QAV #631 — Goodbye, Mr Bond

631 Club Final

[00:00:00] Cameron: Wel­come back to QAV Tony. This is episode 631. We’re record­ing this on the 1st of August. You’re in the great metrop­o­lis of Wag­ga Wag­ga again this week.

[00:00:24] Tony: I am. Yes, the great metrop­o­lis. The over­cast, cold metrop­o­lis of Wag­ga Wag­ga.

[00:00:29] Cameron: How’s the golf in Wag­ga Wag­ga this week?

[00:00:31] Tony: Don’t know yet. We’re play­ing tomor­row and Thurs­day.

[00:00:34] Tony: Right here

[00:00:34] Cameron: last night. Ah, right. Well, what else is news TK before we get into stuff? Any­thing else you want to report?

[00:00:41] Tony: In my life or in the stock mar­ket? Yeah,

[00:00:43] Cameron: no, in your life. What’s going on? You

[00:00:45] Tony: good? I was sav­ing it for after hours, but I’ve been down at Cape Shank. I spent some time with Alex. Which was nice, love­ly.

[00:00:51] Tony: She’s busi­ly paint­ing for her first afford­able art show

[00:00:55] Cameron: gig.

[00:00:56] Tony: It’s cool. Went to the MCG a [00:01:00] cou­ple of times to watch foot­ball, which was good fun. Caught up with some friends.

[00:01:04] Cameron: Did you get a new Star­link?

[00:01:06] Tony: It’s, I think it’s been deliv­ered to Syd­ney. So I’ll pick it down

[00:01:10] Cameron: next time. I read a report the oth­er day.

[00:01:12] Cameron: Did you know that? Elon Musk, since 2019, has been send­ing a rock­et into space every week with a dozen or so satel­lites on it. He now has over four and a half thou­sand satel­lites in space, which is more than 50% of all the satel­lites in space are now owned by… Star­link, Musk, I mean, one of his oper­a­tions, his plan in the next few years is to get that up to 42, 000 satel­lites around the Earth.

[00:01:44] Cameron: They said it’s already, there’s already so many satel­lites now that it’s start­ing to affect astronomers abil­i­ty to see the night sky. He’s going to increase that by ten­fold in the next few years. And they’re all going to be flash­ing a big bright X logo to pro­mote. But [00:02:00] just think about that, like, we’ve been putting satel­lites into space since the 50s.

[00:02:04] Cameron: He in four years has put up the major­i­ty of them in the last few years. I guess it pays to own your own rock­et com­pa­ny. Yeah.

[00:02:12] Tony: Well, it’s more, I found a shoe­box sized each satel­lite. So they’re not that big. Yeah. Yeah. But yeah, like, but what, I mean, my issue is that is how reli­able is it all? Because my Star­link bust­ed and I called the guy who installed it after muck­ing around for a while myself and going online and try­ing to get help and things, which was hope­less.

[00:02:32] Tony: And he said, yeah, every­one’s hav­ing trou­bles, mate. Just, just. Send them an email, they’ll send you a new one. Right. It’s, yeah, it’s not very good.

[00:02:39] Cameron: Well, it’s good cus­tomer ser­vice though, if they’re replac­ing it. It’s like Apple cus­tomer ser­vice. You take in your iPhone, yeah, just have anoth­er one.

[00:02:44] Tony: Yeah. No, that, uh, for sure, it’s good that way.

[00:02:46] Tony: But I can’t be mak­ing much mon­ey if he’s send­ing up all those satel­lites with rock­ets and then basi­cal­ly giv­ing away the equip­ment for free as well, because it breaks.

[00:02:55] Cameron: You have to won­der what he’s going to do when he’s got 42, 000 of them up there, what his plan is. Apart [00:03:00] from Star­link.

[00:03:01] Tony: It’s going to look like, it’s going to look like Tran­tor.

[00:03:04] Tony: Isn’t that the, is it Tran­tor? The mid­dle of the foun­da­tion where it’s, it’s been so overde­vel­oped. It’s got a big iron cir­cle around it.

[00:03:13] Cameron: Well, maybe the, you know, they’ll cap­ture the sun­light and beam it back down to earth as ener­gy, but you have to pay 99 bucks a month to get your sun­light. To charge, to charge your car.

[00:03:24] Cameron: Any­way, let’s talk about the mar­ket. I did. Our port­fo­lio analy­sis this morn­ing, we’re still up, you know, two and a half times the index since incep­tion. It’s been, it’s been sort of a flat week for us. Our port­fo­lio was down 0. 41% over the last week, but old mate, TRS was the stock of the week. It was up sev­en, which is inter­est­ing because I saw that this morn­ing.

[00:03:53] Cameron: I was like, Oh, I won­der what that. Is means for where the mar­ket thinks the econ­o­my is going when the reject [00:04:00] shop is up 7% in a week, but then today CCP took a 15% hit. They came out with their results and appar­ent­ly the, the Aus­tralian econ­o­my is doing much bet­ter than peo­ple thought. Chan­ti­cleer wrote about it in the Finan­cial Review.

[00:04:19] Cameron: Why this 15% share price plunge is good for the econ­o­my. Investors pun­ished dis­tressed lender Cred­it Corp after it revealed very good news for the rest of us. The num­ber of Aus­tralians who can’t pay their bills is hard­ly ris­ing. The inter­est rate ris­es. The num­ber of Aus­tralians strug­gling to pay their cred­it card bills is small and show­ing few signs of growth, despite repeat­ed inter­est rate ris­es, the soar­ing cost of liv­ing and a soft­en­ing econ­o­my.

[00:04:43] Cameron: Cred­it Corp boss Thomas Bereg­gi, whose busi­ness buys books of dis­tressed cred­it card and per­son­al loans cus­tomers off the banks, says the Aus­tralian con­sumer is still in real­ly good shape with few bor­row­ers, either in arrears or default. Does that come as some, [00:05:00] what of a sur­prise to you, Tony?

[00:05:02] Tony: What does come as a sur­prise is that Thomas Bereg­gi does this every year, if not every half.

[00:05:08] Tony: And, and… And the share price reacts accord­ing­ly. So he’s a clas­sic under promiser and over deliv­er­er. Right. So, yeah, the results came out today and good on Cred­it Corp. They’re always first off the first cab off the rank, you know, so it can’t be too hard to have your results out a month after the. Shut off of the books, but you know, every­one drags their feet except for Cred­it Corp.

[00:05:32] Tony: Any­way, he’s first out, he always says, con­sen­sus fore­cast is too high. We’ve had a good year, uh, prof­its up 10%, blah, blah, blah, but gee, next year’s look­ing tough. It’s been like that for at least 15 years, he’s been around for a long time and every half I see him do it. So I’d, I’d be. You know, I’m quite relaxed about Cred­it Corp and the results and I’ll just watch it rebound because it tends to do this [00:06:00] thing.

[00:06:00] Tony: And this is a, this is a prob­a­bly an indict­ment of the fund man­agers who fol­low it. Sure­ly. If you’re fol­low­ing this com­pa­ny, you’ve seen Bari­gi and his pat­tern, uh, over the years and you know that he’s going to come out and say, we’ve had a good year, but the future looks bleak and that resets the share price.

[00:06:15] Tony: And then he, you know, out­per­forms and the share price booms, that’s been the modus operan­di for a long time. So. Yeah, I’m, I’m think­ing that it’s a buy­ing oppor­tu­ni­ty when share, when cred­it court drops like this, anoth­er sell­ing, anoth­er sell­ing oppor­tu­ni­ty, anoth­er must sell on this drop.

[00:06:33] Cameron: Some­body asked on the Face­book group if you would rule one or just hold on.

[00:06:41] Cameron: And, uh, would you make an excep­tion because of the cir­cum­stances? And I, I replied, Tony nev­er makes an excep­tion with the rules except for when he

[00:06:49] Tony: does. Yeah, cor­rect. Well, it’s still above my rule one price. Yeah, mine too. And it’s still above a three point trend line, so it’s sell price. So, yeah, if it keeps going down, sure, there might be [00:07:00] some­thing that the ana­lysts have picked up on that I think it’ll rebound.

[00:07:04] Tony: Yeah, Chat­ter­clear

[00:07:05] Cameron: did­n’t men­tion that he does this all the time either. You would think that the finan­cial review would have some sense of his­to­ry, but you know, no one remem­bers his­to­ry. Tony, it’s one thing that I believe. Yeah, true.

[00:07:16] Tony: But also too, I mean, I think Cred­it Corp is more than just cred­it card bad debts as well.

[00:07:21] Tony: They, they do util­i­ty com­pa­nies. They now offer loans to peo­ple because they’ve got a great cred­it pro­file for them after work­ing with them to repay bad debts. They’re in the U. S. So, you know, it’s not just cred­it cards because cred­it cards would prob­a­bly be a wor­ry because I think I haven’t seen num­bers recent­ly, but I think they’re in decline around the world as things like after pay have come in and young peo­ple in par­tic­u­lar have worked out that, you know, it’s not a great deal to put some­thing on the cred­it card and pay 21% inter­est on it.

[00:07:53] Tony: So that kind of busi­ness mod­el is, it’s still around, but it’s not as strong as it used to be. So, but Thomas Brigg, he’s [00:08:00] nev­er called out as a prob­lem for them. So. I think he’ll be fine. Well,

[00:08:05] Cameron: an Aus­tralian… House­hold debt lev­els record high and the high­est in the world? For

[00:08:11] Tony: mort­gages, yeah. I guess it’s all debt, but the large part of that would be hous­ing mort­gages, I would have thought.

[00:08:16] Tony: Right.

[00:08:17] Cameron: I’m look­ing at an arti­cle here from a few years ago. It says, cred­it card debt only makes up 1. 9% of all house­hold debt. Makes

[00:08:25] Tony: sense. Because half, rough­ly half of the peo­ple who have a cred­it card nev­er pay debt. They just, what they call, Revolvers, they pay their bal­ance off every month and col­lect the points, which is pret­ty much what I do.

[00:08:36] Tony: And then, you know, redeem. Can’t buy some­thing with the points. Yeah. When you’ve got enough, you have to fly or some­thing. Yeah. Yeah. So, uh, yeah, it’s a strange busi­ness mod­el. It’s been suc­cess­ful in the past. It’s prob­a­bly going to be suc­cess­ful in the future, but it’s prob­a­bly not grow­ing at the rates it used to grow at.

[00:08:52] Tony: Right. But any­way, back to your orig­i­nal point, the reject shop, I think, did they just change their CEOs? Would that be behind their [00:09:00] recent share price rise, per­haps? But yeah, peo­ple might be expect­ing that they’ll do well giv­en a reces­sion. Dis­cre­tionary retail has been drop­ping. Lead­ing up to report­ing sea­son, I expect to see a rebound because, you know, sur­prise, sur­prise, the econ­o­mists who can pre­dict the future say­ing we may not go into a reces­sion now.

[00:09:19] Tony: So the dis­cre­tionary retail­ers have been hard hit might actu­al­ly start to bounce back from their share price lows and the reject shop might be caught up in that. But yeah, I take your point. If, if the econ­o­my is look­ing bad, so the reject shop will do well. But then Cred­it Corp should do well and it’s not.

[00:09:37] Tony: So it’s, it’s, it’s strange. And that’s prob­a­bly just indica­tive of the mar­ket. No one can real­ly pre­dict what’s going on. I read anoth­er arti­cle on today’s Fin Review where there was, I think it was now the major­i­ty of the econ­o­mists in the US have changed their tune. It’s not going to be a dif­fi­cult land­ing or a reces­sion over there.

[00:09:53] Tony: It’s going to be okay. And they’re all say­ing, oh, we should have been in stocks this year. You know, don’t, don’t trust crys­tal ball [00:10:00] gazes, I guess is the, is the, is the learn­ing out of all

[00:10:04] Cameron: this. Well, there was an arti­cle on July 17th in the Finan­cial Review says dis­count giant Dol­lara­ma seeks bar­gain at the reject shop.

[00:10:13] Cameron: Despite eco­nom­ic head­winds, there’s been no lack of activ­i­ty in the local retail sec­tor and prof­it warn­ings from some of the coun­try’s high­est pro­file brands from Har­vey Nor­man to Best and Lest and Adair’s have not dulled inter­est in Aus­tralia from one major over­seas retail­er, Canada’s Dol­lara­ma. The Mon­tre­al head­quar­tered dis­count chain.

[00:10:32] Cameron: Sources told Street Talk that Dol­lara­ma had approached the reject shop. The ASX list­ed dis­count retail­er whose largest share­hold­er is bil­lion­aire busi­ness­man Raphael Gimin­da’s kin group. Assist­ing the reject shop with those dis­cus­sions was UBS, they added. So maybe they’re in the mid­dle of an acqui­si­tion play.

[00:10:53] Cameron: Yeah,

[00:10:53] Tony: it’s pos­si­ble. Could be a takeover play as well. Yeah. But my sense is it’s going to be some­thing like that rather than peo­ple [00:11:00] fore­cast­ing what’s going to hap­pen to the econ­o­my.

[00:11:01] Cameron: Right. Yeah, well, their share share prices jumped in the last, well, since that arti­cle came out on July 17th, coin­ci­den­tal­ly, they were trad­ing at 4.

[00:11:11] Cameron: 50 on July 17th and now trad­ing at 5. 30. So, you know, it’s been a cork­er cou­ple of weeks. So thank you Dol­lara­ma for that lit­tle boost to our port­fo­lio. If it’s even true. I’m sure it has noth­ing to do with get­ting the sto­ry out there. Hey, speak­ing of things that aren’t true. A cou­ple of weeks ago on the show, some­body asked the ques­tion about dif­fer­ing wheat prices.

[00:11:34] Cameron: We had a wheat price on Stock Doc­tor. We had a wheat price on Trad­ing Eco­nom­ics. Can’t remem­ber who asked it. Might’ve been me. Might’ve been some­body else. Might’ve been Alex. I don’t know. Any­way, I went back to Stock Doc­tor. And asked them about it, and they came back to me a cou­ple of days ago say­ing, our devel­op­ment team have found an error in our data.

[00:11:54] Cameron: There was a drop in the val­ue of our feed from 636 to 1 62 on [00:12:00] the 29th of March 21. Sev­er­al oth­er com­mod­i­ty prices are affect­ed, such as cop­per and heat­ing oil. 21. That’s cop­per real­ly, two and a half years ago. The val­ue of their com­mod­i­ty prices took a hit and we alert­ed them to it a cou­ple of weeks ago.

[00:12:21] Cameron: So, well, two points there. Num­ber one, don’t rely on Stock Doc­tor’s com­mod­i­ty prices for wheat, cop­per, or heat­ing oil. Sec­ond­ly, if we do ever spot dis­crep­an­cies, because remem­ber we’re on the show going, what’s going on here? And you’re like, yeah, I can’t make sense of it. Well, we should trust our gut and always go back to Stock Doc­tor and say, Hey, What’s going on here?

[00:12:43] Cameron: Because it just might be that their data is funky as

[00:12:47] Tony: it was in this case. Yeah. Well, I think of it too, and we’re talk­ing about data. A cou­ple of years ago, I had to dive into Cred­it Cor­p’s data because the oper­at­ing cash flow on Stock Doc­tor dif­fered from the oper­at­ing cash flow on their [00:13:00] annu­al report, which I think one of our lis­ten­ers may have point­ed out actu­al­ly.

[00:13:04] Tony: And Stock Doc­tor came back and said, yeah, this is one of the. One of the few stocks they actu­al­ly manip­u­late the data for before they release it, because they, I for­get now what the actu­al detail was, they took a view that some­thing was not being report­ed as oper­at­ing cash flow and it should have been, it was being report­ed some oth­er way.

[00:13:21] Tony: Right. I for­get now. And they thought that it was account­ing stan­dards that did­n’t real­ly apply or should­n’t apply or did­n’t reflect what Cred­it Corp was doing. So they manip­u­late the data. So, but you just remind­ed me of that. And if any­one, before any­one rais­es a ques­tion and says, Hey, I’m not using Stock Doc­tor and Cred­it Corp does­n’t appear on my buy list, that’ll be the rea­son why.

[00:13:43] Cameron: Well, it was Sam actu­al­ly that high­light­ed the wheat price dif­fer­en­tial to us. I just looked it up. So thank you, Sam, for that. And yeah, a cou­ple of good exam­ples there of where if we spot an error, this is why we always do, we, D Y O R if you, if you, you know, what do they say? If you see [00:14:00] some­thing, say some­thing as they used to say.

[00:14:02] Cameron: Was that for pedophiles? Yes.

[00:14:04] Tony: I don’t know. Was­n’t it the aban­doned, aban­doned lug­gage at air­ports or some­thing? Oh,

[00:14:08] Cameron: it could have been. I don’t know. Maybe aban­doned by pedophiles. Who knows? Speak­ing of which, R. I. P. Pee Wee Her­man

[00:14:14] Tony: today. Oh real­ly? Oh no. I thought you were going to say Sinead O’Con­nor. R. I. P.

[00:14:20] Cameron: Sinead O’Con­nor too, was­n’t she? Yeah. And more pow­er to her for tak­ing the heat that she took in 1992. I don’t think Pee Wee Her­man was a pedophile, just to be clear, but he did get bust­ed with some child pornog­ra­phy on his com­put­er 20 years ago, and… One of the two scan­dals that he had to face down, but much beloved by Amer­i­cans of my wife’s gen­er­a­tion.

[00:14:42] Cameron: She absolute­ly adores Pee Wee Her­man and so does Fox. Fox has watched all of his shows and his movies. We were just watch­ing one of his movies about a week ago and yeah, he. Appeals to cer­tain kind of crazy kid like Chris­sy was in the eight­ies and fox­es. Now, cer­tain­ly a [00:15:00] unique char­ac­ter. He was not, does­n’t mean much to Aus­tralian audi­ences.

[00:15:04] Cameron: I think because we did­n’t get him or Mr. Rogers and those things, but for Chris­sy, yeah, very, very deep feel­ings for Pee­wee Her­man. Well, my only oth­er new sto­ry for today, Tony from the finan­cial review again, shares crush year of the bond and biggest sen­ti­ment shift since 1999. This is a sto­ry out of Lon­don, July 30th.

[00:15:26] Cameron: All the chat­ter back in Decem­ber was that 2023 was to be the year of the bond. And for a brief moment or two in the first quar­ter, that call and the eco­nom­ic doom and gloom that under­pinned it look right. It is now being over­run though, by an avalanche of demand for shares that has unleashed a furi­ous ral­ly across the globe.

[00:15:44] Cameron: In a sign, the gains are prob­a­bly far from over. It has also made investors more hope­ful. about stocks rel­a­tive to bonds than at any point since sen­ti­ment trad­er mod­els began com­par­ing them 24 years ago. As [00:16:00] sen­ti­ment, tech­ni­cals, and risk of the reces­sion got pushed fur­ther out, we moved from being under­weight stocks to over­weight, said Nathan Thupt.

[00:16:08] Cameron: Glob­al head of asset allo­ca­tion at Man­ulife Asset Man­age­ment in Boston. And the man vot­ed to have the best sur­name. He has reduced his cred­it expo­sure in favor of an equi­ty over­weight. So, weren’t we just talk­ing like last week about. Investors pulling their mon­ey out of the share mar­ket and putting it in bonds.

[00:16:29] Tony: Yeah, that’s right. And even the week before, I think you had an arti­cle say­ing that some­one thought the share mar­ket was­n’t pay­ing enough as div­i­dends now or as a return now, because you could get risk free. four or five per­cent in the bond mar­ket, and there­fore why take the risk of get­ting nine or ten per­cent cap­i­tal appre­ci­a­tion in the share mar­ket.

[00:16:49] Tony: And then

they’ve

[00:16:50] Tony: all come scur­ry­ing back to the share mar­ket. So hon­est­ly, I have often thought the most, the, the, that’s what I’m try­ing to say, the most, It’s the appen­dix of the [00:17:00] share mar­ket as the asset allo­ca­tor. Seri­ous­ly, they’re like, they get paid a squil­lion dol­lars to sit there and go, bonds this year and 51% shares.

[00:17:09] Tony: No, no, no, no, no, no, no, no. 48% bonds and 52%. But it’s just like, it’s just. It’s, it’s sil­ly. You work out what’s going to be the best asset class long term, put all your assets there. But these guys get paid to try and read a crys­tal ball about whether they should be in bonds or shares or some oth­er asset.

[00:17:28] Tony: And no one ever goes back and says, how did you, how did you go? They nev­er get held to account. It’s, it’s, you know, the fund gets held to account if it does­n’t per­form, but these asset allo­ca­tors, I mean, fair dinkum, they may as well work for the RBA. That’s, you know, it’s that kind of hocus pocus detailed report that you just, you just ignore it.

[00:17:48] Tony: Just stay, as we’ve said, as I’ve said many, many, many times, just stay ful­ly invest­ed. Don’t, don’t wor­ry about try­ing to pre­dict the future. Yeah, you might suf­fer some set­backs for a while, but you know, over [00:18:00] time, the esca­la­tor goes up in the share mar­ket. So there’s no point try­ing to time it. Well,

[00:18:04] Cameron: you know, I often think I’m, I’m so grate­ful that I have QAV to edu­cate me about this stuff because if I was going by the arti­cles I read in the finan­cial, like one week, it’s shares are fucked, you know, my bonds the fol­low­ing week, it’s, ah, don’t wor­ry about bonds, invest in

[00:18:19] Tony: Sha­zoo.

[00:18:20] Tony: Come

[00:18:20] Cameron: on. What? What am I sup­posed to do, peo­ple? Like…

[00:18:25] Tony: Yeah, and it is dri­ven by news events. I don’t know how many fund man­agers there are around the world, and they’re all put out of the press release talk­ing about the minute allo­ca­tion changes to their port­fo­lios. It keeps the fund review in print, in newsprint, but it’s, it’s com­plete­ly use­less infor­ma­tion.

[00:18:41] Cameron: And if you look at the, the Aus­tralian share mar­ket, look at the all ordi­nar­ies, I mean, it’s had a pret­ty good cou­ple of months. I mean, three months, real­ly. I mean, we’re, we’re above where we were back at the begin­ning of May. It dropped over the course of May though, been since the begin­ning of June’s way up, dropped again at the begin­ning [00:19:00] of July, but has been up.

[00:19:01] Cameron: Con­sis­tent­ly since then, but it’s been pos­i­tive over the last three months. It almost feels like we’ve turned a cor­ner in over­all sen­ti­ment of the share mar­ket. But again, who knows? But it just goes to what you always say. Stay invest­ed. You nev­er know when the mar­ket’s turned around until you can look back at it with some, you know, ret­ro­spec­tive glass­es.

[00:19:24] Tony: Cor­rect. And, and I, you know, I won­der how much of these changes to asset allo­ca­tions are peo­ple going, shit, we’ve missed the turn­ing point in the mar­ket, quick jump in because it’s up, it’s up 10%, which is just, you know, clas­sic late to the par­ty sort of invest­ing styles. It’s a. Strange way to do it.

[00:19:41] Cameron: The All Lords is almost back to where it was six months ago.

[00:19:45] Cameron: Start­ed Feb­ru­ary at 7, It’s cur­rent­ly 4. It’s been a chop­py ride, but you know, with, uh, the bot­tom of the mar­ket in the last six months was in March 7 it’s [00:20:00] way up since then. So, you know, all the peo­ple that sort of capit­u­lat­ed in March, April, May, June have missed out. At this stage on a very nice run.

[00:20:12] Cameron: Any­way.

[00:20:13] Tony: Yeah, they’ll be back. That run of the 10 or 20 per­cent, they’ll come back. Yeah. Hel­lo, Alex.

[00:20:19] Cameron: What do you have for us today as our offi­cial read­er of ques­tions? Yes.

[00:20:25] Alex: Thank you. I have a ques­tion from Jeff. So he says, good morn­ing. Kung Fu mas­ter cam. I hope you and your fam­i­ly are doing well. A pod­cast ques­tion from a begin­ner or, or alter­na­tive­ly hands off invest­ment per­spec­tive.

[00:20:39] Alex: There is often talk in invest­ment cir­cles about the val­ue of ETFs, a great place to start. Or alter­na­tive­ly, oh yeah, to set and for­get invest­ing. Why does there seem to be no dis­cus­sion about LICs or maybe LITs? I lis­ten to Mar­cus Padley and also Equi­ty Mate’s finance pod­casts. While these pod­casts are very high lev­el, no sys­tem, they [00:21:00] will often talk about the val­ue of ETFs.

[00:21:02] Alex: Same with mar­ket index and NAB trade newslet­ters, LICs and LITs, def­i­nite­ly secret squir­rel stuff. I remem­ber TK talk­ing about includ­ing licks in his will. Lin­da and I did sim­i­lar when we redid our will. Is it because of per­for­mance, fees, unfranked div­i­dends, some­thing else, all of the above? Just check­ing and always learn­ing more.

[00:21:21] Alex: QAB is def­i­nite­ly the right place for that. Thanks again to you and TK for all your great work. I add my QAB sub­scrip­tion to my port­fo­lio of sol­id invest­ments. Oh, that’s

[00:21:31] Tony: nice, Jeff. Yeah. Thanks, Jeff. Yeah. I mean, we’ve, we’ve spo­ken about this before over the years, but it’s worth revis­it­ing, I think. So the cou­ple of ques­tions in there, why do peo­ple kind of focus on ETFs rather than LICs or some­times LIF, LITs and I’ll, until I talk about the dif­fer­ence between LICs and LITs, I’ll just refer to them as LICs.

[00:21:52] Tony: ETFs.

[00:21:56] Tony: suit index style invest­ing because [00:22:00] their fees are very, very low and they’ve kind of, there’s enough expe­ri­ence in run­ning them now that they can mim­ic an index and be run quite cheap­ly. So that’s real­ly what they’re good for. Where­as an LIC tends to be for an active man­ag­er, so that they can raise some mon­ey, um, and then invest it, they’ll charge high­er fees, uh, because they’re, they’re doing more work, both them­selves and in terms of, you know, vis­it­ing com­pa­nies and ana­lyz­ing reports and, and data and then buy­ing and sell­ing shares, so their fees are always high­er.

[00:22:35] Tony: And gen­er­al­ly they charge per­for­mance fees as well, which ETS don’t. So often­times it’s, uh, it’s the old two and 20 mod­el though. No one charges 20% these days that I know of. It’s usu­al­ly around 1 to 2% for man­age­ment fees, and then usu­al­ly about 10%, some­times a bit more, about per­for­mance of the, of the LOC.

[00:22:56] Tony: Why, why are those two struc­tures? That [00:23:00] way, why have they evolved that way? Well, LICs, the big dif­fer­ence between ETFs and LICs is that LICs are what’s called a closed end fund. So in oth­er words, if you’re, if you’re rais­ing mon­ey, if you’re start­ing an LIC, you raise all the mon­ey, you put it into a fund, and then you issue shares to peo­ple, and if they want to sell their shares, they find some­one else to buy them, which is what the stock mar­ket.

[00:23:24] Tony: does for them. An ETF, which is an open end­ed fund, works dif­fer­ent­ly. So if you buy shares in an ETF, they’ll go out and take your mon­ey and buy more shares for the index fund that they’re, they’re run­ning. And if you sell shares in an ETF, they’ll have to sell under­ly­ing shares to pay you out. So the, the rea­son why LICs tend to attract active fund man­agers is because when the mar­ket turns down, even though the share price for the LIC might drop as peo­ple sell shares, The under­ly­ing funds aren’t changed.

[00:23:53] Tony: They can just sim­ply sit there and write it out and then start to rein­vest when the mar­ket looks like it’s going to turn up again. [00:24:00] Where­as an ETF will get small­er and small­er and small­er as the mar­ket drops and peo­ple get scared and they sell their, their stakes in the, in the ETF. So that’s prob­a­bly the main rea­son why LICs and ETFs have evolved to one be pas­sive and the oth­er be active.

[00:24:16] Tony: That, that closed end­ed fund thing is a, is a big deal. And that’s why I pre­fer LICs because I’d rather see the, the fund stay intact when the mar­ket’s turn­ing down this again, the same dis­cus­sion we had before about always being invest­ed. Because if you are hav­ing to sell out, if you’re an ETF and you’re sell­ing out as the mar­ket drops because peo­ple are redeem­ing it’s, it’s, you know, it’s the worst time to sell.

[00:24:38] Tony: You don’t want to sell when the mar­ket’s drop­ping. You want to sell, you know, at the top if you can, but you cer­tain­ly don’t want to sell at the bot­tom. So. That’s, that’s a prob­lem I think with ETFs. But hav­ing said all that, if all you want to do is, is invest in an index fund, then an ETF is the way to go because they gen­er­al­ly charge like about 0.

[00:24:58] Tony: 25% [00:25:00] as a man­age­ment fee. So there’s not too much fric­tion on, on the index like returns. And. The ETF mar­ket now is so large, large­ly dri­ven, pio­neered by the US, but, but now in Aus­tralia as well, you can pret­ty much buy an ETF for almost any sort of index you want to, like a tech index or the Aus­tralian index or the NASDAQ or com­mod­i­ty index, like gold index or what­ev­er.

[00:25:24] Tony: And it won’t cost you very much to invest in those things. So that’s attrac­tive to some peo­ple as well. They might decide that they want to invest in tech stocks, but don’t want to do the work to work out which ones to buy. They just buy them all and pay a low fee to do it. So, so that both ETFs and LICs have ben­e­fits.

[00:25:42] Tony: The oth­er thing to say then is the dif­fer­ence between LICs and LITs. So list­ed invest­ment com­pa­nies ver­sus list­ed invest­ment trusts. The com­pa­nies. Com­pa­nies, and when they have a tax event, so they’ve earned income either through div­i­dends or sell­ing shares, they pay com­pa­ny tax at the com­pa­ny [00:26:00] tax rate of 30%.

[00:26:01] Tony: And being a com­pa­ny, it’s up to the direc­tors as to when and how much they pay out. In prof­its or pay out in div­i­dends of their prof­its, where­as a list­ed invest­ment trust, being a trust means that you don’t own shares in a com­pa­ny, you own units in a trust. And just like a fam­i­ly trust, if any­one out there has one, they would know that every year, all of the income is dis­trib­uted in a trust struc­ture.

[00:26:27] Tony: And so there’s no abil­i­ty to con­trol the flow of the prof­it out of the trust. It just has to all go. And then once you receive it and If they’ve earned frank­ing cred­its, if the trust has earned frank­ing cred­its, they also get dis­trib­uted to the trust, the unit trust hold­ers, and then it’s up to them as to what their tax rate is, depend­ing on whether it’s a per­son­al tax rate, which could be high or could be low.

[00:26:52] Tony: Or whether the super­an­nu­a­tion fund or some­thing else has bought the units in the trust for them. So again, there’s swings and round­abouts with [00:27:00] both of those. I tend to favor again, list­ed invest­ment com­pa­nies, because hav­ing that dis­cre­tion to con­tin­ue to pay div­i­dends, even if they don’t have the prof­its to sup­port them, like they can dip into reserves and retain prof­its if they want to.

[00:27:14] Tony: If direc­tors feel that it’s a bit of a one off bad year this year, and they’re going to still pay a div­i­dend, they can do that. Where­as a list­ed invest­ment trust, if it earned no mon­ey that year, you don’t get any income from it. So it’s, it’s more volatile from that respect. And you might get a lot of income one year, when you, which you did­n’t plan off, plan on, and that could push you into a high­er tax rate as well.

[00:27:33] Tony: So there are impli­ca­tions for that kind of dif­fer­ence in the struc­ture. So I pre­fer LICs because they’re closed end­ed. And they don’t have to sell in a down­turn. And because the direc­tors can decide when and how much to pay div­i­dends, regard­less of how much mon­ey that they’ve made that year. They obvi­ous­ly can’t pay div­i­dends if they’ve got no retained prof­its and they’ve made no mon­ey that year.

[00:27:54] Tony: But gen­er­al­ly, a well man­aged list­ed invest­ment com­pa­ny will keep retained prof­its to get it through the So they can still [00:28:00] keep pay­ing div­i­dends, much the same as any sort of list­ed com­pa­ny that’s well man­aged will do as well. So that’s the dif­fer­ence. ETFs are the fla­vor of the month and they, and, you know, if we think about the invest­ment lad­der, the buy­ing an index fund is.

[00:28:16] Tony: Often­times peo­ple’s first step into the share mar­ket and they may go no fur­ther because it’s a great way to invest for the long term. If you’re like Alex’s age, you can buy an index fund and hold it for the rest of your life and you’ll get at least the mar­ket return. Or if you’re putting it into your will, you have to be a kid who may not under­stand invest­ing.

[00:28:34] Tony: It’s not a bad thing to do as well. And that’s what War­ren Buf­fett is doing. Although I don’t think he lists, he does­n’t call it an ETF, he calls it an index fund, which they do in the States. Uh, so yeah, ben­e­fits for both. Um, I’m attract­ed to the clos­ing struc­ture of an LIC and also to, because they’re man­aged by active man­agers, they, the good ones do out­per­form the mar­ket.

[00:28:56] Tony: And we’ve had Wash­ing­ton sold Pat­ter­son­’s on before [00:29:00] I’ve spo­ken, I’ve spo­ken about Wil­son asset man­age­ment and their sta­ble of LICs of, of recent times, even though they claim a good long term per­for­mance of recent times, they’re more focused on pay­ing out a high div­i­dend. Ratio, which will suit retirees, for exam­ple, I think that year last time I had a look was about 7% plus frank­ing cred­it.

[00:29:19] Tony: So their cap­i­tal appre­ci­a­tion has­n’t been that great, but they cer­tain­ly do do a good job of giv­ing retirees a real­ly good div­i­dend, frank div­i­dend to live off.

[00:29:33] Cameron: Would Berk­shire be a, an LIC, an exam­ple of an LIC?

[00:29:36] Tony: No, it’s a good ques­tion. Actu­al­ly, it’s, it’s gen­er­al­ly seen as a con­glom­er­ate because it actu­al­ly owns oper­at­ing com­pa­nies as well.

[00:29:44] Tony: So, so the. The sec­tion of Berk­shire Hath­away, which just buys shares on the U S stock exchange, which is only about, I think about a quar­ter of their busi­ness. Yeah. You LLC. That’s the same sort of thing, but they do own the rail­roads and the insur­ance busi­ness­es, et [00:30:00] cetera. So it’s more like a West farm.

[00:30:02] Tony: It’s their con­glom­er­ate. Yeah. Okay.

[00:30:04] Cameron: Fair point. All right, Alex, time for you to take a test now. Are you ready? Yep. Yeah. Ready? I got­ta make you say, Oh, okay.

[00:30:17] Tony: You passed the test. Thank you. I

[00:30:19] Alex: was read­ing up on them, the dif­fer­ence between ETFs and LICs, and it was say­ing that it was on Canstar’s web­site, I think.

[00:30:27] Alex: And they were say­ing that more often than not, LICs have a like, they were talk­ing about net asset val­ue and that it’s pret­ty sim­i­lar for an ETF to its net asset val­ue. But for most LICs, they’re quite a bit low­er than the net asset val­ue. I don’t know. Dad, does that make sense?

[00:30:45] Tony: Yeah, thank you. It does. No, it’s one, one ele­ment I neglect­ed to men­tion, but yes, they, it’s, it’s a com­plex sort of struc­ture in some respects, even though it’s a sim­ple premise, but they have what’s called a mar­ket mak­er sit­ting between the per­son [00:31:00] buy­ing and sell­ing the shares and the under­ly­ing shares being bought and sold and that, that mar­ket mak­er will always trade so that if the, if the ETF is say, if the, if all of the shares in the ETF were divid­ed by all of this, the shares, Sor­ry, if all of the assets in the ETF, so the com­pa­nies they bought shares in, is divid­ed up by the num­ber of peo­ple who own shares in the ETF, then the val­ue of the assets they bought will equal the val­ue of the shares on issue, if that makes sense.

[00:31:31] Tony: And there’s actu­al­ly some­one sit­ting in between active­ly doing that. So it’s very rare to see an ETF. Get out of align­ment with what the under­ly­ing val­ue of the fund is in terms of its share price, but an LIC because it’s a closed end­ed fund can trade at an asset, sor­ry, a dis­count to its. Assets that they hold or it can actu­al­ly try to the pre­mi­um to the assets that they hold and so it depends on the LIC.

[00:31:56] Tony: So that’s been a bit of a thing in the last few years [00:32:00] and peo­ple like Jeff Wil­son have been going around and buy­ing up oth­er LICs if they have a big dis­count to their assets. Because it’s, it’s buy­ing a dol­lar’s worth of assets for 80 cents, for exam­ple, and then, you know, real­iz­ing the, the val­ue of the under­ly­ing assets, either by sell­ing the shares or by putting them with one of his oth­er LICs, which don’t cre­ate a dis­count.

[00:32:21] Tony: How­ev­er, some­times his flag­ship fund, WAM, Wil­son Asset Man­age­ment Trades, are the A pre­mi­um to your under­ly­ing assets, and that’s a fac­tor of the fact that it pays a high div­i­dend yield, which is attrac­tive to some peo­ple. So they’re pre­pared to pay a dol­lar for a dol­lar five for a dol­lar’s worth of assets because they’re get­ting sev­en or 8% in the div­i­dend yield every year, which is attrac­tive to retirees.

[00:32:43] Tony: So, yeah, good point, Alex. ETFs should always trade at their asset val­ue and LICs can trade above or below or at their asset val­ue. And yeah, for a long, for a long time, I haven’t done it for a while, but for a long time, I used to buy into those [00:33:00] LICs that were under­val­ued and wait for them to return that kind of the per­for­mance back to their asset val­ue.

[00:33:08] Tony: And that can be done in a num­ber of ways. It can just be done over time because the mar­ket has­n’t liked them for what­ev­er rea­son, like the assets that they hold are out of favor. They might be, you know, they might hold coal stocks or oil stocks or some­thing like that. But over time, the, the. You know, even those become attrac­tive as their per­for­mance improves.

[00:33:27] Tony: It could be that they’ll get bought out by some­one like Jeff Wil­son, who will buy out the LIC, and then he’ll have to pay a dol­lar for the under­ly­ing assets, or, that’s not true, sor­ry, he might, he might pay the cov­er price, so 80 cents in the dol­lar, but then he’ll You know, sell the assets and return them to the oth­er share­hold­ers or mix­ing them with one of his funds.

[00:33:47] Tony: So you get, you get the extra 20% back through that or some­times in a fair­ly extreme case, the fund man­ag­er just gives up and they sell the, they sell the under­ly­ing assets and make a return of cap­i­tal. So you get your. [00:34:00] 20% under­per­for­mance back that way. But, but gen­er­al­ly it’s, it’s not a bad way to invest, espe­cial­ly if you’re start­ing out, have a look at ICs, have a look at Morn­ingstar every month, we’ll put out a report, which will tell you infor­ma­tion about the LIC, like its size, how it invests, and then give you its NTA, which is its next tan­gi­ble assets, which is, which have to be report­ed at least month­ly.

[00:34:24] Tony: I think most LICs, a lot of LICs report them or some LICs report them week­ly. Every­one has to report them month­ly, and I’ll also tell you how much of the pre­mi­um or dis­count their share price is to that tan­gi­ble asset. And you can use that as a great start­ing guide to see if you, if you can find a a good LIC trad­ing beneath its asset val­ue and whether you want to invest in it.

[00:34:47] Tony: So the bad way to start an invest­ment invest­ing career. Well, I just want­ed

[00:34:50] Alex: to ask with, so you’re say­ing kind of peo­ple start­ing out and then peo­ple who are poten­tial­ly retir­ing or putting like divid­ing up a will or some­thing like that, [00:35:00] but what about kind of mid career investors who might be doing QAB?

[00:35:03] Alex: Would there be a rea­son why they would also want to invest in LICs?

[00:35:07] Tony: Yes. Okay. So I, I’ve used those exam­ples as just gen­er­al­ly peo­ple who might find them attrac­tive, but any­one can find an LIC or an ETF attrac­tive. So peo­ple who are doing, you know, might decide that they, they like the idea of buy­ing an asset for 80 and a dol­lar, and they might look at some LICs as well as QAB as a way of.

[00:35:28] Tony: I’ve tried to spot val­ue in the mar­ket, so they could do that. I know a lot of our lis­ten­ers are busy pro­fes­sion­als and they might decide that I know I’m going to be busy for the next year or so, so I don’t have time to do QoV. So they might buy a port­fo­lio of LICs, which is what I did when we went over­seas once that there was a, there was anoth­er tax ben­e­fit of doing it, but I bought LICs that were under­val­ued when we went over to Cana­da.

[00:35:56] Tony: So there are some rea­sons to do it, you know, for per­son­al [00:36:00] rea­sons, but no, it’s cer­tain­ly some­thing any­one can do at any stage in their life. I guess the why I said it would suit some­one start­ing out is because of that Morn­ingstar report that comes out every month and says, Hey, here are all the under­val­ued assets in the list of invest­ments.

[00:36:16] Tony: Com­pa­ny space world. And so if you’re a val­ue investor, it’s a real­ly easy way to start get­ting your head around buy­ing, buy­ing an asset for 80 cents in a dol­lar. Where­as, you know, using QIV, I guess QIV because we’ve sys­tem­atized that makes it easy. But if you, you know, if you did­n’t have QIV and you’re try­ing to go out into the mar­ket and val­ue indi­vid­ual com­pa­nies and work out their intrin­sic val­ues, that’s a bit, a bit more dif­fi­cult to do than just look­ing at that.

[00:36:43] Tony: Morn­ingstar report and find­ing a, an LIC that’s large and has been around for a long time that’s trad­ing at a dis­count to its assets. Well, sounds good. Thank you.

[00:36:53] Cameron: And remind me why we don’t include LICs on our buy lists now, Tony. We did at one point and [00:37:00] then we stopped doing it.

[00:37:01] Tony: Yeah, because one of our key met­rics is oper­at­ing cash flow and ETFs, the oper­at­ing cash flow looks like it’s the buy­ing and sell­ing of the ETF.

[00:37:10] Tony: So like if they have lots of peo­ple buy­ing into the ETF, that oper­at­ing cash flow looks strong. And if there’s, if they have lots of redemp­tions, their oper­at­ing cash flow can be neg­a­tive. So that did­n’t suit. And the sim­i­lar thing for LICs. It was­n’t that they were, the buy­ing and sell­ing of the shares does­n’t affect the oper­at­ing cash flow, but the oper­at­ing cash flow can, can be affect­ed by things like, you know, a cap­i­tal return for one of the stocks that they hold or bumper div­i­dends being paid that year or some­thing like that.

[00:37:39] Tony: So, it’s not like the oper­at­ing cash flow for our cof­fee shop. Where if oper­at­ing cash flow is going up, it gen­er­al­ly means that the shop is grow­ing and, and doing well. For a list of invest­ment com­pa­nies, it can be ad hoc rea­sons for the oper­at­ing cash flow going up or down. Right.

[00:37:54] Cameron: So it’s hard to real­ly mea­sure.

[00:37:56] Cameron: Yeah.

[00:37:58] Tony: You can mea­sure the val­ue [00:38:00] of the com­pa­ny much more eas­i­ly because like I said every month, they tell you what the under­ly­ing assets are worth. The oper­at­ing cash flow can go up or down depend­ing on whether they bought stocks or they’re pay­ing div­i­dends, what time of year is it with div­i­dends com­ing in or going out or what­ev­er.

[00:38:12] Tony: So, and real­ized gains and unre­al­ized gains. So, you know, if they hap­pen to sell a lot of stocks, This quar­ter, then oper­at­ing cash­flow is going to look real­ly good in a list­ed invest­ment com­pa­ny, but that’s dif­fer­ent to, like I said, a cof­fee shop type com­pa­ny, which if they have high oper­at­ing cash­flow, it prob­a­bly means they’ve sold a heck of a lot of cof­fee, which is great for the com­pa­ny.

[00:38:33] Tony: Yeah. Yeah. Thanks.

[00:38:36] Cameron: Thanks, Alex. Great, Al. Talk to you next week. See you next week.

[00:38:40] Tony: Thanks, hon. Bye. Bye. All right. All right. That was a good ques­tion. It was a good ques­tion. Talk­ing about those things. Yeah. Thanks, Jeff. Yeah, and I guess we, we haven’t spo­ken about the invest­ment lad­der for a long time, but LICs were on the invest­ment lad­der.

[00:38:55] Tony: So like I said before, it’s a good way of learn­ing about val­ue in the mar­ket and I guess [00:39:00] about qual­i­ty because some­times things are cheap for a rea­son. So if an LIC is trad­ing it at a dis­count, it might be because the under­ly­ing Uh, stocks are all going down, so the share price is ahead of the, the assets because the assets are only report­ed month­ly.

[00:39:15] Tony: Um, so that’s, you know, some­thing to learn. Uh, and then we also talked about, you know, putting togeth­er your own, um, index funds. So gen­er­al­ly, on the, in the Aus­tralian scene any­way, the, the Ord, Ordi­nary’s index is is heav­i­ly weight­ed towards the top 10 or top 20 stocks in the mar­ket. And if you want­ed to put togeth­er your own index fund, you just buy those.

[00:39:38] Tony: And then every quar­ter say, or every half, maybe half when the results come out, you know, rebal­ance it, check, check to see if that com­pa­ny is still in the top 10 or top 20 and sell it. If it’s not by the replace­ment, if it is, and You might find that’s even cheap­er than pay­ing the man­age­ment expense ratio on a, on an ETF to track the index.

[00:39:58] Cameron: Awe­some, Tony. Right. [00:40:00] Do you have any oth­er news items you want to talk about?

[00:40:02] Tony: No, I’m good. I’ve got a pulled pork to do.

[00:40:06] Cameron: And which pork are you pulling this week, Tony? Endeav­our Grill. Which was a request from…

[00:40:12] Tony: Cor­rect. Love the request.

[00:40:14] Cameron: Yes. Thank you to who­ev­er’s request that was. I can’t remem­ber, but it came in late today.

[00:40:19] Tony: Oh, I can’t see it. Sor­ry. See if it’s… I don’t think I’ve got their name. No, I’m sor­ry. Any­way, it’s a good request. I like get­ting requests for pulled porks. How­ev­er, Endeav­or Group isn’t on our buy list, so I’ll just high­light that now. And share price is going down, so do not hold me respon­si­ble for this, this com­pa­ny going back­wards after a pulled pork.

[00:40:39] Tony: But yeah, an inter­est­ing com­pa­ny. Endeav­or Group, code is EDV. It’s Aus­trali­a’s prob­a­bly largest Pub oper­a­tor. There is a com­pet­ing com­pa­ny, ALE, which also has lots of pubs, but I think this will be the largest. Big own­er of pubs. It also owns the old, or the ex Wool­worths liquor [00:41:00] busi­ness. So it has Dan Mur­phy’s out­lets and BWS, Beer, Wine and Spir­its out­lets amongst oth­ers.

[00:41:05] Tony: It owns a cou­ple of, owns three winer­ies. And a cou­ple of bot­tling plants, sor­ry, it owns fine wine, fine, let me start again. They prob­a­bly are fine wines, but it owns five winer­ies, I meant to say, three bot­tling plants, 260 odd Dan Mur­phy’s and over 1, 400, so it’s quite a large com­pa­ny. And yeah, so 349 hotels and inter­est­ing back­ground to this busi­ness, which back when I was work­ing for Coles­mar.

[00:41:32] Tony: I have a. I was exposed to it. So I know a lit­tle bit about it. So 15, 20 odd years ago, the super­mar­kets were get­ting into the liquor game and they’d seen enough evi­dence over­seas to say that in Europe and the US to say that if the super­mar­ket sold liquor in the store, it was obvi­ous­ly prof­itable and it would be a boost to the super­mar­ket sales.

[00:41:55] Tony: How­ev­er, licens­ing laws did­n’t allow that in, in Aus­tralia. [00:42:00] So they. Kind of evolved to have a busi­ness mod­el, which was to have the, the Liquor­land or the BWS right beside the super­mar­ket. So there were some syn­er­gies, I guess, in, in oper­at­ing the two com­pa­nies sep­a­rate­ly. But they, but they kind of got around the licens­ing laws, well not got around them, they, they max­i­mized their oppor­tu­ni­ty by putting the two stores near each oth­er.

[00:42:22] Tony: So if you were going gro­cery shop­ping and want­ed liquor. You just have to go out one door and in the oth­er, the oth­er issue in Aus­tralia, which can be dif­fer­ent to over­seas is that the liquor licens­ing laws here say that the per­son sell­ing the liquor has to be of legal age. So at least 18 in most States, I think, or maybe all States.

[00:42:40] Tony: And of course, super­mar­kets like to keep their costs low. And so the aver­age check­out check 15 years ago in the super­mar­ket was a school age. They, they weren’t. Even, they, they weren’t able to sell liquor, even if you could do it through the mar­ket space. And Coles and Wool­worths weren’t about to hire a whole bunch of 18 year olds on their check­outs to, [00:43:00] to be able to sell liquor when they were pay­ing the 15 year olds a lot less.

[00:43:04] Tony: So as a whole, all of this sort of busi­ness has been put togeth­er and dri­ven by the liquor licens­ing laws. So 15, 20 years ago, The Coles and Woolies had grown their liquor busi­ness­es to be large busi­ness­es and we’re always look­ing to expand and Woolies, I guess. Got a bit of a toe­hold or expand­ed into the mar­ket by buy­ing the Dan Mur­phy brand, which is the big box retail­ing out­lets, pio­neered in Vic­to­ria and then moved around to the rest of Aus­tralia.

[00:43:32] Tony: And then Wool­worths, sor­ry, Coles very soon after­wards got into First Choice Liquor, which was their big box liquor offer­ing. How­ev­er, in states like Queens­land, they were thwart­ed because the liquor licens­ing laws up there, this is just an exam­ple, it may have been the case in some of the oth­er states as well, but in Queens­land, you had to be under the pub­lic, a pub­li­can’s license to be able to sell.

[00:43:58] Tony: liquor through a bot­tle [00:44:00] store. So that’s why you have dri­ve in bot­tle shops and bot­tle shops next to pubs in Queens­land. And a pub could have up to three stand­alone bot­t­los in the local area under the, under its license. And that was the only way you could open a bot­tle shop in Queens­land. And so Coles and Wool­ley start­ed buy­ing pubs and then open­ing, you know, a Dan Mur­phy’s or three Liquor­land stores in the local area.

[00:44:25] Tony: using that, that hotel’s license. And around that time, they went, Oh my God, look how prof­itable these pubs are, large­ly because they have pok­er machines. And so that became a very prof­itable busi­ness. Um, and yeah, peo­ple may have read in news­pa­per arti­cles about pubs trad­ing for enor­mous prices. Based on what you would think they’d go for and large­ly because of the pok­er machine licens­es that they get trad­ed with them.

[00:44:51] Tony: Not always, but that’s, but you know, peo­ple are pay­ing 20 or 30 mil­lion for a hotel that isn’t real­ly jus­ti­fy­ing it based on the [00:45:00] pub­lic bar trade, but it is if you take into account the pok­er machines. So Coles and Woolies went on this ram­page across Aus­tralia and start­ed buy­ing hotels up and loved the pok­er machines side of things that became quite prof­itable for them.

[00:45:14] Tony: Wool­worths. Again, we’re pio­neer­ing in a day or the chain oper­a­tor, the chain of pubs oper­at­ed by a guy called Bruce Math­e­son in, he was in Vic­to­ria and they came up with the imag­i­na­tive joint ven­ture name of brew and woo Bruce, Bruce and Wool­worths to joint­ly run the, the hotel chain. And that was smart of them because they got to use some­one who was an own­er founder, which we.

[00:45:39] Tony: Talk about a lot in QAV, have a lot of expe­ri­ence in the game and always got to pick his brains and use his expe­ri­ence to help shape their busi­ness. And it was very prof­itable and Coles put togeth­er a big net­work of hotels and pok­er machines under the Aus­tralian, I think it’s called the Aus­tralian Leisure, A L E, I can’t remem­ber what the E’s were, Aus­tralian Leisure and Enter­tain­ment Group, I think.[00:46:00]

[00:46:00] Tony: So sim­i­lar sort of thing. Then in prob­a­bly the last sort of five or so years. The mums and, mums and fam­i­lies who shopped at Wool­worths and Coles start­ed to say, hey guys, we’re not com­fort­able with you being so heav­i­ly invest­ed in pok­er machines, what are you going to do about it? And so Coles spun off its hotel chain into a sep­a­rate­ly list­ed vehi­cle, actu­al­ly quite a while ago, they did it first, and then in 2021, Wool­worths, spun off their hotel chain and the Dan Mur­phy’s and BWS’s and all the rest of it into this com­pa­ny Endeav­or Group and Wool­worths still retained 14.

[00:46:42] Tony: 5% invest­ment in it and they still have The invest­ment with Bruce, the joint ven­ture with Bruce Math­e­son, I think, and that gives them, and that’s also been fold­ed in, so they’ve got more than 14 and a half per­cent of this com­pa­ny, but it has tak­en a bit of the heat off the Wool­worths brand in [00:47:00] terms of being respon­si­ble for prob­lem gam­bling in Aus­tralia.

[00:47:04] Tony: And I would­n’t be sur­prised if over time they may sell down their stake as, as even more heat in the ESG world is applied to them on this issue. But that’s, that’s by way of back­ground. That’s, that’s how Endeav­or Group came to be. There’s a cou­ple of oth­er issues that… That peo­ple should be aware of and again, if they read the paper, which I’m sure our lis­ten­ers do, New South Wales has changed state gov­ern­ments and they’ve announced that their pol­i­cy is to tri­al cash­less gam­ing cards in pokey places.

[00:47:33] Tony: The, one of the gov­ern­ment, might be AUSTRAC. One of the gov­ern­ment depart­ments has said that Casi­nos aren’t the real bad guys in the mon­ey laun­der­ing world these days, it’s pok­er machines. So there’s a bit of a focus on pok­er machines from that aspect. And the Vic­to­ri­an gov­ern­ment, which is prob­a­bly the biggest risk, has come out, and I think from mem­o­ry said some­thing like, you have to use a card in a pokey venue and you can only lose a cer­tain amount per day.

[00:47:58] Tony: A hun­dred bucks I think it is, or it might [00:48:00] be a thou­sand per day. So any­way, there’s going to be a cap on, on pok­er machine rev­enues in the works for a long time, but it’s, it’s sort of slow­ly com­ing in as part of the gov­ern­men­t’s gov­er­nance cul­ture in Aus­tralia now. When the Vic­to­ri­an gov­ern­ment announced their, their Mut­ed changes, the Deva­Group share price dropped and it’s been going down pret­ty much ever since.

[00:48:23] Tony: So that’s a big risk for the com­pa­ny. But if you go to their web­site, they don’t talk about pok­er machines. It’s all about how great they are in the com­mu­ni­ty and how their core busi­ness prin­ci­ple is get­ting peo­ple to meet togeth­er and enjoy their com­pa­ny and all that. And that’s all fine. I did. Try and go through the annu­al report.

[00:48:39] Tony: It did­n’t break out pok­er machine rev­enue or prof­it, but it did break out hotels, which is about a third of their prof­its. Pok­er machines have to be a large part of that, that, so you’ve got to say maybe 15 to 20 per­cent is at risk if, if there is a clamp down on pok­er machines in Aus­tralia. But it might be even worse than that, because [00:49:00] if peo­ple don’t have a rea­son to go to the pub, they might revert back to how they used to be, which is, you know, where you go to have a beer after the crick­et or what­ev­er.

[00:49:08] Tony: Or after work, and the pubs become much less valu­able on that basis and you know, all the mon­ey they’ve paid and sit­ting on and sit­ting on that bal­ance sheet for these pubs and the high val­u­a­tions get marked down. So, that’s a, that’s a long bow I’m draw­ing and it’s prob­a­bly a long time into the future, but it is a risky, it is a risk for this com­pa­ny.

[00:49:27] Tony: Um, to go through the num­bers, which is I guess what we’re here to do, and this is not a QAB stock. It is a large stock, so 31 mil­lion aver­age dai­ly trad­ed, and I’m doing the analy­sis of the share price of 6. 10. And that’s pret­ty high when you com­pare it to IV1 of 1. 57 and IV2 of 2. 97. So it’s two times our intrin­sic val­ue, our most gen­er­ous intrin­sic val­ue val­u­a­tion for the com­pa­ny.

[00:49:54] Tony: How­ev­er, it’s less than the con­sen­sus tar­get, so the ana­lysts still like it. It’s a bor­der­line star stock [00:50:00] in Stock Doc­tor, so it gets a point for that. The yield­’s rea­son­able at 3. 6%, but it’s not above the mort­gage rate. So we don’t score it. Stock doc­tor health is, finan­cial health is strong and steady. So it scores for that.

[00:50:13] Tony: If this com­pa­ny is almost 20 times, which is quite large, but fun­ni­ly enough, it is the low­est since list­ing in 2021. So there’s some­thing five halves of data there, and this is the low­est. And that’s the inter­est­ing thing about these com­pa­nies. I’ve always. To me, to my mind, and I might be, I might be the only per­son who thinks this, com­pa­nies like this are a bit of a dead zone for me, like they’re trad­ing on a high peer, they’re fac­ing risks, they’re not going to grow real fast because they’ve pret­ty much soaked up all the pubs in, in Aus­tralia.

[00:50:43] Tony: They’ll prob­a­bly get organ­ic growth from here in terms of liquor sales and things like that. So, you’re pay­ing a kind of a growth. So the pre­mi­um pay for this com­pa­ny, but it does face risk and it’s not real­ly grow­ing. In fact, the con­sen­sus fore­cast is for this com­pa­ny’s earn­ings per share to fall [00:51:00] by 2% next year.

[00:51:01] Tony: So it’s not even, not even a low growth com­pa­ny. It’s kind of fall next year, accord­ing to the, to the ana­lyst. One bright spot is that Bruce Math­e­son sits on the board. So. It did­n’t come out in the Stock Doc­tor num­bers that there was an own­er founder and direc­tors, accord­ing to Stock Doc­tor, hold 2. 7%. But I think that’s because Mr.

[00:51:22] Tony: Math­e­son will have a share­hold­ing in one of the joint ven­tures, this Bru­in Wu joint ven­ture, which is now called some­thing dif­fer­ent­ly, which is also a share­hold­er in Endeav­or Group. So I think he’s kind of A cou­ple of lay­ers removed, but he’s on the board and he’s still there. So stock doc­tor, the, the bar list won’t mark it down as an own­er founder, but like, I think it kind of does have an own­er founder, but it’s cur­rent­ly a three point trend line sell.

[00:51:44] Tony: So there’s no rea­son to be in a hur­ry to buy the stock any­way, all in all qual­i­ty score of four out of 15 or 27% and a QAB score of 0. 02. So what do I like about it? It’s got Bruce Math­e­son on the board and he’s a very suc­cess­ful [00:52:00] pub own­er. And. And, and this, this type of busi­ness is a bit like super­mar­kets, actu­al­ly, they’re known as defen­sive earn­ing.

[00:52:08] Tony: So if we do go into a reces­sion, peo­ple will still drink. It’ll be the last thing they cut their spend­ing on, you know, eat­ing and drink­ing. So the, the, the com­pa­ny’s sales won’t crash, but they won’t grow quick­ly either. And that’s why peo­ple bid up the price on com­pa­nies like this, because it’s kind of seen as a safe har­bor.

[00:52:25] Tony: How­ev­er, it does car­ry the neg­a­tives of the, of the pokey leg­is­la­tion risk, which I think is, is, Is large and loom­ing for this com­pa­ny. So all in all, it’s too expen­sive and too risky for me, and I’m quite hap­py to see it not on our buy

[00:52:39] Cameron: list. What, what do you think the chances are that a few years ago, the board at Woolies is like, this Pokey’s leg­is­la­tion is com­ing down the chain, let’s get rid of it, sell it off for hun­dreds of mil­lions of dol­lars to the pun­ters, and then when it crash­es, not our prob­lem.

[00:52:58] Tony: Yeah, well I still own at least [00:53:00] 40 and a half per­cent, so I, I, I, yeah, I don’t know that it may be, that may be part of it, it was, it was cer­tain­ly the think­ing that that was going to get, help their brand, because they pump hun­dreds of mil­lions of dol­lars a year into Well, he’s the fresh food peo­ple and their brand and that, that costs them mon­ey.

[00:53:17] Tony: It would have cost them a lot more if they were then hav­ing to put a man­date over the pok­er machine, pok­er machine, you know, the neg­a­tives that go with pok­er machines that were erod­ing the spin on that brand. So it made sense to spin it off and, and dis­tance their, their rep­u­ta­tion­al risk. I’m not sure about they did it because they thought pok­ies might face stiff leg­is­la­tion.

[00:53:38] Tony: I think every­one’s thought that, so maybe, but the inter­est­ing thing I found about this com­pa­ny was they put. Dan Mur­phy’s and BWS into the mix and I would have thought, you know, they were good sol­id com­pa­nies for Wool­worths to keep it in its core busi­ness. So, um, that they may have had to sweet­en the offer to get it away to, to make it attrac­tive to insti­tu­tion­al investors by putting [00:54:00] some good busi­ness­es with some poten­tial­ly risky ones.

[00:54:03] Cameron: By the way, Woolies sold a third of their stake. That they had retained at the end of last year, they’re down to 9. 1% inter­est, accord­ing to the finan­cial.

[00:54:12] Tony: Okay. Yeah. So that’s pret­ty clear. They’re try­ing to dis­tance them­selves away from pok­er machines, whether it’s because they know there’s going to be leg­is­la­tion change or whether it’s just from a brand point of view, they’re get­ting out.

[00:54:22] Cameron: Well, thanks for that, Tony. Endeav­or group. I remem­ber when that spin­off hap­pened. I remem­ber my mum who worked at Big W got some shares. I think all of the, well, if you own a Woolies share, you got an Endeav­or share at the time. Cor­rect. Yeah.

[00:54:39] Tony: Yeah. It was, it was spun off then, but exist­ing World War share­hold­ers got shares in the float as

[00:54:45] Cameron: well.

[00:54:45] Cameron: And it did, it did well for a lit­tle while. But, you know, it’s sort of, I think they launched around, list­ed around 6. 10 in 2021. Is that June 2021? By August [00:55:00] 2022, they’re up around 8. 30. But now they’re down to 6. 14, so back where they start­ed. Yeah,

[00:55:07] Tony: and prob­a­bly a rare exam­ple of a big com­pa­ny spin­ning off a sec­tion of the com­pa­ny and not doing bet­ter than the big com­pa­ny.

[00:55:14] Tony: That’s often­times why they do that. But I think the rea­son this time is just the Pock­y’s rep­u­ta­tion was get­ting too hot for Wool­worths to han­dle and they got rid of it. Yeah, so inter­est­ing com­pa­ny, inter­est­ing his­to­ry. It may do well in the future, but not

[00:55:27] Cameron: for me. Well, now we’re going to throw to the inter­view that we record­ed last week with lis­ten­er Brent Sweeney, who a few months ago went to the Berk­shire Hath­away Annu­al Gen­er­al Meet­ing in Oma­ha, Nebras­ka.

[00:55:40] Cameron: Where are you, Brent?

[00:55:41] Brent: Townsville. Townsville camp.

[00:55:43] Cameron: Mate, what’s the weath­er like in Townsville today? Oh, beau­ti­ful, mate. Hot and sun­ny. How hot? Oh, I think it’d be about 20,

[00:55:51] Brent: 27,

[00:55:52] Cameron: 28 That’s what it is in my office, right? 28. 7 degrees accord­ing to my lit­tle ther­mome­ter in here, but only 22 [00:56:00] out­side. I should be record­ing this out­side.

[00:56:02] Cameron: At least we’re not in Ari­zona, where Chris­sy’s sis­ter and broth­er in law and fam­i­ly are. I see it’s got near 50 Cel­sius in Phoenix, Ari­zona this week, up around 48, 49, like it is in Athens. Tony, we were in Athens. No, you did­n’t come to Athens. I did­n’t go, no. Where were you? I went home before that. Yeah. I don’t think Italy’s much bet­ter off, but five years ago I was in Athens, and it was pret­ty hot then, but not as hot as it is.

[00:56:30] Cameron: I actu­al­ly, I remem­ber just after we left, they had bad fires in Athens, like two weeks after we left. And they’ve got, I think there’s 80 fires around Greece at the moment they’re fight­ing. It’s a bit like an Aus­tralian sum­mer. Kind of fun­ny,

[00:56:42] Tony: isn’t it? It’s like the, the nature is, is fight­ing the virus, right?

[00:56:47] Tony: Because like, how do you solve glob­al warm­ing? One way is to plant trees. No, no, we’ll burn all those down until those pesky humans are expelled from our sys­tem.

[00:56:57] Cameron: Yeah, I think we’ve been remov­ing the trees. [00:57:00] at a rapid rate. Any­way, let’s look, the mar­ket’s depress­ing enough, Tony. We don’t need to talk about cli­mate change on top of it.

[00:57:08] Cameron: Let’s get into, before we get into the news of the week, the rea­son QAV club mem­ber Brent Sweeney has joined us today is to talk about his recent expe­ri­ence. Which if you stand up, you’ll be able to show the view­ers at home, which is just me and Tony, the Berk­shire Hath­away annu­al shoul­der, annu­al share­hold­er event, Oma­ha, Nebras­ka, USA, t shirt, the offi­cial t shirt.

[00:57:34] Cameron: Did you bring one home for Tony and I, Brent?

[00:57:37] Brent: No, this is the only sou­venir.

[00:57:39] Tony: Do you want to do the DeB­o­rah and design that? Oh,

[00:57:42] Brent: you know, every­thing, every­thing around the sta­di­um this year was, was fun. Themed and this sort of these stripes and these col­ors. So the shirt

[00:57:50] Cameron: matched every­one matched. So no, we know War­ren did­n’t cause I, we’ve seen the Berk­shire Hath­away web­site.

[00:57:56] Cameron: It looks like it was built in three. It’s [00:58:00] just a few blinds of black text on a white page and that’s it. No frills. So Brent, when was the AGM? Remind us. Ah, it

[00:58:10] Brent: was May, ear­ly May. I think it was the 5th of May, 5th of May just gone. So two, about two months ago, two and a half months ago.

[00:58:16] Cameron: And were you over in the U S for, on busi­ness or plea­sure or out­side of the Berk­shire AGM?

[00:58:23] Cameron: No,

[00:58:24] Brent: look, I specif­i­cal­ly went over there for the AGM. So I had a,

[00:58:28] Cameron: I think I had two, week and a half over there. Yeah. Just for that. That’s hard. Did you spend the whole week and a half in Oma­ha, Nebras­ka, or were you trav­el­ing around?

[00:58:35] Brent: No, trav­el­ing around. We, we, we start­ed in Vegas. That was our des­ti­na­tion. And we drove all the way from Las Vegas.

[00:58:43] Brent: Up through the Rock­ies out to Oma­ha and then came back

[00:58:46] Cameron: after the meet­ing. Who’s the oth­er peo­ple? So I took my father. My father and I went togeth­er. Fan­tas­tic. Is he a big Buf­fett and Munger fan or was he just? Tag­ging along with you recent­ly con­vert­ed him in the last few [00:59:00] years. That’s great. And it’s your first time to a Berk­shire AGM, cor­rect?

[00:59:04] Cameron: Yeah. First time. And how did you gain entry? You did­n’t buy a 400, 000 share like Tony did to get in. Did you?

[00:59:12] Brent: No, no. So I’ve been a big B share­hold­er quite some time. So I remem­ber ask­ing this ques­tion on the pod­cast, if you would have been ear­li­er in the year on how, how you do get entry. It was quite, it was quite a, quite an easy expe­ri­ence actu­al­ly.

[00:59:28] Brent: So as long as you’ve got those B shares, I think you can have one before the event on the Fri­day, you turn you, your ride, and I guess it’s called the will call area and you just show up and you present. Even on your phone, you put, you show them your trad­ing app, show them your share­hold­ing and proof id, and you’re giv­en four tick­ets.

[00:59:51] Brent: Four tick­ets all up for each, for for each

[00:59:54] Cameron: indi­vid­ual per­son. And why did you want to go to a Berk­shire Hath­away? A g m. Oh. Who does­n’t take who? Who

[00:59:59] Brent: [01:00:00] does­n’t camp?

[01:00:00] Cameron: I did­n’t until we start­ed doing this pod­cast. I was mad when he told me he went to it. What the? I thought it was just sad and lone­ly and some­thing that said lone­ly old Rich White­man did.

[01:00:13] Brent: Well, who are those Mup­pets? The two old, like,

[01:00:17] Tony: sit­ting up in the estate? Statler and Wal­dorf.

[01:00:20] Brent: Yeah, that’s it, yeah. It’s those two guys sit­ting up in front of the stage. And no, look, I, I, I’ve always want­ed to go and I, I, I find I, I guess I had every­thing lined up this year to be able to go, so I thought I’d go before these guys pass away, and I real­ly want­ed see them before, you know, we, we, we don’t have ’em here any­more.

[01:00:40] Brent: So Are

[01:00:41] Cameron: they pass away about sev­en years

[01:00:43] Tony: ago, ? Well, the way they, the way they behave, I mean, these guys.

[01:00:48] Brent: Spoke for what I think each each ses­sion went for three hours near­ly six hours and one blokes what 92 and the oth­er blokes 99 is It’s sim­ply amaz­ing that they can have [01:01:00] that sta­mi­na,

[01:01:00] Cameron: you know, present all day.

[01:01:02] Cameron: That’s what, sor­ry, sees can­dy does, keeps you awake. So the sug­ar, the C’s in the coke, keeps you up.

[01:01:10] Brent: I remem­ber the start of the meet­ing, they put on a plat­ter of coke and three lol­lies for every­one. And

[01:01:18] Cameron: instead of going to a Catholic church and get­ting the wafer and the, the wine, you get coke and can­dy.

[01:01:24] Cameron: Yeah. Did it live up to expec­ta­tions? Was it worth the trip? Oh,

[01:01:28] Tony: for sure. Yeah, for sure.

[01:01:30] Brent: Inter­est­ing. I think you get more, I found I got more out of talk­ing cups and, you know, shop­ping at all the stores and attend­ing the oth­er var­i­ous events. Sur­round­ing them, that, that, that, that was a real high­light for me.

[01:01:41] Brent: Look, most of the things that War­ren and Char­lie talk about, I feel any­one can lis­ten to the years and years of, you know, 25 years of his­to­ry of the AGMs online. So it’s very sim­i­lar. They,

[01:01:54] Tony: they, they talk very sim­i­lar, preach the same

[01:01:56] Brent: mes­sages as past years. So, but yeah, I enjoyed, [01:02:00] I’ll be, I’ll be

[01:02:00] Cameron: back

[01:02:00] Brent: again there next year.

[01:02:02] Brent: All things work

[01:02:02] Cameron: out. Wow. That’s so cool. Oh yeah. Any sur­pris­es? I’d say the high­light

[01:02:08] Brent: of my event is, that was actu­al­ly on the Thurs­day, um, Kel­ly Part­ners had a share­hold­er event for share­hold­ers. And I

[01:02:19] Cameron: went along to that and met Brett Kel­ly, the CEO of Kel­ly Part­ners. And that, that was amaz­ing, ter­rif­ic guy, a lot

[01:02:27] Tony: of insight.

[01:02:28] Brent: And he, he talks the book, the Out­siders book that we, that Tony’s often ref­er­enced, talks that book.

[01:02:36] Tony: So many ques­tions, Brent. Take us through it. You drove from Vegas. Where did you stay in Oma­ha? The thriv­ing metrop­o­lis of Oma­ha? I actu­al­ly stayed,

[01:02:45] Brent: I, I booked my accom­mo­da­tion too late. So I actu­al­ly stayed out at the casi­no on, on, at Coun­cil Bluffs.

[01:02:52] Tony: You won’t, you won’t believe this, but that’s where I stayed when I was there. Yeah. Coun­cil Bluffs. Yep. Coun­cil Bluffs, look. At the casi­no. Actu­al­ly next door to the [01:03:00] casi­no was the Hilton.

[01:03:01] Brent: My tip for adven­tur­ers who are going to go is try and book in ear­ly or there’s anoth­er

[01:03:07] Cameron: huge chain

[01:03:08] Brent: there, but expect to pay prob­a­bly 700, 800 US a night, maybe more for that, for that week­end.

[01:03:15] Brent: But if you can stay in the city. You have access to a lot more events right in those hotels.

[01:03:22] Tony: So, yeah, yeah, fan­tas­tic. So favorite stand at the exhi­bi­tion hall before the

[01:03:28] Cameron: Oh, Netschetz,

[01:03:30] Tony: so they, they, they shipped in a, not a whole

[01:03:34] Cameron: plane, but half a plane and you get to walk through

[01:03:36] Brent: it. That that was

[01:03:37] Tony: quite impres­sive.

[01:03:38] Tony: Wow. And this

[01:03:39] Cameron: is the lux­u­ry, this is the lux­u­ry pri­vate jet for hire. Jet share. For hire thing.

[01:03:45] Tony: Yeah. Jet share. Frac­tion­al own­er­ship they call it. Yeah. Which was rev­o­lu­tion­ary when it came out. Buf­fett was all over it. Mm hmm. He sold his cor­po­rate jet and bought it. Some own­er­ship in Net­Jets and I start­ed they bought either bought the com­pa­ny or bought most of the [01:04:00] com­pa­ny.

[01:04:00] Tony: Yeah. Yeah So who won the paper toss con­test? They did­n’t they did­n’t do it.

[01:04:06] Brent: Well, not that I seen any­way So what War­ren does­n’t do that any­more, and I don’t know I was­n’t maybe I was­n’t there But yeah, I did­n’t see that. Sor­ry.

[01:04:15] Tony: Yeah. Yeah, because we did­n’t have a Net­Jet jet when I was there we had the Demount­able Homes.

[01:04:20] Tony: Yes. They just bought that com­pa­ny. Yep. And, uh, that was set up to walk through and then they did the paper toss onto the front porch of the demount­able home. Yeah. That

[01:04:29] Brent: was Clay­ton Homes, so they had Clay­ton’s, that’s Yeah, they had a full size house, prob­a­bly about, uh, 150 square meter house plopped in the mid­dle of the enter­tain­ment area.

[01:04:38] Brent: Yeah, that you could walk through.

[01:04:40] Cameron: Yeah, it was impres­sive. I’ve got a I’ve got a Clay­ton’s home. It’s a town­house. It’s the house you have when you’re not real­ly hav­ing a house. Yeah, true.

[01:04:48] Tony: And what time did you get up to go from Coun­cil Bluffs to the sta­di­um in the morn­ing for the meet­ing? Well,

[01:04:56] Brent: I want­ed to get up at 3 o’clock and be there by about 4 o’clock, 3.

[01:04:59] Brent: 30, [01:05:00] 4 o’clock. My dad held me back and we got there at 6 o’clock. Oh, that’s late. Yes, it is late. So at 6 o’clock, there’s prob­a­bly about four or five entries into the CHI cen­tre. That’s what they call it. And I reck­on I would have been about 200 metres. Yeah. 200 meters back from the front door. So very, very orga­nized line up.

[01:05:21] Brent: Yeah. No, no one’s

[01:05:22] Tony: fight­ing or any­thing like that, but

[01:05:24] Brent: that was at six o’clock at eight o’clock gates open. And I had a lit­tle Wan­da behind me and this line prob­a­bly, I’d have to say it’d be about a kilo­me­ter long.

[01:05:34] Cameron: So yeah,

[01:05:36] Brent: I was wait­ing at six o’clock, but I would­n’t get a seat. So the sta­di­um holds 16, 000 peo­ple.

[01:05:42] Brent: So I was sit­ting there quite ner­vous, won­der­ing whether I’d get a seat, seat at 6 a. m. So,

[01:05:48] Tony: yeah. And what kind of enter­tain­ment did they have out­side to keep peo­ple amused at that hour of the morn­ing? Absolute­ly

[01:05:55] Brent: noth­ing. Apart from all the, all the Net­Jets peo­ple, union [01:06:00] peo­ple walk­ing around protest­ing. So gen­er­al­ly there’s always a few pro­test­ers, you know, pro­test­ers.

[01:06:04] Brent: Yeah.

[01:06:04] Tony: They did the year I was there as well. Maybe that’s why there was­n’t a Net­Jet inside the area, that they were they had a. They had a team of long horned bulls dri­ve an old wag­on up and down the street out­side, crack­ing whips and things when I was there. Right.

[01:06:20] Brent: Yeah, no, I did­n’t see

[01:06:22] Tony: any­thing. Yeah. And so you’ve got to see it inside.

[01:06:25] Tony: That’s the all impor­tant thing, isn’t it? Yeah. Not hav­ing to go across the road and watch it on the screen. Yeah, that’s right. Yeah. Good, good seats. Yeah, but we, we,

[01:06:34] Brent: we could­n’t get on the floor. There was too much of a line­up to get on the floor,

[01:06:38] Tony: but yeah, we’re about halfway

[01:06:40] Brent: up, halfway back to on the, on War­ren’s right hand side.

[01:06:44] Brent: So we, we had a good, we did have a good view.

[01:06:46] Tony: Good. Yeah. Good. And any­thing else in Oma­ha? Did you go and see his house or did you go to. Mrs. B’s Fur­ni­ture Empo­ri­um or the Steak­house he goes to. Yes, I went out to… Jew­el­ry

[01:06:58] Brent: shop por­tions. I nev­er, nev­er hit [01:07:00] a steak­house. I hit, I went out to the Fur­ni­ture Mart, Nebras­ka Fur­ni­ture Mart.

[01:07:05] Brent: And that is a sight to behold. I thought Bar­ney, you know, Bar­ney’s Com­plex­es around Aus­tralia were quite large. These places are impres­sive. And, I mean, you can buy any­thing from that place. So, unbe­liev­able. Unbe­liev­able what, what he’s, what he’s built.

[01:07:21] Tony: And it’s all on one lev­el, it’s like foot­ball field after foot­ball field.

[01:07:25] Brent: Yeah, it is impres­sive. I did­n’t go to his house. I thought that was a bit, yeah, I thought that was a bit inva­sive of

[01:07:32] Tony: his pri­va­cy. I don’t think he’d be there. He’s prob­a­bly in the, he’s prob­a­bly stay­ing in the pent­house at the hill. For

[01:07:38] Brent: sure. But I did­n’t go to his house. We went to his office. I tried to get into his office.

[01:07:43] Brent: I met him. a young girl there and I’ll try to per­suade her to at least let me in and see the plaque of where Berk­shire Hath­away is, you know, on the top lev­el. So, but no, I could­n’t do that. It’s, it’s, it’s, it’s locked down. I mean, there’s no secu­ri­ty guards there, but. It’s locked down. So [01:08:00] it was actu­al­ly fun­ny.

[01:08:01] Brent: I thought the build­ing was white, but it was, it was paint­ed black. They recent­ly did a

[01:08:05] Tony: remod­el. Wow. That’s a Kiewitz plaza from mem­o­ry, isn’t

[01:08:10] Brent: it? Yes, Kiewitz plaza. And appar­ent­ly the Kiewitz fam­i­ly have sold the build­ing. So that’s why they did a remod­el. So, so when I got there, I was a bit mad. I had to ask around, so.

[01:08:22] Brent: I did

[01:08:22] Tony: the, the 5k fun run, although I warmed it on a Sun­day morn­ing, and that was the sort of turn­ing point was Kiewitz Plaza. We all piled past Kiewitz Plaza. So did you get, did you get any­where near War­ren or Bill or any of those? No, not a chance, not a chance.

[01:08:40] Brent: The clos­est, I did try and attempt to ask a ques­tion, so they have all the ques­tion sta­tions, I think about 10 or 11 So when you,

[01:08:51] Cameron: what’s your ques­tion going to be?

[01:08:52] Cameron: Have you ever lis­tened to the QAV pod­cast? Oh, well, I was going

[01:08:55] Brent: to talk to him a lit­tle bit about val­ue invest­ing, so, but the, the [01:09:00] line­up for the ques­tions was, was crazy. There would have been about 50 peo­ple at each sta­tion look­ing to ask a ques­tion and they do a lot­tery sys­tem. So they give you a tick­et and they, they, Draw that out and that lucky per­son, that sta­tion gets the oppor­tu­ni­ty

[01:09:13] Cameron: to ask the

[01:09:14] Brent: ques­tions.

[01:09:15] Tony: And there’s a dozen or so sta­tions around the sta­di­um too.

[01:09:18] Brent: I found it inter­est­ing. There was a lot

[01:09:20] Tony: of, a lot of chil­dren or young peo­ple

[01:09:23] Brent: asked ques­tions dur­ing the meet­ing I found. There was, there was. There was a lot, a lot of young peo­ple, you know, 12, 13 year olds there. It was quite

[01:09:30] Tony: inter­est­ing. That’s great.

[01:09:32] Tony: And, and how would you describe Oma­ha, Nebras­ka to peo­ple who haven’t seen it or been there? Oh,

[01:09:37] Brent: I, I was expect­ing a small­er, a small­er lit­tle town sim­i­lar to like, sim­i­lar to Townsville, but it’s actu­al­ly got a mil­lion peo­ple there. So the actu­al city cen­ter is quite small of, you know, was­n’t expect­ing much,

[01:09:51] Tony: but yeah, I was expect­ing, of.

[01:09:53] Tony: Yeah, maybe expect­ing more.

[01:09:55] Brent: It’s a qui­et lit­tle town. It’s a qui­et

[01:09:58] Tony: lit­tle town. And it’s a, it’s a [01:10:00] kind of the cen­ter of the farm­ing sup­port ser­vices. So you see some of the big, the real­ly big com­pa­nies that sup­port farm­ing in Amer­i­ca on the sides of bill­boards and trucks and rail stock, Conag and peo­ple like that.

[01:10:15] Tony: Yeah, cor­rect. So it’s a big farm­ing cen­ter. Now, I hired a car and drove around and the only high­light I could find apart from. Nebras­ka Fur­ni­ture Mart was the Air and Space Muse­um because they used to fly the B 52s out in the Cold War. That was, that was

[01:10:30] Brent: inter­est­ing to see. What I was amazed at, and some­thing that Buf­fett talks about with Nev­er Bet Against Amer­i­ca, that opened my eyes up there, and I’ve been to Amer­i­ca, it was prob­a­bly my sev­enth or eighth time, is we, we drove from Den­ver over to Oma­ha, which is sort of a lat­er­al sort of From, from west to east and it’s, I’d say it’s 700

[01:10:50] Cameron: kilo­me­ters and it’s

[01:10:52] Brent: con­tained or just filled with flat farm­land

[01:10:56] Cameron: and it’s all irri­gat­ed and they’re every square meter of that [01:11:00] land that we dri­ve

[01:11:00] Brent: along was farm­land.

[01:11:02] Brent: You know, you had cat­tle feed lots, they’re grow­ing corn, they’re grow­ing every­thing. I found that very. Just amaz­ing that the sheer size of,

[01:11:12] Cameron: of the farm­land in that area, you know, I think they call that the Great

[01:11:15] Brent: Plains. So the way I pic­ture it is from, for exam­ple, from Bris­bane to a place called Rocky up the coast, just full of farm­land.

[01:11:23] Brent: I thought that was quite amaz­ing. Wow. You under­stand that, Ken, from Bundy, yeah? From Bris­bane all the way to Rocky flood, farm­land irri­gat­ed.

[01:11:34] Cameron: Yeah. Where­as you dri­ve, if you did that dri­ve, it’s most­ly just nat­ur­al. There is farms. I don’t know. It has it, I guess to say 85, 90% of it is just noth­ing.

[01:11:46] Brent: So the sheer infra­struc­ture in Amer­i­ca, you know, sort of opened my eyes.

[01:11:51] Brent: See­ing that part of Amer­i­ca,

[01:11:52] Cameron: the, How, how far, you know, how far advanced they are, prob­a­bly com­pared to Aus­tralian. And what did your dad think of the whole [01:12:00] thing, Brent? He’s going to kill me

[01:12:01] Brent: this, but I caught him sleep­ing dur­ing the meet­ing. He’s get­ting a lit­tle bit old, but no, he thor­ough­ly enjoyed the meet­ing.

[01:12:07] Brent: And I could just, just being present, you know, at the meet­ing. Amongst every­one else and here in War­ren life, so yeah,

[01:12:14] Cameron: he loved it as well. Get­ting a bit old. I think if War­ren and Char­lie can stay awake through it, then the rule is no one’s allowed to sleep. That’s

[01:12:22] Tony: right. I can’t believe you only bought a t shirt though.

[01:12:24] Tony: I mean, that exhi­bi­tion hall was full of great sou­venirs. Oh yeah,

[01:12:28] Brent: no, I got a cou­ple of… A cou­ple of Yeti cups, Yeti cof­fee mugs, and they had some Berk­shire emblems on them. So Yeti must have let them put their emblem on it. So I got

[01:12:36] Cameron: a few of

[01:12:37] Brent: those and hand­ed

[01:12:38] Cameron: them around.

[01:12:38] Tony: Okay. I mean, I loaded up. I bought Brooks shoes.

[01:12:43] Tony: Yeah. Yeah. Yeah. Pens from the jew­el­ers.

[01:12:46] Brent: Yeah. Well, actu­al­ly, I got the kids some Char­lie duck­ies. So, you know, lit­tle, lit­tle ducks for the bub­ble heads.

[01:12:53] Tony: Yeah. Oh, okay. Yeah. They love that. Mmm. C’s can­dy. Did you try some C’s can­dy? Yes, I did.

[01:12:59] Brent: [01:13:00] I did. It is nice can­dy, but, uh, it’s over­priced. It is

[01:13:04] Tony: expen­sive can­dy.

[01:13:05] Tony: And what about the book­store? That was, that was always a real treat for me. It was. Yeah. So I grabbed a cou­ple of books. Went back to that. Grabbed

[01:13:11] Brent: a cou­ple of books there. Most of them have been rec­om­mend­ed in the past, but all those books sold out. None, none

[01:13:18] Cameron: left on the shelf by the end of the week.

[01:13:19] Tony: All gone.

[01:13:20] Tony: Wow. Wow. Yeah. That’s, that’s a book for val­ue investors. It’s all sold out. That’s incred­i­ble.

[01:13:26] Cameron: Yeah. I won­der how many peo­ple that attend the AGM are active val­ue investors ver­sus just Berk­shire investors, pas­sive Berk­shire

[01:13:38] Tony: hold­ers? I would­n’t know. My guess would be most would be val­ue investors, not, not Berk­shire Hath­away investors.

[01:13:44] Tony: They all have to have a B share to get in, but. Yeah, I mean, it’s very expen­sive to buy an A share now. I think most of those sort of life­time Berk­shire Hath­away share­hold­ers are going to be as old as War­ren and Char­lie, prob­a­bly, or their kids.

[01:13:57] Cameron: When we hold our first QAV [01:14:00] annu­al gen­er­al meet­ing slash con­fer­ence, Tony, we’ll, you’ll be doing the paper toss.

[01:14:05] Cameron: I’ll be with Bren­t’s dad, prob­a­bly hav­ing a nap up the back while you do the Q& A. Brent! Tell us a bit about your­self. So tell us a bit about your invest­ing jour­ney. Yeah. So I come across, when I come across QAB

[01:14:19] Brent: prob­a­bly 2020 after the COVID cough, prob­a­bly in about Sep­tem­ber, I

[01:14:24] Cameron: joined up in Jan­u­ary. The

[01:14:25] Brent: rea­son I, I recent­ly read what works on Wall Street book by Jim O’Shaugh­nessy

[01:14:34] Cameron: about the same time, and

[01:14:36] Brent: it just, for me, it just clicked.

[01:14:38] Brent: I’ve read many books in the past, but Jim’s book clicked and then. I come across you guys and I said, this is exact­ly what Jim’s been talk­ing about a process sys­tem­ized with rules and adding togeth­er a lot of data.

[01:14:55] Cameron: And rank­ing, you

[01:14:56] Brent: know, stack rank­ing a list to buy from. So [01:15:00] I, then I

[01:15:00] Tony: start­ed in 2020, I’ve

[01:15:02] Cameron: been hav­ing

[01:15:03] Brent: a crack at run

[01:15:04] Cameron: since.

[01:15:04] Cameron: Yeah. It’s been a rough, rough cou­ple of years since then. How’s your port­fo­lio doing? Like at the moment I post­ed my port­fo­lio on

[01:15:11] Brent: Face­book the

[01:15:12] Cameron: oth­er day, but look, I have. We had a bad year last, I think we got

[01:15:16] Brent: 8%

[01:15:17] Tony: last, last finan­cial year,

[01:15:18] Brent: but the, the first finan­cial year, I’ll just read them out. First finan­cial year, about 21% and the sec­ond one, 35% and then

[01:15:26] Cameron: 8% last finan­cial year.

[01:15:27] Cameron: So

[01:15:28] Brent: I’ve had a good run.

[01:15:29] Cameron: We’ve had a good run. Can you come and run my port­fo­lio for me? Very good. Well done. That’s great. And what about your

[01:15:34] Tony: back­ground, Brent? What, what do you do for a

[01:15:36] Brent: crust?

[01:15:37] Cameron: Why the hell are you liv­ing in Townsville? I actu­al­ly only moved

[01:15:40] Brent: here a few weeks ago. In a pre­vi­ous life though.

[01:15:47] Brent: I used to explain to you what that is, but, but nowa­days the last four or five years, I’m actu­al­ly an oper­a­tor, machine oper­a­tor

[01:15:53] Cameron: at a coal mine down in, down in Black­wa­ter. That’s a nat­ur­al

[01:15:56] Tony: tran­si­tion. Yeah, occu­pa­tion­al ther­a­pist and machine oper­a­tor. Yeah. You get [01:16:00] to, I guess you get to do your stretch­es after every hour that you stand up and respond.

[01:16:04] Tony: They tell us to do that. I used to Black­wa­ter. I used to look after the Shell ser­vice sta­tion out there and the fuel dis­trib­u­tor in. Emer­ald. Yep. They have depos and black water. Yeah. Mm-hmm. . So are you in, is it, it’s IDE there I think from Emory, isn’t it? The under­ground coal? Um,

[01:16:18] Cameron: no, the

[01:16:19] Brent: ides a bit more south.

[01:16:20] Brent: So around black water, there’s about five, five coal mines. Big, big coal mines. You’ve got

[01:16:26] Cameron: black water to the south, which B m A owns or, or B

[01:16:30] Brent: H P owned. And to the north you’ve got Car­ra. Which are, Coro­n­a­do are, so

[01:16:35] Cameron: both open­lands open, big

[01:16:37] Tony: mines. Okay. Yeah, right. And I’ve read today that BHP is sell­ing their coal mines too.

[01:16:43] Tony: Yeah, so they’ve got, you know, just from what we hear

[01:16:45] Brent: through what BHP

[01:16:48] Cameron: announced, they’ve got a mine up for sale in Dornier, which is more up, near

[01:16:51] Tony: More­murr. Yeah, right. You’re not affect­ed by that, are you?

[01:16:54] Brent: No, no. I work there for a large con­trac­tor, so we, yeah, look, [01:17:00] we pos­si­bly could be, but… Yeah, if the mine keeps going, the mine will keep going.

[01:17:05] Brent: You know, they need oper­a­tors there to move the stuff.

[01:17:07] Tony: The last time this hap­pened, any­body who buys a coal mine off a large com­pa­ny like BHP or Rio just makes out like ban­dits because they get them for a song.

[01:17:17] Brent: They gen­er­al­ly get a bar­gain, gen­er­al­ly speak­ing. And that was Stan­more Coal recent­ly bought.

[01:17:25] Brent: Poytrell

[01:17:26] Cameron: Mine and

[01:17:27] Brent: South Hawk­er Creek and they’ve done extreme­ly well. I think they’ve had them for about 18 months now, so. Right, yeah. So Stan­more was on their buy list

[01:17:36] Cameron: a

[01:17:36] Tony: lit­tle while ago. Yes, yeah, well and White­haven and the rest. I think White­haven’s in the run­ning to buy one of these coal mines, so good luck to them.

[01:17:43] Tony: Yeah, cor­rect. Excel­lent.

[01:17:46] Cameron: Thanks for com­ing on and telling us your sto­ry, Brent. I’m jeal­ous. And obvi­ous­ly my Yeti Berk­shire brand­ed cof­fee mug is still in the mail. I’ll, I’ll keep an eye [01:18:00] out for that.

[01:18:01] Brent: Wait­ing for next year, Cam, or we can, we can get one togeth­er.

[01:18:07] Cameron: I’d love to actu­al­ly, that sounds like fun. Yeah, it is. Thanks, mate. Thanks for com­ing on. Cheers, Ken. Thanks for hav­ing me. All right. Well, that is the invest­ing part of the show done. After hours, Tony, golf, golf, and more golf and foot­ball. I played golf

[01:18:25] Tony: last week. Yeah, it was, it was good being at Cape Shanken, play­ing those cours­es again.

[01:18:29] Tony: That was great fun. They’re great. Such, such good cours­es. It was a real treat. And I actu­al­ly loved being back in win­ter. I had­n’t. Been down at Cape Shanken win­ter for a very long time, and my mem­o­ry of it was being, it’s very Scot­tish, so like the rain com­ing in side­ways and 50k an hour winds, but I had nice weath­er last week, so it was love­ly.

[01:18:46] Tony: And being win­ter, there was hard­ly any­one around, so it was a real­ly nice. enjoy­able envi­ron­ment to play golf. Thank you. Cli­mate change. Yes. Thank you. Cli­mate change. The hottest year. We were, well, are we now we’re out of cli­mate change into boil­ing [01:19:00] change or some­thing? Glob­al boil­ing. Glob­al boil­ing. Yeah.

[01:19:04] Tony: Well, bring it on for Cape Shang. That’s fan­tas­tic. I love it. And. When Alex was born, we signed up an appli­ca­tion form to become, for her to become an MCC mem­ber, the Mel­bourne Crick­et Club, and the per­son who nom­i­nat­ed her said, I can do two, do you And I said, sure. And it’s the thing in Mel­bourne, the, the, You get told to do when your kids first born because by the time they get to Alex’s age, the mem­ber­ship comes through.

[01:19:29] Tony: So I’ve got my pro­vi­sion­al mem­ber­ship in the MCC. So I was able to go along to a cou­ple of games of footy for the first time as a mem­ber on the week­end at the MCG. What do you mean? It’s good because the first one was Carl­ton Colling­wood, and that was 87, 000 peo­ple. And the sec­ond one was the British Low Cup Rug­by, which I went to with a few friends.

[01:19:48] Tony: There was 80 or 82, 000, I think at that. So it’s great to get out and be a part of a glad­i­a­to­r­i­al col­i­se­um hold­ing near­ly a hun­dred thou­sand peo­ple. It’s a real spec­ta­cle.

[01:19:59] Cameron: So [01:20:00] what, what advan­tages do you get being a mem­ber? Oh,

[01:20:02] Tony: well, you’re pay­ing annu­al fee and then you go just tap your card and go in. And you’re in the mem­bers sec­tion, which is a bit more upmar­ket.

[01:20:09] Tony: So there’s good bars and bet­ter food. You know, you get a chili on your hot dog, that kind of thing. So, but yeah, you know, the seats, seats are good.

[01:20:19] Cameron: Yeah. That’s good. Well, that was worth the 25 year wait to get a chili on you.

[01:20:22] Tony: Yeah. Cor­rect. And I’m sure if I was liv­ing in Mel­bourne, I’d get my mon­ey’s worth out of it, but liv­ing in Syd­ney, I’m not going to.

[01:20:28] Tony: What about

[01:20:28] Cameron: Alex? Is she get­ting her, has she got hers? She’s got her

[01:20:32] Tony: mem­ber­ship and I asked her on Fri­day night to the footy, but she was going to see the Bar­bie movie. So she did­n’t come with me. I’ve got a pri­or­i­ty straight. Yeah, so I think she may have, because I think Sean just got his mem­ber­ship too, so I think they’ve been to see a foot­ball match with maybe his fam­i­ly at some stage.

[01:20:51] Tony: Yeah, but you know, it’s, it’s also there for con­certs and oth­er things too, which I’m

[01:20:55] Cameron: sure she’ll use it for. Oh, okay. Right. What

[01:20:57] Tony: else? That’s pret­ty much it. I’m in Wag­ga Wag­ga [01:21:00] now, work­ing my way back to Syd­ney by Fri­day. A cou­ple of games of golf Wednes­day, Thurs­day now, and we’ll trav­el on Fri­day back to Syd­ney.

[01:21:07] Tony: Haven’t watched any­thing good. So again, I went to the Carl­ton Colling­wood game Fri­day night, which was good. Went to the Bledis­loe Cup, which was a white­wash. And of course we got beat­en by the All Blacks again, as we always do. So that was that. And. I watched them at Hilda’s Soc­cer last night with Rud­dy, which was good fun.

[01:21:25] Tony: So that was an unex­pect­ed 4 0 win against Cana­da, which kept us alive in the World Cup. And that was, it’s been great fun to watch to see wom­en’s sport doing so well and being so well

[01:21:33] Cameron: sup­port­ed. Was that, was that being played up here in

[01:21:36] Tony: Bris­bane? That was last week. Last night’s game was down in Mel­bourne.

[01:21:39] Tony: As FIFA called the rec­tan­gu­lar sta­di­um at Amy Park, I don’t use the brand name. And, and that was, I mean, that’s, that’s my sto­ry about it too. I thought, Oh, I can, I can stay an extra night in Mel­bourne and go to the Matil­da’s if there’s a tick­et, I’ll see if Alex wants to go. Logged on and they said almost sold out.

[01:21:57] Tony: So I had to go through about a 20 minute process of [01:22:00] reg­is­ter­ing with FIFA to set up an account to get the two fac­tor authen­ti­ca­tion set. All this stuff, final­ly get it all, log on and it’s, it’s the only seats left. And they’re not even the, the seats for peo­ple with dis­abil­i­ties. They’re seats for peo­ple who are with peo­ple with dis­abil­i­ties.

[01:22:15] Tony: So they’re car­ers. So you can’t sort of buy one and go in and say, Oh, you left my wheel­chair at home. Can I stay here? Cause you can’t, they’re already tak­en. You’d rather, it’s got­ta be a car­er who came with you. So yeah, there was a com­plete mar­ket­ing deba­cle. Waste of time.

[01:22:32] Cameron: Sounds like a set­up for a curb in terms of what else we, sor­ry.

[01:22:36] Cameron: Oh, it sounds like a set­up for a Curb Your Enthu­si­asm episode. Yeah. . Lar­ry would find some­body in a wheel­chair to take as his plus

[01:22:42] Tony: one. Can I be your car­er? Yeah. Yeah. I did think about that. And, and Jen­ny’s father’s in a wheel­chair, but all the wheel­chair seats were sold, so I could­n’t buy him a tick­et.

[01:22:50] Tony: Mm-hmm. And go with him. So it did­n’t work. Alex and I did rewatch the sec­ond half of the David Lynch June film on Sun­day night flick­ing

[01:22:58] Cameron: chan­nels, and it came the sec­ond half. [01:23:00]

[01:23:00] Tony: Yeah, so we’re just fuck­ing chan­nels and it came on, but it was exact­ly the spot where the Dan­ny Vil­leneuve June part one fin­ished.

[01:23:09] Cameron: So I sort of

[01:23:11] Tony: watched part two from David Lynch pri­or to the part two from Dan­ny Vil­leneuve com­ing out. And what a great film. I mean, Lynch is, it’s just a mas­ter­piece. It’s a flawed mas­ter­piece, but it’s bril­liant.

[01:23:24] Cameron: Well, he, he can, he still designs it to this day. Yeah,

[01:23:29] Tony: I know, but I mean, it had all the key scenes I remem­ber from the books and from watch­ing the movies before, I guess, but they’re all there and, and yeah, there’s, it moves quite quick­ly between the scenes because it’s pack­ing in, you know, a large nov­el, if not nov­els into a movie.

[01:23:44] Tony: But yeah, it was good. The act­ing was, was great. Sting was fan­tas­tic, and I think Charles Dirty played the Baron, it was good. And it just had that sort of Euro­pean sen­si­bil­i­ty, it was­n’t all, you know, a cast­ing call went out to Mal­ibu and they all came in with, you know, big jaws and stuff. It was [01:24:00] Patrick Stew­art and Kyle MacLach­lan, and it was good, I

[01:24:03] Cameron: real­ly enjoyed it.

[01:24:04] Cameron: I’ve always loved that ver­sion of the film, you know, I know David sort of hates it and I saw him talk­ing just recent­ly about how that was a turn­ing point for him to real­ize he need­ed Final Cut. He would nev­er make a film again with­out Final Cut. Dino De Lau­ren­ti­is sort of screwed him on Final Cut with that and he was like, well, that’s it.

[01:24:22] Cameron: I’m nev­er. And then he did make anoth­er film with Dino De Lau­ren­ti­is lat­er on. He’s like, that’s it. I’m nev­er mak­ing a film again with­out Final Cut. Be a les­son to young film­mak­ers out there. Always insist on final cut. Your life’s not worth like four years of your life. And then you don’t get the final con­trol over the prod­uct.

[01:24:38] Cameron: It’s not worth it. But I think he got pret­ty, he was pret­ty bit­ter about that for a while.

[01:24:44] Tony: Yeah. No, fair enough. But I thought the end result was pret­ty good. Yeah. I was con­trast­ing it to, I don’t know if you’ve seen the foun­da­tion series on Apple TV. I

[01:24:54] Cameron: haven’t yet done.

[01:24:56] Tony: Cause again, like June was a big part of my child­hood and so was the foun­da­tion [01:25:00] tril­o­gy from Asi­mov.

[01:25:01] Tony: And it’s the reverse. It’s kind of like all the key points are just stretched and stretched and stretched to make an episode out of. And it’s a bit like those, I’m being a bit harsh, but it’s a bit like the orig­i­nal Star Trek where they run from side to side, you know, look, look like they’re doing all the things and noth­ing’s real­ly going on.

[01:25:17] Tony: So there’s a lot of high tech flash­ery and peo­ple fight­ing and run­ning around doing noth­ing in between the, the plot points and this. Adap­tion of foun­da­tion, which I’m frus­trat­ed by com­pared to David Lynch’s June, which is just, yeah, key point, key point, key point, key point, con­dens­ing of, you know, a large book, a thou­sand page book into 90 min­utes.

[01:25:39] Tony: I think it’s great and it brought

[01:25:42] Cameron: his cre­ative rela­tion­ship with Col­in McLaugh­lin togeth­er, which yes. How much joy that’s brought me over the deck.

[01:25:51] Tony: And McLaugh­lin must have been real­ly young when he made Dune, like he looks like a boy

[01:25:54] Cameron: in it. Yeah, I think he was real­ly young. Yeah. So good cast­ing. Well, speak­ing of old [01:26:00] movies, we sat down with Fox on the week­end to watch The Wiz­ard of Oz, which he had­n’t seen and I had­n’t seen since I was a kid.

[01:26:07] Cameron: Have you watched it? In recent

[01:26:09] Tony: years. Oh, I would have seen it, you know, when Alex was younger and how did Fox go with the fly­ing mon­keys? Cause they were quite ter­ri­fy­ing for Alex.

[01:26:18] Cameron: Ter­ri­fy­ing for me when I was a kid too, did­n’t bat an eye­lid. He’s like, Oh, they’re cute. Can I get one? I loved it. Chris­sy and I both loved it.

[01:26:27] Cameron: It just held up real­ly well. I was like 1939, it holds up real­ly well. Like the per­for­mances, par­tic­u­lar­ly like the scare­crow and the lion. They’re just tremen­dous per­for­mances and the Wicked Witch and the West, all of them. They’re just, okay, the, the, the, the munchkins prob­a­bly, you know, would­n’t fly today.

[01:26:53] Cameron: The lit­tle peo­ple think of these weird high pitched voic­es, ding dong, the Wicked Witch is there, but the rest of it are real­ly, [01:27:00] real­ly great. Then I read some of the back­sto­ry on the, the mak­ing of it, which I was sur­prised by, you know, it was a com­mer­cial­ly, it was a flop when it first came out in 39. It lost mon­ey.

[01:27:11] Cameron: did­n’t, did­n’t make a prof­it for the stu­dio until they re released it, I think in 49. And then it hit the, went on TV in 56 and slow­ly start­ed to become prof­itable for them. But it was a 20 year pay­back on the film, a lot of prob­lems with peo­ple get­ting hurt on set. The orig­i­nal Tin Man, they put alu­mini­um pow­der on his face and he had an aller­gic reac­tion to it.

[01:27:36] Cameron: He end­ed up in hos­pi­tal. They need­ed to recast and reshoot all of his scenes. The Wicked Witch of the West, they were putting, they put cop­per paint on her. face and hands to make her green and then at one point when she dis­ap­peared from Munchkin­land with this big burst of flame in a trap door that went down, her cos­tume caught fire and all of the cop­per paint caught on fire.

[01:27:59] Cameron: She got third [01:28:00] degree burns. took three months of recov­ery before she could come back to set. Judy Gar­land got sex­u­al­ly harassed by munchkins con­stant­ly on the set. And at one point they

[01:28:13] Tony: should have, they should have filmed that. That would have been fun­ny. And

[01:28:16] Cameron: to keep her skin­ny, they were feed­ing her with uppers and then down­ers to bring it down.

[01:28:22] Cameron: And at one point dur­ing the Cow­ard­ly lion scenes. She could­n’t stop laugh­ing. The direc­tor, I think it was George Cukor at that stage, went up and had to slap her around to get her to stop laugh­ing. It sounds like it was a pret­ty, pret­ty bru­tal shoot. But any­way, the end prod­uct real­ly sur­pris­ing­ly holds up real­ly well.

[01:28:42] Cameron: 90 years lat­er, it’s quite astound­ing. 85 years lat­er. Well,

[01:28:46] Tony: two things that I’d like to say about that. The author of the book was a guy called Al Frank Born. And that was the name of a race­horse that we had once, years ago. So that’s, that’s a slight con­nec­tion to it. But I remem­ber [01:29:00] read­ing that the Wiz­ard of Oz was around the time Star Wars came out.

[01:29:04] Tony: The Wiz­ard of Oz and Star Wars were two exam­ples of the Joseph Camp­bell, hero of many, what was it, hero of many faces mythol­o­gy.

[01:29:14] Cameron: Hero of a thou­sand faces. If you lay

[01:29:15] Tony: out Star Wars against the, against the Wiz­ard of Oz, it’s very sim­i­lar. Yeah. In terms of struc­ture any­way.

[01:29:22] Cameron: Yep. The per­son gets tak­en against their will on a jour­ney, does­n’t want the mis­sion, final­ly gets to accept the mis­sion.

[01:29:34] Cameron: And comes back a bet­ter, stronger per­son hav­ing learned some­thing along the way. I read too that the, I mean the book is a lot dark­er than, I’ve nev­er read the book, but appar­ent­ly it’s a lot dark­er than the film. They sort of Dis­ney fied it, even though it was­n’t a Dis­ney pro­duc­tion. What else did I read?

[01:29:50] Cameron: Oh yeah, the, the songs for the film, they, they cut, the orig­i­nal cut of the film was over two hours long. They cut 20 odd min­utes out of it. [01:30:00] But one of the things they were going to cut after the orig­i­nal screen­ings of it, the test screen­ings was some­where over the rain­bow, they decid­ed that. Stretched out the Kansas scenes too long and they want­ed to cut it.

[01:30:12] Cameron: The stu­dio want­ed to cut it. Some of the pro­duc­ers fought tooth and nail to keep it in. Of course, it won the Oscar for best orig­i­nal song that year and became the defin­ing song of Judy Gar­land’s career and is con­sid­ered, you know, one of the great­est songs of all time. So. Yeah, a lot of inter­est­ing back­sto­ries to it.

[01:30:32] Cameron: But yeah, any­way, there you go. Inter­est­ing. I saw that I’m still read­ing Ovid’s Meta­mor­pho­sis. Cory Doc­torow has got a new book out, which I just start­ed read­ing as well. It’s all about cryp­tocur­ren­cy. Nov­el, his lat­est nov­el. I love a good Corey nov­el. And I’ve been lis­ten­ing to a lot of Tony Ben­nett and Sinead O’Con­nor over the last week in hon­or of their respec­tive pass­ings, nev­er real­ly got into Tony Ben­nett that [01:31:00] much.

[01:31:00] Cameron: Like he has a great voice, but there was just some­thing about Tony, he’s just a lit­tle bit vanil­la for me. I always found Tony Ben­nett. Would it be a Tony Ben­nett fan?

[01:31:07] Tony: A lit­tle bit. Yeah. I guess we all went through a bit of a Frank Sina­tra phase at one stage and the Rat Pack was our heroes and he was on the edge of that.

[01:31:17] Tony: Yeah, so we did and then we found out that the singer in The God­fa­ther was based on Tony Ben­nett, the one who gets the pro­tec­tion from The God­fa­ther. So we heard that. What? So, yeah, we sort of looked into Tony Ben­nett after that. Yeah. He was based

[01:31:32] Cameron: on, he was based on Sina­tra. No, no, it’s on Tony Ben­nett. No.

[01:31:36] Cameron: Pret­ty sure. Mmm. Al Mar­ti­no’s char­ac­ter. Yeah. Yeah. That’s it. No. It’s based on Sina­tra. Because Sina­tra got the film, his career was in the dumps, and he got the film that was shot, some of it, here. Oh, I’ve got kids try­ing to call me. It’s sup­posed to be Do Not Dis­turb, how the hel­l’s he get­ting through? What was that, the, the, the scene, the, the Sina­tra film where he’s [01:32:00]rolling around on the beach, on the beach­es?

[01:32:02] Cameron: Yeah, from here to eter­ni­ty. Yeah, yeah, yeah, yeah, yeah. The whole thing where he’s got the, he gets the film from Mr. Waltz, I thought was based on Sina­tra’s From Here to Eter­ni­ty. Any­way.

[01:32:12] Tony: Okay. Well, I, I, for some rea­son I thought it was Tony Ben­nett. Nev­er heard that sto­ry.

[01:32:16] Cameron: Yeah, I always pre­ferred Dean. I always pre­ferred Frank.

[01:32:20] Cameron: Mel, Mel Torme even, I love Mel Torme. But any­way, I’ve been lis­ten­ing to a lot of Tony Ben­nett. He had a good innings, a good sec­ond act of his life. He did very well.

[01:32:31] Tony: Yeah. And kept, and kept play­ing right up until the end too. He was not sure how old he was when he died, but he was

[01:32:37] Cameron: speak­ing of peo­ple who.

[01:32:38] Cameron: We’re still singing. McCart­ney’s com­ing to Aus­tralia. No way I can afford 500 a tick­et to go see McCart­ney. But how amaz­ing is that? Like he’s 81 com­ing back. He’s still play­ing the same Hofn­er bass he played in the Bea­t­les. He said the acoustic gui­tar he plays yes­ter­day on is the one he used on the Ed Sul­li­van show.

[01:32:59] Cameron: He’s [01:33:00] still got the same instru­ments. It’s real­ly, that’s an astound­ing life. McCart­ney’s had just the most astound­ing life. Isn’t it

[01:33:07] Tony: incred­i­ble? And they had the. You know, the tour kicks off in Ade­laide, which is where the Bea­t­les kicked off their Aus­tralian tour. Yeah. We saw McCart­ney when I was in Toron­to.

[01:33:16] Tony: It’s a fan­tas­tic show. It real­ly is

[01:33:19] Cameron: spe­cial. I bet. Just

[01:33:21] Tony: see­ing an ex Bea­t­le on stage is real­ly spe­cial as well, but it’s a great show. Because it, it start­ed off with the, well, back then it was his most recent album, which was Now, I think it was called. And so he played a cou­ple of those songs. And then, you know, it just goes through some of the Bea­t­les, goes through Wings, just keeps, keeps on com­ing and it’s like, it’s like, you know, four con­certs rolled up into one because it goes for a long time.

[01:33:50] Tony: And then like at one stage he comes out and plays Black­bird just by him­self and then anoth­er stage they’ve got a piano paint­ed like Yel­low Sub­ma­rine he comes out and per­forms, you know, more [01:34:00] sort of trip­py songs and it’s just bril­liant. real­ly, real­ly good. Oh, and it fin­ished with the bag­pipers com­ing on stage from Molok­in­tai.

[01:34:07] Tony: Like they get, they rang up the local Scot­tish march­ing band and got them to turn up. It was, and that was very, very

[01:34:13] Cameron: pow­er­ful. What must it be like to be McCart­ney? Like you were part of the song­writ­ing dur­ing the Bea­t­les. You know, the songs that you wrote in your twen­ties, I con­sid­ered some of the great­est songs ever writ­ten.

[01:34:25] Cameron: Then he had a bunch of hits in the sev­en­ties with wings as an artist. He should be get­ting bet­ter over time, but can you name a sin­gle track off any album McCart­ney’s done since 1985? Well,

[01:34:37] Tony: back when we were young, I think it’s called, was the one on now, which we used to lis­ten to. That was­n’t too bad.

[01:34:43] Tony: Well, back when we were, back when we were young, back when we were famous, I think it was called. Yeah, it was­n’t a bad album, but yeah, it’s not, noth­ing like. Well, I mean, and the Bea­t­les, I mean, it was just a shock val­ue too. I mean, you know, I’ve had friends who said music would change overnight the first time I heard.

[01:34:59] Tony: [01:35:00] Please please me, or, you know, I want to hold your hand. So, you know, the shock val­ue of that and then their lead­er­ship in, in the sort of hip­pie move­ment and psy­che­del­ic move­ment, you know, just were real­ly out there in the van­guard. And then when they broke up, they kind of drift­ed back into. Not medi­oc­rity, but back into the, you know, back in line, I guess, with all the oth­er musi­cians around and they hand­ed off that kind of tor­ture, the new stuff.

[01:35:26] Tony: But as an

[01:35:26] Cameron: artist, like, I mean, I can’t, I mean, I lis­ten to every album he puts out and I enjoy them, but yeah. Say, say, say duet with Michael Jack­son or Ebony and Ivory in the eight­ies with Ste­vie Won­der. They’re prob­a­bly the last songs I’d be able to, the most recent songs I’d be able to name of McCart­ney.

[01:35:49] Cameron: Yeah, right. And not the best. Well, no, not those, but you know, like he had this, this like hit after hit after hit after hit live and let die also from the ear­ly eight­ies, I think like hit after hit after hit [01:36:00] for decades. And then he’s gone on and lived and con­tin­ued to write songs and put out albums. You know, there’s no one num­ber one hits com­ing out from does that mean the indus­try has changed?

[01:36:10] Cameron: There’s more, you know, the mar­ket is frag­ment­ed. His cre­ative pow­ers aren’t what they once were. I don’t know. I won­der how he pro that’s like, if I could sit down with McCart­ney, part of it would be how the hell do you live? Being as famous as you’ve been since you were 20 years old. Like, how do you do that?

[01:36:28] Cameron: And, and keep your san­i­ty and be, how does it feel to still be putting out music and no one gives a shit? Like you, the songs that you did in those first few decades, like con­sid­er,

[01:36:41] Tony: that’s a

[01:36:44] Cameron: seri­ous ques­tion. Like, how do you, how do you process that from the peo­ple still just want to hear the stuff that you did when you were 20, 30.

[01:36:53] Cameron: Yeah, I mean, I don’t know how he, you know, how do you, maybe just, he seems like a fair­ly accept­ing guy. He’s [01:37:00] like, Oh, it’s just the way it is. You know, I just do the stuff from, well, I think

[01:37:03] Tony: also too, out of all the Bea­t­les, he’s a bit like Mick Jag­ger. They’re very com­mer­cial­ly mind­ed. So he’d just be going, yeah, okay.

[01:37:08] Tony: I’ve got to, got to put up with play­ing my old songs for three hours a night for a cou­ple of months. And I make, you know, 10 mil­lion or what­ev­er it’s going to be. So yeah, I can, I can suck that. And

[01:37:17] Cameron: that’s the third ques­tion. Why does he keep doing it? Like he does­n’t need the mon­ey. I’m quite sure. Why is he still tour­ing is not easy on the body fly­ing from city to city to city to city get­ting up doing three hours of hard yakker every night.

[01:37:34] Cameron: He looks like he’s in good shape, but what dri­ves him to keep? Is it just the love of the peo­ple? Is it? He does­n’t like his wife and he wants to get out of the house. I mean, what is it that keeps him tour­ing? It’s what I want to know. Well, does­n’t he have a new wife now? Of course he does. He’s Paul McCart­ney.

[01:37:49] Cameron: He’s got a new wife. He’s

[01:37:50] Tony: a pub­li­cist or he’s ex pub­li­cist. Yeah. Yeah, it’s a good ques­tion. And you could ask Bob Dylan, who still plays last nights of the year. You know, it’s just, it’s just, it’s their [01:38:00]being, I guess. Oh,

[01:38:00] Cameron: that’s who else I’ve been lis­ten­ing. I’ve been lis­ten­ing to a lot of Willie Nel­son this week.

[01:38:05] Cameron: Oh, real­ly? Okay. I don’t know, man. I just was like, I don’t real­ly, I told you my Willie Nel­son sto­ry when Chris­sy and I saw him in Vegas, prob­a­bly have at some point. So we got mar­ried in Vegas, as you know, years ago. Yeah. I think the night before we got mar­ried, we were, we were, we were, went to this lit­tle bar some­where in Cae­sar’s palace or some­thing.

[01:38:27] Cameron: It was a, there was a rodeo, not a rodeo. An elec­tric bull thing. We went in to see the elec­tric bull. And there was like five peo­ple in this bar, and there was a lit­tle stage, and there was a Willie Nel­son imper­son­ator on stage doing his Willie songs. And we went there to see this, uh, elec­tric bull. Next thing we know, Willie, the real Willie Nel­son walks in with two.

[01:38:48] Cameron: huge­ly endowed blondes, one on each arm, gets up on stage, gives the imper­son­ator a hug, and then does an act with the imper­son­ator. He does a duet. He [01:39:00] does five or six songs, duet­ing with the imper­son­ator. And there’s like eight of us stand­ing in this bar, no audi­ence. And then they hug. It looks like they knew each oth­er.

[01:39:09] Cameron: And then Willie leaves, just walks off the stage and goes on his way. I was like, man, that was, that was cool. But I’ve been going back and lis­ten­ing to some of his stuff from the ear­ly sev­en­ties, like the, what do they call it? The out­law coun­try days when he and Chris Christo­pher­son and John­ny Cash sort of broke away from the Nashville scene.

[01:39:28] Cameron: Way­lon James did their own thing. It’s, it’s, you know, it’s sort of bluesy, coun­try, lit­tle bit of jazz, lit­tle bit of rock, a lit­tle bit of rock­a­bil­ly. It’s real­ly, you know, quite inter­est­ing stuff. I hate coun­try gen­er­al­ly, but I always say that I hate coun­try music unless you’re talk­ing about… Willie Nel­son, John­ny Cash, Dol­ly Par­ton, Paul Lovett, Ken­ny Rogers or John Den­ver.

[01:39:51] Cameron: They’re like, I set them apart from coun­try music, right? They’re sort of…

[01:39:56] Tony: That’s not fair though, real­ly, is it? It’s like say­ing I hate rock and roll except for [01:40:00] Mick Jag­ger, Paul McCart­ney, Bruce Spring­steen, Elton

[01:40:03] Cameron: John. Kind of the joke, Tony. Yeah. I don’t like coun­try except for the great­est coun­try stars.

[01:40:10] Cameron: The coun­try’s here. Sor­ry,

[01:40:11] Tony: I’m in the coun­try.

[01:40:12] Cameron: And yes, Sinead O’Con­nor, going back and lis­ten­ing to her stuff. I always loved her and big fan of her tak­ing a posi­tion on the Catholic church when she did. Have you seen the footage of her Madi­son Square Gar­den con­cert a week lat­er, speak­ing of Kris Kristof­fer­son?

[01:40:25] Cameron: I saw a clip of it,

[01:40:26] Tony: yeah, when she was booed off the stage, or not off the stage, but booed.

[01:40:30] Cameron: He intro­duced her and then as she was being booed. He walked up to her and Lan­don, you can hear in the micro­phone, he said, don’t let the bas­tards get you down. And she said, I’m not down. And then she screamed an a cap­pel­la ver­sion of war and then just walked off the stage and appar­ent­ly fell into his arms and burst into tears.

[01:40:49] Cameron: I guess, you know, any­way, there you go. Was­n’t she way ahead of her time in call­ing out the Catholic church in pub­lic. Yes. Yep.

[01:40:59] Tony: Sure [01:41:00] was. Yeah, way ahead of the time. Real­ly way ahead of the time for that. Yeah. That’s, that’s,

[01:41:06] Cameron: that’s all I got, Tam. Say hi to Rud­dy for me and I’ll talk to you next week. I will.

[01:41:12] Cameron: OK, Matt. Have a good week. If you like the QAV pod­cast, help us out and help your friends out. Help Aus­tralia out by telling some­body about it. You can shoot some­body an email with a link to our lat­est newslet­ter. Say, hey, you should check this thing out. I think you’d real­ly like it. Oh. Write us a review on Apple Pod­casts or on Spo­ti­fy.

[01:41:33] Cameron: It only takes 30 sec­onds. You can find the links in our newslet­ter or our blog posts every week and fol­low the instruc­tions for how to do that. Or write a review or make a post on Face­book or Twit­ter or X, what­ev­er it’s called now, on Threads. On, I don’t know, what­ev­er it is, what­ev­er the social media chan­nel of your pref­er­ence is.

[01:41:54] Cameron: Just help spread the word, you’ll do us a favour and you’ll help your friends and help Aus­tralia [01:42:00] learn how to take con­trol of their invest­ing as well. The QAV pod­cast is a pro­duc­tion of Space Craft Pub­lish­ing Pty Ltd. Autho­rised rep­re­sen­ta­tive of AFSL 520442. AFS rep­re­sen­ta­tive num­ber 001292718. Please don’t make any invest­ment deci­sions based sole­ly on lis­ten­ing to this pod­cast.

[01:42:22] Cameron: This is pre­sen­ters 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.