QAV #639 — Holiday Mode

[00:00:00] Cameron: Wel­come to QAV 639 Hol­i­day Mode, is what I’m call­ing this episode, because I’m in hol­i­day mode.

[00:00:10] Tony: Are you tak­ing the Apol­lo

[00:00:11] Tony: Tourism and Leisure Camper out, are you?

[00:00:15] Cameron: Those, I told you Tony, did­n’t they change their name? They’re not called Apol­lo Tourism any­more, aren’t they? I think they changed their name because I, I for­bid use of

[00:00:22] Tony: yeah, we out­ed them, so they had to get rebrand­ed.

[00:00:27] Cameron: I think our entire audi­ence must be in

[00:00:29] Cameron: hol­i­day mode too, because we have a total of like one ques­tion for the show today, which suits me fine. I want to thank Andrew, who, took me out for a cof­fee today. Andrew from Mack­ay, who’s in town, took me out for a cof­fee. We had a good chat about Chat­G­PT, most­ly works in IT.

[00:00:44] Cameron: Up in the mines. And he was, he’s just lov­ing Chat­G­PT, using it for cod­ing and all design­ing his IT stuff. He and I were just both going, Oh my God, peo­ple have no idea what’s going on. It’s, you know, he said he talks to a lot of peo­ple and they’re like, what? Even [00:01:00] peo­ple in tech cir­cles aren’t using it yet.

[00:01:01] Cameron: And he’s just like, Oh man. Any­way, it was good fun. Rupert retired this week. Tony, that’s the big news for the week. Rupert.

[00:01:12] Tony: Rupert Mur­doch, of course, Kei­th Rupert Mur­doch, to be offi­cial.

[00:01:16] Cameron: Kei­th Rupert Mur­doch.

[00:01:17] Tony: Stephen Mayne wrote an inter­est­ing piece in the Eure­ka Report today about that. And it was, you know, think­ing about what hap­pens when Kei­th isn’t around, or when Rupert isn’t around any­more. And even though Lachie’s CEO, he does­n’t con­trol all the shares because the fam­i­ly trust kicks in. And then you’ve got three sib­lings who’ve been oust­ed.

[00:01:39] Tony: You’ve got Siob­han and the oth­er two. Who are won­der­ing whether Lach­lan is the right per­son to lead Fox and Sky and all the rest of it. News

[00:01:51] Tony: Corp. And there might be a vote to oust him in about a year’s time.

[00:01:55] Cameron: yeah. Did you get to the end of Suc­ces­sion?

[00:01:57] Tony: Oh yeah.

[00:01:59] Tony: [00:02:00] Great end­ing.

[00:02:00] Cameron: the last time Rupert’s been asked, was asked about it, he said he had­n’t watched it, but I’m think­ing… And, he’s prob­a­bly going, okay, I see the clus­ter­fuck it was when Logan died, I need to, spoil­er alert for any­one who has­n’t watched it,

[00:02:14] Tony: Yeah,

[00:02:15] Cameron: I need to be around to man­age this thing, I think.

[00:02:18] Cameron: He does­n’t want to make the same mis­take Logan made, hold­ing

[00:02:21] Tony: well, well, did you read the Fin Review piece about, about the back­ground to how it hap­pened? They, he hired, Onas­sis yacht and they all flew, all the kids flew into the Mediter­ranean and the sib­lings and the grand­kids and the hang­ers on, and they all went onto a boat thrash

[00:02:39] Tony: out what was going to hap­pen. And I thought, wow, that’s just like the last

[00:02:42] Tony: sea­son of

[00:02:43] Tony: Suc­ces­sion.

[00:02:43] Cameron: Right out of suc­ces­sion, yeah.

[00:02:45] Tony: yeah.

[00:02:47] Tony: Yeah.

[00:02:47] Cameron: And let’s hope Lach­lan isn’t Kendall, I guess. And I was sur­prised because I had the impres­sion over the last few years. since Ro when Roger Ailes got, kicked out of Fox, and they [00:03:00] sort of turned on Trump, after the last elec­tion, that Lach­lan was try­ing to push Fox into a Less con­ser­v­a­tive right wing modal­i­ty, but the first thing he does is appoint Tony Abbott to the board.

[00:03:15] Cameron: Like,

[00:03:16] Tony: Mmm.

[00:03:16] Cameron: what?

[00:03:18] Cameron: Like, why? Like, what the hell has Tony Abbott got to do with any­thing? Like, I don’t get that at all.

[00:03:27] Tony: Yeah, exact­ly. He can only be

[00:03:28] Tony: there to push Fox News even fur­ther to the right.

[00:03:31] Cameron: But what, like, what’s his rel­e­vance on a glob­al stage? Or an Amer­i­can stage? Why would you,

[00:03:37] Tony: Yeah.

[00:03:38] Cameron: there’s plen­ty of right wing con­ser­v­a­tive peo­ple he could have appoint­ed from the US. What has Tony Abbott got to do with any­thing? What did they owe Tony Abbott? You know, what was the

[00:03:50] Tony: Yeah. That’s more like that. That was a thought that crossed my mind is that he’s replac­ing Jack Nas­sar, who

[00:03:56] Tony: was a suc­cess­ful Aus­tralian busi­ness­man in [00:04:00] the auto indus­try for a long

[00:04:01] Tony: time.

[00:04:01] Cameron: was­n’t he the CEO of

[00:04:02] Tony: Yeah. Yeah, and he was Aus­tralian as well, so per­haps they feel like they’ve got to have an Aus­tralian on the board, but it does sound like Kripo

[00:04:10] Tony: Kwi for some­thing that hap­pened in the past in Aus­tralia.

[00:04:13] Cameron: Wow. Any­way, con­grat­u­la­tions to my old, my old friend Lach­lan. met

[00:04:19] Tony: You’re old friend? I thought you were more friends with his

[00:04:20] Tony: wife.

[00:04:21] Cameron: Well, I tried to get friend­ly with his wife. I

[00:04:23] Cameron: mean, I often said, I said to her, what’s he got that I don’t have? She said, you know, he’s going to inher­it bil­lions of dol­lars. And I was like, yeah, but you know, real­ly? Does that buy hap­pi­ness?

[00:04:34] Cameron: And she was like, yeah, actu­al­ly it does. I was like, okay.

[00:04:37] Tony: buys you Onas­sis’s yacht on the Mediter­ranean for a month.

[00:04:42] Cameron: Any­way, con­grat­u­la­tions to Lach­lan and Sarah and all the kids. I hope it, hope it works out well for them. Bet­ter One­Tel did.

[00:04:51] Tony: Yeah, that’s, that’s the thing, isn’t it? Again, Stephen Mayne point­ed out he’s only chaired

[00:04:55] Tony: two busi­ness­es so far, and they’ve both gone bel­ly up.

[00:04:59] Cameron: [00:05:00] Well, you know, you learn from your mis­takes if you’re a

[00:05:02] Tony: Yeah,

[00:05:03] Tony: absolute­ly.

[00:05:04] Cameron: And he’s, I’m sure he is.

[00:05:06] Cameron: And I’m sure his dad’s going to be look­ing over his shoul­der for the rest of his life. How­ev­er

[00:05:13] Tony: well, you’ve got to think that, yeah, you’ve got to think that that’s, on the hori­zon for Rupert now, apart from his age. Why would he step back if he was­n’t

[00:05:20] Tony: start­ing to feel it in his bones that, he was up, not up to the job?

[00:05:25] Cameron: Well, I think to avoid the Logan Roy sce­nario where

[00:05:27] Cameron: he drops over dead of a heart attack, dish­ing a mobile phone out of a toi­let or what­ev­er Logan was doing. And then. The whole suc­ces­sion thing plays out of every­one fight­ing each oth­er. And did he, did dad real­ly sign that doc­u­ment? Is that real­ly Kendal­l’s name on it?

[00:05:44] Cameron: Or did he draw a line under your name or through your name and all that kind of stuff? It was good stuff.

[00:05:50] Tony: That’s still going to hap­pen, right? Cause he’s got this fam­i­ly trust with kids and grand­kids and new kids and old kids in it. It’s, it’s going to

[00:05:57] Tony: hap­pen. There’s going to be all sorts of deals and [00:06:00] counter deals and renegs

[00:06:01] Tony: going on.

[00:06:01] Cameron: I don’t think the new kids are in it. I don’t think Wendy’s kids made it. I think it’s just, and his first daugh­ter’s not, and I think it’s just the, the three. I think the three are the only ones that are in it. Lach­lan and his broth­er and his sis­ter.

[00:06:16] Tony: James. Okay. I thought that, okay. There was some deal done I seem to recall with Wendy Ding’s kids. Maybe they have their own sep­a­rate trust and

[00:06:22] Tony: hold­ing.

[00:06:23] Cameron: I think they got looked after, but I don’t think they have any pow­er is what I read. Any­way, enough of News Corp. I, I did note the lit­tle spike that in their share price on the day that it was announced, which I thought was some­body stick­ing the knife in to Rupert. But, I do want to talk about stick­ing the knife in.

[00:06:38] Cameron: I want to, I

[00:06:40] Tony: bit of con­fi­dence for the new CEO.

[00:06:42] Cameron: Sure. Let’s read it like that. I want to get back to our YAL con­ver­sa­tion. This is only inter­est­ing to peo­ple that are inter­est­ed in, YAL and Stock Doc­tor. So we had this con­ver­sa­tion last week about YAL’s price to oper­at­ing cash­flow and whether or not tax­es should be tak­en into account [00:07:00] and We had one num­ber from Stock Doc­tor and a dif­fer­ent num­ber from Stock­o­pe­dia.

[00:07:06] Cameron: I went back to the Stock­o­pe­dia guys, to Elio D’Am­a­to, and Chris Batch­e­lor, and said, you sure your num­bers right here. Did you fac­tor in the income tax, etc. They came back and said, yeah, yeah, no, we stand by our num­bers. You should go back to Stock Doc­tor. And I’d already been to Stock Doc­tor and said, yeah, yeah, we stand by our num­bers.

[00:07:24] Cameron: So I spent hours, build­ing a spread­sheet that looked at the, I got Yale’s annu­al report, dumped those num­bers in, looked at the Stock Doc­tor num­bers, looked at the Stock­o­pe­dia num­bers, and some­thing was­n’t right about the Stock Doc­tor num­bers. So I went back to Stock Doc­tor again and said, I think you’re miss­ing, what I said in my orig­i­nal email to them, I think you’re miss­ing about 3 bil­lion dol­lars of oper­at­ing cash flow here.

[00:07:51] Cameron: And it, but it was­n’t the June half, it was from the Decem­ber half. They had, they say it was­n’t them, it was Morn­ingstar, but the, the [00:08:00] Decem­ber half num­bers were 3 bil­lion dol­lars out. And they’d car­ried it over into their trail­ing 12 month fig­ure. so they were 3 bil­lion dol­lars out in their oper­at­ing cash flow.

[00:08:10] Cameron: so. When we ran our check­list on YAL and it had the price to oper­at­ing cash flow of like 8, it should have been more like 3. So, they’ve fixed their num­bers, they tell me. but, you know, this is not the first time we’ve had prob­lems with Stock Doc­tor num­bers over the last cou­ple of years. And, you know, I’m not point­ing the fin­ger at Stock Doc­tor because A.

[00:08:33] Cameron: They rely on a third par­ty for their data. And B. You know, there’s a lot of… Deal­ing with num­bers. I’m, I’m, I’m the last per­son who should, crit­i­cize any­one for get­ting a spread­sheet wrong, but it just points out that, it’s good to have, a sec­ond data provider that we can com­pare num­bers with and say, Hmm, okay, why is there such a big dif­fer­ence in the num­bers between provider A and provider B?

[00:08:58] Cameron: I just hope that in [00:09:00] future, when that hap­pens, I don’t need to spend three hours build­ing a spread­sheet to try and work it out and go back to them. Hope­ful­ly.

[00:09:07] Tony: done. Cause I did that last week and the dif­fi­cul­ty I was hav­ing was Yan­coal and their report­ing weren’t giv­ing us a six month­ly fig­ure. So I was just get­ting 12 month and 12 month and 12 month and

[00:09:17] Tony: 12 month. So I could­n’t work out the six month or the rolling six month.

[00:09:22] Cameron: There was, I did find a six month­ly fig­ure in one of the Yan­coal reports, but I need­ed to dig back into it and, you know, add that in and all that kind of jazz. It was a pain in the arse, Tony. But just let­ting peo­ple know that the Stock Doc­tor num­ber was wrong. And, and props to Jon Alt­man, one of our new sub­scribers, new club mem­bers, who was the first per­son to high­light that to me, because he was doing his own num­bers and they weren’t, he was won­der­ing why YAL was­n’t on the buy list, so.

[00:09:51] Cameron: Props to John. One of the things we always say, it’s great that we have smart QAV club mem­bers

[00:09:59] Tony: Yeah. The hive [00:10:00] mind is always, the sum of the parts is always bet­ter than the, than greater than the, the

[00:10:04] Tony: whole is always greater than the sum of the parts. Yeah.

[00:10:08] Cameron: oth­er news items. I did our port­fo­lio now that we’ve agreed that NAVEX is okay again, I went back and had a look at our num­bers this morn­ing. Our, dum­my port­fo­lio since incep­tion, still up around 16.41% per annum ver­sus STWor the AXJOA at 6.45.

[00:10:33] Cameron: per­cent per annum. So we’re doing, I don’t know, two and a half times that. But the most, the more inter­est­ing one was the finan­cial year num­bers. So we’re near­ly at the end of Sep­tem­ber now. So three months into the finan­cial year, the Port­fo­lio is run­ning at 7. 18 per­cent per annum for the finan­cial year ver­sus the.

[00:10:58] Cameron: STW at [00:11:00] neg­a­tive 0. 32%. So, we’ve had a good start to the finan­cial year, par­tic­u­lar­ly vis a vis the bench­mark. That’s how we like it. That’s what I want to see.

[00:11:13] Tony: Yeah, it is. You know, as we spoke about for the six months pre­ced­ing when we were under­per­form­ing, it’s it’s a rub­ber band and it winds up and then let’s go and we

[00:11:23] Tony: fling the oth­er way and start to

[00:11:24] Tony: out­per­form.

[00:11:25] Cameron: Yeah.

[00:11:27] Tony: Yeah,

[00:11:27] Cameron: if I look at I don’t know, I did­n’t look at it for the last 12 months. so last one year, Yeah, if I look at the last one year now, we’re neck and neck, the bench­mark, so it’s sort of caught up, I guess, we’ve caught up to the, bench­mark, and if I look at the two year Time­line, we’re ahead again, 6. 4 per­cent ver­sus 3. 34%. So a lit­tle

[00:11:58] Tony: Dou­ble mar­ket.

[00:11:59] Cameron: [00:12:00] yeah, a lit­tle bit less than dou­ble mar­ket, but pret­ty close to dou­ble mar­ket. So, you know, it was, we had a bad stretch there last year, but it seems to be writ­ing itself, at the moment, even though the mar­kets had a shit­ty time. We had like an 11, 11 month low, I think the AFR said the oth­er day.

[00:12:21] Cameron: The ASX was at its low­est point in 11 months, but our port­fo­lio has been doing rea­son­ably good despite all of that, prob­a­bly because we’re weight­ed in a lot of, min­ing stocks that have been doing well recent­ly, per­haps. What do you think?

[00:12:36] Tony: Not, not sure. I’m going to have to start buy­ing the dum­my port­fo­lio stocks. I’ll sign up for QAV Light because, I just had to sell Qan­tas yes­ter­day after it crossed its three point trend sell line, which was mar­gin­al­ly above my rule one line. So it was going to be a sell either way this week, I think.

[00:12:52] Tony: And a bit of a shame I can’t vote at the AGM because I know

[00:12:55] Tony: I’ve been vot­ing to do,

[00:12:57] Tony: but I sold it yesterday.[00:13:00]

[00:13:00] Cameron: Yeah, I think a few of us were, I had to rule one a week or two ago from my super too, so yeah. Nice job, Alan. Thanks, Alan.

[00:13:10] Tony: Richard.

[00:13:11] Cameron: Yes, Alan and Richard. well that’s all I’ve real­ly got to talk about this week. Tony, have you got any­thing on the to do list?

[00:13:21] Tony: All I’ve got is a pulled pork to

[00:13:22] Tony: do. I did­n’t have any news this week

[00:13:24] Tony: either.

[00:13:24] Cameron: Right, okay. Well, if you want to get stuck into that and then we’ll do our one ques­tion and then we can all go home.

[00:13:31] Tony: you can, you can go on your hol­i­day. . I’m just com­ing back from mine, so I’ll get stuck into my pulled pork.

[00:13:36] Cameron: Okay,

[00:13:38] Tony: Okay, so today it’s on Karoon ener­gy, KAR, which has come back on the buy list. And, this is a, an oil and gas, I guess, driller and and main­ly oil, it’s, it’s been around for a while, if peo­ple aren’t famil­iar with it, it’s main­ly, it’s, it’s an Aus­tralian oil and gas provider, but the, it basi­cal­ly [00:14:00] has exten­sive oil fields over in Brazil, in what’s called the San­tos Basin, off the coast of Brazil, the com­pa­ny’s It’s been around for a while on the list­ed set since 2004 and start­ed drilling and explor­ing in the Browse Basin off the WA coast back in that sort of time frame of 2004 onwards.

[00:14:21] Tony: It part­nered with some large com­pa­nies like Cono­coPhillips to devel­op the fields that it had the rights over and did well out of that and then used the cash that it got in from that and oth­er sales to pur­chase rights. To, drill for oil in Peru and Brazil. it, for exam­ple, it sold 40 per­cent of one of its Browse Basin gas wells to Ori­gin Ener­gy for 800 mil­lion in 2014 and used the income to devel­op the Brazil fields even fur­ther.

[00:14:52] Tony: so the focus now though, is on the. If I’ve got the pro­nun­ci­a­tion right, the Bau­na Fields, B A U [00:15:00] N A, Bau­na Fields, in Brazil, in the San­tos Basin, and they’re also explor­ing in near­by areas, the Pato­la Field, and they’ve also had some dis­cov­er­ies recent­ly in some new wells in the Neon and, again, I hope I pro­nounced this right, Goia.

[00:15:15] Tony: Goia, G O I A, Oil Dis­cov­er­ies, and the last one is the Clari­ta Explo­ration, Prospect, all over in Brazil. Why Brazil, I guess, is a legit­i­mate ques­tion. And, some­thing hap­pened in the world of oil and gas. about 30, 40 years ago, the Brazil­ian gov­ern­ment Nash had nation­al­ized all of its oil fields, and, they were owned by a com­pa­ny called Petrobas.

[00:15:40] Tony: Petrobas sa, they con­trolled all pro­duc­tion until 1998 when the gov­ern­ment opened up the indus­try for invest­ment, by pri­vate, com­pa­nies. And they, they did that by, Putting out var­i­ous ten­e­ments for ten­der, in an auc­tion for­mat, and then, allow­ing, pri­vate inter­ests to buy and devel­op those [00:16:00] fields.

[00:16:00] Tony: So, I guess the pos­i­tive is Brazil has always had a strong oil and gas sec­tor, so the infra­struc­ture is ready made for Caroon to use. labour and on and off­shore ser­vices aren’t a prob­lem. there are also some favourable tax and roy­al­ty incen­tives avail­able in Brazil as well, so… That’s where their focus is.

[00:16:19] Tony: recent dis­cov­er­ies have put a bit of a rock­et under the share price, as has the oil price, which has become a buy on our buy list over the last cou­ple of weeks. and there is a strong cor­re­la­tion to the oil price. If peo­ple want to see that go into some­thing like Stock Doc­tor and call up Caroon and then call up Brent Crude Futures, and you’ll see it’s, it’s a very strong cor­re­la­tion.

[00:16:41] Tony: So that’s the strength at the moment. While the oil price is strong, it could well become, of course, a neg­a­tive if, if the oil price turns down, but at the moment it’s a strength. Any­way, on the num­bers, using our, our buy list down­load, this is a large cap stock. It’s ADT is 4, 000, 000 per day, so it should suit [00:17:00] every­one to buy into this fair­ly safe­ly.

[00:17:02] Tony: The share price I’m doing my num­bers on is 2. 50. Which is greater than IV1 but less than IV2, and also, two times the share price is also less than IV2. which gives it an extra point on our check­list. So it’s good val­ue if you believe the con­sen­sus fore­cast going for­ward. it’s also 90 per­cent but less, less than the con­sen­sus tar­get cur­rent­ly.

[00:17:25] Tony: And I guess the last, the last thing to, or anoth­er thing to point out is that it’s just become a star growth stock in Stock Doc­tor. So if I… like this com­pa­ny as well. no div­i­dends, so you’d expect that from a com­pa­ny which is grow­ing based on explo­ration in the oil indus­try, that they’re tak­ing what­ev­er cash they have and putting it back into new finds and devel­op­ing what they’ve already found.

[00:17:48] Tony: finan­cial health in Stock Doc­tor is sat­is­fac­to­ry and steady, so not quite strong, but we accept sat­is­fac­to­ry as being good enough to score. If any­one’s inter­est­ed, return on equi­ty is 39%, which is [00:18:00] quite high. and high giv­en the low PE and low Prop­Caf, and the Prop­Caf for this com­pa­ny is only three times.

[00:18:06] Tony: So, we’re buy­ing cur­rent cash flow at three times the price, and giv­en its growth pro­file, which is expect­ed, earn­ings per share is expect­ed to grow by 86 per­cent next year, that Prop­Caf is going to get even cheap­er unless the share price goes up, which is, I guess, what we’re Bank­ing on. I can’t quite buy this one at book val­ue or book plus 30.

[00:18:28] Tony: Book plus 30 per­cent is 1. 64, which is below the share price of 2. 50, so we can’t score it for that. Get­ting back to growth, it scores extreme­ly well on that met­ric. Growth over P. E., which we look to have a hur­dle rate of 1. 5. This com­pa­ny scores 13 times because of the low P. E. and high fore­cast growth. No own­er founder, which I thought was a bit inter­est­ing, but, but, There isn’t one in this case. P is only 6. 43, which is not the low­est or the high­est, so [00:19:00] we score it a zero. Like­wise for increas­ing or con­sis­tent­ly increas­ing equi­ty, it’s been up and down a lit­tle bit. It’s increas­ing now, but not con­sis­tent­ly for the last six halves. It gets a one for a new upturn, just scrapes in there.

[00:19:15] Tony: since the last results and, Oh, sor­ry. Since, since June, the end of finan­cial year, over­all, we’re giv­ing it 16 or 81 per­cent for qual­i­ty score, which is, which is quite good and a total QAV score of 0. 27, which puts it rea­son­ably high up on the buy list. As I said before, there are some risks and, and, pos­i­tives with this one.

[00:19:38] Tony: The risks are the, I guess, nor­mal ones of cur­ren­cy, for exam­ple, so, because it’s based in Brazil and it’s sell­ing oil from Brazil, all of its rev­enue is in U. S. dol­lars, which will, you know, could go up or down depend­ing on the exchange rate. It’s good at the moment, but if you think that, you know, our exchange rate is low, it might get worse.

[00:19:59] Tony: Might get [00:20:00] depressed going for­wards. if you think it’s going to go fur­ther down, then it’s, it’s a pos­i­tive for the com­pa­ny, but it’s cer­tain­ly a risk. the oil price, is going up, but it will even­tu­al­ly come down. So that’s got­ta be a risk. And I’ve put in here as a risk, and I did ques­tion whether it’s a risk or, or a pos­i­tive, or per­haps just an obser­va­tion is sov­er­eign risk.

[00:20:19] Tony: So, you know, Brazil has had. Nation­al­ized oil fields in the past, even though the last 30 odd years they’ve been pri­vate­ly owned, there’s no nec­es­sary rea­son why it could­n’t go back to being nation­al­ized in the future. Cur­rent­ly, as I said before, Brazil is try­ing to attract invest­ment in the indus­try, so it is pro­vid­ing some roy­al­ty relief and tax incen­tives.

[00:20:44] Tony: Might actu­al­ly be a pos­i­tive being in Brazil rather than sov­er­eign risk, but, but cer­tain­ly it’s a, it’s a exter­nal gov­ern­ment to where we’re invest­ing from, so that there’s always a bit of a risk there. We’re not hands on with the Brazil­ian, polit­i­cal cli­mate. but the pos­i­tives for this [00:21:00] com­pa­ny are very strong cash flow.

[00:21:01] Tony: We’re buy­ing it at three times cash flow, which is great. And giv­en that it’s had a, you know, a good growth path since incep­tion, it does seem like­ly that they’ll be able to par­tic­i­pate in oil dis­cov­er­ies and, and a good explo­ration pro­gram going for­ward, which will also boost the share price. So all in all, one to watch, Caroon Ener­gy.

[00:21:22] Tony: Have a look.

[00:21:23] Cameron: I own it in four port­fo­lios, Tony, which I’m obvi­ous­ly going to have to sell now that you’ve done a pulled pork on it. WGX, by the way, is down since you cov­ered it last week, but it’s sort of in line with the rest of the mar­ket. But I was going to say that, I first added KAR, at least with the cur­rent hold­ings, to my Stock­o­pe­dia test port­fo­lio on the 19th of July at 2.

[00:21:46] Cameron: 17. It’s up 16 per­cent since then. so yeah, the Stock­o­pe­dia check­list. Pulled that one out too, which was good. It’s in a cou­ple of oth­er port­fo­lios where it has­n’t done as well, but I only added [00:22:00] it dur­ing this month, a cou­ple of weeks ago, but yeah. Thank you. Karoon Ener­gy. Good stuff. Well, we’ve got one ques­tion.

[00:22:11] Cameron: It’s from Richard, and he’s ask­ing whether or not we should apply a three point trend line sell to the All Ords, look­ing at the All Ords. And I think we have talked about this before. And my rec­ol­lec­tion is that we don’t apply it to the mar­ket, because we’re try­ing to cher­ry pick the best stocks inside of the mar­ket.

[00:22:37] Cameron: So we don’t real­ly care where the mar­ket’s going. We, we try and stay ful­ly invest­ed, but is there more to it than that? Is there some­thing I’m miss­ing as to why we don’t apply it to the mar­ket in gen­er­al and use that as an indi­ca­tor that we should go to cash and get out?

[00:22:54] Tony: Well, I think I, I agree with you, but there are a cou­ple of fur­ther points on that. and, and Karoon Ener­gy is a good exam­ple. [00:23:00] You know, it’s been my expe­ri­ence that whether the mar­ket’s going up or down, gen­er­al­ly I can find some­thing to invest in,

[00:23:06] Tony: which could be, counter to the mar­ket. Does­n’t always hap­pen that way, the GFC being a case in

[00:23:10] Tony: point.

[00:23:11] Cameron: And last year.

[00:23:11] Tony: Yeah, yeah, that’s right too. does­n’t always work, but cur­rent ener­gy is a great exam­ple of that. I mean, the mar­ket’s down because bond yields are high, bond yields are high, which means inter­est rates are high because inter­est rates are high. inter­est rates are high because of infla­tion. Infla­tion is being held up by the oil price.

[00:23:29] Tony: so what’s depress­ing the mar­ket is actu­al­ly some­thing we’re invest­ing in because it’s going up. So there is always a, usu­al­ly, a sort of coun­ter­mar­ket oppor­tu­ni­ty for us to invest in. Not that I approach it from that point of view, like a macro down approach, but, you know, our nor­mal process uncov­ers these kind of, yeah, coun­ter­in­tu­ition­al, coun­ter­in­tu­ition­al, stocks to buy into. so that’s, that’s… Coun­ter­in­tu­itive, thanks. That’s the first, the first point to make. the sec­ond one is, yeah, you could use, the three point trend­line check on any sort of [00:24:00] graph. And we do for com­modi­ties and we do for stocks. So there’s no rea­son why you could­n’t use it for the ASX.

[00:24:05] Tony: And I, I did try and do a bit of research this morn­ing and I’ve for­got­ten the lis­ten­er’s name, but there was a gen­tle­man who I think worked in the edu­ca­tion indus­try who last time there was a, three point trend­line sell. in the ASX he bought into, it was, I think it was called Some­thing like Beta Hedged.

[00:24:24] Tony: There’s a, there’s a cou­ple, there was two ETFs that you can buy, which actu­al­ly are the inverse of what the share mar­ket does. So they’re basi­cal­ly, short­ing the mar­ket. And he was going to do that, but I haven’t heard how he went. So if he’s lis­ten­ing, please come back with some results. Cause this was going back about three years, I

[00:24:39] Tony: think,

[00:24:40] Cameron: Hmm.

[00:24:40] Tony: maybe, maybe before around the time of COVID when he was look­ing at that.

[00:24:44] Tony: so I’d be inter­est­ed to know how that went, but I did do my own research last time we talked about this and went back as far as I could to look at the sell, the sell peri­ods in the stock mar­ket, and they did­n’t cor­re­late when my port­fo­lio was going down, so it, [00:25:00] Like, as you said, it’s been prob­lem­at­ic in the recent past, but his­tor­i­cal­ly it has­n’t always been a one to one cor­re­la­tion that the mar­ket turns down, becomes a three point trend line sell and there­fore we should go to cash.

[00:25:11] Cameron: Okay, I’m just scrolling through my show notes and see­ing if I can find what you’re talk­ing about and who it was.

[00:25:21] Tony: One of our ear­ly lis­ten­ers who either worked as a teacher, I think he might have went from teach­ing into some kind of edu­ca­tion con­sul­tan­cy.

[00:25:29] Tony: Any­way, if you’re out there lis­ten­ing, let us know. But yeah, look, if, if Richard wants to pur­sue it, he could look at just even paper test­ing when the, you know, go back into Stock Doc­tor or wher­ev­er and look at the long term and look at when the sales would have been, and then look at going into beta shares, Hedged or beta shares, short and, and then see how you would have gone.

[00:25:49] Tony: I did do that analy­sis last time this hap­pened and it was, was­n’t, the results weren’t that great because, using three point trend lines any­way, you sort of, The stock mar­ket [00:26:00]comes down, which means your returns in the stock mar­ket are reduced when you sell and you buy into hedge and it goes up, but then it needs to come down to be a sell, and so you weren’t get­ting great returns out of that strat­e­gy, but, it’s worth anoth­er look if some­one’s inter­est­ed.

[00:26:14] Cameron: okay, there was, I do have some­thing from, this is only from Octo­ber last year, Doug was talk­ing about short­ing the mar­ket, and Ed was talk­ing about look­ing at major trig­gers of a gen­er­al down­ward trend in the mar­ket. But there’s no men­tion of, Beta, shares, hedg­ing,

[00:26:38] Cameron: and this.

[00:26:39] Tony: I could have that wrong. It could be Doug. It could have been Doug Vass. I think his name

[00:26:43] Tony: was.

[00:26:43] Cameron: Yeah, Doug

[00:26:45] Tony: Yeah, all right. Okay. Well, Doug, if you’re lis­ten­ing, I’m pret­ty sure you’re the per­son I’m think­ing of. If

[00:26:51] Tony: you’ve

[00:26:52] Tony: got some research into, into hedg­ing. Yeah. Give us

[00:26:55] Tony: a shout.

[00:26:55] Cameron: Yeah.

[00:26:56] Cameron: No, I know Doug’s still a mem­ber. So, I haven’t spo­ken to Doug for a while. But yeah, [00:27:00] he’s liv­ing in Spain. I think his wife’s got a job in Spain or some­thing. Any­way, X? No? Yeah. All right. Well, Doug, update us. You know, you know what Tony’s talk­ing about, Doug. Let us know how that went.

[00:27:14] Cameron: All right. Well, that’s it, Tony. that’s it. That’s the show, apart from After Hours. What have you been After Hours ing, Tony, now that you’re back in Syd­ney?

[00:27:25] Tony: Yeah, after rous­ing and carous­ing up on the Gold Coast,

[00:27:28] Tony: that was love­ly. back in Syd­ney now, back to the grind, we’ve

[00:27:32] Cameron: A grind.

[00:27:32] Tony: oh yeah,

[00:27:33] Tony: we’ve had a horse run on the week­end, so Poi­fect ran

[00:27:36] Tony: third, which was, you know, great

[00:27:37] Tony: result.

[00:27:38] Cameron: I was in a cafe today and I said, I’ll have a muf­fin, that looks poi­fect. And I thought, oh my god, now I’m say­ing poi­fect. You’ve infect­ed my brain with poi­fect. My new word now.

[00:27:51] Tony: yeah, every­one’s doing it.

[00:27:52] Cameron: So sor­ry, how did poi­fect

[00:27:53] Cameron: go?

[00:27:55] Tony: it.

[00:27:55] Tony: ran third, so it was­n’t quite Poi­fect, but it was a good run. And she’ll, she’ll race in [00:28:00] the… She’ll race in the Edward Man­i­fold Sat­ur­day week in Mel­bourne, Octo­ber 7th. in the Edward Man­i­fold Stakes, so Group 2, so hope­ful­ly she’ll do well there. I might go down and see her too.

[00:28:11] Tony: and then, Caste, unfor­tu­nate­ly, is out for the spring. She was the Great White Hope, but, luck­i­ly she did­n’t have any sort of bone dam­age to her knee, which they thought first was the prob­lem, and they did lots of x rays, and

[00:28:24] Tony: it just seems to be a bit of jar­ring. and some inter­nal bruis­ing, but she’ll be out

[00:28:28] Cameron: This is the one that tum­bled last week.

[00:28:31] Tony: did­n’t tum­ble, it ran two weeks ago and pulled up a lit­tle bit lame after the race. Yep, and they’re look­ing at what that, what might the, what the cause might be. And, it looked like some­thing died there for a moment, because if a horse, you know, los­es its leg, it’s, it’s not, not a great future for the horse.

[00:28:49] Tony: But,

[00:28:49] Cameron: dog food fac­to­ry.

[00:28:52] Tony: but, well, off to the breed­ing barn more like­ly in her case. But,

[00:28:54] Tony: but no, she’ll race on next year.

[00:28:56] Cameron: Yeah. That’s what the dog,

[00:28:59] Cameron: the dog [00:29:00] food fac­to­ry is called the breed­ing barn. Yeah. Yeah.

[00:29:02] Tony: Well, we had, we had one,fall a cou­ple of days ago, so that was good. Since the fol­low­ing sea­son is just start­ing now in spring. So we have a few brood­mares, one of them just fall, which is love­ly. Always good to see. and haven’t real­ly seen much. I start­ed watch­ing What’s the, there’s the new thing on, I think it’s Prime, it’s the part of the, John Wick fran­chise, Uni­verse,

[00:29:24] Cameron: Con­ti­nen­tal. Is that out

[00:29:26] Tony: yeah,

[00:29:27] Cameron: with Mel Gib­son?

[00:29:29] Tony: yeah,

[00:29:29] Cameron: Is that any good?

[00:29:31] Tony: what’s the first episode, it’s okay, but, yeah, I’ll per­sist.

[00:29:35] Tony: It’s, it’s worth watch­ing if you’re a fan, but not as great as Keanu Reeves.

[00:29:39] Cameron: Right.

[00:29:40] Tony: Yeah. So that’s that. And I’m read­ing a book called pun­ters. If, if any­one does like horse rac­ing, like I do, it’s, it’s a great rip roar­ing, his­to­ry of Pad­dy Pow­ell, the Irish book­mark­er who grew to be a big play­er in the world­wide indus­try of bet­ting.

[00:29:54] Tony: it’s a fun read as much for the cheek­i­ness of their mar­ket­ing as, as, you know, the sort of his­to­ry of, [00:30:00] of, book­mak­ing when it went from sort of. You know, dingy stores in retail out­lets and pubs through to the online era and the sort of quant era and how that all that sort of Wall Street now sort of risk man­age­ment

[00:30:15] Tony: and man­ag­ing large data sets came to the mar­ket.

[00:30:17] Tony: So yeah, very inter­est­ing read, if any­one’s

[00:30:19] Tony: inter­est­ed.

[00:30:20] Cameron: That’s a play­er in punt­ing, horse

[00:30:23] Tony: Pad­dy Pow­er is, yeah, now, now,

[00:30:25] Tony: sor­ry?

[00:30:26] Cameron: for, for horse rac­ing. They use quant analy­sis and all that kind of stuff. Oh, I did­n’t know that. I did­n’t know it had made its way to

[00:30:33] Cameron: that.

[00:30:34] Tony: You haven’t seen my spread­sheets, have you?

[00:30:36] Cameron: No.

[00:30:37] Tony: But, no, they do. They use large data to, to rake over what the, because the book­mark­ers have to set the odds. So they’re try­ing to min­i­mize risk. So they, they rake over large sets of data to set the odds.

[00:30:47] Cameron: Wow. Hmm.

[00:30:50] Tony: But it was always sort of done by gut feel up until, you know, the birth of the inter­net and data sets became larg­er and, and tools became [00:31:00] avail­able to, crunch the num­bers.

[00:31:02] Tony: Yeah.

[00:31:03] Cameron: Have you tried apply­ing Chat­G­PT to horse race bed­ding?

[00:31:09] Tony: I haven’t, but when I’ve tried to apply it to oth­er things, it says, I don’t have live data. So it gets out of it that way.

[00:31:15] Cameron: Yeah, does­n’t have live data.

[00:31:17] Tony: Yeah.

[00:31:18] Cameron: Fas­ci­nat­ing. Well, I’ve,

[00:31:20] Tony: that’s all I’ve got.

[00:31:21] Cameron: I’ve been read­ing lots of stuff as I told you off air, but,

[00:31:24] Cameron: like some of the high­lights have been, I’m read­ing this book by a guy called Neil Ger­shen­feld, I men­tioned, who, his book is called Design­ing Real­i­ty. It’s from 2016, so a few years old now.

[00:31:39] Cameron: And I start­ed read­ing his book because I, Saw him inter­viewed on Lex Fried­man’s pod­cast, which is a recent inter­view. Ger­shen­feld runs some­thing at MIT called the Cen­ter for Bits and Atoms, Bits and Atoms, CBA. And he’s sort of the guy, one of the guys that’s on the fore­front [00:32:00] of try­ing to get us to nano.

[00:32:02] Cameron: bots and nanofab­ri­ca­tors. They’re build­ing machines that build machines, is their design, their, their sort of design goal. He said he’s got a prize for his, like PhD stu­dents at the moment. No one’s claimed it, but a few peo­ple have got­ten close. The prizes for the first stu­dent Whose the­sis, whose mas­ter’s the­sis can walk out of the print­er on its own steam and con­tain with­in itself the instruc­tions for how to repli­cate itself.

[00:32:34] Cameron: that’s what they’re aim­ing towards. So some­thing can get print­ed and walk out of the print­er under its own steam. But he

[00:32:46] Tony: Which has got to be the, which has got to be the secret to col­o­nize the uni­verse, has­n’t it? If you can stream data at the speed of light and does­n’t, it does­n’t mat­ter if it takes a mil­lion years to get some­where and you do it enough in enough direc­tions. [00:33:00] And one of them strikes a Goldilocks plan­et and then has the

[00:33:02] Tony: instruc­tions to build itself and start again over there.

[00:33:05] Tony: Yeah. That’s, That’s,

[00:33:06] Cameron: Well, in the Lex Freed­man inter­view, he talks

[00:33:09] Cameron: about it from the per­spec­tive of col­o­niz­ing Mars. It’s okay, that’s what they think about. Okay, what would you need in terms of robots and build­ing blocks to send to a plan­et like Mars? That could, under their own steam, build a civ­i­liza­tion infra­struc­ture, or an infra­struc­ture for a civ­i­liza­tion that humans could then go and pop­u­late.

[00:33:32] Cameron: You, the first humans arrive there and it’s already built. There’s a, you know, a city ready for you to inhab­it. And he says there are basi­cal­ly 20 build­ing blocks of near­ly every­thing, 20 basic build­ing blocks that you can build almost any­thing with, and they’re try­ing to fig­ure out how to build machines that can build those things, and a fas­ci­nat­ing guy, but he start­ed this thing in 2003, acci­den­tal­ly, called a, [00:34:00] what they call a Fab Lab, Fab­ri­ca­tion Lab, basi­cal­ly a lab at MIT, the first one was, that had Fab­ri­ca­tion Has a, a milling machine and now has a 3D print­er and all the things you need to make those work and big and small and what­ev­er.

[00:34:16] Cameron: sort of a lab with all the machines that you can use to build lots of dif­fer­ent cool things. And he start­ed run­ning a course at MIT called How to Build Almost Any­thing, or How to Make Almost Any­thing. And then they had… Peo­ple from all around the world say, oh, could we build one of those labs here?

[00:34:36] Cameron: And there’s now about two and a half thou­sand of these fab labs around the world, all with the same design, with the same com­po­nents. They have like a, it’s like a McDon­ald’s, right? They have, here’s how you, here’s all the stuff that you need. It costs like a hun­dred grand or two hun­dred grand to build a fab lab.

[00:34:53] Cameron: Here’s all the videos for how to work every­thing. So, but they have any­one from the local com­mu­ni­ties, and these are like in [00:35:00] devel­op­ing coun­tries, they have a lot of these things, any­one can go in, watch the videos, learn how to use all the machines and all the soft­ware, and then just start build­ing things, you know, design­ing, com­ing up with ideas, design­ing it, build­ing it.

[00:35:15] Cameron: And the idea is that these things will become more and more pow­er­ful, cheap­er to set up and estab­lish, more and more capa­ble of, of, you know, build­ing machines that can build machines is the idea. Until you get to a point where you have a nanofab­ri­ca­tor that can just down­load a blue­print for almost any­thing and build it.

[00:35:39] Cameron: And of course, as, you know, I’ve been say­ing for, since I’ve been think­ing about this stuff for 20 odd years, like the first nanofab­ri­ca­tor, if, if I was rolling these things out, you’d have a nanofab­ri­ca­tor that you would give away to some­body for free, but hard­wired into it is the con­tract that the first thing [00:36:00] you have to build with it is a copy of itself that you need to give to some­body for free.

[00:36:06] Cameron: And when they reg­is­ter that they’ve received it for free, then yours gets unlocked and you can make any­thing else you want with it. But then they need to build a repli­ca and give it to some­body for free. And then you just… under­cut the basis for cap­i­tal­ism in a year. Every­one has free nanofab­ri­ca­tors and they can

[00:36:24] Cameron: build pret­ty much any­thing they want as long as they have the blue­print.

[00:36:28] Cameron: But he, like, so this guy, it’s a real­ly inter­est­ing, talk on Lex Fried­man, a real­ly inter­est­ing book, just about this idea of how, and he makes the point in the Fried­man show, obvi­ous­ly the book came out before we had AI, but he was say­ing the, the same NVIDIA chipsets that became avail­able a That enabled large lan­guage mod­els to hap­pen.

[00:36:53] Cameron: are the things that they’ve been wait­ing for to dri­ve the nan­otech­nol­o­gy rev­o­lu­tion, because it’s real­ly about [00:37:00] com­pu­ta­tion­al pow­er to solve all of the prob­lems that they’ve been try­ing to fig­ure out for how you build, nano scale machines and sim­u­late, you know, basi­cal­ly the abil­i­ty to do bil­lions of sim­u­la­tions of dif­fer­ent.

[00:37:16] Cameron: Mod­els for how this would work and com­ing up with the most, viable, method­olo­gies to put into actu­al phys­i­cal research. So you don’t need to test them all phys­i­cal­ly, you test them vir­tu­al­ly and to do that takes a lot of com­pu­ta­tion­al pow­er. He had this great line, he said some­thing about the human brain runs at like 10 to the pow­er of 15 MIPS, mil­lions of instruc­tions per sec­ond.

[00:37:40] Cameron: mil­lions of instruc­tions per sec­ond, yeah. And the NVIDIA chipset now is doing 10 to the 15, some­thing like that. And he was basi­cal­ly say­ing, if we did­n’t cre­ate arti­fi­cial intel­li­gence with that, we’d have to be asleep at the wheel. Like if you have, as soon as you have chipsets that can process the same lev­el of [00:38:00] instruc­tions per sec­ond as the human brain to not do some­thing like arti­fi­cial intel­li­gence with it, you’d have to be just not try­ing.

[00:38:06] Cameron: I mean, that’s basi­cal­ly what brains do, right? They think. And of course, Moore’s Law being Moore’s Law, these things are going to be twice as pow­er­ful per dol­lar, 18 to 24 months from now, and then twice as pow­er­ful again a year after that. And you and I have been big fans of guys like Ray Kurzweil for 20 years.

[00:38:28] Cameron: I had him on G’day World, I think in 2007, 6, 7, I think, talk­ing about this stuff. it’s start­ing to… Start­ing to hap­pen. Like this is, this is the decade that he’s been, we always said 2030, 2035, these things start to become real. And we’re just start­ing to hit that part of the curve between 2023 and 2035.

[00:38:54] Cameron: The next 10 years is where all of this stuff comes online. You know, there’s [00:39:00] super com­put­ing plat­forms that are cost effec­tive. You know, busi­ness­es that can afford to spend 10, 000 a proces­sor and buy 10, 000 of them, right? Which is what Elon Musk just did. He just built his own AI lab, the XAI lab, and bought like 10, 000 NVIDIA proces­sors at 10, 000 a pop, what­ev­er they were to, to make it hap­pen.

[00:39:25] Cameron: It’s doable.

[00:39:26] Tony: Yeah, or they just do what you

[00:39:28] Tony: said. Every time you buy one you have to repli­cate it and give it to some­one

[00:39:32] Tony: else.

[00:39:32] Cameron: It’s not that, you can’t do that yet. You need,

[00:39:34] Cameron: you need to have

[00:39:35] Cameron: tens of thou­sands of these things to get to the point where you can do that in the first place. But yeah, but we’re not far away from that. No, I think, you know, we’re a decade or so away from hav­ing machines that can build a micro­proces­sor for you in your.

[00:39:48] Cameron: Bed­room.

[00:39:49] Tony: yeah,

[00:39:50] Cameron: Which means Chi­na does­n’t need to take over Tai­wan because they’ll be able to build their own, if you have the IP, I guess, then it all comes down to the [00:40:00] IP. do you know, can you get the blue­prints for build­ing these things? the, the build­ing of it becomes a sec­ondary issue at some point.

[00:40:07] Cameron: Yeah.

[00:40:08] Tony: well, I mean, as the inter­net taught us, you can get blue­prints for any­thing real­ly, so it’s, it’s hard to, to IP, to pro­tect IP in this mod­ern world, but all that talk about send­ing out repli­ca­tors that can repli­cate them­selves and have the instruc­tions I had, reminds me of a, an arti­cle I read years ago about the Star Trek, you know, Beam Me Up Scot­ty, Trans­porter room and how this, the author of the arti­cle said, well, one way to solve the Star Trek prob­lem is that you have, you trans­mit all the data up, but then you build the per­son from scratch at, on the enter­prise.

[00:40:42] Tony: So they’re down on the plan­et, they come back, they get built from scratch. And if that per­son has all the data that they had when they entered the trans­porter, all their mem­o­ries, all their per­son­al­i­ty, et cetera. How do they know it’s a dif­fer­ent per­son even though you built them from scratch? Is it the same per­son or not?

[00:40:59] Tony: Inter­est­ing [00:41:00] debate whether, you know, if that’s the case then yeah, you could send, you could decode Cameron Riley, put him in a, an ion beam, send him across to Mars or fur­ther afield and a mil­lion light years, when a mil­lion years pass­es and he’s trav­eled a mil­lion light years, repli­cate him and for all intents and pur­pos­es it’s the same per­son who left, con­tin­u­ing on.

[00:41:20] Cameron: Yeah, if all of your mem­o­ries are encod­ed in mol­e­cules in your brain and we can read the posi­tion and ener­getic state of each of those mol­e­cules at a spe­cif­ic point in time, record the data points for those, you should be able to the­o­ret­i­cal­ly rebuild an exact mol­e­c­u­lar ora­to­ry. Repli­ca of that at any giv­en point in time.

[00:41:41] Cameron: It also means you can back up that per­son too. I remem­ber in, I think it was Cory Doc­torow’s book, Down and Out in the Mag­ic King­dom, his first nov­el, I think it was 20 or 25 years ago, peo­ple in that built into their bed head. Was like a [00:42:00] brain, mol­e­c­u­lar brain scan­ner. So every night when you went to sleep, your bed, while you were sleep­ing, your bed just updat­ed the mol­e­c­u­lar blue­print of your brain.

[00:42:10] Cameron: So you, you had a night­ly back­up of where your brain was at. And you get hit by a bus, they just rebuild you, based on your last back­up. Yeah, and the idea of tele­por­ta­tion is always, you know, the Star Trek ver­sion of it is that the per­son lit­er­al­ly gets decon­struct­ed atom by atom at point A and then rebuilt atom by atom at point B.

[00:42:32] Cameron: Would­n’t have to do it at an atom­ic lev­el, you do it at a mol­e­c­u­lar lev­el. Gets rebuilt as an exact repli­ca of where they were.

[00:42:41] Tony: Yeah, although they could, they could equal­ly just be killed at point A and then rebuilt at point B, and the per­son who gets rebuilt at point B thinks that they are a con­tin­u­um from the per­son who

[00:42:51] Tony: was killed at

[00:42:52] Tony: point A.

[00:42:52] Cameron: Well, you are killed if your mol­e­cules get pulled apart, if you get decon­struct­ed. That is kind of a [00:43:00] death, but if you’re rebuilt exact­ly the same way Point B, then, are you real­ly dead? It’s a bit like Jesus. If he came back after three days, was he ever real­ly dead? I mean, that’s just, that’s a nap.

[00:43:10] Cameron: That’s a long nap. It’s not like he died for our sins. He took a nap for our sins for three days and then he came back. Not real­ly as good a sto­ry. Yes. Yeah. Yeah. Yeah. He took a nap for our sins. Does­n’t real­ly have the same mar­ket­ing impact.

[00:43:25] Cameron: yeah, so I’m read­ing that, which is great. so many books I got on the go at the moment.

[00:43:29] Cameron: So I dis­cov­ered this guy, Gra­ham Alli­son, who wrote a book about the Thucy­dides trap. the whole idea that Spar­ta went to war, with Athens, the Pelo­pon­nesian War, because Athens start­ed to become a rival. to Spar­ta and they, they could­n’t stand that. It actu­al­ly kind of gets back to our con­ver­sa­tions over the last few months about the Dark For­est hypoth­e­sis, right?

[00:43:54] Cameron: If you, if you see a poten­tial rival com­ing, you don’t know if they’re going to be pas­sive or aggres­sive towards you if they [00:44:00] catch up to you. So strate­gi­cal­ly, it kind of makes sense to try take them out before they have the poten­tial to take you out, just in case they do try and take you out. Gra­ham Alli­son runs the, or ran, I think he’s still involved, he’s quite old though now, he’s in his 80s, the Kennedy Cen­ter for Gov­ern­ment at Har­vard or some­thing.

[00:44:20] Cameron: So any­way, I was read­ing his book, Des­tined for War, about Thucy­dides trap, specif­i­cal­ly look­ing at the U. S. and Chi­na and how the U. S. sees Chi­na as a threat. But he talks a lot about Lee Kuan Yew in this and how Lee Kuan Yew was sort of the world expert on Chi­na and all these pres­i­dents and world lead­ers over decades would go and meet with Lee Kuan Yew and ask him what was going to hap­pen with Chi­na.

[00:44:44] Cameron: And he wrote a book, Graeme Alli­son wrote a book, about Lee Kuan Yew and inter­viewed him in 2013, a cou­ple of years before he died, about his views on Chi­na, among oth­er things. And so I’ve been read­ing that as well, and it, which is fas­ci­nat­ing, his views on [00:45:00] not just Chi­na, but how he built Sin­ga­pore, you know, the enlight­ened dic­ta­tor­ship, if you like, or the pro cap­i­tal­ist dic­ta­tor­ship.

[00:45:09] Cameron: the, the, the dic­ta­tor that the West loved, Lee Kuan Yew, he just ran a dic­ta­tor­ship like any oth­er dic­ta­tor­ship, but the West, the West loved him because it was a pro. Cap­i­tal­ist dic­ta­tor­ship.

[00:45:22] Tony: Yeah.

[00:45:23] Cameron: Very suc­cess­ful dic­ta­tor­ship if you were, if you were on the right side of

[00:45:29] Tony: Mm

[00:45:30] Cameron: the gov­ern­ment any­way. But yeah, that’s fas­ci­nat­ing.

[00:45:33] Cameron: And he’s just talk­ing about his view of Chi­na and basi­cal­ly that, yeah, Chi­na’s going to run, Chi­na’s going to rule the world. It’s just inevitable. And in his view, they would do it just by try­ing to avoid. A hot con­flict for as long as pos­si­ble, because he said they saw what hap­pened to Ger­many and Japan dur­ing World War II.

[00:45:54] Cameron: They saw, and they also learned from the mis­takes that the Sovi­ets made dur­ing the Cold War, [00:46:00] which was to be forced to invest or over invest in mil­i­tary. at the cost of being able to build their infra­struc­ture and man­u­fac­tur­ing base and the engines of their econ­o­my because they had to defend them­selves against a poten­tial all out war with the U.

[00:46:20] Cameron: S. and the West. So Chi­na’s plan is just to try and not look like a threat for as long as pos­si­ble until they’re so big that they’re basi­cal­ly a black hole and all of the economies. First, he talks about South­east Asia just get­ting sucked in, like you basi­cal­ly have to become part of the Chi­nese eco­nom­ic bloc because the alter­na­tive is you miss out.

[00:46:46] Cameron: He said, he said Chi­na always, and this is like pre Xi Jin­ping, they talk about Xi Jin­ping as being the, you know, sort of the guy who was sup­pos­ed­ly, looked like he was gonna become the next, pres­i­dent, [00:47:00] but he said, you know, Chi­na comes and talks to us and they say, lis­ten, we’re all equals. We, we, we don’t think we’re bet­ter than you or more impor­tant­ly, we’re all broth­ers in South­east Asia.

[00:47:13] Cameron: We all have an equal voice, but if you don’t give us what we want, you’re going to make 1. 3 bil­lion peo­ple unhap­py. So lis­ten, you can do what­ev­er you want. We’re not try­ing to push you into doing any­thing, but if you want access to 1. 3 bil­lion peo­ple, might want to con­sid­er what we’re like. It’s this soft pow­er kind

[00:47:35] Tony: Oh, yeah.

[00:47:37] Cameron: to it.

[00:47:37] Cameron: So.

[00:47:38] Tony: Yeah, which is what the U. S. have done for years.

[00:47:41] Cameron: Whaaaat. Yeah. Kind of. I think it’s more of a direct, mil­i­tary threat. If you believe, the guy who wrote Con­fes­sions of an Eco­nom­ic Hit­man, John, I remem­ber his last name, worked for the World Bank for a long time. [00:48:00] And he said, we, the way that it works is, you know, we roll into, you know, a Latin Amer­i­can coun­try or what­ev­er it is, and we say, okay, here’s what we want.

[00:48:12] Cameron: The US wants access to all of your resources and all of your mar­kets. Give it to us, give us what we want, or else we’ll replace you with some­one else who will, you know, we just, we will, find a gen­er­al, a dis­af­fect­ed gen­er­al in your army, or a gen­er­al who, you know, is ambi­tious. And we’ll roll up our media engine to say that you’re a com­mu­nist or you’re cor­rupt or you’re this that or the oth­er and your gen­er­al will roll over you and we will sup­port the incom­ing gov­ern­ment as being bet­ter for the peo­ple and you know la dee da dee da and if we can’t find a gen­er­al then we’ll roll in our troops or we’ll roll in some proxy troops or we’ll roll in our troops.

[00:48:57] Cameron: But either way, we’re going to get what we want, so you might as well just [00:49:00] give it to us now, because, you know, it’s, at the end of the day, there was always a threat, there’s always sort of a threat of, not just, you don’t get access to the IMF and the World Bank and invest­ment, it’s like a real threat, we will replace you if you don’t, play ball, you know.

[00:49:16] Cameron: One way or the oth­er, we’ll get what we want. You can have it the hard way or the easy way, it’s up to you, you know. Any­way. Subs That’s his view of it.

[00:49:24] Tony: Yeah, it’s a, I mean, it’s a com­pelling view. The, as we said offline, the ques­tion in my mind is whether the U. S. has left it too late to strike against Chi­na, because the, you know, the dark for­est prob­lem is you strike ear­ly as soon as you start to iden­ti­fy the rival.

[00:49:40] Tony: Rather than wait­ing until It’s an equal fight, which, you know, kind of negates your chances of suc­cess, of

[00:49:45] Tony: suc­ceed­ing.

[00:49:45] Cameron: It’s a bit hard when you’ve out­sourced all of your man­u­fac­tur­ing to the

[00:49:48] Cameron: rival.

[00:49:49] Cameron: quotes from Gra­ham Allison’s book, Des­tined for War, though, which I’ll read to you. Like, he’s got some real­ly inter­est­ing stats, and this book, again, is [00:50:00] not recent. I think it’s a few years old, but, He says, In a sin­gle gen­er­a­tion, a nation that did not appear on any of the inter­na­tion­al league tables has vault­ed into the top spot.

[00:50:12] Cameron: In 1980, Chi­na’s gross domes­tic prod­uct was less than 300 bil­lion. By 2015, it was 11 tril­lion. Mak­ing it the world’s sec­ond largest econ­o­my by, by, by mar­ket exchange rates. In 1980, Chi­na’s trade with the out­side world amount­ed to less than 40 bil­lion By 2015, head­ed in it had increased 100 fold to 4 tril­lion for every two year peri­od.

[00:50:38] Cameron: Since 2008, the incre­ment of growth in Chi­na’s g d P has been larg­er than the entire econ­o­my of India. Even at its low­er growth rate in 2015, Chi­na’s econ­o­my cre­at­ed a Greece every 16 weeks and an Israel every 25 weeks. I thought that was inter­est­ing.

[00:50:59] Tony: yeah, it’s [00:51:00] incred­i­ble. And, and I guess we’ve been the ben­e­fit of that through com­pa­nies like Fortes­cue Met­als Group, BHP, et cetera, sell­ing com­modi­ties over there. so I think Aus­tralians are well aware of the growth rate of Chi­na and, and, I think the, the mes­sage that’s been lost recent­ly is that Chi­na’s still grow­ing at four to 5% even this year when the news is full of how ter­ri­ble it is over there and how they’re hav­ing prob­lems and how builders are going bust and the shad­ow bank­ing net­works about to col­lapse, et cetera, it’s still grow­ing.

[00:51:30] Tony: You know, it has a growth rate

[00:51:31] Tony: that any west­ern coun­try would would kill for.

[00:51:34] Cameron: Yeah, I like this. He says, When Amer­i­cans com­plain about how long it takes to build a build­ing or repair a road, author­i­ties often reply that Rome was not built in a day. Some­one clear­ly for­got to tell the Chi­nese. By 2005, the coun­try was build­ing the square foot equiv­a­lent of today’s Rome every two weeks.

[00:51:54] Cameron: Between 2011 and 2013, Chi­na both pro­duced and [00:52:00] used more cement than the U. S. did in the entire 20th cen­tu­ry. In 2011, 11. A Chi­nese firm built a 30 sto­ry sky­scraper in just 15 days. 3 years lat­er, anoth­er con­struc­tion firm built a 57 sto­ry sky­scraper in 19 days. Indeed, Chi­na built the equiv­a­lent of Europe’s entire hous­ing stock in just 15 years. So,

[00:52:29] Tony: Yeah, and that’s, that’s both good and bad. I mean, com­men­ta­tors like Roger Mont­gomery have point­ed out that there are plen­ty of apart­ment build­ings which are, which aren’t filled and will nev­er be filled. So, but when, when you’re build­ing at that rate of growth,

[00:52:41] Tony: that’s real­ly on the fringe.

[00:52:43] Cameron: yeah. So any­way. That’s what I’ve been read­ing. Oh, and in terms of watch­ing stuff, there’s the ABC has got a two part doc­u­men­tary on the Brett White­ley fraud. Have

[00:52:53] Tony: Yes, I’ve

[00:52:53] Tony: been watch­ing

[00:52:54] Cameron: you know, isn’t it great? What a sto­ry.

[00:52:58] Tony: Yeah. And I think, [00:53:00] you know, that’s, it’s great that the per­son who was defraud­ed is being inter­viewed because I mean, it just… It’s almost, it’s mind blow­ing. It’s like the psy­chopath book where, you know, psy­chopaths will open­ly tell you they’re psy­chopaths.

[00:53:13] Tony: It’s like this guy just open­ly says, yeah, I just like buy­ing art, bought heaps, heard about this one, bought

[00:53:18] Tony: it. Like, it’s just, it was just like grist of the mill for him, even though he was defraud­ed of mil­lions of

[00:53:22] Tony: dol­lars.

[00:53:23] Cameron: One of

[00:53:23] Cameron: them spent 1. 1 mil­lion sight unseen on a White­ley. You saw a pho­to. And the oth­er guy spent two and a half mil­lion. The guy who bought the big blue spent two and a half mil­lion, sight unseen, because his art expert advi­sor told him it was a good buy. Sight unseen! For what he thought was a White­ley.

[00:53:45] Cameron: But the, the, the best part of the sto­ry is the two guys that got charged, the artist and the art deal­er, Peter Gant, the art deal­er, and the oth­er guy who was the, sup­pos­ed­ly the artist doing the fraud, when [00:54:00] a cou­ple of guys work­ing in their stu­dio were tak­ing pho­tos of them paint­ing these paint­ings, well, one of the artists paint­ing them, like they could see the, the pro­gres­sion of it being paint­ed, they get, they get found guilty by a jury.

[00:54:13] Cameron: And then they appeal it, and the appel­late judge gets, lets them off, says, well yeah, the jury, you know, they, they, they could­n’t have decid­ed that there was not rea­son­able doubt. And their defense attor­ney, their defense argu­ment was, no, no, no, no, no, no, no, you, you, what, what you saw them paint­ing was­n’t these paint­ings, they were paint­ing copies of these paint­ings, and there’s noth­ing ille­gal about paint­ing a copy of a paint­ing.

[00:54:44] Cameron: It’s only ille­gal if you claim that it’s an orig­i­nal White­ley, and they nev­er did that. You can’t prove that, you know, these paint­ings that every expert says are frauds aren’t real, includ­ing Wendy White­ley. No, no, no, no, no. They were paint­ing a copy [00:55:00] of that, and you can’t prove it was­n’t a copy of it. I mean, it’s, it’s, the great­est get out of jail free card of all time.

[00:55:07] Cameron: Well, you can’t prove it was­n’t just a copy of that, not the actu­al thing, so. Clas­sics.

[00:55:13] Tony: I mean I would have thought you could, there was no prov­i­dence in the paint­ings they sold and they were passed off as

[00:55:17] Tony: whitelies, so that would be a way of prov­ing it, but you can’t prove that they paint­ed it,

[00:55:23] Cameron: But they man­age. The, Peter Gant man­aged to come up with a woman who said she worked in his stu­dio in 1988 when the paint­ings arrived in the stu­dio, direct from Brett White­ley and there was a pho­tog­ra­ph­er that they pro­duced, the Defence pro­duced, who said that he was hired to take pho­tos of the paint­ings for an exhi­bi­tion that nev­er actu­al­ly hap­pened in the 1988, late 80s, so they had two wit­ness­es that said, oh yeah, those paint­ings were around in 1988.

[00:55:57] Cameron: That’s it. So two wit­ness­es that [00:56:00] said, yeah, yeah, we, we, we saw those paint­ings in 1988, mean­ing that they weren’t paint­ed in 2007 when the pho­tographs were tak­en of things being paint­ed, Wiley dying in 92.

[00:56:10] Tony: Yeah.

[00:56:11] Tony: Right.

[00:56:11] Cameron: but the fact that these peo­ple are spend­ing mil­lions of dol­lars on art­work that they don’t even, that’s mon­ey.

[00:56:18] Cameron: I mean,

[00:56:19] Tony: Yeah. And it’s just on some­one sort of sidling up to them going, hey, psst, want to buy a paint­ing?

[00:56:25] Tony: Want to buy a White­ley? Open the rain­coat, want to buy a White­ley?

[00:56:28] Cameron: yeah, I near­ly bought a White­ley?

[00:56:31] Cameron: once, it’s a small one, yeah, it was a draw­ing of a bird, it was avail­able for 80, 000, this is just right about the time I was at Microsoft

[00:56:44] Cameron: and I was think­ing about buy­ing it as an invest­ment, cause, and I’m a big White­ley fan, always been, you know, I wrote a screen­play about White­ley back in the

[00:56:51] Tony: know

[00:56:52] Cameron: that I always want­ed to make, and, I did­n’t buy it.

[00:56:55] Cameron: I fund­ed TPN with that mon­ey. Actu­al­ly. [00:57:00] So yeah, should have bought the White­ley, you know,

[00:57:04] Tony: what it’s worth now?

[00:57:04] Cameron: hired some­one to paint copies of it. no, I, I, I hate to

[00:57:08] Cameron: think. A

[00:57:10] Tony: Yeah. It’s like a stock. You nev­er look back.

[00:57:12] Cameron: net­work. Yeah. Yeah. Yeah. Nev­er look

[00:57:15] Cameron: back. Yeah. Yeah. And I was this close. I like, I was,

[00:57:18] Cameron: you know, yeah. Any­way, so yeah, that’s a good

[00:57:23] Tony: great sto­ry. It is, yeah. Great sto­ry. And art is the, the

[00:57:28] Tony: wild west of, of invest­ing, real­ly, isn’t it? There’s no rules. There’s no reg­u­la­tions.

[00:57:33] Cameron: exact­ly. And that’s what one of the guys on the doc­u­men­tary goes, Oh, it’s like, it’s

[00:57:36] Cameron: com­plete shit, you know, one of the art deal­ers who was the one who goes, Oh, the art world is just full of scum­bags. It’s a scum­bag indus­try. But yeah, you said that the, one of the guys that. Defraud­ed, he got his mon­ey back though, the, it was like a car sale, a car deal­er I think he was who, the guy who lives in Bon­di with this amaz­ing house full of amaz­ing art, includ­ing some orig­i­nal White­leys that he has,[00:58:00] Peter Gant, the guy that was found guilty but then got off, the art deal­er guy, who has been found, has been charged with lots of art fraud crimes over the years, and even, He said that one of the White­leys was, he bought it off a third par­ty guy, who, who, he had like an affi­davit signed by this guy that he’d, he’d, he’d bought the White­ley direct from Brett and then sold it to Gant, and then when this guy got called as a wit­ness, the mid­dle­man in court, he was like, I nev­er signed that, I nev­er owned that, and Gant went, oh, well, no, I, I, I forged that let­ter.

[00:58:42] Cameron: Because I knew that if I said that I bought it direct­ly from Brent, every­one would, every­one would­n’t believe me. So I did, I did lie about that, but you know, but he’s on the doc­u­men­tary as well. Just,

[00:58:55] Tony: I know.

[00:58:56] Cameron: yeah, not true.

[00:58:57] Tony: I know. Yeah.

[00:58:59] Cameron: I don’t know. [00:59:00] It’s fas­ci­nat­ing. Just the balls on

[00:59:02] Tony: Yeah, but these peo­ple are so flam­boy­ant and so psy­cho­path­ic almost that they

[00:59:07] Tony: all agree to par­tic­i­pate in a doc­u­men­tary which points the fin­ger at them.

[00:59:11] Tony: It’s

[00:59:11] Cameron: Well, I mean, the guy who bought the paint­ing, I mean, he’s mere cul­prit­ing the whole thing. Yeah, he says it was the stu­pid­est thing I’ve ever done. It was like, real­ly, real­ly, real­ly stu­pid. I just had to re And he said that even his art expert was telling him, like, this, this isn’t real, don’t buy this, you know, this is too cheap for a real Wiley.

[00:59:31] Cameron: Peter Gantz involved, don’t go any­where near it. Made him sign a doc­u­ment say­ing that I told you not to do this. I think it was his lawyer, or some­body, and he said, and he just ignored it. He ignored all of the advice. He goes, ah, I’m just going to do it any­way. He thought it was a way to make a quick buck on own­ing a White­ley for a few years.

[00:59:48] Cameron: Well, I like the fact that he’s just like, yeah, I did it. I thought I could make a quick buck out of it. Bit me on the ass. It was real­ly stu­pid. Hel­lo. I kind of admire that. You know, at least

[00:59:58] Tony: Well, yeah, but.

[00:59:58] Cameron: to defend him­self. [01:00:00] He’s just going, nah, it was, I was just, I was just being greedy.

[01:00:02] Cameron: It was stu­pid.

[01:00:04] Tony: yeah, So you won­der why the fraud squad aren’t around there check­ing out all the oth­er paint­ings he’s got or that he’s

[01:00:09] Tony: sold, if that’s his, you know, if that’s his

[01:00:12] Tony: men­tal­i­ty.

[01:00:13] Cameron: What about the cops that went to get the oth­er paint­ing

[01:00:16] Cameron: and they could­n’t get insur­ance? The one that was worth two and a half mil­lion, poten­tial­ly, they want­ed to get it from Syd­ney to Mel­bourne to be used in the tri­al. They could­n’t get an insur­ance com­pa­ny to cov­er the trans­port. So they went and picked it up in a truck them­selves, sort of van and drove it from Syd­ney to Mel­bourne.

[01:00:33] Cameron: There’s paint­ing in the back that might be worth two and a half mil­lion or could be

[01:00:36] Tony: yeah, mmm.

[01:00:39] Cameron: I think that’d

[01:00:39] Tony: then had to have it tak­en into court every day and then tak­en back to a lock­up,

[01:00:43] Cameron: yeah. But imag­ine dri­ving the van

[01:00:46] Cameron: from Syd­ney to Mel­bourne. What’s that? 10 hours, eight, 10 hours with a two and a half mil­lion dol­lar paint­ing that’s got to be used. That’s got to be a stress­ful dri­ve.

[01:00:57] Tony: yeah,

[01:00:59] Cameron: I [01:01:00] loved it. It was good stuff.

[01:01:02] Cameron: I’m done, Tony. That’s after

[01:01:04] Tony: yeah. Yeah, same.

[01:01:06] Tony: Alright mate, enjoy your hol­i­days, enjoy Bund­aberg,

[01:01:08] Cameron: Thanks mate. I will. I’ll talk to you next week. You have a good week.

[01:01:12] Tony: [01:02:00] Cheers.