Hello QAVvers

It’s another Tuesday.

The AORD has had a good week, despite suggestions we are headed for more interest rate rises in coming months. And Iron Ore, our old friend, became a buy again yesterday!  

Let’s have a look at the portfolio.

QAV PORTFOLIO REPORT

INCEPTION (02/09/2019) REPORT 

Our portfolio is still tracking at around 2.5x the benchmark since inception.

You can always check out the live version of the portfolio chart here.

FY REPORT

The STW is still ahead of us for the FY but we’re doing okay, up about 13% pa. 

QTR REPORT 

We’re still neck-and-neck with the STW for this quarter.

Here are how the stocks have performed in the last 7 days. 

FPR and MLX had a good week.

RECENT TRADES

No trades in the last 7 days. 

STOCKS OF THE WEEK

During the last week, we did trade some stocks in our portfolios. Details here.

** As always, please check our work, DYOR, and consult a financial advisor before making any investing decisions.

BUY LIST

Each week we produce a buy list that we share with our members. The intended primary purpose of this buy list is for club members to use as a reference for comparing their own buy list. In theory, all of our buy lists should look pretty similar each week.

THIS SECTION CONTAINS CONTENT WHICH IS VISIBLE TO QAV CLUB SUBSCRIBERS ONLY.

LAST WEEK’S EPISODE

 


THIS SECTION CONTAINS CONTENT WHICH IS VISIBLE TO QAV CLUB SUBSCRIBERS ONLY.

Detailed highlights of the episode:

THIS SECTION CONTAINS CONTENT WHICH IS VISIBLE TO QAV CLUB SUBSCRIBERS ONLY.

Episode Transcription

 

Cameron  00:06

Welcome back to QAV, episode 624, recorded on the 13th of June 2023; the day after the birthday of somebody called Mr King. I don’t know who this Mr King is, no friend of mine, but apparently everyone down south had a holiday for him yesterday, so you must all be big fans of this Mr King Guy.

 

Tony  00:27

Yeah, it’s not even his birthday, I don’t think, although we call it that. We just say, “no, it’s your birthday. Just sit back and take it.” Relax.

 

Cameron  00:33

Shut up.

 

Cameron  00:36

Didn’t have one for him up here, so I’m working. The markets not open. That’s always kind of weird.

 

Tony  00:42

Yeah, it isn’t.

 

Cameron  00:44

The AFR at 7am this morning, Tony, predicted a rise in the market today. Yesterday, they were saying that the US is in a bull market because of AI stocks, which we’ll talk about a little bit later on. It said the market was going to be up today.  Wasn’t when I looked before. Oh, It’s gone up a little bit. Gone up a little bit since lunch, but today it’s a little bit on the upside by the looks of it. But it hasn’t been very exciting. It’s been the usual kind of depressing nonsense from the market of late. I had a look yesterday when I was doing the weekly report. I think the ASX is up 6% for the year, the All Ords is up 6%, sorry, for the year. It’s barely, barely moved.

 

Tony  01:30

Was it up 16% at some stage?

 

Cameron  01:33

The STW is up.

 

Tony  01:35

Oh, right.

 

Cameron  01:35

Actually, the All Ords over a twelve-month period is not up. For the financial year it’s up 6%, because it dropped at the end of the financial year last year. But if you look at the one year, right back to mid-June, it’s yeah, it’s pretty much a straight line. Over the last two years you’re looking at pretty much a straight line. It’s gone up, it’s gone down, one foot forward, one foot backwards for two years now. But anyway. But one thing I did see in the AFR this morning in the same article that said the AFR, sorry, the ASX was going to rise, it said that oil was dropping. And when I went and had a look at the oil price about an hour or so ago, I think oil is now a sell. Would you mind bringing up oil and having a look for me? See what you think.

 

Tony  02:25

I did have a look at oil today. This is earlier on, but I’ll look at it again now. And just bear in mind that we normally use Brent and the AFR will probably be using the US oil price, and US oil was a sell this morning and Brent was a buy, but it may have changed. Let me have a look.

 

Cameron  02:44

Well, I was looking at Brent in Stock Doctor, and it’s hard to draw an L2, but I think there’s one there. It’s only a trough by a cent from memory.

 

Tony  03:00

Oh yeah, its dropped off today.

 

Cameron  03:02

Yeah, L1 is obviously the March 2020 COVID cough. L2, you know, it’s got of a little bit of a dip at the end of May, but I don’t know. It’s still falling after that, so that’s not really a trough. But if you go back to March 23, it closed March 23 at 79.5. It closed April at 79.51. So, that makes March technically a trough even though it kind of looks flat on the graph. So, yeah, I think it’s a sell, which turned out not to be a big deal because I don’t own any oil stocks. So, it just means that we’re not going to be buying any until it turns around.

 

Tony  03:42

Yeah, I had to sell Karoon Energy. It wasn’t because of that, actually Karoon went through its sell line as well, because I think probably it’s more driven, could be driven more by the US oil price, which was a sell when I had a look this morning.

 

Cameron  03:57

Yeah, I don’t seem to own Karoon or any oil stocks in any of the portfolios. I was — and there’s a question I’m going to ask you a little bit later on — I was looking at brookside, BRK, I think, yesterday or late last week actually, but doesn’t matter now. I’ll talk about it anyway. Tin is a buy though, so bought a little bit of MLXtoday. MLX is on the buy list and it’s in the tin biz. Now interestingly, when I was doing a little bit of research on tin and what could be affecting the tin price, I came across one of Tim Treadgold’s articles from back in March. I know you read a bit of Timmy Treadgold from time to time. He provided a pretty pessimistic analysis of tins prospects at the time, but we don’t listen to forecast. But it was worth a read though, because it talked a little bit about what drives the tin price, and one of the things that it gets used a lot in is GPUs — CPUs and GPUs. And I was wondering if its price is on the rise at the moment because of the GPU market, which is going kind of nuts because of AI at the moment. So, GPUs for people over the age of twenty-five, are graphics processing units designed originally for gaming systems, Xbox consoles, that kind of stuff. They process graphics really quickly. Turns out they’re really good for AI, Chat GPT, LLMs, that kind of stuff. So, they cost about, I think, $10,000, a GPU, the high-end ones, and Open AI and the like are buying them in the tens of thousands to run their LLM engines. So, they cost a pretty penny if you want to build an LLM. If you’re thinking of building your own LLM, Tony, after you buy your Apple Vision Pro — I’m sure you’ll be the first person to buy an Apple Vision Pro when they come out next year. You’re about the only person I know that can afford one. Yeah, it’ll cost you, set you back a few billion if you want to buy the GPUs to build yourself an LLM. So yeah, I thought that might be a thing. And Nvidia, technically an American company, but really, they’re all made in Taiwan, their GPUs are made from…

 

Tony  06:29

For how much longer?

 

Cameron  06:29

Well, they’ll keep being made in Taiwan it just depends, you know, who owns Taiwan, I think. They’re made from “aluminium, copper clad laminates, glass fibres, thermal silica gel, tin, tantalum, and tungsten.” According to their website, “many of these materials are outsourced from suppliers in Indonesia and China.” “Tin, tantalum, and tungsten are conflict minerals that have been tied to funded violence/human rights violations.” That’s not a fair website. I got that off another website,

 

Tony  07:05

Particularly in Tasmania, where Metals X is based.

 

Cameron  07:11

I wouldn’t know anything about that. Yeah.

 

Tony  07:13

I’m just joking. You’ve lost me on a lot of that stuff. So, LLM: large language lunar lander module?

 

Cameron  07:20

Large Language Module. Generative AIs are a form of, well, particularly the chat versions of it, are large language models. That’s how they’re trained, around a large language model.

 

Tony  07:34

Okay. So, you’re suggesting that because the LLMs are using lots of these — gee, I’m getting the lingo now, these graphics GPU, there they go — that tin might be on the rise, the price of tin.

 

Cameron  07:48

You’ll be able to give a TED Talk on it in a week.  I don’t know, something’s driving the tin price up anyway. I don’t know if it’s GPUs, but it’s just something that I thought when I was doing some research on it.

 

Tony  08:00

I had a look at the article, and Tim Treadgold gold was actually, I think, arguing against that. He was saying that last year the price was rising because people thought it was gonna get a lot of use in AI. But he pointed out that there was a supply imbalance, and once that righted itself the price came down, and he still thought it might continue to go down from here. Again, it’s interesting from the point of view of he’s done a deep dive into one commodity and explained the supply chain and looked at various mines, which are coming online, in, I think, Peru from memory, etc., etc., and thought the price would therefore keep dropping because there was a lot of supply. And that’s the kind of analysis that is probably, you know, a much better predictor of price then looking at the graphs and looking at the trends. In a lot of cases, it’s basic supply and demand. But commodities work that way. And I’m reminded of, I think it might have been an article I read on the weekend, but certainly one that’s been around for a long time, that Blackrock I think it is, when they got going, made a lot of money out of looking at satellite photographs of oil storage tanks. The big oil storage tanks at ports around Australia and around the world have floating ceilings on them, so you don’t get any air in the tank. So, as they get full of fuel, the ceiling rises. And they could tell from the satellite pictures that most of the storage tanks around the world, the ceilings are dropped. So, there was going to have to be a restocking which would drive the price up, and they invested in oil and rode that wave. And that’s typically what someone who does a deep dive in commodities will do. They’ll try and work out where the supply demand imbalance is at the moment. And you know, Tim was saying it’s more on the supply side with tin. Without having the ability to do that, because I know nothing about the tin market, all that stuff gets baked into the price. And so, we see it in the graphs. And the graph is a tussle in tins case between people who think that AI’s gonna soak up lots of GPUs and need lots of tin, and the more traditional analysts who are saying, well, there’s lots of tin coming on the market. So, you do often see that kind of analysis baked into the price in the graphs as well. That’s what I rely on, anyway.

 

Cameron  08:00

So, we still rely on the charts.

 

Tony  09:12

Yeah, I certainly don’t have the ability to analyse every commodity market in depth and look at satellite images for mines coming online, and oil tanks and where their storage is, etc.

 

Cameron  10:27

You have the ability; you just don’t have to give a shit factor.

 

Tony  10:30

Exactly. You could be wrong, you could do all that analysis and still be wrong, right? Because the day after you do it, the mine could collapse and the whole things thrown out the window, so who knows?

 

Cameron  10:45

As you’ve said many times before, if analysts and economists really knew what they were doing they’d all be rich.

 

Cameron  10:51

Most of them aren’t, so they don’t really know what they’re doing.

 

Tony  10:51

Yeah.

 

Tony  10:52

And Tim wouldn’t be writing articles for Eureka Report for a journalist wage. And no disrespect to Tim, I don’t know him. He may well be, you know, sitting on a pile of gold and writing for fun, who knows?

 

Cameron  11:09

Sure, like you’re doing for this podcast.

 

Tony  11:13

Yeah, helping you pay your back taxes.

 

Cameron  11:17

Don’t bring that up, you’ll depress me. Before we move on to Brookside, I wanted to let everyone know that we launched our end of financial year campaign, end of financial promotion today. Discount let’s just say that. There’s also a Stock Doctor EOFY promotion on at the moment, too. So, have a look at my blog post that went out today or yesterday by the time you get this, it’ll run to the end of the financial year. If you want to save some money on your signing up or upgrading your club membership, or if you’re thinking about becoming a member and you want to save a few bucks on us and Stock Doctor, go check that out.

 

Tony  12:00

Sorry, thank you for that. And by the way, my pulled pork today is going to be on Metals X, on tin.

 

Cameron  12:07

Oh cool. That’s nice. Well, it’s gonna be the tin show, the Tin Man.

 

Tony  12:12

The Tin Man, yeah.

 

Cameron  12:14

Brookside Energy, Tony. Now this one bamboozled me a bit. I was looking at them, as I said, the other day. They were on the buy list and in the breakdown in my Comm Stocks tab I had them as listed, sort of, half/half LNG and crude, but one of my sheets said 51/49 the other ones had 60/40. I don’t know where those numbers came from, or why they were different, so I went to their website, their annual report, and couldn’t find a breakdown anywhere on their revenues. They just said, “revenue from oil and gas,” “revenue from oil and gas,” “revenue from oil and gas.” So, I posted a question on Facebook. Now Richard G said, “by my reading no LNG. Just oil, natural gas and natural gas liquids like butane and propane. So, they are separating the components by heating and then stripping off the lighter saleable components, but definitely no liquefied natural gas by these guys on those wells from my reading.” Now, this I found interesting because I did not know that natural gas, natural gas liquids and liquefied natural gas were in fact separate things. I just thought it was all “get the natural gas, then you liquefy it, and you sell it.” Apparently, these are different things, Tony. Now nobody knows more about natural gas thank you, can you explain to me the difference between all of these?

 

Tony  13:38

I can’t. I can explain the gases, the butane and all that, they are part of the distillation process. But when I had a look to answer your question, I thought the natural gas was liquid natural gas myself. Which again is distilled from the refining process from oil, but it’s generally put under pressure and transported in a liquid form under pressure, which has a lot more cost in the supply chain than simply refining oil and putting it in a truck and taking it to a service station. What I found when I was looking at this particular company was, like you, I couldn’t find anything on their website in their annual report about the breakup, but I did find on their website the brokers report, which I’ll try and find for you. So, it’s in the investors link on the Brookside website, and it’s a broker’s report. It’s from the Australian Research Independent Investment Research. It’s literally called Australian Research and then Independent Investment Research, so I guess it’s Australian Research. No, Independent Investment Research. Never heard of them. Anyway, they’ve done a deep dive into Brookside, and on page three there’s a graph of the breakup between oil, NGL — which I thought was going to be the same as natural gas, but I’ll take it on notice that it’s not — gas, and then the total BOE, barrels of energy. And it breaks it down, and importantly, gives a unit price. So, all of these different types of distillates have different prices. And so, what I came up with was the oil section was 54% and the gas and distillates were the rest.

 

Cameron  13:50

Let me add that in my thing for next time. So, 54% for oil, which would make 46% for the gas.

 

Tony  15:39

Yeah, but what’s called NGL, which I assumed was natural gas, but it may not be, but certainly the other one, which is called gas, has a different price according to this analysis. So, we can’t use the LNG graph for the other half, we have to use the oil graph for this one. And just last thing is that it’s a welder in the US, so it’s going to be in US price. It won’t be the Brent, which is the one we use in Australia. It’s going to be the US crude oil price.

 

Cameron  16:08

Well, the Stock Doctor Brent price does say Brent Crude North America, isn’t that an American price, therefore?

 

Tony  16:15

It’s an American price, but Brent crude is… So, oil from different parts of the world has different characteristics, and Brent is typically from Australia or some parts of the Middle East, and US oil is different again. And the oil wells that this company owns are in the US, so we need crude oil futures in Stock Doctor.

 

Cameron  16:36

And that’s not what BRT-N is? Oil Brent Crude North America?

 

Tony  16:42

No, that’s if you’re selling Brent crude using US dollars. And we want the one called crude oil. And that’s simply because this company’s oil wells are in the US. Yeah, so we use Oil Brent Crude North America, and I would think the most relevant one for this company is crude oil futures, which is also a sell, so they’re probably not going to be too different.

 

Cameron  17:07

And so, as far as how we rate it in our checks, we’re just using oil from now on.

 

Tony  17:16

Yep, it’s a sell.

 

Cameron  17:18

Okay, well, because I want to drive up the price of tin, I went to Chat GPT and I asked it to tell me the difference between LNG natural gas and natural gas liquids. And here’s what it said: “natural gas LNG and natural gas liquids, NGL…” It’s funny, when my kids right NGL it’s Not Gonna Lie: NGL I’m feeling like shit today. NGL.

 

Tony  17:42

Oh, never heard that.

 

Cameron  17:43

“…Are all related components of the oil…” Yeah, Alex probably doesn’t use hip lingo like that, she’s too educated. My boys dropped out of uni, so they speak, you know, Gen Z speak. “…All related components of the oil and gas industry but they have some important differences. 1) natural gas: this is a fossil fuel form from plants and animals that lived millions of years ago. It is primarily composed of methane but can also contain small amounts of other hydrocarbons such as ethane, propane and butane…” “Propane and propane accessories.” “…white vapour and various other gases.” That’s a King of the Hill reference for anyone who’s never watched that. “It is primarily used as a fuel…” Mike Judge’s show. Mike Judge creative Beavis and Butthead and Silicon Valley and Office Space and Idiocracy. Very funny guy Mike Judge. “… primarily used as a fuel for heating, cooking, and electricity generation. Natural gas is often found in reservoirs beneath the earth’s surface, and it can be extracted through drilling to liquefied natural gas, LNG. This is a natural gas that has been cooled down to liquid form for ease and safety of non-pressurised storage or transport. When natural gas is cooled to a temperature of approximately minus 162 degrees Celsius, it condenses into a liquid. In its liquid state it takes up much less volume than in its gaseous state, around six hundred times less, which makes it economical for storage and transportation over long distances where pipelines may not be feasible. Once it arrives at its destination, it is regasified,” there’s a great word, “and distributed as natural gas. 3) natural gas liquids, NGL,” not gonna lie. “These are hydrocarbons in the same family of molecules as natural gas and oil that are often found alongside dry natural gas, methane, in wells. While the terms natural gas and NGL are often used interchangeably, they are distinctly different. NGLs are heavier compounds that remain liquid at room temperature, including ethane, propane, butane, isobutane, and pentane. NGLs are valuable as separate products, and they are therefore often separated from natural gas and used in a variety of products including plastics, heating appliances and as additives in motor gasoline. In summary, natural gas primarily refers to methane gas, while LNG is that same gas cooled to a liquid state, and NGLs are the heavier, liquid at room temperature hydrocarbons often found alongside natural gas.” So, therefore, I would assume that natural gas and LNG are the same thing.

 

Tony  20:25

In different states.

 

Cameron  20:27

  1. A) Chat GPT could be lying to me. So, if Richard or anyone else listening to this who actually knows what’s going on could explain that to us at some point, that would be handy, seeing as Tony apparently isn’t the expert on the topic that I thought he would be having worked for Shell for a long time.

 

Tony  20:45

Yeah, well natural gas/LNG was just coming in as I was leaving, was becoming the big thing.

 

Cameron  20:51

That’s funny. Normally when you enter a room, natural gas enters. 

 

Tony  20:57

Nah, it was there, but I’d left. Didn’t get the blame.

 

Cameron  21:01

Well, Brookside Energy, crudes a sell now, so it’s just a sell anyway. All right, Steve Mabb. We need to clarify something. So, last week, I brought up a point that Steven Mabb, chairman of the ASA, made about maybe putting our cash when we’re sitting on cash into some of these ETFs, so at least it’s earning for us. And he sent us this email during the week. “Just listened to this week’s episode. As a point of clarification, I suggested AAA as a way to improve your returns when you have cash in the portfolio. Why? Because AAA has funds in major Australian banks at the 30 BBSW rate. They’re not bonds, it’s cash in the bank, albeit through a third party. So, it’s close to investing your cash in your own bank account, albeit they don’t get the $250,000 government guarantee. The interest rate is now over 4% paid monthly, which is why the price drops by that much each month when it goes exdiv. It wasn’t that much twelve months ago, of course, before the RBA started lifting rates, and they charge a 0.18 management fee that comes out of the price automatically. Whether you want to do that or you trust Beta Shares is your call, but for me, it’s better than taking a couple of days at a time to transfer cash to and from a broking account from your own bank account versus being able to access it in seconds by selling AAA to buy something else. TVIL is short term US Treasuries and is subject to currency swings, so maybe not as good as AAA security wise. I believe this is what Buffett parks Berkshires cash in the T bills, not the Aussie ETF, of course. Thanks, Steve.” So, 4% paid monthly is less than 0.18%, is better than a poke in the eye with a blunt stick. How does that change your view of putting our cash into these AAA ETFs when we’re stuck in cash, Tony, from what you said last week?

 

Tony  22:56

Yeah, perhaps it does. So, thanks, Steve, for clarifying that. I’m not familiar with these at all. Couple of things is that 4% is the annual yield, so paying it monthly is not going to be a big amount.

 

Cameron  23:09

Really? It’s not monthly? That’s annual?

 

Tony  23:11

One-twelfth of 4%, yeah.

 

Cameron  23:14

I mean, it would be a lot to pay monthly, wouldn’t it.

 

Tony  23:16

Yeah, you’d be getting 48% annually if you got 4% monthly.

 

Cameron  23:20

Aww, that’s why I got excited.

 

Tony  23:23

Yeah. So, it’s one-twelfth of 4%. Yeah, it’s nothing to sneeze at, I guess. But it’s been going up recently. So, if you look at the last twelve months, it’s only about 2.5%, 2.6%, I think, if you annualize all the monthly payments. It is substantial now, 4% per annum is pretty good. So, thanks for that, Steve. And if Steve uses them, a couple of questions. What’s the timing of the purchase? Particularly with a short term, if you have a short-term holding of cash, so it’s only going to be in there for a couple of weeks, you could still not get a dividend and face a drop, potentially, in the in the share price. Or does Steve wait until it’s paid a dividend and put the money in and hold it there for at least a month? Or does he borrow just before it gets paid as a dividend? I’m not quite sure how it’s gonna work if you’re doing it short term. But look, yeah, if you’re getting 4% per annum, and we have cash sitting there for twelve months, it’s worth doing, because that’s 4%.

 

Cameron  24:15

Yeah, it’s unlikely we’re gonna have cash sitting there for a year, right?

 

Tony  24:19

No.

 

Cameron  24:19

I mean, it’s usually a couple of weeks. Maybe lately, you know, a month or so. So, you’re getting 4% divided by twelve, which is too hard for my brain to work out.

 

Tony  24:33

0.0375 or something like that.

 

Cameron  24:36

Right. A month.

 

Tony  24:37

Yeah.

 

Cameron  24:38

So, better than nothing, particularly if you got a lot of money.

 

Tony  24:42

Yeah, so thanks, Steve, for pointing that out. It makes more sense now. And just for people, the BBSW, or the 30 BBSW, is a bank bill swap rate for thirty days, which is basically the rate at the banks all agreed to lend each other money. over a thirty-day period, which is usually the RBA rate, plus a margin.

 

Cameron  25:05

Glad you explained that, because my dirty mind went somewhere completely different with BBSWs, so I’m glad that you pulled my brain out of the gutter, Tony.

 

Tony  25:16

Yeah, so thanks Steve. So, Cam, try it. It does seem to have limited downside as a risk. I think the only risk I can see now is just timing it. If we put money in for two weeks and the share price moves around waiting for another dividend, we might pull it out at slightly less or slightly more than we put it in for, but it won’t be material, I don’t think.

 

Cameron  25:34

All right. Well, I’ll start doing that. If it goes wrong, we’ll blame Steve. I saw his article in the Fin late last week: “Artificial Intelligence powers US shares into a bull market,” is the one I mentioned earlier. “Surging enthusiasm for technology giants building consumer products based on artificial intelligence catapulted the US benchmark S&P 500 into a technical bull market on Thursday. On Friday, the blue-chip Bellwether index was up more than 20% from its lows and at its highest level since August, since the tech heavy NASDAQ index chasing seven straight weeks of gains to a 27.4% year to date. Heavyweight technology darlings including Google parent Alphabet, Microsoft, Nvidia, Adobe, and Facebook owner Meta have all jumped as investors bet that companies can build more valuable products using AI.” Unfortunately, we don’t have any AI plays in Australia of that calibre that I’m aware of. We probably have some small companies that are playing around the edges with AI, but nobody who’s going to really play on the scale of those companies. But it’s interesting. I was just going to ask if these sorts of… I guess this is a black swan, but in a positive sense. I mean, six months ago, nobody really saw AI as being something that was going to push the US into a bull market, all of a sudden, it’s just seemingly come out of nowhere. It hasn’t really, I mean, all of those companies have been working on AI behind the scenes for, well, forever in Microsoft’s case. But in this LLM sense, LLM started to become a thing in AI research circles in 2015. So, it’s been eight years they’ve been building this functionality behind the scenes. Just from an investing perspective, Tony, when these sorts of things drive the US market up, do you expect to see a lift in the Australian market as well? I know when the US market collapses, we collapse. When the US market booms, do we boom?

 

Tony  27:44

Oh, I think in very, very broad terms, yes. But I don’t think we will in this case, because I did see someone analysis; if you back out those companies, tech companies, the large scale tech companies, the US markets gone nowhere, much like ours. So, I think we’re following the US market ex-big tech, because we don’t have any large-scale tech in Australia, as you’ve said. And that’s a bad thing and a good thing. It’s a bad thing right now because the NASDAQ’s up 27%. But maybe a good thing when people move on to the next thing or the bubble bursts with AI stocks. May not, but if history unfolds the way it always has, it will, and it’ll fall spectacularly.

 

Cameron  28:25

Well, you know, if history plays out, what I expect to see over the next year is hundreds of billions of dollars of venture capital being spent on hundreds and hundreds and hundreds of AI based start-ups. You’ll have the pets.com of AI and, you know, there will just be a tonne of hype, a tonne of money everywhere flying around crazy. And yeah, a lot of money will be made, and a lot of those will go belly up. 98/99% of those start-ups will get trade sold as a quick exit at some point or will just collapse, and a couple will make it and survive.

 

Tony  29:08

And in every slide deck of every PowerPoint presentation from now on, slide one will say “what we’re doing with AI.” “How we’re using AI.” “How we’re benefiting from AI.” Just like, you know, a few years ago, it was all “agile”, agile development. “We are an agile company.”

 

Cameron  29:22

Yeah, every brand will just tack AI onto the name of their brand.

 

Tony  29:26

Yeah. Dot AI. It will have, as we’ve talked about before, meaningful impacts on the world and productivity, and all that kind of stuff. But from an investing point of view, it’s another bubble that we’ve seen a hundred, if not a thousand times before.

 

Cameron  29:43

Yeah, that’s just human nature bubbles, right?

 

Tony  29:46

Yeah.

 

Cameron  29:46

Everyone gets excited about all the money to be made.

 

Tony  29:49

All the headlines are on AI and how the NASDAQ is up 27%. If only it had been a headline this time last year when the NASDAQ wasn’t up 27%.

 

Cameron  29:59

Well, it’s like lithium at the moment. One of my sisters texted me this morning and said, “do you charge for financial advice?” And I said, “well, I don’t, because I’m not a financial advisor, and I can’t give financial advice. Why?” And she said, “oh, I was thinking about buying this lithium stock.” And I said, “well, I can teach you how we think about investing in stocks on our podcast,” and sort of talked about the difference between… I said, the first thing to know is there’s a difference between investing and gambling. I just sort of covered the basics of your approach to investing, which is, you know, to back up your decisions with as much logic, reason, science as you can. And that, fundamentally, we believe that companies that have a good track record of generating a lot of profits, if you can buy them at a discount to what you think their valuation is, more often than not, they should do well, and your investment in them should do well. And then looked at this lithium stock that she was interested in, LTR, which has never generated any revenue, but its share price has gone up by, like, 250%, in the last year or so. And I think it’s subject to take over offers, and it’s all bubbly, and you know, there’s all that kind of excitement going on. And yeah, I mean, it’s, you know, it’s one of those things when, you know, people hear on the street that there’s these booms on these stocks and they want to get in on it. And so I sort of pointed out, “yeah, look, lithium is going through this boom at the moment,” and some of the reasons why: batteries etc., and wars, rare earth minerals, all that kind of stuff. And some of those companies are going to do well, and some aren’t. Hard to know unless you’re an expert on the lithium industry, which companies are going to do well and which aren’t, and even the expert’s probably going to get it wrong most of the time. So, it’s really in the category, you know, it’s not something that I would look at, because to me it’s in the category of gambling, if you can’t put any science and logic behind why you think this company is particularly a good investment. But that’s not financial advice.

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Cameron  1:35:44

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That’s it for today! 

QAV A GOOD WEEK. 

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