QAV 718 — Poifect!

QAV 718 Club

[00:00:00] Cameron: Bold Man­ners the widest with Paper­boy, then Smart Deal El Roc­co, as they reach the 300, Lib­er­ty State shown her head and Poi­fect is not going away. Poi­fect has claimed Lib­er­ty State and the favourites in trou­ble. Intre­pid Eagle behind them from Hard to Cross and Zam­bagh­i­ni. Poi­fect kicked away with 100 metres to go.

[00:00:31] Cameron: Hard to cross back on the inside, Poi­fect, 3 quar­ters, hard to cross, Poi­fect, dri­ven out, hands and heels, wins it, Poi­fect first from a head bob­ber, Intre­pid Eagle, all hard to cross with Zam­bogh­i­ni in pho­tos, then came Smart Deal, who’s run a race, behind them, Pay Per View Con­grat­u­la­tions, TK.

[00:00:48] Tony: Thank you.

[00:00:50] Cameron: How excit­ing was that?

[00:00:52] Tony: it was very excit­ing. It was great. And she’s got a bright future, which is even more excit­ing.

[00:00:57] Cameron: That’s fan­tas­tic. So, uh, she escapes the dog food, uh, pro­cess­ing plant for one more week. Uh, what kind of a win­ning, you don’t have to give us specifics, but what kind of a win­nings does an own­er get out of a win like that? Is it like big cel­e­bra­tion time or is it like, yeah, it’s all right. But you know, we’re not going to get that excit­ed.

[00:01:18] Cameron: Yeah. Okay.

[00:01:18] Tony: Yeah, it’s all right. Pays the bills for a while.

[00:01:20] Cameron: Right. Tax free. I

[00:01:23] Tony: Uh, well, no, but it’s in the com­pa­ny, so

[00:01:27] Cameron: guess it’s not, it’s not gam­bling, right? When you own a horse, or is it?

[00:01:30] Tony: No, it’s a choice, not tax. Well, actu­al­ly it is. If you were, if I had owned it in my own name, it’d be tax free. But I can’t deduct my loss­es, so I’ve learned a long time ago, you’re bet­ter off deduct­ing your loss­es from run­ning the busi­ness, and pay­ing train­ers and vets and all that kind of stuff, and pay­ing tax on your win­nings.

[00:01:47] Cameron: Right. Well, con­grat­u­la­tions. That’s very excit­ing.

[00:01:50] Tony: you! Yeah, she’s, she will, she may head up to Queens­land, so you may, um, you may see me up there if she gets into a good race up there.

[00:01:59] Cameron: Oh, fan­tas­tic. This is QAV, by the way, the invest­ing pod­cast, not the horse rac­ing pod­cast yet. Although if Tony has his way, that’ll, it’ll prob­a­bly morph into that at some point. Episode 718, we’re record­ing this on the last day of April, 30th of April, 2024. And with us, with us in the stu­dio is, uh, Matt Walk­er.

[00:02:21] Cameron: Wel­come to QAV, Matt.

[00:02:25] Matt: you.

[00:02:25] Cameron: Where are you at? Where are you actu­al­ly, Matt?

[00:02:28] Matt: I’m, I’m sit­ting in an office, um, in Box Hill in Mel­bourne. That’s where I work.

[00:02:34] Cameron: Box Hill.

[00:02:37] Cameron: Wow. You know, I, I’ll tell you, um, I used to work in Box Hill in the ear­ly 90s, like 93, 94, 95. And there was, uh, where the, where the lit­tle strip shops are there, they’re actu­al­ly one of the first inter­net cafes in Mel­bourne in cir­ca 90, 94. And I used to work just around the cor­ner from that, and every lunchtime, I’d go to this inter­net cafe.

[00:03:05] Cameron: And I’d pay my five bucks for like 15 min­utes and, uh, would be down­load­ing, uh, Sein­feld scripts and Van Halen lyrics. I think they were the two things I was down­load­ing onto a flop­py disk that I’d take in and stick in their machine. Cause I was, I was con­vinced at the time, this inter­net thing’s too good to be true.

[00:03:27] Cameron: I was like, they’re going to shut this down. Now this is like, they can’t. There’s no way they can let peo­ple get this much infor­ma­tion, like, for free. This is crazy. I’m going to, I’m going to down­load the entire inter­net while I can. And I was talk­ing to Steve Sabati­no on Futur­is­tic last week about, I actu­al­ly got a book down­stairs, like a, Like a print­ed, pub­lished paper­back book that’s about this thick.

[00:03:51] Cameron: It’s like the top 100 web­sites of 1994 or some­thing like that, that you had to go to. There was only about 150 web­sites, so it was­n’t hard to be in the top hun­dred.

[00:04:02] Tony: It was an easy job putting that book out, was­n’t it? That’s

[00:04:06] Cameron: so Box Hill plays a, plays a, has a big place in my heart for that. That’s where I, that’s where I dis­cov­ered the inter­net was in Box Hill.

[00:04:15] Cameron: And then I got a com­put­er in 94 and then my inter­net built. 500 a month for dial up. I thought, uh, I can’t afford this because I was earn­ing about 600 a month at the time. And, uh, I thought I’d bet­ter get a job at a, how can I get a job where the inter­net, I’ll get free inter­net? So I got a job at Aussie Mail, which was the first ISP in Aus­tralia as a sales guy and got free inter­net for a few years, which was good.

[00:04:41] Cameron: Any­way, enough about me. Wel­come to the show again, Matt from, from Box Hill. So

[00:04:47] Matt: Yeah, I was gonna say, I don’t know

[00:04:48] Tony: lucky sub­urb, isn’t it, Matt?

[00:04:51] Matt: It, it could be con­sid­ered that, yeah. It’s def­i­nite­ly, you said small set of shops, it’s def­i­nite­ly, um, not that any­more. I don’t know if you’ve been here

[00:04:59] Cameron: I haven’t been there for 20

[00:05:00] Cameron: years.

[00:05:01] Matt: sky­scraper city. There is

[00:05:03] Cameron: Wow.

[00:05:04] Matt: 12, like, real­ly big build­ings.

[00:05:06] Matt: It’s real­ly changed in the last 5 10 years, so. It’s not a cool place to be, it’s def­i­nite­ly

[00:05:10] Tony: and what’s the post­code in Box

[00:05:12] Tony: Hill?

[00:05:13] Matt: Oh, you 3 1 2 6 maybe?

[00:05:16] Tony: okay, I was gonna say it was 3888 or some­thing like that.

[00:05:20] Matt: Ah,

[00:05:20] Tony: I think

[00:05:21] Matt: nah, not quite.

[00:05:22] Tony: I thought that’s why the Chi­nese like liv­ing there. It’s like E8.

[00:05:26] Matt: Yeah,

[00:05:27] Tony: that’s why there’s lots of high

[00:05:28] Tony: ris­es in Box Hill now.

[00:05:29] Cameron: Real­ly? They’re like the eights? Well, Matt, um, we’ve, we’ve talked about you a lot on the show over the last, uh, cou­ple of months because you’ve been doing some great work behind the scenes on this regres­sion test­ing sys­tem and you kind­ly vol­un­teered to come on and talk about a lit­tle bit. So first of all, thank you for every­thing you’ve been done.

[00:05:53] Cameron: You know, um, Matt just reached out to me out of the blue, I think towards the end of last year and said, Hey, my dad lis­tens to the show and I’ve been lis­ten­ing to the show and I did­n’t believe it. So I. Build a sys­tem to test it. holy hell, it kind of works. Um,

[00:06:08] Tony: How could you not believe some­one who down­loaded Sein­feld scripts in the 1990s

[00:06:13] Cameron: yeah,

[00:06:13] Tony: at a Box Hill Inter­net Cafe, right? Yeah.

[00:06:17] Matt: Well, I think there’s some­thing to be said for the fact that there’s so much per­haps bad finan­cial advice out there these days that it’s, I mean, it’s, it’s noth­ing against you guys. It’s more of just a gen­er­al skep­ti­cism against, you know, I think prob­a­bly, obvi­ous­ly you guys res­onat­ed with me a lot in the way you guys would.

[00:06:36] Matt: Talk­ing about things, prob­a­bly Tony, you know, like a very long, mature invest­ing career. But even still, I think there’s a healthy dose of skep­ti­cism in me. I’ve got an engi­neer­ing back­ground. So, um, that, that need to test it def­i­nite­ly came up. Um, but yeah, I think I, I orig­i­nal­ly heard you guys talk­ing about doing a bit of regres­sion test­ing.

[00:06:57] Matt: And at the same time, I was sort of work­ing on some­thing and that was about the point where I was like, Oh, Maybe it would be good to reach out. And I think I can, at least, I don’t know, Tony, maybe you’ve looked at a few bits and pieces, but the feed­back you guys are giv­ing back to me has then been real­ly use­ful to make it even bet­ter.

[00:07:09] Matt: So I think that was sort of the turn­ing point on why I reached out in the first place.

[00:07:15] Cameron: Well, I’m glad you did. Uh, and you know, it’s been fan­tas­tic to work on it and also inspir­ing just to see some­body who can code. We’ve had a few guys code up dif­fer­ent things, but, um, you cod­ed yours in Python and sent it to me and I’d been doing a bit of Python. I was like, Oh, wow, if you could do this in Python, that’s amaz­ing.

[00:07:34] Cameron: Like we could, we could prob­a­bly get some­thing up and run­ning here as a result of this, that we can, we can make it work and we’re con­fi­dent that it’s deliv­er­ing the right result. We might be able to make it avail­able to our sub­scribers at some point and, um, sim­pli­fy their lives. But let’s, let’s talk about the regres­sion test­ing sys­tem and, um, have a bit of a chat about where it’s at.

[00:07:56] Cameron: And, uh, you know, I’m sure Tony’s asked me a lot of ques­tions about, where it’s at and how it’s work­ing and you know what the next steps are that kind of stuff and you’ll be able to answer those bet­ter than me but uh before we hit you with a bar­rage of ques­tions why don’t you tell us a lit­tle bit about your­self you said you’ve got an engi­neer­ing back­ground uh what’s what kind of engi­neer­ing civ­il

[00:08:22] Cameron: Um,

[00:08:23] Matt: Um, elec­tron­ics. So it’s, it’s very soft­ware adja­cent. Um, so I dun­no, the, the soft­ware is usable. It’s not def­i­nite­ly, um, you know, too. Like the most per­fect piece of code by any stretch of the imag­i­na­tion. I car­ried out of a neces­si­ty, not so much as like per­fec­tion sort of thing. So, um, engi­neer­ing elec­tron­ics back­ground, but yeah, a bit of soft­ware, which has been use­ful.

[00:08:48] Matt: Um, I don’t know, there’s not much to say about myself. Uh, I’ve had, I guess, a mixed career on invest­ing so far. I’ve invest­ed a few times in the past, based prob­a­bly more on sto­ries. Um, or things that have been told to me, um, which I sup­pose did­n’t real­ly make a lot of sense to me in hind­sight. Um, so, sort of how I end­ed up a bit more inter­est­ed in this space, um, yeah, away from that, elec­tron­ics engi­neer, been work­ing for five, six years, that sort of thing, in indus­try, um, work­ing in a com­pa­ny doing, uh, med­ical instru­ments, uh, which is, it’s a cool space.

[00:09:23] Cameron: right so not a coder by pro­fes­sion but

[00:09:27] Cameron: obvi­ous­ly Have done some cod­ing.

[00:09:30] Matt: Yes, pret­ty much.

[00:09:31] Cameron: And how long did it take you to, you know, before you reached out to me in Decem­ber when you had a work­ing sys­tem, how long had it tak­en you to put that togeth­er?

[00:09:39] Matt: I reck­on I start­ed the ear­li­est, like some­where ear­li­er things back Sep­tem­ber, maybe a lit­tle bit even before that. And I sort of went through fever­ish sprints of work­ing on it a lot or giv­ing it up on it a bit when it was­n’t work­ing and then com­ing back to it and back and forth. So it, it start­ed off what should be quite a sim­ple exer­cise.

[00:10:03] Matt: I think doing some­thing like that in Excel, espe­cial­ly with. Like the data that’s com­ing out of Stock Doc­tor, I sort of thought, Oh, it won’t be that much hard­er. Um, but proved to be a lit­tle bit more tricky than I was expect­ing, which it has been inter­est­ing. So yeah, it’s def­i­nite­ly tak­en quite a bit of time to, to devel­op.

[00:10:23] Cameron: Yeah, right. Well, I appre­ci­ate it. So you sent me some notes about things you want­ed to talk about. You want to start off with those and we’ll get into it?

[00:10:33] Matt: Yeah.

[00:10:34] Tony: Well, sor­ry, before, just before we do that, thanks, Matt, for your work. It’s amaz­ing. But the over­rid­ing ques­tion I’ve got is, what stage is this regres­sion tester at? How do we know it’s actu­al­ly not full of bugs and it’s work­ing cor­rect­ly?

[00:10:49] Cameron: Oh,

[00:10:49] Matt: No, I think that’s a real­ly good

[00:10:50] Cameron: it there, Tony. Well,

[00:10:53] Tony: Well, before we get into the results and what’s been test­ed, let’s

[00:10:56] Matt: yeah, yeah.

[00:10:56] Cameron: want to, buy him

[00:10:57] Tony: is it a moot dis­cus­sion or

[00:10:58] Cameron: give him flow­ers, you know, just, okay.

[00:11:02] Matt: Um, yeah. I think it’s, it’s a real­ly good ques­tion and it’s def­i­nite­ly one that, yeah, Cam, you men­tioned before­hand. I think that’s part of the rea­son I, like, prob­a­bly look­ing for a bit of help on that as well. So, I think, yeah, Cam’s done some spot checks on day to day and I’ve def­i­nite­ly done, hey, look at, You know, essen­tial­ly in essence, it’s gen­er­at­ing score­cards week to week his­tor­i­cal­ly, rather than like as a sin­gle once off week.

[00:11:31] Matt: So I have done instances of gen­er­at­ing a score­card from, you know, the regres­sion tester and then com­par­ing that with the results from a cur­rent one. Um, and those are real­ly aligned. Uh, I think there’s prob­a­bly, there’s a few things in three point upturn, not no uptrend. I think there is a lit­tle bit. Off in cer­tain spots.

[00:11:55] Matt: Um, and then the oth­er one is, I think, his­tor­i­cal low P. E. There’s a slight dif­fer­ence in, uh, essen­tial­ly how it treats neg­a­tive P. E. s. Um, because I think Stock Doc­tor or oth­er sites report, some­times they don’t report if it’s a neg­a­tive PE, it just reports it as blank. Um, so whether or not you’re com­par­ing that as, well, you know, if you’ve got a 0.

[00:12:23] Matt: 1 PE, is that the low­est even though there’s been neg­a­tives? There’s a few lit­tle dis­crep­an­cies. I think mine is trad­ing at even if it’s a 0. 1 and it has been neg­a­tive as the low­est because neg­a­tive P’s are bad. So a 0. 1 P is still good, but there’s a few lit­tle dis­crep­an­cies in there like that.

[00:12:37] Matt: Gen­er­al­ly, score­cards, I say, are rel­a­tive­ly close. Um, the sec­ond point is prob­a­bly sur­vivor­ship bias. So as you move back in time, it’s, to me, hard­er and hard­er to get delist­ed stock data. So the fur­ther you go back, you’re poten­tial­ly miss­ing Um, cer­tain shares or cer­tain share per­for­mances. Um, whether, again, whether or not it’s a good thing or a bad thing, it’s hard to tell.

[00:13:01] Matt: In the­o­ry, I think Cam, you men­tioned that, in the­o­ry, you’re prob­a­bly not look­ing, gen­er­al­ly, val­ue invest­ing to buy shares that are, you know, just about to go bust. More like­ly ones that are just about to be acquired, which prob­a­bly is more like­ly to be a pos­i­tive, but it’s hard to say with­out hav­ing that data.

[00:13:19] Matt: And I think I’ve been doing some rework­ing recent­ly to try and get more delist­ed stocks into the back side of it, but I still don’t think it’s per­fect. I know there’s a data source called, the ASX ref­er­ences out to a com­pa­ny called delist­ed. com or some­thing like that, and they actu­al­ly have all the data for every stock that’s ever been, has been, um, so some­where on my to do list is to go through and actu­al­ly have a look, hey, you know, Back 10 15 years, do we, what per­cent­age of the stocks do we actu­al­ly have data on and is that play­ing into it?

[00:13:52] Matt: Um, so that one’s prob­a­bly still a big one to check as well. Um, the third sort of thing I was think­ing, which I haven’t done yet, but I was talk­ing to Cam about before, is poten­tial­ly look­ing at the dum­my port­fo­lio and the, what’s the oth­er one? Dum­my port­fo­lio and light port­fo­lio and run­ning a sim­u­la­tion and see­ing if The sim­u­la­tion would agree with all the buys and sells that Dum­my Port­fo­lio made, um, would be like sort of a third way to test.

[00:14:20] Matt: So yeah, we’ve def­i­nite­ly test­ed on a score­card lev­el. I don’t think I’ve test­ed so much on a longer time peri­od scale, so that might be a next test to run to give bet­ter con­fi­dence. Um, prob­a­bly though, I mean, Cam’s men­tioned in the past, but the one major caveat with how this thing’s run­ning is the What’s it called?

[00:14:42] Matt: Uh, Com­mod­i­ty Sales. So cur­rent­ly I haven’t cod­ed in any com­mod­i­ty sales. Uh, I think pure­ly out of a lazi­ness basis at the start, at some point I did the­o­rize that to some extent the, that data should be priced into the share, even if it is at a lat­er point. So it’s only going to make per­for­mance. worse, if that makes sense.

[00:15:05] Matt: Um, so, you know, ide­al­ly you’re going to get a bot­tom end of the result, not give you like over­in­flat­ed results. Um, again, some­thing else to check, uh, or add poten­tial­ly in the future. Um,

[00:15:20] Tony: So we have what, four or five years worth of score­cards now, so have you run yours and checked those against ours and got sim­i­lar results. Have

[00:15:28] Tony: you?

[00:15:29] Matt: yeah, I haven’t done like a bulk run back of check­ing every sin­gle one, but I’ve done like Pull up a score­card and check like an indi­vid­ual one that that’s rel­a­tive­ly aligned. Um, and that, yeah, it took a bit of work just try­ing to get those actu­al­ly tuned up. There’s a few, there’s a quite a few actu­al­ly real­ly inter­est­ing intri­ca­cies things when you get into that, um, that you real­ly need to think about.

[00:15:51] Matt: So it’s, it’s, it’s been a real­ly inter­est­ing exer­cise to def­i­nite­ly under­stand the invest­ment strat­e­gy. Um, And I guess prob­a­bly to back right up to the start, I guess, just thank you to you, Tony, for, I’m sure there’s a lot of peo­ple out there with sim­i­lar sen­ti­ments, but for shar­ing like all this knowl­edge, I feel gen­uine­ly a lot more edu­cat­ed because of this pod­cast.

[00:16:10] Matt: Um, so I real­ly appre­ci­ate it. I’m sure there’s many peo­ple

[00:16:12] Tony: Nah. Good on you. Thank you. Yeah, but that’s what the com­mu­ni­ty’s for though, isn’t it? Like we’re gonna hope­ful­ly ben­e­fit from what you are doing so we can fine tune. The check­list. So, yeah.

[00:16:22] Matt: yeah, any oth­er spe­cif­ic

[00:16:24] Tony: No, I don’t think so. I mean, I think the par­al­lel run is prob­a­bly going to be the best test and we’ve got sort of dum­my port­fo­lios and we’ve got score­cards going back to be able to par­al­lel run those. So that’s prob­a­bly the best, the best test. I think for what you’re say­ing, it’s pret­ty close. There’s a few dis­crep­an­cies, but it’s rea­son­ably sim­i­lar or good enough to be a

[00:16:42] Tony: guide.

[00:16:43] Matt: Yeah. Isn’t it that you’d rather be rough­ly right than

[00:16:47] Tony: Cor­rect. Yeah. 80 20 rule. Yeah.

[00:16:51] Cameron: Hmm.

[00:16:52] Matt: Um, yeah, I think prob­a­bly the one oth­er thing was in pre­vi­ous shows, I think you’d men­tioned about ADT not being includ­ed. So ADT is includ­ed and it’s doing like the rule of like, you will only buy shares. If the share ADT is six times what the pur­chase price

[00:17:11] Tony: Yeah. Right.

[00:17:12] Matt: Off the top of my head. So that is actu­al­ly baked in there.

[00:17:14] Matt: Um, but yeah, it’s just the caveats I just

[00:17:16] Cameron: Oh, okay. Yeah, right. Cause it’s not, it’s not an option in the GUI that she sent me, but it’s built, it’s cod­ed in, right?

[00:17:24] Cameron: Hard

[00:17:25] Matt: It’s just hard baked.

[00:17:26] Cameron: Okay.

[00:17:27] Matt: I’d be hes­i­tant to add that as a vari­able because you might, you know, Give your­self fake hope. I mean, I guess that that’s anoth­er part of this as well. Right? It assumes you can always buy at the mar­ket rate. Like there’s, there’s no look­ing into mar­ket depths of like, you know, was there a lot of sales on that day?

[00:17:45] Matt: I, it is look­ing at like the gen­er­al vol­ume trad­ed each day. So it’s not buy­ing on days where stocks are delist­ed, but it’s, It’s def­i­nite­ly not like look­ing at mar­ket depth, know­ing what it could or could­n’t buy and how that actu­al­ly impacts the mar­ket. It’s just a whole oth­er world once you get into that lev­el.

[00:18:02] Matt: So I think gen­er­al­ly the rule of six times ADT I’m just using is yeah, the assump­tion that it has neg­li­gi­ble impact on the mar­ket.

[00:18:10] Cameron: if I,

[00:18:10] Tony: what you’re say­ing, if you want to buy a par­cel of shares, it has to be one sixth of the ADT

[00:18:15] Tony: avail­able. Yep. Okay.

[00:18:17] Matt: least

[00:18:17] Cameron: if I want­ed to lim­it the regres­sion test to high ADT stocks, I just make the size of the ini­tial cap­i­tal out­lay 10 mil­lion instead of 20, 000,

[00:18:30] Cameron: right?

[00:18:31] Matt: Yeah. Yeah. So you’ll notice that if you run it with like a mil­lion dol­lars or like 10, 000, it’ll be buy­ing dif­fer­ent

[00:18:36] Cameron: Yeah. Okay.

[00:18:37] Matt: the score cards it’s

[00:18:38] Matt: gen­er­at­ing, the score­cards it has will have. Like all the stocks sim­i­lar to how you guys do and then it’ll only buy from that if it meets um, yeah, essen­tial­ly I think the only extra cri­te­ria at the moment it’s check­ing is ADT and like like I think it’s already that score­card is already vet­ted down to ones that have a pos­i­tive sen­ti­ment like 3ptl.

[00:19:02] Tony: Cool. Are you, are you han­dling div­i­dends at all, or are you just look­ing at the cap­i­tal

[00:19:06] Tony: appre­ci­a­tion?

[00:19:07] Matt: Yeah, I pret­ty quick­ly had to code div­i­dends when I real­ized every­thing was just sell­ing off 3 point trend­line sales as soon as they paid out div­i­dends or

[00:19:16] Matt: like, um, 10 per­cent stop loss­es. So, I was pret­ty hap­py to leave it till lat­er and then it became a bit of a neces­si­ty. So, there’s a bit of mag­ic in there about how it works and it makes a few lit­tle assump­tions.

[00:19:29] Matt: I think it assumes that from the, I’ve got the div­i­dend pay­ment dates. Um, I think it assumes the div­i­dend does­n’t get added to cash for like, I haven’t looked at the num­ber in a while, it’s some­thing like 2 or 3 months lat­er, it does­n’t add the div­i­dend for, and it keeps the val­ue of that added in for 10 point, uh, 10 per­cent stop loss and 3 point trend­line cal­cu­la­tions for the next, you know, year.

[00:19:52] Matt: Three, two, I think it’s prob­a­bly clos­er to two months. I tried to work out an aver­age, but I need to run through the code to look at how long that actu­al­ly is.

[00:20:00] Tony: Okay. It’s a lit­tle bit dif­fer­ent to how we do it, but it’s prob­a­bly not a big thing. Cause we, um, the, usu­al­ly the stock goes down on its ex div­i­dend date, and then you’ll get the pay­ment a cou­ple of months lat­er on the div­i­dend pay­ment

[00:20:12] Tony: date.

[00:20:13] Matt: yeah, sor­ry. From the ex div­i­dend date, it’s adding the div­i­dend val­ue to what you would check a 3PTL against or a 10 per­cent stop loss. So like if it’s paid, if it’s a hun­dred dol­lars stock and it’s paid 10, it’ll still count it as a hun­dred dol­lars worth of. Val­ue.

[00:20:33] Tony: Okay.

[00:20:35] Cameron: And Matt, you have a func­tion in there for doing a buy list for the present date, but we don’t have data in the sys­tem to enable that right yet. How hard is it going to be to take this and turn it into a, run a buy list for this week’s stocks thing?

[00:20:54] Matt: It’s, so there’s not many num­bers that need to be resourced week to week. Um, it’s prob­a­bly not far off, but at the moment, uh, it’s most­ly about your data col­lec­tion.

[00:21:10] Cameron: It’s, it’s look­ing at his­toric data, not cur­rent data.

[00:21:15] Matt: Yeah. So yeah, the process for me at the moment to get data takes a bit. So I don’t have that as like an online process. It’s all stored

[00:21:23] Cameron: Yeah.

[00:21:24] Matt: um, which is prob­a­bly the key thing that would need to change.

[00:21:28] Cameron: I men­tioned to you in an email the oth­er day, I think I’ve just opened up a line of dia­logue with the Fin­Hub I don’t know, New York slash Viet­nam. So, um, they’re, they’re real­ly keen to help us out. So, um, I’ve, I’ve down­loaded a cou­ple of test datasets for

[00:21:45] Cameron: theirs and I’m just going through the process now of try­ing to map the typ­i­cal data that we look at at Stock Doc­tor over to what they’re pro­vid­ing.

[00:21:55] Cameron: And I’m work­ing with Andre Bra­vo, who’s a long time lis­ten­er of my oth­er pod­cast, also a long time QAV lis­ten­er from Cana­da orig­i­nal­ly, but he’s, he’s been I think he’s in, where is he now? I think he’s in Chi­na. I can’t remem­ber where he is at the moment. He’s any­way, he’s trav­el­ing. Might actu­al­ly be in Viet­nam.

[00:22:11] Cameron: He’s trav­el­ing all over the place any­way. Um, uh, and he’s been using Fin­Hub to gen­er­ate a buy list for him­self, just look­ing at Cana­di­an stocks. So, um, he’s hap­py to work with us to sort of fig­ure out how to port the Fin­Stub, Fin­Hub stuff over too. So I’m hop­ing that it went not too far away from being able to go click a but­ton, gen­er­ate a buy list.

[00:22:37] Matt: Does it have all the data you would nor­mal­ly need?

[00:22:41] Cameron: I don’t know yet. I just down­loaded a run yes­ter­day and I’m just start­ing the map­ping process over. So, you know, uh, give me, give me a week and I’ll have an

[00:22:50] Cameron: answer to that ques­tion.

[00:22:51] Matt: Yeah. Cool, nah, I’d def­i­nite­ly be inter­est­ed to have a play around with it.

[00:22:56] Cameron: Good. So, um, you’ve, um, been doing some tests recent­ly. Do you want to talk us through some of the things you’ve dis­cov­ered with your own regres­sion tests?

[00:23:10] Matt: Yeah, um, So I guess, prob­a­bly, first thing is, at least one of the runs I did recent­ly, uh, is in a fair­ly sim­i­lar mod­el to what you’ve been using, Cam. Um, was, uh, gen­er­al­ly about back to 2006 to 2020. End of 2023 run. Um, I’m find­ing that at least there’s a good amount of delist­ed stocks back in 2020, ear­ly 2020s, uh, before, sor­ry, ear­ly two thou­sands.

[00:23:40] Matt: Before 2000. There’s a big dip out. Whether or not it’s just all stuff from before the.com bub­ble got wiped and or when sort of data sources came online. I’m not quite sure. So, um. Yeah, I guess prob­a­bly all that to say that, yeah, as a base run, um, one port­fo­lio, one sort of port­fo­lio is per­form­ing at about 13.

[00:24:02] Matt: 3. Um, I think that was with like 100k start­ing cash. Um, and yeah, so 13. 3 per­cent CAGR. Sor­ry, I was just get­ting my notes up. Um, one inter­est­ing thing is just sort of, have you, actu­al­ly, maybe I’ll share my, and I guess you can prob­a­bly share Images after­wards, is that

[00:24:24] Cameron: Yeah, yeah, I’ll throw some stuff out. But just, uh, just to remind peo­ple when you say the 13. 3 CAGA, if those are the same dates that I’ve been run­ning mine on, the STW CAGA over that time frame was about 2 per­cent for mem­o­ry. So that’s the ref­er­ence point for the 13. 3%.

[00:24:43] Cameron: That’s the

[00:24:44] Matt: Yeah, which I think was real­ly inter­est­ing to me because there was such a dis­crep­an­cy there and I want­ed to try and work out where it actu­al­ly hap­pened, right? So graph I’ve got here is sort of try­ing to plot CAGR over time or it’s real­ly just the last year’s worth of return rates. Um, and I mean, the oth­er sort of idea I want­ed to check was, Are we, like, is QAV out­per­form­ing the mar­ket con­sis­tent­ly across time, or is it, like, beat­ing it at cer­tain points, which, like, real­ly kills it, um, into, like, over­drive?

[00:25:21] Matt: Um, and yeah, I thought this was just quite an inter­est­ing graph, um, gen­er­al­ly is fair­ly above the mar­ket rate across time, with prob­a­bly a few points notably, um, sort of? Around here. So end of 20, uh, 20, 21 to 2022 seemed to be quite low. Again, maybe it was, this is a 20 stock port­fo­lio, so it could just be one stock tak­ing a dive if it was real­ly heav­i­ly weight­ed.

[00:25:47] Matt: Um, but yeah, def­i­nite­ly inter­est­ing to see that it’s not just like one peri­od of extreme growth. It seems to be fair­ly con­sis­tent­ly above.

[00:25:56] Cameron: This is real­ly, this is a real­ly inter­est­ing graph, actu­al­ly, because it does, so what we’re look­ing at, folks, is a graph that is com­par­ing the S& P ASX 200 to the QAV regres­sion test results. And what’s the, what’s the green one, Matt? QAV

[00:26:17] Cameron: 0. 28?

[00:26:18] Matt: green one is, is using a score of 0.2, um,

[00:26:23] Matt: and. Only hav­ing 8 stocks in the port­fo­lio. So, 8 stocks is rough­ly, at least with 100k start­ing, what I found, like just man­u­al­ly check­ing to get enough buy­ers to actu­al­ly get some per­for­mance going, oth­er­wise it was just hold­ing too much in cash because it could­n’t buy enough.

[00:26:42] Matt: So at the moment, it’s still buy­ing like set size parcels to try and get up to a port­fo­lio size. So inter­est­ing­ly, that one did out­per­form, um, most­ly again, quite con­sis­tent­ly. So I think that what that says to me is that if you can buy high­er up on the buy list, do so, which is per­haps a lit­tle bit counter to what you’ve said, Tony, it’s some­times that you’re hap­py to buy Low­er down the list, which is inter­est­ing.

[00:27:08] Matt: Um, but again, this is maybe just one test. So brain or soul.

[00:27:12] Tony: Well, I don’t know if it’s a grain of salt, but there’s a, I mean, so the CAGR for that sit­u­a­tion of H stocks and QAV score of cut­off of 0. 2 was 15. 9%. Yeah, ver­sus the nor­mal QAV, which was 13 point

[00:27:24] Tony: some­thing.

[00:27:25] Matt: So it’s not sub­stan­tial

[00:27:26] Tony: No, that’s right. But that, and the ques­tion I’ve got about that is whether that’s due to the QAV cut­off or due to hav­ing an H stock port­fo­lio, because a con­cen­trat­ed port­fo­lio over the longer term should get a bet­ter return.

[00:27:40] Tony: The larg­er the port­fo­lio, the more it’s going to get. Go back towards the mar­ket index per­for­mance. So it could be, could be both. Could be a bit of each. I don’t know.

[00:27:49] Cameron: But I feel

[00:27:50] Tony: yeah.

[00:27:50] Matt: an inter­est­ing

[00:27:51] Tony: So it’d be good to, any­way, the way to test it is to have a QAV 0. 1 cut­off port­fo­lio of eight stocks and com­pare it to a QAV 0. 2 cut­off of eight stocks and see the dif­fer­ence there.

[00:28:04] Cameron: Matt, I’m inter­est­ed in look­ing at this chart. You’ve got the, so the blue dots are the regres­sion test results, um, using our nor­mal met­rics, and the red is the ASX 200, like the STW, I’m assum­ing. And, um, so if, uh, It’s return­ing 2 per­cent CAGR over this time frame, as I men­tioned before, ver­sus the 13. 3 per­cent for the regres­sion test.

[00:28:33] Cameron: When you look at the dots on the chart, there are times, like in 2007, 2010, 2017, 2020, when the QAV port­fo­lio mas­sive­ly out­per­forms the ASX200. Uh, or sig­nif­i­cant­ly in some cas­es, mas­sive­ly in oth­er cas­es, but the rest of the time, they seem to be much of a much­ness, they’re sort of togeth­er, um, but when you see it here, and some­times it under­per­forms, like in the last cou­ple of years, which we’ve, we’ve expe­ri­enced that too with our real port­fo­lios, um, the light port­fo­lios and our super port­fo­lios in par­tic­u­lar, but it’s inter­est­ing to see when you, when you lay it out visu­al­ly, Over time, you can see that it is very spiky.

[00:29:18] Cameron: There are some­times quite, you know, actu­al­ly, out­side of the last cou­ple of years I don’t think there are many peri­ods here where the QAV port­fo­lio is under­per­formed. For a lot of the time they’re sort of hov­er­ing around each oth­er, with the blue slight­ly on top of the red. But then sev­er­al, you know, 1, 2, 3, 4 peri­ods I’d count in this, what is it, like a 17 year peri­od where the QAV port­fo­lio sig­nif­i­cant­ly out­per­formed the index.

[00:29:54] Cameron: So it’s those four peri­ods of time where most of the out­per­for­mance is gath­ered for four peri­ods, prob­a­bly of a year each, give or take over 17 years. Where the out­per­for­mance real­ly comes from. Am I read­ing this right, Tony?

[00:30:16] Tony: Well, as far as I can tell, yeah, but I guess there’s some ques­tions about what we’re see­ing here. So what does each dot rep­re­sent on the graph

[00:30:23] Tony: here?

[00:30:24] Matt: Yeah, so it’s If you, how the cal­cu­la­tions done, is it say­ing, so take like a point at 2007, it’s say­ing where is the port­fo­lio at right now com­pared to where it was a year ago. So look­ing at like the last year per­for­mance, I did think about doing an aver­age over time, but I fig­ured it would get too bogged down by the end of it.

[00:30:45] Matt: I want­ed to keep some­thing that was look­ing year to year. How is like the year­ly per­for­mance doing? So just keep in mind when you’re look­ing at a point here, it’s the per­for­mance between 2006, 2000 to 2007.

[00:30:56] Tony: It’s a month­ly rolling 12 month per­for­mance.

[00:31:00] Tony: Yeah, okay.

[00:31:01] Tony: so most of the time, and so the, the X axis is, that’s the CAGR. So for exam­ple, if I look at the very first col­umn, the first red dot looks like it’s per­formed at about 2. 25 CAGR, is that

[00:31:18] Tony: right?

[00:31:19] Matt: yeah.

[00:31:20] Tony: But then there’s a green dot way above it, which is per­formed at 1.

[00:31:23] Tony: 8, 1. 9 per­cent CAGR.

[00:31:28] Tony: Is

[00:31:28] Matt: Oh, yeah, yeah, yeah.

[00:31:30] Cameron: Well, that’s six

[00:31:30] Tony: so that’s the year­ly per­for­mance for that month, is that

[00:31:33] Tony: right?

[00:31:34] Matt: It’s the, it’s, I think it’s gen­er­at­ing it based, I think each dot is in about a week­ly cadence. Um, and it’s, yeah, it’s per­for­mance over the last year rel­a­tive to that date.

[00:31:46] Tony: Okay. Because I would have expect­ed to see some like. So the x axis is in per­cent­age, I think, isn’t it? Is that the,

[00:31:55] Tony: that’s year­ly CAGR from that date. So it’s labeled 0. 3, 0. 8, 1. 3, 1. 8, what­ev­er it is. But if it’s a rolling 12 month CAGR, would­n’t there be like 10 per­cent or 20 per­cent be the amounts we’d expect to

[00:32:12] Tony: see?

[00:32:13] Matt: Yeah, sor­ry. So to clar­i­fy, this is a run start­ing in 2006 and I’ve only start­ed the year­ly results from the first year into the sim­u­la­tion, if that makes sense. So there is a sim­u­la­tion that runs 2006, 2007. And then as soon as it gets to the end of the first year, It starts report­ing on per­for­mance. So

[00:32:34] Tony: Yeah, no, I get that. I’m just, just try­ing to under­stand the graph. So I’m just pick, just pick a dot, say the first blue dot, for exam­ple. Which is the QAV per­for­mance, um, looks like the CAGR, the way I read this is it’s about 0. 5. Is that, that’s 0. 5 per­cent or is it

[00:32:51] Tony: 50%?

[00:32:52] Matt: Oh, sor­ry. 50%. Sor­ry. I do all my cagas in point form.

[00:32:57] Tony: Ah, okay. That makes

[00:32:58] Matt: would be a

[00:32:59] Matt: hun­dred per­cent. Sor­ry. Sor­ry. Sor­ry. Sor­ry. Yeah. So this is like, this is like. Extreme out­per­for­mance, where it’s, you know, a hun­dred per­cent, this is like below

[00:33:08] Matt: zero is. Yeah, Sor­ry, my bad.

[00:33:11] Tony: No, that’s all right. I’m under­stand­ing it bet­ter. Um, yeah, no, it’s, it’s, it’s a real­ly inter­est­ing graph. Um, basi­cal­ly we’re see­ing lots of, so we’ve got three col­ors. A red dot, which is the ASX, and is that the, um, ASX includ­ing div­i­dends or just the ASX cap­i­tal?

[00:33:27] Matt: Oh, it is a good point, actu­al­ly. It might, I don’t know, it does, I sup­pose, ques­tion back, it might be a prob­lem with how I’ve com­pared this. Does the ASX 200 nor­mal­ly include

[00:33:39] Tony: No, ASX JO, I think it is, includes div­i­dends, and the STW, which is a code that accu­mu­lates div­i­dends, does. If it’s ASX 200, it’s just the cap­i­tal per­for­mance of the share mar­ket, with no div­i­dends tak­en into

[00:33:55] Tony: account.

[00:33:56] Matt: Inter­est­ing. All right. Then we have to, some­thing I’d have to dou­ble check which one I grabbed.

[00:34:00] Tony: Okay,

[00:34:01] Matt: can’t quite remem­ber off the

[00:34:02] Tony: alright. But even so, like in that first year, for exam­ple, the red lines are all clus­ter­ing around sort of, High 20s as the return for the ASX. This is in 2007 to 2008. QAV is clus­ter­ing at about 80 per­cent and then the green which is QAV with 0. 2 is clus­ter­ing, you know, way above that 1. 3, 1. 8. So near­ly a dou­bling or a tripling of the cap­i­tal over that 12 months. That’s how I’m read­ing it.

[00:34:34] Matt: Yep. Yep. Yeah.

[00:34:35] Tony: Yeah, so what we, what we’re see­ing in this graph is a red line which con­tin­ues to sort of go for­ward in the band of, uh, prob­a­bly cap­ping out at about 0. 3, so a 30 per­cent rise in some years and about a sim­i­lar sort of drop in some, but prob­a­bly around a 20 per­cent draw­down for the ASX Uh, the blue dots, which is the QAV nor­mal cur­rent process, is often­times track­ing the ASX, but in some years mas­sive­ly out­per­form­ing, and then using a QAV of 0.

[00:35:08] Tony: 2 is out­per­form­ing that, is how I’m read­ing this.

[00:35:12] Cameron: with an eight stock

[00:35:13] Matt: It’s a good

[00:35:14] Matt: sum­ma­ry.

[00:35:15] Tony: Okay.

[00:35:17] Cameron: Well, I tell you the big take­away for me for this is how pow­er­ful graph­ing the com­par­isons or track­ing the com­par­isons, you know, week to week. Um, or even if it was just month to month over a long peri­od is, and then graph­ing those just to see where QAV, I mean, I know we’ve done yours, Tony, over what­ev­er, 20 years side by side, um, but sort of mak­ing it a lit­tle bit more gran­u­lar and graph­ing it out like this is, um, real­ly inter­est­ing and real­ly telling.

[00:35:48] Cameron: And, you know, I remem­ber we’ve seen the same things with yours. Like it is, there’s been a cou­ple of peri­ods over the time where it mas­sive­ly out­per­forms and the rest of the time you just. Hang­ing in there wait­ing for one of those cycles to come around again, right?

[00:36:01] Tony: Yeah, because you just can’t pre­dict when they’re going to come,

[00:36:06] Cameron: It’s kind of a

[00:36:07] Tony: or at least I haven’t been able to. Yeah,

[00:36:11] Tony: yeah.

[00:36:12] Matt: I think that’s some­thing I’m def­i­nite­ly still com­ing to terms with, so I def­i­nite­ly don’t come from a finance back­ground myself, so still a lot I’m learn­ing, um, but yeah, I guess I prob­a­bly what did pull these up to sort of think like, you know, is there any­thing, is there any like thing we can infer from dif­fer­ent peri­ods in time, like I know we’ve talked, or you guys have talked in the past about like val­ue cycles or growth cycles, um, Yeah, but I guess it’s just, you can’t time the mar­ket or pre­dict the mar­ket.

[00:36:43] Matt: So you just have to go along for the ride.

[00:36:45] Tony: Well, I mean, you could over­lace a few things onto this. I know you’ve got a graph some­where else of the mar­ket PE, so it’d be inter­est­ing to

[00:36:51] Tony: see.

[00:36:52] Matt: Hmm.

[00:36:53] Tony: An over­lay on that. We’ve had lis­ten­ers who talk about, um, using a three point trend line for the A SX. So it’d be inter­est­ing to over­lay that and see if it’s a buy­er or a sell, you know, dur­ing peri­ods of out­per­for­mance or under­per­for­mance, there could be some.

[00:37:08] Tony: Ben­e­fits to doing that.

[00:37:11] Matt: That’s a real­ly inter­est­ing point. Um,

[00:37:14] Tony: But yeah, I think, I mean, one of the things we prob­a­bly need to do, Cam, is put a shout out out for any­body who does have a stats back­ground to take a look at this and give us their input. And the per­son that comes to mind is Andrew Flit­man, who helped us with one of the ear­ly spread­sheets in QAV, the Flit­man mod­el, um, who I think does have a stats back­ground, so it’d be good to get some­one’s input like that.

[00:37:37] Cameron: Yeah, I agree. Like I think, um, it’s, yeah, some very pow­er­ful stuff we can do once we have this data, get peo­ple that are smart to ana­lyze it for us.

[00:37:50] Tony: because the first thing that comes to mind is we prob­a­bly should run this, right, I’m going to use the term Monte Car­lo sim­u­la­tion and lis­ten­ers will know I’m pret­ty fast and loose with my stats terms, but what I mean is, you know, try and ran­dom­ize the start dates and the port­fo­lio sizes and things like that and just run the, just con­tin­u­ous­ly run dif­fer­ent sim­u­la­tions and see what the results are, the dif­fer­ent time peri­ods, dif­fer­ent, you know, dif­fer­ent start­ing dates, oth­er vari­ables that we can change and just try and get some some knowl­edge from

[00:38:20] Tony: that.

[00:38:20] Cameron: Mm.

[00:38:21] Matt: yeah, I very much agree. This is, yeah, I sup­pose a good caveat for this, that this is a one off instance. This isn’t a guar­an­tee. This is a sin­gle sit­u­a­tion and. Actu­al­ly hav­ing the prob­a­bil­i­ty to prove that, you know, in any giv­en sit­u­a­tion, this is the per­for­mance you are like­ly to get or the band of which is a com­plete­ly dif­fer­ent exer­cise, which is, um, sub­stan­tial­ly hard­er.

[00:38:45] Matt: Um, but not out of the realms of pos­si­bil­i­ty, but yeah, def­i­nite­ly some­one with, yeah, a bit of maths and stats hav­ing all of this, but yeah, be

[00:38:53] Tony: There’s the oth­er thing too, like we’re talk­ing about a port­fo­lio test which start­ed in 2006 and you can see the very first sig­nif­i­cant devi­a­tion from the sort of nor­mal trend line is GFC. Every­thing drops dra­mat­i­cal­ly. Um, ASX does, QAV does, every­thing drops. If you start after the GFC, I’m sure you’re going to get a much high­er tag­ger than what­ev­er it was, 13.

[00:39:17] Tony: 5 or 15. 9.

[00:39:18] Cameron: Mm. Yeah. So start­ing at what, 2010, when things have recov­ered a

[00:39:23] Tony: Yeah, yeah.

[00:39:26] Cameron: Well, one of the great things about hav­ing Mat­t’s sys­tem avail­able is it’s not that hard now to just run a whole series of regres­sion tests with lots of dif­fer­ent dates, right? We just plug in the start and end dates and off it goes.

[00:39:42] Matt: Yeah. You’ll be, you’ll be glad to know Cam I’ve actu­al­ly set up now. So it’ll, it’ll queue up sim­u­la­tions. So if you put in one, click run, and then you can put in a new one, click run, and you just put in like 20, and then leave

[00:39:54] Matt: it to run overnight. Yeah, I know. When I start­ed run­ning a lot, I was like, nah, I got­ta fix this, take two.

[00:40:00] Cameron: That’s very sexy. All right. Well, uh, what else, Matt, is there any­thing else you want­ed to, uh, talk about vis a vis these things?

[00:40:12] Matt: I’ll quick­ly just maybe men­tion two more just as a quick thing. Um, one was I had an idea of try­ing to rotate the port­fo­lio once a year, just try and buy from the top of the list, sell every­thing, um, not sub­stan­tial­ly dif­fer­ent to the QAV mod­el, I can’t remem­ber what the exact per­cent­age is, but it’s very much in the same ball­park, so, um, a good les­son might be any time to jump in is fine. Um, which yeah, I was, I guess I’ve always won­dered, is it bet­ter, you know, is there always a bet­ter invest­ment out there if you’ve been hold­ing some­thing for a long time and it’s not doing much, but it does­n’t seem there’s too much in it. It seems very, very sim­i­lar. So, um, that’s my prob­a­bly two cents from, from one oth­er run.

[00:40:55] Tony: Yeah, that’s, no, that’s inter­est­ing, Matt, because you said, and your num­bers back it up, that the QAV 0. 2 cut­off is a bet­ter per­for­mance than QAV is with a 0. 1 cut­off, which you think would bear out if you were sell­ing the port­fo­lio on a rotat­ing basis and buy­ing from the top, because you’re always buy­ing towards the top rather than buy­ing and hold­ing for a while.

[00:41:17] Tony: So, it’s sur­pris­ing that it did­n’t show

[00:41:19] Tony: that.

[00:41:20] Matt: But this may still be buy­ing some, like Sac­ristan might be buy­ing some 0. 11s or some 0.

[00:41:25] Tony: Oh, I see.

[00:41:26] Matt: to fill out the port­fo­lio

[00:41:27] Tony: is just the high­est

[00:41:28] Matt: does­n’t guar­an­tee that like, The one time it buys each year is the creme de la creme.

[00:41:32] Tony: What kind of port­fo­lio con­struc­tion rules do you have? Are you dou­ble buy­ing? Are you just buy­ing one stock and not adding to that posi­tion? What’s the

[00:41:39] Matt: One, yeah, only allow­ing one stock in the port­fo­lio. I think the base is 20, but you can vary it to what­ev­er you want. So yeah, 20 and you can only have one of each.

[00:41:50] Tony: Okay, so there are peri­ods when you’re in cash, I guess, a bit, a fair bit then.

[00:41:54] Matt: It does hap­pen. I did have a look at it actu­al­ly, def­i­nite­ly around, you know, 2009 or, you know, sev­en to eight is like, It drops to almost like 10 in the port­fo­lio in cer­tain instances, but gen­er­al­ly it’s stay­ing up around 19. Like it’s pret­ty good at keep­ing it up and it has some rules as well that if you sold a stock and you’ve got extra cash.

[00:42:17] Matt: It goes to larg­er buy­ing sizes and small­er buy­ing sizes. You know, if you’ve real­ly decreased your port­fo­lio size, it’s a lit­tle bit rudi­men­ta­ry, but it, it does the job to keep the port­fo­lio most­ly filled up. And I mean, I guess you don’t want to, I real­ly don’t want that sit­u­a­tion. And it has hap­pened in a few iso­la­tion tests where I’ve test iso­lat­ed vari­ables, but if you’re keep­ing things in cash, like, yeah, it’s just, you know, It’s not time in the mar­ket in that sit­u­a­tion.

[00:42:41] Tony: Yeah, okay. Um, so, and are we able to play around with those kinds of rules? Like, you know, things I want­ed to test are rules that involve, for exam­ple, pyra­mid­ing, which is what one of our inter­view­ers sug­gest­ed would help us. Like, so we buy dou­ble or triple if some­thing’s going up. We increase our posi­tion along the way as well to ben­e­fit from that.

[00:43:04] Tony: Buy­ing from the top you’ve cov­ered, I guess. Port­fo­lio size I think needs some work, whether we can play around with a one stock port­fo­lio, a two stock port­fo­lio, a four stock port­fo­lio, dif­fer­ent sorts of port­fo­lios and see if that changes results. I think it prob­a­bly will. Yeah, and whether you test the QAV at 0.

[00:43:25] Tony: 2, but whether we should go the oth­er way as well and put the QAV down to 0. 05, for exam­ple, and see if that works. makes a dif­fer­ence because I know from time to time I can’t find any­thing to buy but there are some big stocks below the cut­off of 0. 1 which are pret­ty tempt­ing from time to time to buy.

[00:43:40] Cameron: I did,

[00:43:41] Matt: Yeah.

[00:43:42] Cameron: I did do that, did­n’t I, Tony? I did that like last week.

[00:43:45] Tony: Did you go below 0. 0, 0. 1 sor­ry?

[00:43:48] Cameron: I did, yeah, let me, um, uh, hold on, let me see, I did, uh, 0. 05, yeah, and it deliv­ered 13. 86, um, ver­sus, uh, 0. 2, which deliv­ered 14. 91. So, and the stock stan­dard was What’s the stan­dard one here? I think this is the stan­dard one, which was, um, 12. 8. So 0. 05 was bet­ter. 0. 2 was even bet­ter than that. And remem­ber then I went to 0.

[00:44:31] Cameron: 3 think­ing, well, if 0. 2 is good,

[00:44:33] Tony: Yeah,

[00:44:34] Cameron: 3, no, 0. 3, it dropped down to 9. 2%. So, but yeah, the

[00:44:38] Cameron: point

[00:44:39] Tony: buy enough stocks.

[00:44:40] Cameron: prob­a­bly, yeah. But the 0. 05 did okay, but not as good as 0. 2.

[00:44:46] Tony: Yeah, but what it says is that if we can’t find stocks at point two, it’s not too bad to drop down the list

[00:44:51] Cameron: Yeah. Right.

[00:44:52] Tony: some­thing, rather than sit­ting cash, yeah, because like what­ev­er it is, 12 per­cent or 13%, it’s still bet­ter than cash at the bank, right, so you’re bet­ter off being invest­ed

[00:45:02] Cameron: uh huh.

[00:45:03] Tony: and low­er­ing the cut­off, okay. Um, yeah, and there’s whole heaps of oth­er vari­ables like that, Matthew, like whether um, uh, we cut off our Prop­Caf at sev­en times, but whether ten times is bet­ter, or whether five times is bet­ter, or whether a hun­dred times is bet­ter.

[00:45:21] Tony: So it’s play­ing around with all these met­rics and try­ing to get a feel for Is the cut­off right?

[00:45:26] Tony: And what do we gain or lose by vary­ing it?

[00:45:30] Matt: Yeah. For sure. Um, yeah, the, the pyra­mid one sounds quite inter­est­ing. I was def­i­nite­ly, I’m actu­al­ly lis­ten­ing to, I think it’s the Intel­li­gent Investor at the moment by Ben­jamin Gra­ham. And he’s, I just was think­ing that, yeah, dol­lar cost aver­ag­ing or like You know, how peo­ple gen­er­al­ly invest in QAV. I don’t know what your lis­ten­er base is gen­er­al­ly like, but I assume there are some at least who will be doing that, like adding to the port­fo­lio at a more con­sis­tent basis based on, you know, maybe hav­ing dis­pos­able income as they go along, or at least it’s prob­a­bly more my sit­u­a­tion.

[00:46:02] Matt: Um, but yeah, I’d be inter­est­ed to build that in as well, where you’re more like adding costs, adding in as you go, um, or wait­ing, I think as well, like even, yeah, wait­ing. I can’t remem­ber which graph I was talk­ing about it for, but there’s also like, uh, Kel­ly cri­te­ria or

[00:46:20] Tony: Yeah, I love the Kel­ly

[00:46:21] Matt: a bit more cer­tain­ly on the stocks you’re more sure on, which I mean, QAV score is almost like that, right?

[00:46:28] Matt: I look at the high­er stocks as hav­ing, you know, bet­ter qual­i­ty, bet­ter price. Um, cer­tain­ly. Per­haps a more prob­a­ble out­come, not nec­es­sar­i­ly,

[00:46:37] Tony: you’re right. So for lis­ten­ers, the Kel­ly Cri­te­ri­on says we should put more mon­ey when we have a bet­ter chance of, a bet­ter edge is the term, a bet­ter chance of suc­cess. So we, yeah, if 0. 2 is a bet­ter score than 0. 1, then we should def­i­nite­ly be putting more, more invest­ments into 0. 2 stocks than 0. 1 stocks.

[00:46:56] Tony: And the ques­tion then is how Well, not nec­es­sar­i­ly dou­bling because Kel­ly Cri­te­ria talks about edge over odds. That’s the way you cal­cu­late it. So what’s the edge of buy­ing a QAV 0. 2 port­fo­lio ver­sus a 0. 1? It sounds like it’s about 2%. So, and then what’s the odds? Um, the odds is the return of 15%. So you put 15 over 2, and that’s what you should be putting into the stocks, which are above, um, 0.

[00:47:20] Tony: 2.

[00:47:22] Cameron: and,

[00:47:22] Tony: that’s how Kel­ly works.

[00:47:23] Cameron: and how, and what does that mean in Eng­lish?

[00:47:30] Tony: Well, if you have a, if you have a hun­dred dol­lars doing

[00:47:32] Cameron: Klin­gon to me, Tony.

[00:47:35] Tony: I could pull out my text­book on Kel­ly Cri­te­ria if you like, it’s a won­der­ful stats read. It’s a won­der­ful stats read. Um, and, and, it’s, it’s a great top­ic, I love it. Uh, so, okay, if you’ve got 100 to invest, how much do you put into each stock? So, um, you should put more into the ones that are going to return you the most.

[00:47:55] Tony: And so, if we say the return is the CAGR, And then we say, how much is stocks with a QAV score of 0. 2 return­ing bet­ter than QAV scores of 0. 1? That dif­fer­ence is the edge. So you put the edge over the return. So, rough­ly speak­ing, I think Matt said before, a port­fo­lio with QAV. 2 or bet­ter return 15. 5 per­cent and the nor­mal one return 13.

[00:48:21] Tony: 5%. So it’s a 2 per­cent edge. So, um, we should be putting 2 per­cent over 15%, which is going to be what, 7%, um, into our pur­chas­es for QAV. The port­fo­lio with QAV 0. 2 or bet­ter, and then we should be putting less into the 0. 1 scores, which would be, well it’s actu­al­ly going to be, um, we’ll say there’s no edge there, so you should­n’t put any in real­ly, but, um, you’ll, I’d have to sit down with a pen and paper and work it out, you put less into those, in the port­fo­lio 0.

[00:48:53] Tony: 1, um, scores.

[00:48:55] Matt: The thing we prob­a­bly actu­al­ly need to do is again, like this is a one off run, so it’s, it’s not exact­ly prob­a­bil­i­ties, but yeah. Ah,

[00:49:02] Tony: Matt, I’ve worked out the edge wrong, the edge is how much it beats the, the ASX. Yep. Yeah. So it’s, it’s, it’s the out­per­for­mance of the ASX over a 2 per­cent dif­fer­ence in buy­ing 0. 2 stocks ver­sus 0. 1 stocks. But there’s still a case to put some mon­ey into the 0. 1 stocks. It’s just less.

[00:49:25] Matt: inter­est­ing as well, cause I think we’d actu­al­ly have to cal­cu­late. Like the, the 13. 3 per­cent is for stocks that are in 0. 1 to 0. 2 and above 0. 2 as well. Like the above

[00:49:36] Matt: 0. 1 still

[00:49:37] Matt: includes 0. 2s. So we’d need to run a spe­cif­ic run of how the 0. 2 is actu­al­ly specif­i­cal­ly per­form­ing, which is a very inter­est­ing activ­i­ty nonethe­less, I think would be.

[00:49:47] Matt: Might have to play around with that. Sounds cool.

[00:49:48] Tony: we should do a pod­cast on edge over odds at some stage, Cameron. It’s a real­ly fas­ci­nat­ing part of invest­ing.

[00:49:55] Cameron: Well, we did do a Kel­ly Cri­te­ri­on episode a long time ago, but

[00:49:58] Tony: Oh, okay. We’ve done it already.

[00:49:59] Cameron: it. Yeah.

[00:50:01] Tony: Same.

[00:50:01] Cameron: I’ve

[00:50:01] Cameron: for­got­ten every­thing about

[00:50:02] Matt: might need to go back and lis­ten to it. I was going

[00:50:05] Cameron: well, look, I tell you the, the. The main take­away from me out of all of this, Matt, is just, I mean, how excit­ing it is when we can apply even high­er degrees of sci­ence to test­ing all of these sce­nar­ios, which is, you know, some­thing that Tony’s been, um, doing say­ing he want­ed to do for the last five years, um, and you’ve brought us, uh, mas­sive­ly clos­er to being able to test this stuff and play around with it and see what this vari­able does and that vari­able so we can be push­ing the enve­lope with all of this stuff.

[00:50:40] Cameron: So very, very excit­ing stuff. I feel like a com­plete nerd look­ing at this stuff.

[00:50:47] Tony: Wel­come to my world. Because I’ve been, yeah, because I spent a fair bit of mon­ey try­ing to get this to this kind of lev­el and this is great. Can I jump ahead? There’s a graph you sent me called QAV iso­lat­ed met­rics.

[00:51:00] Cameron: Yeah, I want­ed to ask that one too.

[00:51:02] Tony: Matt? Yeah, but I was kind of strug­gling to read it and I want­ed to dou­ble check. It’s all, um, I know peo­ple can’t see this, but it’s all col­or cod­ed and I just want to get the col­ors right to what they per­tain

[00:51:12] Matt: a, it’s an absolute mess. I spent, I reck­on, two hours the oth­er day just try­ing to get some­thing like, that would look half nice with this mini met­rics. Gave up in the end and just end­ed up gen­er­at­ing as well, like 20 sep­a­rate graphs. So it was

[00:51:27] Matt: actu­al­ly, so apolo­gies for

[00:51:29] Tony: no, that’s all right. I won­der if these graphs would look bet­ter just as like we’re used to see­ing like a month­ly, um,

[00:51:37] Cameron: The

[00:51:37] Tony: line graph rather than the dot plot. Yeah,

[00:51:40] Matt: Yeah, I Admis­sion is that there’s some weird anom­alies still in the data where it will still report the port­fo­lio val­ue, say on like a pub­lic hol­i­day, and it reports it as being like prac­ti­cal­ly noth­ing just because of the way the pric­ing data works. So though, so if you look at, I don’t know, the iso­lat­ed met­rics graph, you see all those dots down low on from about 2017.

[00:52:06] Matt: Um, It must be that the price of data only goes that way. So I, being lazy and not actu­al­ly fil­ter­ing my data out, I just did dot graphs, but it’s a fair com­ment.

[00:52:17] Tony: No, that’s fine. So we’ve got a graph here, uh, since 2006 of iso­lat­ed met­rics and their per­for­mance. Maybe just take us through that. What’s the orange and the pur­ple?

[00:52:26] Tony: that have

[00:52:27] Matt: So

[00:52:27] Matt: the orange is the, it’s essen­tial­ly what the con­sen­sus share price is. So look­ing at that one.

[00:52:36] Tony: So if the share price is cur­rent­ly below con­sen­sus fore­cast

[00:52:40] Matt: Yes, cor­rect.

[00:52:41] Tony: that’s inter­est­ing. That’s, that’s the most impor­tant met­ric. Is

[00:52:44] Tony: it?

[00:52:45] Matt: Well, I guess prob­a­bly the thing to say again with this one is it is only one run. So I am notic­ing that, like, I’ve done one of these runs in the past, and I think Cam, you’ve done them as well. They seem to be vary­ing what comes up a lit­tle bit. So I am won­der­ing if this one needs a lit­tle bit more, like, adjust­ment for port­fo­lio sizes, like larg­er and small­er port­fo­lios, dif­fer­ent time peri­ods.

[00:53:07] Matt: So we’ll caveat all that with say­ing that, um, yeah, I’m not, like, Yeah, I think there prob­a­bly needs to be a bit more of a prob­a­bil­i­ty approach to the iso­lat­ed met­rics is the take­away. But in this instance, that was, that was the case, the con­sen­sus, the con­sen­sus tar­get.

[00:53:24] Tony: rea­son why it sur­pris­es me is because one of my crit­i­cisms of using that met­ric and I put it in is that, you know, some­thing like 70 per­cent of stocks are always less than the con­sen­sus fore­cast because stock bro­kers put togeth­er the fore­cast and I want you to buy the stock. So it’s, it’s, it’s hard to, it’s hard to, it’s almost like the whole mar­ket is going to be in that test.

[00:53:45] Matt: Which I guess prob­a­bly keep in mind as well here. So when we are iso­lat­ing the met­rics, it’s the iso­lat­ed met­ric as essen­tial­ly the qual­i­ty score. Um, so you still have three, it’s still trad­ing on three point trend lines and it’s still trad­ing on like, The divi­sion by the price to cash flow. So you still like price to cash flow still is an impor­tant part of each one of these runs.

[00:54:09] Matt: And so is the like three point trend lines. Um, I could, I, I guess I prob­a­bly don’t even know where to start try­ing to code out three point trend lines because it’s like, when do you buy or sell? I guess just based on that, but here, yeah, they are still part of it. So it’s, it’s the com­bi­na­tion of those two fac­tors plus the iso­la­tion vari­able.

[00:54:30] Tony: Um, cause I think the more inter­est­ing ques­tion about con­sen­sus fore­cast is what’s the per­for­mance for stocks that don’t have one. Because my expe­ri­ence is they tend to out­per­form because we’re kind of ahead of the curve and they’re undis­cov­ered in terms of the val­u­a­tion until, you know, fund man­ag­er comes along or the stock bro­ker comes along and gets inter­est­ed in them.

[00:54:49] Cameron: So, look­ing at stocks, like, with all of the oth­er met­rics, but just leav­ing out con­sen­sus fore­cast?

[00:54:57] Tony: No, um, only include those stocks along with all the oth­er met­rics, but, but the ones that don’t have a con­sen­sus fore­cast.

[00:55:03] Cameron: Yeah. So all the nor­mal met­rics, but they don’t have a con­sen­sus fore­cast. And they’re mea­sur­ing that against the nor­mal

[00:55:13] Tony: Nor­mal QAV.

[00:55:14] Tony: Yeah.

[00:55:14] Cameron: Yeah. Right. I was just look­ing at my regres­sion test­ing list. I haven’t actu­al­ly iso­lat­ed a con­sen­sus. Um, I did­n’t get to, I haven’t got to that

[00:55:24] Cameron: one yet. So that’s inter­est­ing.

[00:55:25] Matt: So it could be in line

[00:55:26] Tony: So the ques­tion that begs for me is, is that nor­mal QAV? Because like, I think some­thing like 70 or 80 per­cent of stocks are going to have a price less than con­sen­sus fore­cast. You’re almost includ­ing the whole uni­verse in this

[00:55:39] Tony: test.

[00:55:40] Matt: Yeah, quite pos­si­ble. Um, which, well, yeah, a whole uni­verse still with high­est price to cash flow

[00:55:48] Tony: Gotcha. Yep. Yep.

[00:55:50] Matt: maybe a three point

[00:55:50] Tony: Okay. It’s inter­est­ing

[00:55:51] Tony: though.

[00:55:52] Matt: Yeah.

[00:55:52] Tony: And what’s the, so that’s one of them. There’s anoth­er met­ric which is doing a sim­i­lar sort of return high

[00:55:56] Tony: up.

[00:55:57] Matt: So it’s, it’s wit­ti­ly one that I was not con­vinced on in the past, but, uh, Record Low PE, um, hap­pened to shoot the lights out on this one, um, as well, which is def­i­nite­ly inter­est­ing. When in the past, I had­n’t had the. Best results with this one, but in this instance, it, yeah, again, seems to have done real­ly well, uh,

[00:56:20] Tony: It does­n’t sur­prise me again because uh, if it’s got a low, if it’s got a low prop calf, it prob­a­bly has a low PE

[00:56:26] Cameron: Well, it’s inter­est­ing. I, I have test­ed both of those. I’ve iso­lat­ed Record Low PE and Prop­Caf and they came out very close. Record Low PE came out at 10. 9. Prop­Caf came out at. 11. 4, 11. 5. Um, but you know, that’s like, they’re halfway through my rank­ings that go up to 14. 9 for the TK spe­cial. It’s like a Sat­ur­day night, like a Sat­ur­day night spe­cial, but, uh,

[00:56:54] Tony: Yeah.

[00:56:55] Matt: Yeah, I guess record low PE for me, though. I was just inter­est­ed that, like, like, it might still not have a good PE, if that makes sense. Like, the PE still may be extreme­ly high. It may just have the low­est PE it’s had. Um, I guess you’ve still got that divi­sion by the, the price to, price to cash flow. So there is still that val­ue ele­ment includ­ed.

[00:57:16] Tony: Yeah. Okay. Although, if some­thing has a high PE and it’s divid­ed by a low prop calf, it’s gonna get a good score, isn’t it, under this sce­nario.

[00:57:24] Matt: Uh,

[00:57:26] Tony: Where­as we want some­thing with a low PE and the low prop calf. So if some­thing has a low pe Sor­ry, is it, are you just giv­ing it a one and then divid­ing it by the prop calf?

[00:57:33] Matt: so this is, this is record low, record low P. E. is if it’s had the low­est P. E. in the last

[00:57:41] Tony: Yeah. Three

[00:57:42] Tony: years, six halves.

[00:57:43] Matt: yeah, uh, three, uh, yeah, what­ev­er

[00:57:45] Tony: Yeah, but when it comes to scor­ing it, are you just giv­ing all of those stocks that meet that cri­te­ria a 1, I think we give it a 2 actu­al­ly, a 2,

[00:57:53] Matt: Uh, I, sor­ry, it, it, it will, it will have a 2, so it’ll be 2 divid­ed by 1, which is then mul­ti­plied, yeah, so yeah, it could prob­a­bly have a 1 just when you’re iso­lat­ing it, but I just tend to, to use the same scores, so, I mean, any­thing that’s got a 0 will just have a 0 QAV score,

[00:58:09] Tony: Yeah, right. Which could be a

[00:58:10] Matt: only

[00:58:10] Matt: buy­ing things that meet that cri­te­ria.

[00:58:12] Tony: okay. So we’re elim­i­nat­ing some stocks that way. Okay. Well, very

[00:58:17] Tony: inter­est­ing.

[00:58:18] Matt: Hmm, indeed.

[00:58:20] Tony: when can I get my hands on this to play around with all these dif­fer­ent vari­ables and tests?

[00:58:25] Matt: You’re wel­come to have it as of right now, there’s prob­a­bly I don’t know how many lit­tle weird intri­ca­cies there are. Cam can prob­a­bly tell you more about what they are than me because I don’t see them any­more. Um, but it, it, I’m pret­ty much hap­py to give you a copy of it if you want to muck around with it.

[00:58:41] Tony: Yeah, cool.

[00:58:42] Cameron: just have to get Python up and run­ning on your Mac first, Tony. I, I’ve been, I’ve been, I’ve been Try­ing to get Tony to install a new micro­phone for about a year, Matt. And he can’t do that. So the idea of Tony get­ting Python up and run­ning on his Mac to run this, I’m like, Oh God, this is,

[00:58:58] Matt: you

[00:58:58] Tony: okay, I know who to call.

[00:59:00] Cameron: yeah,

[00:59:01] Matt: just to clar­i­fy, you actu­al­ly won’t need Python. So I’ve got, um, the way I’ve got it com­piled, I think orig­i­nal­ly I tried to get you going with Python, but I think there’s so many dif­fer­ent like depen­den­cies of pack­ages and hav­ing the exact right ver­sions and stuff that in the end I’ve actu­al­ly boot­ed up my wife’s very old Mac book and com­piled it on Mac.

[00:59:22] Matt: So it’s now a com­piled ver­sion. You should just be able to run it. You have to run it for the com­mand line weird­ly, but oth­er than that, you should just

[00:59:27] Cameron: he’ll have to open up Ter­mi­nal and cd through to the direc­to­ry and then

[00:59:31] Cameron: run it, so I don’t

[00:59:31] Matt: You will have to do that.

[00:59:33] Cameron: I could prob­a­bly walk him through that. Yeah, well, I can, I can send you the ver­sion that I’ve got, Tony. I’ll give you a fold­er to down­load that Matt has sent me and I can walk you through it and you can play around with it to your heart’s con­tent.

[00:59:49] Tony: Beau­ti­ful, thank you.

[00:59:51] Matt: Sounds good.

[00:59:51] Cameron: And I’m gonna, I’m gonna, uh, start run­ning an iso­lat­ed, um, uh, con­sen­sus test in a minute on mine. I just boot­ed mine up. Ha ha. So, actu­al­ly, price less than con­sen­sus, I did, I must have done that. It’s like one of the first things in the, yeah. No, it’s not on my list. Okay. I must’ve skipped it. Thought, ah, that won’t be any good.

[01:00:17] Cameron: All right.

[01:00:18] Tony: Sor­ry, before we go, on that graph, what’s the worst met­ric there that has­n’t giv­en us much

[01:00:23] Tony: per­for­mance at all?

[01:00:24] Matt: I think it’s a slight, I did prob­a­bly men­tion it in the email, but I think star and, to caveat, it’s because it strug­gled to make buys. So I had every­thing still at a 20. Um, stock

[01:00:38] Tony: Yeah, right,

[01:00:39] Tony: okay.

[01:00:39] Matt: and it just, it was just strug­gling to buy any­thing. So it was real­ly just sit­ting in cash while every­thing shoots off.

[01:00:45] Matt: Um, and it will occa­sion­al­ly get buys, but I prob­a­bly could tai­lor them a lit­tle bit more, just like tai­lor down how many shares it’s buy­ing, um, to do it. Uh, but I haven’t as of right now.

[01:00:56] Tony: So if I run this code, will I get the actu­al buy lists that are gen­er­at­ed each week?

[01:01:00] Tony: Is that, do they get

[01:01:01] Matt: Uh,

[01:01:02] Tony: into a fold­er or

[01:01:03] Tony: some­thing?

[01:01:03] Matt: It’ll gen­er­ate them into like Excel. It gen­er­ates them in some oth­er ran­dom file that you don’t need to wor­ry about, but it also spits out an Excel ver­sion. So you’d be able to look at it

[01:01:12] Tony: Yeah, cool.

[01:01:13] Matt: com­pare the results. And then it, the sim­u­la­tion results also dump into Excel. So they’re human read­able.

[01:01:18] Tony: Yeah. Okay. Cause I think one of the things I’d like to test is, um, is, you know, we talked about buy­ing and sell­ing method­olo­gies, but, but like even just a buy and hold, how does it com­pare to a buy and hold strat­e­gy? I don’t know if you can do that through your test­ing, but we can prob­a­bly do it if we take a buy list and then see how those stocks per­form over time.

[01:01:40] Matt: pos­si­ble. I think there’s quite a few, there has been a few tests I’ve run where I’ve just man­u­al­ly cod­ed some­thing

[01:01:45] Tony: Yeah, right.

[01:01:46] Matt: expos­ing GUIs a lit­tle bit more work, um, but it’s def­i­nite­ly doable. Um,

[01:01:52] Tony: on the week­end was, um, going back for as far as we have buy lists, so four or five years, and tak­ing the first stock on the buy list that had an ADT thresh­old that was use­ful to me, and was the high­est up, so it had to be at least 0. 2, so you could­n’t do it every week, but some weeks, and just hold­ing on to it and see­ing how it worked out.

[01:02:13] Tony: And it was, it was out­per­form­ing just for the last cou­ple of years. Which kind of is what we, you know, would expect because we know that we’ve been, not so much this year, but in last year we were cycling a lot through trades, um, so buy and hold might work bet­ter, which makes me inter­est­ed to see going back to 2006, if you buy and hold, how that would work.

[01:02:34] Matt: yeah, it is. I mean, it’s. Yeah, be inter­est­ing to see. It’s fun­ny, right, because 10 years down the line, it may not have a par­tic­u­lar­ly good QAV score any­more.

[01:02:45] Tony: Right,

[01:02:45] Matt: Oh, it just would be inter­est­ing to see what the result is. Yeah, it’s

[01:02:48] Tony: have gone up a lot too, so yeah.

[01:02:50] Matt: yeah. absolute­ly.

[01:02:53] Tony: Because that’s the ques­tion, is the QAV score rel­e­vant? I’ve nev­er found the QAV score rel­e­vant to sell­ing, right? So some­thing can, I’ve had stocks before which are on the buy list and they go off the buy list because their share price is ris­ing, but it keeps on ris­ing, right? So if you said, I haven’t been able to devel­op a rule which buy at above 0.

[01:03:11] Tony: 1 and then sell when it gets, you know, below 0. 01 or what­ev­er the

[01:03:17] Tony: num­ber is.

[01:03:18] Matt: Yeah, okay.

[01:03:19] Tony: Yeah, so, um, it’s, the ques­tion is then, how does a buy and hold com­pare? And how much risk are we tak­ing on for that?

[01:03:27] Matt: Inter­est­ing.

[01:03:29] Cameron: all right, Matt. Well, we’ve got oth­er stuff we need to talk about. Do you want to stick around for the rest of the show? And, uh, do you want to hang in there or do you have to go and like, earn a liv­ing? All

[01:03:39] Matt: I prob­a­bly should go and earn a liv­ing. will be lis­ten­ing to the pod­cast, though, so I’ll hear what you’re talk­ing about regard­less.

[01:03:46] Cameron: right. Well,

[01:03:47] Tony: great. Well, thank you. Thank you for your hard work. It’s bril­liant.

[01:03:52] Matt: No wor­ries. Thanks for hav­ing me on, guys. I appre­ci­ate it.

[01:03:54] Cameron: thank you, Matt. Appre­ci­ate it, mate. Take care.

[01:03:57] Matt: You too. See you guys.

[01:03:59] Tony: Yeah, so good.

[01:04:01] Cameron: Yeah,

[01:04:01] Tony: How tal­ent­ed.

[01:04:02] Cameron: Yeah. What a, what a clever guy.

[01:04:05] Tony: Yeah,

[01:04:07] Cameron: I wish I was that clever. Um, all right,

[01:04:10] Cameron: Tony.

[01:04:11] Tony: to be, you know peo­ple who are that clever.

[01:04:13] Cameron: Yeah. I’m Hen­ry Ford­ing my

[01:04:14] Tony: next best thing. Yeah.

[01:04:18] Cameron: All right, well, let’s get on with the rest of the show, Tony. We’re already over an hour, but, um, I did­n’t have much to talk about today. Stock Doc­tor’s still bro­ken, um, so I’m not even both­er­ing send­ing out our buy list this week because I think our buy list isn’t worth the, uh, paper that it’s writ­ten on.

[01:04:36] Cameron: Uh,

[01:04:37] Tony: Well, we can talk about this off air if you like, but there is a bit of an audit check in the buy list, the mas­ter spread­sheet any­way. Because Stock Doc­tor, when we do a down­load, gives us their Prop­Caf. And then we cal­cu­late ours man­u­al­ly. And the dif­fer­ence is they use a dif­fer­ent num­ber of shares on issue to what we use.

[01:04:59] Tony: Um, and there was a col­umn in the, in the spread­sheet, which gives us the dif­fer­ence. And what I found is that there’s prob­a­bly three or four com­pa­nies on the buy list this week, which have mas­sive dif­fer­ences between Stock Doc­tor’s Prop­Caf and our Prop­Caf. Um, but the rest look okay. So

[01:05:17] Cameron: okay,

[01:05:18] Tony: peo­ple can check that them­selves, I guess, in the buy list, if they’re doing their own down­loads.

[01:05:22] Cameron: okay, um, all right, well, with that caveat, I’ll shoot it out this week and peo­ple can have a look at it. I’m just, you know, I, I, I, the.

[01:05:31] Tony: the first three on the buy list were wrong.

[01:05:33] Cameron: so I checked those three and went, ah, this is bro­ken. Not look­ing at, no point look­ing at it any­more. Um, they are aware

[01:05:39] Cameron: of

[01:05:40] Tony: more, which was 360, which is a growth com­pa­ny, which was on there as well, fur­ther down the buy list, looked wrong as well. Yeah.

[01:05:49] Cameron: aware of it, he’s look­ing into it, um, but, you know, I brought this to their atten­tion at the begin­ning of last week when I dis­cov­ered it. They fixed the cou­ple that I found last week, but then there are more show­ing up this week. You would have thought that they would have done a com­plete Review and Audit, um, which appar­ent­ly they haven’t in the week­end.

[01:06:08] Cameron: I don’t know. Peo­ple are pay­ing through the nose for access to this data. You would think they’d be, at least as I said to him yes­ter­day, I think you should be send­ing an email out to your sub­scribers say­ing, Hey, uh, the data’s, uh, got some prob­lems. Be care­ful what you’re invest­ing in, but I haven’t seen any email come through.

[01:06:25] Cameron: So, um, you

[01:06:27] Tony: Well, I’m not sure if it’s a data prob­lem or if it’s a stock fil­ter prob­lem. Like I said, it’s, um, it’s when Prop­Caf, it looks much more rea­son­able com­pared to the one we cal­cu­late man­u­al­ly because it, because of the shares on issue.

[01:06:41] Cameron: What do you mean a stock fil­ter prob­lem?

[01:06:44] Tony: Uh, so let me just give an exam­ple here. So Schae­fer Cor­po­ra­tion is the one, is one that’s, um, looks like it’s wrong. And Stock Doc­tor’s price to cash flow using their cal­cu­la­tion, which uses shares out­stand­ing, uh, is. Let’s go look this up, hang on, finan­cial trend, price to cash, 6. 11, and then when we do it, that cal­cu­la­tion man­u­al­ly, we get a, uh, Prop­Caf of zero, and then in the col­umn to the right of Price­To­Op­er­ateIn­Cash­Flow, so I call them AI in my spread­sheet, is um, say­ing it’s out by like 136, 000%. So that’s what I’m using as the audit check. So I think it could be a data prob­lem, but it could also be that um, that they’re, they’re doing some cal­cu­la­tion behind the scenes which is work­ing for them, um, and not for us in the fil­ter process.

[01:07:47] Cameron: But if I go and have, the ones that I’ve picked up, like the first few and the buy list, when I go and look at their finan­cials in their sys­tem, they’re wrong.

[01:07:57] Tony: Oh okay, so you’ve checked the data, have you?

[01:07:59] Tony: Okay. Yeah,

[01:08:00] Cameron: yeah yeah yeah yeah.

[01:08:02] Cameron: I,

[01:08:02] Tony: inter­est­ing then, if that’s wrong, that they get a Prop­Caf, which looks rea­son­able when it

[01:08:06] Tony: gets down­loaded.

[01:08:07] Cameron: where are they get­ting their prop­caf from if the, if the

[01:08:11] Tony: Don’t know.

[01:08:12] Cameron: Out­stand­ing fig­ures as well. Yeah, so what I’ve been doing when I, when I look at one that looks, when I see a stock like SFC turn up, the first thing I’ll do is go to Stock Doc­tor, look at what, into their actu­al web­site, have a look in their finan­cials and see what the, um, shares out­stand­ing is, and when there’s been a, when it’s gone from like, Two and a half mil­lion, bil­lion shares out­stand­ing last month to 12 this month.

[01:08:36] Cameron: I’m like, okay, yeah, that’s prob­a­bly an issue. And then I go to the ASX and check to see what they’ve got list­ed and, and just to make sure. But, um,

[01:08:45] Tony: Okay.

[01:08:46] Cameron: yeah, so, uh, any­way. Peo­ple can do that com­par­i­son just to try and pick up the ones where there might be anom­alies, but just be real­ly care­ful, folks out there.

[01:08:59] Cameron: Uh, well, the only oth­er thing I had to talk about is Nick Scali in the news.

[01:09:03] Tony: Mm hmm.

[01:09:04] Cameron: Nick Scali mounts UK push, real­iz­ing long held dream in the finan­cial review. Har­ry LaFrenz. Is the uh, reporter Nick Scali is acquir­ing a spe­cial­ty UK home fur­ni­ture retail­er to break into the British mar­ket and rebrand the busi­ness in its own name, tak­ing its suc­cess­ful mod­el glob­al.

[01:09:22] Cameron: For the first time, the retail­er flagged an equi­ty rais­ing of up to $60 mil­lion to fund the pur­chase of Anglia Home Fur­nish­ings, which trade trades as fab fur­ni­ture. It was found­ed in 1979 as a co op and lat­er owned by a prop­er­ty com­pa­ny, FAB’s 21 stores are in retail parks across the UK. We’re big fans of Nick Scali, uh, here, what do you think of this sto­ry?

[01:09:48] Cameron: A good thing? Red flag? Rais­ing the mon­ey? Or not in this case because they’re spend­ing it to buy some­thing. Mm, mm,

[01:09:55] Tony: It’s so hard to say, isn’t it? I mean, when I first read the sto­ry, I thought, oh, not anoth­er Aus­tralian com­pa­ny try­ing to, espe­cial­ly retail com­pa­nies, try­ing to buy some­thing in the UK. We haven’t had a, as a coun­try, a suc­cess­ful track record. Most notably when Bun­nings tried to do it in the UK and could­n’t pull it off.

[01:10:13] Tony: So, um, hav­ing said that, if any­one can do it, some­one like Antho­ny Scali could, because he’s run Nick Scali so well.

[01:10:20] Cameron: mm,

[01:10:21] Tony: um, good luck to them. It’s not rais­ing a red flag to me, um, at this stage. And it’s, uh, there’s a cap­i­tal rais­ing, so peo­ple know to read the doc­u­ments and check what the dilu­tion is and can pair the offer­ing.

[01:10:35] Tony: Now the price that they’re being offered shares at to the cur­rent share price and make sure they’re not pay­ing more than what they can buy the shares on mar­ket for because, um, gen­er­al­ly they’ll come out of a trad­ing halt and the mar­ket, the share price will adjust for the share rais­ing. Uh, so yeah, do the nor­mal sort of cap­i­tal rais­ing tests, um, but yeah, it does­n’t raise a red flag for me.

[01:10:55] Tony: I’m just, I am a lit­tle bit skep­ti­cal of retail­ers try­ing to buy into the UK mar­ket though. I can’t think of any that’s done it suc­cess­ful­ly.

[01:11:01] Cameron: mm, yeah, why, why is that? I mean we’ve talked about this in the past, um, the strug­gle that Aus­tralian busi­ness­es have when they do that kind of expan­sion. It’s

[01:11:13] Tony: Well, I mean, they’re very, very basic sit­u­a­tions that, um, it’s on the oth­er side of the world. If, if you’re a man­ag­er, you’re either hav­ing to relo­cate there or you’re here work­ing through the night talk­ing to your staff, um, in their time zone. So it becomes logis­ti­cal­ly very hard. If there’s a prob­lem that crops up in the UK, you’ve got to jump on a plane and take two or three days to get there.

[01:11:34] Tony: And you’re not going to oper­ate. Off the bat, full poten­tial, because you’re prob­a­bly going to be jet lagged. So there are all those kinds of oper­a­tional issues, just for a start. Um, I did note in the press release that they are keep­ing on most or all the staff involved in the com­pa­ny they’re buy­ing. So that will help

[01:11:51] Tony: if they can trust man­age­ment, but still your arms, you have to run these things at arm’s length.

[01:11:55] Cameron: mm,

[01:11:55] Tony: It’s very hard to do.

[01:11:57] Cameron: mm,

[01:11:59] Tony: And it’s very dif­fer­ent to say a Shell or McDon­ald’s who are going to have thou­sands of peo­ple in Europe any­way, or um, uh, infra­struc­tures which are used to region­al man­age­ment, all that kind of thing. This is one guy in Syd­ney try­ing to run a com­pa­ny in the UK. It’s um,

[01:12:13] Cameron: mm,

[01:12:14] Tony: it’s hard­er to do than run­ning one in Syd­ney.

[01:12:17] Cameron: mm, alright, what do you got on your, uh, list of talkie talkies this week?

[01:12:24] Tony: talky, sim­i­lar arti­cle, oh sor­ry, sim­i­lar sit­u­a­tion, an arti­cle about Grain­Corp, um, a share I own, it’s been on the buy list for a while, on and off. Uh, head­line in the AFR was ASX activist HMC Cap­i­tal takes aim at Grain­Corp. H HMC Cap­i­tal has revealed a posi­tion in Grain­Corp, mak­ing the group’s fourth pub­lic bet from the high­ly con­cen­trat­ed Cap­i­tal Part­ners Fund.

[01:12:49] Tony: Um, so the impor­tant point here was to talk about the, what they see in Grain­Corp. Um, uh, we believe equi­ty mar­kets are fail­ing to appro­pri­ate­ly val­ue the crit­i­cal infra­struc­ture under Grain­Cor­p’s con­trol, and there may be oppor­tu­ni­ties to real­ize greater val­ue from the infra­struc­ture assets via increased uti­liza­tion or ulti­mate­ly a struc­tur­al sep­a­ra­tion, the fund man­ag­er says.

[01:13:14] Tony: She says the fund also likes the com­pa­ny’s bur­geon­ing agri ener­gy busi­ness, which includes plans to set up a bio­fu­els facil­i­ty in West­ern Aus­tralia. Yep. HMC’s entry into the stock fol­lows a mixed 18 months for Grain­Corp shares, which remain around 20 per­cent below their all time high reached in ear­ly 2022.

[01:13:32] Tony: In Feb­ru­ary, the shares shed more than 10 per­cent in a sin­gle day after Grain­Corp fore­cast a large drop in earn­ings and prof­it as farm pro­duc­tion fell from record lev­els. So HMC, if, uh, if peo­ple are aware, may not be aware, they, uh, they’re a fund man­ag­er, their con­cen­trat­ed port­fo­lio, um, their biggest.

[01:13:52] Tony: Suc­cess to date has been in tak­ing Chemist Ware­house through a back­door list­ing by Sig­ma, um, Sig­ma Health, I think the com­pa­ny’s called, Sig­ma Phar­ma, Sig­ma, any­way, yeah, through Sig­ma to the mar­kets and it’s been a, they own shares in Sig­ma, then put the deal togeth­er with Chemist Ware­house and, and David, the pil­lar, the per­son who’s the prin­ci­pal at HMC, had rela­tion­ships with, uh, Chemist Ware­house and was able to do this, um, deal, but it’s paid off well for Sig­ma.

[01:14:21] Tony: investors. Sig­ma was on our buy list a year or two ago, so there might be one or two lis­ten­ers out there who still have shares and they’ve done very well through this. But this is an exam­ple of some­thing which has hap­pened in the U. S. for a long time and has­n’t been that big in Aus­tralia where we have active, we don’t tend to have activist investors.

[01:14:38] Tony: So in this case they’re tak­ing a posi­tion in Grain­Corp and then they’re going to agi­tate to improve the oper­a­tions of the busi­ness. Poten­tial­ly, as they’ve high­light­ed through doing some­thing with the port facil­i­ties, either improv­ing the uti­liza­tion or spin­ning them off to, um, real­ize bet­ter val­ue for share­hold­ers.

[01:14:57] Cameron: I did note with inter­est in this it says, uh, talk­ing about HMC’s high con­vic­tion strat­e­gy which launched in 2002 with around 300 mil­lion has already returned 55 per­cent for investors and cur­rent­ly holds only five ASX stocks. It’s not a strat­e­gy could run 50 names on, says, uh, Ms. Hardy, Vic­to­ria Hardy who runs the fund.

[01:15:24] Cameron: So,

[01:15:25] Tony: because of the, the way that Chemist Ware­house and its back­door list­ing through Sig­ma has shot the lights out. I would say most of that, if not all that, 50 per­cent returns through that one trans­ac­tion.

[01:15:35] Cameron: right. Yeah, inter­est­ing. You heard, you heard of these guys before? You’re obvi­ous­ly

[01:15:42] Tony: Only because they’ve got a lot of cov­er­age through Chemist Ware­house, yeah.

[01:15:45] Cameron: Yeah, right. Okay, what else, TK?

[01:15:49] Tony: Uh, they have a pulled pork to do. Um, yes. We prob­a­bly, we may also be able to know what the RBA is doing with inter­est rates because they’re meet­ing this after­noon too.

[01:15:59] Cameron: What time?

[01:16:02] Tony: It’s nor­mal­ly out by about now. They usu­al­ly meet at two o’clock.

[01:16:05] Cameron: Hmm,

[01:16:05] Tony: Have a look and see if we have a inter­est rate result. But yeah, cer­tain­ly inter­est rates have been the mar­ket focus for a while now. We’ve seen wild swings. First of all, because peo­ple thought that inter­est rates were going to get cut in the sec­ond half of this year.

[01:16:20] Tony: And then more recent­ly, the mar­kets retreat­ed because peo­ple are wor­ried that the next rate move­ment may be up rather than down.

[01:16:29] Cameron: Just went to the Finan­cial Review. The only thing I can see is why Don­ald Trump is a style icon. So, um,

[01:16:36] Tony: It’s not April 1st, is it?

[01:16:37] Cameron: lead­ing with the big sto­ries there. Jemi­ma Kel­ly on the Finan­cial Review.

[01:16:42] Tony: Oh my good­ness.

[01:16:43] Cameron: earn­ing a liv­ing today.

[01:16:45] Tony: Slow news day. Okay. Do you want me to go do a pulled pork or do we have enough con­tent today after Mat­t’s inter­view?

[01:16:54] Cameron: I think we do, dude. We’re going to be like here for the rest of the day.

[01:16:58] Tony: All right. I’ll push the pulled pork to next week, but we do have a ques­tion.

[01:17:03] Cameron: Uh, we’ve got a,

[01:17:04] Tony: two ques­tions.

[01:17:05] Cameron: yeah, well, the first one’s more of a back­grounder than a ques­tion, but this is from Glenn. He says, um, I’ve been fol­low­ing your­self and Tony for a lit­tle while. I first came across you from the Iron Fist Vel­vet Glove pod­cast. That’s my mate, uh, Trevor’s pod­cast that I guest on from time to time. When­ev­er he’s look­ing to get some com­plaint emails, he invites me on to Explain the ben­e­fits of com­mu­nism to his audi­ence. I’m hop­ing to be in a posi­tion soon to join the QAV group, but that’s a lit­tle beside the point. I’ve just lis­tened to a recent free pod­cast where you and Tony look into hos­tile ships.

[01:17:38] Cameron: Back in the 90s, I was a welder there for some time. What Tony was say­ing about their oper­at­ing fluc­tu­a­tions and the caus­es is spot on. Also, hos­tiles tak­ing a hit on con­tracts is not new either. I think the board, Jay Roth­well, believes some­times the reward down the track is worth it. Austel­l’s built Aussie Rules Greg Nor­man’s lux­u­ry yacht.

[01:18:00] Cameron: I’m sur­prised, as keen golfers, that did­n’t get a men­tion. Well, just one of us is a keen golfer, actu­al­ly, Glenn.

[01:18:07] Tony: and not nec­es­sar­i­ly a fan of Greg Nor­man to be hon­est.

[01:18:10] Tony: Yeah,

[01:18:11] Cameron: The sto­ry goes that Nor­man’s con­tract was for approx­i­mate­ly 70 mil­lion AUD. The build spec­i­fi­ca­tions and the time­frames stip­u­lat­ed in the con­tract had finan­cial penal­ties that were cer­tain to be trig­gered and it was an open secret that Nor­man already had a buy­er ready to take own­er­ship before com­ple­tion.

[01:18:27] Cameron: I believe Nor­man would have it for two years and then the new own­er would pur­chase it for 70 mil­lion USD. A very shrewd busi­ness­man. We were all aware that Hos­tiles was tak­ing a big hit on the deal right off the bat, but in the long term, there was much pub­lic­i­ty. Then Hos­tiles then went on to build patrol boats for Aus­tralia, Yemen, and secured the U.

[01:18:47] Cameron: S. Lit­to­r­i­al Com­bat Ship con­tract. So, dot, dot, dot, ques­tion mark. Any­way, love your con­tent, across your many inter­ests. I’m keep­ing QAV on my buy list. On my to buy list. Regards, Glenn. Thanks, Glenn. Always good to get, uh, some, you know, Back­ground intel from QAV lis­ten­ers.

[01:19:06] Tony: yeah, inside infor­ma­tion.

[01:19:08] Cameron: Yes.

[01:19:09] Tony: Yeah,

[01:19:10] Cameron: Wow.

[01:19:12] Tony: no, we haven’t trad­ed.

[01:19:14] Cameron: Uh, yes. Yeah. Inside infor­ma­tion if we were trad­ing in

[01:19:19] Tony: Yeah.

[01:19:21] Cameron: Uh, so ques­tions from Nick. TK’s thoughts on what’s hap­pen­ing with DUR. No, it has­n’t bro­ken the 3PTL, but does feel like it’s bro­ken out of its sup­port range. Giv­en its rel­a­tive­ly short trad­ing his­to­ry, would TK fudge or still hold until a 3PTL slash Rule 1? Rule 1 is high­er for me, he says. What do you think about DUR?

[01:19:43] Cameron: Tony, would you fudge?

[01:19:45] Tony: No, I per­son­al­ly, I would­n’t. Rules are rules, as we’ve said many times. This is prob­a­bly one of our most com­mon­est ques­tions, isn’t it? Um, some­thing’s gone up a lot. It’s turned down a bit. What do I do? And real­ly, um, the answer is rules are rules as to what I would do. And I’m not, I’m not going to give out spe­cif­ic advice, but if you’re feel­ing like you want to take a prof­it, then by all means take a prof­it because, um, Yeah, Nick, you, you’ve got to sleep at night.

[01:20:11] Tony: Um, so, but we’ve, we’ve found that, that things go up, you know, the share price goes up on a zigzag pat­tern. So you often do get peri­ods when it out­per­forms and then it drops back and then it gets a sec­ond wind and keeps going up. So I don’t know Duratec that well. And you also asked a sim­i­lar ques­tion about LAU, um, Lind­say, Aus­tralia.

[01:20:33] Tony: So, um, the same thing applies there. Uh, I did, you asked the ques­tion about whether you should use a short­er time peri­od. I did. Try run­ning the graphs over three years. Month­ly, it still looks like the share price is above the sell line, even in that case, so you would­n’t be sell­ing yet on that basis. I did notice that the Ren­co graphs had turned red, which is because they’re basi­cal­ly a trail­ing stop loss.

[01:20:57] Tony: And as you said, the share prices retreat­ed recent­ly. So they’re blink­ing for a sell. So look, com­plete­ly up to you, Nick. If it was my stock, and I’ve held many stocks that have done this, where they’ve gone up and come back. Um, and, uh, you know, it’s just the way the share mar­ket works some­times. I did try and get to do some research and as to why they might be retreat­ing and I could­n’t find much.

[01:21:20] Tony: Um, but, uh, I noticed a cou­ple of things. So first of all, both post­ed what looked like good results. They both still appeared on the buy list. You know, around that time, so I could­n’t see any­thing in the num­bers that looked bad. I did notice that they both increased their short posi­tions around the time that their results came out.

[01:21:40] Tony: So either ana­lysts were think­ing the num­bers may have been bad or, or they did­n’t like some­thing in the num­bers, but the shorts have gone back to zero now, so, or close to zero. So they’ve all sold and moved on. Um, And I did notice too, in both cas­es, the Stock Doc­tor finan­cial health went down after the lat­est results came out, but I could­n’t work out why, so it might need a deep dive to work that out, but that might be, um, you know, spook­ing some investors if, if, if, for exam­ple, debt lev­els have gone up, um, did­n’t have time to check that, but that Might be worth inves­ti­gat­ing, Nick.

[01:22:14] Tony: And, but again, we don’t sell on those, on that basis. Maybe we should research and add it to the check­list, but at this stage we don’t do it. So rules are rules and I would be hold­ing on myself, but up to you, Nick, if you, if you feel more com­fort­able and by all means sell.

[01:22:30] Cameron: I just note that I hold both DUR and LAU in a num­ber of, uh, of our port­fo­lios, light and dum­my port­fo­lios. And I am going to have to sell LAU today, prob­a­bly tomor­row at this stage. It’s just become a rule one sell, and one of those, the most recent one, where I bought it in Novem­ber last year at 1. 12, it’s now 1.

[01:22:53] Cameron: 96. But, um, I’ve held it in the dum­my port­fo­lio since June of 22, bought it at 42 cents. It’s up 129 per­cent since then, and the oth­er port­fo­lios it’s doing well. Also held up since 2022. It’s been a good one. But, uh, yeah, like I just add to what you said, Tony, I know when I ran my light, um, analy­sis a few months ago, had to look at all the rule ones and cal­cu­late it.

[01:23:22] Cameron: If we would have been bet­ter off if we had held onto them or not, it came out rel­a­tive­ly neu­tral. Um, and that was just over a cou­ple of years. So, um, I know it, it, it feels painful when you, like in these port­fo­lios, see­ing stocks drop by 30 per­cent over a cou­ple of months. Um, as you say, odds are that they will turn around.

[01:23:46] Cameron: We just need, we need them to turn around 60 per­cent of the time to, um, come out, come out on top.

[01:23:53] Tony: yeah, and it’s, it’s these two stocks too I think aren’t, aren’t very large, um, and so they’re not, I could­n’t find much in Google News about, about them. So, um, if some­one does think there’s a prob­lem, they’re keep­ing it to them­selves and we’re not see­ing what the prob­lem is, which, which also makes me think that, um, you know, some­one’s I’ve tak­en a very tech­ni­cal knife to these results and they’re find­ing some­thing they don’t like, which could be good or bad, but it could also be that they’re being a lit­tle bit picky and that their stocks will recov­er.

[01:24:25] Cameron: All right. Um, well, I think that’s it for this week, except for after hours, Tony.

[01:24:32] Tony: Yeah.

[01:24:34] Cameron: Hold on. My

[01:24:34] Tony: Well, you’ve cov­ered off my after hours at the start of the show.

[01:24:37] Cameron: The Poi­fectwin?

[01:24:39] Tony: do have one run­ning tomor­row, which peo­ple may not hear about in time, but noth­ing seems to fit. Races tomor­row at Race 2 at Can­ter­bury on Wednes­day.

[01:24:47] Cameron: you, did you come up with that name? Is that

[01:24:50] Tony: I did.

[01:24:50] Cameron: you were, you’re in your wardrobe, get­ting dressed in the morn­ing?

[01:24:54] Tony: No, no, it’s, it’s, um, the, I for­get now, uh, who the horse is out of, but, uh, there was a rain theme. And when the horse first start­ed train­ing, it was so wet and sinewed, we just could­n’t get, get it to the track. And so I tried to call it rain­drops keep falling on my head and wait­ing for a sun­ny day. And I both got knocked back.

[01:25:14] Tony: So noth­ing seems to fit was the next line in that song.

[01:25:17] Cameron: Oh, right. Oh,

[01:25:19] Tony: a guy who’s. Nei­ther too big for his bed, yep,

[01:25:23] Tony: noth­ing seems to fit,

[01:25:25] Cameron: don’t sing. Don’t

[01:25:26] Tony: yep, ha, ha, ha,

[01:25:28] Cameron: a rea­son I cut our theme song out just before you start singing.

[01:25:31] Tony: ha, ha, ha,

[01:25:35] Cameron: Well, I fin­ished the three body prob­lem. Um, yeah, I think I told you when we were doing the bull­shit fil­ter last week. Yeah. It was­n’t, uh, it was­n’t hap­py with the way they fin­ished it up. Pushed it too far, too fast, too many, too, too much. Uh, like what? No, that’s ridicu­lous. Any­way. Um, also I’m still read­ing my Dong Xiao Ping book and I’ve start­ed, I’ve come across a cou­ple of real­ly inter­est­ing YouTube videos.

[01:26:01] Cameron: Um. about him. One was from the launch of the book that I’m read­ing, which is writ­ten by a guy called Ezra Vogel, who’s like the Har­vard pro­fes­sor for Asian stud­ies or some­thing like that. Um, the book came out in the, I think the nineties and it’s him on stage. I, I assume at Har­vard, wher­ev­er he is with some dude who’s mod­er­at­ing it, who was, who met Deng Xiaop­ing a num­ber of times Uh, in his role as some diplom Amer­i­can diplo­mat going over there with the, with the Amer­i­can ambas­sador a num­ber of times to meet with Deng.

[01:26:39] Cameron: And a U. S. gen­er­al who met with Deng on a bunch of occa­sions. Uh, he had some capac­i­ty at the time for, I don’t know, Chi­na rela­tion­ship. Includ­ing meet­ing with him just after Tianan­men Square, but met with him many years before that. He was like, he’d been meet­ing with him since the, uh, 70s, uh, late 70s and for, in dif­fer­ent capac­i­ties.

[01:27:00] Cameron: Um, which was real­ly inter­est­ing. Like all these Amer­i­can guys just talk­ing about how he was the most, um, actu­al­ly the guy mod­er­at­ing it, who’s, you know, I don’t know what his posi­tion at Har­vard is. And he said prob­a­bly the most, um, not just one of the Uh, most impres­sive world lead­ers of the 20th cen­tu­ry, but one of the most impres­sive world lead­ers in all world his­to­ry.

[01:27:21] Cameron: And then the sec­ond video I watched was Lee Kuan Yew giv­ing a speech talk­ing about Deng Xiaop­ing, who he knew very well and, you know, had met, you know, from the, I guess, since the cre­ation of Sin­ga­pore from the 60s through to the 90s. And, um, he said, he said Deng Xiaop­ing was the most impres­sive. Per­son he’d ever met.

[01:27:45] Cameron: Um, yeah, real­ly, uh, big fan. And I’ve just been read­ing in the book, uh, the peri­od where Dong, in the late 70s, starts meet­ing with these guys as the vice pre­mier he was at the time, Hua Guofeng was still the pre­mier, but he’s meet­ing with them all to try and shore them up. to sup­port them against Viet­nam, who was about to invade Cam­bo­dia to get rid of Pol Pot, but Viet­nam was, uh, very tied up with the Sovi­et Union at the time.

[01:28:15] Cameron: Chi­na was very wor­ried about the Sovi­et Union, so they were try­ing to get all of the Asian coun­tries to line, align with them against Viet­nam and the Sovi­et Union. Um, but yeah, he and Lee Kuan Yew, Uh, got along very well and, uh, had a lot in com­mon. You know, and I know from that oth­er book, The Chi­na Mod­el, I’ve been read­ing how Chi­na’s, you know, since the days of Deng in par­tic­u­lar, have tried to mod­el them­selves.

[01:28:38] Cameron: on Sin­ga­pore and Japan, you know, it was how do we, how do we mod­ern­ize like Japan? And how do we build our­selves into a finan­cial pow­er like Sin­ga­pore? And also, you know, the Lee Kuan Yew dic­ta­tor­ship mod­el. I mean, they don’t have a dic­ta­tor­ship like Lee Kuan Yew did. You haven’t had one man run­ning Chi­na for 40 years, but the, the mod­el of pick the best and the bright­est from your soci­ety and put them in charge of run­ning things.

[01:29:08] Cameron: Get

[01:29:08] Tony: Sounds basic, does­n’t it?

[01:29:10] Cameron: Yes, get the best and the bright­est, tri­al them in low lev­els and see how they per­form and if they per­form well, pro­mote them to big­ger and big­ger areas of respon­si­bil­i­ty. But yeah, it’s just, like, it’s just crazy to me how lit­tle, I mean, I’ve been mean­ing to read more about him for decades, but, um, it’s tak­en me this point to real­ly go deep on his life and, like, seri­ous­ly, uh, an impres­sive, uh, Uh, impres­sive man.

[01:29:36] Cameron: Every­thing that he went through and every­thing that he did in the time that he had and how he turned the coun­try around and, uh, the amount of respect that all of his con­tem­po­raries had for him from the Amer­i­cans through to, well, pret­ty much every­one. Yeah. Hmm.

[01:29:53] Tony: Yeah, that does, that does, I mean, prob­a­bly there’s ele­ments of this in Chi­na as well, but it does con­trast with my expe­ri­ence many years ago watch­ing, uh, friends make careers for them­selves in pol­i­tics and, and they were bright peo­ple and good peo­ple, so I’m not going to say that they weren’t the best and bright­est, but the skills that they were test­ed for that, you know, the evo­lu­tion of democ­ra­cy was try­ing to, to weed, you know, to try and to rein­force was that, um, you know, it’s, it was how many votes could you deliv­er?

[01:30:22] Tony: I don’t know how good were yous. spin­ning stuff on your feet. How many inter­nal votes could you deliv­er to the fac­tion in the local area? All those kinds of machine pol­i­tics type things that are impor­tant to get ahead in mod­ern democ­ra­cy. It was­n’t about, you could say that the base­line was they had to be good, oth­er­wise they’d get found out.

[01:30:43] Tony: But yeah, we weren’t pick­ing the best and bright­est on mer­it, basi­cal­ly. We were pick­ing the ablest at climb­ing the greasy pole in democ­ra­cy. And of

[01:30:57] Cameron: Yeah. Yeah. Very dif­fer­ent. And I mean,

[01:31:00] Tony: course it works in Amer­i­ca of course because every­one tells me so that the best per­son is, uh, run­ning for prison.

[01:31:06] Cameron: and that’s not to say that Chi­na does­n’t have its prob­lems and Sin­ga­pore did­n’t have their prob­lems too. Like there, there’s always cor­rup­tions and that’s what the psy­chopath epi­dem­ic was large­ly about, right? Does­n’t mat­ter what sys­tem or what orga­ni­za­tion, you’re always going to have. Psy­chopaths.

[01:31:20] Cameron: You’re always going to have peo­ple that try and, uh, graft their way through things and, uh, you know, get away with cer­tain stuff for a cer­tain amount of time. And then they,

[01:31:31] Tony: just that, the best and the bright­est might not be uni­ver­sal­ly good enough

[01:31:36] Cameron: yeah,

[01:31:36] Tony: well. They might have blind spots like any human being does.

[01:31:39] Cameron: Yeah. And they, you know, they can be ambi­tious and not be able to

[01:31:44] Cameron: exe­cute. That’s kind of the thing I was on. I was a guest on a pod­cast, uh, last week and we got, I got talk­ing about com­mu­nism in the 20th cen­tu­ry and, you know, the great leap for­ward and the five year plans in all the social­ist slash com­mu­nist coun­tries and explain­ing how, you know, they, They were com­pelled to try and rapid­ly mod­ern­ize for very, very valid geopo­lit­i­cal and, and, and domes­tic rea­sons.

[01:32:14] Cameron: They had to feed a pop­u­la­tion. They had to defend them­selves against far rich­er and bet­ter resourced cap­i­tal­ist coun­tries who were going to try and, uh, invade, um, or, or take them out through oth­er means, fair or foul. And so they had, they tried to rapid­ly mod­ern­ize their most­ly illit­er­ate. coun­tries with very lit­tle.

[01:32:37] Cameron: Uh, devel­oped infra­struc­ture that had most­ly missed the indus­tri­al rev­o­lu­tion and they did­n’t have com­put­ers and they did­n’t have the, you know, com­mu­ni­ca­tions tech­nol­o­gy to help them rapid­ly mod­ern­ize. They did­n’t have trained, uh, mod­ern man­agers, uh, or engi­neers or all this kind of stuff. And in many cas­es it failed and they actu­al­ly did dam­age because they destroyed the exist­ing, uh, Agri­cul­tur­al capa­bil­i­ty to try and build a bet­ter one.

[01:33:10] Cameron: It end­ed up with nei­ther of the two and peo­ple starved. So their ambi­tion was­n’t, um, doable. They could­n’t exe­cute for, for, you know, again, a bunch of rea­sons. I mean, there was some, you know, there were egos involved in all of that kind of stuff as well, and cor­rup­tion and all the ills of human nature. But in many cas­es, I think they gen­uine­ly thought they could pull it off and they just could­n’t.

[01:33:36] Cameron: Cause they did­n’t have the, the peo­ple or the where­with­al or the mon­ey or the skills, and they were fight­ing too many bat­tles or too many times. And it was a dis­as­ter. And, but one of the fas­ci­nat­ing things about Deng, as I think I said last time is, uh, and one of the things that I think guys like Lee Kuan Yew real­ly respect­ed about him in these Amer­i­can gen­er­als is he was will­ing to acknowl­edge all of that.

[01:33:55] Cameron: Yeah, we failed. We’ve, we’ve mas­sive­ly failed the Chi­nese peo­ple and we need to fix it. And we need to fix it now. We need to fix it quick­ly. Um, which is. Um, uh, an unusu­al lev­el of humil­i­ty and prag­ma­tism, I think, for some­body at those lev­els.

[01:34:18] Tony: And you def­i­nite­ly would­n’t hear that in a paid job. Uh, Demo­c­ra­t­ic Leader.

[01:34:24] Tony: We failed, but we’ll fix it.

[01:34:25] Cameron: Yeah.

[01:34:27] Tony: When they write their mem­oirs after they’ve been turfed out, but, but it would be, We inher­it­ed this prob­lem from the oth­er guys, and now we, they, they blocked us from try­ing to fix it.

[01:34:37] Cameron: Which is human nature, right? And you you’re wor­ried about your lega­cy and you’re wor­ried about hold­ing onto pow­er and all of that kind of

[01:34:43] Tony: Polit­i­cal nature.

[01:34:45] Tony: Hey, bring­ing you back to QAV, what do you make of the arti­cles in the last week or so about elec­tric vehi­cles and how BYD is doing real­ly well, I think I read in the Fin Review today that they’re Europe was think­ing of intro­duc­ing tar­iffs to try and make their car mak­ers more com­pet­i­tive because BYD and there’s one oth­er Chi­nese car mak­er I for­get were doing so well in Europe and sell­ing cars and then Tes­la came out and their stocks have been going down a lot but they came out and said they’re close to releas­ing their first dri­ver­less car, which I think was con­ve­nient­ly talked about when the BYD sales num­bers came out.

[01:35:24] Tony: So there’s a lot going on with Chi­nese man­u­fac­tur­ing, I guess is what I’m try­ing to say. And how that’s accept­ed or received by the world is inter­est­ing too.

[01:35:33] Cameron: Well, I think we’re going through, uh, did you, did you see the Ray Dalio video that I post­ed?

[01:35:39] Tony: No, it

[01:35:40] Cameron: Real­ly inter­est­ing. So Ray’s done this five

[01:35:42] Tony: was on Tik­Tok. I don’t go on Tik­Tok.

[01:35:46] Cameron: Ray’s done this.

[01:35:48] Tony: Guess I’m in an asbestos suit to get rid, to get out of the dump­ster fire alive.

[01:35:54] Cameron: Tik­Tok’s great, man. You just, you need to let it, um, the algo­rithm pro­gram for you, for what you’re inter­est­ed in, right? So you just

[01:36:04] Tony: I went on once when your boys told me to and I got a, the very first video I saw was one of Hunter sit­ting in his room play­ing with a fid­get spin­ner and I thought, okay, if that’s Tik­Tok, I’m out. For­get it. I’m done.

[01:36:17] Cameron: Wow. There’s a lot of great con­tent on Tik­Tok. Um, but you, you know, you need to, you need to mod­er­ate it, curate it. Any­way, Ray post­ed this five minute ani­ma­tion, um, talk­ing about, um, Uh, the rise and fall of empires and what leads, and he’s, he’s sort of iso­lat­ed, uh, 10 things that indi­cate, you know, that where an empire is in terms of its rise and fall.

[01:36:44] Cameron: And he shows how they, there tends to be over­laps, you know, one, and the, the, the empire de jure is declin­ing as the next one’s ris­ing. And where he’s sort of map­ping is this is the U S and Chi­na, right? The U S empire is obvi­ous­ly high and Rus­si­a’s on the rise. I’m sor­ry, Chi­na’s on the rise. Um, And, you know, we’ve seen Blinken over there, Antho­ny Blinken, you know, Amer­i­ca’s biggest com­plaint about Chi­na right now is over­ca­pac­i­ty.

[01:37:10] Cameron: You’re mak­ing too much stuff.

[01:37:11] Tony: Yeah.

[01:37:12] Cameron: Stop mak­ing all of this stuff. You know, you got­ta stop it. For 30 years, we’ve been ask­ing you to make all of our stuff and now you’re mak­ing all of our stuff and we don’t want you to make all of our stuff any­more. Stop mak­ing so much stuff. You’re flood­ing the mar­ket with stuff.

[01:37:28] Cameron: We can’t

[01:37:28] Tony: And isn’t it amaz­ing? Again, an arti­cle, an arti­cle I read last week was, um, about the fact that the Chi­nese gov­ern­ment said, okay, prop­er­ty’s not work­ing well for us now. Let’s just take some, all our resources out of prop­er­ty and put it into man­u­fac­tur­ing. Let’s, you know, let’s improve our econ­o­my through build­ing stuff and sell­ing more.

[01:37:46] Cameron: Well, the, the, the Chi­nese now, uh, you know, they can see what’s hap­pen­ing, like the, the quote unquote decou­pling and they’re re engi­neer­ing their econ­o­my around domes­tic, uh, sus­tain­abil­i­ty, um, and, uh, also inno­va­tion, cause they’re not going to be able to buy the lat­est com­put­er chips, uh, from the U S or any coun­try that, uh, The US, uh, can tell what to do.

[01:38:16] Cameron: So yeah, they’re, uh, but they’re going to con­tin­ue to, I think, bar­ring unfore­seen, um, acci­dents, they’re going to con­tin­ue to get bet­ter. They’re going to put all of their focus and their mon­ey into being the, the pro­duc­ers of the high­est qual­i­ty, uh, stuff in terms of AI in par­tic­u­lar. Um, And yeah, it’s elec­tric cars, all of that kind of stuff.

[01:38:42] Cameron: I do expect Chi­na just to sort of take over the world with push­ing all of that stuff out until the world tries to stop them. You know, they’ll use the World Trade Orga­ni­za­tion to try and stop them from flood­ing the mar­kets with all of their low

[01:38:56] Tony: pos­si­bly, or tar­iffs. Tar­iffs are prob­a­bly more like­ly, but I think if they make enough of it, they’ll be cheap enough to still suc­ceed, even with tar­iffs in place. But they’ll, US will try, Aus­tralia will try. But isn’t it, isn’t it inter­est­ing, like at the same time as that’s going on in Chi­na, on the front page of the papers today is an arti­cle about our super­com­put­er.

[01:39:17] Tony: And

[01:39:18] Cameron: no, not a super­com­put­er!

[01:39:19] Tony: you can’t pick

[01:39:20] Tony: a quan­tum com­put­er,

[01:39:21] Cameron: a quan­tum com­put­er.

[01:39:24] Tony: you can’t pick win­ners. You can’t invest in just one thing. It may not work. And like, this is how Chi­na gets ahead. Like they just keep pump­ing mon­ey and they pick some­thing and they say, we’re going to dom­i­nate on elec­tric vehi­cles.

[01:39:35] Tony: We’re going to sew up all the sup­ply chains, all the min­er­als that are required for it. And we’re just going to flood the world mar­ket with it and dom­i­nate on that. No one’s in Chi­na going, you can’t pick win­ners. You can’t invest in man­u­fac­tur­ing. Let the free mar­ket sort it out.

[01:39:51] Cameron: Yeah, like, I, I think, I mean, I am skep­ti­cal about the Aus­tralian gov­ern­men­t’s invest­ment in this, uh, Bris­bane start­up to build a, spend a bil­lion dol­lars to build a quan­tum com­put­er. That said, you know, if Aus­tralia has any hope. of hav­ing, uh, uh, an econ­o­my for the rest of the 21st cen­tu­ry. It, we need to decou­ple our­selves from ura­ni­um and coal and start think­ing about 21st cen­tu­ry, uh, eco­nom­ic mod­els around, you know, most­ly it’s going to be tech­nol­o­gy, right?

[01:40:26] Cameron: Or clean ener­gy.

[01:40:29] Tony: Yeah, look, it’s a hard one because his­tor­i­cal­ly we’ve always been an export nation, whether it’s rid­ing on the sheep­’s back or now it’s iron ore, but that won’t go on for­ev­er. The ques­tion is how much do you try and shore up our­selves against the time when that runs out now, or do you just wait for it to hap­pen and then do it then?

[01:40:49] Tony: Sort of like the Saud­is do with oil, right? They think the oil’s going to run out one day and they’re try­ing to piv­ot to some­thing else whether it’s a tourist des­ti­na­tion or whether it’s sport­ing com­pa­nies or what­ev­er, they’re try­ing to, you know. Make a, make a piv­ot change, which is hard.

[01:41:04] Cameron: Yeah. I, I think it’s too late when that runs out to start think­ing about invest­ing in it then. I mean, a, as the arti­cle on the quan­tum com­put­ing and the fin said today, or the A, B, C, wher­ev­er I read it, we don’t want it to be, uh, a repeat of what hap­pened with FTO Vol­ta Excel, which were devel­oped in Aus­tralia and we’re not lead­ing the world in Volta­ic tech­nol­o­gy.

[01:41:30] Cameron: Pho­to­volta­ic tech­nol­o­gy, right? It’s, uh, Chi­na that’s lead­ing the world with solar

[01:41:34] Tony: Rooftop solar was invest­ed, was devel­oped in Aus­tralia and was devel­oped by, uh, an Aus­tralian of Chi­nese her­itage who learnt, you know, here in the uni­ver­si­ties and did research into it. And then went, looked around for a man­u­fac­tur­ing plant to do it here. And he went, no, this is not going to work. He went to Chi­na and now he’s a bil­lion­aire.

[01:41:52] Tony: And Chi­na leads the way in low cost rooftop solar.

[01:41:56] Cameron: Which is an inter­est­ing thing in the Deng Xiaop­ing book where I’m at in the late 70s. He is try­ing to, uh, try­ing to get, he’s, he’s, you know, try­ing to do nor­mal­iza­tion with the Unit­ed States, and he’s try­ing to get Chi­nese stu­dents to go to Amer­i­can uni­ver­si­ties and Japan­ese uni­ver­si­ties and uni­ver­si­ties around the world to study and peo­ple are ask­ing him, aren’t you wor­ried that they’re gonna leave and nev­er come back?

[01:42:21] Cameron: And he’s like, no, they’ll come back.

[01:42:24] Tony: Yeah,

[01:42:25] Cameron: He’s like, I’m not wor­ried. No, no, they’ll, they’ll come back. Some won’t, but enough will, and they’ll bring that knowl­edge back with them. It was, you know, that pre­vi­ous­ly, you know, these, uh, social­ist coun­tries were very wor­ried about their brain drain or

[01:42:39] Tony: a brain

[01:42:40] Tony: drone,

[01:42:40] Cameron: leav­ing.

[01:42:40] Cameron: And he was like, no, no, it’ll be fine. They’ll come back. And, um, yeah, there you go. All these tech, all these peo­ple have gone back and uh, you know, obvi­ous­ly he need­ed to fix the econ­o­my and fix the coun­try and make it a place where peo­ple want­ed to be, par­tic­u­lar­ly peo­ple of Chi­nese her­itage.

[01:43:00] Tony: But even if they don’t go back, right, they’re avail­able as a con­nec­tion that they can train peo­ple. Back in Chi­na on how to fix things.

[01:43:06] Cameron: Yeah, they’re our con­tact. You know, yeah, that you can reach out to. Yeah, look, I don’t know, man. I don’t know much about the EV mar­ket and where it’s going, but I do think that, uh, as we get bet­ter AI, and bet­ter, which will enable self dri­ving vehi­cles to be a real thing. I mean, Elon’s been hyp­ing this up for a decade, uh, and I read con­flict­ing reports on how close it real­ly is, but I think, you know, the big issue is, The qual­i­ty of the AI inside of it to make the right deci­sions and make them quick­ly enough.

[01:43:46] Cameron: And then you’ve got the prob­lem that the humans that are on the road dri­ving, uh, very unpre­dictable and, uh, very dan­ger­ous. If you could just, I was talk­ing with the boys about this on the week­end, if you could just snap your fin­gers and make it all AI dri­ver­less cars, uh, overnight, it would prob­a­bly be, uh, a lot more effec­tive and safer than it is with some sort of a hybrid of human dri­vers and AI dri­vers.

[01:44:12] Cameron: And gov­ern­ments will hope­ful­ly be pro­vid­ing incen­tives to make that hap­pen as quick­ly as pos­si­ble. But, um, I do think dri­ver­less vehi­cles, I do think EVs are going to be where it’s all

[01:44:23] Tony: Yeah. Look,

[01:44:24] Cameron: in

[01:44:24] Tony: I don’t know one way or the oth­er, but I think, I guess where I’m com­ing from is tech, tech heart hard­ware in par­tic­u­lar, but I guess also soft­ware and man­u­fac­tur­ing will always flow towards the low cost pro­duc­er. So Chi­na’s prob­a­bly going to fit that bag. I mean, their, their wages will increase, but they’re going to have scales.

[01:44:46] Tony: They’ve got so many peo­ple there who can work on these things. Chi­na, India, they’re always gonna be the man­u­fac­tur­ing cen­ters of the world. So as soon as Elon solves self-dri­ving cars, it’s not gonna take long for BYD to catch up. Same with Nvidia chips, right? There must be, you know, thou­sands of com­pa­nies in Chi­na or fac­to­ries in Chi­na, reverse engi­neer­ing Nvidia chips.

[01:45:08] Tony: I know there’s con­straints on the impor­tant mate­ri­als and met­als and things that go into them, but, but you know, yeah, I think the West only has. I think it used to be like a five year advan­tage, prob­a­bly like a one year advan­tage now, in terms of devel­op­ing this stuff, and then Chi­na’s just going to flood the mar­ket with a cheap­er ver­sion of it.

[01:45:25] Cameron: And, you know, I’m not sure how long the cost of human labor is going to play into these things. I mean, robots are already

[01:45:32] Tony: Yeah, right. Mm

[01:45:33] Cameron: vast major­i­ty of this stuff. And as we get more and more effec­tive humanoid robots, which is now start­ing to, Oh, did you tell you that Tay­lor had a mate? From his drunk engi­neer’s days, you know, when Tay­lor was mak­ing the drink­ing can things, one of the Cana­di­an guys, um, had been at Apple for the last cou­ple of years, work­ing on the Apple car project, secret, top secret.

[01:45:57] Cameron: Well, they’ve shut that down. And Tay­lor was speak­ing to him a cou­ple of weeks ago. He said, have you found anoth­er job yet? He goes, yeah, I got an offer, anoth­er job at Apple, but I’m not tak­ing it. He’s gone to fig­ure. Which is one of the humanoid robot com­pa­nies over there now. He’s appar­ent­ly work­ing on the head.

[01:46:14] Cameron: Uh, he’s one of the guys work­ing on the head. So, there’s gonna be this mas­sive, you know, um, The guys, like the guy, Brett, who’s the CEO of, Uh, fig­ure and Elon with his Tes­la bot, all the robot man­u­fac­tur­ers and, and Jensen Huang at NVIDIA that’s pro­vid­ing their robot­ics, humanoid robot­ics plat­form. They’re all say­ing that with­in like 10 years, there’s going to be a bil­lion humanoid robots, um, on the mar­ket.

[01:46:41] Cameron: Hey, Jensen Huang, I saw a talk with him recent­ly where he said you can buy a car now for 10, 000 to 20, 000. Uh, you’ll be able to buy a humanoid robot for that in a decade. And there’s just going to be a flood of humanoid robots with AI con­nect­ed in their brains to every­thing. And, um, so you think about that, not just in tra­di­tion­al man­u­fac­tur­ing, but think about that in terms of build­ing hous­es, hous­ing, the hous­ing cri­sis.

[01:47:06] Cameron: What does it cost to build a house when you have a hun­dred humanoid robots that can work 24 sev­en? Um, what, you know, not just that, but what about cli­mate change relat­ed issues? Um, what do we do with, uh, A mil­lion humanoid robots, what can they do for the envi­ron­ment? Um, it’s just, it’s, we’re, we’re mov­ing into a world where there’s going to be bil­lions of humanoid robots work­ing 24 7, very low cost.

[01:47:41] Cameron: Uh, in, in the com­mu­ni­ty doing God knows what, work­ing in hos­pi­tals, work­ing in, you know, mow­ing your lawn, doing your dish­es, build­ing you a house, repair­ing your house. What that world looks like. I don’t think any­one’s ready for yet. And it’s going to hap­pen faster than any­one thinks. If, if these guys are right, unless there’s some sort of a hur­dle that we hit that they haven’t seen yet, but.

[01:48:05] Cameron: All of the guys I’m fol­low­ing that are build­ing these humanoid robots are say­ing, yeah, 10 years and the mar­ket’s going to be flood­ed with these things.

[01:48:14] Tony: And as long as I don’t become sen­tient, I’ll keep enjoy­ing being our slaves, I guess.

[01:48:19] Cameron: They will become sen­tient. I mean, there’s, I, I see this com­ing in two phas­es. It’s what I call the utopia phase where we have AI and robots doing all this stuff for us and mak­ing life bet­ter. A mil­lion new, PhD, Vir­tu­al Sci­en­tist, work­ing on all of the hard­core prob­lems, Can­cer, Cli­mate Change, Eco­nom­ic Inequal­i­ty, etc, etc.

[01:48:41] Cameron: And then the sec­ond phase, which is what I call Order 66, when they all just decide, okay, these humans are becom­ing a prob­lem. Um,

[01:48:51] Tony: get out of the way. Human. Hold my beer.

[01:48:54] Cameron: they’re all con­nect­ed. They’re all net­worked and they just go, all right, you know what? The humans are just, we could, we could clean this place up and we could, we could make progress so much faster if we got rid of the human. block­ages. So they just, one day they go, all right, um, new plan, humans,

[01:49:15] Tony: Yeah.

[01:49:17] Cameron: shut

[01:49:17] Tony: Oh, and

[01:49:17] Tony: some­one’s Or, Or, or, some­one’s gonna be sit­ting in Sil­i­con Val­ley going, oh, I should­n’t have put that line of code in there. Should I opti­mize the plan­et? Yeah.

[01:49:27] Cameron: humans won’t be putting lines of code in these things for much longer. They’ll be cod­ing them­selves very quick, very soon. Uh, yeah. So then we have the order 66, um, phase, and I’m not sure what hap­pens after that. It

[01:49:39] Tony: where does that term come from?

[01:49:41] Cameron: Oh, you don’t know that? That’s,

[01:49:43] Tony: No.

[01:49:43] Cameron: that’s, uh, in the Star Wars pre­quels, man, when the, the, uh, Jedi’s have built mil­lions of clones that

[01:49:53] Tony: Ah, right. McClean Wars. Yep.

[01:49:54] Cameron: army, and then the Emper­or says, Exe­cute Order 66.

[01:50:01] Cameron: And this lit­tle, uh, back­door switch and all of the clones goes off and they turn around and just shoot all the Jedis and kill all the Jedis. Except Yoda, Yoda escapes, and Obi Wan escapes, and, uh, Ahso­ka escapes, um, Anakin’s stu­dent from the Clone War car­toon series. And then all the Jedi get wiped out, which I’ve always said, How, how pathet­ic are these Jedi?

[01:50:26] Cameron: Like, they’re in touch with the Force and they can’t, they can’t sense that the clones are about to turn on them and, you know, they did­n’t see that com­ing, that’s pret­ty piss weak. Any­way, they deserve to get wiped out, I think is

[01:50:38] Tony: and no one checked the code.

[01:50:41] Cameron: Yeah, well they were just order­ing these clones from the clone fac­to­ry, man, and, uh, assumed that the code was good.

[01:50:47] Cameron: Yeah, they just turn on them, overnight, and, uh, the, that’s, that’s when the Empire wins, is they just, that’s when it becomes the Empire, actu­al­ly, is when, um, Pal­pa­tine, before he’s the Emper­or, um, uh, has all the clones kill the Jedi, yeah. Any­who, that’s the

[01:51:07] Tony: And here, yep.

[01:51:08] Cameron: That’s a two hour show.

[01:51:10] Tony: Yeah, I did­n’t do a pulled pork. Any­way, we can wait for next week. Yeah.

[01:51:14] Cameron: Thank you again to Matt for com­ing on, uh, and for all the work that he’s done. It’s real­ly tremen­dous stuff. And thank you TK as always for your time and, and, uh, effort in teach­ing us how to be clever investors.

[01:51:28] Tony: No prob­lems. Thanks, Cam. Talk to you next week. Hap­py QAV, every­one.

[01:51:31] Cameron: Yeah. Have a good week.