’s always good to revisit these sorts of questions. I should put it in my new sexy database that I’m building. He writes, “my interpretation is: ‘has the monthly share price breached the 3PTL buy line since the release of the most recent financial reports.'” I think that’s the right definition, right?

Tony  45:38

I think I expanded it, and I’m not sure what’s in the Bible so I could be wrong. Well, what I look at is if it’s the end of the year for the most recent financial reports. So, for example, if it’s August reporting season, I will go back to the end of June. So, from the first of July onwards.

Cameron  45:55

Ah, okay. Same thing, kind of.

Tony  45:59

Yeah, it’s a month different to what we’re saying here, but that’s how I do it.

Cameron  46:04

Well, it’s since the end of the last reporting period, not necessarily…

Tony  46:09

The day the report drops.

Cameron  46:12

Yes, that one.

Tony  46:15

And just a bit of reasoning on that is because the companies generally know where they’re at, at the end of the financial year, and it starts to leak. It shouldn’t, but it does. So, you can see up turns starting a bit earlier than when the companies report.

Cameron  46:29

And then Chris has given some examples here of stocks where he believes they should be getting a point for a recent positive upturn on our checklist, but they’re not. And there can be a lot of reasons for that. I mean, I didn’t go through and look at all of these individually, but we don’t necessarily do all of the manual data every week for every stock on the checklist, because a lot of them fail for different reasons before we get to do the manual data, so we don’t update it. So, that could be one reason there might be other reasons. So, we just missed it, or we screwed up. But we don’t always look at all the manual data every week. It would take us way too long.

Tony  47:11

Yeah, I accept that. That’s true. But just to help, Chris. So, to pull out a couple that he has given us, three examples that won’t take us long to look at in the Brettelator. So, C6C was one of Chris’s questions. He thinks it should be a “one” for recent update.

Cameron  47:28

Well, I can already tell you that’s aluminium, and aluminium is a sell — or is it copper? Copper.

Tony  47:35

Yeah, it’s copper.

Cameron  47:36

And copper is a sell, right?

Tony  47:39

So, we wouldn’t have updated the manual data.

Cameron  47:41

Yeah, we wouldn’t be bothering to check it because it’s a non-event for us right now.

Tony  47:47

Yeah, but just to help Chris out, if he calls up C6C in the Brettelator, the buy line for C6C is ages ago, right? It crossed the buy line back in, it looks like about July 2020, and it went up and it’s come back again almost to the sell line. So, yeah, I’m not sure why Chris thinks this is a recent buy, but if he has a look at the Brettelator, we’re using the buy line — the yellow line in the Brettelator — and that’s way back in the past. So, I can’t C6C, even if we’ve looked at it being a recent buy line. So, I hope that helps, Chris. I can do some other examples, I’m not sure it’s worth it. But yeah, that’s what we do.

Cameron  48:25

But definitely, like, for everybody out there. If you look at our checklist and you think we’ve got a score wrong, just shoot me an email.

Tony  48:35


Cameron  48:36

And I’ll look into it. Sometimes, you know, we screw up. There’s plenty of human error to go around. But sometimes there are good reasons for it. But the key thing I want to just reiterate is if it’s failed on some earlier metric, we won’t check the manual data every week because there’s no point checking everything for stuff that’s not going to be on the buy list anyway. That’s just, I mean, I know Alex does, she does like pain. That’s why I have her do the checklist, because it’s painful. And she likes it. She goes, “I love it! I love it. I love the numbers. I love spreadsheets.” So, that’s why I give Alex all the painful stuff to do. But there’s a limit to even how much pain Alex is gonna take on. She’s not going to do work that doesn’t need to get done.

Tony  49:21

No, it’s a filtering process. We don’t look at every stock in the market, we don’t download every stock, we only look at stocks with positive cash flow. And then if it’s not going to make the buy list through the first stage of our filtering, we don’t bother looking at the manually enter data for it either. So, you make a good point.

Cameron  49:37

And for SDG

Tony  49:41

Again with SDG, the Brettelator is giving a buy line that crossed way, way, way back. So, 30th of September 2020. So, a year ago.

Cameron  49:51

That’s two years ago.

Tony  49:53

Thank you, two years ago. See, we all make mistakes.

Cameron  49:57

I know you’ve blocked out the last couple of years. Okay, I hope that helps, Chris. Doug: “uno pregunta.” I was like, I don’t know that word in Italian, and then I looked it up and it’s Spanish, not Italian. Uno demanda, maybe, in Italian. “From TK’s expertise,” and Doug lives in Spain, so that makes sense. “Why does he think capital goods companies are starting to show up in droves on our list? The coal companies are obvious, but is there anything about the current business cycle that would lead to these capital goods companies (XTE, LYL, MLD, NWH etcetera), climbing our buy list?” Good question, Doug.

Tony  50:36

Yeah, I’m not sure. Well, my understanding of capital goods companies is that they’re basically manufacturers. So XTE fits that mould, but I’m not sure about LYL, MLD, and NWH, which are all contractors and mining services businesses to the mining industry. LYL and NWH are both mining contractors and MLD provides accommodation for mines. So, I can see why they’re on our list, because we’ve been going through a mining boom. So, the mining contractors and suppliers do well, but they’re not manufacturers. I haven’t had a look at what ASIC category there is for those companies, I would have called the miners material goods, or materials companies, but perhaps these companies are lumped into capital goods. But certainly, I would draw a distinction between the mining contractors and other capital goods companies, which are manufacturers, which XTE is one. And I think in XTE’s case, it’s probably company specific; they’ve won some contracts recently to provide Kevlar and helmets and things to the US military, I think, which has helped it. However, having said that as a specific answer, I wouldn’t be surprised that manufacturing comes back onto the buy list, because I spoke last year about the macro scenario planning that companies like Shell do, and they said one of the scenarios going forward will be less outsourcing and countries bringing back manufacturing as the world moves from free and open borders back towards country-first type policies, and we saw that under Donald Trump in the US in particular. But there are other reasons for it; you know, supply chains, if we have trading issues with China and with Russia and the Ukraine, we have to find other ways of manufacturing goods. So, we might see manufacturing come back into the US and back into Australia, and that may have an impact on that sector. Again, prediction, who knows what will happen? But we may see manufactures back on buy list. And of course, if you’re an Australian manufacturer and you’re exporting the goods overseas, happy days, because the dollar being so low is a good tailwind for that. So, that may be another reason why we see manufacturers on the buy list. But I think we’ve just got to be careful we don’t lump manufacturers in with mining services companies and miners because they are different — even if they do all fall under the ASIC category of capital goods. And I’m not sure they do, but I haven’t looked at it. The other point I want to make is that my process is very much a stock-up process. So, I’m not looking at any particular industry or any particular sector or commodities, we just follow the rules and then look back and say, “hey, how about that. We’re now owning airlines, or we’re now owning banks, or we’re now owning gold companies.” It’s just how it works.

Cameron  53:34

Yeah, somebody — I think might have been Murray, who’s still in Hawaii getting ready for his Ironman, I think, this week — but somebody posted on Facebook in the last week asking again for your policy on overexposure. I think he was talking about being overexposed to coal, and I didn’t add it to the questions because we talk about it a lot, but I did just remind him that your position has always been “don’t care. If it’s top of the buy list and it’s undervalued, I don’t care what sector it is or how much I own in that sector already. Just buy it.”

Tony  54:10

Correct. Yeah, I mean we’ve had a few emails about re-buying things, and I’ve been doing that, re-buying coal stocks in the last week or so and then buying double positions. A couple of things you have to be aware of is that if you are re-buying extra positions because you can’t find some new stock to buy, then just be aware your ADT rules s still apply. So, you don’t want to hold too much of a small company because you will get stuck when it comes time to sell. And if you are overweight in industry, and it does turn against you, you do want to get out and you don’t want to be trying to push too many shares through the fire door to get out, so that’s an issue. I guess the other thing that I try and do, for example, at the moment I think Yancoal is top of my buy list when I take into account ADTs and all that kind of stuff, and I’ve now bought a double position in it. I wouldn’t buy a triple position if there was another stock, I haven’t got a double in down the buy list; I’d buy that first, if that makes sense. So, you know, I’ll go double in Yancoal, and then I think I went double in AMP recently because I already owned it, it was back into a buy situation on the buy list, and it was high up on the list. And then maybe a double into Whitehaven Coal, for example. So, just like I do when I’m setting up a portfolio, I’m trying to buy the next stock I don’t already own. With rebuying I’m trying to buy the next stock I haven’t gotten a second position in first before I, you know, will buy a triple position in Yancoal, for example — if I could, I don’t think I could because the ADTs high, but I don’t want to get too much into one company and get stuck. One last thing that the Iron Man has pointed out is that when the coal stocks turn, if we have a sell line for the commodity which is way below the price, then we could suffer a hit to the portfolio. Which is one of the reasons why I’m also looking at Renko charts, because I think in that case, if we do have a low sell line for coal, they might prove more useful than waiting for us to breach. But that’s still something I’m parallel testing at the moment.

Cameron  56:10

Speaking of stocks that we hold and how often we turn them over, I just happened to notice that we’ve held ECX in the dummy portfolio, the current parcel that we own, since the eighth of September 2020. We’ve held it for over two years, ECX, and it’s up 16.63% per annum. We bought it at $1.50, it’s now $2.02 today. So, it’s gone up 33% roughly over that period of time, about 16.63% per annum, which makes sense considering it’s two years. That’s ECX. IGL we’ve held since the 28th of July 2021, over a year. We bought it at a $1.46.

Tony  56:56

Sorry, sorry to interrupt you again. ECX is a three-point trend line sell at the moment.

Cameron  57:01


Tony  57:02

Yeah, have a look. I sold mine last week for the same reason, but I had held it for a long time.

Cameron  57:08

You and your rules, Tony.

Tony  57:11

Hate to spoil a good story with the facts, but yeah.

Cameron  57:15

I can’t check it because the Brettelator is not working for me. It hasn’t turned up in my alerts.

Tony  57:20

Oh, okay.

Cameron  57:22

I’ll look into that. Something to add to my to do list. Is IGL a sell, Tony?

Tony  57:31

No, IGL’s fantastic.

Cameron  57:33

IGL we’ve held since the 28th of July, bought at $1.46, currently $2.20. So, it’s up 53.81% per annum. I remember holding on to IGL in one of my personal portfolios like two/three years ago and it was just sitting there doing nothing for like a year, hovering. I think I did sell it at some point, but you know, it’s gone gangbusters recently. So, it was a good bet, a good buy, just took a long time to kick in.

Tony  58:00

Just on IGL, they’ve just announced a capital raise. So, if you want to buy IGL, or buy more of IGL, the share price in the capital raise is $2.25. The current share prices $2.23. So, at this stage, it’s not worth buying any more through the capital raise, you can buy it cheaper on market. But I think we have at least a number of weeks to go before the capital raise shuts. So, if anyone owns IGL just keep your eye on the price, and when it gets above the capital raise price you might want to consider buying some.

Cameron  58:34

And CVL, Civmec, we’ve held since the first of March 2021. Bought it at 60 cents, it’s currently trading all the way up at 60 cents. So, it’s gone nowhere in eighteen months, but there you go. We did get a dividend for it, actually we’ve got a tonne of dividends out of it. They’ve paid four dividends in that period of time, but that’s only added 4.42% to our return on it, but there you go. So, we do hold stuff a long time, which harkens to your point early on.

Tony  59:14


Cameron  59:15

Okay. There we go, Doug. That’s Doug. I’ve got a late one from Mark, Tony. “Hi Cam. Could you please ask Tony to explain once again the theory of 3PTL sells and dividends. I understand the basics of ex-dividend dates, i.e., the share price should drop by the dividend per share amount, we should factor this in. But I don’t understand the relevance of the payment date. Let’s say a share at $1 has a remarkably flat 3PTL sell price of 91 cents and it pays a 10-cent dividend. If the share price should drop to 90 cents on the ex-div date, and we would add back the 10-cent dividend for a 3PTL sell share price of $1, we don’t sell. My understanding is that Tony would sell on, or the day after, the payment date if the share price is still at 90 cents and the remarkably flat 3PTL sell price is still 91 cents. To me, this makes no sense. I’ve trousered the 10-cent dividend, I’m holding a 90-cent share, I’m still all square. Sentiment has gone south in line with the dividend per share only, so theoretically it’s flat. Thanks, Mark.” And I agree with Mark, I still don’t understand that. I’ve got the money. I’m not underwater, technically. So, why am I selling on the day after the payment date?

Tony  1:00:41

Yeah, I can see what Mark’s getting out, and in some respects it’s arbitrary. My logic for what it’s worth is that in Mark’s case, if I’ve pocketed the 10 cents, I’ve redeployed that somewhere else. You know, I put that to work somewhere else, so it’s no longer associated with that stock. And we have to draw a line somewhere in time to say, how long do we keep adding 10 cents back? Is it one month, six months? Is it twelve months? Is it forever? So, if you look at your portfolio tracker — and I use Sharesite and Navexa’s the same — you can see for the period you’re looking at that the capital portion of the stock performance might be negative, and you add back dividends and it’s back above a 10% drop. But when do you stop doing that? And so, my logic is, when I’ve redeployed the capital somewhere else, I can’t keep allocating it to two different stocks, that’s when I say it’s enough. The other point to note about dividends is it’s not mathematical, the share price can go up after a dividend is paid and they don’t always drop exactly the amount of the dividend. So, there’s oftentimes something else, there’s other market forces at play at the same time that can have the overriding effect. So, I don’t want to ignore those market forces for too long, and so I just use the payment period as the time when I’ll add it back. When I get it and redeploy it, I stop doing that.

Cameron  1:02:00

Yeah, that makes perfect sense. To me, anyway, hope it does to Mark as well.

Tony  1:02:05

But feel free to come up with your own rules, Mark. This is not etched in stone. It’s just what I do.

Cameron  1:02:11

Be a QAVerick if you want, Mark.

Tony  1:02:13

Yeah. Be a QAVerick.

Cameron  1:02:16

All right. Well, that’s all of the questions for this week, TK. After hours. Tell us about your horsies, Tony…

Cameron  1:09:22

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