Chris Batchelor from Stockopedia talks to us about how their product can help Australian (and international) investors make better investing decisions.

Then in the Club edition, TK and I talk about the market rout, RBA and interest rates, portfolio performance, Woodside and Richard Goyder, the double loop concept in retail, putting Super into housing, Josephines and dividends, and the Murdochs.

Get the QAV discount on a Stockopedia subscription here!

Transcription

QAV 640 Club

[00:00:00] Cameron: well. welcome to QAV. This is episode 640.

[00:00:12] Cameron: We’re recording this on the 3rd of October, 2023. How are you, Tony?

[00:00:19] Tony: Oh, I’m well. Very good.

[00:00:22] Cameron: That’s good.

[00:00:22] Cameron: If you see my wife walking around Sydney, say hello to her for me. She

[00:00:26] Tony: I didn’t.

[00:00:27] Cameron: there today with her, niece. They’re doing a quick couple of days seeing the sights of Sydney. She said to me just as she was gonna the airport, whoa, what, what should we do in Sydney?

[00:00:39] Cameron: I dunno what to do in Sydney. Go to the opera house. That’s about it. Nothing else to do in Sydney really. Gallery of Art, Sydney Art Gallery. That’s about it. That’s all I

[00:00:47] Cameron: know.

[00:00:47] Tony: Very good. Well, I’ll get her to make, to reach out. We’ll

[00:00:50] Tony: catch up.

[00:00:51] Cameron: Really?

[00:00:52] Tony: Yeah, why not?

[00:00:53] Cameron: Oh, okay. I’ll let her know. She said I didn’t even get a chance to talk to Tony about it when he was here the other day. I didn’t even get a chance to [00:01:00] say hi. Anyway, with us today, sitting quietly in, Sydney himself, a special guest today, All the way from the country of stockopedia, Chris Batchelor.

[00:01:10] Cameron: Welcome to the show, Chris.

[00:01:13] Chris: Thanks Cameron. Great to be with you here today.

[00:01:16] Cameron: What do you, what do you do at Stockopedia, Chris? What’s your official title and, job there?

[00:01:22] Chris: Ah, well, I’m the jack of all trades. I’ve the c e o when I want to be, and I clean the toilets when that needs to be done too. , so,

[00:01:32] Cameron: I know that feeling. yeah.

[00:01:34] Tony: think the market’s done that to us today,

[00:01:36] Cameron: It’s clean the toilet. Yeah. Yeah. Yeah.

[00:01:38] Chris: I do a lot of investment analysis work and I also help out with the, the marketing and the support side of things. So yeah, my background is in investment analysis.

[00:01:51] Tony: Oh, where at? Who with?

[00:01:53] Chris: I used to run a company

[00:01:54] Chris: called Scaffold, which is a stock market research business.

[00:01:58] Cameron: Oh, Scaffold. [00:02:00]

[00:02:00] Tony: Ah, Let’s talk about,

[00:02:02] Cameron: Let’s talk about, can you talk about

[00:02:04] Cameron: Scaffold? We tried to buy Scaffold.

[00:02:08] Chris: Yeah, right. Yeah, I actually tried to do that too at one stage, but, didn’t happen.

[00:02:13] Tony: Used to be part of our QAV process

[00:02:15] Tony: until it went

[00:02:16] Cameron: Well, under the post Scaffold name, which was share. Advisor, share something. What was it called a

[00:02:26] Chris: went

[00:02:27] Chris: to, yeah, share analysis, I think, something like that. Yeah, yeah. Yeah, so myself and Roger Montgomery founded that business and built it up and then we sold it and then the new owner took it in a different direction, shall we say.

[00:02:44] Cameron: Yeah.

[00:02:45] Chris: Yeah.

[00:02:45] Cameron: The,

[00:02:46] Tony: kaput. Down. Got the company

[00:02:50] Tony: moving.

[00:02:53] Cameron: Yeah, we actually, we reached out to Roger, when it went off, when share analysis went off the air, we reached out to [00:03:00] Roger to see if he knew who we could talk to about maybe buying the underlying, you know, code base or whatever. And he was like, nah, and he said it was all very complicated and I don’t know, so Yeah, anything you want to contribute to that or is it just complicated?

[00:03:15] Chris: oh yeah, it got a bit messy. Yeah, it ended up in, Administrators and so on. So Yeah,

[00:03:21] Tony: which is a shame because it was

[00:03:22] Tony: another good tool for retail

[00:03:24] Tony: personal investors.

[00:03:26] Chris: yeah, no, exactly. It was disappointing to see that happen, but we move on.

[00:03:31] Cameron: Well,

[00:03:31] Chris: got a new tool.

[00:03:33] Cameron: well, it’s one of the reasons why I’m excited about having Stockopedia as another tool. Obviously, our audience knows that we use Stock Doctor mostly, but it was good when share analysis was, when share analysis Was around to have two data sources and you can compare the analysis from both.

[00:03:55] Cameron: And we could look at things like intrinsic valuation or [00:04:00] consensus valuations. And we can compare the two and get a bit of a heat map for how different businesses were viewing it. But we’ve only had the one, data source for Australian stocks, really, that we’ve used since share analysis went away, but in using.

[00:04:14] Cameron: Stockopedia, our listeners know that I’ve been playing around with it for six months and it has, helped me pick up, some flaws in Stock Doctor’s data from time to time and, you know, I, I end up in email sandwiches between Link and Indicators and yourself and Elio saying, Your data’s different and both, both people go, Ah, our data, we stand by our data.

[00:04:39] Cameron: So then I have to… Become Sherlock Holmes and build spreadsheets and try and work out who I agree with, which tends to be you guys. so,

[00:04:48] Tony: And to be fair though, it’s, I think it’s usually a problem with the data feed provider to,

[00:04:52] Cameron: oh yeah.

[00:04:53] Tony: you know, to the intermediaries that we use, the tools that we

[00:04:56] Tony: use. Yeah.

[00:04:58] Cameron: So,[00:05:00] let’s, talk a little bit about Stockopedia then, Chris, and we’ll, you can tell us how you got involved with it and what it does and that kind of stuff. Where, where did Stockopedia come from? How long has it been around?

[00:05:11] Chris: yeah, sure. So Stockopedia was founded in 2012 by a chap called Ed Croft and a few of his colleagues over in the UK. And they, Ed originally started designing this product because he got really burnt during the GFC and he thought there’s got to be a better way. He was working in the city as they called it, London, at the time and, they were working for Goldman Sachs and yeah, his, portfolio didn’t do so well during that time.

[00:05:38] Chris: So he set about, studying all the academic research and really trying to come up with a solution to how to invest in stocks in a way that is safer And he came up with this, it’s not a new concept, but he put together this, product around the concept of factor investing. And factor investing, I won’t bore you [00:06:00] to snores with the details, but it, it dates back to the early 90s when some academics, did some analysis and discovered that there are certain factors that do drive returns in stock markets.

[00:06:11] Chris: You know, back when I was in uni, back in the early, early 90s, we were all taught that, stock markets were efficient, and the capital asset pricing model was the model to, to follow, and that you really couldn’t, outperform the market. And then, ironically, the same chaps that were pushing that, that particular theory, a, a guy called Fama, or two men, Fama and French, came up with a, a paper which said that, actually, we’ve done some further analysis and discovered that there are certain factors.

[00:06:39] Chris: That do show a tendency to outperform markets over periods of time. so we’ve built a model, a product around those factors. We’re focusing on three, a quality factor, a value factor, and a momentum factor. And use those to rank all the stocks, not only in our stock market, but across global markets. Of course, it [00:07:00] originated out of London, so that, you know, the focus has been the UK, but it’s now a global product.

[00:07:06] Chris: And myself and Elio D’Amato got involved, about 12 months ago. I’ve known Ed for five years or more, and I got in touch with him and said, you know, I know you’d like to make a push into Australia. You know, Elio and I are looking for a new gig. We’d be keen to get involved with you. And so, you know, we negotiated and that all came together.

[00:07:27] Chris: And so now, Elio and I run the Australian side of the business. Manage all the Australian customers, look after support, do analysis, write,blog posts and so forth about Australian stocks as well as New Zealand and, and of course liaise closely with the team in the UK who are the in charge of all the development and that side of things.

[00:07:49] Cameron: And of course, many of our listeners will remember Elio from his days with Stock Doctor, and I think we had him on the show a few years ago, after he left and was [00:08:00] doing some other

[00:08:00] Cameron: stuff. So Yeah, both of you obviously with a long, a lot of experience in analyzing the Australian market, which I’m sure is of great value to Stockopedia.

[00:08:12] Cameron: So what’s, what’s the vision for Stockopedia in the Australian market, Chris? What do you guys hope to do?

[00:08:19] Chris: Yeah, we hope to be one of the major players in the stock market research space. You know, we, really believe that this product really helps investors. It’s quite simple and intuitive in its approach. but it gives people, I don’t like to use the term an edge, but it helps people who are time poor to analyze the market quickly, get themselves down to a short list of stocks that they can then dig into in more detail and come up with a portfolio that suits them.

[00:08:46] Chris: The other thing that it’s really good at is it’s not, particularly oriented towards one investing style only. So, you know, I have my particular bent and others will have their particular bent when it comes to investing, but Stockopedia is fairly style agnostic, [00:09:00] so, you know, short term traders. long term investors, value investors, momentum investors, whatever, way you like to cut it, you can find value in Stockopedia and find it to be a very useful source of information.

[00:09:16] Tony: Yeah, I think one of the, one of the great things in the last probably 10 years or so is the ability for retail investors to be able to screen the market because of, I guess, improvements in the internet and IT. and that’s, that’s a real bonus for, you know, people who aren’t in the industry or running or working for fund managers, et cetera, and have access to Bloomberg screens and that kind of stuff that was only available to stockbrokers in the past.

[00:09:41] Tony: And I guess my, my kind of take on all of that is that it doesn’t really matter. It may not matter which tool you use, but if you use a tool properly, diligently, and with the right process, you should be able to beat the market. Fairly, fairly easily, fairly comfortably, and it just comes down then to, as you say, what, [00:10:00] what style do you prefer and how disciplined are you at applying that style and sticking to it?

[00:10:05] Tony: so, so knowing that, do, do you guys measure, with some kind of dummy portfolio, the, the returns that someone using Stockopedia would generate? And I know it’s, it’s across all different types of styles, but do you, do you have

[00:10:19] Tony: like a CAGA return that we can benchmark you with?

[00:10:22] Chris: sort of, yeah, so we don’t have a done portfolio per se, but what we do do is we backtest all of our, stock ranks. So we calculate, as I mentioned, we have quality, value and momentum as the key ranking metrics that we use. And then we calculate what we call the stock bank, which is basically just a composite of those three, components.

[00:10:44] Chris: And, and we use that across the market. We rank every stock from one to a hundred. And then what we do is we in backtest those, different bands, so we break it down into deciles. And we backtest them across all the data that we have. So [00:11:00] for the Australian market, for example, that goes back to 2016. And we can compare, stocks that are ranked 90 to 100.

[00:11:08] Chris: If we, set up a hypothetical portfolio, we rebalance that quarterly. And then we compare that to stocks that are ranked north to 10. Well, it actually outperforms on a cumulative basis by about 150 percentage points, and it also outperforms your ordinary index. So you know, we have those sorts of metrics.

[00:11:29] Chris: Now have to caveat all of that with, this is hypothetical. It’s not an actual portfolio that you could replicate. There’s no trading costs taken into account, for example. but what it does do is give you a good indication of the types of, you know, the types of returns, the direction of returns that following the stock ranking, methodology can lead to.

[00:11:53] Tony: Sorry, just so I understand that 150 points above the index or 150 points above

[00:11:59] Tony: what?

[00:11:59] Chris: [00:12:00] No, so separating the top from the bottom group of stocks,

[00:12:05] Tony: Okay. And that is the top group of stocks, the top group of quality, value and momentum stocks, or is it the top of the quality, top of the value and top of the momentum looked at separately?

[00:12:17] Chris: it’s the top of

[00:12:20] Tony: The composite. Okay.

[00:12:21] Chris: that’s right.

[00:12:22] Tony: Okay. and how does that top decile perform over time, from a CAGR point of view or a market outperformance point of view?

[00:12:33] Chris: Give me a second, I can speed that up for you.

[00:12:39] Tony: I guess while you’re doing that too,

[00:12:41] Cameron: how’s it doing today?

[00:12:45] Chris: So, yeah, so I can tell you over the last, eight years that it’s done a cumulative return of 73%, that’s, that’s not per annum, that’s [00:13:00] opposite. That’s cumulative.

[00:13:02] Tony: you

[00:13:03] Chris: if you wanted to look, just say at the last year, it’s, it’s basically flat, basically zero. So it has underperformed over the last year.

[00:13:16] Tony: Last year being crowning the last 12 months or

[00:13:18] Chris: 12 months, yeah.

[00:13:19] Tony: yeah, okay, gotcha, alright. And can I also then say, why quality value and momentum and can you do other ones like growth, for example,

[00:13:29] Tony: or other asset classes?

[00:13:32] Chris: yeah, so we’ve chosen those three because we’ve found that they had the biggest impact on stock returns. So in theory, we’ve rid of that. Others, growth, there are various growth metrics in the system and very early versions of the system did have a growth component, but it was decided by the team in the UK.

[00:13:53] Chris: This happened many years ago, but they decided to just bring it back to those three to keep it simple. And because they were the [00:14:00] ones having the greatest impact. There was a fair bit of overlap between, I think particularly the quality rankings and the growth rankings.

[00:14:08] Tony: Really? That’s interesting, isn’t it? Okay. Yeah, good, good. And, So you kind of got to those three through experience. is it based on research or is it

[00:14:19] Tony: just based on the experience of the developers?

[00:14:22] Chris: Most of it is research. There’s a lot of academic studies that have gone into it, and most of those are actually accessible through the program. There’s a, what we call the Learn section, so you can dig into that detail if that’s of interest to the viewers, to listeners. and then of course there, there has been the, the testing of the actual models, both what you can see in the system as well as, back testing with data when the system was being developed.

[00:14:49] Tony: And the backtesting supports the fact that you’re better off having a portfolio of the top in each of those categories, rather than just say the top quality stocks or the top value stocks,[00:15:00]

[00:15:00] Tony: for example,

[00:15:00] Chris: yeah, we don’t push a particular angle there. I mean, overall, the, the overall stock rank gives you the best exposure to all three different factors, and the advantage of that is that different factors will outperform at different times. So, you know, at certain periods of time, that value will be doing really well, and then it won’t do so well for a while, but momentum will do really well.

[00:15:23] Chris: And so by spreading yourself, or by taking that composite, you’re getting exposure to all three of those, factor drivers.

[00:15:32] Tony: you using for momentum? Is it like a, a long term over short term

[00:15:35] Tony: type cross? Is that the idea?

[00:15:37] Chris: there’s two elements to the momentum score. One is based on share price, and it’s looking at primarily, well, it’s looking at the relative of the share price versus, you know, the market. And it’s looking at it particularly in the 6 to 12 month period. And then also we look at, analyst earnings. So there’s a [00:16:00] earnings component.

[00:16:00] Chris: So if analysts are revising their earnings up, then that’s positive for the momentum score. So there’s those two, components that are taken into account. And it’s a number of metrics underlying each of the two broad groups that Drive that momentum score. So it’s not purely a share price momentum,

[00:16:19] Tony: Right. Okay. And relative strength, is that the same as the relative strength index that we often hear talked about?

[00:16:25] Chris: correct?

[00:16:26] Tony: Yeah. Okay. Good. And I guess that’s one component of putting a portfolio together. Does, Stockopedia or yourselves recommend things like the size of the portfolio or, whether you’re buy and hold or rebalance or trade, what, what are the sort of recommendations along the

[00:16:42] Tony: trading elements of putting a portfolio together,

[00:16:45] Chris: Yes. Yeah, Stockopedia per se does not, give a recommendation on that. I do have a personal view,

[00:16:53] Tony: which is,

[00:16:53] Chris: which is I, I think a portfolio of around 15 to 20 stocks gives you good diversification without [00:17:00] making it overly complicated. And most, a number of studies have shown that you get the biggest bang for your buck in terms of diversification benefits around that 20 stock mark.

[00:17:10] Chris: After that it starts to taper off a bit. so that’s certainly, certainly my own investing. I have about 20 stocks in my portfolio. And then to your other question about, you know, strategies, trading versus buy and hold, etc. as I mentioned at the top, the product itself is style agnostic. So, It is used by people that like to trade on a frequent basis and they tend to focus on momentum, whereas those who tend to like to buy and hold for a longer term, and that’s more me, tend to be more focused on quality and value factors.

[00:17:49] Chris: Personally, The way I tend to invest is I look for stocks that I think have a lot of long term potential, that are high quality businesses, but also trading at a reasonable valuation. [00:18:00]And then I ideally hold them for long periods of time. A lot of the stocks in my portfolio I’ve had for seven, eight, nine years now.

[00:18:08] Chris: so provided my theory proves correct, and that I’ve picked the right stocks, then what I do do is I rebalance. So if a stock goes well and it starts to become highly weighted within my portfolio, I trim that back to a, you know, a target weighting. Likewise, if a stock falls and provided it still meets all the valuation criteria and the fundamentals of the business are still solid, then I’ll add to that weighting from that stock.

[00:18:38] Chris: I generally hold for, as I said, years, but of course, the thing that will trigger me to change that is if I discover that the business has changed, either I’ve made a mistake, or the business itself decides to take a slightly different direction, or a very different direction, you know, if the assumptions around revenue and earnings, if they prove to not be [00:19:00] playing out, or around the balance sheet structure, or cash flow, You know, if that changes significantly, or even just the ongoing strategy of the business generally, we have an understanding that, you know, there’s a particular strategy this business follows.

[00:19:14] Chris: If they change that dramatically, then I’ll look to sell because the fundamentals of why I bought that business no longer stand.

[00:19:23] Tony: that mean that you need to set alerts or follow a business that you own carefully to look for those kinds of triggers for sellers or, or you’re pretty hands

[00:19:32] Tony: off?

[00:19:33] Chris: yeah, I’m not that hands on. I mean, I do watch it daily. And do I set alerts? I set price alerts for that. Yeah, but what I mentioned, the trimming. Sort of thing. So, I’ll, you know, most stocks in my portfolio, I’m generally looking to, if one gets 20 percent overweight relative to my target. Then I’ll look to trim, so I set the price alerts for those.

[00:19:59] Chris: Stockopedia does allow [00:20:00] you to set alerts on any number of different metrics. I use that a little bit, but I don’t, do that a lot. Mainly because I’m very close to my portfolio, I guess because it’s my job. You know, I’m looking at this stuff every day, and, you know, keeping a close eye on how this business is doing.

[00:20:16] Tony: So what kind of period do you normally

[00:20:19] Tony: rebalance? Is it an annual thing or a shorter or

[00:20:22] Tony: longer time?

[00:20:23] Chris: No, it’s not based around a time factor for me, it’s based around those share price movements. So I will rebalance, whenever a stock gets out of whack in terms of the percentage of my portfolio. so that could be, you know, at any point in time.

[00:20:40] Tony: And what about rebalancing due to changes in the scores? How often do the scores change enough to drop something or bump something up the decile ladder, so to speak? Is it after new numbers come

[00:20:51] Tony: out in the reporting season or is it changing all the time?

[00:20:54] Chris: yeah, so it depends on the factor. So for the quality score, the, well, it [00:21:00]pretty much just comes down to when new numbers are released. So half the elite for Australian stocks. the, momentum factor changes on a daily basis, as you would imagine, and then value, it change, it can change on a daily basis, it tends to be more steady, but value of course is related to price, and so if price moves considerably, then the value metrics will change as well.

[00:21:27] Chris: It can also change due to changes in analyst forecasts and so on, but as I said, that tends to be more gradual, unless there’s some sort of announcement which drastically alters the perception of a business.

[00:21:43] Tony: So do you have any other sell triggers outside of rebalancing? If, if some bad news came out or the CFO resigned or something like

[00:21:51] Tony: that, would you sell a stock? And what are those rules?

[00:21:54] Chris: Yeah, well, I do look at valuation

[00:21:55] Chris: metrics, and I certainly consider selling when valuation [00:22:00] metrics get high. But in my case, that’s more likely to be somewhat extreme. I don’t, I generally just trim when valuations get high rather than sell right out. But, there have been occasions when I have sold completely because I just thought this is.

[00:22:17] Chris: Valued, you know, ridiculously well, and I might as well take advantage of that and get out. and then the third situation is, you know, I mentioned I generally keep to around 20 stocks. Well, if I find something that’s a really compelling buying opportunity, but I don’t have any spare funds available, well, I’ve got to look to sell something.

[00:22:36] Chris: So I’ll go through my portfolio and say, which is the least attractive of these existing holdings. And that one will get sacrificed to bring in the new one.

[00:22:45] Tony: Least attractive being the

[00:22:46] Tony: lowest score in Stockopedia some other way of doing that?

[00:22:50] Chris: that, that’s, yeah, that’s certainly a factor, but then I’ll also look at some of the other metrics that I like to focus on. I, I like to look at the balance sheet. So [00:23:00] if a company’s debt profile has gotten worse, then that’s obviously a negative in my perspective. I, I look at cash flow. I think cash flow is a very important metric to keep a close eye on.

[00:23:13] Chris: Bear in mind that it’s, it’s volatile and variable, but nevertheless. over time, cash flow should be strong for a business to be strong. And then I’ll also look, of course, at revenue and earnings and the projections for those and how the business is tracking relative to what is projected in the past.

[00:23:32] Chris: So all of that factors into the stock ranks, but I’ll also pull them out separately and look at those factors myself. People use Stockopedia in different ways. Some people just want to keep it pretty simple and focus on the stock ranks. But others, you know, like myself, who’ve been in this game for quite a while, like to dig into the detail and, and, look at the actual underlying numbers as well as the stock ranks.

[00:23:56] Chris: The two should correlate, but it’s, it’s [00:24:00] also helpful just to look at the underlying metrics.

[00:24:04] Tony: Yeah, and are you agnostic when it comes to the size of the company or do you tend to stick to a certain market cap

[00:24:11] Tony: size or average daily trading value size?

[00:24:14] Chris: Yeah, pretty much agnostic. I know if you look at my portfolio, it’s definitely skewed towards the small caps. I tend to find there’s more opportunities in that space, and that’s just tends to be the space where I play the most. I do have some larger stocks, but for the most part I’m focused on the small caps.

[00:24:32] Chris: The stock APU itself is largely neutral. we do find, particularly with the value metric, that sometimes you get more opportunities in the smaller end of the market. Mainly because, the big institutional investors, they have difficulty playing in that space. And so sometimes that skews the valuation a bit and throws up opportunity for smaller, more nimble investors who are able to get into those stocks, you know, without disturbing the share price.

[00:24:56] Chris: Obviously, when you get down to the really small stocks, you’ve [00:25:00] got to watch liquidity. And, It’s not only related to market cap, it’s also related to how widely held the stock is and whether there’s a lot tied up with one or two individuals. But generally, if you’re patient, and you’re not looking to invest too much money, you can get a decent position in most stocks.

[00:25:20] Chris: It may take a few days to get into that, you know, without upsetting the market. But generally, yeah, I’ve got some really tiny stocks, I’ve got a couple of large ones, and then most of them are probably in that 1 to 200 million, up to 2 billion sort of market cap.

[00:25:40] Tony: So with the ranking process, you get the market ranked on those three metrics from top to bottom. Have you, do you or have you heard of anyone using the bottom of ranking stocks to short the market

[00:25:54] Tony: at all?

[00:25:55] Chris: Yes, yes, I don’t, but yeah, people do do that. And we actually have [00:26:00] six pre built, short selling screens within Stockopedia. So people can just click onto those screens and see at a glance what stocks are the most attractive in a short selling perspective. which means they’re probably the most unattractive.

[00:26:16] Chris: And that will focus largely on the low scoring stocks, but it also takes other indicators into account. yes, they’re based around what we call guru screens. So they’re based around a particular short seller’s strategy for short selling. And it might be that they focus on three particular metrics. And so, you know, we’ll analyze those metrics and look for the ones that meet those criteria.

[00:26:41] Chris: But of course, there tends to be a very strong correlation with those and low ranking stocks.

[00:26:48] Tony: And do you have guru screens then for the

[00:26:50] Tony: other end, for buying stocks?

[00:26:53] Chris: Absolutely, yeah. So most of our guru screens, you know, we have value, we have momentum. We have quality, we [00:27:00] have growth, and our end income, of course, and we have some income screens as well. I

[00:27:08] Tony: No, we could

[00:27:08] Tony: add a QAV guru screen to

[00:27:12] Chris: certainly do not have

[00:27:13] Chris: a question here.

[00:27:17] Tony: Stockopedia. Good stuff. do you adopt any macro screens or macro views or

[00:27:21] Tony: positions in Stockopedia?

[00:27:23] Chris: Yeah, now, Stockopedia

[00:27:24] Chris: doesn’t take a macro view per se. However, the one qualifier I would add to that is that we do use consensus analyst forecasts. And of course, when analysts are generating those forecasts, they’re considering the macro factors when they’re deriving their numbers. But yeah, Soccerpedia is a very company focused tool, rather than focusing on metrics, macro metrics.

[00:27:51] Chris: And personally, I invest that way as well. I tend to look at the company. I’m of the view that, ideally, you want companies that are going to prosper [00:28:00] irrespective of the economic circumstances. Now, of course, that doesn’t mean they’re going to be immune to it. Most companies will be impacted in some way by rising inflation or slowing economic growth, but good companies will have the strength to ride through those periods of time.

[00:28:15] Chris: And they may even emerge out the other side in a stronger position because their competitors may well have suffered more than they did. So that’s what you’re looking for.

[00:28:25] Tony: yeah, do I take it from that then that you stay fully invested the whole time?

[00:28:29] Chris: Yeah. that’s, that’s correct.

[00:28:31] Tony: Okay. And, what about stock weightings in your portfolio? Is it, is it 15 to 20 equal weightings that you start off with or do you favor those higher scoring stocks

[00:28:41] Tony: with a larger part of the portfolio?

[00:28:44] Chris: Yeah, what I do personally, I break my portfolio into two segments. I call them bottom draw and top draw stocks. So bottom draw are the ones that I’ve held for years that I’m really comfortable with. basically ones that don’t cause me stress. And I [00:29:00] give those a higher weighting. So I, within that group, they’re equally weighted, but that group gets a higher weighting.

[00:29:07] Chris: And then the top draw stocks are the ones that I’m keeping a close eye on because, you know, they’re great right now, but I’m not 100 percent confident that they’re going to be great for a long period of time. And, and so as a group, that gets a smaller weighting, which means that each individual stock, whilst equally weighted, has a smaller weighting than the bottom draw stocks.

[00:29:27] Chris: So yeah, there’s a skew there.

[00:29:30] Tony: Okay. What’s, what’s a good example of a stock that’s in each of those two drawers?

[00:29:36] Chris: sure. So Nick Scali or Kodan, they’re stocks that I’ve owned for a long time and I’ve trimmed at times. I’ve added to them at times. So Kodan, I was buying it when it got down to 4 last year. I was selling it when it was at 19, A core holding, well not always, [00:30:00] but for a long time, I’ve had a lot of core holding in that. top draw stocks, so I’ve got some little sort of minnow stocks. I’ve got Magellan, for example, that’s not a minnow, but it’s one that keeps me up at night. If I worry about what should happen there. It looks attractive, provided they can turn it around, but that’s a big provided. And then some of the smaller sort of tech stocks, I have dabbled in a couple of those, so I, I have very few stocks that have no earnings or, you know, don’t have positive earnings, but I do have a small handful of little tech stocks.

[00:30:40] Tony: Your point about the bottom drawer stocks, something that I’ve noticed From investing over the years is that some stocks just keep appearing on the, what we call it, quality value score sheet. I imagine it’s the same thing for Stockopedia. Why do you think that is? I mean, you mentioned Scali before it’s been on and off my buy list [00:31:00] now for probably 10 years.

[00:31:01] Tony: why do value stocks stay value stocks? And, and, you know, the, the theory is that they’re meant to grow up and become blue chips. So it doesn’t seem to always happen that way. Do you have any insight into

[00:31:11] Tony: that or thoughts?

[00:31:13] Chris: yeah, well, my, my thoughts are that, I mean, using Scali as an example, it’s a very well run business. Now, furniture is not going to shoot the lights out, it’s not like AI or something, but it’s something that we all need and we’re going to continue to need. Forever in a day. And of course there’s quite a few businesses in that space, but Nick Scholarly, just, just a very well run business, they have quite flush and they’ve, really transformed that business and now generated really strong margins from that business.

[00:31:44] Chris: So whilst they’re, you know, we’re not a we chip stock, they, they have grown quite a lot over the last 10 years or so and they churn out the dividends. So if you just sit there collecting the dividends, you’re doing pretty nicely.

[00:31:59] Chris: And it’s [00:32:00] just one of those ones where you’re pretty confident that Anthony Scali’s just got it.

[00:32:04] Chris: He’s highly invested in himself, so it’s in his interest to make sure that the business is run well, and he does that, and you pretty much sit back and let him manage your money. As I said, when the market sells down because of some external event, That’s when you can pick up more at a good valuation. And then, you know, it was at 12, 18 months ago, they got quite high.

[00:32:28] Chris: So, I think they got up to 14, 15. And yeah, I took that opportunity to trim a bit. But overall, I think it’s just a very steady business paying a great

[00:32:39] Chris: dividend. Just a nice underhand thing.

[00:32:42] Tony: Yeah, I think it’s a great business, but it’s just always surprising me that it trades on a low PE, when, as you’ve outlined eloquently, what all the good things are about it, and yet the instos haven’t really jumped onto

[00:32:53] Tony: the register in a big way.

[00:32:55] Chris: Yeah, and it’s interesting that they will often cite things like, Oh, we’re looking at a property to [00:33:00] find their sales and leverage to the property market. And that’s true. But that’ll

[00:33:07] Tony: is,

[00:33:09] Chris: be a, it’ll be a,

[00:33:10] Chris: blip.

[00:33:10] Tony: except resources, no, they are too.

[00:33:12] Chris: Well, yeah,

[00:33:13] Chris: that’s right. And what will happen is,

[00:33:15] Chris: yeah, sales might decline a bit, but that’s just a little blip, you know, they’ll come back.

[00:33:20] Chris: And you can look through their history, like the GFC, their share price tanked. And yeah, their earnings fell a bit too, but they bounced back quickly, you know, and if you seized them at that time, you would have done really well.

[00:33:33] Tony: Yeah, I think that’s my answer to the question is that you, the GFC saw a lot of those businesses which are always on the value list, declined dramatically, Credit Corp, Nick Scali come to mind straight away. But, as you say, if you take that 12 months out of the, stock market graph over the long term, they’ve been terrific investments.

[00:33:52] Tony: which means that that 12 months was a great buying opportunity, not a selling opportunity.

[00:33:56] Chris: Yeah, that’s right, and it was the same during the panic of 2020 at the start [00:34:00]of the pandemic, you know,

[00:34:00] Chris: if

[00:34:01] Tony: With COVID, yeah.

[00:34:02] Chris: the, and the courage, there were some great

[00:34:04] Chris: opportunities there.

[00:34:06] Tony: Anyway, interesting to s aside from someone who’s, like you, been in the market for a long time looking at these stocks, and I guess research. From what I’ve seen, Stockopedia plays a big part in the development of the product. Can you outline some of the, I guess, more salient pieces of research that have gone into it?

[00:34:23] Tony: I know you spoke before about Eugene Fama, but there

[00:34:26] Tony: probably are some other ones too.

[00:34:29] Chris: Yeah, sure. So, there’s, well, I’m not a big expert on momentum, you’ve probably picked that up by now, it’s not my style, but there’s had been studies. done on Momentum and also a lot of practitioners of Momentum, guys like Richard Tryhouse. The name of the guy who did the big study is just escaping me right now, but there was a study done in the early 90s that really identified Momentum as a key factor. then, yeah, they’re, they’re probably the [00:35:00] two ones, the, the Fama and French paper called the Cross Section of Expected Market Returns in 1992. That, that’s a real driver behind all of this. And then there’s, I don’t know, specific papers around different elements of it, you know, be it quality, be it value,

[00:35:19] Tony: I know, listening to Ed Croft in the past speak, he’s a big fan of the Zulu principle. So that was another one that, people might want to look up.

[00:35:26] Chris: yeah, that’s right,

[00:35:28] Tony: And there was another one too, whose name escapes me, which caught my eye. some research was suggested that it was very hard to find the perfect stock because finding the stock, which was great at quality and value and momentum might be impossible, but you can get the same sort of characteristics if you spread that over 10

[00:35:45] Tony: stocks, which I thought was an interesting concept as well.

[00:35:49] Chris: yes, I know the one, it’s like, you know, I can’t think of the exact name, but I have read that one too. One guy who does do a lot of research in this space is Arnott. He’s a hedge [00:36:00]fund manager in the US, but he’s probably the most famous of the factor investing hedge funds. He, you know, really popularized this strategy back in the 90s and still to today he’s running that fund.

[00:36:14] Chris: It’s, it’s a well known fund and he’s done very well.

[00:36:19] Tony: Very good. I guess, you know, before you go, do you have any sort of, war stories from your time running Scaffold or with Roger Montgomery or being around the markets for a long time that sort of, you can share with our

[00:36:30] Tony: listeners that might be helpful?

[00:36:34] Chris: Award stories. I mean,

[00:36:37] Chris: we’ve all

[00:36:37] Tony: do during COVID?

[00:36:39] Chris: yeah, COVID was an

[00:36:40] Chris: interesting time. I, I, I did buy. I didn’t have enough cash because I hadn’t sold for, I did, I trimmed a couple of things just at that, around February, you know, February 2020. I thought, I remember trimming Magellan when it was up around 70, [00:37:00] but again, didn’t sell out.

[00:37:01] Chris: and so I had some cash and so I did buy a number of my favorite stocks during that period of time. of course, what was interesting in that time was, It was the big unknown. yeah, it’s all very well to say, oh yeah, you look at the graph now and it dropped and it came straight back. But at that time, it was the first time in living memory that businesses actually shut down. no one knew how long they were shutting down for. So I looked at my stocks and said, can these companies survive six months with next to no revenue? And Nick Scali was one. You look at it and you say, well, they’ve got very little debt. They’ll obviously cut their expenses right back, and yeah, sure, their revenue will go to PromoCero, but yes, I can see they would survive.

[00:37:49] Chris: ARB was another one, yeah, they’ll survive. The ones that were highly leveraged, Virgin was a classic, you know, they’re toast in a situation like [00:38:00] that, because once… Once the cash flow dries up and they can’t service their debts, they’re in trouble. Yeah. So yeah, I, I did an analysis of all my stocks and said, how would they go if this goes on for six months and there’s, there’s no revenue coming through the door?

[00:38:16] Chris: And I was comfortable that they would survive. I knew they’d take a whack, but they would survive. And as we know, all my stocks survived. Most companies did survive, but there were some that really struggled. A lot had to raise capital, so whilst they survived, Raising capital at really low prices you can argue is actually going broke because if you’re having to do that you’re diluting your shareholders and if you’re not, if you can’t survive without that capital then you’re effectively in a dire situation.

[00:38:52] Tony: Yeah. And we’re seeing that with Star

[00:38:53] Tony: Entertainment Group at the moment too, with their capital raisings recently.

[00:38:57] Chris: Correct, yeah. And we’ve got a webinar coming up in a [00:39:00] week or so where we’re going to talk about avoiding disasters and that’s one of the examples that we will highlight because Stockopedia, you know, do you have any warning signals about that?

[00:39:12] Tony: Yeah, right. Good. Cam, over to you. Do you have any questions to add? No.

[00:39:17] Cameron: Just some, I guess, questions about the product itself, Chris. I guess the first one everyone listening to this is going to be asking is, what’s the unique value proposition vis a vis Stock Doctor? Most of our members listening to this are already Stock Doctor members. Some new members may not be though yet.

[00:39:37] Cameron: If people already have Stock Doctor, do you see Stockopedia as a A secondary tool, like a complementary tool, or is it an either or situation?

[00:39:50] Chris: I would think it’s complimentary. So, Stockopedia doesn’t, attempt to usurp any particular process. So, I’m no expert on Stock Doctor, [00:40:00] but I gather they focus on their, sort of, the health of companies and their star stocks. You can then use Stockopedia to analyze those stocks and get a different perspective.

[00:40:10] Chris: Obviously, it’s the same underlying data, but you’ll see how is that stock ranking in terms of its quality, in terms of its value, in terms of momentum. I would imagine this, this type of the stocks they recommend that would be more quality and value stocks, but as I said, I’m not an expert on their system.

[00:40:28] Chris: so the real thing we bring is this hot factor investing concept. And the stock ranks, which make it quite simple for people to see at a glance. What is the driving factors behind the returns of a particular stock? And then you know, okay, this stock is, really scores strongly in terms of momentum.

[00:40:50] Chris: I’m not really a momentum investor. That’s not my area. So that’s not one that I’m going to be looking at. I’m going to focus on these ones over here, which are quality or [00:41:00] great value stocks.

[00:41:04] Cameron: Okay, so complementary, one of my only bugbears so far with using Stockopedia are the download limits. You can only download 200 stocks at a time. When I’m doing an Australian download, okay, that just means I have to do like four or five downloads to get the full list of stocks I want to look at. But as our listeners know, I’ve been using it to try and build a US version of our checklist.

[00:41:33] Cameron: In which case I have to download about 20 pages of stocks to get through the full 3, 000 that I want to filter. Any explanation for why the limits and any chance that they’re going to get removed? What do we have to do? Who do we have to complain to about that, Chris?

[00:41:54] Chris: I think you would have to,

[00:41:55] Cameron: chain to, the UK?

[00:41:57] Chris: well, I think you’d actually have to go higher than that and that, [00:42:00] that’s because it’s, it’s due to the data provider, that’s a refinitive restriction. Yeah,

[00:42:05] Cameron: We’re good friends with Refinitiv. We can reach out to them and, have a crack at them. yeah, okay.

[00:42:10] Chris: yeah, yeah. And the reason they have that is, it’s meant to be, you know, they’re selling a data subscription to Stockopedia based on this being a retail product.

[00:42:19] Chris: And if, if it starts to look more like a, institutional grade product, then they want to charge institutional prices. So that’s, that’s why there’s that restriction.

[00:42:29] Cameron: Fair enough. final question. The reporting, the portfolio, portfolio, reporting. I think it’s time weighted return you guys use. we prefer to have a CAGR report.

[00:42:41] Cameron: Is there any way of getting a straight up CAGR report, or is that, beyond your, toolset at the moment?

[00:42:49] Chris: yeah, it is beyond what we’ve said at the moment. I know what we can do is put through a request to the development team. I’m not sure where that would rank in [00:43:00] terms of the priorities. Obviously they’ve got a large wish list of people requesting different things, but yeah.

[00:43:08] Cameron: Tell ’em Tony asked. Tony Kynaston. I’m sure they know who Tony is. TK says. See how that goes. Alright. and I believe you’ve got an Oprah deal for our listeners today, Chris.

[00:43:22] Chris: yeah, that’s right. So,

[00:43:23] Cameron: gets a car.

[00:43:25] Chris: yeah, well, not quite, but everyone can have 10 percent off if they, if they choose to subscribe. What we’ve done, we’ve set up a webpage, y. stockopedia. com forward slash QAV. And if you go along to that, you’ll, we’ll be offered a 10 percent discount on any one of our plans. So, you know, we’ll start with Australia only is our cheapest plan, but you can go right through to the whole global package or Australia and US, for example, is 720 per annum, which is very competitive compared to some of the alternatives that are out there. [00:44:00]

[00:44:00] Cameron: And that’s Y as in W H Y dot stockopedia, not the letter Y, just in case people are wondering. Well, thank you. That’s very generous of you. And, you know, it is, I know that some of our members are interested in international markets, not just Australia. Up until this point, we’ve only focused on the Australian market, but I know we’ve got listeners in the UK.

[00:44:21] Cameron: The USA that have been asking us to help them build checklists. So that’s one of the things I’m excited about Stockopedia being an option for us is we can use that for these international audiences. So, go check it out. why.stockopedia.com/QAV. Thanks very much for coming on and having a chat, Chris, and Thanks, for the deal for our members, and good luck with the building of the Stockopedia Empire in the Australian region for you and Elio, I hope it does very [00:45:00] well.

[00:45:00] Chris: Thanks, Cameron. Thanks, Tony. It was really great to chat with you guys today.

[00:45:04] Tony: Yeah, thanks, Chris. Thanks for your

[00:45:06] Tony: time, mate.

[00:45:07] Tony: now 2. 56pm, when are we? October 3. I think the RBA is meeting as we speak, or is about to, announce what’s going to happen with interest rates, but, I really hope they leave them on hold. I, I just, I’m just finding this whole macro environment topsy turvy at the moment, if I can put it politely.

[00:45:30] Tony: And I’m not lying, Solly Lew came out during the week and said interest rates have gone too far, and I… I really agree with Sully, but I tend to agree with him on that. I just don’t see how raising interest rates now is going to reduce the price of oil. It’s, it’s, it’s just nonsensical to even think about doing it now.

[00:45:49] Cameron: and of course, as we, hinted at during the chat with Chris, the market dived this morning. I think it’s at a six month low as of now, we’re [00:46:00] currently, 7. 150. 70 at the moment is the All Ords, down from 7. 43. 150 a year ago. Big crash today, led by bond yields, I read in the Fin this morning in the U. S.,

[00:46:15] Cameron: hitting a record.

[00:46:17] Tony: And new yields, yeah. Which is usually a sign that, you know, the people buying and selling bonds think that there’s going to be some kind of market ruction or downturn or problems with the economy. open the window guys. I mean, the inflation came down in the U S it’s came down here. At least core inflation did.

[00:46:37] Tony: yes, there are, all prices are going up, but, but raising interest rates doesn’t help that. It’s completely decoupling is completely decoupled from all prices. But, you know, but also two bonds do this, they go up and down and, and Wall Street adjusts their DCF spreadsheets based on that because it feels in field, it feeds into their, their hurdle rates.

[00:46:59] Tony: But, you [00:47:00] know, I’m, I’m kind of over it really. I don’t think it’s a, a relevant, it’s a relevant factor because the market moved and you’ve always got to listen to what the market does. but it doesn’t change what I do. I think, you know, I think. Bond traders on Wall Street can have their say and we can look at companies and go, they got a bit cheaper today.

[00:47:20] Tony: Aren’t we lucky?

[00:47:24] Cameron: And I know that, you know, your portfolio, a lot of our portfolios have struggled over the last couple of years as the, everything’s been going on, but you know, we don’t really have much choice, right? We just have to ride it out and they’re going to do what they’re going to do. And we’re going to have to keep doing what we’re doing.

[00:47:41] Cameron: And, you know, I did, I did look at when I was doing the. Dummy Portfolio reports, this morning. and this is before the market opened. I’m going to, I just want to preface with that. So I don’t know what it’s going to look like, after today’s, events, [00:48:00] but the dummy portfolio was looking really strong on all fronts.

[00:48:03] Cameron: since inception, it was doing two and a half times the index financial, financial year to date. It was up 5 percent versus the FTW which was down 2 percent and again that’s before the market opened today. Over the last 30 days we were pretty much neutral 0. 36 percent but the STW was down nearly 5 percent for the 30 days and over the last 12 months we were up 15.

[00:48:32] Cameron: 4 percent versus the STW up 12. 66 percent and that’s the first time really in the last year that we’ve been back ahead of the STW. We’ve been underperforming it for the, for the last 12 months. So we were back ahead. So I looked at that at nine o’clock this morning and thought, yeah, all right. Things are, things are back, back to normal.

[00:48:52] Cameron: I’m not sure what it’ll look like when I check it tomorrow,

[00:48:55] Tony: But then that word normal is a good thing to use. It is situation normal. Markets kind of move [00:49:00] around on bond trades and changes to hurdle rates and things, but we kind of just, that’s Mr. Market becoming moody and I’m just going to ignore it for now. I might have to do some trades if, you know, the system says to do them, but, yeah, I’m not taking positions based on 10 year bond yields.

[00:49:17] Tony: That’s for sure.

[00:49:19] Cameron: I was actually pleasantly surprised that the only alerts I got this morning were for Virgin UK, VUK. That became a rule one sell in some of our portfolios. And, but then I, I just watched it. First of all, I was like, I jumped to Virgin UK’s, announcements page and I was like, what’s going on? Why is Virgin UK crashed?

[00:49:41] Cameron: Couldn’t see anything, nothing going on. I’m like, what? And then I happened to see what happened to the All Ords. The graph for All Ords looked exactly the same as the graph for Virgin UK. But it was the only alert that I got today out of the 120 stocks that I owned. Everything dropped 3, 4, 5 percent but [00:50:00] didn’t trigger any other alerts and I think Virgin UK is Thank you.

[00:50:03] Cameron: Thank you. Probably recovering back above the Rule 1 line where it was, so that’s good. Shows that there’s a lot of buffer that’s been built up in there over the last couple of months with the rest of our stocks, but, Yeah, it’s disappointing to see that, you know, the market is back, you know, below where it was six months ago,

[00:50:21] Tony: yeah, it’s disappointing and it’s also I think rather strange. like I said, I think, you know, I don’t really care what’s going on in the macroeconomy, but I think the bond traders might have this wrong and they’ve been surprised a fair bit. you know, if you wind the clock back six months ago, you The thematics were, there’s going to be lots of interest rate rises, we won’t see any sort of flattening out until 2024, and the U.

[00:50:47] Tony: S. is going to go into recession. then the market took off, and inflation came down. It was like, They get it wrong, is I guess my point, so, I don’t rely on them, you know, I [00:51:00] do what I do, as Chris said in the Stockopedia interview, you focus on the companies rather than the macro environment, but yeah, it’s a fact of being a stock market investor that the market is going to move around and push our portfolios around as well, but that’s, that in some respects is the market, and in some respects it’s noise as well,

[00:51:20] Cameron: hmm, yeah, you know, again, as we’ve been saying over and over again for the last couple of years, it’s tough for people that just started investing in the last couple of years. It’s trial by fire, but, sorry, blame the, blame the global markets,

[00:51:36] Tony: Blame Wall Street. Blame the bond traders. The bond vigilantes, as they like to call themselves. They’re getting upset about US debt levels and government shutdowns and all that kind of stuff. And, you know, do they have relevance in Australia? Not really. So, anyway, a couple of other things on the company front, I was interested to see that Woodside lost a [00:52:00] decision in the Federal Court during the week about being able to do some significant investment into the Scarborough Gas Project off the coast of Darwin.

[00:52:08] Tony: Or North wa and the only reason I raise it, I mean, these things happen all the time. Another, the only reason I raise it is, is that the chairman of Woodside is Richard Goyder, who’s the chairman of Qantas. And,I, if I think of, I don’t wanna put words in Chairman Mabb’s. mouth, but if he was here, he’d probably say that being the chair of two large companies is a heavy workload and probably shouldn’t be allowed to occur, but it, but it has.

[00:52:33] Tony: And, yeah, we’re not seeing many good news stories coming out of either of those companies at the moment. I’ll leave it at that. and the other one that was interesting is I did a pull talk about a month ago on a company called Endeavor Group, which is not. But one of our listeners requested it.

[00:52:48] Tony: So I did. And I think my headline from that pulled pork was, there’s no reason to own this company. And, in the last week, there’s been a fair few eruptions on the board. The larger shareholder, I think probably agrees [00:53:00] with me and he’s trying to, Tip over them, the management, or at least add a board member who can, bring some retailing now, some discipline to that group.

[00:53:09] Tony: And, interestingly enough, and one of the reasons for talking about it is the person that, that, Mr. Matheson, who’s the investor I’m talking about, he’s wanting to nominate is a guy called Bill Wavish, who used to be involved in Woolworths many years ago, maybe 20 years ago, had also some. directorial positions after that, notably in Myer and in, Dick Smith before it, it floated, and so has been a little controversial because both of those companies, tanked after floating and Dick Smith went broke, I’m not sure how involved he was or in the cause of that, probably not much.

[00:53:43] Tony: but I want to go back 20 years ago, cause it’s an interesting concept that he developed while at Woolworths called the, the double loop or sometimes called the virtuous cycle, and he, I think he was CFO of that wrong, but we’re going back to [00:54:00] the. era of Roger Corbett running the company. And Woolworths was very successful and it was successful in large part because of this double loop concept, which I’m going to just talk a bit about now because it’s interesting for, for sort of retail nerds like myself and investors who might not have come across it.

[00:54:16] Tony: But, the double loop concept in retail, and I guess it applies to other companies as well, is you cut costs as much as you can out of the company. And you give it back as price discounts to customers. So you keep some of it, a small amount goes to the bottom line of the company, but a large amount goes in prices.

[00:54:33] Tony: And, and that sort of creates a virtuous loop where sales increase and bottom line improves, due to cost cutting. And,that certainly worked for them. It creates a kind of Mobius strip. Like, sort of, a graph, I guess, of, decreasing costs and then increasing sales. And, there’s two kind of pricing theories which, retailers need to decide which one they want to be in or be a part of.

[00:54:58] Tony: High, high [00:55:00] low pricing or EDLP, everyday low pricing. And Woolworths was, more in the EDLP. And certainly by trying to have low costs and then low prices, it was adopting that kind of methodology that companies like Walmart in the US pioneered. It’s, it, I don’t think anyone’s ever said one strategy works better than the other one, but because high low gives a retailer the chance to, to control its margins by generally having higher prices than the EDLP player, but then having very specific targeted discounts, which are lower, prices than the EDLP player, typically called lost leaders, in front, you know, from a retail point of view.

[00:55:41] Cameron: that’s what, that’s what high low

[00:55:42] Tony: That’s high low, yeah. Yeah, so, but yeah, Bill Wavish brought this idea of a double loop concept to Australia, pioneered it with Woolworths very successfully, and I imagine if he gets to be a director on the Endeavor Group, that’s what he’ll try and implement there. So, just as background to [00:56:00] what’s going on in the news, it’s an interesting concept and you can read about it further online, I guess.

[00:56:05] Tony: And the last thing I wanted to talk about, is one of my sort of ruminations and I’m going to throw it out there I guess as a seed of an idea and see if other people might run with it and come up with a better way of thinking when it comes to this idea but it’s to do with the Superfund industry and I think one of the issues that’s that’s like starting to appear When people talk about superannuation is are you better off having a strong super system like we do in Australia where 10 percent plus of your wages goes into super and then you get to have a And,I guess the safety net and retirement, or are you better off putting that 10 percent towards buying a house and ensuring that you have somewhere to live rent free when you retire, or do you do a bit of both?

[00:56:54] Tony: And so the idea I’ve come up with, which, I’ll just float out there because I don’t have a super fund that can do this, but, [00:57:00] someone out there might in the industry or, or someone else might see a way of setting up a business around it. But why wouldn’t a super fund, provide a housing to their members?

[00:57:10] Tony: in exchange for that 10 percent that would go into the super fund, still going there, but in some way paying off the loan, on that house, so that over a certain period of time, a long period of time, 20 years, maybe, 25 years, a sort of standard mortgage time, you’ve still been contributing to super, super’s been acting like a bank in that they can borrow and at a wholesale rate, and then I guess notionally lend it to you at a retail rate, so your Superfund contributions give them, give the Superfund a margin, but after 25 years, you pay down a house, and you then have a house rent free.

[00:57:46] Tony: If you’re still working, you put your money into Super in the traditional way, and they invest it for you. but, you know, I kind of see this solving both. Problems for, the industry and, and kind of a neat way of, of solving the housing crisis while we’re at it too. So [00:58:00] anyway, food for thought and I’ll throw it out

[00:58:02] Cameron: I’m going to put a lot of, you know, fund managers working at Superfunds out of work,

[00:58:09] Tony: makes it much simpler, doesn’t it? And there might be some, sorry,

[00:58:15] Cameron: double, double loop benefits for the Superfund because they cut their costs, fire a couple of hundred fund managers who are underperforming the market and just put it into real estate.

[00:58:26] Tony: there might be some tweaks on it, that’s the Superfund takes equity in the house, and that’s how they make some extra profit for their members as well. Although you have to have some kind of liquidation event, which I’m not sure helps or hinders in the process, but that’s, that’s one option too.

[00:58:39] Tony: But anyway, it’s I haven’t heard it talked about, and it’s a thought I had, and I thought it was worth trying out there.

[00:58:46] Cameron: We need, we need a segment like Tony’s.

[00:58:49] Tony: Soapbox. Yeah, crazy idea. Yeah, that’s a good one.

[00:58:55] Cameron: I’ll get a jingle for it.

[00:58:58] Tony: Oh, speaking of jingles, I’m going to [00:59:00] go into after hours now.

[00:59:02] Cameron: Oh, before you do that, I’ve got some stock stuff to ask you. Do you still own

[00:59:05] Tony: No.

[00:59:07] Cameron: It’s still on our

[00:59:08] Tony: Oh, thank you. I’ll take it off. My mistake.

[00:59:11] Cameron: I’ve been wondering, I thought you mentioned last week that you’d gotten rid of it. You finally had to rule one it, I think. And just an update, oh, okay, an update on something we talked about, last week.

[00:59:22] Cameron: Somebody asked about whether or not we should factor in a dividend into the Josephine price and the suggestion that that should be factored into the buy list. I did try and do that this week but the problem that I’m facing is that, I can’t download dividend payment dates in Stock Doctor. Like, I can download the dividend amount, and the franking amount, and the X date, but I can’t download the payment date, so I don’t have an automated, I can’t build a script for an [01:00:00]automated way of backing the fact, the dividend out of the, you know, the, the, the Josephine price.

[01:00:05] Cameron: What I have, what I do with my own alerts sheet, when I’m figuring out my 3PTL pricing and my Real1 pricing and factoring in dividends is, I manually check the payment date every time something goes ex div. I check it, I put it in my spreadsheet. But I don’t want to have to do that every week. I mean, I could get…

[01:00:25] Cameron: Alex to do it, but she said load it up with enough bits and pieces. so I have emailed Victor at Stock Doctor and asked him if there’s any way that we can, you know, get some sort of backdoor to download dividend payment dates. I had a look at Stockopedia to see if they could do that, but they don’t provide any dividend information.

[01:00:45] Cameron: So, well, well, they, some ratios, but not actual dividend X dates and that kind of stuff. So that’s no

[01:00:53] Tony: Well, I’m just wondering whether you can raise this an alert in Stock Doctor for, or even in Yahoo Finance or [01:01:00] something for the dividend notice from the company.

[01:01:05] Cameron: Yeah, but we’re generating a buy list each week that’s got 80 stocks on it. Somebody has to get all of that data and put them into a spreadsheet and monitor it every week. And it’s just a lot of extra workload. so anyway, I’ll keep working on it, but just that’s for, for the time being, people are going to have to do it themselves.

[01:01:23] Cameron: If you want to buy, if you want to buy a stock and it says it’s a Josephine, but that, you know, it’s got a dividend, work it out. Figure out what you want to do. I’ll keep trying to work out an automated way of doing it. yeah, that was my update. Sorry about that. Okay, after hours, TK. What’s after hours for you?

[01:01:43] Cameron: Alright.

[01:01:44] Tony: a few things actually. It’s been a… Busy, it’s been a long weekend in Sydney, not that that means much to me, but, wanted to talk about, I mentioned last week I was reading a book called Punters, about Paddy Power and the gambling industry, the gaming [01:02:00] industry, and I finished it, and it’s really good.

[01:02:02] Tony: If anyone’s, a student of Marketing and guerrilla marketing and data analytics, or in the sort of Stephen main camp of, gambling, being addictive and, and needing to be more excited than it is. It’s, it’s a really good book. I really enjoyed it. It’s, it’s actually written by a crusading journalist who was trying to expose addiction in the gaming industry, but he did, does spend a lot of time talking about some great guerrilla marketing campaigns that, Paddy Power have run, including, Sending Dennis Rodman to North Korea to set up a basketball game with the North Koreans.

[01:02:36] Cameron: Oh yeah, I

[01:02:37] Tony: Yeah. And the trouble was trying to get Dennis to wear a paddy power cap when he was stoned all the time and drunk all the time.

[01:02:47] Cameron: So this is the book by Aaron

[01:02:48] Tony: Rogan

[01:02:48] Tony: Yes. Yep, so that’s a good one. And I’ve just started reading The Fall, the new Michael Wolff book about the Murdochs and [01:03:00] Rupert’s step aside. It’s pretty good. I’ve only gotten to the first few chapters, but it’s worth a read as well, especially if you like succession.

[01:03:12] Cameron: I’ve read a couple of books about Rupert over the years, and they’re always fascinating. I am planning on reading that one

[01:03:19] Tony: Well, this one is, like it’s a chapter per player. So there’s a chapter with Roger Ailes, there’s a chapter with all of the Murdoch children, et cetera, et cetera. So it goes into detail and I just find it amazing. although I have with Michael Wolfe’s books that these people like let him in, do interviews with him and they know he’s going to, you know, write.

[01:03:42] Tony: If not a skewering book about them, you know, a very dissecting book about their lives, but they still, you know, happily let him sit in the meetings, take interviews with him. Yeah,

[01:03:54] Cameron: Well, that gets, gets back to the psychopath book, Tony. Psychopaths don’t [01:04:00] care what you say about them. They don’t, they don’t think it matters. They’re going to win anyway. You can say whatever you want. As long as you’re talking about me, that’s

[01:04:07] Tony: Yeah. And they’re almost flattered by the fact that they’re being interviewed. It’s great. I’m being, you know, that’s the sign of, that’s a badge of honour. It’s a status symbol.

[01:04:16] Cameron: Yeah. Yeah. Yeah. Who cares what you think and who cares what you write and who cares what people think about it. Doesn’t matter. I’m a winner. You’re a loser. Anyone who doesn’t think I’m a winner is a loser by definition.

[01:04:27] Tony: and like, in the first chapter of the book, Roger Ailes is being interviewed after he’s been ousted by the boys, by Lachlan and James from Fox News, and then Rudy Giuliani calls up and it’s like, you know, these two ousted

[01:04:43] Cameron: don’t say anything bad about my

[01:04:45] Tony: I don’t need to, read the book. Even Ailes is like holding the phone and then mouthing what an idiot Giuliani is. To the interviewer, yeah.[01:05:00]

[01:05:00] Cameron: Yeah, when, when you’re too crazy for Roger Ailes. You know, I was reading something, I think it was in the, in the Finn or somewhere over the weekend about this whole thing and how, you know, they’re still saying that. I think it comes from this book that the Murdoch family, including Rupert, sort of hates Fox News.

[01:05:23] Cameron: I hate what Fox News has become, but it makes a shit ton of money, and there’s a shit ton of power, so they’re kind of lumped with this Frankenstein’s monster that Roger Ailes built for them, it makes a bucket load of money and has influence, but they’re kind of personally Disgusted by it. And it, it was James that was, I said on the last workshop, I thought Lachlan was the one that wanted to clean it up, but it was James was the one who wanted to clean it up, but he’s out, so it doesn’t matter what he thinks.

[01:05:55] Tony: Yeah. And it’s, yeah, that’s, that’s all in the book too. It’s, it’s very interesting that it’s almost [01:06:00] like cognitive dissonance. It’s like, shit. We built this Frankenstein’s monster, but it’s very profitable. Frankenstein’s monster. We don’t like it ugly, ugly fucker, but let’s,

[01:06:09] Cameron: yeah,

[01:06:09] Tony: pull the plug just yet.

[01:06:12] Cameron: well, we’ve all got one of those children, don’t we?

[01:06:14] Tony: I’ve only got one and she’s lovely.

[01:06:19] Cameron: yeah, well, for those of us that have more than one, we’ve always got at least one that you’re like, you know what? I don’t like you, but what am I going to do now? It’s too late. I’m going to say which of mine that is. yeah, good stuff. Anything

[01:06:32] Tony: the Wes Anderson short movie? I think it’s on Netflix. Mr. Sugar, The Fabulous Mr. Sugar? Mr. Sugar, anyway.

[01:06:39] Cameron: There’s three of them, all based on Roald Dahl books, and Fox is a huge Roald Dahl fan. We’re all huge Roald Dahl fans. Huge, Chrissy and I are huge Wes Anderson fans, but it’s been too sort of hectic here this week with her niece, so no, I haven’t watched them. I’m waiting to watch them when the

[01:06:56] Tony: right. I loved Mr. Sugar. It was really good. [01:07:00] Yeah.

[01:07:01] Cameron: I love Wes Anderson. I haven’t seen his last film, the Atomic film either.

[01:07:07] Cameron: But I’m taking Fox to see the new Teenage Mutant Ninja Turtle film tonight, so that’ll be my viewing highlight. well we were up in Bundy last week as you know, and, Elise, the niece, and Christian Fox and I went out diving off of Lady Musgrave Island

[01:07:23] Tony: Oh, nice.

[01:07:25] Cameron: Fabulous day. If people ever have the opportunity to dive, well snorkeling, we were off the Great Barrier Reef.

[01:07:32] Cameron: So the sort of the southern tip of the Great Barrier Reef off of Bundaberg there, just spectacular, like sort of whales, in fact our catamaran that we took over, it’s like a two hour ride from Bundaberg over to Lady Musgrave, nearly hit a couple of whales, there was a guy who did, a couple of guys that did get hit by a whale, really in Sydney, yeah, one of them passed away sadly.

[01:07:55] Cameron: Our catamaran catamaran screeched to a halt in the water. cause it nearly ran [01:08:00] into a couple of whales that breached just next to us. And then we saw dolphins and we saw turtles and, snorkeling, just, there’s, I don’t know, like this, it’s only a couple of times I’ve ever done this, but just to be snorkeling and just to be surrounded by hundreds and hundreds of brightly colorful fish that are swimming around you, like you ain’t no thing.

[01:08:21] Cameron: And, just to be in that world, it’s just always really fabulous. You know, I it. Wanted to be a marine biologist when I finished high school and that could have been my, that’s my sliding doors life. I could have, instead of being a podcaster, could have been a marine

[01:08:39] Tony: ha ha ha ha. I can see you in a wetsuit, long white hair, bleached by the sun. Yeah.

[01:08:47] Cameron: Yeah. Same look, just different attire.

[01:08:50] Cameron: ha ha. I’d be yelling at the fish about, you know, capitalism gone wrong and, American corruption and they would pay [01:09:00] just as much as attention as anyone else.

[01:09:03] Tony: Got a couple of horses running this week, Cam.

[01:09:06] Cameron: Oh yeah? How did it, how did you ones go

[01:09:08] Tony: well, I didn’t run last week, week before, so Poifect ran third, and she runs again this week, in the Edwood Manifold Stakes in Melbourne, so I’ll be heading down towards the end of the week to, to watch that. Yeah, and a new one called Negronis is having its first start on Thursday at Gosford.

[01:09:28] Cameron: Wow. Well,

[01:09:29] Tony: yeah, and that’s, I think Steve Mabb’s in that one too, so good luck to both of us. Yeah,

[01:09:36] Cameron: I want to thank everyone who, watched the NRL Grand Final and consequently weren’t on the Sunshine Coast Highway when we were coming back from Bundaberg on Sunday. I’ll say to Chrissy, like, it’s normally way busier than this. It was the last day of school holidays, too, and usually it’s chockers, it’s like snail’s pace on the…

[01:09:58] Cameron: Sunshine Coast Highway, there was [01:10:00] no traffic. And then I suddenly dawned on me why it was. Oh, it’s NRL grand final day and all the Bogans are

[01:10:06] Tony: and Brisbane was playing too.

[01:10:09] Cameron: Yes, yes, so half of the bogans were in Sydney for that, and the rest were at home getting drunk. So thank you to all of the bogans who got off my road, let me have a clean run,

[01:10:21] Tony: Oh, well I was one of the Brisbane bogans. I watched it on TV at the Mate’s Place.

[01:10:26] Cameron: did you? I had, this is the, on Saturday, one of my old mates in Seattle, Buzz Bruggeman, texted me and said, I think the Lions could win this. And I had no idea what he was talking about. I said, what, who, what are you going on about? And

[01:10:45] Tony: Go the Christians

[01:10:47] Cameron: I, I finally twigged it. There must’ve been a football game going on

[01:10:53] Tony: It’s the A F L Grand Final on Saturday. Yeah. Big weekend of sport. Mm. And Thery the cup, which [01:11:00] was the most important thing I thought was on. And Europe beat the us.

[01:11:06] Cameron: Wow. Well, there you go. Big

[01:11:08] Tony: So, yeah. Let’s see if I, I probably can’t if I play this, you won’t hear it, will you? Okay, well I’ll send you a link to the clip where, the European team are on a bus celebrating, singing a song saying, The US is terrified, Europe’s on fire. So, it’s quite fun, I thought.

[01:11:28] Cameron: Well, the big news, for me this week, I don’t know if you’ve seen this, but there’s this new version of ChatGPT that’s rolling out, around the world over the next week or so where it has. audio feedback. You, you can talk to it and it’ll talk back to you. And Taylor actually has it. I was quite pissed that he has it and I don’t, but he came over, the boys came over last night for dinner.

[01:11:51] Cameron: He has it and it’s amazing. For, for everyone who’s used to Siri talking to you, this is astounding. It’s, [01:12:00] it’s intonation. It’s, pauses. It sounds really naturalistic. talking back to you. It’s really incredible. So you can talk to your AI now. And Taylor didn’t have this feature yet, but they’re rolling this out around to every, all the premium subscribers anyway, over the next couple of weeks.

[01:12:20] Cameron: The ability to take photos of anything into your AI and say, what’s this? And there’s some really interesting, demo videos that people have done. There was one woman who took a photo of her bike and said, my bike’s not working. What’s wrong with it? And it told her which part. She described it and it told her what part to check.

[01:12:41] Cameron: She zoomed in and got close and took a photo and said, this bit. And it said, no, no, not that bit. The bit to the left, go up a bit. You’ll see this is what’s wrong and fix it. And, you know, people are taking like photos of, their fridge and saying, give me a recipe based on this. And it’s, analyzing what’s in the fridge.

[01:12:59] Cameron: It’s a [01:13:00] major upgrade to ChatGPT. It sounds really interesting. And then the other major thing that happened, I don’t know if you saw this, but Lex Fridman, guy who has my old job, doing interviewing tech leaders, did an interview with Zuckerberg this week using Meta’s new goggles. Have you seen any clips of this?

[01:13:24] Cameron: Can’t hear you, you’ve gone mute.

[01:13:26] Tony: There you go. I haven’t seen any clips, but I read about it on the weekend.

[01:13:30] Cameron: Holy

[01:13:31] Tony: of thing where you put the goggles on and it says, okay, this is how you make the repair and takes you

[01:13:38] Cameron: No, that wasn’t the… This was just an, they, he interviewed Zuckerberg, but it was the latest version of Meta’s new, immersive three D avatars in the Metaverse. So it was, they were talking to each other, but there was avatar versions of them [01:14:00] talking to each other, but it was really lifelike. Their avatars are incredibly, almost impossible to tell that it’s not.

[01:14:10] Cameron: Video. Lex was kind of blown away in it and he’s a very, sort of, what’s the word I’m looking for? Stollard? Stollard? Stollard? Stoic? Yeah, that’s it. Guy. sorry, that’s not actually the word I was looking for, but that’ll do. He, you know, so the process is they do a very detailed scan of your face, upload that into the system.

[01:14:41] Cameron: So it has all of your face and you, and you, you, you pull different expressions when it’s doing the scan and it builds all of that structure of your face into the system. So then when you have the goggles on and you’re talking, your lips are moving and your eyes are moving and you’re blinking and all that kind of stuff, but it’s picking up just that data.[01:15:00]

[01:15:00] Cameron: to integrate with the rest of your facial data that it’s already scanned. And Zuck was saying like right now it’s quite a, an elaborate process, but they’re hoping they’ll get it to a point where you’ll just be able to hold your iPhone up in front of your face, scan it, pull some expressions, take two or three minutes.

[01:15:18] Cameron: It’ll upload all of that into the system. And then you’ll have a very, very hyper realistic avatar of yourself that can do all sorts of things. And I’m still not exactly sure why I want that or what I’m going to do

[01:15:33] Tony: going to replace me with it, which would be great. I’ll just, I’ll just take a holiday.

[01:15:38] Cameron: Well, so you’d be the first thing you’d go for. People are only listening to your voice. I can already take your voice and turn a voice version of you. It’s your brain that we need, Tony. Not your, not your image or your voice. It’s your brain that we want. anyway, so yeah, there’s big, couple of really big, leaps forward in that space [01:16:00] this week, which is quite astounding.

[01:16:03] Cameron: So anyway, that’s me.

[01:16:06] Tony: That’s all I got.

[01:16:09] Cameron: All right. Well, I got lots of questions, but we’ll have to push them out for next week.

[01:16:12] Tony: I’ll be calling him from Cape Schanck next week.

[01:16:16] Cameron: Oh, lovely. Well, just when I was getting used to what a nice microphone you

[01:16:20] Tony: well, it’s the same microphone at Cape Schanck. Yeah, I’ve got two.

[01:16:25] Cameron: just more echo

[01:16:27] Tony: Yes, probably.

[01:16:29] Cameron: Yeah. All right. Thanks TK. Well, have a, have a good trip. Have a good trip. [01:17:00] [01:18:00] [01:19:00] [01:20:00] [01:21:00] [01:22:00] [01:23:00]

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