Transcript QAV 620

QAV 620 CLUB

Cameron  00:06

Wel­come back to QAV episode 620. We’re record­ing this on Tues­day the 16th of May 2023. It’s about 2:21pm on the east coast. The mar­kets hav­ing a ter­ri­ble day again. How are you, TK?

Tony  00:24

I’m good. Hav­ing a bet­ter day than the mar­ket, I guess.

Cameron  00:30

It’s gloomy out there. I believe that today at some point, the for­mer boss of the RBA, Glenn Stevens, gave a lit­tle talk at some lit­tle con­fer­ence. The West­pac Mel­bourne Insti­tute. No, that was some­thing else. Any­way, he gave a lit­tle talk. Oh, here we go: The Aus­tralian Petro­le­um Pro­duc­tion and Explo­ration Asso­ci­a­tion, where he said, there’s prob­a­bly going to be more inter­est rate ris­es. Mar­ket obvi­ous­ly took him seri­ous­ly. I woke up this morn­ing and read The Fin and it said the mar­ket was gonna open high­er today. And it did not. It opened much low­er. So, any­how.

Tony  01:13

Yeah, but like, it always amazes me how, like, I watch the morn­ing news as well and it’s “oh, the mar­kets expect­ed to open high­er today.” It’s like, hon­est­ly, if you knew that was 100% accu­ra­cy what are you doing work­ing as a reporter at The Fin well or for ABC News, or what­ev­er, just trade the mar­ket. But of course, it does­n’t have any sort of cor­re­la­tion to what’s going to hap­pen next.

Cameron  01:36

All these finan­cial jour­nal­ists would be rich. They’d be doing the pod­cast.

Tony  01:39

Yeah, exact­ly.

Cameron  01:43

Well, let me talk about the port­fo­lio. I did my week­ly report on it this morn­ing. It’s look­ing pret­ty good. Since incep­tion — for new lis­ten­ers, that’s the begin­ning of Sep­tem­ber 2019 — our dum­my port­fo­lio is up. Accord­ing to Navexa, it’s up 16.99% per annum CAGR ver­sus the STW, which is up 7.21. Lit­tle bit less than two and a half. I think I worked it out this morn­ing, it’s about 2.35 times the index over that peri­od of time, which is pret­ty good. Com­ing up to four years. This finan­cial year, the bench­mark is still ahead: it’s 16.41 we’re 12.33% per annum for the finan­cial year. So, we’re hav­ing an okay year, but not as good as the index for the quar­ter. Still kind of neck and neck. It’s over­tak­en us a bit recent­ly. 1.65 ver­sus us, 1.38 for the quar­ter. In the last week it’s been kind of, you know, fair to mid­dling. A few stocks are up: ASG is up 7.3% this week, in the last week I mean; DUR up 6.74, SRG up 3.47. On the oth­er end of the scale, SKT is down 3.61. I just bought that, too. Replaced Myer with SKT and it imme­di­ate­ly went back­wards, so thanks for that, Sky. Reject Shop was down 3%, IGL down 2.12%. But, you know, noth­ing big. Noth­ing big up, noth­ing big down; the mar­kets kind of just coast­ing side­ways recent­ly, noth­ing real­ly excit­ing going on. Have you had any big wins late­ly, TK?

Tony  03:28

In my port­fo­lio? No. No, I’m gonna have to flag with full trans­paren­cy, I’m prob­a­bly going to-I’m almost def­i­nite­ly gonna under­per­form the mar­ket with my own port­fo­lio this finan­cial year as well. But we’ll wait and see. A mir­a­cle could hap­pen in the next month or so.

Cameron  03:45

Are you both­ered? Are you con­cerned about that?

Tony  03:48

No, not at all. I mean, there’s been plen­ty of years where I’ve under­per­formed, and it often gets fol­lowed by out­per­for­mance, because that’s how sta­tis­tics work, right? When you have an aver­age out­per­for­mance, any sort of under­per­for­mance is going to be fol­lowed by out­per­for­mance.

Cameron  04:02

And if you just stick to the sys­tem and just keep doing what you’re doing, you know that even­tu­al­ly it comes good.

Tony  04:08

And psy­cho­log­i­cal­ly, there’s always a temp­ta­tion to say, “oh, I should just sell every­thing and buy an index fund,” right? It’s prob­a­bly the wrong time to do that. Once you get to near the end of the year and you’ve found out you’ve under­per­formed, it’s more like­ly to be your chance to regress to the mean and out­per­form as the index­es. So yeah, it’s the wrong time to change tack.

Cameron  04:28

Yeah, but in that book, What Works on Wall Street I read a year or so ago, he said that’s what a lot of the pro­fes­sion­al fund man­agers he knows kind of do. They’ll fol­low one sort of sys­tem of invest­ing for six months or a year and it works well. And then when it stops work­ing, they’ll try and jump on anoth­er horse for a while, and it does­n’t real­ly work.

Tony  04:48

Yeah, and that’s a real advan­tage that we have over the pro­fes­sion­al fund man­agers. I mean, we’re kind of pro­fes­sion­al because we’re doing a pod­cast about it, I guess. But I mean, the ones that have to go out into the mar­ket every half or every year and have their per­for­mance mea­sured. I mean, yeah, if we had a fund out in the mar­ket and we under­per­formed, we’d have peo­ple redeem­ing. And so, we’ll do every­thing we can to try and get back to the index. And guess what, if you do that enough times, you hug the index, which is what a lot of fund man­agers do. So, the peo­ple are pay­ing fees for no ben­e­fit. Or they make dumb deci­sions. Like, you know, it’s the one time you under­per­form in a long peri­od of out­per­for­mance, and so peo­ple sell, and of course you bounce back the next year and keep bounc­ing back and they’ve left the train. So, yeah.

Cameron  05:32

But if I look at the All Ords for the last year, twelve months today, it was trad­ing at 7350. Today, it’s at 7432. So, it’s real­ly just gone hor­i­zon­tal for twelve months. It has­n’t been a great time for the mar­ket. If I go back two years today, it was 7299, and it’s now 7450. Sor­ry, 7430.

Tony  06:01

So, how does the index go up 16% like you said?

Cameron  06:04

Well, that’s the STW I’m com­par­ing it to, it’s like the 200, not the All Ords.

Tony  06:10

Okay.

Cameron  06:10

So, the All Ords is a lit­tle bit broad­er, right?

Tony  06:13

Yeah, a lit­tle bit broad­er, but it should still… The STW should make up the bulk of it.

Cameron  06:19

Well, if I go back to two years ago, the STW was trad­ing at 65. It’s now at 65. So, the STW has moved in two years, accord­ing to Yahoo Finance. One year ago, it was at 66. Now it’s just under 66. So, it has­n’t moved at all in a year. But if you go back to the begin­ning of this year, it start­ed at 62 and it’s now at 66.

Tony  06:48

Oh, sor­ry, okay, so you’re look­ing at a rolling twelve month ver­sus the finan­cial year.

Tony  06:52

Yeah, it’s a good ques­tion. I haven’t done a lot of thought about it, but I did look at PRN when you raised the ques­tion before the show. And to me, it looks like they’re large­ly ser­vic­ing the gold indus­try, gold min­ing indus­try.

Cameron  06:52

Yeah. If I look at, you know, the last six months, it has­n’t moved much either: 6064 to 65. So, yeah, it’s a lit­tle bit dif­fer­ent to the All Ords, but yeah, it too has been sort of trav­el­ling more or less hor­i­zon­tal­ly over the long haul. Hey, let me ask you a ques­tion: PRN Tony? PRN. I was look­ing at them, Per­en­ti this is, I was look­ing at them last week. They were a buy last week. I was strug­gling to find any­thing to buy to add to our port­fo­lio. I was sit­ting on a bit of cash in the light port­fo­lios and in my Super, try­ing to find some­thing to buy. PRN was a buy but a hard one to fig­ure out, and I end­ed up buy­ing it and then rule one­ing it a cou­ple of days lat­er, so did­n’t real­ly work out. But it’s exposed to the min­ing sec­tor, and I was try­ing to fig­ure out exact­ly what kind of risk it was. So, as I under­stand it, Per­en­ti basi­cal­ly sell picks and shov­els to the min­ing sec­tor. But they’re involved in lots of dif­fer­ent projects, cop­per, gold, coal, all of which at the time were a sell or a Josephine. Gold is a buy this week. No, it turned around. But I could­n’t fig­ure out how close­ly their rev­enue is actu­al­ly tied to the under­ly­ing com­modi­ties of the sec­tors that they serve. Have you ever done any dig­ging into PRN and thought deeply about their expo­sure to under­ly­ing com­modi­ties like that? Should we tie them to the under­ly­ing com­modi­ties of the busi­ness­es they’re involved in? Or are that one lay­er abstract­ed out of that, is my ques­tion.

Cameron  08:39

Yeah, most­ly gold.

Tony  08:40

Which, as you say is, is hav­ing a good run. So, I would think, with­out doing any research into PRN or know­ing that well, that yeah, if you’re ser­vic­ing one par­tic­u­lar com­mod­i­ty indus­try, you’re going to be tied to how the indus­try is going. I would have thought if the gold min­ing indus­try was turn­ing down that there’d be less out­sourc­ing work. I think Per­en­ti make a lot of mon­ey from oper­at­ing mines on peo­ple’s behalf, con­tract min­ing, as well as pro­vid­ing engi­neer­ing ser­vices and data ser­vices and things like that. But you would have thought that work would ebb and flow with the under­ly­ing indus­try, and I think in this case, it’s main­ly gold. So, yeah, I’d be tempt­ed to use the gold com­mod­i­ty chart to work out whether to buy or sell this one.

Cameron  09:24

Right. Well, I’m just, I don’t know. Like, if I look at the gold chart itself, let’s say over the last five years, and then I over­lay Per­en­ti on that they look noth­ing alike.

Tony  09:40

Real­ly? There goes my the­o­ry.

Cameron  09:45

Well, I mean, should there be a cor­re­la­tion if they’re tied that close­ly to gold. You would think there’d be some cor­re­la­tion, right?

Tony  09:53

I would have thought so, yeah. I mean, they’re not going to have the one-to-one cor­re­la­tion, per­haps, because, well, I don’t know what their con­tracts are like, Cam. If they’re doing con­tract min­ing for a gold com­pa­ny, are they get­ting a per­cent­age of the rev­enue or per­cent­age of the earn­ings? Or are they just get­ting paid for their time, basi­cal­ly? I’m not sure.

Cameron  10:12

I would assume it’s the lat­ter, but I did­n’t… But if I look at their five-year chart, Per­en­ti five years ago was trad­ing at about $1.17. They’re cur­rent­ly trad­ing at $1.19. So, that’s been their five-year going side­ways. They went up, you know, a bit and down and all that kind of stuff. They’ve had some peaks and troughs, but they’re basi­cal­ly exact­ly where they were five years ago. If I look at the gold price, Aus­tralian gold price, over the last five years, you know, it was sort of 1644. It’s now 3012. So, it’s dou­bled in the last five years. Per­en­ti has just gone side­ways. So, they don’t seem to be cor­re­lat­ed.

Tony  10:53

Okay. Well, look, if they’re not cor­re­lat­ed, there’s no point using gold. I’m just look­ing at them in Stock Doc­tor, and yeah, they have diverged quite a bit. That’s the test I always do on these things, is it cor­re­lat­ing with a com­mod­i­ty chart?

Cameron  11:07

Yeah. I looked at gold, it did­n’t seem to cor­re­late with gold. I looked at cop­per and nick­el and it did­n’t seem to cor­re­late with those very well, either. So, I just end­ed up tak­ing a punt and it did­n’t go well.

Tony  11:20

Well, I mean, that’s the thing. If you can’t make your mind up, just go back to the nor­mal three-point trend lines and the rules to buy and sell. Because as you say, a lot can go on from a cor­po­rate lev­el with a com­pa­ny like this. Like, it could be acquir­ing com­pa­nies or sell­ing com­pa­nies, it could be win­ning con­tracts, los­ing con­tracts, all that kind of thing, which aren’t nec­es­sar­i­ly cor­re­lat­ing with the… And then you’ve got the gold price on top of that, and how the indus­try is doing on top of that, but nor­mal­ly it’s a broad brush. If the indus­try is doing well and you can track into the indus­try, you’d have to be real­ly stuff­ing up to not make mon­ey.

Cameron  11:54

Yeah, well, there you go. That was a tricky one. Did­n’t real­ly get me any­where. But it’s been a tough week for a lot of stocks, so I was­n’t sur­prised that I had to rule one it. Buf­fett. We spoke a lot about War­ren last week, I don’t want to speak any­more, but I did read this. I like this. He was talk­ing about Ben Gra­ham’s book, The Intel­li­gent Investor. He said, “I wrote Harp­er Collins a note the oth­er day because they’re bring­ing out anoth­er edi­tion. I asked them how many copies have been sold, and they said the records did­n’t go back far enough, but they had 7.3 mil­lion copies of this lit­tle book that changed my life. Every­body keeps bring­ing out new books and say­ing a lot of oth­er things, but they aren’t say­ing any­thing that’s as impor­tant as what he said in 1949, in this rel­a­tive­ly thin lit­tle book.” Now, I’ve got a copy of The Intel­li­gent Investor. I don’t think it’s a thin lit­tle book.

Tony  12:46

No, it’s not. And it’s also damn hard to read, too, because it was writ­ten in the 1930s.

Cameron  12:52

And I don’t know how… Like, they’ve obvi­ous­ly sold mil­lions and mil­lions and mil­lions of copies of this book over the last what­ev­er, how many years that is. Sev­en­ty-odd years, eighty years?

Tony  13:04

Well, no, it’s a hun­dred I think, isn’t it?

Cameron  13:06

Well, he said 1949? What year did it come out?

Tony  13:09

Ah, okay. Okay, no, pos­si­bly, yeah.

Cameron  13:12

But there are mil­lions and mil­lions and mil­lions of suc­cess­ful val­ue investors. I’m pret­ty sure there’s prob­a­bly a loss, but I don’t think there’s that many. And, you know, that just made me think. I mean, one, what he’s say­ing is, I think, ter­rif­ic, like, nobody’s writ­ten any­thing that’s bet­ter than the Intel­li­gent Investor in terms of the under­ly­ing ideas and the influ­ence of those ideas. It just gets back to what you said, like, I remem­ber buy­ing it for the first time when I was eigh­teen or nine­teen and try­ing to read it, and just doing my head in. I gave up and you know, I think that’s… Like, the val­ue of what we do on the show is try­ing to take these ideas and mak­ing them digestible for peo­ple. Teach­ing it in a way that those of us that have an aver­age intel­li­gence can get our heads around and apply the ideas behind it.

Tony  14:05

Yeah, I think what War­ren’s say­ing is there are some key con­cepts in the Intel­li­gent Investor which are good for all time, real­ly. Even though you can queue up Alan Kohler and say, “this time it’s dif­fer­ent,” it’s still the fact that the mar­kets are a weigh­ing machine. Not a weigh­ing machine in the short-term but a vot­ing machine in the short-term, weigh­ing machine in the long-term, and that you need a mar­gin for safe­ty when you buy things. They’re prob­a­bly the two key con­cepts. And then the con­cept of Mr Mar­ket I think is anoth­er one that was there. But, you know, there’s a whole rest of the book on things that Ben Gra­ham was talk­ing about. I recall things like net nets, and he goes into when you should be buy­ing bonds ver­sus shares and how to find a deep val­ue stock by look­ing at dif­fer­ent key met­rics like we do and com­ing up with a score for the stock. So, things have evolved since then, but the basic con­cepts are just as beau­ti­ful as ever. They’re as sim­ple and unchanged as they ever were. So, when peo­ple come along and say this time it’s dif­fer­ent. It’s just rub­bish.

Alan Kohler  15:05

“It is dif­fer­ent. Every time. It’s always dif­fer­ent, Tony, it’s nev­er the same.”

Tony  15:09

Well, the thing that’s the thing that’s not dif­fer­ent is we haven’t evolved in the last hun­dred years. It’s not pos­si­ble that we could have evolved in the last hun­dred years, so the stock mar­ket is always going to be Mr Mar­ket, Mr Man­ic Depres­sive, who comes to you with a price every day. And peo­ple are going to buy based on where they think the votes are, they’re going to vote on the sto­ries rather than weigh­ing up the bal­ance sheet and the P&L of the com­pa­ny — that has­n’t changed in a hun­dred years — and Ben Gra­ham was the first per­son to, you know, to talk about that.

Cameron  15:38

And as War­ren said — we quot­ed last week — the oppor­tu­ni­ty in invest­ing is always oth­er peo­ple doing dumb things. That does­n’t change either.

Tony  15:48

That’s right. “This time it’s dif­fer­ent is not dif­fer­ent.” That’s the dumb thing that’s been said before the dumb thing that gets done, every time.

Cameron  15:59

Yeah, any­way, I like that. Let’s talk about the buy list, Tony. So, Alex and I were hav­ing a chat yes­ter­day and the ques­tion came up, and I know the two of you have been talk­ing about it as well, should we keep putting the Josephine’s and stocks that have an under­ly­ing com­mod­i­ty sell in the buy list each week, and then just forc­ing every­one to fil­ter them out when they actu­al­ly try­ing to decide what to buy? Or should we leave them in? And Alex and I talked about it in some depth yes­ter­day, and one of the rea­sons I kind of like hav­ing at least the Josephine’s, and the com­mod­i­ty sells also in there, is because they can change dur­ing the course of the week, and I don’t want to have to do a new buy list every day. I do need to trade stocks, par­tic­u­lar­ly with the size of the port­fo­lio’s that we man­age now, sev­er­al times dur­ing the week often. And, you know, what I can do now is just use stock his­to­ry to update the share price and I can quick­ly check to see if it’s still a Josephine, what the sen­ti­ment is, and you know. It may be the com­mod­i­ty, like, gold did change from last week to this week. Com­modi­ties can change some­times rel­a­tive­ly quick­ly, and we want to get in on it when it changes. But do you have any thoughts on whether or not we should take them out? Are there any oth­er rea­sons to take them out of the buy list each week apart from mak­ing the buy list small­er?

Tony  17:21

No. So, I think I prob­a­bly con­fused Alex on the week­end because she rang up and asked me whether she should include the stocks that weren’t above the sec­ond buy line, but were above the buy line, and I said, “well, they’re Josephine’s. You include those,” and she said, “well, I’ve only got buy and sell, what do I do?” So, I said, “well, they’re a sell, so you can’t include them.”

Cameron  17:43

Wait, no, they’re not a sell.

Tony  17:47

Well, she said, “I’ve only got buy and sell, what cat­e­go­ry do I put them in?” So, I said, “Well, they’re not buy, so they’ve got­ta be a sell.”

Cameron  17:53

But if we hold them, we would­n’t sell them.

Tony  17:55

Cor­rect. But she only had “buy” or “sell”, and I would­n’t buy them if they were below the sec­ond buy line.

Cameron  18:01

No.

Tony  18:02

So, I con­fused her. And then she rings up a lit­tle bit lat­er and says, “I’ve only got twen­ty stocks on the buy list tab, what have I done wrong?” And I thought straight­away, well, I prob­a­bly made the wrong call there. So, “go back and make all those stocks that haven’t got a sec­ond buy line buys and see what you get.” And she got the nor­mal buy list that came out. Long sto­ry short, I agree with the way it’s done now. Include them all, but let peo­ple know that as of the time of the down­load, “this one’s a com­mod­i­ty sell, this one’s a Josephine,” and that they should check if they’re not doing it on the same time as the buy list is down­loaded.

Cameron  18:35

Yeah. We do have, thanks to one of our club mem­bers — I can’t remem­ber who it was now, might have been Chris, or Gary — some­body built some code that we put out in the buy list now that does show peo­ple what’s a Josephine. It uses Excel stock his­to­ry to do that. So, yeah. Tay­lor some­times com­plaints to me, “ah, it’s too hard. I have to fil­ter every­thing when I get your buy list. I have to fil­ter this out and fil­ter that out. I just want it clean so I can just look at it and know what to buy.” And I get the ratio­nale. But yeah, as I said, things change quick­ly to over the course of the week. Like BRI, Big Riv­er Indus­tries. I added that to one of our light port­fo­lios today. It was a Josephine yes­ter­day when I checked it and today it’s not. Or it was hav­ing a down day yes­ter­day, maybe, and today it’s not. One of the two. But things change day by day, and if it’s not on the buy list you don’t know to check it. If it is on the buy list, so it’s past our fun­da­men­tal checks: it’s above the first buy line, it’s above the sell line but it’s a Josephine, it’s there so you can quick­ly do a check as the week pro­gress­es rather than hav­ing to do a new buy list every day.

Tony  19:53

Yeah, so just helped me out here because that’s the way I do it. So, if I’m need­ing to sell a stock, say I’ve just received an alert some­thing’s crossed the sell line and I need to sell it, I will down­load from Stock Doc­tor into my ver­sion of the buy list, which I think is dif­fer­ent to the one you put out. I down­load it and then I’ll call up the score­card, which is put out every week, and check for the com­modi­ties if it’s a com­mod­i­ty stock, or I’ll jump into the Bret­te­la­tor and check for a sec­ond buy line or a Josephine if it’s some oth­er rea­son, before I buy. Maybe it’s a bit eas­i­er for me because I’m look­ing at large ADT stocks. I might only have to do that half a dozen times before I exhaust the buy list or find some­thing that I want to buy. But that’s the process I go through every time, regard­less of who puts one out.

Cameron  20:37

So, what are you get­ting with the new down­load that you do from Stock Doc­tor? If you do one on a Mon­day and you do one on Thurs­day, the only thing that’s changed in Stock Doc­tor, unless it’s report­ing sea­son, the only thing that’s going to have changed is the price, right?

Tony  20:50

Cor­rect.

Cameron  20:51

So, in the ver­sion of the buy list that we put out on a Mon­day that uses Excel stock his­to­ry, every time I open the spread­sheet it updates the prices of every­thing. It does­n’t update it in a way that it updates the scores. So, the QAV score does­n’t change over the course of the week as the price changes.

Tony  21:10

I’m sor­ry, I just was gonna say, if you real­ly want­ed to be anal about it, you should check the PE ratio. If it was scor­ing on the PE ratio as being the low­est, that the price move­ment has­n’t changed that score.

Cameron  21:23

Yeah, those things could change.

Tony  21:25

Yeah. But then again, we’re only talk­ing about maybe a slight change in the rank­ings and those kinds of things.

Cameron  21:31

If some­thing comes up to buy and I look at the price when we did the analy­sis on Sun­day night, and I look at the price today, and it’s changed by 10%, I will run the num­bers again.

Tony  21:43

Yeah, okay.

Cameron  21:44

If it’s changed by that much I’ll run it just to make sure it has­n’t, you know, the QAV score has­n’t dropped below point one or what­ev­er. But gen­er­al­ly, you know, prices don’t change that much over the course of a cou­ple of days.

Tony  21:56

The only oth­er thing I do check from time to time, espe­cial­ly if I can’t find some­thing on the buy list. One is to check that there has­n’t been some­thing report­ing in the inter­ven­ing peri­od. So, in the last cou­ple of weeks, the bank stocks have report­ed, for exam­ple, and stocks like Elders and Eclipse, Eclipse has got a new name, but the old Eclipse, haven’t report­ed. So, that’s one thing. But they should come out on your buy list when you do a new down­load if they’ve changed their scores. But they do require you to go through and do the man­u­al­ly entered data, at least on my buy list. And the oth­er one is to go down the list into what’s not on the buy list, in my ver­sion of the spread­sheet I still have those stocks that did­n’t make it and look to see if any­thing is pop­ping up close to sen­ti­ment and then go and check on those. Because like you said, if the sen­ti­ments gone up by 10% since the last time you did the buy list, they still might be com­ing up in the stock fil­ter in our spread­sheets as not hav­ing passed the buy line. So, you can drop down. The way my spread­sheet works, if you drop down to things which are scor­ing above 0.1 again but they have neg­a­tive sen­ti­ment, you’ll see them all grouped in the spread­sheet. And I will run through those occa­sion­al­ly as well to make sure noth­ing new has come on the buy list that we haven’t got a sen­ti­ment check for.

Cameron  23:08

Right. And so, they might have gone from a 0.08 to a 0.1.

Tony  23:14

Well, yeah, they might still be 0.08 because we haven’t updat­ed the man­u­al­ly entered data, because sen­ti­ment check­ing is still a man­u­al­ly entered data thing. So, yeah, they might be 0.08 on the spread­sheet, but if you go into the Bret­te­la­tor, you might see they’re a buy because the stock price has moved. So, you’ve got to go in and add that score and then check it again.

Cameron  23:32

Yeah, so there is good rea­son if you want to be that anal about it, doing it each time you run it, not just using Mon­day’s list and updat­ing the prices, I get it.

Tony  23:42

Cor­rect.

Cameron  23:43

I’m not going to do that.

Tony  23:45

I think it’s prob­a­bly fine to just use the week­ly one that Alex does that you guys pull togeth­er and pro­vide, and as you say, just finesse it dur­ing the week.

Cameron  23:55

Before I buy any­thing, I am in the habit of check­ing the news, all that kind of stuff, just in case. I still miss things from time to time. But yeah, I’m try­ing not to let any­thing slip through the cracks. Alright, I’ve got one more thing to talk about. Pla­to Invest­ment Man­age­ment, Dr David Allen. I read, I think, some­thing in Livewire, a quote from him yes­ter­day that I liked. He said, “I just learned the oth­er day that the great Don Brad­man, the best crick­eter of all time, only hit a hand­ful of six­es in his career, and his whole phi­los­o­phy is ‘you don’t get out if you just hit the ball on the ground.’ ” And Alan went on to say, “that’s very much akin to our strat­e­gy. We’re look­ing to con­sis­tent­ly eke out Alpha every day, every week, every month, rather than bet­ting on any one stock or one the­mat­ic.” I thought, well, that sounds like us.

Tony  24:48

It does. Yeah, I agree. Yeah, and I’ve spo­ken about it before. I think there’s only been one time in my invest­ing his­to­ry of twen­ty plus years where I’ve had, you know, a real­ly good return of twen­ty times my ini­tial out­lay. So, gen­er­al­ly it’s just things get­ting… See, I’ve had plen­ty of three and four times my ini­tial out­lay, so home runs. But yeah, most­ly it’s some up, some down, and over­all, they’re 20% up.

Cameron  25:13

I actu­al­ly looked this up, because you know me, I know noth­ing about sport. I did know who Don Brad­man was but that’s about it. I did look it up. He hits six six­es in his entire career. That’s incred­i­ble.

Tony  25:27

It’s amaz­ing, isn’t it?

Cameron  25:28

The great­est bats­men of all time only hit six six­es.

Tony  25:31

Yeah, because he thought if I hit the ball into the ground, I can’t get caught.

Cameron  25:35

Yeah, right.

Tony  25:37

He’s right. He was like risk pric­ing his style of play. It’s like, get­ting six runs for hit­ting it over the fence was­n’t enough of a score to rec­om­pense tak­ing the risk.

Cameron  25:49

Yeah, right. Yeah, it’s one of the things that I love explain­ing to peo­ple about QAV, like new club mem­bers. I had a cou­ple of Zoom calls with new club mem­bers this week, wel­com­ing them and just, you know, sort of talk­ing through some stuff, explain­ing some of the fin­er points and the his­to­ry of it and what­ev­er, his­to­ry of us and the show. But yeah, just that very idea. Like it’s, you know, just buy­ing good qual­i­ty com­pa­nies that have a good his­to­ry of pro­duc­ing a lot of cash, try to buy them when we can get them at a dis­count to what we think the val­u­a­tion prob­a­bly is, and just play­ing the odds on that. You know, more of them will do well than won’t do well and we’ll just make good sol­id returns over a long peri­od of time. You don’t have to try and shoot out the lights, don’t have to take big swings, don’t have to hit six­es. It’s just con­sis­tent, dis­ci­plined per­for­mance.

Tony  26:43

And we’re also negat­ing sur­vivor bias by doing that, too, right? I mean, even though we are sur­viv­ing in the mar­ket because we’re doing that, which is good, but the finan­cial press and the finan­cial book­stores are full of sto­ries about peo­ple who took out­ra­geous risks and made a bil­lion dol­lars, right? And so, peo­ple think “that’s the way I have to invest.” But what’s not in those book­stores is the oth­er nine-hun­dred-and-nine­ty-nine peo­ple who tried to do the same thing and they’re now wait­ing tables at the local cafe or some­thing.

Cameron  27:15

That’s the book we should write. “How to take big risks and fail.”

Tony  27:21

Yeah, right. Yeah, we could. We could show peo­ple not what to do.

Cameron  27:26

Just go out and inter­view the hun­dreds and hun­dreds of peo­ple who thought they were real­ly clever and then failed, and nev­er recov­ered.

Tony  27:33

Or who took a big risk. And that’s one of the prob­lems with invest­ing I’ve found among peo­ple, is that it’s a bit like peo­ple who gam­ble. If their first win is big, they’re hooked. If they lose mon­ey on their first win, they go “oh, it’s not for me.” Which is prob­a­bly equal­ly as bad, at least in terms of invest­ing. They should just learn how to do it bet­ter or give the mon­ey to some­one who does know what they’re doing. But yeah.

Cameron  27:57

Well, that’s what I did. We talked last week about Hot­Cop­per. You know, I remem­ber in the dot­com peri­od bet­ting, gam­bling a lot of mon­ey on a cou­ple of shares, friends of mine’s shares, and it going south and just going “okay, well, obvi­ous­ly that was a stu­pid deci­sion. I don’t know what I’m doing. I bet­ter just stay out of that.”

Tony  28:15

I guess I’m just kind of wired dif­fer­ent­ly. Like, if I fail, and I’ve failed plen­ty of times, my brain just goes, “okay, what did I do wrong? How do I do it bet­ter? If they can do it, I can do it. Get your game face on, let’s work it out.”

Cameron  28:30

That is dif­fer­ent. I think, you know, that is one of your strengths, is just tack­ling that. And then you’ve put the work behind it for thir­ty years fig­ur­ing it out. Most of us, you know, I guess peo­ple do that in dif­fer­ent aspects of their life, prob­a­bly just not all of us do that. They’ll do that in their careers, or they’ll do that in a sport or a hob­by or what­ev­er it is, learn­ing a musi­cal instru­ment, learn­ing how to play chess, just noth­ing that makes mon­ey. Not invest­ing.

Tony  29:01

Noth­ing impor­tant.

Cameron  29:07

Yeah, all right.

Tony  29:08

Learn­ing what not to do is as equal­ly impor­tant as learn­ing what to do. I’ve always said it’s just as impor­tant to have a friend who knows every­thing as it is to have a friend who knows noth­ing, because you can learn from both. And shout out to Rod­dy, if he’s lis­ten­ing.

Cameron  29:21

I was just gonna say, I’m not going to ask you which one of those I am for you. I don’t need to ask. What have you got on your notes to talk about before we get into the Q&A this week, TK?

Tony  29:31

I only had one thing to say, and this is kind of a fol­low on from the pulled pork curse. Some­one asked a cou­ple of weeks ago to do a pulled pork on-there were two lithi­um min­ing com­pa­nies on the buy list. One was Pil­bara Min­er­als, and then the oth­er one was Allkem, ALLKEM, and I chose Pil­bara Min­er­als. But Allkem was part of a merg­er deals in the last week and their shares have shot up like 20% or some­thing. I now know if I can find an indus­try where there’s two com­pa­nies on the buy list and do a pulled pork on one, I can short them, but I can also go long on the oth­er one I don’t do a pulled pork on. So, good luck to any­one who owns Allkem. They were on the buy list, and they were in a lithi­um min­ing stock, which was an unusu­al thing to find on our buy list. But of course, with the lithi­um price being up they’re throw­ing off lots of cash, that’s why they’re there, I guess. But yeah, they announced a huge merg­er deal dur­ing the week with a US com­pa­ny and their stock went up a lot.

Cameron  30:29

Wow, what’s their share code, do you remem­ber?

Tony  30:32

I think it’s ALK from mem­o­ry.

Cameron  30:34

Yeah. Oh no, that’s Alka­ne Resources.

Tony  30:38

Oh, no, that’s the wrong one. No, it’s Allkem. Alka­ne is a gold­min­er, I think, from mem­o­ry.

Cameron  30:44

Oh, good­ness, me. Look at that. Yeah. Shot up from 10 bucks on the 20th of March to about 15 bucks today. $2.50 in 2020, $2.30. So, if you got in on it then, that was a good ride. We would­n’t have. But there you go, some­body rode it all the way up.

Cameron  1:31:17

The QAV Pod­cast is a pro­duc­tion of Space­craft 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 and not per­son­al finan­cial advice. We don’t know your per­son­al finan­cial cir­cum­stances. Please see a finan­cial plan­ner before mak­ing any invest­ment deci­sions.