QAV 715 — The Fourth of the Fourth

QAV 715 C

[00:00:00] Tony: One, two, three.

[00:00:03] Cameron: Wel­come back to QAV, episode 7 1 5, the 9th of April, 2024. You had anoth­er bloody birth­day last week. tk.

[00:00:13] Cameron: I can’t keep track of your birth­days. I swear to God you have like three a year.

[00:00:18] Tony: Well, um, I adopt the con­ven­tion of hav­ing them on the same date every year, so you can put it in your diary.

[00:00:24] Cameron: I have. Mul­ti­ple times! And it nev­er reminds me. Some­body post­ed, I think it was Cos­min post­ed hap­py birth­day to on Face­book and my ini­tial thought was, ah, what are you doing Cos­min? That’s not his bloody birth­day. And

[00:00:38] Cameron: then I looked at the date and I was like 4th of April. See, that sounds right.

[00:00:43] Tony: Yeah, fourth of the fourth, just remem­ber that.

[00:00:46] Cameron: Hap­py birth­day. What did you

[00:00:48] Tony: Thank you. I’ve just got back from Wag­ga. I went down to Wag­ga for four days. and hung out with Rud­dy and, uh, had a break from Syd­ney and it was rain­ing cats and dogs when I left and it’s rain­ing again when I’m back, so we played a cou­ple of days of golf, watched the races, bet like crazy on any­thing that was hap­pen­ing, um, which was a lot of fun, and I actu­al­ly had a birth­day tip­ple.

[00:01:12] Tony: I took a bot­tle of scotch down and, um, man­aged to have, I think, Uh, three nips of Scotch, which will do me for anoth­er year.

[00:01:22] Cameron: Three nips!

[00:01:23] Tony: Three nips. Yep. .

[00:01:24] Cameron: Were the nips get­ting big­ger?

[00:01:27] Tony: They could have, they could have eas­i­ly got­ten out­ta hand, but no, they did­n’t. I got to that nice sort of warm feel­ing, you know, that nice warm feel­ing, relaxed feel­ing.

[00:01:35] Tony: And you start to think, wow, if I feel this good after three sips, how am I gonna feel after , after half the bot­tle? But I went, no, don’t be sil­ly. So, um, yeah, that was good. Good fun, good break, nice and relax­ing. Rod­dy’s a great host.

[00:01:50] Cameron: That’s good. Did you, any of your bets win?

[00:01:55] Tony: Uh, nah, nah, but did­n’t lose much. It was a big race day in Syd­ney, Don­cast­er mile day.

[00:02:01] Tony: So I think I lost about a hun­dred bucks bet­ting on the races there. Um, and then I had, so Rud­dy and I just watched the golf and put 5 on dif­fer­ent play­ers and frayed our for­tunes and stuff. I had 5 on this guy the night before the final round. He fin­ished up run­ning sec­ond, but I thought, it was 6 1, and I thought, gee, he could win this.

[00:02:25] Tony: He’s a much bet­ter play­er than the guy who’s lead­ing. And he got, he made up all the ground, got to a play­off, and then, uh, hit the ball in the water on the first play­off hole. Uh, there’s one good thing about punt­ing is you always find the new way to lose mon­ey.

[00:02:44] Cameron: Well, speak­ing of los­ing mon­ey,

[00:02:48] Cameron: Tony, Chi­na stum­bles back!

[00:02:51] Tony: Share Mark. It’s up today. What are you talk­ing about?

[00:02:53] Cameron: no, I’m not gonna, get straight into the share mar­ket. It’s bor­ing. It’s too, it’s too bor­ing these days. It’s just up, it’s noth­ing going on. It did slide back a lit­tle bit last week, but noth­ing major. Uh, we’ve been talk­ing a lot about Chi­na and, um, in my research on Chi­na’s econ­o­my, I stum­bled on the IMFs web­site over the last week.

[00:03:12] Cameron: Inter­na­tion­al Mon­e­tary Fund, imf.org. There was a, an arti­cle post­ed Decem­ber 23 by ade. Dun­no who he is, but he’s writ­ing on the IMF’s web­site. Says growth slows, risks abound, but eco­nom­ic and finan­cial col­lapse can be avoid­ed. Chi­na’s eco­nom­ic per­for­mance has been stel­lar over the past three decades, with remark­able and per­sis­tent high growth that lift­ed the econ­o­my from low income to upper mid­dle income sta­tus, blah de blah de blah.

[00:03:43] Cameron: Uh, Chi­na has been the main dri­ver of the world’s eco­nom­ic growth, account­ing for 35 per­cent of glob­al nom­i­nal GDP growth, while the Unit­ed States account­ed for 27 per­cent over the last decade and a half, this is. But basi­cal­ly, he’s say­ing, um, detrac­tors have long argued that Chi­na’s eco­nom­ic col­lapse was immi­nent, point­ing to numer­ous fragili­ties.

[00:04:05] Cameron: Coun­try’s growth has been pow­ered by invest­ment in fis­cal cap­i­tal, espe­cial­ly real estate, that has been financed by an inef­fi­cient bank­ing sys­tem. Still not real­ly sure what that means, an inef­fi­cient bank­ing sys­tem.

[00:04:16] Tony: Hmm.

[00:04:17] Cameron: With domes­tic debt lev­els high and ris­ing, the prop­er­ty mar­ket unrav­el­ling and the labour force shrink­ing, some ana­lysts say the day of reck­on­ing has final­ly arrived.

[00:04:26] Cameron: But then he says, they are like­ly wrong. Unbal­anced reforms that have kept the insti­tu­tion­al struc­ture weak, a schiz­o­phrenic approach to the role of the mar­ket ver­sus that of the state, and strains in finan­cial and prop­er­ty mar­kets could result in sig­nif­i­cant volatil­i­ty in com­ing years, but none of this means a finan­cial or eco­nom­ic col­lapse is inevitable.

[00:04:47] Cameron: And his sum­ma­ry at the end is the under­pin­nings of, hold on, he’s a pro­fes­sor at the Dyson School at Cor­nell Uni­ver­si­ty, senior fel­low at the

[00:04:57] Cameron: Brook­ings Insti­tu­tion, and author of The Future of Mon­ey, so

[00:05:00] Cameron: that’s his cred.

[00:05:02] Tony: Is the Dyson Insti­tute, is that like a vac­u­um

[00:05:06] Cameron: Yeah, they make, they make vac­u­um clean­ers and air con­di­tion­ers.

[00:05:10] Tony: It’s the, the God­free Insti­tute.

[00:05:14] Cameron: It might have been, might have been fund­ed by him.

[00:05:16] Tony: Yeah.

[00:05:16] Cameron: Uh, the Charles H.

[00:05:19] Tony: prob­a­bly be Free­man. It’d be Free­man die. Oh, it’s not.

[00:05:22] Tony: It’s not Free­man Dyson,

[00:05:24] Cameron: the Charles H. Dyson School of Applied Eco­nom­ics and Man­age­ment. Charles H. Dyson was an Amer­i­can busi­ness­man and phil­an­thropist, the founder of the Dyson Kiss­ner Moran Cor­po­ra­tion and the Dyson Foun­da­tion. Not sure what they did. Hold on, here we go. The Dyson Corp, no, no Wikipedia link for that. That’s, oh, because it’s changed its name.

[00:05:48] Cameron: No, noth­ing for that either. So I don’t know what they did. Any­way, he died in 1997. Back to, back to this arti­cle. The, the, the sum­ma­ry at the end is The under­pin­nings of Chi­na’s growth seem frag­ile from his­tor­i­cal and ana­lyt­i­cal per­spec­tives, even if no cri­sis mate­ri­al­ize, crises mate­ri­al­ize. Unfa­vor­able demo­graph­ics, high debt lev­els, and an inef­fi­cient finan­cial sys­tem will con­strain Chi­na’s growth.

[00:06:12] Cameron: Yet, If the gov­ern­ment plays its cards right, one could equal­ly well envi­sion a more benign future for the Chi­nese econ­o­my with mod­er­ate growth that is more sus­tain­able from an eco­nom­ic, social, and envi­ron­men­tal per­spec­tive. So I thought it was a, it was a more, uh, um, sort of pos­i­tive out­look com­ing from the IMF.

[00:06:32] Cameron: Of all places for the future of Chi­na’s

[00:06:35] Cameron: econ­o­my than any­thing I’ve read in the Aus­tralian media in the last five years.

[00:06:40] Tony: Yeah, it was a very, um, two by beach way arti­cle, isn’t it? It may crash or it may not, is the, uh, is the, uh, sum­ma­ry.

[00:06:50] Cameron: He is an econ­o­mist after

[00:06:52] Tony: Yeah, exact­ly. I’m try­ing to find a quote. It’s a quite

[00:06:56] Tony: long arti­cle. I can’t find it now on the fly, but there was a quote in there about how econ­o­mists tend not to like Chi­na or Chi­na’s future because it’s not a democ­ra­cy and it’s not, does­n’t have a, um, a mar­ket econ­o­my and a few oth­er things that they look for.

[00:07:10] Tony: Uh, as, as indi­ca­tors of a sol­id, uh, and pros­per­ous econ­o­my. And I’m think­ing, yeah, you’re not going to find a bet­ter or more sol­id and pros­per­ous econ­o­my than Chi­na over the last 20 or 30 years. So, uh, yeah, I think the econ­o­mists have got it wrong there about democ­ra­cy and free mar­kets. Um, yeah, I mean, he makes a very good point that we’re in a cen­tral­ly man­aged econ­o­my.

[00:07:33] Tony: They’re, they’re very well placed to bol­ster the sec­tors that need bol­ster­ing and reg­u­late the sec­tors that need reg­u­lat­ing. And, um, and you know, they’ve had a very long track record of growth, so I would­n’t be bet­ting against them. And I guess the rea­son why it’s of inter­est to us is because Chi­na is such a big trad­ing part­ner for us.

[00:07:53] Tony: And, you know, they were about to, about a month away, we’ll get a bud­get hand­ed down. I’m fair­ly cer­tain it’ll be bol­stered by coal roy­al­ties and iron ore roy­al­ties, iron ore in par­tic­u­lar, um, through trad­ing with Chi­na. So Chi­na’s econ­o­my is impor­tant to us. But as long, I mean, I think prob­a­bly, I remem­ber through my invest­ing career, there was a, there was a very bull­ish sen­ti­ment towards Chi­na maybe 20 years ago when it was grow­ing at even dou­ble dig­it.

[00:08:22] Tony: per annum increas­es. And then it slowed down a bit and you start­ed to see peo­ple post­ing pho­tographs of apart­ment tow­ers where no one lived in and, um, you know, roads to nowhere and all that kind of stuff. But I was always fair­ly skep­ti­cal of that ad hoc sort of analy­sis of the Chi­nese econ­o­my because it’s such a big place with such a big pop­u­la­tion that if there’s a cou­ple of dis­used high­ways, it’s not going to make a scar­ic dif­fer­ence to the econ­o­my.

[00:08:48] Tony: And the num­bers have always been con­sis­tent­ly good. Sure, they’re slow­ing down now, but bal­anc­ing that is the fact that there’s, you know, they brought so many peo­ple out of pover­ty into mid­dle class lifestyles, and that’s got to be good for the econ­o­my going for­ward. It won’t grow as fast, but, but it’ll still grow.

[00:09:04] Tony: And, you know, one of the things that Chi­na seems to be doing well is to bal­ance that, uh, you know, being the sweat­shop for the, for the world, uh, and tran­si­tion­ing from there to being a ser­vices based econ­o­my. Um, You know, we’ve been in areas like IT for exam­ple, so, um, seems to be doing okay.

[00:09:22] Cameron: one of the big push­es over there at the moment is to

[00:09:24] Cameron: move towards self suf­fi­cien­cy.

[00:09:26] Tony: Right. As it is every­where. That’s prob­a­bly,

[00:09:31] Tony: yeah, exact­ly. Yeah. They prob­a­bly would­n’t be push­ing that if Amer­i­ca was­n’t push­ing it first.

[00:09:39] Cameron: Uh, yeah, pos­si­bly, but I do think, you know, they’re cog­nizant of the fact that they need an econ­o­my which isn’t, does­n’t sur­vive on export­ing, you know, being the world’s man­u­fac­tur­er, the world’s sweat­shop, you know, that they need to, Be able to, uh, run off the basis of a domes­tic econ­o­my to a large extent, um,

[00:10:00] Tony: Cor­rect.

[00:10:00] Cameron: uh, con­sump­tion.

[00:10:02] Cameron: Any­way, so inter­est­ing. Uh, you know, it’s like, uh, I’ve said on this show, and we talk about this on the bull­shit fil­ter all the time, just the, the lev­el of. Skep­ti­cism and cyn­i­cism about Chi­na that’s in the Aus­tralian media is over­whelm­ing. It’s just wall to wall skep­ti­cism and it’s real­ly hard to take seri­ous­ly.

[00:10:21] Cameron: So inter­est­ing that the IMF is writ­ing some­thing a lit­tle

[00:10:24] Cameron: bit, um, less cyn­i­cal. But speak­ing of cyn­i­cal.

[00:10:30] Tony: I mean, there is real­ly a dichoto­my in pub­lic life about Chi­na, isn’t there?

[00:10:33] Tony: On the one hand, it’s our biggest trad­ing part­ner, um, and we should be treat­ing it like a good, you know, good cus­tomer. And on the oth­er hand, we’re doing orcas deals to have nuclear sub­marines in case the cus­tomer turns against us.

[00:10:44] Tony: It’s, it’s, uh, I don’t think peo­ple can get their heads around that real­ly.

[00:10:49] Cameron: It’s straight out of that episode of Utopia.

[00:10:51] Tony: Hmm. Yeah.

[00:10:55] Cameron: Gear­ing up to, go to war with our biggest trad­ing

[00:10:58] Cameron: part­ner.

[00:11:00] Tony: Yeah. We need to, we need to pro­tect the Asian trade routes. So what would be the most, uh, Dom­i­nant one that we need to pro­tect, uh, I can’t say.

[00:11:11] Cameron: How about I say it and you just nod. Would it be Chi­na?

[00:11:18] Tony: Yeah.

[00:11:18] Cameron: That’s such a great, such a great scene. Um, speak­ing of cyn­i­cism, I saw this and it just cracked me up. I love this is, this is all, this is Bar­ry Diller. I mean, Like, gee, Bar­ry, what can you say about Bar­ry Diller.

[00:11:33] Cameron: His career, um, he’s sort of been every­where,

[00:11:38] Tony: In the Medi­as­cape, any­way.

[00:11:40] Cameron: yeah, I mean, and, and, not real­ly known as a soft­ie, not real­ly, he was not what I’d call a, uh,

[00:11:47] Cameron: you know, a, a soft­ie, lefty Repub­li­can by any means, um, but, but,

[00:11:52] Tony: some of my friends like to say, a woke

[00:11:54] Tony: snowflake.

[00:11:56] Cameron: Yes. Uh, you know, he ran

[00:11:59] Cameron: Fox for a long time and QVC and, uh, God, what­ev­er else. I’ve even lost

[00:12:05] Tony: he involved in Dis­ney? I think he ran Para­mount.

[00:12:07] Tony: Yeah. Yeah,

[00:12:09] Cameron: I saw this inter­view with him recent­ly talk­ing about Trump social, or what­ev­er, Truth Social, Trump Medi­a’s thing, um, hope­ful­ly you can hear this, shake your head if you can’t hear this when I click now.

[00:12:22] Cameron: Not a polit­i­cal ques­tion about for­mer Pres­i­dent Trump, but actu­al­ly a

[00:12:25] Cameron: busi­ness ques­tion about Truth

[00:12:28] Cameron: Social. You’ve seen this stock on the move in this, in this, I’ll call It

[00:12:32] Cameron: remark­able, maybe even crazy way. I’m going to say two words, GameStop. GameStop. That’s what you think is going on here. I mean, It’s ridicu­lous. the

[00:12:41] Cameron: com­pa­ny has no rev­enue. But do you think it could ever be a big­ger busi­ness? Do you think if he wins the pres­i­den­cy,

[00:12:47] Cameron: it becomes Why? Why would it be

[00:12:50] Cameron: big­ger? Look, he’s only inter­est­ing now because he’s out there enter­tain­ing the folks. I hope if he does get elect­ed, he just plays golf for four years.

[00:12:57] Cameron: But, So do you think That all of the investors, investors in this are, are get­ting

[00:13:02] Cameron: scammed?

[00:13:02] Cameron: Do you think they think this is a trans­fer­ence of wealth from one side to the oth­er, and that’s the goal? What do you think

[00:13:08] Cameron: is hap­pen­ing? I think they’re dopes. I mean, who would buy

[00:13:11] Cameron: a com­pa­ny that lit­er­al­ly, as, I mean, I think, what does it have, 30 of

[00:13:16] Cameron: rev­enue? Uh, why would you put a, how could you put a val­ue on it

[00:13:21] Cameron: They’re buy­ing it for oth­er rea­sons, just like they bought the­aters when there was no the­ater busi­ness, or they bought GameStop or what­ev­er. It’s stu­pid. It’s stu­pid stuff. It was a thou­sand times rev­enue, I think. What? Okay. It

[00:13:34] Cameron: was­n’t four mil­lion, it was Four mil­lion? Four mil­lion dol­lars in rev­enue? That’s four mil­lion dol­lars?

[00:13:40] Cameron: It was ridicu­lous. I’m not say­ing it’s not Four mil­lion Why are you even talk­ing about this? It’s a scam, just like every­thing he’s ever been involved in is some sort of con.

[00:13:52] Tony: It’s refresh­ing to hear some­one say some­thing straight up and down in pub­lic, isn’t it?

[00:13:59] Cameron: Yes. Par­tic­u­lar­ly a guy like Bar­ry Diller who, um, you know, as I said, worked at Fox, all those sorts of things. But yeah, I thought that was great. It’s a scam. It’s a con. Why? And where’s the val­ue? It’s not mak­ing any mon­ey. I don’t know. Just get Bar­ry Diller on the show. Yeah,

[00:14:15] Tony: the line that if he gets elect­ed, I hope he plays golf for four years.

[00:14:20] Cameron: well, he will, no doubt. But, uh, among screw­ing oth­er stuff

[00:14:26] Tony: That was fun­ny. Well, I mean, Truth Social, Truth Social, Truth Social, that’s hard to say. Truth Social was merged in, backed or list­ed into anoth­er com­pa­ny. Basi­cal­ly, so Trump could pay his bond to, uh Be able to keep liv­ing in Trump Tow­er and Fifth Avenue. So it had to work from that point of view, but yeah, I doubt if it’s got any real legs as a media empire.

[00:14:52] Cameron: Lind­say Fox, Tony, LAU was uh, good QAV stock, um,

[00:14:57] Tony: You’ve made the same mis­take some­one made on the

[00:15:00] Tony: QAV group. LAU is Lind­say

[00:15:02] Tony: Aus­tralia,

[00:15:03] Cameron: Oh, Lin

[00:15:05] Tony: a list­ed, list­ed com­pa­ny. Lin­Fox is a pub­lic com­pa­ny, a

[00:15:08] Tony: pri­vate

[00:15:09] Tony: com­pa­ny, sor­ry, owned by Lind­say Fox. Dif­fer­ent com­pa­nies.

[00:15:14] Cameron: I make that mis­take every time with Lind­say. Alright, well I’ll edit that out. And this time, I’ll remem­ber to edit that out.

[00:15:22] Cameron: Last week, you said edit that out, and I did­n’t remem­ber until I’d already pub­lished it, so,

[00:15:27] Tony: oh dear.

[00:15:28] Tony: Okay.

[00:15:28] Cameron: edit it out. Edit that out. Let’s

[00:15:33] Cameron: see if I remem­ber that this time.

[00:15:35] Tony: We can talk about, um, Armour­Guard if you like, but

[00:15:39] Cameron: Nah, it’s not real­ly

[00:15:40] Tony: rel­e­vant. Well, I think it’s rel­e­vant to soci­ety. I mean, I think, well, yeah, I mean, even when I was work­ing at Coles, there was a cost asso­ci­at­ed with cash, right? Peo­ple think cash is free. But if you’re a retail­er, you’ve got to count the mon­ey, you’ve got to col­lect the mon­ey, you’ve got to bank the mon­ey.

[00:15:55] Tony: So, um, You’ve got to out­source that to Armour­Guard. You can’t do it your­self, right? Because some­one will jump you with a, with a knife and, and, uh, take it from you. So, um, yeah, it’s a cost. I think, I can’t remem­ber the num­bers now, but it was like one or two cents in the dol­lar was the cost of pro­cess­ing cash.

[00:16:11] Tony: Um, yeah. And Lind­sey’s now say­ing it’s more than that because there’s less cash in cir­cu­la­tion. So he’s got a, he’s lost some effi­cien­cies in that, um, in that mar­ket. I mean, the way I think it’ll fin­ish is that, uh, the, the banks and the super­mar­kets and the large retail­ers will have to pay more. to keep Armour­Guard run­ning, or, which prob­a­bly means what they’ll do is they’ll start putting a sur­charge on things, on sales for cash, or they’ll stop tak­ing it.

[00:16:37] Tony: Cash just won’t be allowed as a, as a legal ten­der in stores. And that, that may not even be legal. I’m not sure if you can do that, but, um, they’ll try and find ways to incen­tivize you to use cards, which have a ser­vice fee any­way, but, um, cash will either get charged a ser­vice fee or it will stop, or it will dis­ap­pear.

[00:16:54] Cameron: the impli­ca­tions of a soci­ety with no cash? Like, it’s still amaz­ing to me

[00:17:00] Tony: Pos­i­tive, I think.

[00:17:01] Cameron: Yeah. How quick­ly when COVID hit, busi­ness­es

[00:17:05] Cameron: just went, we don’t take cash any­more. It was

[00:17:07] Cameron: almost like

[00:17:07] Tony: exact­ly. And that’s, and that’s what’s killed Armour­Guard. Real­ly. Um, but yeah, it’s, it’s, I mean, the ATO has been try­ing to get rid of cash for years because it’s, cash is the black mar­ket econ­o­my. You don’t, um, they don’t col­lect enough GST because if, uh, you know, if I ring up and want some­one to come in and do some work for me, it’s a rea­son­able chance they’ll say it’s, um, here’s your invoice or it’s 10 per­cent off for cash, which means they’re not pay­ing GST.

[00:17:34] Tony: So, um, yeah, that’s going on and they’re try­ing to, you know, Crack­down, apart from mon­ey laun­der­ing and the black mar­ket econ­o­my, um, in, you know, boot­leg prod­uct like cig­a­rettes. Um, yeah, I mean, the gov­ern­ment would love not to have cash in the econ­o­my.

[00:17:51] Cameron: Mm hmm. Right. So, we end up in a soci­ety with­out cash, less black mar­ket, less,

[00:17:59] Cameron: except for Bit­coin. Every­thing goes to Bit­coin then.

[00:18:03] Tony: Well, Bit­coin’s bet­ter because at least it can be, well, it can’t be tracked, can it? It’s sup­posed to be anony­mous. You can track it as you enter and exit the sys­tem on the Coin­base, um, sites when you trans­fer cash in and out, but, or, or trans­fer mon­ey in and out. But, um, yeah, we all pay less, we should all pay less tax if the peo­ple who are now not pay­ing tax start to trans­act using FPOS or cred­it or what­ev­er and get tracked and pay the right amount of tax.

[00:18:32] Cameron: Mm hmm. I saw, I saw, um, our friend Alan Kohler, on the ABC ear­li­er today talk­ing about how the gov­ern­men­t’s tax rev­enues are at like a record high. They’ve gone up

[00:18:45] Cameron: mas­sive­ly in the last 10 years.

[00:18:47] Cameron: Maybe that’s because there’s less cash

[00:18:50] Tony: Well, no, I think, I haven’t heard that inter­view, but I’m fair­ly cer­tain Alan Cole’s point will be brack­et creep. And apart from the fact that the states are now levy­ing more tax­es to pay for their COVID debt, espe­cial­ly in Vic­to­ria. on land tax­es and COVID recov­ery tax­es. But I mean the Stage 3 tax cuts which got watered down or redis­trib­uted were meant to make up for brack­et creep which is a real thing in tax­a­tion.

[00:19:17] Tony: So instead of hav­ing a tax sys­tem which says, you know, 100, 000, you pay 0. 30 in the dol­lar tax, and at 200, 000, you pay 0. 40 in the dol­lar tax, and above that, you pay 0. 47 and a half, which is, you know, kind of what we’re meant to do. If all those brack­ets are actu­al­ly indexed for infla­tion, then, um, They, they change, they move with, uh, you know, move with the times, so to speak.

[00:19:43] Tony: And, and the amount of tax you pay, um, moves with the times as well. But what tends to hap­pen is that because gov­ern­ments like to give tax breaks to peo­ple, they don’t index the brack­ets. And so, um, As our wages go up with infla­tion and the brack­ets haven’t changed, peo­ple have moved from earn­ing the 100, 000, you know, below the 100, 000 brack­et to being above the 100, 000 brack­et and they’ve sud­den­ly start pay­ing an extra five or ten per­cent tax.

[00:20:13] Tony: Which is, which is a wind­fall for the gov­ern­ment. And because there has­n’t been a hand back or read­just­ment of the brack­ets for the last, what­ev­er it is, Alan Col­lar says 10 years, what­ev­er it is, um, the gov­ern­ment says, yo, you’re a beau­ty, you know, now, now I can give it back to you. Are they a good eco­nom­ic man­ag­er?

[00:20:30] Tony: It real­ly is the reverse. They should just make tax brack­ets indexed and, um, find some oth­er way to pork bar­rel when they’re in gov­ern­ment.

[00:20:40] Cameron: I see. Well, good luck. Con­grat­u­la­tions

[00:20:44] Tony: That’s all aca­d­e­m­ic for you, you don’t pay tax do you? Ha

[00:20:47] Cameron: have an income either, so it’s all aca­d­e­m­ic, yeah. I like, con­grat­u­la­tions to peo­ple whose incomes have been indexed to infla­tion for the last 10 years.

[00:20:56] Tony: ha

[00:20:58] Cameron: Must be nice. Well, speak­ing of black, uh, black econ­o­my stuff, Tony, I saw this, made me laugh too.

[00:21:06] Cameron: Uh, the, um, Pres­i­dent of the Fed­er­al Reserve in, where is it, Min­neapo­lis or some­where. He, uh, says, uh, he was being inter­viewed recent­ly. You’ve already said on record that you have an unlim­it­ed sup­ply of dol­lars, does­n’t it make sense to trade some of them in for a cur­ren­cy with a hard cap? Jen­nifer Ablan, Edi­tor in Chief of Pen­sions and Invest­ments, asked this guy Kashkari dur­ing a LinkedIn Live event on behalf of an audi­ence mem­ber and refer­ring to Bit­coin’s fixed sup­ply of 21 mil­lion Bit­coin.

[00:21:42] Cameron: What is that hard cap, Kashkari, the Pres­i­dent of the Fed­er­al Reserve Bank of Min­neapo­lis, respond­ed? The hard cap could be zero for Bit­coin. It could go down to zero. Just replace the word Bit­coin with Beanie Babies. Should the Fed buy Beanie Babies because Beanie Babies were a fad for a while? For Bit­coin’s hard cap of 21 mil­lion to be changed, it would require a major­i­ty of Bit­coin min­ers who main­tain the net­work to In exchange for Bit­coin to vote for a change, this would fork the net­work with the minor­i­ty of min­ers con­tin­u­ing to main­tain the Bit­coin with a 21 mil­lion hard cap.

[00:22:16] Cameron: Kka said that like Beanie Babies, Bit­coin has no actu­al util­i­ty in the econ­o­my oth­er than being a nice toy that some peo­ple enjoy own­ing and trad­ing. Adding that the only use for Bit­coin is try­ing to sub­vert bank­ing reg­u­la­tions, get around either mar­i­jua­na bank­ing or elic­it activ­i­ties. Bit­coin. He says, has been around for more than a decade, and more than a decade lat­er, there’s still no legit­i­mate use case in an advanced democ­ra­cy.

[00:22:44] Cameron: Warn­ing, there’s a lot of fraud,

[00:22:45] Cameron: hype, and con­fu­sion, so I am wor­ried from a con­sumer per­spec­tive.

[00:22:50] Tony: Well the use case is

[00:22:51] Tony: fraud, mon­ey laun­der­ing and Ha ha ha ha She’s just

[00:22:56] Tony: out­lined what they were Ha ha

[00:22:58] Tony: ha

[00:22:58] Tony: ha

[00:23:00] Cameron: Yes.

[00:23:01] Tony: very good anal­o­gy, it is exact­ly like that isn’t it? Just like, uh, when Nike Brings out a lim­it­ed release num­ber of sneak­ers. It’s, uh, it’s just like Bit­coin. There’s only 21 mil­lion, or what­ev­er it is, 21 bil­lion worth of it.

[00:23:13] Tony: Get­ting, get­ting quick. Yeah, it’s, yeah, it’s the same, exact­ly the same sort of thing. Yeah. What was that? That was part of the, um, uh, influ­ence

[00:23:22] Tony: book that, uh, there’s a, there’s a mar­ket­ing pre­mi­um to, um, hav­ing a lim­it­ed edi­tion of things.

[00:23:29] Cameron: Yeah. Which is a good time to announce lim­it­ed edi­tion QAV, uh, mem­ber­ships. Um, we’re only, only ever allow­ing 500. So get yours today

[00:23:42] Cameron: before the price goes up or some­thing.

[00:23:45] Tony: Peo­ple, there’s a fork in the road and a new hard cap.

[00:23:49] Cameron: That’s right. Yeah. Um, Housel. Mor­gan House­l­l’s, uh, lit­tle idea for the week, Tony. This one, uh, I need your

[00:23:58] Cameron: help to under­stand. Anscombe’s Quar­tet. You ever heard of this before?

[00:24:03] Tony: I haven’t, no. I looked it up, though, when you shared it with me.

[00:24:06] Cameron: Anscombe’s Quar­tet, accord­ing to Wikipedia, com­pris­es four datasets that have near­ly iden­ti­cal sim­ple descrip­tive sta­tis­tics, yet have very dif­fer­ent dis­tri­b­u­tions and appear very dif­fer­ent when graphed. The house­hold expla­na­tion says that they look iden­ti­cal on paper, mean, aver­age, vari­ance, cor­re­la­tion, etc, but look com­plete­ly dif­fer­ent when graphed.

[00:24:29] Cameron: It describes a sit­u­a­tion where exact cal­cu­la­tions don’t offer a good rep­re­sen­ta­tion of

[00:24:35] Cameron: how the world works.

[00:24:37] Cameron: So

[00:24:38] Tony: that’s the corol­lary of that say­ing which says that their sta­tis­tics can be used like a drunk man uses a lamp­post for sup­port rather than illu­mi­na­tion.

[00:24:50] Cameron: oh I like that,

[00:24:51] Tony: It’s the same thing, isn’t it? If you look at the stats, you can have an aver­age. Well, the same aver­age could apply to all sorts of dif­fer­ent data sets, same with stan­dard devi­a­tion and mean.

[00:24:59] Tony: So you don’t know that until you lay it out and have a look.

[00:25:02] Cameron: right, so um, yeah, so there’s, I’ve got these four data sets all graphed out here in Wikipedia and they do sort of have the, uh, Um, same sort of, uh, line, trend line going up, but they’re all over the place, the data points. So you can, when you actu­al­ly see them chart­ed out, you real­ize that the, the, um, trend line is not real­ly giv­ing you an accu­rate rep­re­sen­ta­tion of what’s hap­pen­ing.

[00:25:35] Cameron: Which, as I under­stand it, is why it’s impor­tant to actu­al­ly graph things out some­times, so you can, you know, Make more sense of the data.

[00:25:44] Cameron: Any appli­ca­tion of that, do you think in the invest­ing world, Tony?

[00:25:49] Tony: that’s a good ques­tion. Um, I mean, we can go down the rab­bit hole of sharp ratios, etc. And so you’re tak­ing, you’re try­ing to risk adjust returns. So you’re not just look­ing at, you know, I mean, the clas­sic exam­ple. Um, it may not be ger­mane to this, but if you’ve got, um, two invest­ments and they both return 10 per­cent CAGR, which one do you invest in?

[00:26:09] Tony: What’s the one that’s less risky? And of course, a clas­sic econ­o­mist will say, we’ll mea­sure risk by volatil­i­ty, which is not nec­es­sar­i­ly right either. Um, but yeah, that, that could be an exam­ple of it. If you, you don’t know how, maybe you don’t know how volatile the option A is over option B until you graph it and have a look at it.

[00:26:29] Tony: You see that one’s more squig­gly in terms of its ups and downs than, um, the oth­er one.

[00:26:36] Cameron: I’ve been try­ing to think for the last cou­ple of years about ways to use more visu­al tools with our check­list, like in turn­ing them into an info­graph­ic or some sort of beau­ti­ful look­ing thing that, uh, helps us tell one stock from anoth­er and high­lights this or that. And I’ve, I’ve played around with dif­fer­ent things.

[00:26:57] Cameron: And at the end of the day,

[00:27:00] Cameron: the num­bers seem to do just as good a job. I haven’t

[00:27:04] Tony: an inter­est­ing thought.

[00:27:05] Cameron: that makes

[00:27:06] Tony: Had­n’t thought of that. Why don’t you ask your friend

[00:27:07] Tony: Chat­tyG­BT if they can come up with a solu­tion to it.

[00:27:11] Cameron: Chat­ty GPT. Real­ly? Is that a wow? I saw, uh, I heard an inter­view with Elon Musk ear­li­er today where he said that by the end of next year, he expects we’ll have an AI that’s more intel­li­gent than any human on the plan­et. And I

[00:27:29] Cameron: thought, try sell­ing that to TK Elon

[00:27:34] Tony: No, I think that’s prob­a­bly true, but I just, I’m not sure I believe that human intel­li­gence is the pin­na­cle of intel­li­gence. It’s like, you know, I sus­pect that AI will sud­den­ly work that out and go off on a dif­fer­ent tan­gent and we’ll just, it’ll just dis­ap­pear.

[00:27:48] Cameron: Oh, right.

[00:27:50] Tony: Yeah,

[00:27:50] Cameron: were gonna say you think it’s actu­al­ly octo­pus­es that it needs to com­pete with not humans.

[00:27:54] Tony: pos­si­bly. Or dol­phins as, um, was that Dou­glas Adams said?

[00:27:58] Cameron: Yeah,

[00:27:59] Tony: so long and thanks for all the fish. Yeah,

[00:28:04] Cameron: Uh, well my last thing today before we get onto some oth­er stuff is, um, the regres­sion test­ing.

[00:28:11] Tony: Ooh,

[00:28:12] Cameron: I’ve done a bunch, um, in the last week since we last spoke of iso­lat­ing dif­fer­ent indi­ca­tors and hav­ing a look at their cagr. Now I’m gonna pref­ace this by say­ing. I still, I still have some ques­tions for Matt, um, cause I start­ed to drill into these results and look at the, um, under­ly­ing buys and sells, and I’m look­ing at the data behind the results.

[00:28:36] Cameron: And some of it, I’m not, I’m not able to make sense of, does­n’t mean that it’s wrong, could just mean that I’m dumb. So I’m ask­ing him to clar­i­fy how it works for me, but for what it’s worth, just com­par­ing, um, iso­la­tions, um, by them­selves, assum­ing that they’re some­what cor­rect. Um, I’ll run through them, uh, a cou­ple of the top ones any­way.

[00:29:00] Cameron: So out of all of the things that I’ve iso­lat­ed. Keep­ing all of our met­rics, but chang­ing rule one from 10% to 20% has deliv­ered the high­est results so far over a 2000, over the peri­od of 2006 to 2023, where the STW as I said last week, was 2% CAGR over that peri­od because of the,

[00:29:23] Tony: so low, isn’t it?

[00:29:25] Cameron: Well, as you said,

[00:29:26] Tony: the GFC.

[00:29:27] Cameron: GFC crashed every­thing in 2007, eight, um, the 20% rule one over that peri­od deliv­ered a f.

[00:29:35] Cameron: 14. 9%, say 15 per­cent CAGA over that peri­od. But just iso­lat­ing

[00:29:42] Cameron: finan­cial health as a trend deliv­ered 14. 6%.

[00:29:46] Tony: So sor­ry, when you say just ICE, so you ran it, that was the only item on the check­list that you select­ed stocks in the port­fo­lio based on.

[00:29:54] Cameron: Yes. It’s still at a 10 per­cent rule one. It still did a 3PTL sell. So those things were still there, but in terms of

[00:30:03] Cameron: buy­ing, deter­min­ing what to buy, it was just finan­cial health trend.

[00:30:08] Tony: So no, noth­ing else. No,

[00:30:11] Tony: you know, IV1 cal­cu­la­tions, IV2, noth­ing else. Okay. That’s inter­est­ing, isn’t it? Wow.

[00:30:16] Cameron: Just finan­cial hell.

[00:30:18] Tony: Yeah.

[00:30:18] Cameron: next, the next one that, uh, well, the one that

[00:30:21] Cameron: comes third is No Rule 1, deliv­ered 14. 4%. I don’t know, because the

[00:30:26] Tony: Was­n’t that dif­fer­ent to what you said last time? Did you say no real one ver­sus 10 per­cent real one? You might have said that.

[00:30:35] Cameron: 10 per­cent rule one comes in at num­ber 7 here, 12. 8. Hmm.

[00:30:42] Tony: might have been that. Because I saw this today when you sent it through and I thought, Oh, I thought no rule one was the best out­per­formed 20 per­cent rule one. But then I sort of thought about it and thought, Maybe you com­pared it to 10 per­cent rule one.

[00:30:54] Cameron: Must have been, because these are still the same results.

[00:30:57] Tony: Yeah. Okay.

[00:30:57] Cameron: ear­ly last week. Um, num­ber 4 was book plus 30, it returned

[00:31:02] Cameron: 13%. Again, that’s the only buy­er, uh, only buy­ing, well, only thing I was scor­ing on for buy, for buy­ers was book plus 30, well, price, um, less than book plus 30. Price less than fore­cast

[00:31:17] Cameron: was, uh, about the same, around 13%.

[00:31:23] Tony: Wow, that’s, that one sur­pris­es me

[00:31:24] Tony: because, you know, I’d say how many, what, 75 per­cent of the buy list is less than its con­sen­sus fore­cast?

[00:31:34] Cameron: Well, we don’t have con­sen­sus fore­cast for a lot of stocks. Um, so I don’t, it’s elim­i­nat­ing

[00:31:40] Cameron: the ones that don’t have that too, I guess, that don’t have ana­lysts look­ing at them.

[00:31:45] Tony: Well, that’s some­thing to test, I think, because I think that would. I would sus­pect they would out­per­form

[00:31:51] Tony: the stocks with­out a con­sen­sus fore­cast.

[00:31:54] Cameron: Yeah. Hmm. Don’t know how I do that. I did that. I can see on the thing, like the one that came in the worst was just star stocks. It came in with a neg­a­tive kag­ger,

[00:32:03] Tony: Oh,

[00:32:04] Cameron: but when I looked at what it was buy­ing, it was hard­ly buy­ing any­thing from. 2006 through to 2010. So I sus­pect, I haven’t gone in and drilled into the Stock Doc­tor data from those years, but I, I sus­pect there’s not a lot

[00:32:21] Cameron: of stocks show­ing up as Stock Doc­tor, uh, Star Stocks in that peri­od.

[00:32:25] Cameron: I don’t

[00:32:26] Tony: No,

[00:32:26] Cameron: they

[00:32:26] Cameron: real­ly start­ed using star stocks or maybe our data is a bit flaky

[00:32:32] Tony: you know what? What pos­si­bly hap­pened is they changed the nomen­cla­ture. They may have changed the

[00:32:36] Tony: nam­ing because it, um, I think they were all called star stocks at one stage and now they, and then they broke them off into star gross stocks and star income stocks and bor­der­line gross stocks and bor­der­line income stocks.

[00:32:49] Cameron: So any­way, I, I sort of dis­count­ed this one as there’s prob­a­bly a prob­lem with the data, but going down the list of, um, best to worst. So price less than fore­cast finan­cial health just by itself returned 12. 9, 10 per­cent rule one, 12. 8, just look­ing at the 3PTL was 12%.

[00:33:11] Tony: Okay.

[00:33:12] Cameron: comes in at 11 and a half.

[00:33:14] Tony: Yeah, that’s inter­est­ing, isn’t it?

[00:33:15] Tony: Dylan did work on regres­sion test­ing where he thought Prop­Caf was one of the big dri­vers. Yeah.

[00:33:20] Cameron: Yeah, yeah, um, so it came in fair­ly way down, uh, my list of tests, uh, next was just a new upturn, it was about 9. 3%, low­er than IV2, same, about 9. 2%, uh, low­er than IV1, about 5%, and then Star­stocks, as I said at the bot­tom. So, again, I’m, you know, I, I, I’m not a hun­dred per­cent con­fi­dent in how the sys­tem is buy­ing things.

[00:33:49] Cameron: Um, I’ve got some ques­tions that I’m still work­ing through with Matt, but any­way, for what it is, that’s been an inter­est­ing, um, process to run through. And the fact that the 20 per­cent rule one came at the top, um, which again, it isn’t

[00:34:07] Cameron: con­sis­tent with the sort of regres­sion test­ing you’ve done

[00:34:11] Tony: Cor­rect. Yeah. And, and I’ve been try­ing a 20 per­cent rule one and it’s, my port­fo­lio is very sta­ble at the moment, but I don’t know if that’s because of the way the mar­ket’s per­form­ing or whether it’s a 20 per­cent rule one tri­al is work­ing bet­ter.

[00:34:25] Cameron: Well,

[00:34:27] Cameron: you know, all of the port­fo­lios that I man­age are sta­ble at the moment.

[00:34:31] Tony: Yeah, okay, so that’s prob­a­bly that

[00:34:33] Cameron: and I’m using 10 per­cent still. I mean, I’ve had to sell a cou­ple of things, but I think, you know, a cou­ple of com­mod­i­ty sales and things like that, but, you know, maybe a 3PTL sale, but,

[00:34:44] Cameron: there’s not a lot of rule one sell­ing going on for me at the

[00:34:46] Tony: Mm hmm. Mm hmm. So, I mean, when can we start action­ing some of this and I guess do fur­ther

[00:34:54] Cameron: Well, my, my sort of plan is, you know, get­ting Matt, I’ve asked Matt a few ques­tions, as I said, and, uh, once he’s, um, helped me under­stand why it’s buy­ing some things and not buy­ing oth­er things. I think this came up when I was look­ing at, um, The Ivy one, I think it was the IV one. It was one of the, one of the things I was a book, no, it was book plus 30.

[00:35:19] Cameron: I was drilling down into that, just try­ing to work out how the mod­el­ing’s work­ing and how it’s, uh, choos­ing to buy cer­tain things and oth­er, oth­er things. Uh, my plan though was to run, iso­late all of the indi­ca­tors, run them over this time­frame, and then pick a dif­fer­ent time peri­od. And run them again, maybe say 2013 to 2023 over a 10 year peri­od,

[00:35:44] Tony: Yep.

[00:35:45] Cameron: rerun them, then pick anoth­er one.

[00:35:47] Cameron: So I run like the full set of tests on three to five dif­fer­ent time­frames and see if they’re con­sis­tent and if not, what the dif­fer­ences are. But um, I was able to get, you know, 10 of these done in the last week

[00:36:04] Cameron: now. So, um, Yeah, Start­ing to gath­er some data any­way,

[00:36:09] Tony: Yeah, that’s

[00:36:10] Tony: amaz­ing. And I think, you know, um, it’ll help because if, like, yeah, very sim­ply, if 20 per­cent rule 1 works bet­ter than no rule 1 or 10 per­cent rule 1, that’s what we should move to. Um, but it’ll get a bit tricky when we start to look at, you know, Things like Prop­Caf, like, we need to test whether a cut­off at 7 is bet­ter than a cut­off at 5 ver­sus a cut­off at 10.

[00:36:32] Tony: Like, we have to test a few dif­fer­ent things there, I think, rather than just turf Prop­Caf out as a met­ric or der­ate it in the score.

[00:36:40] Cameron: Yeah, but if, you know, the 20 per­cent rule 1 includes all of our stan­dard met­rics as well, includ­ing

[00:36:48] Cameron: Prop­Caf, so we would

[00:36:49] Tony: Yeah. Well,

[00:36:52] Cameron: right?

[00:36:53] Tony: I guess so. But, um, if Prop­Caf is, as you say here, returns 50 per­cent less CAGA, um, maybe we can improve that if we have a 20 per­cent rule 1, every­thing in, but Prop­Caf is cut off ear­li­er or lat­er than what it is now.

[00:37:10] Cameron: Right, I see what you’re say­ing, Yeah.

[00:37:12] Cameron: So we can actu­al­ly play with the scor­ing of all the indi­ca­tors as well, mov­ing them up and down and say­ing, Yeah.

[00:37:18] Tony: Yeah. Cause I mean, I, I took sev­en from a, that book Out­liers when, um,

[00:37:23] Tony: some­one said that they, they built their net­work out of, uh, buy­ing com­pa­nies that, uh, Had a Prop­Caf of 7, um, but that was nev­er a researched num­ber, so to speak.

[00:37:33] Cameron: Hmm.

[00:37:34] Tony: Um, so there’s that, but also too, I think, if I can encour­age you, maybe just, if you can, can you test the man­u­al­ly entered data? Infor­ma­tion at all. So it looks like you’ve done one of those there, which is the, uh, uh, a recent updo, I sup­pose, yeah, recent upturns of man­u­al­ly entered data piece, but, um, con­sis­tent­ly increas­ing equi­ty and PE less than three years, because if we can find it, if, if they’re not hav­ing an effect on Kag­gle and we can just take them out of the sys­tem and save our­selves some work, if every­thing else is auto­mat­ed,

[00:38:12] Cameron: Yeah. Okay. I’ll have a look at those.

[00:38:15] Cameron: Uh, any­way. Yeah. So that’s that. Just want­ed to

[00:38:18] Tony: It’s good. No, It’s great. Good work. Thank you.

[00:38:21] Cameron: been an inter­est­ing process. So thank you. Con­grats to Matt Walk­er. He’s, um, done an amaz­ing job get­ting this to where it’s at. What have you got

[00:38:30] Cameron: in terms of news sto­ries, TK? What’s tak­en your inter­est this week?

[00:38:35] Tony: a lot of QAV stocks in the news at the moment,

[00:38:39] Tony: so I just pulled out three arti­cles from the Fin over the last week. The first one isn’t a QAV stock of course, it’s about Tes­la, but it caught my eye because I’ve long thought that Tes­la, even though it’s a good com­pa­ny now, it’s not going to main­tain mar­ket dom­i­nance for­ev­er, as we’ve seen.

[00:39:00] Tony: Very few com­pa­nies ever do. You know, Apple has its Google com­peti­tor and all those, Android and all those kinds of things. So, Um, and that seems to be hap­pen­ing now for Tes­la. So there was an arti­cle in the Fin Review, Uh, which starts off, well the head­line is Tes­la veers to the EV slow lane and mar­kets lose con­fi­dence in Musk.

[00:39:19] Tony: Tes­la appeared to be los­ing com­mand of the mar­ket it effec­tive­ly cre­at­ed after it report­ed a stun­ning drop in quar­ter­ly sales on Tues­day, this is Tues­day last week, rais­ing fresh ques­tions about Elon Musk’s lead­er­ship of the com­pa­ny. The sales decline caught investors off guard as rivals such as BYD of Chi­na And Kia and Hyundai of South Africa, sor­ry, South Korea, report­ed increas­es in elec­tric vehi­cle sales, sug­gest­ing that slow­er over­all demand for bat­tery pow­ered mod­els was not the only expla­na­tion for Tes­la’s prob­lems.

[00:39:51] Tony: So yeah, so the Tes­la’s actu­al­ly down quite a bit. Um, I was hav­ing a look at its graph and the bread lat­er and it reached a high point of 385 a share back in Novem­ber 21. And it’s now 175 a share. So it’s pret­ty much halved since, um, since the COVID peak. Uh, and it just, I just, the only rea­son that, um, I’m men­tion­ing it is because, you know, we have ques­tions from time to time about these rock­et ship type stocks and To the Moon, Sit­u­a­tions, and I just thought I’d just high­light once again that even though growth com­pa­nies grow fast, they can also Crash fast and ungrow fast.

[00:40:33] Tony: Yeah, no tree grows to the sky and tall tim­ber drops quick­ly. So, and I think Tes­la’s just going to con­tin­ue to face strong com­pe­ti­tion in the, in the EV mar­kets. Um, the oth­er one that caught, the oth­er arti­cle that caught my eye again in the Fin Review, it’s about the Han­wha bid for Uh, ASB, Austal, the ship­build­ing com­pa­ny we spoke about last week.

[00:40:58] Tony: Uh, this is head­lined, Ex Defense Min­is­ter Pine is Han­wha’s man in Can­ber­ra. Not sure if I was a com­pa­ny want­i­ng to lob­by a Labor gov­ern­ment, I’d hire a lib­er­al, uh, ex min­is­ter as my lob­by­ist, but any­way. Um, maybe there aren’t any Labor Defence con­trac­tor lob­by­ists out there. Uh, goes on to say Han­wha Group, the Kore­an con­glom­er­ate behind a bil­lion dol­lar bid for ASX list­ed Austal, has engaged for­mer Defence Min­is­ter Christo­pher Pyne as it accel­er­ates its local lob­by­ing efforts.

[00:41:28] Tony: Pyne and Part­ners is the lat­est heavy­weight con­sul­tan­cy advis­ing Han­wha, which has had a sig­nif­i­cant pres­ence in the local defence indus­try. Austal reject­ed Han­wha’s 2. 20 bid. 28 per share offer, telling investors it was unlike­ly it would be grant­ed approval in Aus­tralia and the Unit­ed States giv­en its sen­si­tive defense con­tracts.

[00:41:47] Tony: But Han­wha reject­ed those sug­ges­tions and said it was a cred­i­ble bid­der with long term ambi­tions in Aus­tralia. I bet. It said Han­wha had exten­sive ship­build­ing expe­ri­ence which would expand Austal’s growth poten­tial. So yeah, inter­est­ing twists and turns in this takeover defense. Um, It’s obvi­ous­ly a thing.

[00:42:08] Tony: Uh, if you need gov­ern­ment, uh, approvals both here and in the US to, um, to allow, uh, Aus­tralian defense con­trac­tor to be tak­en over, you need to do a fair bit of lob­by­ing to con­vince the gov­ern­ment that, um, you’ll do the right thing. Uh, the, the share price is hov­er­ing around that 2 28 price. So the, the mar­ket seems to think the share, the, the takeover may go through.

[00:42:33] Tony: How­ev­er, I just want­ed to point out that not only does Han­wha need to con­vince the Aus­tralian and U. S. gov­ern­ments, but they have to con­vince Twig­gy For­rest, who owns 19. 5 per­cent of this com­pa­ny, and the orig­i­nal own­er founder, John Roth­well, who owns about 9%, so some­thing like 28, 29%, has to agree for the takeover, as well as the Aus­tralian gov­ern­ment and the U.

[00:42:58] Tony: S. gov­ern­ment. So it seems like Han­wha have their Their work cut out for them.

[00:43:04] Cameron: And Christo­pher Pines, um, Strate­gic Advi­so­ry and Pub­lic Affairs Firm, um, which I believe

[00:43:11] Cameron: is called Minc­ing Poo­dle Agency. The Minc­ing Poo­dles.

[00:43:16] Tony: You believe that or you actu­al­ly know that?

[00:43:19] Cameron: That was what Julia Gillard called him, was­n’t it? She called him a Minc­ing Poo­dle. No, he did­n’t call his advi­so­ry firm that. I think he real­ly missed an oppor­tu­ni­ty there. I think that was a,

[00:43:33] Tony: he

[00:43:33] Tony: need­ed a Bar­ry and Stan to con­duct some mar­ket­ing for him.

[00:43:36] Cameron: exact­ly.

[00:43:37] Cameron: Minc­ing Poo­dle. Any­who.

[00:43:41] Tony: Any­way. Yep. And the last arti­cle I’ve got here is about Caroon, um, anoth­er com­pa­ny I did the Pulled Pork on. Uh, I think towards the end of last year maybe, and um, at the time I was talk­ing about them being a, uh, an acquir­er of a, an oil and gas field in Brazil, and that they had plans to diver­si­fy, and it looks like those plans have come off now.

[00:44:04] Tony: So again from the AFR last week, Caroon Ener­gy is mov­ing swift­ly to try to cap­i­tal­ize on its 1. 1 bil­lion acqui­si­tion of oil and gas inter­ests in the Gulf of Mex­i­co, with a new drilling cam­paign. That could lift the com­pa­ny’s total reserves by more than a third to about 70 mil­lion bar­rels. The drilling of the Hou­dat East and Hou­dat South wells, great names.

[00:44:27] Tony: Bar­ry and Stan obvi­ous­ly got involved in that. The first of which starts next month could add 18. 3 mil­lion bar­rels to Caroon’s pre acqui­si­tion reserves of about 51. 8 mil­lion bar­rels. The Mel­bourne based oil and gas junior has more than dou­bled its cap­i­tal spend­ing bud­get for this year as a result of its share of the worth expect­ed to be Between 67 mil­lion US and 77 mil­lion US.

[00:44:50] Tony: Carone, which owns 40 per­cent of the Hou­dat East Ven­ture and 30 per­cent of Hou­dat South, now puts spend­ing this year at as much as 134 mil­lion US, most­ly in the US. But the final fig­ure is like­ly to be high­er again once a third well planned at the same project in the Sep­tem­ber quar­ter is includ­ed. Any guess­es what that might be?

[00:45:09] Tony: Who dat? Who dat North? Who dat there? Any­way, so just an update on Caroon. They’re, um, they’re expand­ing in the US and, and, uh, it’s prob­a­bly a good thing. The arti­cle goes on to say that, um, the Brazil­ian, the Wells, the Bawana, B A U N A, B A U N A, field in Brazil is, um, it will even­tu­al­ly run out, or it’s in decline, so not a bad idea to diver­si­fy.

[00:45:37] Cameron: Who Dat is, uh, the chant that the New Orleans Saints fans

[00:45:45] Tony: Oh,

[00:45:46] Cameron: appar­ent­ly. Who Dat, Who Dat, Who Dat say they gonna

[00:45:50] Cameron: beat them Saints.

[00:45:52] Tony: okay. Well, it’s in that area. That’s the Gulf of Mex­i­co. So it could be relat­ed through that. Um, the oth­er thing I want­ed to point out about this arti­cle was that, uh, in order to diver­si­fy into the Gulf of Mex­i­co, they, uh, Caroon, um, Raised some mon­ey and that the retail share­hold­ers left 74 mil­lion on the table for the under­writ­ers who have since made 10 per­cent on their share pur­chase, um, if they held their shares to now.

[00:46:20] Tony: So the share price is ris­ing and it’s back on our, on our buy list, but, um, always some­thing to be aware of. It could be a con­scious deci­sion on the behalf of retail investors not to take up rights issues, but hope­ful­ly they did­n’t just ignore the offer and leave it for the under­writ­ers to, to bank the prof­its.

[00:46:37] Cameron: Mm. Speak­ing of which. One of the stocks in my US, uh, Stock­o­pe­dia port­fo­lio, Grin, G R I N, which I think is Grin Road Ship­ping, shot up 30 per­cent yes­ter­day, or the day before, um, and when I looked into it, they, it’s a cap­i­tal reduc­tion. Looks like they’ve got a takeover offer of some shares and they’re basi­cal­ly delist­ing and pri­va­tiz­ing the com­pa­ny via some sort of cap­i­tal reduc­tion.

[00:47:13] Cameron: So it shot up 30 per­cent uh, sort of hov­er­ing around that and I have to decide whether or not I’m just going to exit it and go buy some­thing else or wait and see what hap­pens. It’s got to go to the share­hold­ers I think to

[00:47:29] Cameron: vote on this, but um,

[00:47:31] Tony: Well, if it’s going to do this, you don’t want to be stuck in a pri­vate com­pa­ny. So you need to sell the shares before that hap­pens.

[00:47:37] Cameron: Yes, but it needs to go to the share­hold­er vote first. I guess I’m just wait­ing to see if any­one comes in with a last minute bid to take it over, push it up. But, um, yeah, some­thing to keep

[00:47:49] Cameron: track of. But that’s always nice when a share goes up by

[00:47:52] Cameron: 30%,

[00:47:53] Tony: it’s great. Well done. Yeah, very good. I’ve got a pulled pork to talk about next, if that’s okay.

[00:48:01] Cameron: Who are you pulling today, Tony?

[00:48:04] Tony: I’m pulling a one MA, uh, a IC mines code A one M, which I thought was an inter­est­ing code of the Bar­ry and Stan idea to put a new numer­ic into the code. I guess it dif­fer­en­ti­ates ’em from a two MA two milk, but this is a min­ing com­pa­ny, a cop­per mine, a cop­per gold min­er, although I don’t think they’ve got any gold yet.

[00:48:27] Tony: But, um, cer­tain­ly sell­ing cop­per. So on the buy list, um. It’s a wa well, it’s actu­al­ly head­quar­tered in WA but they’re, they’re mines in Queens­land, so, and they’re all over Aus­tralia, so it might just be like where their sort of head­quar­ters is, uh, for­mal­ly called Intre­pid Mines. Uh, and they, they, uh, they merged with anoth­er com­pa­ny, um, in about 2019 to become a one M uh, there, as I said, there.

[00:48:59] Tony: Their largest mine and their pro­duc­ing mine is called Aloise Cop­per, and it’s near Mount Isa in Queens­land, and it sells cop­per con­cen­trate. But they do have anoth­er sev­en explo­ration projects across most states in Aus­tralia. They acquired Aloise in 2021 and have since suc­cess­ful­ly explored in the area to just about, well, prob­a­bly more than dou­ble min­er­al reserves.

[00:49:25] Tony: So they’re very much in growth mode. This com­pa­ny not pay­ing a div­i­dend because of that and pour­ing a lot of mon­ey into cap­i­tal expen­di­ture to try and grow around the com­pa­ny. That paid off for them in Alois’s case because there’s a pro­posed mine called Jeri­cho in the same area area and it’s at the fund­ing stage.

[00:49:43] Tony: So again, this com­pa­ny is anoth­er exam­ple of a bit like Caroon that may raise mon­ey to help fund its growth. Although I think in terms of Jeri­cho, they’re talk­ing about tak­ing on debt and poten­tial­ly even debt fund­ing from cus­tomers of the cop­per off­take when the mine goes into pro­duc­tion, which is an unusu­al way to fund mines in the U.

[00:50:07] Tony: S.

[00:50:10] Tony: I’ve got to say, the cop­per price is increas­ing, so it’s a buy on the com­mod­i­ty graph, and the com­pa­ny points out that this is being dri­ven by increas­ing needs for cop­per in the pro­duc­tion of wind tur­bines, bat­tery stor­age units, EVs, solar pan­els, and in just gen­er­al­ly upgrad­ing the elec­tric­i­ty trans­mis­sion net­work, often­times need­ed to get access to the grid from.

[00:50:36] Tony: Uh, wind tur­bines or oth­er sort of, um, uh, new facil­i­ties. Uh, gold prices also doing well, but, um, at this stage, I could­n’t see any­thing in their num­bers that, that, uh, sug­gest­ed they were actu­al­ly had much or any gold, um, sales to, to speak of. Uh, it seems to be all cop­per con­cen­trate from the Eloise mine. Uh, but it’s, it’s pret­ty good.

[00:51:00] Tony: been spec­tac­u­lar­ly grow­ing. Lat­est results show that sales are up 58 per­cent and prof­it is up 143 per­cent and it actu­al­ly turned the prof­it this half from a loss last time. So it looks like they’re doing well. It seems like they’ve been able to fund all of their cap­i­tal needs, even for that big explo­ration pro­gram of sev­en.

[00:51:20] Tony: dif­fer­ent sites around Aus­tralia and um, expand­ing LOEs. They’re fund­ing it from cash­flow. I guess that that’s a great thing. Um, the down­side is that of course it means that they’re not hav­ing, even though they’ve termed prof­itable, that they’re not mak­ing much prof­it. And so their PE is quite high. Uh, and to run through the num­bers, I’m going to use a share price of 37 and a half cents.

[00:51:42] Tony: The com­pa­ny has an ADT of 122, 000, um, on aver­age. So. Large ish, but it may not suit big investors, but might suit a lot of peo­ple any­way, at that sort of lev­el. Um, the, inter­est­ing­ly enough, this is a com­pa­ny where the share price is only almost half the con­sen­sus fore­cast. So the bro­kers think there’s plen­ty of upside in the share price.

[00:52:05] Tony: Uh, but we don’t. IV1 is 18, so, um, not on an IV basis will we buy this com­pa­ny. How­ev­er, The IV is going to be dri­ven by earn­ings per share, and a lot of those earn­ings are used to fund mine upgrades and explo­ration, so it’s under­stand­able. The com­pa­ny has no yield. Stock Doc­tor finan­cial health and trend is strong and steady, so that’s good.

[00:52:32] Tony: Any­one inter­est­ed in ROE would not look at this com­pa­ny because it’s only 1%, but again, that’s dri­ven by The earn­ings being ploughed back into CapEx. P is 102, which um, gives, scores us a minus one, and that Uh, is because, as I said, it’s, um, it’s, the cash is flow­ing in, but it’s flow­ing out in terms of CapEx for explo­ration, uh, not to the bot­tom line.

[00:52:56] Tony: Prop­Caf, how­ev­er, um, is 4. 75 times, so there is plen­ty of cash com­ing in through the front door, and it’s, it seems to be, um, judi­cious­ly used if sales have jumped by, um, by 58 per­cent in the last half. NEP’s net equi­ty per share is 0. 34 and if we add 30 per­cent to that 0. 44 it means we can buy this com­pa­ny for less than book plus 30 per­cent so that’s prob­a­bly how the mar­ket’s valu­ing this.

[00:53:25] Tony: It’s mar­kets under­stand­ing that Um, Prof­it is being eat­en away with growth, um, but the assets are there and it’s trad­ing around book plus 30. Fore­cast earn­ings per share is real­ly good, um, it’s the, it’s the growth of near­ly 400, over 400%, which means our, our met­ric that we like to score these on growth over P.

[00:53:45] Tony: E. is 4. 05 times when we’re look­ing for a good com­pa­ny to have at least 1. 5, so we score it well there. Uh, a com­pa­ny which has, um. Uh, uh, I guess you could call it an under­founder. It has­n’t been in exis­tence for that long, but um, there are two peo­ple on the board. Uh, the chair, Joseph L. Ragee, holds 8%. Sor­ry, there are more than two peo­ple on the board, but there are two who have large share­hold­ings.

[00:54:10] Tony: Uh, Joseph L. Ragee, the chair, holds 8%. And there’s a direc­tor called Jonathan Young, who, uh, is asso­ci­at­ed with a fund man­ag­er called FMR Invest­ments, and FMR holds 17. 8%. So between those two, the direc­tors hold 26 per­cent of the com­pa­ny. So we’ll score it for an own­er founder. Uh, it’s been a recent, uh, sec­ond buy line cross, but, um, it’s actu­al­ly been a buy for quite a while.

[00:54:36] Tony: Uh, oth­er man­u­al­ly entered data, no con­sen­sus, uh, no, sor­ry, con­sis­tent­ly increas­ing equi­ty. Uh, so we can’t score it for that. And, uh, the PE is quite high, so we’re not scor­ing it as the, it’s actu­al­ly scor­ing a neg­a­tive as being the high­est in the last three years. So all in all the qual­i­ty score for this.

[00:54:54] Tony: Stock is 11 out of 15, or 73%, and the QAV score is 0. 15, so it’s kind of in the mid­dle of our buy list. Um, but if, uh, peo­ple are inter­est­ed in Spec­cy Min­ers, this one seems to be well run. And that leads me into my pos­i­tives and neg­a­tives. Uh, pos­i­tives was the, the, You would expect there’d be a fair bit of upside from new mine devel­op­ment.

[00:55:19] Tony: Um, explo­ration is pro­gress­ing at Eloise slash Jeri­cho. Um, there’s a cou­ple of oth­er promis­ing projects. One in Char­ter’s Tow­er called, Tow­er’s called the Pyra­mid Project. Anoth­er one called Delame­ri­on, um, near Bro­ken Hill. How­ev­er, they are seek­ing to divest two of their cur­rent Projects, um, Mary Myer and Lemuel, um, which sug­gests that they, they don’t get every­thing right.

[00:55:45] Tony: So, um, this, this is the kind of stock that will go up and down based on releas­es of how much, uh, resources are under the ground for these kinds of explo­ration projects, um, and it’ll also go up and down, um, As new minds come online, so it’s some­thing to be aware of. It’s these com­pa­nies tend to be dri­ven by news and can be a bit specky because who knows what’s under the ground until I drill the holes and, and, and get a fair idea of what’s going on.

[00:56:16] Tony: What the resource lev­els are them­selves. The neg­a­tives for a stock like this is that suc­cess­ful projects will require fund­ing. So that’s one thing to find cop­per under­ground, but you’ve got to get it out. And so that that will mean either an increase in debt for the com­pa­ny or poten­tial Finan­cial rais­ings from, from share­hold­ers in the future.

[00:56:38] Tony: Um, how­ev­er, this com­pa­ny, at least to date, has a, you know, seems to have a very good man­age­ment track record of nav­i­gat­ing their way through that. And the last neg­a­tive, um, that we should high­light is, uh, poten­tial com­mod­i­ty risk. So cop­per’s look­ing good now, gold’s look­ing good now, but, um, with a one, one or two com­mod­i­ty type min­er, um, they will turn down when the com­mod­i­ty prices turn down.

[00:57:01] Tony: So that’s, uh, yeah. A one M.

[00:57:07] Cameron: A1M and the cop­per price is look­ing good.

[00:57:11] Cameron: Gets dri­ven by all sorts of things, right?

[00:57:15] Tony: Oh yeah. Not the least of which is new mines com­ing into pro­duc­tion. As we saw with lithi­um. One of the rea­sons why it, you know, went through a great run and then a great fall was because there weren’t many lithi­um, lithi­um mines in pro­duc­tion. And then the whole heat came online all at once.

[00:57:29] Cameron: Yeah,

[00:57:29] Cameron: right. And obvi­ous­ly cop­per is very big in elec­tron­ic vehi­cle, as well as con­struc­tion and all those sorts of things. Bat­ter­ies. Yeah. Lots of things dri­ving it. Hmm. And dif­fi­cult to mine too, I believe. It’s, uh, dif­fi­cult. Take, it takes a long time to get a cop­per mine online, um, and there’s, uh, lots of prob­lems with some of the exist­ing ones, aging infra­struc­ture,

[00:57:58] Tony: okay.

[00:57:59] Cameron: places like Chile and Peru often have geopo­lit­i­cal ten­sions, they’ve got some big cop­per belts in those coun­tries.

[00:58:07] Cameron: Um, which can affect the price, you know. Any­who,

[00:58:12] Cameron: thank you, Tony. A1M, not a milk com­pa­ny. That’s

[00:58:16] Tony: No, that’s A two

[00:58:17] Tony: M. Yeah. A one and a two dif­fer­ent

[00:58:21] Cameron: the milk.

[00:58:21] Cameron: Cop­per and milk go togeth­er like choco­late and

[00:58:26] Tony: B one and B two. Yeah.

[00:58:30] Cameron: Only one ques­tion this week. This is from Jor­dan. Uh, if the stock mar­ket did­n’t give live prices and instead it oper­at­ed sim­i­lar to say sell­ing a house, would TK have a price to oper­at­ing cash flow val­ue or oth­er met­ric that he would con­sid­er a good price to sell? I’m just think­ing that if less than sev­en rep­re­sents good val­ue to

[00:58:53] Cameron: buy, is there a num­ber that rep­re­sents a good price to sell?

[00:58:58] Tony: Well, that’s, that’s been an age old ques­tion for me and I haven’t been able to find a good price to sell except to look at mar­ket sen­ti­ment. So it’s, I guess it’s a bit hard if the stock mar­ket’s closed. Um, but, um, you know, as I’ve been say­ing, there are com­pa­nies on our Our down­loads, I would­n’t say they’re on the buy list, but they’re in our buy list spread­sheet, which have got Prop­Cafs greater than 100, so they’re in triple dig­it Prof­Cafs, which means they’re not, they’re not gen­er­at­ing much cash yet, but their share prices are going up strong­ly because they’re growth stocks, basi­cal­ly, and peo­ple are buy­ing this sto­ry that some­thing bet­ter is going to come.

[00:59:34] Tony: Um, so Prop­Caf, Is a great way to find val­ue stocks, but it’s not just the val­ue stocks that go up and, um, you know, I’ve, I actu­al­ly tri­aled at one stage sell­ing stocks that had risen above our Prop­Caf cut­off, so using sev­en. Um, and above. I think Dylan encour­aged me to, um, to rebal­ance out of the one that was, out of the stock that had the high­est Prop­Caf in the port­fo­lio and buy the cheap­est one, but it did­n’t work for me.

[01:00:06] Tony: And I’ve found that com­pa­nies can, can keep on going up, their share price can keep on going up, their Prop­Caf can keep on going up, um, and the mar­ket might still love it. Um, Mac­quar­ie Banks brings to mind in that sort of cir­cum­stance. Um, I think Nick­el Mines may have been one that, uh, I looked at and again, you know, we bought well out of it, but, um, the, the Prop­Caf num­ber kept going up and up and up and up and up.

[01:00:32] Tony: Um, but the share, so did the share price, so there was­n’t a cor­re­la­tion. But the, I’ve only found Prop­Caf use­ful in deter­min­ing Deep val­ue com­pa­nies, um, when I can, I’m try­ing to buy a dol­lar for a dol­lar of cash return. So, um, that’s, that’s the use of Prop­Caf. So, no. Um, it’s always an inter­est­ing ques­tion though, and the idea of shut­ting the mar­ket or, or think­ing about your invest­ments as if the mar­ket was shut.

[01:00:58] Tony: Um, as far as I know, it comes from Buf­fett. You may have stole it from some­where else, but, um, he’s encour­aged peo­ple to think about, you know, buy­ing a stock and then. Turn­ing off the mar­ket noise and pre­tend­ing the mar­ket’s shut. But that kind of, um, reflects his needs to buy big­ger and big­ger com­pa­nies.

[01:01:14] Tony: And, um, he’s, even though he still trades stocks, by the way, um, you know, when he’s buy­ing some­thing real­ly big to deploy Berk­shire Hath­away’s cash, um, he’s not going to be able to flip that quick­ly, um, in the, in the mar­ket. Uh, and if he tried to, I think it would mean the sen­ti­ment would, would, you know, ques­tion why, what was wrong with the stock, why is Buf­fett sell­ing, and the price would go down.

[01:01:38] Tony: So you find it hard to, to flip it. Um, so he’s, he’s kind of, I guess, evolved from being the kind of val­ue investor that we are, which is look­ing for cheap things in the mar­ket, cheap qual­i­ty stocks, qual­i­ty stocks we can buy cheap­ly to, as he says, um, good com­pa­nies that, that he can buy the fair price. So he focus­es on things like pre­dictable cash flow.

[01:02:02] Tony: Uh, so if he buys it, he knows he can’t sell it, so he’s gonna hold it for a long time. So I’d like to know that into the future, the cash flows are going to be strong and going up. So he’s found that the way to pre­dict that is to find com­pa­nies that have what he calls a. So that they can with­stand com­pet­i­tive pres­sures bet­ter than com­pa­nies that don’t have a moat.

[01:02:23] Tony: And, um, and there­fore, you know, as their abil­i­ty to raise prices in all kinds of mar­kets con­tin­ues, their share price con­tin­ues to go up as well. Um, and, you know, com­pa­nies like Coke, Amex, Proc­ter Gam­ble spring to mind that Buf­fet­t’s owned for a long time and he’s hap­py to pay a fair price for those com­pa­nies and wait for down­turns to buy more, for exam­ple, when they first bought Apple.

[01:02:47] Tony: Yeah, the price was depressed, but, um, yeah, it’s would­n’t say it was a cheap val­ue stock and by any stretch of the imag­i­na­tion, um, but what I found is I’m not sure that that strat­e­gy works in Aus­tralia, but I mean, I could buy, Hath­away, but I could buy, you know, Amex or Coke or Apple over­seas, but I’ve con­cen­trat­ed on buy­ing Aus­tralian stocks to elim­i­nate cur­ren­cy risk and any sort of tax dis­crep­an­cies.

[01:03:12] Tony: Um, and, you know, you don’t get frank­ing cred­its on div­i­dends from over­seas stocks. Um, but if you looked at try­ing to apply that sort of moat men­tal­i­ty and pre­dictable cash flow style of invest­ing to Aus­tralia, you’re prob­a­bly look­ing at what the big four banks maybe, maybe some of the large insur­ance com­pa­nies, maybe the super­mar­kets.

[01:03:31] Tony: Yeah, that’s, that’s, what’s the dif­fer­ence between that bas­ket and the index? You’re real­ly becom­ing an index investor, I think, in Aus­tralia if you adopt Buf­fet­t’s style of invest­ing. So it, um, I haven’t been able to apply that here to beat the mar­ket. I think it’s not a bad way to look at things if you’re try­ing to main­tain cap­i­tal in retire­ment or some­thing like that.

[01:03:52] Tony: But, um, as a mar­ket beat­ing strat­e­gy, I’m not sure it applies to Aus­tralian stocks. It’s a, it’s a small­er mar­ket and heav­i­ly picked over as well.

[01:04:02] Cameron: But if the mar­ket did­n’t exist and you own stocks in com­pa­nies, you’re basi­cal­ly a busi­ness own­er then, right? You’re, you’re own­ing shares in a busi­ness and you would prob­a­bly sell it if you thought the prospects for the busi­ness weren’t very good, you

[01:04:15] Tony: Yeah. Yeah. So if I owned a mine and the mine price went down, I guess the ben­e­fit of, well, first of all, I don’t know how you sell it because the mar­ket’s shut, but I’m assum­ing you can still, it opens one day a year or some­thing. Can you do a mad flur­ry of March

[01:04:29] Cameron: the same way you sell real estate. How’s sell­ing real estate going for you

[01:04:33] Cameron: at the moment?

[01:04:34] Tony: Slow. Yeah. So, um, yeah, yeah, well maybe that’s, that’s the way, but yeah, you’d use the non sort of sen­ti­ment indi­ca­tors to sell the com­mod­i­ty prices going down, so you sell your shares in the mine, or, um, you know, you’re a cof­fee shop own­er and, uh, the price of cof­fee’s gone up, which it has, it’s gone up tremen­dous­ly, cocoa any­way, it’s gone up tremen­dous­ly this year, um, so you might decide to, you know, Sell your busi­ness on that basis because you can’t afford to buy cof­fee beans and put the price up, um, to recov­er that input cost.

[01:05:08] Tony: So, yeah, so there are those kinds of things which you’d look at the time you’re sell­ing.

[01:05:13] Cameron: You know, it’s not that much dif­fer­ent from the way that we trade now, right? We, uh, we, we think about these things as busi­ness­es. We’re look­ing for busi­ness­es

[01:05:22] Tony: Mm hmm.

[01:05:22] Cameron: are under­val­ued, but have a bright future based on what we can tell from the num­bers. And, um,

[01:05:29] Tony: Mm hmm.

[01:05:30] Cameron: but we, we only sell them

[01:05:32] Cameron: when they breach one of our sell­ing indi­ca­tors.

[01:05:36] Cameron: You know, we’re not real­ly look­ing at. Um, the finan­cial pro­jec­tions and deter­min­ing. We don’t base our sell­ing

[01:05:46] Cameron: on those. We base them on the mar­ket’s reac­tion to those, some­times.

[01:05:51] Tony: real­ly good point. So, you know, I, I would­n’t be an expert in, you know, For exam­ple, cof­fee shops or how the com­mod­i­ty prices affect the abil­i­ty to raise the price of cof­fee to your cus­tomers, but there’s some­one out there in the mar­ket who is and they’re dri­ving the mar­ket. So I’ll, I’ll ben­e­fit off their wis­dom, the wis­dom of crowds and use that change in sen­ti­ment to sell the time I sell.

[01:06:13] Cameron: It’s like the bad news sell. I think, um, Alex, uh, F, one of our sub­scribers men­tioned on the Face­book group today, the DGL, he just picked up the DGL, uh, announced that their CFO was leav­ing and they were look­ing for a replace­ment. I think he said it hap­pened a cou­ple of weeks ago, end of the month or so a week ago.

[01:06:32] Cameron: And, um, whether or not it was a bad news sell and I looked at, uh, the mar­ket’s reac­tion to it

[01:06:39] Cameron: and share price

[01:06:42] Cameron: does­n’t seem to have moved a great deal since that announce­ment came out. So, yeah.

[01:06:47] Tony: That’d be a blow to your ego if you were the CFO who resigned and the mar­ket went, yeah, okay, see ya. Don’t let the door hit you on the way out. well,

[01:06:58] Cameron: and it did­n’t go down.

[01:06:59] Cameron: they’re

[01:07:00] Tony: I think the full sto­ry though, I saw, I saw the arti­cle. I think the full sto­ry is they’re

[01:07:05] Tony: relo­cat­ing from New Zealand to Aus­tralia and

[01:07:07] Cameron: To Syd­ney. Yeah.

[01:07:08] Tony: did­n’t want to move.

[01:07:08] Tony: So that makes sense. It’s, it’s more of some­thing hap­pens in a vac­u­um. Like we can’t work out why the per­son­’s left, but, um, yeah, that’s, that’s more of an issue, I think.

[01:07:19] Cameron: But also we tend to look at how the mar­ket reacts. And my, you know, my assump­tion is that there are peo­ple that, that know this busi­ness, know the indus­try, are pay­ing way more atten­tion to it than we are. And if they

[01:07:31] Cameron: react bad­ly to the news, then we sus­pect some­thing might be afoot.

[01:07:37] Tony: We have gone against the mar­ket occa­sion­al­ly. Fortes­cue Met­als comes to mind when they’ve had a num­ber of exo­dus­es, par­tic­u­lar­ly from the finance area in that com­pa­ny. We’ve decid­ed to bench it. Share price has gone up because iron ore’s gone up. It’s com­ing back a bit now, but, um, yeah, I lost a bit of con­fi­dence in that com­pa­ny when, um, the finance peo­ple lost con­fi­dence in the com­pa­ny and left.

[01:07:58] Tony: Not a good look.

[01:08:00] Cameron: But their share price has­n’t been great. I mean, it’s been going down since the begin­ning of the year. Since Jan­u­ary, it peaked at about 30 bucks. It’s down to 25 now. So, uh, I don’t think we missed out on much there. All right. Well, there you go, Jor­dan. Hope that helps. No oth­er

[01:08:19] Cameron: ques­tions for this week, Tony. So that’s a wrap. We’re into after hours. I think you’ve already

[01:08:23] Cameron: told me most of your after

[01:08:24] Tony: Yeah, I have pret­ty much.

[01:08:26] Cameron: Birth­day nip­ple. Wag­ga Wag­ga

[01:08:28] Tony: Tip­ple, not nip­ple, birth­day tip­ple, not nip­ple.

[01:08:32] Cameron: Oh yeah. Tip­ple, nip­ple. It’s the nips. It was the tip­ple of the

[01:08:37] Tony: Oh, the nips, yes, the nips were get­ting big­ger,

[01:08:40] Tony: all three of them.

[01:08:43] Tony: Yeah, uh, well, it’s, it’s, because it’s my birth­day, it usu­al­ly coin­cides with, um, often coin­cides with the US Mas­ters, so that’s on this week, which I’ll be post­ing on the Perched on the couch watch­ing Eagly on the week­end, but it’ll also be kind of nos­tal­gic because, um, it was a great hol­i­day last year on my 60th to go over­seas and attend Augus­ta Nation­al and watch the Mas­ters live, and it was a real high­light.

[01:09:07] Tony: Um, it’ll be fun to sit on the couch and, and, you know, being to the course, we can see how hilly it is and how steep it is and how, how, how undu­lat­ing the greens are and dif­fi­cult to play, so it’ll be good fun to, to watch it from with that sort of hind­sight as well. So I’m look­ing for­ward to that.

[01:09:24] Cameron: Hmm. That’s it.

[01:09:27] Tony: Yeah, look, I haven’t had a chance to real­ly watch any­thing apart from races and

[01:09:30] Tony: foot­ball with Rud­dy and, uh, um, and I’ll be watch­ing golf next week. So yeah, that’s pret­ty much it.

[01:09:38] Cameron: I did watch one more episode of The Three Body

[01:09:42] Tony: Mm hmm.

[01:09:42] Cameron: the third episode. And it’s, they’re rush­ing it, is my feel­ing for it. They’re rush­ing it. I said to Chris­sy, are you enjoy­ing this? She goes, yeah, it’s alright. So I’m like, okay then. For me though, hav­ing recent­ly read the tril­o­gy, it just seems like they’re real­ly gen like I can tell, I’m guess­ing that The guy who’s got pan­cre­at­ic can­cer is the guy whose brain’s going to end up in the thing that goes out into the uni­verse.

[01:10:12] Cameron: And the woman that he’s in love with is the woman who was sup­posed to be run­ning the whole trip­wire sys­tem, which was like a hun­dred years lat­er after they found out the aliens were com­ing in the book. And now it’s hap­pen­ing where they don’t, they’ve just find­ing out that the aliens are com­ing and it’s like, they’ve com­pressed the first 150 years of the sto­ry

[01:10:33] Tony: Right.

[01:10:33] Cameron: weeks.

[01:10:34] Cameron: And I’m like, Oh, okay. And

[01:10:36] Tony: Yeah.

[01:10:37] Cameron: I’m jump­ing ahead of my thing, but any­way,

[01:10:41] Cameron: it’s inter­est­ing.

[01:10:42] Tony: yeah, I real­ly enjoyed it. I think it’s a great

[01:10:44] Tony: series. Oh, I

[01:10:46] Cameron: Oh, that’s about all I’ve watched this week, except I’ve been going back and watch­ing the Wire. I read some, I know you nev­er got into The Wire, did you? You real­ly need to

[01:10:56] Tony: watched the first sea­son. I fell asleep on the last episode. I just, I just, yeah, I prob­a­bly missed some­thing. I loved, there was one episode I loved when all I said was shit all the way through the episode. Oh, fuck, sor­ry. Yeah, that was, it was, that was

[01:11:10] Cameron: No, not the whole episode. It’s like the first cou­ple of min­utes, but yeah.

[01:11:13] Tony: yeah,

[01:11:14] Cameron: When they’re inves­ti­gat­ing a shoot­ing and they’re just, you know, Putting all the pieces togeth­er is very clever. No, I, I still think it’s, um, one of the great, uh, great series of all, most, most intel­li­gent series I’ve ever watched, just the way that it sort of, uh, took apart.

[01:11:31] Cameron: Well, it’s what David Simon felt was wrong with US, but I read this inter­view with him again over the week­end from 2008 when the series had just fin­ished. And he was say­ing, look, maybe we’ve got it all wrong. Maybe Amer­i­ca’s not as bro­ken as we thought it was. Maybe 15 years from now, peo­ple will say, ah, these guys

[01:11:48] Cameron: did­n’t know what they were talk­ing about.

[01:11:49] Cameron: Every­thing’s great. And I was read­ing it and going, no,

[01:11:52] Tony: real­ly? yeah, ha ha

[01:11:55] Cameron: much, pret­ty much picked it. But I’ll read you some quotes from this, uh, from this inter­view. Again, this is 2008. Um, cause the last sea­son, which you did­n’t see, so the first sea­son they’re look­ing at the cops.

[01:12:10] Cameron: And then the sec­ond sea­son, they were look­ing at the docs.

[01:12:13] Cameron: Then the third sea­son was about, I think, uh, the edu­ca­tion sys­tem, third and fourth sys­tem for third and fourth sea­son, were look­ing at the edu­ca­tion sys­tem. Um, and they also looked at, they looked at drug legal­iza­tion actu­al­ly in the third two and the fifth sea­son. The final sea­son was about the media. Uh, ’cause David Simon was a jour­nal­ist at, uh, the Bal­ti­more.

[01:12:36] Cameron: Son, I think for 15 years. And they were talk­ing in this thing about, in this inter­view about how they got rave reviews. The media loved the show for the first four sea­sons, but when the fifth sea­son dropped and it was about the media. They got a ton of crit­i­cism from the media,

[01:12:55] Cameron: but, um, he says this, uh, he says, I think the peo­ple you saw react to it were jour­nal­ists, school admin­is­tra­tors and politi­cians and long­shore­men and drug deal­ers and cops and police admin­is­tra­tors, they don’t blog and they don’t write.

[01:13:09] Cameron: trou­ble with jour­nal­ism right now, there’s a lot of trou­bles, and one of them’s fun­da­men­tal­ly eco­nom­ic, but I believe the meta nar­ra­tive that jour­nal­ists have embraced right now is, we were doing noth­ing but mak­ing the world safe for democ­ra­cy, doing our jobs, being hero­ic, and then the eco­nom­ic cli­mate and tech­nol­o­gy changed, and the inter­net is now evis­cer­at­ing us, and it’s falling apart, and we are vic­tims.

[01:13:31] Cameron: But I took the third buy­out from my news­pa­per before the inter­net even exist­ed as a con­cept. When jour­nal­ism was prof­itable, extreme­ly prof­itable, news­pa­pers did not improve and hone their prod­uct and make the prod­uct more mean­ing­ful, they con­cen­trat­ed on that which was not par­tic­u­lar­ly rel­e­vant, which Which was a lit­tle bit onon­is­tic and self absorbed, and then, when the inter­net did arrive, they had an infe­ri­or prod­uct that was­n’t some­thing they could charge for online.

[01:13:58] Cameron: So it was a two step process by which that indus­try was utter­ly mis­man­aged. And it’s all fun and games when you’re say­ing nasty shit about Police Admin­is­tra­tors, or the May­or, he’s talk­ing about oth­er sea­sons that

[01:14:10] Cameron: they have, Royce and his Chief of Staff. But the moment you say it about the jour­nal­ist who’s feel­ing only the vic­tim­iza­tion of what’s hap­pened over the last few years, it’s infu­ri­at­ing.

[01:14:21] Cameron: So then he talks about what The Wire was all about. He says, yeah, it’s about the decline of the Amer­i­can empire. It’s about a cul­ture that can no longer rec­og­nize or acknowl­edge its own prob­lems, much less begin to solve them. You look at The Wire and it explains New Orleans. I mean, we may be wrong, we took our best shot, but it explains New Orleans, he’s talk­ing about the floods and every­thing that hap­pened there, he did anoth­er series about that lat­er on called Treme.

[01:14:45] Cameron: It explains Iraq, it explains the dis­con­nect between facts on the ground and pol­i­cy. The Wire made no men­tion of New Orleans, it made scant men­tion except alle­gor­i­cal­ly at points. Points of the war in Iraq, and yet it was about those things and about this par­tic­u­lar time, we did­n’t ref­er­ence the mort­gage cri­sis and the dra­ma on Wall Street because we did­n’t know about it yet.

[01:15:05] Cameron: But it makes per­fect sense in the con­struct of this nar­ra­tive. It’s too sim­ple to say it’s cor­rup­tion or evil or any­thing as sim­ple as that. This is about a coun­try that’s become noth­ing more than a pyra­mid scheme, and the peo­ple in the pyra­mid are look­ing to sal­vage them­selves and aggran­dize them­selves, and nobody has their eyes on the com­mu­ni­ty.

[01:15:24] Cameron: That’s what the Wire is about. You can say it’s about urban Amer­i­ca, but what is Amer­i­ca oth­er than urban? 80 per­cent of us live in cities. At the Repub­li­can con­ven­tion, all that non­sense about small town val­ues, fuck small town val­ues. That’s 20 per­cent of the coun­try. I’m wor­ried about where 80 per­cent of us live.

[01:15:41] Cameron: I need big city val­ues to mat­ter. I need big city sen­si­bil­i­ties to pre­vail. I need to know how lots of us are going to live togeth­er in a small con­fined area, because that’s how we live. So, you know, say­ing the wires about urban Amer­i­ca is say­ing it’s about who we are. Any­way. He does, like the series to me was like this real­ly great expla­na­tion about how the most advanced cap­i­tal­ists, uh, civ­i­liza­tion the human race has ever seen is just falling apart because it, it, it focus­es on the wrong things and it incen­tivizes the wrong things.

[01:16:20] Cameron: I mean, that’s,

[01:16:20] Tony: Yeah,

[01:16:21] Cameron: Like, his sea­son, the sea­son they did on the edu­ca­tion sys­tem, they just high­light the fact that the schools get

[01:16:27] Cameron: fund­ed by test scores. So what do they focus on? Test scores.

[01:16:32] Tony: Same here. Same here. Naplan scores. ha ha

[01:16:36] Cameron: Well, and, and, and, and the way they tell the sto­ry is there’s a cop, one of the cops in the ear­ly sea­sons, um, ends up get­ting pushed out of the police force and he ends up as a teacher. And then he just sees the same pat­terns. He goes, Oh, it’s Duke and the Stats. He says to one of the guys, let’s duke in the stats. This is what we do in the police force. You know, if, if they’re folk, if the may­or wants the chief of police to focus on drug rips, busts, that’s what they focus on is on busts.

[01:17:05] Cameron: They don’t focus on the, the, the root prob­lem of why there are, why there are drugs in the sys­tem. It’s just about drugs on the table. So there’s a press con­fer­ence in the six o’clock news and the may­or gets to wave the flag and say, look at all the stuff that we’re doing. And so it’s,

[01:17:22] Cameron: it’s what.

[01:17:23] Tony: yeah.

[01:17:24] Cameron: What gets incen­tivized is what gets focused on and it’s

[01:17:27] Tony: Oh yeah. Char­lie Munger said that.

[01:17:30] Cameron: Yeah, right?

[01:17:31] Cameron: So that’s what the Y is all about. That’s why it’s, yeah, I think the great­est TV shows, because it reveals all of this kind of stuff, whether it’s in jour­nal­ism, they did the same thing with jour­nal­ism, you know, and they took down jour­nal­ism as being all about, you know, grab­bing eye­balls, what­ev­er grabs eye­balls today, because that dri­ves adver­tis­ing.

[01:17:50] Cameron: And it’s not about actu­al­ly address­ing the

[01:17:53] Cameron: sort of real sto­ries that real­ly make a dif­fer­ence to what’s going on,

[01:17:58] Tony: Well, um, Simon made that point in the arti­cle that we don’t that Amer­i­ca does­n’t even rec­og­nize the prob­lems that it has. And I know and that’s because of jour­nal­ism, real­ly. The only way they can rec­og­nize the prob­lems is if the jour­nal­ists Uncov­er the prob­lem and bring it to day­light. But if they’re focused on sell­ing Bit­coins or get­ting ads from wash­ing machine mak­ers, and, um, yeah, it’s not going to hap­pen.

[01:18:22] Tony: Um, inter­est­ing. We were, you’re talk­ing about the Beanie Baby anal­o­gy for Bit­coin. I went to the Forbes arti­cle on their web­site and there was, must’ve been about 20 or 30 click­bait ads for cryp­to trad­ing strate­gies, and it was an arti­cle say­ing how bad cryp­to was.

[01:18:42] Cameron: But no ads for Beanie Babies, that’s where they should have been. There, I

[01:18:47] Tony: Yeah, well that’s,

[01:18:48] Cameron: I think Zach Gal­i­fi­anakis was in a film, like a biopic about Beanie Babies a lit­tle while ago, about that sort

[01:18:56] Cameron: of fad, the guy who ran the Beanie Baby busi­ness.

[01:19:01] Tony: But yeah,

[01:19:01] Tony: when you talk to Amer­i­cans when you’re there, and you’ve been there as well, and

[01:19:06] Tony: the last thing you want to do is raise one of these prob­lem issues with them, they’ll just say, oh you don’t get it, or, you know, we’re still the best coun­try in the world, and blah blah blah blah blah, so just head in the sand, um, ignore the prob­lem, it’s amaz­ing.

[01:19:21] Cameron: He says at the end, um, talk­ing about the why, I think it’ll stand as an inte­grat­ed sto­ry that was about some­thing. And I hope we’re wrong. I hope that what we think it’s about does­n’t turn out to be true in the long run, because what it’s about is the end of empire. I’m hop­ing that what we were say­ing does­n’t seem pre­scient 10 or 15 years from now, and when peo­ple stick those DVDs in, DVDs.

[01:19:46] Cameron: I’m hop­ing that it seems over­ly pes­simistic, and maybe it will, but we took our shot. It’s what we actu­al­ly believe. It’s what seems to be occur­ring in a con­sis­tent frame­work with regard to every­thing from the sub­prime mort­gage dis­as­ter to New Orleans to the war in Iraq. It seems as if we’re overex­tend­ed as a cul­ture, and if the capac­i­ty to address prob­lems And as if the capac­i­ty to address prob­lems is no longer with­in our grasp, that’s what The Wire was about.

[01:20:14] Cameron: And that’s, you know, I think he was spot on. I think

[01:20:18] Tony: Oh, absolute­ly.

[01:20:19] Cameron: bad to worse since that show fin­ished. And, and I think that’s why Chi­na’s eat­ing their lunch, because Chi­na’s focus­ing on

[01:20:27] Cameron: build­ing a coun­try rather than watch­ing it go down the tubes, you know.

[01:20:32] Tony: well, who knows? I mean, there’s cer­tain­ly been report­ed cor­rup­tion in Chi­na as well. Um, but,

[01:20:39] Cameron: just

[01:20:39] Tony: I was,

[01:20:40] Cameron: I mean, Xi Jin­ping has spent the last 10 years try­ing to fight cor­rup­tion, you know, it’s been one of his, the main­stays of his whole,

[01:20:49] Cameron: um, time in pow­er is try­ing to curb cor­rup­tion, yeah.

[01:20:54] Tony: And you know, and like, we still don’t have a fed­er­al ICAC in Aus­tralia. That was the point I was going to make is that, um, it’s, I don’t want to sound like I’m point­ing the fin­ger at Amer­i­ca as being the failed empire. It’s just, it’s Applic­a­ble to Aus­tralia. As I was dri­ving back from Wal­go­re, I was lis­ten­ing to the news, the news, um, ABC News radio sta­tion.

[01:21:13] Tony: And, uh, you know, the Israel reports come out about the, um, the mis­sile that killed the Aus­tralian aid work­er. And, uh, they had an expert on, on that. And he was being asked, you know, should there be a fur­ther inquiry into this? Is this enough evi­dence to pros­e­cute Israel for war crimes? And he said, it does­n’t mat­ter.

[01:21:34] Tony: We’ve, we’ve sat on inquiries for 20 years from Iraq and Afghanistan in Aus­tralia, where patent­ly there’s evi­dence that Aus­tralian sol­diers killed local peo­ple and we’ve done noth­ing about it. Do those first, before you start point­ing the fin­ger at a dif­fer­ent coun­try.

[01:21:49] Cameron: Yeah, I like that. We did­n’t care about the 33, 000 civil­ians that got killed in Gaza until an Aus­tralian aid work­er got killed and all of a sud­den,

[01:21:59] Cameron: You know, now we sud­den­ly care. We did­n’t care about the oth­er 33, 000.

[01:22:03] Tony: yeah, and why is that? Because

[01:22:04] Cameron: com­plete­ly

[01:22:05] Tony: yeah,

[01:22:07] Cameron: I mean,

[01:22:07] Tony: it’s become a polit­i­cal 24 hour news cycle event and that’s all it

[01:22:12] Tony: is, unfor­tu­nate­ly. I say that with a heavy heart because some­one died and as you said, thou­sands of peo­ple have died through this con­flict. Yeah.

[01:22:22] Cameron: Yeah. No, like Aus­tralia suf­fers from a lot of the, I mean, but Aus­tralia fol­lows the U S in most of these things.

[01:22:28] Tony: Mm hmm. 51st state.

[01:22:32] Cameron: I think we’ve done a, you know, well, it’s the old Goff Whit­lam sto­ry, right? I think Goff did a great job set­ting us up in the 70s. And, uh, you know, var­i­ous admin­is­tra­tions have been try­ing to unwind every­thing that Goff put into place 50 years ago.

[01:22:50] Cameron: Uh, we, you know, and my con­cern has always been that we don’t want to move clos­er to the way Amer­i­ca runs because it’s spi­ral­ing out

[01:22:58] Cameron: of con­trol. We need to dis­tance our­selves from that and pro­tect

[01:23:04] Tony: should be, we should, yeah, we should be able to be able to pick and choose the best from dif­fer­ent places. And I guess the two biggest places now are US and Chi­na. Um, yeah.

[01:23:15] Cameron: And do we want to attach our­selves more to the empire that’s in decline or the empire

[01:23:19] Cameron: that’s on the rise?

[01:23:22] Tony: If you ask Paul J Keat­ing, it’s, um, look to the North, not the North East.

[01:23:29] Cameron: Makes sense to me, but any­way. All right. That’s the

[01:23:33] Tony: good. Thank you. Good to catch up as usu­al.

[01:23:36] Cameron: Yeah, good to talk to you and uh,

[01:23:39] Cameron: hap­py birth­day,

[01:23:41] Tony: Yeah, thank you.

[01:23:43] Cameron: I’ll remem­ber next

[01:23:44] Tony: No wor­ries. Yeah.

[01:23:47] Tony: All right. Have a good week. Hap­py

[01:23:49] Tony: ASX.

[01:23:50] Cameron: hap­py share mar­ket, go have a good week.