QAV #638 — Gaming The Numbers

[00:00:00] Cameron: Wel­come back to the QAV pod­cast, episode 6 38, 19th of Sep­tem­ber, 2023. How’s the Gold Coast tk

[00:00:10] Tony: Very nice. Very, very good. Jen­ny’s just left. She’s going to the air­port, as we speak. And then I dri­ve

[00:00:19] Tony: out tomor­row morn­ing.

[00:00:21] Cameron: the way back to Syd­ney, or are you gonna Wag­ga then to Syd­ney?

[00:00:25] Tony: Well, what was fur­ther than Syd­ney?

[00:00:27] Cameron: Is it?

[00:00:28] Tony: on the Gold Coast. Yeah, it’s halfway

[00:00:29] Cameron: Oh Yeah. that’s right. The oth­er bor­der.

[00:00:34] Tony: Yeah, I’m not sure. I mean, I plan to dri­ve straight through it, but if it gets late. Or I get delayed, I’ll prob­a­bly overnight

[00:00:38] Tony: some­where. I don’t know.

[00:00:41] Cameron: You’ve done a bit of dri­ving in the last few weeks

[00:00:43] Tony: I have, yeah. Cape Shank to the Gold Coast with a cou­ple of

[00:00:47] Cameron: Bri, to Bris­bane.

[00:00:49] Tony: To Bris­bane, yes, you’re

[00:00:50] Tony: right. Yeah.

[00:00:52] Cameron: Thanks for com­ing up the

[00:00:53] Tony: Ah, that’s right, that was love­ly. Love­ly,

[00:00:55] Tony:  to catch up with peo­ple.

[00:00:56] Cameron: Sor­ry, there. weren’t more peo­ple there. A lot of peo­ple did send their excus­es. It was [00:01:00] a lit­tle bit late notice, I think. A lot of peo­ple had oth­er

[00:01:02] Tony: Yep.

[00:01:03] Cameron: orga­nized, but a cou­ple dropped out on the day. But, it’s nice for the peo­ple who turned up to get to, I guess they just got a lit­tle bit more qual­i­ty time with you.

[00:01:12] Tony: Yeah, they had good ques­tions too and good feed­back. It

[00:01:14] Tony: was great.

[00:01:16] Cameron: Alex Franklin sent sent me a, sum­ma­ry of all of his ques­tions and all of your answers today, which is good. I sent it to your Alex, because I thought it might be good fod­der for the QAV book. There was a lot of good, detailed stuff on, well, why do you do this and not that? And how did you come to the deci­sion to do this and not that?

[00:01:36] Cameron: That’s good stuff.

[00:01:37] Tony: yeah, it was. Yeah, we had a good dis­cus­sion. He kept apol­o­giz­ing for ask­ing ques­tions and I said, it was fine. Just, we should be talk­ing about this on the pod­cast.

[00:01:47] Cameron: Yeah, well, we can do that. I’ll invite him to come on and he can re ask them or some­thing.

[00:01:52] Tony: Yeah, there’s lots of good dis­cus­sions. A cou­ple of things were, were new to me, even. I mean, some­one was talk­ing about stage 3 [00:02:00] tax cuts and, how when the 30% Per­son­al income tax rate ris­es to a new thresh­old, which I think is 200, 000. basi­cal­ly if your only income is from div­i­dends and they’re ful­ly frank, you’re pret­ty much pay­ing no tax.

[00:02:16] Tony: So, that was inter­est­ing. I had­n’t worked that one out myself. And look, I guess, seek tax advice before you change plans to, to take account of that. But, made sense to me.

[00:02:27] Cameron: And I think that was Phil, who I believe is a doc­tor who was there with his son, Joe, who’s study­ing exer­cise sci­ence and sleep sci­ence, both of which I need help

[00:02:38] Tony: Yeah, I should have, I should have been ask­ing him ques­tions if

[00:02:41] Tony: I’d known that’s what he was doing.

[00:02:43] Cameron: I said to him, Oh, you can tell me why my body hurts so much. He said, it’s cause you’re old. I was like,

[00:02:48] Tony: Aha­ha­ha!

[00:02:48] Tony: He did­n’t say Kung Fu.

[00:02:51] Cameron: I said that

[00:02:51] Cameron: and Kung Fu.

[00:02:52] Cameron: Yeah. I added the Kung Fu on, but my body hurt before Kung Fu. It just hurts in dif­fer­ent ways now.

[00:02:58] Tony: Yeah. Oh God, [00:03:00] yeah. I know what you mean. I haven’t been doing much. I strained the calf about a month ago. My body is like when one mus­cle goes, they all go. It’s like a union.

[00:03:10] Cameron: Hmm.

[00:03:11] Tony: So, I’ve just been, doing lots of sort of phys­io­type exer­cis­es to try and strength­en every­thing back up again.

[00:03:18] Cameron: How’s it going? You feel­ing

[00:03:19] Tony: Good! Yeah!

[00:03:20] Cameron: work­ing?

[00:03:21] Tony: Yeah, I played golf three days in Bon­neville.

[00:03:24] Tony: In Coffs Har­bour, which was love­ly. Great course. and sur­vived. I haven’t played on the Gold Coast, and we’ll see how I go back in Syd­ney

[00:03:31] Tony: when I see the physio. But yeah, get­ting bet­ter.

[00:03:32] Tony: It’s good.

[00:03:33] Cameron: Did­n’t play on the Gold Coast. How come? I thought that’d be like per­fect golf­ing oppor­tu­ni­ty. Just

[00:03:37] Tony: It is, it is. Yeah, it was pret­ty much a fam­i­ly vaca­tion, which

[00:03:42] Tony: was good. Caught up with Mo.

[00:03:44] Cameron: to. Alex Kynas­ton for last week or a few days ago, when­ev­er it was.

[00:03:49] Tony: Yeah, she’s trav­el­ling too. She’s, she’s dri­ven from Mel­bourne and she’s on her way up to Cape Tribu­la­tion.

[00:03:55] Cameron: Yeah.

[00:03:56] Tony: Must be genet­ic, the Kynas­ton’s like trav­el­ling by

[00:03:59] Tony: [00:04:00] car. I love road trips,

[00:04:02] Tony: so

[00:04:02] Cameron: Me too.

[00:04:03] Tony: might be genet­ic. Yeah.

[00:04:04] Cameron: I like, I like just get­ting off the beat­en track and… Going to lit­tle towns and stop­ping at lit­tle cafes in lit­tle towns and talk­ing to the locals and see­ing the lit­tle local eccen­tric, eccen­tric­i­ties of Whether it’s in the US or it’s here like it’s always, well, Europe. It’s always fun.

[00:04:25] Tony: I’m far too intro­vert­ed for that. I need a bud­dy to do that for me. Take him with you. like, you spend a lot of time in small towns talk­ing to the locals.

[00:04:33] Cameron: I take, I take Chris­sy That’s what Chris­sy does.

[00:04:35] Tony: Ah, okay. Oh, good.

[00:04:38] Cameron: Chris­sy makes friends eas­i­ly.

[00:04:40] Tony: Right. Yeah. So

[00:04:41] Tony: is Jen­ny.

[00:04:42] Cameron: Hmm.

[00:04:42] Tony: And Rud­dy. Yeah.

[00:04:43] Cameron: That’s why intro­vert­ed guys like us are mar­ried to women like them and you’re

[00:04:48] Tony: Yeah, we’re good.

[00:04:50] Cameron: Your oth­er

[00:04:51] Tony: We’re good teams, my

[00:04:52] Tony: oth­er wife. Yeah.

[00:04:53] Cameron: Well, speak­ing of good teams.

[00:04:55] Tony: hang on. Before that, just while we’re talk­ing about the Bris­bane catch up, two more points I want­ed to high­light, [00:05:00] just because they were so good. One was a ques­tion, from Alex. Franklin again about why QAV was­n’t using met­rics like return on equi­ty.

[00:05:09] Tony: I think he, he par­tic­u­lar­ly focused on return on invest­ed cap­i­tal. And,I spoke to him about that. And I think I’ve men­tioned before that ROE in par­tic­u­lar, and I guess ver­sions of that, like ROIC or ROA have always been focused on by both man­age­ment and invest­ment investors. And when investors start­ed focus­ing on it, Man­age­ment start­ed focus­ing on it, start­ed gam­ing it.

[00:05:32] Tony: So it has­n’t always been a clean met­ric. And of course, equi­ty can be affect­ed by how much gear­ing there is and what assets are on the bal­ance sheet and which ones are con­vert­ed to leas­es, things like that. So I, I kind of lost faith in it. but along the way, one thing I did­n’t talk to Alex about, which I I

[00:05:48] Tony: start­ed to use. A met­ric which I devel­oped for myself, which I called ROPE., which was return on pur­chased equi­ty. ’cause one of the things I was find­ing was [00:06:00] stocks with high ROE, high ROIC, et cetera, et cetera, gen­er­al­ly, had a high price because peo­ple were buy­ing into them. And that kind of made sense, which the, the val­ue of that stock to me.

[00:06:12] Tony: And I was try­ing to math­e­mat­i­cal­ly work that out. So I would just,the r Well, I for­get exact­ly what I did, but I con­vert­ed the r o e equi­ty per share into what I’d paid for that equi­ty per share. So I, divid­ed it by price and then worked out the return that I was get­ting based on the high price I had to pay for these com­pa­nies that had I ROEs.

[00:06:32] Tony: and then I found that was, com­pli­cat­ed and, and was cor­re­lat­ing to. Things like price to cash flow, which took the price into account as well as how much cash the com­pa­ny was throw­ing off. So, even­tu­al­ly I ditched it in favor of some of the oth­er things we used, but it was an inter­est­ing, thought pro­vok­ing ques­tion and thought I thought it was worth­while talk­ing

[00:06:51] Tony: about on the show.

[00:06:53] Cameron: Hmm. Well, that’s

[00:06:55] Tony: And I want,

[00:06:55] Cameron: was up, Oh, I was just going to say, yeah, when I was up at

[00:06:58] Cameron: the, Stock Doc­tor meet­up [00:07:00] in Noosa, last week that Ed Nixon invit­ed me up to, yeah, I was talk­ing about the rea­son we use oper­at­ing cash­flow is it’s priced oper­at­ing cash­flow. It’s just because. You feel like it’s the hard­est thing to game.

[00:07:16] Tony: Cor­rect.

[00:07:16] Cameron: It’s the clean­est, the clean­est met­ric we can get, on the

[00:07:21] Tony: And even, even, even with that, I mean, there’s going to be a ques­tion lat­er on about Yankol and how some peo­ple want­ed to back out the Income tax pay­ments from the oper­at­ing cash­flow to get a clean­er num­ber. So, obvi­ous­ly it’s a sore point for some­one, maybe man­age­ment, that their cash­flow looks low­er than it should because they had to pay tax.

[00:07:39] Tony: But hey, that’s the fact of life. If you’re a busi­ness, you’ve got to pay tax.

[00:07:43] Cameron: Hmm.

[00:07:44] Tony: Yeah. So cash­flow is pret­ty clean, is pret­ty clean. a cou­ple of oth­er points that were made. I had a good dis­cus­sion with Ed, so, Ed was love­ly enough to bring me a gift, which was fan­tas­tic. I haven’t drunk it yet, but I’ll put it, put it away.

[00:07:56] Tony: but the point he, he. He made was that, [00:08:00] he appre­ci­ates QAV because he nev­er came across a way to learn the stuff that we talk about. And that got, got us into a dis­cus­sion about how the whole wealth indus­try or finan­cial ser­vices indus­try is set up to com­pli­cate things and take fees from you.

[00:08:16] Tony: And he had a great quote, which I liked, which was that, returns are neg­a­tive­ly cor­re­lat­ed to fees. And I thought that was so true. the more you pay some­one to man­age things for you or to give advice, the worse the returns are. So, yeah, good, good quote, Ed.

[00:08:31] Cameron: Yeah, I like it. It’s a lot of fun. Good guy.

[00:08:34] Tony: Yeah, yeah, and so, I mean, that’s the, I guess, the ques­tion that every­one needs to… Focus on is Aus­tralians are so shy at talk­ing about their finances and invest­ing, and this stuff isn’t taught in schools and,when it’s taught in uni­ver­si­ties, it tends to be clas­si­cal invest­ing type things like,Efficient Mar­ket The­o­ry and Black Scholes method for it.

[00:08:58] Tony: Pric­ing options, etc, etc. [00:09:00] And there’s no real prac­ti­cal advice that I’ve come across except for dig­ging it out of the dirt your­self at the local book­store, or I guess it’s bet­ter now that all the stuff’s online, but yeah, unless we’re, unless we’re keyed into things like the QAV pod­cast and there’s a cou­ple of oth­er ones out there I guess, but it’s pret­ty hard to do it, to, to learn this stuff, so I think that’s a real prob­lem with our soci­ety.

[00:09:23] Tony: I don’t, we’re going, we’re doing our bit to solve it, I guess, or the help to solve it, but, it needs, it

[00:09:28] Tony: needs to be a lot more done.

[00:09:31] Cameron: Yeah, well that gets back to the argu­ment I’ve been mak­ing to the nice folks at Stock Doc­tor for the last four years. It’s like, you may have oth­er peo­ple that, have a long track record of being suc­cess­ful investors using Stock Doc­tor on top of Tony, but how many of them are will­ing to teach peo­ple?

[00:09:50] Cameron: How they use Stock Doc­tor to be suc­cess­ful. I mean, I don’t think they have any­one else. I mean, there’s like, there’s plen­ty of peo­ple out there who on [00:10:00] Tik­Tok that’ll teach you how to invest, but I don’t think many of them are actu­al­ly suc­cess­ful long term investors.

[00:10:06] Tony: Mm.

[00:10:07] Cameron: And the peo­ple who are long term suc­cess­ful investors don’t usu­al­ly don’t want to.

[00:10:11] Cameron: Share, how

[00:10:12] Tony: Yeah, I mean,

[00:10:14] Cameron: can’t be both­ered.

[00:10:16] Tony: well, it’s a bit of both, but I think there’s also this kind of tru­ism that you had some kind of pre­cious IP and you should­n’t share it because it’ll erode your per­for­mance. but, yeah, I think that’s the wrong mind­set. don’t, if we have more investors in the stock mar­ket, there’s more mon­ey.

[00:10:32] Tony: So it gives you more oppor­tu­ni­ty, I think, to, to invest in the stock mar­ket rather

[00:10:36] Tony: than less.

[00:10:38] Cameron: Yeah. Well, speak­ing of invest­ing in the stock mar­ket, Tony — CAGR reports. So in the last

[00:10:44] Tony: Yeah. Thanks for giv­ing me all these detailed ques­tions while I’m on hol­i­day.

[00:10:49] Cameron: I held off for the last week and wait­ed till you were ready to do this week. I thought, so, we, you and I had dis­cussed over months that we did­n’t under­stand. [00:11:00] How Navexa reports were work­ing. We tried to talk to the folks at Navexa and they basi­cal­ly tried to explain it but we did­n’t get it. And they said you should just, if you feel that way you should just build your own.

[00:11:11] Cameron: So I tried to do that using Chat­G­PT. And, look, I’ve spent hours and hours and hours on this over the last few weeks. I’m, I’m pret­ty sure some­thing’s wrong, but I’m not smart enough to fig­ure out what it is, nei­ther is Chat­G­PT appar­ent­ly. So, I thought you’d be able to take a quick look at it and fig­ure it out because you’re smarter than Chat­G­PT.

[00:11:32] Tony: Well, I mean, I did have a look at it, whether I fig­ured it out or not, I’m not sure. But, but I actu­al­ly think Nevex is pret­ty close to the cal­cu­la­tion, the cor­rect cal­cu­la­tion, after I crunched some num­bers myself. so, first of all, yeah, I did a sim­i­lar cal­cu­la­tion to you using a spread­sheet and the start­ing port­fo­lio, which I think was start­ed in Sep­tem­ber.

[00:11:52] Tony: The sec­ond four years ago, start­ing val­ue was 20, 000 or maybe a lit­tle bit high­er than that because we had some [00:12:00] invest­ments before then. and then we know what the price is today and it’s four years apart. So we can cal­cu­late CAGR using RRI, which is the for­mu­la in Excel, which gives you sim­ple CAGR.

[00:12:10] Tony: and I was, I was get­ting 14. 33 per­cent with that, which I think you got, which is, what Navexa is telling us. So, well, I think Navexa was about 15. So there was a slight dif­fer­ence between Excel and Navexa. And I’m will­ing to accept that’s the dif­fer­ence between the sim­ple com­pound growth cal­cu­la­tion of RRI ver­sus what Navexa does, which is… I guess they claim, and it’s prob­a­bly true, that it’s the cal­cu­la­tion that fund man­agers use, which is about time weight­ed mon­ey. So, I guess in a nut­shell, Navexa take every trans­ac­tion, as a dis­crete event, sum them all up, and then, work out the num­ber of days that you were invest­ed dur­ing that time, and add all that up, and then get a return based on the sum­ma­tion of all the…

[00:12:59] Tony: Dif­fer­ent [00:13:00] invest­ments and how long they were in the mar­ket for. so we’re not that far apart. I mean, I was get­ting Navexa at, 15. I’ll

[00:13:07] Cameron: I just looked at it, it says 15. 74, but yeah, around 15 and a half to 16.

[00:13:12] Tony: Yeah. So we’re up by a per­cent. and I mean, giv­en answers, a sim­ple cal­cu­la­tion, there’s, is a bit more accu­rate, or I should­n’t say accu­rate, a bit more com­pli­cat­ed, but I think that would be the dif­fer­ence. The big thing that was, that I focused on apart from that was STW. Because, that, that looked, that looked fun­ny.

[00:13:30] Tony: so I went and got, down­loaded the, what’s it called?

[00:13:33] Cameron: AXJOA.

[00:13:34] Tony: Yeah it’s avail­able if you Google ASX200, all ordi­nar­ies accu­mu­la­tion index.

[00:13:39] Tony: It’s in Yahoo Finance or it’s on, it’s on the, S&P page, I think, to put the index togeth­er. And I was get­ting a CAGR by doing the R R I cal­cu­la­tion of 6.7%, which was again, I think the same as Navexa, pret­ty close to it any­way. So I think, because you were using,

[00:13:58] Tony: what were you using in [00:14:00] Navexa?

[00:14:01] Cameron: I’m using S, STW. Yeah.

[00:14:05] Tony: Yeah. And

[00:14:05] Tony: you’re get­ting 6. 6 per­cent

[00:14:08] Cameron: Well, no, in the spread­sheet, and I, again, I’m pret­ty sure I’m doing some­thing wrong here, but in the spread­sheet I’m get­ting 2. 12 per­cent for the STW.

[00:14:19] Tony: No, I think that’s wrong. Let me have a look. I put them into a spread­sheet myself. Okay. So oh, sor­ry. Yeah. Yeah. Yeah. Okay. I take that back Cam, sor­ry. STW is get­ting 1. 4%, is strange. And the ASX 200 Accu­mu­la­tion Index, when I down­loaded it, I was get­ting 6. 7%. And for STW, I was sim­ply using the start­ing price at the same time we start­ed the dum­my port­fo­lio. And the price today so 62. 15 back in Sep­tem­ber 2019 and I did this this morn­ing 65. 80 so anoth­er big [00:15:00] increase 1. 4 per­cent CAGR. But if I looked at Navexa, Navexa had, so Navexa talks about the It calls it the S P D R 200 fund, but I think the code is STW it’s get­ting 6.66%, which is what I got when I plugged in the A S X 200 accu­mu­la­tion, a accu­mu­la­tion index amounts for Sep­tem­ber, 2019 and today.

[00:15:28] Tony: Yeah,

[00:15:29] Cameron: Right.

[00:15:31] Tony: so the, so I think Navexa is right. But if you do the cal­cu­la­tion for STW, like using Stock Doc­tor for exam­ple, which is what I did, it does­n’t add up. But if you use, if you google ASX 200 Accu­mu­la­tion Index and do it man­u­al­ly using RRI in Excel, I got 6. 7 per­cent and Navexa has got 6. 7%, so I think that’s right.

[00:15:55] Cameron: So this is the AXJOA.

[00:15:58] Tony: Yeah, [00:16:00]

[00:16:00] Cameron: Okay.

[00:16:02] Cameron: Alright, well I’ll plug those into my spread­sheet and see if it… what it comes out with. But if, if we’re get­ting rough­ly the same results as an Navexa, then I guess I can go back to an Navexa. But I was look­ing, I guess over the last few months, I was just look­ing at the STW share price. And

[00:16:17] Tony: I know,

[00:16:18] Cameron: and even when I,

[00:16:19] Cameron: I saw a few peo­ple last week point­ed out that I had­n’t includ­ed the div­i­dend, the STW’s div­i­dends, and then the rein­vest­ment of those div­i­dends.

[00:16:28] Cameron: So I went through and worked all that out, and it, and it did­n’t help much. It, it just added, added, a cou­ple of tiny, dec­i­mal places to it, but not, not a great improve­ment. So inter­est­ing. Okay. So STW and AXJOA, I’ll com­pare those. Thanks for fig­ur­ing that out.

[00:16:48] Tony: yeah, so I don’t know why STW, like in Stock Doc­tor, has a very small RRI, but if you use Navexa, and if you use the, the All Ords Index, Accu­mu­la­tion Index, or sor­ry, not the All [00:17:00] Ords, the ASX 200, I’m get­ting the same num­ber as Navexa, 6.

[00:17:05] Tony: 67%.

[00:17:05] Cameron: Thank you, Tony. Yankol. Now, one of our new mem­bers, John, asked me a week or so ago why YAL was­n’t on our buy list. I had a look through the check­list and I said, yeah, the Prop­Caf was too high. now, I went in and looked at Stock Doc­tor’s num­bers, it report­ed that the oper­at­ing cash flow per share was 65.

[00:17:31] Cameron: 3 cents, price was 5. 01 at the time, so it had a Prop­Caf of 7. 67 above our cut­off of 7. John said, well, that’s not what he was get­ting with his num­bers. He had it down about 2, the Prop­Caf, look­ing at the num­bers I think he was get­ting from the, the, finan­cial report. So I went and had a look at Stock­o­pe­di­a’s num­bers, and we’re going to [00:18:00] have a guest from Stock­o­pe­dia, Chris Batch­e­lor, on the show in a cou­ple of weeks to talk to us about Stock­o­pe­dia and their vision for the world, look­ing for­ward to that because I’ve been using them a lot late­ly, to test dif­fer­ent things.

[00:18:11] Cameron: And actu­al­ly, one of the good things about hav­ing Stock­o­pe­dia is I can see where the anom­alies are with things like this, where Stock Doc­tor reports one thing and Stock­o­pe­dia reports some­thing dif­fer­ent. they report­ed, Stock­o­pe­dia this is, report­ed the price to oper­at­ing cash flow as 2. 92. So I went back to Stock Doc­tor and asked them about it.

[00:18:32] Cameron: They report­ed back that they thought their num­bers were right. And they sent me a screen­shot of, YAL’s,last report. Where it shows income tax paid of near­ly 1. 7 bil­lion that’s com­ing out of its cash flow num­ber. which then says sort of the net oper­at­ing cash flow for the peri­od end­ing the 30th of June, 2023 was 89 million.[00:19:00]

[00:19:00] Cameron: But, I still, I still could­n’t fig­ure that out. Even if that is in fact legit­i­mate, you can take out the. Income tax, which, which I believe is how oper­at­ing cash­flow should work, right? You take out income tax. I went and looked up the def­i­n­i­tion of oper­at­ing cash­flow and they all said it was after income tax had been paid.

[00:19:21] Cameron: You’re frown­ing at me though.

[00:19:23] Tony: Well, then, well, unless there’s dif­fer­ent account­ing state­ments, stan­dards, I went to the… Oper­at­ing cash flow state­ment for Yarn Col­umn, it’s in, so, yeah, it’s a moot point. I would have thought income tax was part of oper­at­ing, but any­way.

[00:19:37] Cameron: But I still could­n’t work out, why the, how the stock doc­tor num­bers were work­ing because.

[00:19:46] Tony: Yeah,

[00:19:47] Cameron: Yeah, go on.

[00:19:48] Tony: Yeah, so, there’s, I think the key might be that Stock Doc­tor, do a rolling 12 month oper­at­ing cash flow fig­ure. So if you go into Stock Doc­tor, and look at [00:20:00] the Get down, drill down to the oper­at­ing cash flow page, you have a check­box, and one says, annu­al­ized, and one says, as report­ed, and that’s, that’s prob­a­bly, that explains a bit of the dif­fer­ence, so the rolling, or the annu­al­ized num­ber is 867 mil­lion, which takes the sec­ond half of last year and adds it to the first half of this year, first half of this year, On an as report­ed basis, it’s only 89 mil­lion, as you said, so you, so the, so Stock Doc­tor are using the 867 mil­lion num­ber, and that’s the one I use as well, and we’ve talked about this very ear­ly on dur­ing QAV, that if we go back, we need a 12 month num­ber to use.

[00:20:42] Tony: Because cash­flow can move around half by half. But if we go back to the lat­est full 12 month num­ber with­out hav­ing to add things togeth­er, it’s in the last annu­al report. And it could be as much as 18 months out of date,12 to 18 months out of date and [00:21:00] for a com­pa­ny like Yan­coal or min­ing com­pa­nies, their cash­flow.

[00:21:03] Tony: Does move around a lot and you can see that just look­ing at the pri­or num­bers in, in this case, and the fact that they’re now start­ing to pay tax, which they weren’t doing before. and so that’s dra­mat­i­cal­ly reduced their oper­at­ing cash­flow. So the num­ber from Stock Doc­tor is 867. That’s the annu­al­ized oper­at­ing cash­flow.

[00:21:21] Tony: And if I use that num­ber, I get the 7. 6 priced oper­at­ing cash­flow, which is what is in our buy list. But if I back out the tax that was paid, the 1. 78 bil­lion, I get a num­ber clos­er to three times cash flow. So, it depends how you do this. These are, I guess, cal­cu­la­tions as to what the

[00:21:44] Tony: num­ber is.

[00:21:45] Cameron: So, should we be, remov­ing the income tax? Do you agree with Stock Doc­tor’s account­ing prin­ci­ples here?

[00:21:54] Tony: Well, Stock Doc­tor haven’t removed the income tax. So I’m not sure why they said that in their answer. [00:22:00] Because, because what’s flowed through to our buy list is an annu­al­ized cash flow. So two halves, two most recent halves of 867 mil­lion. And then divid­ing, make, doing the cal­cu­la­tion to give you the oper­at­ing cash per share and then divid­ing by the share price, you get 7.

[00:22:19] Tony: 6, which is the num­ber in our buy list, and I think it’s the cor­rect num­ber. If you want to take the income tax out, it drops down to 3. 7, which is clos­er to the num­ber that you were say­ing,

[00:22:33] Tony:  the ques­tion­er had.

[00:22:34] Cameron: Yeah.

[00:22:35] Tony: So I’m guess­ing some­one’s backed it out.

[00:22:37] Cameron: When I say take it

[00:22:38] Cameron: out, I mean, we’re, we’re tak­ing it out of the top line and then end­ing up with the bot­tom line of 89 mil­lion for the half. So that’s what Stock Doc­tor have done. They’ve, they’ve tak­en the tax out of the total oper­at­ing cash­flow, the net oper­at­ing cash­flow for the, for the half.

[00:22:56] Cameron: And you, and you’re hap­py with that.

[00:22:59] Tony: [00:23:00] Yes,

[00:23:00] Cameron: Okay.

[00:23:02] Tony: so what I’m say­ing is, if you oper­ate a busi­ness, you pay tax, I mean, that’s part of the oper­at­ing, and it’s in the oper­at­ing cash flow, I went and looked at the oper­at­ing cash, the oper­at­ing cash flow state­ment in the lat­est results for Yan­col, and it’s cer­tain­ly the last item in the oper­at­ing cash flow

[00:23:16] Tony: state­ment.

[00:23:17] Tony: There.

[00:23:17] Cameron: paid. Yeah.

[00:23:19] Tony: Yeah. Now, I know Yankol has a lot of Chi­nese invest­ment in it, so I don’t know whether that’s a par­tic­u­lar Chi­nese stan­dard ver­sus an Aus­tralian stan­dard, but, it makes sense to me that income tax is part of the

[00:23:29] Tony: cash flow state­ment.

[00:23:31] Cameron: Okay, so that’s a ques­tion we can ask Chris Batch­e­lor from Stock­o­pe­dia when he comes on about why they did­n’t remove that from the net oper­at­ing cash flow fig­ure.

[00:23:42] Tony: Well, they did­n’t, or what they did.

[00:23:45] Cameron: Wow. They, they, they did­n’t take the tax away from the net num­ber.

[00:23:53] Tony: But if I read this right, Stock­o­pe­dia has, using Stock­o­pe­di­a’s num­ber, has a Bet­ter Prop­Caf [00:24:00] than using Stock Doc­tor’s num­ber. I think Stock Doc­tor is 7. 6 and Stock­o­pe­dia is around 3 or just less than 3. Yeah, so that sounds like they’ve tak­en the income tax out. But I haven’t rec­on­ciled Stock­o­pe­dia so I can’t speak for them.

[00:24:14] Cameron: Yes. They’ve reversed the, income tax pay­ment.

[00:24:18] Tony: Okay. Okay, that might be good. Let’s ask Chris. There might be a good rea­son for that, but from my point of view, right, if the com­pa­ny gen­er­ates a bil­lion dol­lars in tax and then pays a bil­lion, sor­ry, two bil­lion dol­lars in prof­it and pays a bil­lion dol­lars in tax, that’s one bil­lion dol­lars they don’t have as oper­at­ing cash flow to invest.

[00:24:36] Tony: So it’s mate­r­i­al to us when we’re look­ing at oper­at­ing cash flow that we take that into account.

[00:24:42] Cameron: thank you for clar­i­fy­ing that.

[00:24:44] Tony: Okay.

[00:24:45] Cameron: Hope that helps, John.

[00:24:47] Cameron: last point I had here, Tony, is I added the first stock to our dum­my U. S. port­fo­lio today.

[00:24:54] Tony: Ooh, good.

[00:24:56] Cameron: Yeah. Do you want to know what it is?

[00:24:59] Tony: [00:25:00] A US what?

[00:25:00] Tony: GameStop.

[00:25:01] Cameron:

[00:25:01] Cameron: MFG, Mit­suho Finan­cial Group. A Japan based bank hold­ing com­pa­ny, main­ly engaged in the busi­ness of bank hold­ing com­pa­nies, which is con­ve­nient. Banks, secu­ri­ty spe­cial­ist com­pa­nies and oth­er com­pa­nies. it was 26 stocks deep in my buy list. The first 25 all had neg­a­tive sen­ti­ment includ­ed things like Sig­na­ture Bank.

[00:25:30] Cameron: Which we talked about a while ago that I think it’s just gone bank­rupt. very dif­fi­cult to,

[00:25:36] Tony: That’s that’s extreme neg­a­tive sen­ti­ment, isn’t it?

[00:25:40] Cameron: well, all 25, except one, there was one com­pa­ny in the, in the top one, a stack ranked by QAV score.

[00:25:48] Tony: Mm hmm.

[00:25:49] Cameron: There was one that had a pos­i­tive sen­ti­ment, but when I dug into it. It was called NM. It, was its tick­et code. It, is under an acqui­si­tion offer. [00:26:00] So I nixed, nixed that and MFG was the next one I could find, but, slow process, drilling down, but all the ones that were neg­a­tive, lit­er­al­ly we had, were like flat­line zero.

[00:26:10] Cameron: They’d, they’d all been doing well. And then for some rea­son, all of them had just like flat­lined recent­ly, crashed off the edge of a cliff and flat­lined. I don’t know why, but it was com­pa­ny after com­pa­ny, after com­pa­ny,

[00:26:20] Tony: what data source are you using?

[00:26:23] Cameron: Stock­o­pe­dia.

[00:26:25] Tony: Okay, but I mean, if I saw some­thing like that, I’d ques­tion whether the data source stopped feed­ing

[00:26:31] Tony: data at a cer­tain date.

[00:26:34] Cameron: Yeah, well,

[00:26:34] Tony: a few into the bread loader and see what you get.

[00:26:37] Cameron: yeah, Brade­la­tor, is a bit tricky because they’re all on dif­fer­ent exchanges. Over there. Some are on New York Stock Exchange, some are on NASDAQ, some are on OTC, and I have to keep check­ing which one they’re on and chang­ing the bread­e­la­tor thing, and it’s just eas­i­er to use this one, but I had checked them, I did, the first round I did this a cou­ple of days ago, I did use the bread­e­la­tor and I was find­ing the same thing, [00:27:00] so I don’t, I don’t think it’s a prob­lem, I think there’s just for some rea­son A

[00:27:04] Cameron: lot of these com­pa­nies, because there’s so many com­pa­nies over there and a lot of them,

[00:27:07] Tony: Mm,

[00:27:09] Cameron: for what­ev­er rea­son have, hit the wall.

[00:27:11] Cameron: Any­way, I learned a lot about find­ing qual­i­fied audits. I had to fig­ure out

[00:27:15] Tony: ha, ha

[00:27:16] Cameron: all the dif­fer­ent report­ings that they have over there and where, it was sup­posed to be a 10F, a 10K. Yeah, 10K, that’s right. That sounds about right. But then when I went Look­ing for the 10K for MFG, they did­n’t have one because they’re a for­eign based busi­ness.

[00:27:36] Cameron: So I think that was a, that was a 20F I had to look in. Here we go. Yeah, the 10K and then the 6K and then the 20F. I had to go find their 20F any­way. It was a bit of a bit of a fun exer­cise. But any­way, so there you go. One down, 19 to go and then I can track that. But now we’ve found that Stock­o­pe­dia does­n’t [00:28:00] fac­tor in tax­es paid in oper­at­ing cash flow.

[00:28:04] Cameron: I might have to, revis­it that.

[00:28:08] Tony: Well, we

[00:28:08] Tony: don’t know. We need to talk to them about it, I guess.

[00:28:11] Cameron: Well, I can have a look at some more exam­ples, with the Aus­tralian check­list and, and have a look at where their Prop­Caf sig­nif­i­cant­ly dif­fers to our Prop, Stock Doc­tor Prop­Caf and try and see if I can spot any com­mon­al­i­ties. But any­way, I’ve spent a lot of time on the, on the US port­fo­lio thing.

[00:28:29] Cameron: It’s, a lot of work, but I’m get­ting close to being able to build a check­list and then we’ll see how it goes. Should be fun.

[00:28:36] Tony: Well, thanks for all your hard work. That’s

[00:28:37] Tony: great.

[00:28:38] Cameron: Oh, it’s my plea­sure. Thank chat GPT. It’s done most of the work.

[00:28:44] Tony: I know how much you love finances and drilling through reports and data and spread­sheets.

[00:28:49] Cameron: Love it. Love it. Any­way, what have you got to talk

[00:28:53] Tony: I, if I had a time machine and went back to, what was it, 13 years ago when we went out for our first din­ner and said, your future is [00:29:00] going to be talk­ing about invest­ing and, and drilling through spread­sheets. No, you would­n’t have believed me.

[00:29:07] Cameron: I would have shot myself on the spot. Yeah. Would have jabbed a chop­stick

[00:29:09] Tony: Yeah.

[00:29:11] Cameron: through one of my eyes.

[00:29:12] Cameron: you go. No, I like, I enjoy it. I mean, it’s hard. I’m not good at it and it’s hard, but I feel good when I get some­where, like when I final­ly added a stock today, I was like, okay, it’s tak­en me six months

[00:29:27] Tony: Wow.

[00:29:27] Cameron: get to this point, like try­ing to build a check­list for the Amer­i­can mar­ket and all that kind of stuff was a lot hard­er than I thought it was going to be.

[00:29:35] Cameron: I still don’t know if it’s going to work.

[00:29:38] Tony: yeah,

[00:29:38] Cameron: It’s still,

[00:29:39] Cameron: MFG might, go bel­ly

[00:29:41] Cameron: up next week. Who knows? But any­way, we’ll see how, see what hap­pens. I’ll report on it as, as I go.

[00:29:46] Tony: Yeah, thank you. Well, I mean, it’s it’ll be fun­ny if you get to the stage where you’re right and then Stock Doc­tor releas­es you as stocks and we can do it using our cur­rent sys­tem.

[00:29:56] Tony: We’ll see.

[00:29:57] Cameron: Yeah. That’d be about right. Yeah.

[00:29:59] Tony: Yeah, [00:30:00] any­way,

[00:30:01] Cameron: What have you got on your

[00:30:02] Cameron: to do list today? Tk,

[00:30:04] Tony: yeah, well, it’s, it’s Being one of those times in the, in the share mar­ket, I, Buy list stocks that are in the news have all been hav­ing prob­lems and they’re all neg­a­tive. So, it start­ed off about a week ago when, Sims Met­al Group, one of the stocks I owned, had a mar­ket update. And the, they were trashed, I think they dropped 10%.

[00:30:23] Tony: Straight away after the mar­ket update. And I read the mar­ket update and could­n’t see too much wrong with it. In, in, they were basi­cal­ly say­ing, we don’t know what’s gonna hap­pen with the mar­ket . It’s it’s in a state of flux. And, their shares got sold off. So that was, it came out of nowhere, a bit of a sur­prise, and they had the rule on them.

[00:30:41] Tony: oh, three point trend­line sell, I’m not sure which, lithi­um became a sell at some stage. Last cou­ple of weeks I had to sell my hold­ing in Pil­bara (PLS). So two down, Viva Ener­gy, one of the oth­er stocks I own. It’s, it’s been on the buy list for, for a while. they have a large share­hold­er called [00:31:00] Vitol, V I T O L, who had, invest­ed in the old Shell com­pa­ny, and, tak­en it to the ASX boards.

[00:31:09] Tony: they still, I think they had, about just under half of the com­pa­ny. They retain shares in and they did a sell down last week of 16%, which again, trashed the share price for Viva Ener­gy and sparked a 10 per­cent decline. It’s kind of slow­ly get­ting back from that. And Vitol still holds 16 per­cent and they’ve giv­en all sorts of under­tak­ings that they won’t sell more in the near future or as far as they can see.

[00:31:35] Tony: so that’s been inter­est­ing. And I guess I call that one out because com­pa­nies with large share­hold­ers like that do get knocked down. By Fundies and by Stock Bro­kers because they fear two things, one that the large stock­hold­er will know more about the com­pa­ny than they will, and when Vitol sells down a large stake, peo­ple ques­tion whether it’s [00:32:00] some kind of insid­er knowl­edge which is pro­vok­ing that.

[00:32:03] Tony: Vitol came out and said it was­n’t, and they’re just man­ag­ing their port­fo­lio. So I believe I’m at face val­ue. but the, both the LNG, and oil price has been ris­ing, which, is good for this com­pa­ny. So if they do have inside infor­ma­tion that has­n’t come out yet and every­thing else seems to be okay.

[00:32:21] Tony: the oth­er thing that, that, stock­bro­kers and fundies don’t like about a com­pa­ny with a large share­hold­er like this is, is, it low­ers the free flight. So the ADT. Aver­age dai­ly trans­ac­tion which can keep some peo­ple out. It also is looked on poor­ly by the index mak­ers, Stan­dard Poor’s, etc. So it could crimp VEA’s abil­i­ty, Viva Ener­gy’s abil­i­ty, to get into or out into index­es, to be pro­mot­ed up into index­es.

[00:32:47] Tony: It’s a fair­ly large com­pa­ny, so I think it’s being includ­ed in the large index­es, but I haven’t checked. So any­way, it’s, I haven’t had to sell them, which is good, because I think it will recov­er from from this. but, yeah, it was, a sur­prise to [00:33:00] see Bit­tol sell down and to see the reac­tion

[00:33:01] Tony: from the mar­ket, which was inter­est­ing.

[00:33:04] Tony: And, yeah, I think from mem­o­ry, they did­n’t sell down at a big dis­count, they only got about a 5 per­cent dis­count to the price, because often­times when a com­pa­ny sells down like this, you can imag­ine the mar­kets flowed with, with trade, so it hap­pens off mar­ket. And the bro­kers ring around hec­ti­cal­ly try­ing to get peo­ple to take such a large chunk of the com­pa­ny.

[00:33:24] Tony: And so they have to get those shares away at a dis­count, which when the mar­ket opens again the next day, does mean that the share price is straight away down. But it did go down fur­ther than the dis­count for this

[00:33:35] Tony: par­tic­u­lar com­pa­ny sell­ing.

[00:33:38] Cameron: Sor­ry, you scared me there. ’cause I own a bunch of Viva Leisure.

[00:33:45] Tony: Ah, dif­fer­ent.

[00:33:45] Cameron: V E A, but yeah, I was try­ing to work out what’s the dif­fer­ence between Viva Ener­gy and Viva Leisure? What the, what’s the share code? So, because it’s inter­est­ing for, I, I had noticed that on my alerts report today, Viva Leisure, VVA.[00:34:00]

[00:34:00] Cameron: Isn’t show­ing up in stock his­to­ry. It looks like some­thing’s hap­pened to it. And if I go into, Yahoo Finance and look at today’s chart, it’s say­ing graph unavail­able, so I don’t know what’s hap­pen­ing with Viva leisure. But yes, Viva Ener­gy also down near­ly a rlue one sell in our light port­fo­lios by the looks of it.

[00:34:22] Tony: Right. Yeah. And that’s, I guess, anoth­er point to make at this time of year, too, is before you sell some­thing with a Rule 1 or even a 3PTL, just check to see it’s not ex div­i­dend and you’re wait­ing for pay­ment because that’s hap­pen­ing a bit at the moment, too. And of course, the last stock to men­tion is Qan­tas, again, a buy list stock for a while.

[00:34:40] Tony: It’s had its trou­bles. luck­i­ly it has­n’t been a 3PTL sell or a, has­n’t been a real one for me, but I think you may have sold it from some of the, of the light port­fo­lios. again, I mean, it’s, it’s going to face its chal­lenges, but this could be a buy­ing oppor­tu­ni­ty. It’s not at the moment because the share price is still going down, but if it turns around again, [00:35:00] the num­bers are

[00:35:00] Tony: still quite com­pelling for it.

[00:35:03] Cameron: yeah I had to sell that out of my super too, I think I had to rule 1 it, but I notice you’re still hold­ing onto it so you must have

[00:35:12] Tony: I am, yeah.

[00:35:13] Cameron: at a dif­fer­ent price than I did.

[00:35:15] Tony: Yeah, I did. I bought it quite a while ago, about a year ago, I think.

[00:35:19] Cameron: Right.

[00:35:20] Tony: and hap­pi­ly rode it up and now it’s come back down to earth. And look, it’s going to be an inter­est­ing AGM. I know we talked about it with Steve last week, but,I think that my guess, and it’s only a guess, is that there will be a protest vote against the remu­ner­a­tion report.

[00:35:34] Tony: and I’m not sure what the board will have to do then to… Stop get­ting a sec­ond one next year, but I imag­ine it’s going to have to be to get some kind of repay­ment from Alan Joyce and poten­tial­ly, some of the direc­tors not restand­ing or even retir­ing or poten­tial­ly the chair­man. Whilst I’m not a fan of the chair­man, it’s going to be hard for the com­pa­ny if they turn over both the CEO and the chair­man at the same time.[00:36:00]

[00:36:00] Tony: but maybe if there is a REM strike, he may well, agree to leave after a cer­tain peri­od. But, that’s all just guess­ing. Yeah, the last thing I had to talk about was Alex told me that, as part of her check­ing of, mar­ket infor­ma­tion, she changed the mort­gage rate in the spread­sheet. Just recent­ly, and it looks like it’s now, let me just find it, 6.

[00:36:22] Tony: 58, which is our, 6. 58 per­cent which is our PCV yield, so I know that’s some­thing which peo­ple can, need to update in their own spread­sheets if they’re not using the one you put out, so just be aware of that. It’s now 6. 58, which is the aver­age, Mort­gage rate across the, the lenders in Aus­tralia.

[00:36:39] Cameron: Right. Thank you for that. Good pick up, Alex. Well that’s it!

[00:36:44] Tony: I’ve got a pulled pork to do and that’s it for me.

[00:36:46] Cameron: Oh, you’re doing a pulled pork, on hol­i­days, wow,

[00:36:50] Tony: Work­ing hard.

[00:36:50] Cameron: yeah, who are you pulling today, Tony?

[00:36:53] Tony: West­gold Resources, WGX,

[00:36:57] Cameron: WGX.

[00:36:59] Tony: yeah, I did­n’t tell you [00:37:00] before­hand cause I know you’d prob­a­bly

[00:37:01] Tony: go out and sell it if we had it in the port­fo­lios to avoid

[00:37:03] Cameron: Don’t hold it in the port­fo­lio. So do your

[00:37:06] Cameron: best, go nuts.

[00:37:08] Tony: okay. So, it came onto the buy list this week for the first time, that I can see for a while. it’s been, it’s pret­ty much a turn­around sto­ry, so it’s very inter­est­ing, from a, a invest­ment per­spec­tive if peo­ple want to have a look at it. WGX, West Gold Resources, WA Gold Min­er. it’s based in the Murchi­son area of WA, which is in the north­west part of WA, inland from the Carnar­von Ger­ald­ton area, and north­west of Perth.

[00:37:37] Tony: it’s got three big min­ing areas, in that over­all basin, six under­ground mines, a few open pits, and three gold pro­cess­ing plants. they also oper­ate their kind of own ser­vices busi­ness inter­nal­ly. West Gold Min­ing Ser­vices, which they claim gives them an edge in under­ground min­ing. They’ve devel­oped a lot of knowl­edge and they can apply [00:38:00] it more cost effec­tive­ly than going out and hir­ing min­ing ser­vices com­pa­nies to do it.

[00:38:04] Tony: So they’re kind of the main parts of this busi­ness. The real­ly inter­est­ing thing, I think, from an invest­ment point of view is that they had a turnover in man­age­ment and board about a year or two ago. So a refresh for the com­pa­ny and they’ve made some fair­ly dra­mat­ic changes. The com­pa­ny is now debt free.

[00:38:23] Tony: And because of that, and because of the, the gold price ris­ing, they can. Explo­ration, which the mar­ket’s tak­en, a kind view to, they had no more for­ward con­tracts, which means there’s, they’re ful­ly lever­aged to the gold price and the Aus­tralian dol­lar gold price, at least as a buy, and it’s been going up recent­ly.

[00:38:42] Tony: So that’s a good thing at the moment. they plan to start pay­ing a div­i­dend next year and they haven’t paid one before, I don’t think, or at least for a long time. So, that’s usu­al­ly a sign of, Increas­ing con­fi­dence by the board. if I go through the num­bers, the ADP for this com­pa­ny is [00:39:00] a lit­tle over 2.

[00:39:01] Tony: 1 mil­lion per day. So it’s quite a large stock for peo­ple out there who are look­ing at that. I’m using a share price of 1. 79 as my price for these num­bers might be slight­ly dif­fer­ent when you hear this. That price is less than the con­sen­sus tar­get, which is good. This is one of those com­pa­nies I’ve spo­ken about before where the Stock Doc­tor finan­cial health is strong and recov­er­ing.

[00:39:23] Tony: And it scores an extra point for that. I like recov­er­ing stocks. They tend to… Per­form very well finan­cial­ly as man­age­ment focus­es on costs and focus­es on debt and growth, which is, which is good. I know man­age­ment always focus­es on those sort of things, but typ­i­cal­ly if some­thing’s recov­er­ing, they’ve real­ly had to have a look at it to, to turn the com­pa­ny around.

[00:39:45] Tony: the Prop­Caf for this com­pa­ny is five times. Inter­est­ing­ly enough, the P. E. ratio is 85 times, and when I sort of had a look at that because I thought that was strange, the P. E. ‘s fore­cast to go down to 8. [00:40:00] 7, so kind of high sin­gle dig­its in June 24, accord­ing to Stock Doc­tor. I guess time will tell whether that’s the case or not, but I guess what it means is that there has­n’t been much earn­ings.

[00:40:11] Tony: In the last annu­al num­bers, and they, but the cash­flow is com­ing through and we’d expect to see the PE drop going for­ward. But PE of 85 times is the high­est in the last six halves. So it scores a neg­a­tive one for that. using IV1 and IV2, IV2 in par­tic­u­lar is inter­est­ing because it’s based on the fore­cast earn­ings per share.

[00:40:30] Tony: And so IV2 is 2. 10, their price is 1. 79, 1. 80. So it’s below that. So it scores for that. IV1 is only 11 cents, but that’s using the cur­rent earn­ings per share, which we just said was low, because it’s a turn­around. net equi­ty per share is cur­rent­ly 1. 26,an addi­tion­al 30 per­cent takes it to 1.

[00:40:50] Tony: 64, and that’s just below the share price of 1. 79, so we can’t score it for that, but it’s not too far off, which may change if there’s some [00:41:00] kind of retreat in the share price risk in the com­ing months.

[00:41:02] Tony: Fore­cast earn­ings per share growth I want­ed to focus on. The ana­lysts cov­er­ing this com­pa­ny believe that the earn­ings per share will grow by 900%, which is prob­a­bly one of the high­est fore­cast growths I’ve seen for a long time. And that means that our met­ric of putting a hur­dle around growth, which is growth over P.

[00:41:24] Tony: E., has a 10. 6. Which is way above our 1. 5 hur­dle for that par­tic­u­lar score. So that’s a real­ly good thing to say. no yield, but we can’t score it on that, but they will start pay­ing out div­i­dends next year, no own­er founder, and the direc­tors are only hold­ing less than 1%, so we can’t score it for that. We do score it for a new three point trend line.

[00:41:48] Tony: it’s, it’s. A clas­sic horse­shoe or swoosh or hock­ey stick type share graph which was going down for a long time and now it’s on its way back up again. I guess because of [00:42:00] that, because of the prob­lems they’ve had in the past which are just being turned around now, we can’t score it for con­sis­tent­ly increas­ing equi­ty.

[00:42:07] Tony: So all those things add up to a score of 11 out of 16 items, some of those scored 2 along the way, and a qual­i­ty score of 69%, which is not too bad, and a QAV score of 0. 14. So, I think it’s worth inves­ti­gat­ing, have a look at it, you’re on the buy list, some of the… I guess my com­ments on the com­pa­ny, the pos­i­tives are, they’re real­ly, they real­ly seem to be man­ag­ing cash flow well, very dis­ci­plined.

[00:42:32] Tony: There’s a bit of, con­sol­i­da­tion going on in the WA gold fields at the moment, and this com­pa­ny bid for anoth­er gold com­pa­ny. and then was out­bid by, I think, Perseus or Remelius, I think, and, they backed away. They did­n’t try and get into a bid­ding war, so I think, again, it’s a sign of their dis­ci­pline in these things, and they said we can prob­a­bly get a bet­ter return by tak­ing that bid mon­ey and look­ing for, gold our­selves with their own explo­ration pro­gram, so I think that’s a great approach[00:43:00] to, to cash flow man­age­ment.

[00:43:02] Tony: yeah, so the oth­er pos­i­tive is, is the way they’re man­ag­ing the com­pa­ny now. Plen­ty of cash flow, no debt. No, no hedg­ing for the gold price. So if the gold price keeps com­ing up, that’s good. But of course that’s the flip side. That’s a risk if the gold price comes down, they’ll feel it pret­ty hard in their cash­flow as well.

[00:43:19] Tony: yeah, so all in all, worth, worth hav­ing a look on you on the buy list and it looks like a

[00:43:24] Tony: turn­around sto­ry for us,

[00:43:25] Cameron: Well, that’s inter­est­ing. And when I looked at gold on Mon­day, I decid­ed it was a Josephine, but look­ing at it today, it’s not,

[00:43:38] Tony: gold or US gold.

[00:43:40] Cameron: no, I’m look­ing at

[00:43:41] Cameron: Aus­tralian gold.

[00:43:42] Tony: When I say Aus­tralian, I mean Aus­tralian cur­ren­cy, gold,

[00:43:46] Tony: the gold price in Aus­tralian cur­ren­cy.

[00:43:48] Cameron: the chart that we nor­mal­ly use, which is kit­co. com, I’m look­ing at that, and now it looks okay, but for some rea­son, when I looked at it on Mon­day, I decid­ed that [00:44:00] it was, not. It was a Josephine, but any­way, I’m just pulling up my screen­shots that I would have tak­en on Mon­day. Here we go. Yes­ter­day.

[00:44:10] Cameron: Yeah, it’s fun­ny, look­ing at the, look­ing at the screen­shot of the chart that I took and it looked like it was dip­ping down yes­ter­day in Josephine, but when I look today, it’s back up. I think there’s Kit­co, there’s Kit­co charts that says it’s month­ly, but I don’t think it is. I think the lat­est price it’s show­ing is today’s price.

[00:44:34] Cameron: You know what I mean?

[00:44:36] Tony: Oh, it’s month­ly to the end of the last month, but it’s, it’s updat­ed dai­ly for the cur­rent month.

[00:44:41] Cameron: Yes.

[00:44:42] Tony: Alright,

[00:44:43] Cameron: that’s, I think that’s right. So when I looked at it yes­ter­day, it looked like a Josephine. Gold was going down and today it looks like it’s going back up. So it’s show­ing it as a buy. So any­way, how should we play that? Do you think just take it as we see it?

[00:44:59] Tony: [00:45:00] yeah, I think, yeah, take it, well, when you’re ready to buy,

[00:45:02] Tony: buy it, I guess, if it’s,

[00:45:04] Tony: well, check The chart.

[00:45:05] Cameron: Check it. Yeah. The fact that they’re

[00:45:07] Tony: but cer­tain­ly it was a buy.

[00:45:09] Cameron: Yeah. Okay. Yeah. All right. Thank

[00:45:10] Tony: It was cer­tain­ly a buy when I had a look before.

[00:45:12] Cameron: you. WGX. Good stuff. Cou­ple of ques­tions. Phil.

[00:45:18] Cameron: He says, Tony Kynas­ton has pre­vi­ous­ly talked about bor­row­ing against his mort­gage to invest in shares. Was this sim­i­lar to debt recy­cling as per Peter Thorn­hill? If so, how did he go with his sys­tem and the need to ensure he used only div­i­dend pro­duc­ing shares?

[00:45:37] Cameron: And also, with the buy­ing and sell­ing of shares fair­ly reg­u­lar­ly, how did he man­age that with­in a debt recy­cling set­up? Thanks.

[00:45:47] Tony: Yeah. So, I haven’t, I haven’t come across Peter Thorn Hill’s book or Peter Thorn­hill, but I did Google it this morn­ing. So, his web­site looked fair­ly sim­i­lar to what I, I did, I guess, at the moment I have a.[00:46:00] a prin­ci­pal and inter­est mort­gage with a redraw facil­i­ty and a, off­set account, so that’s pret­ty stan­dard, but, up until we came back to Aus­tralia, I was using more of an over­draft facil­i­ty, which is, I think, even more advan­ta­geous.

[00:46:15] Tony: So basi­cal­ly that was, I mean, we start­ed off using a prod­uct called Virid­i­an, which was with the State Bank of Vic­to­ria, which became Colo­nial. And then, so that’s what they called it. but com­pa­nies have dif­fer­ent, dif­fer­ent names from it. it’s called Equi­ty Man­ag­er with ANZ when we moved to them.

[00:46:32] Tony: but basi­cal­ly what it was is, A mort­gage that still charges you inter­est but does­n’t require a month­ly repay­ment. So it kind of suits tak­ing mon­ey like bor­row­ing against your house than invest­ing in the share mar­ket because you’re only get­ting div­i­dends, usu­al­ly twice a year. Some, some, some­times you can dig it.

[00:46:51] Tony: So it’s four times a year because some div­i­dend pay­ers come out in, dif­fer­ent quar­ters to the major­i­ty of the mar­ket. So you can do that. [00:47:00] But any­way, you’ve got month­ly cash­flow. So your income’s com­ing in, say, twice a year. with the, with the over­draft type facil­i­ty, that does­n’t mat­ter because you can pay down the mort­gage at any time, pay off inter­est first and then prin­ci­pal.

[00:47:12] Tony: it also suit­ed me when I was work­ing and, and Jen­ny’s was work­ing, because, we get bonus­es at the end of the year, most years, and so you can pay off the mort­gage with that, pay it down and then redraw it and invest it and you made that, tax deductible. So that’s pret­ty much how I man­aged it.

[00:47:28] Tony: In terms of going after div­i­dend pay­ing stocks, I mean, I do favor div­i­dend pay­ing stocks any­way, like you see in the check­list, because that’s a sign that man­age­men­t’s com­fort­able that the prof­itabil­i­ty will con­tin­ue and they can pay out div­i­dends. but, I did­n’t, I did­n’t, pay too much atten­tion to it.

[00:47:47] Tony: I, I gen­er­al­ly look at it, but some­times what I found was that some stocks had a very high yield, which could cov­er me to buy a stock that had no yield, and I’d still be able to, to pay off the, the mort­gage. And as I said, there was income [00:48:00] com­ing in some­times from bonus­es and things, so we could cov­er it.

[00:48:04] Tony: And even if we did­n’t gen­er­ate enough income to pay down the, the inter­est costs for that year, that was still, that was neg­a­tive gear­ing, basi­cal­ly, which would be a, a tax return against their oth­er income. So there’s a whole lot of things at play there. If you take, if you do take out that kind of, over­draft type facil­i­ty, you will pay more inter­est.

[00:48:23] Tony: And gen­er­al­ly it’s about 1 per­cent high­er than the rates you can get on stan­dard mort­gages. So take that into account, but it real­ly was worth that. to give us the flex­i­bil­i­ty of being able to draw down when­ev­er we need­ed and pay back when­ev­er we need­ed. And the fact that they could cap­i­talise the inter­est and not require a month­ly pay­ment.

[00:48:42] Tony: Bit dif­fer­ent to me now and a bit dif­fer­ent since post HANE. When I was talk­ing to the bankers when I came back to Aus­tralia, which was around the HANE Roy­al Com­mis­sion time, they were say­ing that banks were either being told by APRA that they could­n’t take out or could­n’t offer more than 10% of those kinds [00:49:00] of loans or they were just being con­ser­v­a­tive to try and be, tow the line a bit more in terms of how much mon­ey they lent to peo­ple and under what con­di­tions because of the Hayne Roy­al Com­mis­sion.

[00:49:10] Tony: But they’re a lot hard­er to find now and I don’t have one now because of that rea­son. even though I pre­fer it, but I’m cop­ing with the, with the mort­gage I’ve got. The big dif­fer­ence is that I’ve got to pay back a month­ly repay­ment now, and then,I’ll get div­i­dends in and lump sums, which, will put me ahead for a bit in the off­set account, and I either keep it or invest it, and then,manage my cash flow as I go.

[00:49:35] Tony: So, yeah, I’d pre­fer to have an over­draft type account, but I still man­age. And of course, your tax return also is anoth­er lump sum that comes in, which allows you to pay off or get ahead of your mort­gage repay­ments, I guess, and then cov­er costs going for­ward. A cou­ple of tips and tricks, though, apart from that, if you are going to do it, Then you do, [00:50:00] from a tax office point of view, you do need to A, invest in them.

[00:50:03] Tony: You do need to take the draw­down from your mort­gage and invest it in income pro­duc­ing assets. So you could­n’t, for exam­ple, draw down and take a hol­i­day or draw down against your house and, and ren­o­vate the house. That, that’s not income pro­duc­ing. as far as the tax office is con­cerned, even though it improves the val­ue of your house when you even­tu­al­ly sell it, it’s not tax­able.

[00:50:21] Tony: So you don’t get The tax office does­n’t like you claim­ing it as a deduc­tion. So from that point of view, I think it’s eas­i­er if you, keep a sep­a­rate invest­ment mort­gage and what­ev­er oth­er kind of fund­ing you need for your per­son­al use. It’s eas­i­er. Clean­er from a report­ing point of view and to avoid temp­ta­tion to, to def­i­nite­ly if you’re redraw­ing against your house for invest­ment to keep that sep­a­rate from any oth­er mort­gages you might have or any oth­er fund­ing you might have.

[00:50:53] Tony: So that’s the first thing. Sec­ond thing is that the tax office likes to see you draw down and invest straight away. [00:51:00] So, I don’t know if there are any, if there are firm rules about this, but sort of draw­ing down and putting it in your bank account while you decide what to do,it’s just kind of a two stage process and the tax office may query that, but again, seek your accoun­tan­t’s tax advice on that, but, it, it, the idea is that you draw down your mort­gage and you put it straight into an income pro­duc­ing asset, and then you get a tax deduc­tion for the inter­est.

[00:51:24] Tony: And you can use the income from div­i­dends to pay it off. and I guess last­ly, the oth­er thing to make note of is that it does­n’t have to be shares that you buy. You could, for exam­ple, go out and buy anoth­er invest­ment or buy anoth­er prop­er­ty and use that as an invest­ment prop­er­ty. So there are all sorts of per­mu­ta­tions and com­bi­na­tions to this, but it’s cer­tain­ly.

[00:51:43] Tony: was a valu­able leg up for us to be able to take that fact that we had equi­ty in our prop­er­ties and to put it to work for us in a tax effec­tive way was, was a real eye open­er for me and some­thing we’ve used to our advan­tage over the

[00:51:55] Tony: years.

[00:51:56] Cameron: Race­hors­es. Could you buy race­hors­es with it?[00:52:00]

[00:52:00] Tony: well, yes, as long as it’s a com­pa­ny, a busi­ness, that’s the big thing with resources is the tax office treats most peo­ple who buy resources, as a hob­by­ist because you’re not con­duct­ing a busi­ness. So that’s anoth­er test. So yeah, get tax advice before you do any­thing on this, but,if you’re doing it with shares, you should be fine.

[00:52:19] Cameron: We’ll talk to you

[00:52:20] Cameron: in after hours about how your hors­es are going. Dave, thank you, Tony. That was for Phil. Thank you. This is a ques­tion from Dave. If a stock is ex div­i­dend, but the div­i­dend has­n’t been paid yet, do we add the div­i­dend back into work out if it is a Josephine? I thought that was a good ques­tion.

[00:52:38] Cameron: I did­n’t know the answer to

[00:52:40] Tony: It is. Yeah, no, and I had­n’t come across it before either, but it does make sense. So we’ve always focused on if you hold the stock, if you own the stock and it goes below one of our sell trig­gers to have a div­i­dend back, if it’s ex div­i­dend before the div­i­dend’s being paid. because that’s basi­cal­ly your mon­ey and part of the invest­ment until you invest it in some­thing else.

[00:52:59] Tony: but, I had­n’t [00:53:00] con­sid­ered this one, but yeah, it’s actu­al­ly a good buy­ing oppor­tu­ni­ty. If a stock goes ex div­i­dend and it drops because of that, because peo­ple aren’t going to get the div­i­dend, they don’t pay as much for the stock, it could be a buy­ing oppor­tu­ni­ty. I mean, if it was sell­ing close to a, a 3PTL, I prob­a­bly would add it back.

[00:53:17] Tony: Because the stock usu­al­ly recov­ers over a peri­od of time back to what it was before it went ex div­i­dend. Because there’s an expec­ta­tion of get­ting anoth­er div­i­dend in six months time. So, that’s a good, good thought from Dave. I think

[00:53:30] Tony: we should prob­a­bly do it.

[00:53:31] Cameron: So let me just make sure I under­stand that. If we’re look­ing at a stock, we haven’t bought it, it’s on the buy list, it’s a Josephine, but if I fac­tor its div­i­dend back in, if it’s in between the ex date and the pay­ment date, if I fac­tor the div­i­dend back in and that makes it not a Josephine, then it’s still a buy.

[00:53:54] Cameron: Okay,

[00:53:55] Tony: Yeah, so I guess a prac­ti­cal exam­ple would be some­thing like, I don’t know,Credit Corp, which I [00:54:00] know is ex div­i­dend at the moment, and it’s dropped by 5 or so per­cent, if you’re look­ing at it this month, you’d prob­a­bly see the share price was down com­pared to the end of last month, so it’s a Josephine, but it’s down because of the div­i­dend, so I would expect Cred­it Corp to raise by 5 per­cent between now and the next month.

[00:54:18] Tony: Div­i­dend pay­ment, because peo­ple will be buy­ing it in expec­ta­tion of that div­i­dend. And so, yeah, if it’s, you could add the 5 per­cent back and see if it was back above its month end clos­ing price from the

[00:54:29] Tony: last month.

[00:54:30] Cameron: GPT, you’re gonna have to… Help me

[00:54:33] Tony: Yeah. Anoth­er process. Exact­ly.

[00:54:36] Cameron: To fac­tor

[00:54:37] Tony: To your check­list you used to buy from the buy

[00:54:39] Tony: list.

[00:54:41] Cameron: Yeah, The meta check­list.

[00:54:45] Cameron: Thanks, Dave. Good one.

[00:54:47] Tony: It could pick up.

[00:54:48] Cameron: Yeah. Last ques­tion

[00:54:50] Cameron: this week is from John. Are you able to sup­ply mem­bers a chart or graph relat­ing to the score­card? Exam­ples. Num­ber one, [00:55:00] quan­ti­ty of stocks that are a buy over time. For exam­ple, week­ly, month­ly, quar­ter­ly. Num­ber two, quan­ti­ty of sales. 3.

[00:55:09] Cameron: Quan­ti­ty of Josephines. Com­par­ing these charts to see any cor­re­la­tion. Rea­son­ing. It helps to get a sense of the mar­ket. Is it bear­ish neg­a­tive? Equal buy quan­ti­ty ris­es and dur­ing bull pos­i­tive equals buy quan­ti­ty declines. Have you ever con­sid­ered or dis­cussed in the pod­cast? I don’t think we have, John, and I’m not sure I even under­stand it, but,

[00:55:33] Cameron: sounds inter­est­ing.

[00:55:34] Tony: think. I think what John’s get­ting to, and it’s not a bad idea, is how much of the buy list are in buys ver­sus Josephines or com­mod­i­ty sells or for some oth­er rea­son not a buy, and does that ratio change over time, and is it a sig­nal for us to be buy­ing or sell­ing gen­er­al­ly, I guess? if there are more buys than sells, it prob­a­bly means the mar­ket’s going up, and if there are more sells than buys, it prob­a­bly means the mar­ket’s going down, [00:56:00] which can, boost or drag on our port­fo­lios too.

[00:56:04] Tony: it’s a fair bit of work I would have thought to go back and do that analy­sis,

[00:56:07] Tony: but it can be done for sure.

[00:56:09] Cameron: If, if some­thing’s on the buy list, by def­i­n­i­tion, it’s not a sell.

[00:56:13] Tony: Oh, no, we check for com­modi­ties. And we check for Josephines, and it’s already, the three point trend line is already part of the check­list, so it should­n’t be there if it’s a sell there, but yeah, there’s a cou­ple of steps that we apply to the buy list before we actu­al­ly buy.

[00:56:34] Cameron: but my, okay, it might be a com­mod­i­ty sell, but it won’t be a three point trend­line sell because it won’t be on the buy list if it’s a three point trend­line sell. So what, what would, what would I be chart­ing then? The num­ber of stocks that are on the buy list, but are a com­mod­i­ty sell?

[00:56:54] Tony: And, or a Josephine.

[00:56:56] Cameron: Yeah. That’s the third one. Josephines I can do. Yeah. [00:57:00] yeah. Okay. But in terms of John’s point that you could sort of. And I get a sense of the mar­ket, bear­ish, neg­a­tive, etc.

[00:57:11] Tony: Yeah, well Josephines would do that for us, I would think.

[00:57:14] Tony: How many Josephines are on the buy list?

[00:57:17] Cameron: yeah, yeah. I was think­ing I could also, track my alert sheet and chart the per­cent­age of the stocks that I hold in all of our port­fo­lios that are sells and some­how com­pare that to the num­ber of stocks that are on the buy list or some­thing, but yeah. I’m all for chart­ing. I’ve often wished we had pret­ti­er things to show peo­ple.

[00:57:47] Tony: For our hol­i­day snaps, or our golf videos,

[00:57:49] Tony: or our horse

[00:57:50] Cameron: ha ha ha ha! Info­graph­ics, Tony! Info­graph­ics! I’ve gone through var­i­ous phas­es over the years try­ing to fig­ure out how do I turn QAV, the check­list, [00:58:00] pre­dom­i­nant­ly, into an info­graph­ic.

[00:58:02] Cameron: That is pret­ty and com­mu­ni­cates some addi­tion­al lay­er of infor­ma­tion visu­al­ly than the spread­sheet does. And I’ve nev­er, nev­er kind of worked it out, but maybe John’s onto some­thing here.

[00:58:16] Cameron: Maybe I can talk to GPT about how to do that. Thanks, John.

[00:58:22] Tony: And maybe also too, there’s, maybe there’s, yeah, maybe there’s a chart of… The ratio between the num­ber of stocks on our buy list ver­sus the num­ber of stocks that we down­load.

[00:58:32] Cameron: Yeah, I mean, I could just look at the length of the buy list.

[00:58:35] Tony: Mmm. Yeah.

[00:58:37] Cameron: dur­ing cer­tain times over the last few years, there’s been very, very few stocks on the buy list and some­times there’s a cou­ple of hun­dreds. So

[00:58:44] Tony: Yeah. Right.

[00:58:46] Cameron: yeah, no, it’s got some food for thought there. Thank you, John. Well, that’s it for the Q’s of the QAV today, TK.

[00:58:55] Cameron: After hours, I’ll start. Elon Musk. [00:59:00] I start­ed read­ing Wal­ter Isaac­son’s new bio on Elon Musk recent­ly. Big fan of Wal­ter Isaac­son’s biogra­phies. I read his Steve Jobs one, which I enjoyed. I read his Leonar­do da Vin­ci one. I’ve used that. Ray and I have just done. About 70 episodes on Leonar­do da Vin­ci on our Renais­sance show, which is rough­ly 70 hours.

[00:59:25] Cameron: We just fin­ished a three part series on the Mona Lisa, which I got­ta say, was mind blow­ing. I know so much more about the Mona Lisa now than I ever thought there was to know, and it’s actu­al­ly, I don’t know if you know this, pret­ty, pret­ty amaz­ing paint­ing, Mona Lisa. Don’t know, don’t know how many peo­ple out there know this, the Mona Lisa,

[00:59:46] Tony: Ha

[00:59:46] Tony: ha. Ha ha ha

[00:59:47] Cameron: pret­ty awe­some.

[00:59:50] Tony: I thought it was just an every­day

[00:59:51] Tony: paint­ing until some­one stole it and it became famous.

[00:59:54] Cameron: I had heard that sto­ry when we went to the Lou­vre in 2018 from our guide, turns out, [01:00:00] not real­ly true. It was already famous.

[01:00:03] Tony: ha ha.

[01:00:04] Cameron: I mean, it became, sort of more, more peo­ple were talk­ing about it after that hap­pened. Real­ly what hap­pened to it though in the 20th cen­tu­ry, which sort of coin­cides with that, is pho­tog­ra­phy.

[01:00:17] Cameron: More pho­tographs were tak­en of it. Those pho­tographs end­ed up in news­pa­pers and it starts get­ting men­tioned in art books, which start to become a thing. And then in 1963, er, no, 1960, it went to the Unit­ed States for the first time. Was on tele­vi­sion, JFK and Jack­ie brought it over as a big thing. They did a big thing.

[01:00:40] Cameron: So peo­ple, in the 20th cen­tu­ry, more peo­ple got to see it, because not a lot, before. Air­fares became rea­son­ably avail­able. Not a lot of peo­ple went to Paris and got to go to the Lou­vre, but, Napoleon liked it so much he hung it in his bed­room in, 1800 cir­ca that. So, I mean, it was a big [01:01:00] deal for peo­ple, for the Parisians, for the French, the French knew it was a big deal.

[01:01:04] Cameron: Art crit­ics knew it was a big deal. Guide books in the 19th cen­tu­ry said, hey, if you go to Paris, make sure you go to the Lou­vre and see the Mona Lisa. But, out­side of France, just peo­ple, you did­n’t get to see it until, in high qual­i­ty pho­tographs, prob­a­bly only, lat­ter half of the 20th cen­tu­ry.

[01:01:24] Cameron: But no, it’s, it’s, when you real­ly get deep, deep, deep into it, And the sto­ry that it’s telling,

[01:01:32] Tony: Right. Okay.

[01:01:33] Cameron: I, my appre­ci­a­tion of it.

[01:01:36] Cameron: Any­way, so Wal­ter Isaac­son wrote a great biog­ra­phy on Leonar­do da Vin­ci.

[01:01:39] Tony: And the oth­er rumor I’ve heard about it was, that it was actu­al­ly a paint­ing of Leonar­do him­self.

[01:01:44] Tony: in female form. Is that, is that true?

[01:01:47] Cameron: no, no evi­dence of that, but I do think there are, there is a, there are, there are a cou­ple of copies of it and a lot of nude ver­sions of it as well. Which I like. that all seemed to have come out of Leonar­do’s [01:02:00] stu­dio, by, like, his assis­tants, were doing copies of it at the same time he was doing the orig­i­nal, and he worked on the orig­i­nal for 16 years.

[01:02:09] Cameron: It was still in his stu­dio when he died. It was a nev­er end­ing process of per­fec­tion. But if you look at some of the copies that were made, they look more fem­i­nine than It does, and I think, I don’t think it’s a ver­sion of him, I think it’s sup­posed to be, and sort of gen­der ambigu­ous, because what she’s rep­re­sent­ing is all of human­i­ty.

[01:02:36] Tony: Okay.

[01:02:37] Cameron: If you go back and you look at the back­ground, I don’t know if you’ve ever noticed the back­ground of it, but it starts off way back in the dis­tance, real­ly crag­gy, bare, pre­his­toric moun­tain­scape. What are you doing that for?

[01:02:53] Tony: you, you stopped them for a lit­tle while.

[01:02:56] Cameron: Oh, did I? I

[01:02:56] Tony: see if it was me or you. Yeah.

[01:02:58] Cameron: thought you were like, this is [01:03:00] bor­ing. Shut up. Stop

[01:03:01] Tony: No, no, no, I thought it’s fas­ci­nat­ing, but yes, you, you froze for 10 sec­onds,

[01:03:07] Cameron: Hey, Chris­sy just got back in. If you go, if you look right in the back­ground, it’s pre­his­toric moun­tain­scapes. And as it gets clos­er and clos­er to you, the view­er, the land­scape starts to soft­en and become green­er and there’s rivers and a road and a bridge. And it’s sort of telling the pas­sage of time.

[01:03:26] Cameron: It’s the evo­lu­tion of the earth. And then the riv­er that runs on the right hand side of the paint­ing flows in over her shoul­der and becomes the silk over her shoul­der, which cas­cades as a water­fall down her breast. And the road that’s on the left comes in and enters her right breast and goes into her heart.

[01:03:45] Cameron: So he’s sort of talk­ing about. Humans evolv­ing out of the earth and, it’s like this pro­gres­sion of time. Every­thing that he, all of his macro, the macro world is reflect­ed in the micro world. All of [01:04:00] his study of geol­o­gy and his­to­ry and sci­ence, he’s tried to put into this one paint­ing and it real­ly is, a mas­ter­piece and, and, then you look at the.

[01:04:10] Cameron: His use of sfu­ma­to and chiaroscuro so there’s no hard lines around a face and the shad­ing and the col­or­ing and all of that kind of stuff as well obvi­ous­ly is par­tic­u­lar­ly com­pared to the oth­er art the oth­er great artists like Bot­ti­cel­li of the time is just way ahead of any­thing any­one else was doing but it was that lay­er of The, the sci­en­tif­ic and philo­soph­i­cal, mes­sages that he seemed to be pack­ing into it, that blew my mind the most.

[01:04:36] Cameron: Any­way, Wal­ter Isaac­son, his biog­ra­phy on Albert Ein­stein I also read, which was great. So any­way, the Elon one is fas­ci­nat­ing. Like, so far he, man, he had a messed up child­hood and, and, real­ly crazy start.

[01:04:52] Tony: And it got worse. got

[01:04:55] Tony: worse from there.

[01:04:56] Cameron: Well, I read the bit, the chap­ters last night of [01:05:00] X. com, his online pay­ments busi­ness that he start­ed in the ear­ly 90s, which merged with Pay­Pal, and then all the fights that he had with the Pay­Pal founders and Peter Thiel and, but, Yeah, like, the guy was a genius as a kid. Like, he wrote his first com­put­er games when he was 14 and was sell­ing them to com­put­er mag­a­zines.

[01:05:24] Cameron: I mean, the guy, there’s these sto­ries that you hear today that, oh, he’s not a genius and he’s nev­er done any­thing and he just buys oth­er busi­ness­es. Not true. And he was, like, he was… Obsessed with build­ing rock­ets to go to Mars as a teenag­er. He like inter­views with his high school friends and the peo­ple he knew as a kid.

[01:05:44] Cameron: That’s all he’s a bit obsessed with for his entire life is sus­tain­able ener­gy, putting humans on Mars, elec­tric cars. And, reform­ing the bank­ing indus­try. These are, this has sort of been his [01:06:00] pas­sion since he was a teenag­er. He’s been obsessed with those things and he’s still obsessed with them now, which, he’s just, he’s just fig­ured out how to buy the busi­ness­es that, are gonna, that seem to be help­ing him get to where he wants to be.

[01:06:15] Cameron: I mean, it’s kind of a fas­ci­nat­ing sto­ry, but the guy, like his wives, his var­i­ous wives and baby moth­ers that he has. Which are a lot, because he’s got about 10 or 11 kids. All seem to refer to him as a bit of a man child, which his father was too. His father sounds like a com­plete psy­chopath. so any­way, yeah, fas­ci­nat­ing sto­ry.

[01:06:36] Tony: Yeah. It’s on my list

[01:06:37] Tony: of books to read.

[01:06:39] Cameron: Chris­sy and I watched the Sinead O’Con­nor doc­u­men­tary on the week­end too, which came out last year, which, so before she passed away. And, yeah, real­ly, real­ly pow­er­ful, real­ly good stuff. It’s sort of her ear­ly years, child­hood up to sort of 1993 when,[01:07:00] the whole SNL thing hap­pened and her career kind of got…

[01:07:04] Cameron: She got, can­celed basi­cal­ly, par­tic­u­lar­ly in the Unit­ed States. but yeah, fas­ci­nat­ing, fas­ci­nat­ing doc­u­men­tary. And, yeah, she had­n’t just, she was an incred­i­ble, had an incred­i­ble voice and was incred­i­bly hon­est about her view of the world and just. Nev­er want­ed to be a pop star and, and just want­ed to use what­ev­er reach she had to tell the truth about the Catholic Church and all of the hor­ri­ble things par­tic­u­lar­ly it had done to peo­ple in Ire­land, women and chil­dren in par­tic­u­lar.

[01:07:39] Cameron: So yeah, I can rec­om­mend that too. It’s on SBS. What

[01:07:42] Tony: Yeah. I don’t know if, dun­no if you’ve seen it, but, just that sto­ry reminds me some­thing he’s pop­ping up, in my Face­book reels, which I guess means it’s on Tik­Tok a lot, is the, the, the song linger with, Dolores singing almost, I think it’s an acoustic set in the record store or some­thing, but it’s just.[01:08:00]

[01:08:00] Tony: So pow­er­ful and haunt­ing. It’s, it’s real­ly, real­ly good. Like every cou­ple of days

[01:08:05] Tony: it serves back up to me. So,

[01:08:07] Cameron: Real­ly? I haven’t seen that. There’s the Cran­ber­ries,

[01:08:09] Tony: that’s good. The cran­ber­ries. Yeah. Yeah,

[01:08:12] Cameron: away too, not long ago.

[01:08:13] Tony: he did. Yeah. So that just remind­ed me of that. yeah, I haven’t watched much at all or read much at all. I’ve just been trav­el­ing and doing things.

[01:08:20] Tony: So we cel­e­brat­ed Alex’s birth­day up on the Gold Coast here, which was good fun. And Sean was here too. And my broth­er and sis­ter came down with, Their spous­es and kids, which was a lot of fun. So it’s been a big fam­i­ly get togeth­er for us. Played golf, as I said before, in Bon­neville on the way up at Coffs Har­bor, which was, it’s a great course, real­ly good course.

[01:08:40] Tony: If any­one’s in the Coffs Har­bor area, look it up. And, we had a race­horse cast run­ning a group two race on the week­end and unfor­tu­nate­ly fin­ished fifth. it was­n’t a bad run, but even more unfor­tu­nate­ly is she looks like she’s injured. So we’re just wait­ing for the X race to come back. But she might be out for the spring and could even be worse.

[01:08:58] Tony: So, it’s been a bit [01:09:00] depress­ing the last 24 hours as the dribs and drabs of infor­ma­tion come in about that.

[01:09:04] Tony: But, we don’t have the final

[01:09:06] Cameron: What hap­pened? Was it a tum­ble or some­thing?

[01:09:08] Tony: No, no, they think she got injured in the race. She pulled up lame on one of

[01:09:12] Tony: her legs the next day, which.

[01:09:15] Cameron: just by run­ning, like noth­ing in

[01:09:17] Tony: Yeah, jar­ring, she may have been kicked or some­thing in the race, we don’t know.

[01:09:21] Tony: but yeah, it’s dev­as­tat­ing to have a good horse like that who may be out for­ev­er, but may be out for the spring, well def­i­nite­ly out for the spring, so we’ll see.

[01:09:28] Cameron: Hmm.

[01:09:30] Tony: On a lighter note, we have Poi­fect, who’s going to run on the week­end, a new horse com­ing in. we’re just wait­ing to find out whether she runs Sat­ur­day or Sun­day, they’re going to assess the fields and either throw her in the deep end or give her an easy start on the Sun­day.

[01:09:43] Tony: So that’s some­thing to look for­ward to, and Negro­nis, one of our oth­er hors­es, in Syd­ney this time, had a tri­al today and did OK, so she’ll be going off to the races fair­ly soon as well.

[01:09:54] Cameron: I hope she does bet­ter than the, no gronies that we had at, Felon’s Brew­ing in Bris­bane the [01:10:00] oth­er night. They were just no, they’re not no

[01:10:03] Tony: did­n’t taste, yeah,

[01:10:05] Cameron: Just

[01:10:05] Tony: did­n’t taste much like a

[01:10:06] Tony: Negroni, did they?

[01:10:07] Cameron: No. It was in a glass. That’s about the, where the, com­mon­al­i­ties with­in a no gronies stuff. Poi­fect, is that a, Three Stooges? ref­er­ence.

[01:10:18] Cameron: Is that where the name comes from? Per­fect.

[01:10:19] Tony: yep, Poi­fect, yeah, I was play­ing golf one day with Alex and I hit a good shot and I went, Ah, it’s Poi­fect! He had a laugh though. I, I named a horse that. And it’s quite fun­ny watch­ing all these, all these, stage rac­ing train­ers try­ing to either call it per­fect, or they can’t quite do the three Stooges, they call either Poi­fect or per­fect.

[01:10:41] Tony: Ha ha ha ha ha ha

[01:10:45] Tony: ha ha ha,

[01:10:47] Cameron: I love it. All right. Well, I got to go to Kung Fu. You got to go do what you got to do. Pack up your apart­ment.

[01:10:55] Tony: up, Yep, dri­ve back to Syd­ney tomor­row,

[01:10:58] Cameron: Thanks TK. Thanks for [01:11:00] com­ing on. Thanks for com­ing up to Bris­bane and safe trav­els back. I’ll talk to you next week. QAV a good week, every­one.

[01:11:07] Tony: thanks mate, you too,