QAV #625 — A Good Week!

 

[00:00:00] Cameron: Wel­come to QAV 625, TK. It’s the 20th of June, 2023. How’s the weath­er in Syd­ney, Tony?
[00:00:17] Tony: We’ve been blessed. It’s absolute­ly per­fect. Beau­ti­ful win­ter weath­er. Sun­ny. We haven’t had rain in weeks, if not longer. It’s love­ly. How’s Bris­bane?
[00:00:27] Cameron:
Bris­bane’s been cool. It’s been nice. You know, I went down to the park with Fox at about five o’clock yes­ter­day after­noon, so we could do the nin­ja course as he likes to do. Time tri­als on the nin­ja course. I had to wear a track­suit. It’s the one day of the year I actu­al­ly wore a track­suit out­side ‘cause it was a bit nip­py.
[00:00:46] Tony: Did you have your best Bris­bane track suit on? Was it three stripes, two stripes, one stripe?
[00:00:51] Cameron: Three stripes, Adi­das all the way. Three stripes. Yeah. The full Adi­das, man. We’re an Adi­das fam­i­ly. Chris­sy loves noth­ing more than get­ting us all to wear Adi­das. What? His­to­ry, what?
[00:01:01] Tony: You know the his­to­ry of Adi­das, don’t you?
[00:01:02] Cameron: I have read about it, yeah.
[00:01:06] Tony: The Nazi his­to­ry of Adi­das.
[00:01:08] Cameron: Yeah. The Nazis made all the best stuff, man. Say what you want to say about the Nazis.
[00:01:16] Tony: They had good uni­forms.
[00:01:16] Cameron: They did. Hugo Boss uni­forms, you know, the archi­tec­ture.
[00:01:22] Tony: True.
[00:01:23] Cameron: What I always say is, you know, say what you want about Hitler, but at least he killed Hitler. The All Ords, Tony, has had a good week.
[00:01:32] Tony: Yes. Thank good­ness. Final­ly.
[00:01:33] Cameron: I feel like it’s mess­ing with me a lit­tle bit, you know? I’m like, yeah,yeah,yeah . You want me to take you seri­ous­ly, but I’m not tak­ing you seri­ous­ly. You’ve done this to me before, All Ords.
[00:01:47] Tony: No, this time it’s dif­fer­ent. No, I’m good now. Yeah, well, the US mar­ket is get­ting excit­ed that Jerome Pow­ell’s gonna start to put the brakes on inter­est rate ris­es, which means it brings the inter­est rate cuts that much clos­er. So, they’re all get­ting excit­ed over there. I’m not sure. I think it’ll be inter­est­ing, in terms of Aus­tralian’s point of view, I think it’s gonna be an inter­est­ing earn­ings sea­son com­ing up. When is it now? August. So, a lit­tle over six weeks away, I guess. And just to see what kind of effect infla­tion’s hav­ing on our com­pa­nies. And yeah, where the mar­ket goes from there, who knows? Again, peo­ple are gonna try and look through a crys­tal ball as to whether infla­tion is com­ing down, whether it’s been tamed, and there­fore where inter­est rates are going up or down. And that will be the dri­ver of the mar­ket, I guess. But you know, from our point of view, we’re just plod­ding along look­ing at indi­vid­ual stocks and how much cash they’re throw­ing off.
[00:02:39] Cameron: Yeah. All the analy­sis I see by the pun­dits and the fore­cast­ers in the Finan­cial Review and places like that is that there’s anoth­er cou­ple of inter­est rate ris­es com­ing local­ly from the RBA.
[00:02:50] Tony: Yep.
[00:02:50] Cameron: So, I know that the mar­ket’s gonna cry in its cof­fee when that hap­pens. The girl is cry­ing in her lat­te, as The Sparks said on their recent song. But any­way, it’s up. I mean, I’m hap­py for an up week. At least I could buy some stuff this week.
[00:03:04] Tony: Yeah.
[00:03:05] Cameron: I think I final­ly closed out the light port­fo­lio that I start­ed at the end of last year. It’s tak­en six months to final­ly get to spend all the mon­ey.
[00:03:15] Tony: Wow.
[00:03:15] Cameron: You know, after rule 1ing stuff on a week­ly basis and sit­ting on cash for a long time. And it’s fun­ny, we were talk­ing last week about cash and I wan­na talk a lit­tle bit more about that lat­er on in the show, but, here we were last week try­ing to fig­ure out what to do with all the cash. I’ve spent it all this week: yes­ter­day and today I’ve spent all of the cash that I was sit­ting on in our port­fo­lios because iron ore is a buy. Woo!
[00:03:43] Tony: Yay!
[00:03:43] Cameron: For how long, we don’t know.
[00:03:46] Tony: And again, it’s kind of sen­ti­ment dri­ven. The Chi­nese Com­mu­nist Par­ty came out and start­ed to talk stim­u­lus pack­ages again for their econ­o­my, which the iron ore pun­dits took as being bull­ish. But the CCP also came out and said, “hey, we’re a bit depen­dent on Aus­tralian iron ore. Let’s try and find some­where else to buy it from.” So, maybe in the long term it’s not that great, but in the short term, every­one, yeah, went Woohoo.
[00:04:10] Cameron: Did you see the clip I post­ed on Face­book from the new sea­son of Utopia talk­ing about mil­i­tary expen­di­ture?
[00:04:17] Tony: No.
[00:04:18] Cameron: It’s great. It’s Rob Sitch sit­ting in a room with all of these gen­er­als and guys in suits, and they’re look­ing at this mas­sive Mil­i­tary bud­get increase that we need, gonna spend bil­lions and bil­lions of dol­lars. He goes, “and why, why do we need to spend all of this mon­ey all of a sud­den on defence capa­bil­i­ty? “Oh, to pro­tect our­selves against region­al play­ers.” He goes, ” which region­al play­ers are we pro­tect­ing our­selves against?” And they’re like, “oh, just region­al play­ers. You know, no one specif­i­cal­ly.” He goes, “oh, I’ll just say a word. I’ll say a coun­try, and if you agree with it, just nod. Right?” And he says, “Chi­na,” and they nod. He says, “right. And why do we need to pro­tect our­selves from Chi­na? What is it we’re actu­al­ly pro­tect­ing?” And they’re going, “oh, just gen­er­al capa­bil­i­ty, you know,” blah, blah, blah. He goes, ” just nod if I say some­thing that you agree with. Is it our trade routes?” They’re all nod­ding. “Yeah. We need to pro­tect the trade routes. You’re right.” He goes, “and who is our num­ber one trad­ing part­ner in the region? Would it be Chi­na?” “Yeah.” He goes, “so we’re spend­ing this mon­ey to pro­tect our­selves from Chi­na inter­rupt­ing our trade with Chi­na.” They’re like, “yep.” He goes, “alright, makes per­fect sense now.” Any­way.
[00:05:32] Tony: Yeah, I’ve seen that one before. I must’ve seen it on the episode.
[00:05:34] Cameron: Oh, that’s not a new one? I thought that was a new one.
[00:05:37] Tony: No, it’s an old one.
[00:05:38] Cameron: Oh, okay. Iron ore is a buy. So, FEX, FMG on our buy list this week, CCP became a buy. Our old friends CCP and FMG. It’s like good old times, the good old days are back, Tony. It’s 2019 all over again.
[00:05:55] Tony: Well, it’s fun­ny. After doing this for decades, you do get the same names crop­ping up on the list all the time. There’re plen­ty of oth­er new ones, too. But yeah, they fall off, they come back on, they fall off, they come back on.
[00:06:08] Cameron: Fortes­cue Met­als and the Chi­nese Com­mu­nist Par­ty, CCP. Cred­it Corp, the oth­er CCP. Yeah, so, You know, I was able to get rid of near­ly all. There were a few hun­dred bucks left from the port­fo­lios, but near­ly got it all. Speak­ing of which, I did post this on their forums, et cetera, and I spoke to you, and I spoke to Steven Mabb after last week’s show. So, we were talk­ing about Steven Mab­b’s sug­ges­tion that we take our cash and we put it into Beta shares’ AAA ETF. When I went to do that for the light port­fo­lios last week, I sud­den­ly real­ized that, you know, we’re not play­ing with a lot of mon­ey in those port­fo­lios. We start­ed with 20 grand in cap­i­tal for each of them. And so, I’m sit­ting on 2, 3, 4 grand in cash. I was last week, any­way. And I real­ized that if it’s pay­ing a 4% annu­al div­i­dend less a small fee and it gets paid out month­ly, and if we were real­ly buy­ing and sell­ing shares, like these are dum­my port­fo­lios, but if we real­ly were, and we had bro­ker­age costs every time we bought and sold some­thing, I need­ed to fac­tor in the bro­ker­age cost into what, you know, the amount of mon­ey that we’re gonna get out of this thing. And I did a spread­sheet to work it out, and worked out that, you know, let’s say you’re using Self­Wealth and its $10 bro­ker­age in and out. So, $20 every time you buy and sell one of these ETFs. And the div­i­dend is return­ing — let’s say you put in $3,000. If you bought $3,000 worth of AAA, it would be return­ing about $2.30 a week. So, I’d need to hold it for at least nine weeks in order for the inter­est, the div­i­dends, to cov­er, neu­tral­ize the bro­ker­age costs, let alone prof­it from it. And, you know, nine weeks sound­ed like a long time for me to be sit­ting on cash. Usu­al­ly, it might be a cou­ple of weeks here or there, but you don’t real­ly know. It could be a day. Could be six months. So, I spoke to you, I spoke to Steven Mabb, and we kind of agreed after I did the spread­sheet and worked it out; I think the min­i­mum you would need, again, if you’re using some­thing like Self­Wealth or low-cost bro­ker­age play, then you would need to be at least buy­ing $30,000 for it to work out. If you’re hold­ing it for a week, you know, any more than that, you’re in the mon­ey. But yeah, so just keep a, keep a, keep an eye on that folks. If you’re think­ing about if you have to go to cash again and you’re think­ing about putting it into some­thing, just make sure you fac­tor in your bro­ker­age costs.
[00:08:39] Tony: Yeah. And the fact that it pays a div­i­dend on a month­ly basis, and you may not even get a div­i­dend if you only put it in there for a cou­ple of weeks. So, all those, all those things are part of the mix. So, yeah, it’s been inter­est­ing. It’s thanks to Steve for high­light­ing it to us. I guess it’s got a place and a use, espe­cial­ly if, like these days with inter­est rates being so high, it’s, I actu­al­ly won­der gonna be 4% paid month­ly, that will suit some peo­ple. But I did lit­tle bit of a dig around on the inter­net after we had that dis­cus­sion. And I, I went as far as Mac­quar­ie Bank, they’re offer­ing 5.1% now just for the deposit­ing for, I think it was three months. So, there’s some, cer­tain­ly some decent inter­ests out there if peo­ple have some mon­ey they want to tie up for a short peri­od of time.
[00:09:21] Cameron: Right. This gets back to the yield curve inver­sion.
[00:09:24] Tony: It does, yeah. The inter­est rates are ris­ing, so deposits are pay­ing more, and it’s been a deposit war going on. We’ve talked about the Mort­gage War, but there’s also a deposit war, which Mac­quar­ie Bank, I think is prob­a­bly win­ning, which is attract­ing cus­tomers to, to their bank away from the oth­er ones.
[00:09:38] Cameron: I remem­ber the great deposit war of 2023. Well, accord­ing to the Finan­cial Review, Tony, boards around Aus­tralia think we’re about to have a reces­sion we have to have, again.
[00:09:51] Tony: Oh, what a ter­ri­ble term that is. We don’t have to have it. Did you see what I, I post­ed? There was a graph in, I think it was the Finan­cial Review, might have been in one of the email ser­vices I read. But it said that, of the cur­rent infla­tion­ary amount, there’s two types of caus­es for that infla­tion. One is sup­ply dri­ven, one’s demand dri­ven. We spoke about this last week, sup­ply dri­ven as all the things that we spoke about, which are ener­gy prices and import­ed goods and things like that where the price is high. But, you know, and I think tran­si­to­ry. But that’s mak­ing up more than half of the cur­rent infla­tion, which means that demand dri­ven infla­tion, which is the cash and peo­ple’s pock­ets, look­ing for a place to spend, is only up 3% of infla­tion. So, you know, that’s with­in the 2 to 3% range the RBAs charged with look­ing at. So, why on earth are we rais­ing inter­est rates to try and kill off some­thing which is tran­si­to­ry when the under­ly­ing demand infla­tion is, is prob­a­bly tran­si­to­ry as well as the covid cash dries up. But yeah, it’s still with­in the accept­able range.
[00:10:59] Cameron: Yeah. In this arti­cle, Tony, I read in the Fin a cou­ple of days ago, “ ‘boards sound alarm on a reces­sion we have to have,’ says direc­tors from major com­pa­nies, includ­ing Tel­stra, NAB, and Coles, warn a reces­sion might be inevitable, but say that avoid­ing gov­ern­ment give­aways and waste­ful spend­ing and lift­ing pro­duc­tiv­i­ty would lessen its sever­i­ty. Lead­ing com­pa­ny Chair­man Gra­ham Bradley has described the econ­o­my as poised pre­car­i­ous­ly on the cliff edge of reces­sion.” I won­der if Chat GPT wrote that for him. “Tel­stra Chair­man, John Mullen, has rat­ed a reces­sion of 50/50 chance…” He’s rat­ed it a 50/50 chance. Well, we’re either gonna have one.
[00:11:39] Tony: Yeah.
[00:11:40] Cameron: Or we won’t have one. Oh man. That’s why he gets paid the big bucks, John Mullen, Tony, not every­body can come up with that kind of rea­son­ing.
[00:11:48] Tony: So, how come the head­line isn’t “large cap CEO sits on fence? Or ” large cap chair­man sits on fence.”

Cameron 12:46
This is why you got fired from being the edi­tor of the Finan­cial Review, Tony. It was when you make those sorts of calls that got you fired. Tel­stra chair­man said he “takes a buck each way, real­ly.” From my posi­tion on top of the ivory tow­er, I can tell you with an extreme lev­el of con­fi­dence we’re either going to have a reces­sion or we won’t. I mean, it’s real­ly that sim­ple. “Syd­ney hydro direc­tor Tony Shep­pard warned that the resources sec­tor won’t save us this time from anoth­er reces­sion we may have to have.” But lat­er on, it was quot­ing Boral Direc­tor Jacque­line Chow, and it also said, “Miss Chow, a direc­tor of Coles, Char­ter Hall, Boral and NAB.” I was like, can’t she get a real job? She’s a direc­tor of four com­pa­nies. Real­ly?

Tony 13:39
It is a real job.

Cameron 13:40
Just direc­tor of every­thing?

Tony 13:42
Yeah.

Cameron 13:43
Do you think she has sep­a­rate busi­ness cards for each one of those?

Tony 13:45
She’s made it into the Direc­tors Club.

Cameron 13:47
Ah, the Direc­tors Club.

Tony 13:49
Yeah, that’s the one where if there’s a vacan­cy, they ring up and say, “this this per­son who’s on your board. How does she vote? With you or against you?” “Oh, always with us.” “Oh, great. You’re hired. You’re on our board, too.”

Cameron 14:01
We’re not cast­ing any asper­sions on Miss Chow, you’re speak­ing gen­er­al­ly. Broad­ly, that’s what hap­pens. It said she had, “shift­ed from a qui­et con­fi­dence Aus­tralia would not expe­ri­ence a reces­sion to a mod­er­ate con­cern that it would.”

Tony 14:16
A mod­er­ate con­cern. So, the head­line is “direc­tor in search of a day job calls mod­er­ate con­cern on the econ­o­my.”

Cameron 14:30
Rep­re­sen­ta­tive of the gig econ­o­my, Miss Chow, who has four jobs because she can’t get paid enough from one, says… Lat­er on she says, “the fed­er­al gov­ern­ment need­ed to avoid mak­ing infla­tion a self-rein­forc­ing prob­lem, includ­ing with bud­get mea­sures to help sup­port house­holds.” So, I thought that spoke to your com­ments over the last few weeks about it being a self-rein­forc­ing prob­lem, the RBA ris­ing inter­est rates.

Tony 14:56
It’s the RBA rais­ing inter­est rates that I think is the fly­wheel that’s rein­forc­ing it. It’s not the gov­ern­ment help­ing peo­ple who are on very low incomes either get a basic wage rise or get some ener­gy cost reduc­tion through some hand­outs. I think that’s exact­ly what should be hap­pen­ing. The RBA should­n’t be rais­ing inter­est rates, I think is the prob­lem.

Cameron 15:17
Yeah. Well, there you go, but as you said ear­li­er, we just keep doing what we’re doing, try­ing to find com­pa­nies that gen­er­ate a lot of cash that we can buy at a dis­count. Anoth­er arti­cle I read in the Fin: “meet the young investors who are semi-retired at twen­ty-sev­en.” I’m not one of those, but it just has some more stats on invest­ing in this coun­try that I thought were inter­est­ing. We’ve seen a cou­ple of these in the last cou­ple of weeks. Where’s the inter­est­ing bit here? Ah, this is based on an ASX study. You know, instead of spend­ing time replac­ing CHESS, they decid­ed they’d go do a study. I won­der if they used blockchain to do this study. “The ASX study found 57% of lapsed investors pulled out due to changes in per­son­al cir­cum­stances, and among female investors, most, 48%, said they would con­sid­er return­ing to invest­ing when they had few­er finan­cial com­mit­ments.” I find that’s the way life works. I always have few­er finan­cial com­mit­ments.

Tony 16:25
How much did the ASX spend on that research? “I stopped invest­ing because I can’t afford it.”

Cameron 16:30
They paid for it with Bit­coin, Tony, it’s all good. “Of the lapsed investors, 21% plan to return in the next twelve months, up from the 16% with that plan in the 2020 report. Miss Lee plans,” this is some­body they’re talk­ing to, “Miss Lee plans to return to the share mar­ket in the next month or two. ‘I think I’ll go more towards ETFs at this point,’ she said.” I thought this was inter­est­ing because we’ve talked a lot about this over the last few months. The mar­kets been tough. We were talk­ing about this off air. When I looked the oth­er day, the All Ords was down 6% over the last two years. It’s been like one step for­ward to step back­wards. And I think all of us have felt the pain in our port­fo­lios. I know, you have, I have, it’s been real­ly hard. What did you call it before? The rule one death spi­ral. You buy some­thing and then you have to sell it because the mar­ket goes back­wards. And then it goes back up and you buy it again, and the mar­ket goes down, and you buy it and it goes down. And it’s been sort of a crazy peri­od. But peo­ple tend, you know, I guess it’s human nature if you don’t have a sys­tem, peo­ple just tend to throw their hands up in the air and go, “oh, this is not work­ing out. This is too hard.” And they go back in when the mar­kets set­tled down. “I’ll start invest­ing again when the mar­kets set­tle down.” But as we know, you only real­ly know that the mar­ket has set­tled down once you have some hind­sight, right, six months lat­er. We were jok­ing before that the All Ords has been up this week over the last sev­en days, and it’s done that before and then turned around. But at some point, it will keep going up. And it won’t be until three months lat­er, you’ll go, “oh shit, look at that. It’s going up.” I mean, you can get in then, but you’ve missed out on a lot of that ear­ly upside.

Tony 18:43
And that’s the clas­sic retail investor mis­take of sell­ing low and buy­ing high.

Cameron 18:49
Yeah. And you go, “oh well, you know, my port­fo­lio is down 5% or 10% over the last two years.” But you’ll make that up and then some when the mar­ket turns around, you’ve just got to be in it when the mar­ket turns around.

Tony 19:01
Cor­rect. You can make that all up in a month if the mar­ket turns quick­ly. Yeah. No, absolute­ly. And you won’t be able to pick it, as you say, so that’s why we always try and stay invest­ed.

Cameron 19:12
And for peo­ple who are new lis­ten­ers and haven’t heard Tony talk about his his­to­ry of annu­al returns, I actu­al­ly dug it up the oth­er day and I post­ed it on the about page of our web­site to make it easy to find because every time peo­ple ask me for it, I can nev­er remem­ber where I put it. So, if you go to qavpod­cast **Porky Pig sound effect**.com.au.

Tony 19:40
Your Chat GPT just went hay­wire.

Cameron 19:46
That was from the Three Body Prob­lem, the aliens have inter­cept­ed our com­mu­ni­ca­tions. If you go to qavpodcast.com.au/about, you can see Tony’s returns over twen­ty-odd years. We’ve post­ed them up there. You see that there are good years, bad years, great years and ter­ri­ble years. And you’ve just got to stick around for the good years.

Tony 20:13
Every year the Fin Review will do an arti­cle where they poll the top fifty econ­o­mists and stock pick­ers as to what they think the ASX will be at the end of the year. You know, it’s a dart­board toss, it bears no rela­tion to what hap­pens. So, you can’t know on Jan­u­ary 1 whether to invest or not, you’ve got to just keep invest­ing.

Cameron 20:33
Yeah, keep fol­low­ing the sys­tem and you’ll get there in the end. But it’s a long race, and it’s been a par­tic­u­lar­ly tough cou­ple of years as I was say­ing. The mar­kets been down for a cou­ple of years now.

Tony 20:48
And it may get tougher if we do go into a reces­sion, I’ll flag that quite open­ly now.

Cameron 20:55
All right. Well, I just want­ed to touch on that. Oh, it also said, “high val­ue investors are also appre­hen­sive about risk. While oper­at­ing with sig­nif­i­cant­ly larg­er port­fo­lios (1.45 mil­lion com­pared with 45,500), the sur­vey found Aus­trali­a’s high val­ue investors, defined as the top 10% of investors buy wealth and trad­ing vol­ume, are also wor­ried about risk. More than one quar­ter of high val­ue investors want guar­an­teed returns up from 9% in 2022.”

Tony 21:26
They’re gonna get it, because like I said, you can sniff around the ETF mar­ket at the moment and find some pri­vate ETFs and they’re going to return you high num­bers. You can put your mon­ey into Mac­quar­ie Bank term deposits and get 5.1%. risk free. So, yeah, it’s out there if you want it, but that’s not how we make mon­ey.

Cameron 21:47
Yeah. It said, “while 66% of high val­ue investors were will­ing to accept high or mod­er­ate vari­abil­i­ty in exchange for greater poten­tial returns in 2020, by 2023, that had fall­en to 48%.” So, from two thirds to less than half of high val­ue investors. Now, you know, rough­ly 20% less are look­ing for secu­ri­ty guar­an­teed returns rather than a lit­tle bit of risk and reward. So, that’s where we are in the mar­ket at the moment accord­ing to the ASX study. Peo­ple are ner­vous, peo­ple are feel­ing like they don’t know what the future holds. But we are lucky because we do know what the future holds. Skynet. We know that the mar­ket always turns around. We just need to be in it to win it.

Tony 22:52
And it might go down fur­ther. So, who knows? When we say we know what the future holds, we know what the future holds in the next ten or twen­ty years if we keep invest­ing. We don’t know what it’s gonna hold next year.

Cameron 23:03
No. But we know that if we just man­age the down­side, keep invest­ing in under­val­ued com­pa­nies, we can get them at a dis­count.

Tony 23:12
Well, we don’t even know what’s going to hap­pen. I should stop myself though. We don’t even know what’s going to hap­pen in ten or twen­ty years. We just know that his­tor­i­cal­ly, this is the best place to invest our mon­ey.

Cameron 23:22
Yeah. And we know that his­tor­i­cal­ly, the mar­ket goes in cycles.

Tony 23:26
Cor­rect.

Cameron 23:26
It may not always go in cycles. We can’t absolute­ly know that 100%. But at least for the last hun­dred years, that’s what’s hap­pened. We’ve gone in cycles.

Tony 23:37
I have an arti­cle I want­ed to men­tion before we leave the news sec­tion. I could get on a soap­box about it, but I’ll read the head­line and leave it there. The head­line is from the Fin Review today: “Levy slams ALP’s bizarre fail­ure on finan­cial advice. Labour’s bizarre fail­ure to mean­ing­ful­ly reform the finan­cial advice sec­tor is leav­ing younger Aus­tralians strand­ed with­out guid­ance in a soar­ing prop­er­ty mar­ket and cost of liv­ing cri­sis, the lawyer who led a review into the sys­tem has warned. Michelle Levy said finan­cial ser­vices min­is­ter Stephen Jones’s plan to adopt only four­teen of the reviews twen­ty-two rec­om­men­da­tions would change very lit­tle about the afford­abil­i­ty or acces­si­bil­i­ty of advice. Lack of clar­i­ty will also stymie inno­va­tion and dig­i­tal advice by local out­fits and stop big over­seas play­ers from invest­ing in Aus­tralia, she said.” Yeah, I’m not a fan of this guy. And I think every gov­ern­ment has a min­is­ter for dona­tions. In this case, the Labour gov­ern­men­t’s big donor base is the trade unions but also the indus­try super funds, and the review looks like favour­ing cheap advice only being avail­able through indus­try super funds. I’m a big fan of indus­try super funds. They’ve done tremen­dous things for work­ers in Aus­tralia, or any­one in Aus­tralia, and the econ­o­my. But, you know, play­ing pol­i­tics like this, I think, is a real shame. And we’ve heard this from our own mem­bers. You know, if they want to set up an SMSF and they have to go and get a finan­cial advi­sor to sign off on some­thing that costs $4,000 for a sig­na­ture, that’s a big fric­tion in the econ­o­my which we can just do with­out. The Levy review would have gone a long way to stop­ping that. I think AI will go a long way to stop­ping that if it’s allowed, but it looks like that won’t hap­pen now. So, it’s a real shame this review’s been squibbed, and I’ll leave it there.

Cameron 25:33
You don’t think AI will be allowed?

Tony 25:35
No, I think what’s going to hap­pen is indus­try super funds will be the only peo­ple allowed to offer finan­cial advice cheap­ly to peo­ple, to their mem­bers.

Cameron 25:43
I don’t know how they’re going to stop AI from giv­ing peo­ple finan­cial advice.

Tony 25:48
Yeah, well, who do you fine? When ASIC comes around and says, “hey, you’ve been rec­om­mend­ing stocks with­out a licence,” what do you do?

Cameron 25:57
Mr GPT.

Tony 26:00
Sor­ry, does not com­pute.

Cameron 26:03
I’m sor­ry, Dave. I’m afraid I can’t do that.

Tony 26:06
Com­put­er says no.

Cameron 26:08
Yeah. All right. Any­thing else or do you want to do your pulled pork?

Tony 26:12
No, that’s it, pulled pork. The pulled pork today is an inter­est­ing one, actu­al­ly. I went through the list, and as I said before, there are some stocks high­er on the buy list than the one I’m going to talk about, but I have talked about most of those before. So, as you were say­ing before, Cred­it Corps back on, Vir­gin UK, I think I saw, was back on this week, I’ve done a pulled pork on those. So, I’ve gone down the list a lit­tle way, well, not too far. And I’m going to review a com­pa­ny I don’t know much about. So, it’s been a good exer­cise for me. The com­pa­ny is called Viva Leisure Group. VVA is the code, and we should­n’t con­fuse it with the VEA, which is the Viva Ener­gy Group, which is the Shell net­work of refiner­ies. It’s unusu­al to see the same trade name as this prop­ping up a cou­ple of times, because nor­mal­ly the trade­mark reg­is­ter would stamp that out. But any­way, they must have sort­ed some­thing out. Viva Leisure Group is not the net­work of Shell ser­vice sta­tions. It’s a fair­ly large net­work of gyms oper­at­ing in Aus­tralia and New Zealand, and appar­ent­ly, they even have some fran­chise loca­tions in India. So, that was sur­pris­ing to note. This one is a small ADT stock; they’re trad­ing at 43,000 a day on aver­age. Some­thing about that, as we’ll see as I go through this analy­sis, sug­gests that might change because the share price is off about two thirds from its high a cou­ple of years ago, and it’s just start­ing to turn up again now. And as you’ll see from the analy­sis, there are some rea­sons for that. So, 43,000 might be too small for some of our lis­ten­ers now, but it may grow. So, watch this space, in the com­ing months and maybe even years. So, in terms of the busi­ness, there’s a hun­dred and six­ty loca­tions which Viva oper­ates them­selves, a hun­dred and six­ty gyms, and they also have a fran­chise net­work they’re the mas­ter fran­chisor for, and they’re called the Plus Fit­ness group. There’re some a hun­dred and sev­en­ty-five fran­chise loca­tions for them, as I said before, main­ly in Aus­tralia, but also some in India. And just one thing about New Zealand and India. Expand­ing over­seas for Aus­tralian com­pa­nies has often been a grave­yard, because apart from any­thing else, just that extra trav­el com­po­nent for man­age­ment can cause prob­lems in terms of keep­ing your eye on the ball. Tech­nol­o­gy cer­tain­ly moved ahead a lot since COVID. We can do Zoom meet­ings now with, you know, peo­ple in India run­ning gyms, but you nev­er know unless you fly out there and have a look whether, you know, the actu­al gym behind the Zoom call was actu­al­ly not a mess and whether or not there’s a com­peti­tor opened up across the street, etc. So, noth­ing replaces the Aus­tralian man­age­ment from going around and hav­ing a look at these places over­seas, except the time and effort to fly to get over there. So, New Zealand’s not too bad. In terms of trav­el time, it’s about the same as Perth. So, it does add you know, it’s a four-hour flight, so you do lose half a day at least, if not a full day trav­el­ling to have a look at those loca­tions. India prob­a­bly could string some­thing togeth­er from Perth and make it maybe a sev­en-hour flight.

Cameron 29:25
Can’t you just get your guide to get Zoom out on his phone and walk around the gym and then walk out­side and show you what’s on the oth­er side of the street, walk up and down the street with his phone?

Tony 29:34
Yeah, absolute­ly. And you know, the busi­ness grave­yard is lit­tered with com­pa­nies that have relied on that. And then when they actu­al­ly find out why they went broke, it’s because the guy showed you the side of the street he want­ed you to see and not the oth­er side of the street where, you know, a big US fran­chise just opened up in com­pe­ti­tion with him.

Cameron 29:54
Google Maps Street View, Tony, there’s my tip. Look around. Satel­lites, man.

 

 

Cameron 1:27:35
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, not per­son­al finan­cial advice. We don’t know your per­son­al finan­cial cir­cum­stances. Please see a finan­cial plan­ner before mak­ing any invest­ing deci­sions.