Transcript QAV 623

QAV 623 CLUB

Cameron  00:06
And we’re back. QAV 623. June the sixth, 2:17 pm on the West Coast. No East Coast. Which coast are we on again?

Tony  00:17
East Coast.

Cameron  00:18
How are you, TK? I knew that.

Tony  00:22
Real­ly well. Good, thank you.

Cameron  00:23
That’s good. How was Wag­ga?

Tony  00:25
Fan­tas­tic.

Cameron  00:27
Got some golf in?

Tony  00:27
Yeah, well, actu­al­ly, the weath­er was real­ly good. A bit like Syd­ney; it was sort of 20 degrees. The days are pret­ty short, the nights are cold, but the days are love­ly, love­ly and sun­ny.

Cameron  00:37
You got to watch a spi­der.

Tony  00:38
Yeah, as I was telling you, I saw a spi­der eat­ing an insect, which was absolute­ly chill­ing to watch. It just moseys on over near the web, got caught. Spi­der comes down, com­plete­ly cocoons it in about 30 sec­onds, pulls it up starts to eat. It was just… oof. Nature is chill­ing some­times.

Cameron  00:55
That reminds me of Tom giv­ing Shiv the scor­pi­on gift in Suc­ces­sion. I want to do a shout out to War­ren, one of our rel­a­tive­ly new club mem­bers. Had a good zoom ses­sion with War­ren last night and walked him through build­ing a check­list and that kind of stuffed. Over in WA. RBA today, Tony. The mar­ket was up yes­ter­day, briefly. And then every­one said, “oh, the RBA is prob­a­bly going to announce anoth­er rate rise.” Has it hap­pened yet? What’s it like? 2:00, isn’t it, nor­mal­ly?

Tony  01:28
No. 2:30.

Cameron  01:30
Oh, 2:30.

Tony  01:31
Yeah, we’re about to find out.

Cameron  01:33
We should have record­ed lat­er, wait­ed ten min­utes.

Tony  01:34
Yeah, well, we’ll know dur­ing the record­ing. I’d be sur­prised if they don’t. And you know, we bang this drum all the time about inter­est rates being a blunt instru­ment, but some­one should go back — and per­haps they do in the RBA — go back and just see how effec­tive rais­ing inter­est rates is. Like we’re in this cycle now of wage growth, and that’s one of the rea­sons why I think inter­est rates will go up. Wages are going up because of infla­tion, which is also being pushed up because of inter­est rates. Rents are going up, and the cost of doing almost every­thing’s going up because of inter­est rates, which is forc­ing wages up. So, the prob­lem isn’t wages by itself or inter­est rates by itself. Infla­tion is being caused by ener­gy, so the Ukraine war amongst oth­er things, and sup­ply chain issues as a hang­over from COVID. At least the sup­ply chain one starts to resolve itself. But why put up inter­est rates? It just makes it worse. So, I’d like to know if there’s any analy­sis which shows that rais­ing inter­est rates is actu­al­ly help­ing in the cir­cum­stance, because it’s almost the fis­cal prob­lem that the gov­ern­men­t’s try­ing to alle­vi­ate, at least on the EG side, by pro­vid­ing some sub­si­dies and cap­ping prices. They can’t do much about sup­ply chain, I guess, but that should resolve itself. So, it’s almost like a vicious cycle. Inter­est rates go up, wages go up; wages go up, inter­est rates go up. It’s a very blunt instru­ment. So, I hope some­one at the RBA is look­ing at that.

Cameron  02:56
It’s the James Bond of eco­nom­ics.

Tony  03:01
Why’s that, Miss Mon­eypen­ny?

Cameron  03:03
A more recent James Bond. The first of the Daniel Craig films, M says to him, I think it’s the first one: “I realise you’re a blunt instru­ment, Bond, and I don’t expect you to under­stand. But try to stop blow­ing peo­ple up in the least.” Dame Judi

Tony  03:21
Dame Judi, yeah.

Cameron  03:22
I tell you what’s not going up, Tony, are hous­es by the sounds of it. Because builders are going bust, appar­ent­ly. Did you see this in the ABC today?

Tony  03:31
No. I haven’t seen it in the ABC, but I’ve been watch­ing it for the last six months. We were talk­ing about it last year when the first of them start­ed to go broke, but now it’s get­ting worse. And it’s because, as we said last year, they’ve got con­tracts with fixed prices, but their inputs are going up and they just can’t make mon­ey.

Cameron  03:48
Yeah, my mate Tony Ash­win, who’s a builder down in the Gold Coast, when they start­ed to go down, he said, “you wait, man. This is just the begin­ning of it.” And he was right. This is in the ABC today: “How did the con­struc­tion indus­try enter an insol­ven­cy cri­sis and how can it get out?” It says, “Phil Dwyer, Pres­i­dent of the Builders Col­lec­tive of Aus­tralia and builder of forty years’ expe­ri­ence says the insol­ven­cy cri­sis in the con­struc­tion indus­try is a nation­wide prob­lem. He says cur­rent­ly there’s a great esca­la­tion in sol­ven­cies. The data bears this out. Accord­ing to ASIC, 1709 con­struc­tion com­pa­nies entered admin­is­tra­tion between July ’22 and APR ’23, up from 1284 in the same peri­od twelve months ear­li­er. Dwyer traces the cur­rent insol­ven­cy cri­sis back to the home builder grant, which was intro­duced by the Mori­son gov­ern­ment in June 2020, as part of its eco­nom­ic response to the COVID 19 pan­dem­ic. The pro­gram offered a $25,000 grant to own­er-occu­piers who signed eli­gi­ble con­tracts between June 4 and Decem­ber 31, 2020, or a $15,000 grant for eli­gi­ble con­tracts signed between Jan­u­ary 1 and March 31 2021. As a stim­u­lus mea­sure it worked too well. As Tim Law­less, Research Direc­tor from Core Log­ic, told ABC Mel­bourne’s “The Con­ver­sa­tion Hour” in 2022, home­builders became over­sub­scribed as peo­ple rushed to sign con­tracts before appli­ca­tions closed. By Feb­ru­ary 2023, the scheme had received 138,000 appli­ca­tions and dis­trib­uted $2.52 bil­lion in grants. Dwyer says intro­duc­ing the home builder scheme into an already heat­ed indus­try cre­at­ed a vol­ume of work that has proved unman­age­able for the nation’s builders. ‘The gov­ern­ment should nev­er have done it,’ he says. Two years on, sup­ply chain issues and infla­tion caused by fac­tors such as COVID-19, Rus­si­a’s inva­sion of Ukraine, and labour short­ages have cre­at­ed a cri­sis. Builders oper­at­ing on fixed price con­tracts who can­not pass on increased costs to cus­tomers have been hard­est hit, with the price of raw mate­ri­als such as steel and tim­ber increas­ing between 40 and 50% dur­ing the pan­dem­ic. Many oper­a­tors have sim­ply run out of mon­ey to fin­ish projects.”

Tony  06:09
That is exact­ly what’s hap­pen­ing, and it’s to my point. That’s one of the prob­lems at the moment: infla­tion. You know, builders are fac­ing infla­tion­ary issues, and they’ve got fixed price con­tracts. So, let’s put inter­est rates up! It’s just not the answer. It real­ly isn’t. The gov­ern­ment… When I talk about fis­cal pol­i­cy, I’m talk­ing about what the gov­ern­ment can do, and I haven’t heard of any activ­i­ty yet. But it should be focus­ing on the indus­try, because builders col­laps­ing means unem­ploy­ment in the sec­tor, and that’s going to be a reces­sion­ary drag on the econ­o­my, if it’s not hap­pen­ing already. Or even pret­ty soon. But yeah, the solu­tion: put inter­est rates up. It’s not the solu­tion. It makes it worse.

Cameron  06:48
Maybe be we should get some­body from the RBA on the show. You know any­one in your high­fa­lutin cir­cles that you mix in?

Tony  06:56
I know an ex-mem­ber or two but I’m not sure they’ll come on.

Cameron  07:02
Real­ly? Why not? Mov­ing right along. Steven Mabb, Chair­man Mabb of the Aus­tralian Share­hold­ers Asso­ci­a­tion, came down from his ivory tow­er to call me last week. He heard us com­plain on the show, heard me com­plain on the show last week that the light port­fo­lios have tak­en a hit because I’m sit­ting on all this cash and I can’t spend it, and sug­gest­ed we could park our cash in some ETFs. He sug­gest­ed par­tic­u­lar­ly Beta Shares ETF AAA, which he said pays 4% less a 0.2 man­age­ment fee, or in VanEck TBIL, 4.5% US Trea­sury bills. So, at least you’d be get­ting-it’s not a lot, but at least you’d be get­ting a cou­ple of points on your cash while you sit there and wait for some­thing to buy. And he said the good thing about these things is you can sell them when you want cash to invest. What are your thoughts on putting our mon­ey in ETFs when we can’t buy any­thing for long peri­ods of time?

Tony  08:03
I don’t know. I’m not famil­iar with these two. I had a look at them this morn­ing as I was prep­ping for the show. How long are we hold­ing the cash for in the light port­fo­lios?

Cameron  08:11
I can’t say, but I’d say for a month we’ve been sit­ting, maybe more, on a lot of cash. I get to buy a cou­ple of things here and there, but, you know. I got to spend some this week, but I had to buy dou­ble parcels in a cou­ple of things when GNC and KAR became buys this week with crude oil and wheat becom­ing buys again, which we’ll talk about lat­er in the show. But most of the port­fo­lios, the light port­fo­lios, have been sit­ting on between 20 and 40% cash for weeks and weeks and weeks.

Tony  08:45
Oh well, if that’s the case, if it’s more than a month then it’s worth­while. I had a look at the these two ETFs that Steve rec­om­mend­ed, and the first one, which is called-the stock code’s AAA, pays a div­i­dend month­ly, so that would make sense to invest in it. But you are tak­ing risks because it’s still list­ed on the stock exchange, and the month­ly div­i­dend yield isn’t that great and it could be eat­en up by a move­ment in the actu­al ETF share price. But it’s pos­si­bly a place to park it. I’d ques­tion Steve’s com­ment about 4% yield. I don’t think that’s the case with it at the moment.

Cameron  09:20
What hap­pened to it when Steve called me on the 31st May? The share price had been going up and then it just fell off a cliff on the 31st of May. I mean, it’s only 10 cents out of 50 bucks, but still.

Tony  09:33
Yeah, the move­ments aren’t big. So, it may have just paid a div­i­dend or some­thing.

Cameron  09:38
It tends to do that. It seems to go up from the begin­ning of the month, it goes up to the end of the month and then it falls at the begin­ning of the next month. So, this is their month­ly div­i­dend, right?

Tony  09:49
Yeah, it pays a div­i­dend. But I added up the last twelve months worth of month­ly div­i­dends and got rough­ly $1.25 on 50 bucks. So, it’s pay­ing about 2.5% yield. On a month­ly basis, if you divide that by twelve, it’s, you know, bug­ger all.

Cameron  10:04
So, you’re not real­ly ben­e­fit­ing a great deal.

Tony  10:07
No. A cou­ple of oth­er points. I mean, in my per­son­al case, I’ve just gone back into the mar­ket yes­ter­day. Prob­a­bly the same time you did with the dum­my port­fo­lio, because some things turned up — a cou­ple of com­modi­ties turned up into buys. But there were also some oth­er ris­es which I bought into. But I think I was only in cash for a cou­ple of weeks at the most. And if I think back, the last time I was in cash was COVID, and that was per­haps a month at the most as well. So, I don’t tend to stay in cash very long. And that leads me to the last point — well, there’s a cou­ple more points to make. When I do go into cash, it gen­er­al­ly sits in an off­set account. Unless it’s in my super­fund or some­thing like that, but it goes into an off­set account. So, I’m sav­ing mort­gage inter­est on that. So, that’s worth more than putting them into these ETFs. But the oth­er point is that these kinds of ETFs are some­thing I was talk­ing about a cou­ple of weeks ago. I real­ly want to high­light; I’ll call it the “reach for yield” which goes on in the mar­ket. If some­thing’s offer­ing a good yield, don’t ignore the risks. And so, the risk for these two ETFs: one is a US Trea­sury bills ETF, so you’ve got cur­ren­cy risk. I don’t know if they hedge, but if they hedge it’s com­ing at a cost and that reduces your div­i­dend pay­ments. But trea­sury bills are bonds, and bonds have been fair­ly volatile in the last six or twelve months as inter­est rates rise. And then there’s yield curve inver­sions and poten­tial calami­ties. You can wake up the next day and the bonds may have moved quite a bit. So, you’re putting your cap­i­tal at risk to get a month­ly pay­out, which isn’t much. So, on a risk weight­ed basis, I’d be care­ful about going into these. Same with the Aus­tralian cash one. I’m not sure how it works, I haven’t researched it well enough, but again, cur­ren­cies can move a fair bit, too, over the course of a month. So, I don’t know what the risks are with these. I would just hes­i­tate with­out ful­ly under­stand­ing the risks to put mon­ey into these kinds of ETFs. What might be worth look­ing at is putting them into… If we’re find­ing it’s hard to buy some­thing, chances are that, you know, some­thing like one of the short ETFs that one of our lis­ten­ers was explor­ing about a year ago might be bet­ter off for us. You know, like those inverse index ETFs. That might prove bet­ter. But again, there’s a risk there, too. So, I’m not con­vinced that this is a good idea.

Cameron  12:32
I am look­ing at the oth­er one, the VanEck TBIL — TBIL is the ASX code. It shows a bit of move­ment, too, but it’s like the oth­er one. It sort of hov­ers between $50 and $51.5. $50.50 and $51.50. Not to be con­fused with the first Van Halen album with Sam­my Hagar in 1986, 5150, which is appar­ent­ly the LA Police Depart­men­t’s code for, I think, a crazy per­son. That’s a 5150. Yeah, it goes up and down by 1%. I’m look­ing at the two-year chart on it. It seems to go up and down from, you know, as I said, $50.50 to $51.50. Not a lot of move­ment there but pays a lit­tle bit of a div­i­dend.

Tony  13:22
Yeah, like I said, the risk may not be in that graph. What hap­pened when the GFC was around? What hap­pened dur­ing COVID? Prob­a­bly more per­ti­nent ques­tions. Or at the start of the Ukraine war. I mean, bonds can move quite a lot.

Cameron  13:36
Well, this is just a one-to-three-month trea­sury bond by the looks of it. Like, their chart on the ASX only goes back to May, 19 of May. I don’t know how that works. Any­how, you’re not a fan of the idea. So, what do I do? See, the dif­fer­ence between the light port­fo­lio and your port­fo­lio, the dum­my port­fo­lio, we’re not sit­ting on any cash in the dum­my port­fo­lio, but in the four light port­fo­lios we’re sit­ting on, like, six­ty/six­ty-five shares, and they’re all recent, rel­a­tive­ly new port­fo­lios over the last year. So, you know, there’s been a lot of rule ones in there and, you know, 10% of them get rule oned, and you’ve got sev­en­ty stocks on the port­fo­lios. That’s sev­en replace­ments, and there haven’t been sev­en stocks to buy for a long time. I tend to buy for the light port­fo­lios one or two a week. If I’m lucky, I can find some. And usu­al­ly, in the last few weeks, they’ve been sec­ond parcels of things that we already own. Or, you know, this week I end­ed up buy­ing dou­ble parcels of KAR and GNC, just because I knew I was prob­a­bly not going to get to offload that cash, you know, oth­er­wise. So, I thought it’s bet­ter off hav­ing it in some­thing rather than in noth­ing. We don’t have an off­set account for the light port­fo­lios. What will we do with it?

Tony  15:00
I’d just leave it in cash, Cam. I mean, if the stocks that we want to buy are going down, then the cash is actu­al­ly going up in terms of its use­ful­ness. So, even though we’re not earn­ing inter­est on it.

Cameron  15:09
Sure, it just does­n’t look good in our com­par­a­tive per­for­mance to the STW every month, because the STW is going up. And now cash isn’t.

Tony  15:19
Yeah, we could put some kind of notion­al earn­ings on cash. But I just think we have to where it.

Cameron  15:25
Wait for the turn­around, and we’ll all look good. Suck it up.

Tony  15:29
And so, just in recap for peo­ple who are hav­ing this prob­lem them­selves, or this issue them­selves. The num­ber one use of cash, I think, is to put it into an off­set account, reduce your inter­est bill. Num­ber two would be to put it into a bank deposit, depend­ing on how much you have, because that’s gov­ern­ment guar­an­teed. So, that’s risk free. Even if you’re only earn­ing one or 2% a year, and you only have it in for a month so it’s bug­ger­all, it’s still risk free. Putting it into ETFs, even though they might pay more, does come with some risk.

Cameron  15:55
Num­ber three is to put it on Tony’s horse that’s run­ning at Rand­wick this week.

Tony  16:01
I don’t have one rac­ing at Rand­wick this week, but yeah, go Caste in the spring.

Cameron  16:07
Num­ber four is to find your local friend­ly mob­ster and give it to him to put out with the vic.

Tony  16:14
No. I can tell you the cafe, though, to goes over and ask around.

Cameron  16:18
Yeah, I bet you can. It was­n’t that many years ago when I was pret­ty sure that’s what you did for a liv­ing. Part of the Irish mafia. The Ran­ga mafia in Syd­ney. Some­body else who is not wait­ing around is Myer’s CEO John King. Myer has announced that John King will retire from his role in the sec­ond half of cal­en­dar 2024 and will return to the US, because things are just going so well over there. He fig­ured, you know, “I don’t want to miss out on this great Renais­sance that’s hap­pen­ing in the US.” Not exact­ly in a hur­ry.

Tony  16:54
No. I think a hall­mark of his tenure is he’s giv­en eigh­teen months’ notice, or at least twelve months’ notice. So, the suc­ces­sion plan should go rea­son­ably smooth­ly. But he’s been a ter­rif­ic CEO, I’ve got to say, for Myer. And he’s faced a lot of dif­fi­cul­ties, turned it round. I mean, their share price was down around 25 cents, I think, when he came in, and it’s now — even though it’s come off recent­ly with all the prob­lems with dis­cre­tionary spend­ing because of ris­ing inter­est rates — it’s still at least dou­ble what it was when he came in. It sounds like he has­n’t been there for long, but he’s been there, I think, since about 2018. So, he will have served six years by the back end of 2024, which is kind of an aver­age tenure for a CEO. He’s had Sol­ly snip­ing at him the whole time and lots of board issues to try and man­age. But he’s done a great job. He’s an expe­ri­enced retail­er, and I tip my hat to him. He’s done a great job.

Cameron  17:46
Myer’s share price five years ago was 40 cents, 40.5 cents, cur­rent­ly trad­ing at 68 cents. Has been as high as $1.07 just back in March. But yes, come off quite a bit since then.

Tony  18:05
And what was its lows?

Cameron  18:07
Oh, COVID cough it dropped down to 10.5 cents. It’s sort of been grow­ing nice­ly since then. I’ve done my time as a Myer share­hold­er, on and off. We own it in a cou­ple of light port­fo­lios. One’s up 14%, the oth­er is up 18%. So, not tak­ing over the world. But I remem­ber when I owned it in my own port­fo­lio at one point it was up like 100% and then it came all the way back down to its buy price. I was telling War­ren about that in our chat last night. He was ask­ing the old ques­tion that we always get about trail­ing stop loss­es and that kind of stuff, and I said, you know, explained your think­ing around it. How if you stick to the rules with our sell trig­gers, more often than not it works in your favour. But you don’t remem­ber the ones where it’s worked in your favour, because you did­n’t sell it so you did­n’t think about it. You only remem­ber the ones where it went all the way back down to your buy price, and you got out and you’re just pis­sy about it. You don’t pay atten­tion to the times when it actu­al­ly works out in your favour unless you go back and do some sort of analy­sis. It’s fun­ny how that works. Okay, so we talked about inter­est rate ris­es and wages. I saw this arti­cle in the Fin yes­ter­day, I think. “Will DIY investors stay in love with the share mar­ket?” It’s by Jonathan Shapiro. “More than half of the pop­u­la­tion has a share port­fo­lio but will high and ris­ing inter­est rates force them to choose between stocks and prop­er­ty,” then going on about some event that some­body spoke at. Inter­est­ing here, it says — I think we’ve talked about this before — that, “1.2 mil­lion Aus­tralians have start­ed invest­ing in the share mar­ket since 2020,” I think near­ly all of them lis­ten to the show. “That means 10.2 mil­lion adults, or more than 51% of the pop­u­la­tion, have invest­ments out­side of super­an­nu­a­tion or the fam­i­ly home, and increased from 46% in 2022.” That’s a big jump in one year. But they’re say­ing that with inter­est rates, the share mar­ket is going to strug­gle. Peo­ple might feel like they’re bet­ter off putting mon­ey in prop­er­ty. They have the req­ui­site men­tioned to Scott Pape here. You can’t write an arti­cle in the Aus­tralian media about invest­ing with­out talk­ing about Scott Pape. It’s in his con­tract. He needs to be men­tioned at every oppor­tu­ni­ty. And there needs to be the same pho­to of him with his bare feet in the cam­era, appar­ent­ly. I don’t know why I need to see his feet every time they men­tioned him, but some­body’s got a foot fetish like Quentin Taran­ti­no out there.

Tony  20:56
It’s because he’s the Bare­foot Investor.

Cameron  20:59
I know. But still. Do I have to see his feet every time they quote the book? Real­ly?

Tony  21:04
Its in his con­tract?

Cameron  21:05
It’s in his con­tract. Yeah. Got­ta show off the feet.

Tony  21:08
Trade­marked.

Cameron  21:09
Good thing he did­n’t call his book “the Bare Ass Investor”, they’d have to have a pho­to of his ass every time they talk about him. “Sor­ry, it’s in the con­tract.” Like liv­ing with Fox. So, he talks about… Some­body, I don’t know who this is here. Some­body who goes by the name of Mr Quick, who, “in Feb­ru­ary posed an intrigu­ing ques­tion. If you had $200,000 to invest, what was the high­est return you could achieve with the great­est cer­tain­ty? The answer is north of 10%, but there is a caveat. The con­di­tion is that the indi­vid­ual has a mort­gage over the fam­i­ly home. If that’s the case, and that per­son is in the top 45% tax brack­et, based on cur­rent inter­est rates, any invest­ment has to return more than 10.5% after tax to beat pay­ing off your home loan. If one adjusts for risk pre­mi­ums, that fig­ure might be about 16%. The point is that there’s now extreme­ly high oppor­tu­ni­ty cost to do any­thing with your mon­ey, includ­ing adding to your share port­fo­lio, if you’re car­ry­ing debt. This will have impli­ca­tions for house­hold bal­ance sheets and equi­ty mar­kets. We’re now unde­ni­ably in an envi­ron­ment of high­er inter­est rates, which few Aus­tralians have expe­ri­enced.” So, it’s say­ing you’ve got to be get­ting at least 16% to make it worth your while, rather than just pay­ing off your mort­gage.

Tony  22:32
Yeah, if you fac­tor in the risk pre­mi­um.

Cameron  22:34
How many super funds in this coun­try are return­ing an aver­age of 16% per year?

Tony  22:40
Well, none.

Cameron  22:43
I think there’s a cou­ple, but not many. Cer­tain­ly not over the long term.

Tony  22:46
Yeah, that’s right. I mean, he makes a good point. It’s basi­cal­ly the point we’ve been mak­ing about ris­ing inter­est rates. They affect the asset pric­ing of the growth stocks. The ones that, when inter­est rates are low or zero, you just throw some mon­ey into them. Its spec­u­la­tive, you can afford it. All that’s off the table now that you, you know, that every time you make an invest­ment and you’ve got a mort­gage, you need to beat that mort­gage hur­dle. So, the hur­dle rate went up for peo­ple to invest. So, yeah. Less peo­ple are throw­ing mon­ey at or gam­bling with the stock mar­ket, is, I guess, the essence of the arti­cle. There are a few oth­er things in there which I liked about only a small per­cent­age of peo­ple using a finan­cial plan­ner, basi­cal­ly because of the costs. And I think that will improve. The gov­ern­ment has to change the rules around that. But peo­ple have been talk­ing about Robo advice for a long time now, the last four or five years, as being the solu­tion. And that’s per­haps where your mate Chat GPT plays a role in pro­vid­ing off the shelf advice for peo­ple at a very cheap cost. So, I think that’s poten­tial­ly on the hori­zon to solve that prob­lem.

Cameron  23:53
I think there’s a smoke alarm.

Tony  23:55
Must be your sour­dough bread.

Cameron  23:57
it’s the clothes dry­er.

Tony  23:59
I can’t hear it.

Cameron  24:00
I thought Chris­sy had set fire to the house while I’m in here, but it’s the clothes dry­er mak­ing this high pitched whistling noise. Sor­ry about that.

Tony  24:06
It’s alright, I can’t hear it.

Cameron  24:08
Does­n’t mat­ter if I burn to death, as long as you can’t hear it.

Tony  24:11
Yeah. You can get out in time, come on. You’ll Wing Chun your way through a win­dow or a door or some­thing.

Cameron  24:19
Hi-Ya! Venu­sian karate. That’s what the third Doc­tor knew, any­way.

Tony  24:25
John Per­twee, yeah.

Cameron  24:27
Venu­sian Judo I think it was, Venu­sian Judo. Sor­ry to inter­rupt there. Get back to the point.

Tony  24:32
Yeah, I agree with the arti­cle. And on top of all that, and this is prob­a­bly, you know, a bit of a chick­en and egg thing; if peo­ple are mak­ing that deci­sion about whether they invest in the share mar­ket or pay off their mort­gage, there’s less peo­ple in the share mar­ket. So, the share mar­ket does­n’t go up as quick­ly or maybe even comes down, which becomes a self-ful­fill­ing prophe­cy. So, again, this is one of the argu­ments where we see peo­ple sell­ing out of the mar­ket at the wrong time and then get­ting back in at the wrong time.

Cameron  25:04
But accord­ing to that arti­cle every man and his dog is now invest­ing in the Aus­tralian share mar­ket.

Tony  25:12
Was, I think, is what he’s say­ing.

Cameron  25:14
Well, he said the num­bers were up.

Tony  25:16
This year, or up until this year?

Cameron  25:19
I don’t think its up until.

Tony  25:21
Okay, so the thrust of the arti­cle is, will they stay?

Cameron  25:23
I think so, yeah. He’s say­ing that “51% of the pop­u­la­tion have invest­ments out­side of super­an­nu­a­tion or the fam­i­ly home, an increase from 46% in 2022.” So, there’s an extra 5% of the pop­u­la­tion who are invest­ed in it this year. He’s link­ing to a study quot­ed in the Fin on May 30, so a week ago: “pan­dem­ic fren­zy spawns 1.2 mil­lion new Aus­tralian investors” by Lucy Dean. So, say­ing that a whole tonne of peo­ple are invest­ing. “ ‘Women account­ed for 50% of the new investors and also made up 50% of those intend­ing to invest,’ ASX Senior Man­ag­er Rory Cun­ning­ham told the Stock­bro­kers and Invest­ment Advi­sors Asso­ci­a­tion.” I won­der if he then told every­one to sell the shares in the ASX? Because it’s not hav­ing a good day, the ASX itself.

Tony  26:23
No, well they just came out and said CHESS would­n’t be replaced for twelve years.

Cameron  26:28

I read through that sto­ry this morn­ing to try and fig­ure out who was the main IT con­trac­tor who was pitch­ing the whole, “oh, we’ll do it on blockchain. It’s all going to be great. Don’t you wor­ry about it.”

Tony  26:48
Was­n’t Chi­nese Walls, was it?

Cameron  26:50
Well, I don’t know. But there was no men­tion. I don’t know if it was all, you know, a com­plete­ly inter­nal build — which would be rare these days, I think. Com­pa­nies don’t tend to have huge IT depart­ments like that.

Tony  27:02
No, they part­nered with a blockchain installer/assembler. I don’t know what you’d call it. A blockchain com­pa­ny. I for­get who they were.

Cameron  27:12
I could think of oth­er words I could use, but I’d prob­a­bly get sued. Any­way, back to “women are 50% of new investors.” Well, you know, we did a show about get­ting more women invest­ing, and obvi­ous­ly it paid off. So, you’re wel­come, females out there.

Tony  27:30
It is good to see. They should be mak­ing up 50% of invest­ing, or investors.

Cameron  27:35
Well, the head of Research at Invest­ment Trends, Irene Guia­mat­sia, said that “while women made up 50% of new investors, the per­cent­age of over­all investors who were female had not moved from 42% since 2020.” Still, 42% is a lot high­er than I would have guessed. I thought it was like 10%. 42%.

Tony  27:58
Yeah.

Cameron  27:58
That’s pret­ty good. Good on ya ladies, well done. My ques­tion was going to be if all these peo­ple are invest­ing in the share mar­ket, we know they’re not going to finan­cial advi­sors, because it’s too expen­sive. We know they’re not lis­ten­ing to us. So, where are they get­ting their invest­ing strate­gies from, do you think?

Tony  28:17
Influ­ences. Yeah, that’s what the arti­cle sug­gest­ed. But you don’t know how many are just buy­ing ETFs as well.

Cameron  28:25
Or Bit­coin.

Tony  28:26
Or Bit­coin, yeah. We don’t know much about where they’re invest­ing. Because it does­n’t talk about share mar­ket investors, it talks about invest­ing out­side of super and the fam­i­ly home. They could be buy­ing wine or art or cars or watch­es, or any­thing col­lectible as well.

Cameron  28:42
Okay. Race­hors­es.

Tony  28:44
Yeah. I’m kind of sur­prised by those num­bers, in that I had seen arti­cles about the peo­ple who with­drew mon­ey dur­ing COVID now hav­ing not much left and going home with their tails between their legs, and the num­bers drop­ping, so I’m sur­prised that this year is high­er than last year.

Cameron  29:04
Do you think you can do bet­ter than 16%, Tony?

Tony  29:08
Well, I have over time, but that is get­ting to be quite a high thresh­old, isn’t it? I think our dum­my port­fo­lio’s return­ing about 16% now.

Cameron  29:16
Per annum over the long haul, yeah.

Tony  29:19
But for me, the mind­set isn’t how much tax am I pay­ing, add that to the mort­gage, add the 6% risk pre­mi­um every­one talks about, and try and reach that hur­dle. It’s can I make any mon­ey in the share mar­ket? Yes. And can I have the div­i­dends pay the mort­gage inter­est rate? Yes. So, to me, it’s still a no brain­er. But I accept the premise that the per­son was talk­ing about in the arti­cle. It’s not how I see it, though.

Cameron  29:45
Okay. Let me ask you a ques­tion. So, Navexa. Some­body sent me an email last night about the light port­fo­lios and how one of them is up 20%. One of them is down 20%-well, down about 10%, actu­al­ly, but it’s 20% of cap­i­tal is down but then there’s div­i­dends that have made up 10%. I think we’re actu­al­ly report­ing it down a lit­tle bit more than that. But he was say­ing, “if you rule one things at 10%, why is it down more than 10%?” I said, “well, yeah, that’s a good ques­tion. And there have been a cou­ple of cas­es, I think OML and RBL are two that I can think of, where the share price just fell off a cliff, like, in one morn­ing, and you know, it was like 20 or 30% down by the time I heard about it and could get out. But then I saw GRR. I could­n’t fig­ure this out. It said that we bought GRR on the 16th of Feb­ru­ary 2022t at 81.5 cents. We sold it on the sec­ond of Sep­tem­ber 2022 at 77.5 cents. So, that’s a loss of about four cents a share about 5% of the buy price. We sold because it was an iron ore com­mod­i­ty sell. But Navexa is show­ing it as a loss of 54.14% per annum. Now, I’m not very good with the num­bers, Tony, so I thought I’d ask you to explain that to me.

Cameron  1:05:05
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.