QAV 722 — WELTANSCHAUUNG

QAV 722 Club

[00:00:00] Cameron: Wel­come to QAV.

[00:00:12] Cameron: It is, uh, episode 22 7 22

[00:00:16] Cameron: Uh, record­ing this on the 28th of May, 2024. Tony Kynas­ton, where are you today, Tony? No longer in Bris­bane.

[00:00:26] Tony: No, fab­u­lous Sap­phire

[00:00:27] Tony: Beach in Coffs Har­bour.

[00:00:30] Cameron: Love

[00:00:30] Cameron: Sap­phire Beach. Fox had his first surf­ing les­son at Sap­phire Beach a cou­ple of years

[00:00:36] Cameron: ago.

[00:00:36] Tony: Wow.

[00:00:38] Cameron: it was great.

[00:00:39] Tony: Okay. Well, the flags aren’t up at the moment, so I was at

[00:00:41] Tony: dur­ing sum­mer.

[00:00:43] Cameron: Uh, no, it was about this time of year, I think. We, we were on our way down to vis­it you, for some rea­son, and, um, it was actu­al­ly mid COVID, I think. Any­way, so it was prob­a­bly four, four years ago. Oh my God, has it been four years since COVID? Wow, isn’t that crazy? Wow, four years. Any­way, love­ly part of the world, Coffs Har­bour.

[00:01:05] Tony: It is. Yeah, I’m enjoy­ing it.

[00:01:08] Cameron: How did POIFECT go on the week­end, Tony?

[00:01:11] Tony: Not, not quite per­fect.

[00:01:13] Cameron: Less than POIFECT.

[00:01:14] Tony: Less than per­fect. Yeah, she ran 10th. Uh, in the words of the train­er, we threw a lot at her. She flew up from Mel­bourne, um, hors­es run a dif­fer­ent way in Bris­bane. It’s like chang­ing from being left hand­ed to right hand­ed. And she went out in dis­tance to 2, 000 metres. So, it was a lot of effort on her part.

[00:01:38] Tony: So, um, she’ll be rest­ed now. She’ll prob­a­bly come to the end of the line this time and come back in the spring.

[00:01:47] Cameron: Right.

[00:01:48] Tony: Yeah, but for a young three year old, it was­n’t too bad. It was­n’t, it was­n’t too bad. We went out there. It was a great day. We had a beau­ti­ful lunch out there in the, one of the, uh, ban­quet rooms

[00:01:57] Tony: and had a buf­fet and yeah, it was good.

[00:02:02] Tony: Good day.

[00:02:03] Cameron: Nice. Hope­ful­ly the food was bet­ter than the Nor­man

[00:02:05] Cameron: Hotel where we went on

[00:02:07] Tony: Oh, you did­n’t like it either. My steak was awful.

[00:02:10] Cameron: Yeah, the boys and I all on the way home were

[00:02:12] Cameron: like that food was real­ly aver­age.

[00:02:16] Cameron: I haven’t been to the Nor­man in, in years. Uh, you know, it’s got a rep­u­ta­tion as being the go one of the go to steak restau­rants in Bris­bane and it was, yeah, very aver­age.

[00:02:28] Tony: I thought so too.

[00:02:30] Cameron: Expen­sive and aver­age food. So

[00:02:33] Tony: No, the

[00:02:33] Cameron: down to the Nor­man Hotel in Wool­loongab­ba.

[00:02:36] Tony: at, uh, food at, was real­ly good.

[00:02:39] Tony: Food. Yep. Good day. Yeah.

[00:02:41] Cameron: Well, let’s move on to invest­ing, Tony. We don’t have a lot to talk about today. It’s going to be a short show, which is

[00:02:47] Cameron: good because you’re in tran­sit any­way. No ques­tions from the mem­bers today, but I’m look­ing at the mar­ket. You know, it’s fun­ny. I got up and I looked at the Fin this morn­ing, as I always do.

[00:02:59] Cameron: And the Fin said. ASX to edge high­er, April Retail Sales Await­ed, and then I got back from Kung Fu, uh, half an hour ago, and I looked at it and it says ASX Falls, Retail Sales Missed Fore­casts, Gold Lifts, uh, so appar­ent­ly, Mar­ket was not hap­py with the retail sales num­ber, and as far as I can tell, it says that, uh, I don’t know, it was too, too good?

[00:03:29] Cameron: Not good enough? I’m not quite sure. Retail trade ris­es 0. 1 per­cent in April. Miss­ing fore­casts.

[00:03:36] Tony: haven’t seen the arti­cle. I

[00:03:37] Tony: imag­ine the fore­cast was for a high­er num­ber.

[00:03:41] Cameron: Says Rise 1.1% in April, rebound­ing

[00:03:44] Cameron: from a 0.4% fall. The pre­vi­ous month, mar­ket’s con­sen­sus was for a 0.2% rise, year on year retail trade. Retail trade was up 1.3%. Why it mat­ters. The Cen­tral Bank is look­ing for evi­dence of a slow down in the econ­o­my to help bring infla­tion back to tar­get. It has kept the cash rate on hold at 4.35% since Novem­ber.

[00:04:09] Cameron: So. If they were expect­ing a 0. 2 per­cent rise, but 0. 1 per­cent rise, then that does seem to be a slow­ing down, which

[00:04:23] Tony: should have gone up.

[00:04:27] Cameron: that’s why I was con­fused. Like, wait, hold on. Isn’t that exact­ly what you want­ed? But, uh,

[00:04:32] Tony: strange. Good news is bad news and bad news is good news. Well, we’re in the moment,

[00:04:35] Tony: isn’t it?

[00:04:36] Tony: We’ll

[00:04:37] Cameron: but like the frus­trat­ing thing, I mean, okay, maybe I’m just dumb, which would explain every­thing, but, The Fin seems to say that we’re look­ing for evi­dence of a slow­down and yet it did­n’t sort of explain why that evi­dence of a slow­down First of all it said the mar­ket was going to wedge high­er, then it does­n’t, and instead they don’t real­ly explain why.

[00:05:02] Cameron: Um, so I don’t know, that’s shit­ty jour­nal­ism from the Finan­cial Review, I thought.

[00:05:08] Tony: it tomor­row. Yeah.

[00:05:12] Cameron: Okay.

[00:05:14] Tony: Yeah, look, um, it’s retail is look­ing pret­ty ane­mic, which I guess is why there are some retail stocks on the buy list at the moment.

[00:05:22] Tony: Which is usu­al­ly a good time to buy them because it’s not going to stay ane­mic for­ev­er.

[00:05:27] Cameron: Yeah,

[00:05:28] Cameron: right.

[00:05:28] Tony: but com­pa­nies, like I own Super Cheap Auto in my port­fo­lio and it’s come back a lot.

[00:05:32] Tony: Um, large­ly because it’s been, um, I’ll argue the fact that it’s strug­gling to increase sales when inter­est rates are up. Um, I think, I for­get now the num­ber that they, they said that they were down some­thing like 1 per­cent year on year. Um, I’m not sure if that’s with new store open­ings includ­ed or not, whether it’s like for like or whether it’s, um, total sales.

[00:05:55] Tony: So yeah, so inter­est rates abid­ing, which is what the RBA wants, so I would have thought if retail sales weren’t meet­ing tar­gets, the RBA has less rea­son to raise inter­est rates, and the

[00:06:05] Tony: share mar­ket might like that, but, um, who knows.

[00:06:09] Cameron: Who knows? Oh, what about con­fes­sion sea­son, Tony? I think we, we’re I’ve been in con­fes­sion sea­son now for

[00:06:16] Cameron: sort of a good cou­ple of weeks, um,

[00:06:19] Tony: rel­a­tive­ly qui­et this

[00:06:20] Tony: year.

[00:06:21] Cameron: it is rel­a­tive­ly qui­et. Yeah. I mean, any, any the­o­ries

[00:06:25] Cameron: on why and what’s hap­pen­ing in cor­po­rate

[00:06:28] Cameron: Aus­tralia?

[00:06:29] Tony: no, I mean, I think, I think com­pa­nies like Supercheap came out with a sales fore­cast decline. So that hit the stock. Um, there were some oth­er retail­ers, I think from mem­o­ry, JB Hi Fi also said some­thing sim­i­lar. Um, Tel­stra has been the big one, I guess, but we don’t usu­al­ly see Tel­stra on our buy list.

[00:06:50] Tony: They’re cut­ting staff and Well, you know, fore­cast­ing num­bers less than, reduc­ing the fore­cast, um, from what the ana­lysts thought. But oth­er­wise it’s been rea­son­ably qui­et. Um, and I haven’t noticed any big upticks, like no one’s come out and said we’re going to beat fore­casts by a lot.

[00:07:09] Tony: So the econ­o­my is quite sub­dued.

[00:07:11] Cameron: So for new mem­bers, new lis­ten­ers, we should explain what con­fes­sion sea­son is, um, some­thing to do with a good Catholic upbring­ing.

[00:07:23] Tony: Yeah. Yeah. Take your rosary beads.

[00:07:28] Cameron: Say 24 Hail

[00:07:31] Tony: You go, go in and say, um, the priest asked you if you’d sinned that week and you try and make up some­thing innocu­ous like, yeah, I’d raise my voice to my moth­er or some­thing like that. Except to slap on the wrist and off you go back out to the play­ground, pick up the footy and keep going.

[00:07:46] Tony: Yeah. Um, Con­fes­sion Sea­son, so in what’s it, five weeks time, the com­pa­nies are going to rule the line on their books at the end of June, as they do every half, or most com­pa­nies do, some do it on a March dead­line, but most com­pa­nies do it in Aus­tralia on an end of June basis. So they’ll be putting their num­bers togeth­er now, they’ll have a pret­ty good idea of what What the end of year is going to look like for their com­pa­nies, at least 11 months in.

[00:08:20] Tony: If some­thing dra­mat­ic hap­pens in June, I’ve got a fair idea of how they’re going to fin­ish. Um, the ASX list­ing rules say if the, if the, the, if, you know, you have infor­ma­tion which you think will change the share price, you’ve got to announce it. So if, um, if the com­pa­ny chair per­son knows that, uh, most ana­lysts or con­sen­sus fore­cast is to, 10 per­cent and it’s start­ing to change.

[00:08:45] Tony: to look like they’re going to grow by five, then they need to come out and say that, um, because you don’t want the mar­ket trad­ing on mis­in­for­ma­tion. And the reverse hap­pens too. If it looks like being a great year, they’re going to boost sales by 20%. They have to come out and announce that too.

[00:09:00] Tony: Um, so it’s called Con­fes­sion Sea­son.

[00:09:01] Tony: It’s, there’s no hard and fast date to it, but it gen­er­al­ly occurs about, um, in about the last month of the, um, of the finan­cial half. As, as com­pa­nies become aware of how they’re going to

[00:09:14] Tony: fin­ish up the year or the half com­pared to what the ana­lysts think.

[00:09:18] Cameron: I saw an arti­cle in the Fin, Chan­ti­cleer.

[00:09:22] Cameron: I think.

[00:09:22] Cameron: this was yes­ter­day. Says, there is a fragili­ty about this bull mar­ket that is worth watch­ing head­ing into the end of the finan­cial year. While fund man­agers love cheer­ing the mar­ket high­er and will take Mon­day’s 0. 8 per­cent gain ahead of the June 30 per­for­mance tests, they are scan­ning the hori­zon for the top of the mar­ket.

[00:09:43] Cameron: When will the good times end? We’ve heard all sorts of things. The next inter­est rate increase, when the tech slash AI dream turns into real­i­ty, when ten­sions flare in Tai­wan, Upcom­ing report­ing sea­son. Every hard head­ed investor has his or her favorite lead­ing indi­ca­tor. Regal Part­ners Chief Invest­ment Offi­cer Phil King swears by the US 10 year bond rate, cur­rent­ly 4.

[00:10:05] Cameron: 46%. For exam­ple, oth­ers watch the VIX, 11. 9 points, a 35 year low for their smoke sig­nals. At the stock lev­el, it’s all about earn­ings. Mac­quar­ie’s equi­ty strate­gist put an inter­est­ing lead­ing indi­ca­tor out there on Mon­day, warn­ing it had been trig­gered. And could crimp com­pa­ny prof­its, acti­vat­ing the risk of a near term down­grade clus­ter?

[00:10:27] Cameron: Mac­quar­ie’s indi­ca­tor is Aus­tralian busi­ness­es for­ward pur­chas­ing orders, which is a proxy for for­ward sales and eco­nom­ic activ­i­ty. Wor­ry­ing­ly, for­ward orders fell off a cliff last month to mul­ti year lows. We say wor­ry­ing­ly because the last time there was such a fall was 12 months ago. And it trig­gered a wave of earn­ings down­grades for the fol­low­ing month.

[00:10:49] Cameron: That wave has­n’t come yet, but the data sug­gests we should watch out for it next month as man­age­ment teams and boards look at their for­ward orders and think about what it means for fore­casts this year and next. And it goes on and on and on. But, um, Yeah, you would think that if, uh, peo­ple know that they’re not get­ting as many for­ward orders, they must know that their results aren’t going to be as good as they fore­cast, and they should be con­fess­ing stuff.

[00:11:17] Cameron: Like we, I seem to recall that six months ago, we got hit with a lot of sur­prise. Well, not six months, but when the last finan­cial results, I remem­ber we were get­ting hit with a lot of down­grad­ed things and going, hold on, where was the warn­ing? Where, why did­n’t this come out dur­ing con­fes­sion sea­son? And I don’t remem­ber there ever being any sort of, uh, ASIC swing­ing the bat at peo­ple for not, uh,

[00:11:40] Tony: Mm.

[00:11:40] Cameron: con­fess­ing. Do you, did you see any­thing?

[00:11:43] Tony: Well, the A SX, um, is the reg­u­la­tor in this case, and, uh, no, they’re, they’re, they’re a bit of a paper tiger. Um, when it comes to this, I, I can’t think of any­body in a very long time that’s been, um, pulled up for not dis­clos­ing, uh, some­thing that they should have dis­closed where they, where they do run a big­ger risk is, is the class action lawyers get­ting involved.

[00:12:07] Tony: So. There’s been a cou­ple of cas­es, um, Sims, Sims Met­al Man­age­ment comes to mind, or Sims, Sims Met­als comes to mind. A cou­ple of years ago, they, um, they came out with a down­grade, but it was­n’t sig­naled prop­er­ly. They knew about it before­hand. And, and so the class action lawyers, um, went to work and con­tact­ed all the share­hold­ers and said, you know, if you bought shares, buy Between this time when, which is basi­cal­ly alleged­ly when Sims knew about the down­turn in their busi­ness to when they told peo­ple pub­licly, um, then you were trad­ing with mis­in­for­ma­tion and, and, uh, I think that got to a set­tle­ment.

[00:12:44] Tony: I don’t know if it ever got to court, but it got to a set­tle­ment and some, and the share­hold­ers were paid out some­thing by Sims, prob­a­bly by their, their, um, insur­ers. But, uh, but yeah, that’s, that’s where the com­pa­nies do get fear­ful. So, um, it, it can be an issue for the small­er ones if they’re not. Like a big com­pa­ny like Com­Bank or Tel­stra, they’ve got, you know, a whole floor of lawyers.

[00:13:07] Tony: Watch­ing this for this kind of mar­ket dis­clo­sure infringe­ments and mak­ing sure it does­n’t hap­pen, but, um, if it’s a small com­pa­ny, which I know some of our lis­ten­ers have in their port­fo­lios that, um, they can, uh, sell close to the win­ning when it comes to all the fin­er points of, um, of the ASX announce­ments.

[00:13:27] Tony: I mean, there was a, I’m doing a pull talk lat­er on on one small com­pa­ny and they will issue what’s called a speed­ing tick­et. So the ASX said, well, your share price has gone up. Do you know why? Um, then they came back and said, um, oh, we see you made this pre­sen­ta­tion at a con­fer­ence or to a web­site or to an audi­ence.

[00:13:47] Tony: And it looks like it had mar­ket sen­si­tive stuff he did­n’t declare. And then they got a fair­ly legal­is­tic response from the com­pa­ny’s lawyers say­ing no, he did­n’t. So as far as I know, that’s as far as it went. But yeah, that’s, that’s the kind of thing that the ASX is meant to be reg­u­lat­ing. But it gen­er­al­ly just, it’s almost like I’m going to remind you of your oblig­a­tions rather than I’m going to fine you

[00:14:12] Tony: for break­ing your oblig­a­tions is the approach.

[00:14:16] Cameron: Hmm. Yeah. I just looked up the Sims one. It was set­tled for 29. 5 mil­lion, but, um, it looks like it, uh, took quite a few years

[00:14:29] Tony: yeah. Class. Class Set­tle­ments do, for sure, or Class Actions do,

[00:14:34] Tony: yeah.

[00:14:35] Cameron: Right. Uh, all right. Well, noth­ing for con­fes­sion sea­son then.

[00:14:43] Tony: No, I mean, the only ones I’ve been aware of are a cou­ple of the retail­ers who came out, um, with down­grades, and then com­pa­nies like Tel­stra, but I can’t recall any, um, ter­rif­ic upgrades, uh, and I can’t recall much hap­pen­ing yet, so far this con­fes­sion sea­son. There’s still a month to run, though, so we might get some late

[00:15:02] Tony: action lead­ing into the finan­cial year end.

[00:15:07] Cameron: Well, the only oth­er thing I want­ed to talk about, Tony, is to pick your brain on, I’ve had two emails in par­tic­u­lar in the last week from QAV club mem­bers. And

[00:15:18] Tony: Mm

[00:15:19] Cameron: um, want­i­ng to thank us because he said he’s look­ing at a great return for this finan­cial year. So around 20%. The oth­er say­ing that, uh, he’s has­n’t got a great return and both, both mem­bers have been around about the same amount of time.

[00:15:36] Cameron: Both start­ed ear­ly. 2022, um, which we know is, is, you know, when the Ukraine inva­sion hap­pened and inter­est rates, inter­est rates start­ed going up and all of that kind of stuff real­ly rocked the mar­kets, uh, for a long time. Um, but you know, it’s just this sit­u­a­tion where we have, One mem­ber that’s get­ting great results, one mem­ber that’s not get­ting great results, and assum­ing that they’re both fol­low­ing the rules.

[00:16:05] Cameron: Um, I know that my super per­for­mance over the last cou­ple of years has­n’t been great. I know that the dum­my port­fo­lio’s not had a bad year. I mean, it’s up about 10%, I think, this finan­cial year, but it’s under­per­form­ing the STW. I know the light port­fo­lios have been strug­gling in the last cou­ple of years to match the STW.

[00:16:28] Cameron: They’re under­per­form­ing. But, you know, we’re all fol­low­ing the same rules. And why some, one per­son­’s port­fo­lio would be doing great, anoth­er would­n’t, um, I have my the­o­ries on why that is, but, um, I want­ed to throw it to you and see what your back of the enve­lope analy­sis would be, why

[00:16:49] Tony: Yeah, well,

[00:16:50] Cameron: the same rules are get­ting dif­fer­ent year on year per­for­mances.

[00:16:54] Tony: um, yeah, so I looked at the two year per­for­mance in the dum­my port­fo­lio, I think it’s actu­al­ly been neg­a­tive. If you take a cal­en­dar per­for­mance, maybe you’ll look that up for me, thanks, um, and the mar­ket’s been slight­ly pos­i­tive, uh, but it’s a bit, it’s a bit like chaos the­o­ry. It’s, um, ini­tial states mat­ter, so if you’ve got two peo­ple, if they start­ed invest­ing on the same day, um, if they bought the same, the Num­ber of stocks in their port­fo­lio at the same time.

[00:17:20] Tony: If they, um, had the same sort of ADT lim­its, then yeah, they should apply the same rules and get the same results. But it does­n’t take much for that path to diverge if, for exam­ple, they start­ed Even a few days lat­er than each oth­er or one start­ed with a small­er port­fo­lio and one start­ed with a larg­er port­fo­lio or some­one took a cou­ple of days to real­ize it was a sell before they sold.

[00:17:46] Tony: Um, some­one did a down­load dur­ing the week and found there was some­thing else to buy on top of the buy list com­pared to the week­ly one we put out. There’s all sorts of rea­sons which

[00:17:55] Tony: can diverge the per­for­mance of those, of those two port­fo­lios for sure.

[00:18:00] Cameron: Um, you said Dum­my Port­fo­lio over the last two years.

[00:18:03] Tony: Yeah,

[00:18:06] Cameron: Uh, I’m look­ing at it now. It says, uh, our two year CAGA per­for­mance is 6. 77 per­cent per annum. Um, the STWs is 9. 1 per­cent CAGA per annum, but our cap­i­tal, our cap­i­tal gain is actu­al­ly down over that peri­od. It’s income, income return is what’s sav­ing it.

[00:18:27] Cameron: Cap­i­tal gain is down 3%. Income return is up 9. 8%.

[00:18:32] Tony: yep, okay,

[00:18:34] Cameron: But I’d be hap­py with my super port­fo­lio if it was run­ning at

[00:18:38] Tony: yeah,

[00:18:38] Cameron: per­cent

[00:18:39] Tony: and I’m the same over the last cou­ple of years as well. It has­n’t been a good time to be, uh, invest­ed,

[00:18:45] Tony: um,

[00:18:46] Cameron: I think ADT, um, seems to have a lot to do with it, I think. Like the, the mem­ber who said that he’s look­ing at a 20 per­cent return, I think he said his ADT is about 150, 000. Um, I know my super is def­i­nite­ly high, but then again, the, the light and the WPort­fo­lio Restric­tions. They’re all, you know, 15, 000 and up and the light port­fo­lios.

[00:19:13] Tony: yeah, but they do have more small stocks in my port­fo­lio, for exam­ple.

[00:19:19] Cameron: Well, that’s what I’m say­ing. So,

[00:19:20] Cameron: um, but their, their per­for­mance has­n’t been par­tic­u­lar­ly strong either. Like not 20%, like that mem­ber, the one mem­ber is get­ting 20%. Like if I look this finan­cial year for the dum­my port­fo­lio, it’s look­ing at the moment, it’s about 10%. Ver­sus the SDW about 13. Um, and if I just start look­ing at the light port­fo­lios, like the 221 light port­fo­lio, this finan­cial year is up, uh, it’s up about 13, which is about the same as the index.

[00:19:52] Cameron: Um, so that’s, uh, not too bad. Uh, let’s say 222 is up 5 per­cent ver­sus 13. 223 is up 10 per­cent ver­sus 13. 231 is down 1 per­cent ver­sus 13. I think it was sit­ting on a lot of cash, uh, for a long peri­od of the begin­ning of this finan­cial year when I could­n’t find any­thing to buy. Um, so, uh, you know,

[00:20:26] Tony: It’s a spread.

[00:20:27] Cameron: okay.

[00:20:27] Cameron: They’re not doing 20 though, right?

[00:20:29] Tony: No, it’s a spread, but, but also too, you’re look­ing at a short term per­for­mance. If you’re think­ing you’re going to find 20 per­cent across the board on all of those, that’s not going to hap­pen.

[00:20:39] Cameron: Yeah,

[00:20:39] Cameron: right.

[00:20:39] Tony: they’ve got to get estab­lished and,

[00:20:41] Tony: you know, wait a fair bit of time before they’re aver­ag­ing 20%.

[00:20:44] Tony: Mm

[00:20:46] Cameron: Yeah. So if I look at the dum­my, you

[00:20:49] Cameron: know, the dum­my has been run­ning since, um, 2019, late 2019, I think Sep­tem­ber was when we invest­ed the final bit of our cap­i­tal and it’s doing 15 per­cent CAGR per annum ver­sus the STW about nine. Um, and as you know, any­one knows if they’ve been fol­low­ing us for a while or looked at their chart, you know, we had mas­sive over­per­for­mance Our per­for­mance from sort of, uh, Sep­tem­ber, 2020 through to, um, May, 2022, April, May, 2022, when our stocks start­ed to sink rel­a­tive to the SDW.

[00:21:33] Cameron: But there was one peri­od there, like in July, 2021, we were doing, we were up, we were up 45% ver­sus the STW up 12%,

[00:21:43] Tony: Yeah, and that’s, we need a few of those in the oth­er port­fo­lios, so

[00:21:47] Tony: you can start to out­per­form con­sis­tent­ly over the longer term. And that’ll hap­pen with

[00:21:51] Tony: time. Yeah, I

[00:21:55] Cameron: It’s just, if, if you start­ed, uh, April, ear­ly 2022, when the mar­ket was crash­ing, it’s just bad, bad tim­ing. That’s all you just got­ta, you just got­ta be, be con­sis­tent, be per­sis­tent and wait for those good years. You get one, one and a half good years. What every. What do you think? Decade? Or is it less than that?

[00:22:22] Cameron: Six or sev­en years?

[00:22:23] Tony: have said one

[00:22:23] Tony: cycle, yeah, six or sev­en years, um,

[00:22:27] Tony: tends to be a sort

[00:22:27] Cameron: So you get, you get a 12 to 24 month peri­od where you mas­sive­ly

[00:22:32] Cameron: out­per­form, and then the rest of the time you’re coast­ing, under­per­form­ing, maybe in a cou­ple of years, mod­er­ate­ly out­per­form­ing in a cou­ple of years, and then just hold­ing on for that cycli­cal peri­od. You

[00:22:46] Tony: the human psy­chol­o­gy of that and why it’s so hard for investors to do that because, um, what’s that, but let’s say it’s sev­en years, it’s, it’s six out of sev­en years. You’re look­ing like the worst investor in the world. So, you know, maybe for two or three of those sev­en years, you’re under­per­form­ing the index even on a 12 month basis.

[00:23:06] Tony: Um, and so the psy­chol­o­gy is nor­mal­ly, Oh, this is no good. I’ve got to get out of here. I’ve got to put my mon­ey some­where safe. Um, this is not work­ing. And that’s called capit­u­la­tion. And so, that’s, I mean, there, there are peo­ple who think there’s some sci­ence around that, and there prob­a­bly is. Um, one guy was Cop­pock who said that, you know, that the mar­ket goes through the stages of grief, like a per­son does after a close rel­a­tive dies.

[00:23:33] Tony: And it takes about 18 months before the mar­ket gets back up on its feet after a big fall. Um, The point I’m try­ing to make is that it’s, I don’t know which of the sev­en years is going to be the mas­sive out­per­former. Um, so you’ve got to stay in for all sev­en years. And then after a peri­od of time, like sev­en to 10 years, you’ll be doing much bet­ter than the mar­ket.

[00:23:56] Tony: Um, if you take a short­er time­frame than that and you haven’t had that, that, you know, once in a cycle, real­ly good result, you, it’s going to look rea­son­ably aver­age and you may want to quit and that’s the worst thing to do.

[00:24:09] Tony: Because you’ll nev­er get the ones, you know, the one unit out­per­forms if you do

[00:24:12] Tony: that.

[00:24:15] Cameron: know, in my head, if I ever start to feel, um, depressed about per­for­mance for my super or I get, you know, start to ques­tion it, the process that I go through is I return to fun­da­men­tals. I think, okay, what are we doing here? We’re try­ing to find com­pa­nies that are per­form­ing well, that are under­val­ued. We’re buy­ing shares in those com­pa­nies under the assump­tion that.

[00:24:42] Cameron: Over time, the mar­ket will rec­og­nize that they’re per­form­ing well and they’ll regress to the mean. We’re not going to get it right all of the time. We’re just try­ing to get it right 6 out of 10 bets. Things are going to go the oth­er way. Uh, and even that 6 out of 10 is like an aver­age over a long peri­od of time.

[00:24:59] Cameron: You’re going to have peri­ods where you get them, we get 8 out of 10 wrong. You know, you’re try­ing to get on aver­age 6 right over a peri­od of time. And then, of course, while you’re doing all of that, there’s the froth and bub­ble in the mar­ket­place of, as we talked about last week, loss mak­ing, high growth stocks that the mar­ket’s obsessed with for what­ev­er rea­sons, a lot of froth and bub­ble that will be dri­ving up dif­fer­ent trends.

[00:25:23] Cameron: Stocks and the STW and all that kind of stuff in many cas­es, and you just got to ignore the froth and bub­ble and just stick to the fun­da­men­tal the­o­ry. I guess that’s what it comes down to in my head is, look, is there any­thing wrong with the fun­da­men­tal the­o­ry? Find good per­form­ing com­pa­nies when you can get them at a dis­count, buy them and hold them until they You know, you ha you, you’re forced to sell ’em because they break one of the rules and you know, you doing an insur­ance call on them, basi­cal­ly.

[00:25:52] Cameron: Um, and I, if, if I can’t find any­thing faulty with the the­o­ry and I don’t have a bet­ter the­o­ry, ,

[00:26:00] Tony: Yeah, that’s the thing. We can always improve the the­o­ry, but, um, until we do, we’ve got to, you know, we’ve got to prove it. But, um, until we do, we’ve got to stick with it, right? Because you, you, you’re right. I mean, it’s a bit like life, isn’t it? So your next door

[00:26:12] Tony: neigh­bors upgrad­ed their car, you know, well, what are they doing?

[00:26:15] Tony: Do I should be? No, I’m not. What am I doing wrong?

[00:26:18] Cameron: they’re not a pod­cast­er. That’s basi­cal­ly what it comes down to. And in every case, every­one I know is doing bet­ter than me and I’m going, well that’s, that’s ’cause they’re not a pod­cast­er, you know? No. But yeah, no.

[00:26:29] Tony: so it does­n’t mean you go and quit your job and apply for the same job they are, but they

[00:26:33] Tony: have. You stick with it, unless you think that your job isn’t going to pay off in the

[00:26:37] Tony: end.

[00:26:39] Cameron: There was this great, um, quote I saw recent­ly. I’m gonna see if, um, I can find it in my list of quotes. Um,

[00:26:54] Tony: Patience is so impor­tant in Life Cam, it’s not, you know, in invest­ing it’s impor­tant, in busi­ness it’s impor­tant, in almost every­thing it’s impor­tant, but peo­ple are always pres­sured into mak­ing quick deci­sions and that’s not how you should oper­ate.

[00:27:08] Cameron: yeah. I’m try­ing to remem­ber this quote and where I got it from.

[00:27:14] Cameron: Yes. So it was Geof­frey Hin­ton. Um, do you know who Geof­frey Hin­ton is? Geoff Hin­ton?

[00:27:21] Tony: I do not,

[00:27:22] Cameron: you’ve prob­a­bly seen him in the media. Okay. So Geof­frey Hin­ton is, they call him the god­fa­ther of AI in main­stream media.

[00:27:30] Cameron: He was the. Pro­fes­sor of Ilya Sutskev­er, who was the chief tech­nol­o­gy offi­cer at Ope­nAI until he got pushed out a cou­ple of weeks ago. Um, uh, and, and Hin­ton was then end­ed up at Google. He was like, he and his team of researchers end­ed up at Google’s AI thing where they built basi­cal­ly, uh, The mod­el that is used now for lan­guage large mod­els large­ly came out of Geoff Hin­ton and his, and his stu­dents.

[00:27:57] Cameron: They built this thing. So I was watch­ing a real­ly good inter­view with him recent­ly and he was talk­ing about, um, hir­ing smart peo­ple or bring­ing smart peo­ple into his team. And he was talk­ing about Ilya as, you know, the first time he met Ilya, he obvi­ous­ly was very, very bright. And he said some­thing like this, in his expe­ri­ence, real­ly smart peo­ple have a mod­el for how the world works in their head. And if some­body presents them with data that does­n’t match their mod­el, they are sus­pi­cious of the data, first of

[00:28:37] Cameron: all. And then, but then they will inter­ro­gate their mod­el for weak­ness­es to see if the new data can improve their mod­el. Or it just does­n’t fit with their mod­el. Uh, you know, their mod­el stands up.

[00:28:51] Cameron: It’s, it has a robust­ness to their mod­el. And then they reject the data as being faulty or prob­lem­at­ic, right?

[00:29:00] Tony: hmm.

[00:29:01] Cameron: There’s this idea about you and I, and, and, and I thought, well, that. I mean, that’s kind of how I work with geopol­i­tics, right? When I do the bull­shit fil­ter and, you know, when I’m doing my his­to­ry shows, I have a mod­el that’s been estab­lished over 30 years of read­ing his­to­ry and pol­i­tics and phi­los­o­phy and that kind of stuff, a mod­el for how Coun­tries work, pol­i­tics works, geopo­lit­i­cal affairs work, why wars hap­pen, how gov­ern­ments oper­ate, right?

[00:29:30] Cameron: So I have this mod­el in my head and I don’t, I don’t think it’s a per­fect mod­el and I don’t think I’m always right, but I have a mod­el. And I’m pret­ty con­fi­dent that that mod­el explains the vast major­i­ty of stuff that I’ve read about his­to­ry and geopo­lit­i­cal con­flicts. And if some­body presents me with a ver­sion of events that does­n’t map to my mod­el, I’m going to go, hmm.

[00:29:56] Cameron: Yeah, I’m not sure about that. And, you know, then I can inter­ro­gate my mod­el and see if my mod­el could be improved by inte­grat­ing their ver­sion. But you have to have a mod­el that you, you know, WELTANSCHAUUNG, that you see the world through, right? And I guess that’s what I’ve been learn­ing from you over the last five years with invest­ing is I have a mod­el, which is.

[00:30:18] Cameron: Been proven not just by you over 30 years, but by Buf­fett and Munger and, you know, all these guys came before them. And it seems to make sense. It’s, it’s, it’s coher­ent. It’s log­i­cal. It’s ratio­nal. I can’t find any weak­ness­es in the mod­el. So unless I have a bet­ter mod­el, for invest­ing that’s more coher­ent, more ratio­nal, more log­i­cal.

[00:30:43] Cameron: I have to stick with this mod­el. And if the mod­el does­n’t seem to be work­ing in the short term, it gets back to who is that guy

[00:30:51] Tony: Well, just let me pull you up there too. The

[00:30:52] Tony: mod­el is work­ing in the short term, but dum­my port­fo­lio proves it’s work­ing in the short term.

[00:30:57] Cameron: Yes, exact­ly. Yeah, yeah, yeah, yeah, yeah. Well, I mean, on short term, like one year though, you know?

[00:31:04] Tony: But, but I’ll, I’ll just want to pull you up there. You’re say­ing it’s not work­ing because per­haps it’s under­per­formed the mar­ket in a one year time frame.

[00:31:13] Tony: But the mod­el is still work­ing. It accounts for the fact that some years you’re going to under­per­form.

[00:31:18] Cameron: Oh yeah, right. Okay.

[00:31:19] Cameron: Yeah. Yeah.

[00:31:20] Tony: I

[00:31:21] Cameron: And you’ve always said

[00:31:21] Tony: Jan­u­ary the 1st, I can’t pre­dict that this year is going to be

[00:31:24] Tony: an under­per­form year or an out­per­form year. So I’ve got to stay in it. That’s the

[00:31:27] Tony: mod­el.

[00:31:29] Cameron: Yeah. And you’ve always, like, I remem­ber in the ear­ly days when we were talk­ing about this, you was, you would say. You know, in some, some years we will under­per­form and I used to go, yeah, I did­n’t, I did­n’t real­ly believe you at the time. He’s just being hum­ble. He’s just being mod­est. But, uh, appar­ent­ly it’s, we do under­per­form some­times.

[00:31:47] Cameron: Yeah. I’m try­ing to remem­ber the name of that book I was read­ing, um, What Works on Wall Street. Um, cou­ple of years ago,

[00:31:55] Tony: McGin­nis, isn’t it? Oh, it was O’Shaugh­nessy.

[00:31:57] Tony: Yeah. It’s an Irish name. McGin­nis or O’Shaugh­nessy? Could be O’Shaugh­nessy. Uh

[00:32:03] Cameron: but I clear­ly remem­ber in his book, he was say­ing that based on his expe­ri­ence, that’s exact­ly what peo­ple do, they pick a mod­el, They run that mod­el for a year or two until it does­n’t work for a year. And then they go, Oh shit. And they jump off of that mod­el and they go, they go find anoth­er mod­el, uh, that works for a year or two.

[00:32:28] Cameron: And then it stops work­ing and they go, Oh shit. And then they jump off of that and they go find anoth­er mod­el. And it’s like long term that nev­er works. Cause you know, the, you’re not con­sis­tent with your mod­el. I don’t know why I

[00:32:41] Tony: Well, it’s, well, you’re always jump­ing off the mod­el at the wrong time. You’re jump­ing off the mod­el and it’s down year. And so that’s just clas­sic buy­ing high and sell­ing low.

[00:32:52] Tony: You’ve seen some­thing, you’ve seen some­thing increase in date or some mod­el out­per­form. It’s like fund man­agers, right? You nev­er, you nev­er buy the, buy, you nev­er put your mon­ey into the fund of the high­est per­form­ing man­ag­er from last year.

[00:33:04] Tony: Because they’re going to regress to the mean. If you keep doing that, you’re just going to keep los­ing mon­ey. It’s the same with, with invest­ment style. You don’t just keep jump­ing around because you’re, you’re fol­low­ing one that’s worked and this year it’s not work­ing. So you’re going to jump out and find some­thing else.

[00:33:17] Tony: That’s just, that’s just con­sis­tent­ly

[00:33:19] Tony: tak­ing a loss.

[00:33:22] Cameron: I just found a cou­ple of quotes from his book that I’d made a note of. Find­ing ex It is, James O’Shaugh­nessy, What Works on Wall Street. Find­ing exploitable invest­ment oppor­tu­ni­ties does not mean it’s easy to make mon­ey, how­ev­er. To do so requires an abil­i­ty to con­sis­tent­ly, patient­ly, and slav­ish­ly stick with a strat­e­gy, even when it’s per­form­ing poor­ly rel­a­tive to oth­er meth­ods.

[00:33:44] Cameron: Few are capa­ble of such action. Struc­tured invest­ing is a hybrid of active and pas­sive man­age­ment that auto­mates buy and sell deci­sions. If a stock meets the cri­te­ria, it’s bought. If not, not. No per­son­al emo­tion­al judg­ments enter the process. Dis­ci­plined imple­men­ta­tion of active strate­gies is the key to per­for­mance.

[00:34:04] Cameron: Tra­di­tion­al man­agers usu­al­ly fol­low a hit and miss approach to invest­ing. Their lack of dis­ci­pline accounts for their inabil­i­ty to beat sim­ple approach­es that nev­er vary from their meth­ods. Don’t sec­ond guess. Don’t change your mind. Don’t reject an indi­vid­ual stock if it meets the cri­te­ria of your strat­e­gy, because you think it will do poor­ly.

[00:34:24] Cameron: Don’t try to out­smart.

[00:34:26] Tony: Ooh,

[00:34:28] Tony: good

[00:34:28] Cameron: Right? How good is that? Yeah. I remem­ber read­ing that and going, okay, well, I was­n’t going to do it because Tony told me, but if this guy tells me, I’m gonna No, but it’s

[00:34:41] Cameron: like

[00:34:41] Tony: exact­ly right though, isn’t

[00:34:43] Tony: it?

[00:34:43] Cameron: Yeah, right? It’s like, bril­liant. It’s just,

[00:34:47] Cameron: don’t, you know, try, unless you are smarter than the strat­e­gy, then come up with a smarter strat­e­gy and

[00:34:54] Tony: Yeah, hon­est­ly, every strat­e­gy should evolve over time as long as it’s done sci­en­tif­i­cal­ly. You can’t just sort of think, oh, that did­n’t work this week. I’m going to change it. It needs to be test­ed prop­er­ly. Yeah. But yeah, I mean, oth­er­wise,

[00:35:07] Tony: oth­er­wise it’s the casi­no that Buf­fett talks about. I mean, he’s had plen­ty of years where he’s under­per­formed. Um, he, you know, he says some­thing hum­ble at the AGM and moves on and keeps invest­ing. And in fact, when he first set up his part­ner­ship, when it was the Buf­fett Part­ner­ship back in the 50s, um, he made peo­ple sign a con­tract say­ing that they were going to keep their mon­ey with him, I think it was for 10 years at least.

[00:35:29] Tony: Like, they weren’t going to, they weren’t going to be able to pull it out. Um, because, uh, you know, he had a bad year and he under­per­formed. It was invest­ed for the longer peri­od and he would get out­sized returns. And that was real­ly smart of him to do that because he knew that if some of his investors would lose faith along the way and try and pull their mon­ey out and try and sell it or redeem at the wrong time when the mar­ket was down or when he was

[00:35:49] Tony: down com­pared to the

[00:35:50] Cameron: Yeah. Yeah. You just got­ta stick with it. Be dis­ci­plined. Slav­ish­ly stick to it, as O’Shaugh­nessy says.

[00:35:59] Tony: cor­rect.

[00:36:01] Tony: Be Doc­tor No.

[00:36:01] Tony: Ha ha ha.

[00:36:05] Cameron: Yeah. What have you got for us on a pulled pork front this week, Dr. No?

[00:36:11] Tony: I’ve just got one more thing to talk about before we get there. So we talked about con­fes­sion sea­son, but it’s also CGT, uh, sell­ing sea­son too, just to make peo­ple aware of that. Um, by that I mean, it’s, yeah, so it’s com­ing up to the end of the finan­cial year. Um, and this is not finan­cial advice or tax advice, and peo­ple should talk to their accoun­tants about it.

[00:36:34] Tony: But, um, it seems to me, uh, if you have, A port­fo­lio, uh, which is sold stocks dur­ing the year and they have a cap­i­tal gain and you have a stock in your port­fo­lio which you’re hold­ing on to, which is at a loss, then you might want to think about sell­ing that stock and off­set­ting the cap­i­tal loss or real­ize that cap­i­tal loss this month.

[00:36:56] Tony: Um, against the cap­i­tal gains to reduce how much cap­i­tal gains tax you pay. Um, so just, just be aware of where you are sit­ting with cap­i­tal gains tax before the end of the finan­cial year. And if you need to try and min­i­mize that, then, um, look at sell­ing some­thing which is at a loss. Um, and there are rules around that, which your accoun­tant can help you with.

[00:37:13] Tony: The, the wash rule is the most impor­tant. So, if you do sell some­thing, um, to off­set the cap­i­tal gain, don’t buy it back again on July 1. Because the tax office will say, oh, you’ve just done that to, to try and reduce your tax.

[00:37:27] Cameron: Right.

[00:37:27] Tony: Yeah, so you sell it and you buy some­thing else. Replace it with, um, you know, don’t re buy it after a peri­od.

[00:37:35] Tony: Um, so yeah, so yeah, talk to your accoun­tants, but just be aware that the clock­’s tick­ing before June 30. If you do have some good cap­i­tal gains, um, you might want to, and you do have a loss in your port­fo­lio and you’re

[00:37:46] Tony: hold­ing onto it, you might want to think about off­set­ting one against the oth­er.

[00:37:50] Cameron: Very good.

[00:37:51] Cameron: Hmm.

[00:37:53] Tony: my pulled pork today is on a com­pa­ny called Stealth Group. Great name, Stealth Group, SGI. I thought it was going to be some kind of secret, secret squir­rel cyber secu­ri­ty

[00:38:06] Tony: com­pa­ny, but it’s not. It’s a tool com­pa­ny. It’s a tool retail­er.

[00:38:11] Cameron: Stealthy tools,

[00:38:12] Tony: Stealthy tools, yes. SGI, small com­pa­ny. ADT is only 35, 000. Be aware of that. It’s a WA based com­pa­ny and they have a net­work of, I guess, now five busi­ness­es that retail auto­mo­tive and indus­tri­al parts, tools, con­struc­tion tools, safe­ty equip­ment, work­wear, hard­ware, con­struc­tion mate­ri­als, truck and trail­er parts, auto­mo­tive parts, elec­tri­cal parts, Clean­ing, uh, sup­plies, and any oth­er sort of work­place con­sum­able.

[00:38:51] Tony: Um, so they oper­ate five busi­ness­es. One is called Heat­ley Safe­ty and Indus­tri­al. Anoth­er one’s called C& L Tool Cen­tre, Skip­per Trans­port Parts. Indus­tri­al Sup­ply Group and Unit­ed Tools, uh, brings up the rear, great name, Unit­ed Tools, uh, they have 65 loca­tions around Aus­tralia, and they’ve had a good year, so, the mar­ket’s been kind to them, and their share price is up, um, this is the com­pa­ny I was talk­ing about before that, uh, Went into a pre­sen­ta­tion say­ing that their finan­cial year 24 pre audit num­bers showed that prof­it, net prof­it was up 49 per­cent and oper­at­ing cash flow was up 65%.

[00:39:37] Cameron: Wow.

[00:39:38] Tony: And yeah, so they’re good. The ASX came out and said, hang on, you haven’t announced those to the gen­er­al mar­ket. And their lawyers came back with some dou­ble Dutch rea­son why there was pre audit num­bers and you could­n’t rely on them, etc, etc. But any­way. Um, but if they, if those num­bers do flow into the, uh, end of finan­cial year num­bers, then their QAV score will prob­a­bly get even bet­ter, um, because, uh, they’re, they’re impres­sive.

[00:40:07] Tony: Um, the buy list is still using num­bers, though, from 31st of Decem­ber, 2023. So, that’s anoth­er thing, I guess, to bear in mind now is that, um, we always have this debate. In the last month of the year, do you wait until new num­bers come out, or do you rely on the old ones? And my answer is always to rely on the old ones, so I’ve got some num­bers to work with.

[00:40:27] Tony: Uh, that’s the case with this analy­sis, but just bear in mind that the com­pa­ny is already high­light­ing that the num­bers will get bet­ter. Uh, com­pa­ny was, has a, an own­er founder, which we score well, uh, for, so a chap by the name of Mike Arnold set the com­pa­ny up in 2014, and it’s been grow­ing since then.

[00:40:47] Tony: He’s still the CEO today and he still holds 11 per­cent of the com­pa­ny, so that’s pret­ty good. So it’s, it’s, my sort of, um, Take away from read­ing about this com­pa­ny is it’s like a mini Bun­nings sort of store. Um, or maybe if you com­bine Bun­nings and super cheap order into a, into one busi­ness, um, they’re, they’re grow­ing, uh, both organ­i­cal­ly, uh, but also by acqui­si­tion.

[00:41:12] Tony: So I think there is space in the mar­ket for a niche play­er who is. Um, we’ll even­tu­al­ly acquire lots of the, the, you know, sin­gle store out­lets that still ser­vice their mar­kets, par­tic­u­lar­ly in rur­al areas. So, um, I don’t see any rea­son why they can’t grow, even though they’ve got a cou­ple of big com­peti­tors on their doorsteps.

[00:41:34] Tony: Um, it’s often the case in retail that, uh, the niche play­er and the big play­er. Do well, um, and that’s the one in the mid­dle that gets squeezed from the top and the bot­tom. Uh, but even­tu­al­ly, I mean, you know, if this com­pa­ny gets real­ly large, then it’s either going to be picked off by one of the big play­ers or, or face some stiff com­pe­ti­tion from them.

[00:41:56] Tony: But any­way, num­bers at this stage are pret­ty good. Um, it’s just, as I said, a small com­pa­ny, we don’t have a con­sen­sus fore­cast for it, which is some­thing I like usu­al­ly. Uh, but it means we, we don’t know what, um, what we think the, the com­pa­ny will do next year. Notwith­stand­ing the fact that they’ve called out that this year is very good, and that next year, um, will be bet­ter. Uh, we have, no, the com­pa­ny isn’t pay­ing a div­i­dend, and they do see them­selves as a growth com­pa­ny, so we’re not get­ting, we can’t score them for yield. Stock Doc­tor finan­cial health and trend is sat­is­fac­to­ry and recov­er­ing, so I like the recov­er­ing side of things of that, and we score it well for that.

[00:42:34] Tony: PEs, you know, about mar­ket aver­age, it’s 18. 4, maybe a lit­tle bit, um, below that, but, uh, 18. 4 is not the high­est or the low­est over the last three years for this com­pa­ny, so I’m going to kind of score it for that. Prop­Caf is only 2. 78 times, which is very good, so. This com­pa­ny is throw­ing off a lot of cash and that’s obvi­ous­ly going to fund their growth as they go look to acquire more busi­ness­es or to expand.

[00:43:00] Tony: I know they’ve done a fair bit of work expand­ing into an online chan­nel. So, um, but, but what­ev­er they do, I, I, you know, from my sort of cur­so­ry look at them, I don’t see them, um, nec­es­sar­i­ly putting their hands out for, you know, Cap­i­tal rais­ings or tak­ing on lots of debt when they’ve got such strong cash­flow.

[00:43:19] Tony: Uh, IV one for this com­pa­ny is only 6 cents, so it’s trad­ing. Um, uh, well above that I, the num­ber, I use the share price of 21 cents, I think for this analy­sis. Yeah, 21 cents. Um, I think it’s a bit high­er than that today. Um, 21 cents is way above the IV one score. We don’t have an IV two score because we don’t have, uh.

[00:43:46] Tony: Uh, con­sen­sus fore­cast about future EPS. On the net equi­ty side, uh, Neps for this com­pa­ny is 16 cents per share, and the book plus 30 is 21 cents, so you can buy this com­pa­ny that’s throw­ing off a lot of oper­at­ing cash flow basi­cal­ly at its book plus 30 per­cent, um, on a down day per­haps it’s going to trade around that num­ber, uh, but you know, that, that to me is good buy­ing.

[00:44:11] Tony: Um, from a val­ue side of things any­way, and, uh, as I run through the scores, it’s, it’s also scor­ing well on the qual­i­ty side, the qual­i­ty score side of things too, so it’s, um, it’s right in that nice sweet spot for, for peo­ple if they want to have a look. Um, can’t score it for growth because we don’t have ana­lyst fore­casts.

[00:44:29] Tony: Um, we do score it for hav­ing an own­er founder, so Mike, Mike Arnold, as I said, has 11 per­cent still. Uh, the com­pa­ny has con­sis­tent­ly increased equi­ty over the last three years, so that’s. You know, that’s, that’s a good thing. Well man­aged com­pa­ny. Uh, over­all, out of all those things, the, the com­pa­ny Stealth Group has a qual­i­ty score of 10 out of 11 items.

[00:44:52] Tony: We can score at 4 or 91 per­cent and a QAV score of 0. 33. So it’s quite high up on our buy list. Um,

[00:45:01] Cameron: Hmm.

[00:45:02] Tony: as I said, pros and cons are going to come, um, I think entire­ly around the fact the pros will be because they’re a niche play­er and they’re going to have bet­ter cus­tomer rela­tion­ships. with their local com­mu­ni­ties and some of the big chains are going to be more nim­ble.

[00:45:16] Tony: And I think, you know, poten­tial­ly have more growth oppor­tu­ni­ties because they’re more like­ly to grow by buy­ing one or two busi­ness­es with a small num­ber of out­lets per year. But, you know, Bun­nings will need to buy a whole chain of Uh, of a com­pa­ny like this, it may well come up on the, the acqui­si­tion hori­zon for Bun­nings at some stage.

[00:45:37] Tony: Um, and then the, the cons for this, this is that they do have a big com­peti­tor in the mar­ket like Bun­nings or SuperChea­pOr­do, uh, keep­ing prices, um, as low as pos­si­ble so that, that will always, um, put head­room on what they’re able to charge. Uh, and, um, you know, if they grow, rea­son­ably large and they don’t get acquired and they will start, um, you know, find­ing it hard to find niche mar­kets that aren’t in the catch­ment areas for a big, a big store, which will, um, which will affect their growth

[00:46:05] Tony: oppor­tu­ni­ties. But over­all, this com­pa­ny scores real­ly well and it’s worth hav­ing a look at.

[00:46:11] Cameron: I’m just look­ing at our his­tor­i­cal buy list. it’s

[00:46:13] Cameron: been on and off our buy list going back like 2021, I think, and it was trad­ing at around, I don’t know, 10 cents back then. It’s now trad­ing at, uh, 23 cents, 23 and a half cents. So any­one

[00:46:31] Cameron: who,

[00:46:31] Tony: That’s good. Yeah.

[00:46:32] Tony: Yeah,

[00:46:33] Cameron: it, Back then when it was first on our buy lists and has held it, I mean, it’s had a cou­ple of declines.

[00:46:38] Cameron: So you might’ve had a three point trend line at some point, but, uh, I don’t hold it in any of our port­fo­lios. I’ve nev­er real­ly looked at it before. SGI for me means Sil­i­con Graph­ics. Do you remem­ber Sil­i­con Graph­ics?

[00:46:56] Tony: do. Yes.

[00:46:59] Cameron: Wow, they are like Sil­i­con Graph­ics

[00:47:02] Cameron: back in the day, man. They were the orig­i­nal SGI. I was just, um, I looked up what­ev­er hap­pened to Sil­i­con Graph­ics.

[00:47:12] Cameron: I vague­ly remem­ber, but, uh, yeah. From 1984 to 1997, their rev­enue went from 5. 4 mil­lion, 1984 to 3. 7 bil­lion. In 1997, 3D graph­ics, and then a few years lat­er they filed Chap­ter 11.

[00:47:32] Tony: Ah! Yeah, right.

[00:47:37] Cameron: When Macs and PCs could do 3D graph­ics as well,

[00:47:41] Cameron: no one was pay­ing hun­dreds of thou­sands of dol­lars for an SGI, uh, com­put­er. But, um, you know, the guy who, uh, found­ed it was Jim Clark, who then found­ed Netscape.

[00:47:57] Tony: Okay.

[00:47:58] Cameron: so, you know, I’m pret­ty sure he did okay. I’m not too wor­ried about, uh, Jim Clark. He’s still around 80 years old.

[00:48:06] Cameron: So yeah, I think, I don’t know what, I think Netscape end­ed up get­ting bought by Ora­cle, but any­way, I’m, I’m rant­i­ng now, but yeah, SGI takes me back to the, the nineties, nineties IT indus­try when SGI was sort of like a beast of a machine that

[00:48:23] Tony: It was, was­n’t it?

[00:48:24] Cameron: Ooh.

[00:48:25] Tony: Ah,

[00:48:28] Cameron: 3D graph­ics, which is how, I mean, NVIDIA, I mean, this is com­plete­ly off the NVIDIA then sort of did the 3D graph­ics thing and, uh, look at what’s, look at where they’ve gone.

[00:48:41] Tony: That’s why it’s always hard to find the next big thing, isn’t it?

[00:48:45] Cameron: Yeah. You know, you, you look at SGI late nineties, you would have thought

[00:48:49] Cameron: this com­pa­ny is going to dom­i­nate for­ev­er. And with­in 10 years, I think they’d gone bank­rupt.

[00:48:56] Tony: Yeah, and I read an arti­cle, I think it was in last week’s Fin, about Dun­can Miller sell­ing out of Nvidia. He got in ear­ly.

[00:49:03] Cameron: Who?

[00:49:05] Tony: Uh, Druck­en­miller, he’s a famous investor, used to work for George Soros,

[00:49:10] Tony: um, I think it’s Stan­ley Druck­en­miller, if I remem­ber, Druck­en, Druck­en­miller, get that name right. Worked for Soros, went off on his own, has had great returns for a long time, um, he’s often, you know, men­tioned in the Buf­fett, um, League, uh, or peo­ple like Soros, and, uh, uh, but any­way, it’s, it’s that time in the US when they’re all announc­ing their quar­ter­ly move­ments and their invest­ments.

[00:49:36] Tony: Buf­fett did a cou­ple of weeks ago as well. And, uh, he came out and sold out of NVIDIA. So, uh, he, I think he said he made eight times his mon­ey and it was time to get out. I don’t think he had a clear rea­son for doing it or he’s not required to give a clear rea­son for doing it. It was just fol­low­ing a report on what he trad­ed, but, um, he’s out.

[00:49:55] Cameron: Right. Tak­ing his prof­its out.

[00:49:57] Tony: Yeah.

[00:50:01] Cameron: Yeah, well, they’ve had a year.

[00:50:04] Tony: Oh Yeah.

[00:50:06] Cameron: Crazy. What’s going on with that? Well, thank you for SGI, Tony. That’s a good one to keep an eye on. As I said, I wish I’d, wish I had it in my port­fo­lio over the last cou­ple of years. It’s had a great run.

[00:50:17] Tony: Well, I’m, I’m guess­ing if it’s ADTs, what’d I say it was, it’s about 27, 000. So it’s prob­a­bly only got­ten up to the stage where you can put it in your port­fo­lio in the last year. At 10 cents the ADT was

[00:50:29] Tony: prob­a­bly below 15, 000. I’m guess­ing.

[00:50:32] Cameron: Yeah.

[00:50:33] Cameron: prob­a­bly. Well, that is every­thing for today, apart from a lit­tle bit of after hours. I fin­ished watch­ing Dream Sce­nario last night, the Nico­las Cage film.

[00:50:45] Tony: Ah, I’ve got halfway through it and haven’t got­ten back to it.

[00:50:52] Cameron: I took sort of a week to watch it while Chris­sy was away, a bit here and a bit there. But I real­ly enjoyed it. Um,

[00:50:58] Tony: good.

[00:50:59] Tony: I’ll get back to it then. It was, it was flag­ging for me. As much as I liked it, it

[00:51:02] Tony: was

[00:51:03] Cameron: oh real­ly? Yeah.

[00:51:05] Cameron: I mean, you know, and it has a, it has a twist that I did­n’t see com­ing, um, but you know, I’m world’s num­ber one Nico­las Cage fan, so I’m gonna love every­thing he does, but he’s had a good run late­ly, like he’s doing real­ly inter­est­ing films that are show­ing a range.

[00:51:22] Cameron: Did you see Pig? We talked about Pig?

[00:51:25] Tony: No, I haven’t seen it.

[00:51:27] Cameron: Oh, you got­ta see Pig, man. Pig was great. They steal his pig.

[00:51:31] Cameron: Um, yeah. You

[00:51:35] Tony: of thing?

[00:51:37] Cameron: would think, but no,

[00:51:39] Cameron: no, not real­ly. That’s the direc­tion you expect it to go in, but it real­ly does­n’t. He’s, um, yeah, it’s a real­ly qui­et role, he bare­ly speaks in it. And this one, he’s obvi­ous­ly play­ing this schlub­by, mid­dle aged, bald­ing pro­fes­sor, and he’s play­ing against type, not doing

[00:51:59] Cameron: the crazy Nico­las Cage kind of per­sona.

[00:52:03] Tony: Yeah.

[00:52:04] Cameron: Yes! Yeah, that one!

[00:52:08] Tony: Yeah.

[00:52:09] Cameron: Ren­field, um, yeah.

[00:52:13] Cameron: Any­way, uh, I enjoyed that. Haven’t watched any­thing else real­ly. What about you? Seen any­thing good on your trav­els? Hmm.

[00:52:21] Cameron: Hmm.

[00:52:22] Tony: or films or any­thing for the last two weeks. That dream sce­nario remind­ed me a bit of the, like, if you like movies like Eter­nal Sun­shine of the Spot­less Mind, those kind of,

[00:52:33] Tony: you know, real­ly good ones from the

[00:52:36] Tony: 90s. That kind of mo Yeah. I’ll get, I’ll get back to it. I just did­n’t have time to watch it,

[00:52:41] Cameron: The guy who wrote and direct­ed this I’d nev­er heard of before. I think he’s from

[00:52:45] Cameron: Nor­way or some­thing like that. He’s done a cou­ple of films, a bit of a writer, direc­tor, auteur. Um, obvi­ous­ly had a good enough resume to, although I don’t think it’s very hard to get Nico­las Cage to make any­thing if you’ve got to give him a pay pack­et.

[00:53:00] Cameron: Um, But this was good. It made me want, it makes me want to watch this guy’s ear­li­er films because I

[00:53:06] Tony: Oh, right,

[00:53:06] Cameron: real­ly, real­ly, real­ly, impressed with this.

[00:53:09] Tony: Yeah.

[00:53:10] Cameron: I just watched a YouTube, uh, today or last night, last cou­ple of days of, uh, the Curb Your Enthu­si­asm cast at some, you know, I don’t know, indus­try thing where they were being inter­viewed for an hour by Judd Apa­tow talk­ing about Curb Your Enthu­si­asm and the his­to­ry of mak­ing it, which was fun.

[00:53:31] Tony: Yep. Well, that’s good. No, well, we’ve, we’ve been, um, absorbed by golf and horse rac­ing for

[00:53:39] Tony: the last, uh, week or so and catch­ing up with friends and fam­i­ly too, which has been nice. Yeah,

[00:53:45] Tony: um,

[00:53:45] Cameron: body going with the golf? So you, uh. Over your injuries.

[00:53:50] Tony: Yeah, no, back­’s hot. I’ve, um, been a lit­tle cropped though late­ly. I had to get some antibi­otics after I saw you in Bris­bane, not because of you, but, I think I prob­a­bly from scar­ring when I was down there in lots of crowds,

[00:54:03] Cameron: That’s so good.

[00:54:04] Tony: no, I picked up some kind of sinus infec­tions.

[00:54:07] Tony: I’ve just been bat­tling that for a while, but that’s com­ing good, which is good. Oth­er­wise all good. We played a great game yes­ter­day. Went to Bon­neville, which is a golf course in Coffs Har­bour. Very, very nice. Um, had a great round there with Rud­dy yes­ter­day. A lot of fun. Had the course to our­selves pret­ty much.

[00:54:26] Tony: Real­ly rec­om­mend doing Bon­neville to any­one. Um, and then we’re head­ing down to one called Fos­ter Tunkari tomor­row, meet­ing up with a friend down there. So we’re get­ting up ear­ly and check­ing out and get­ting on the road quick­ly tomor­row.

[00:54:41] Cameron: Nice.

[00:54:41] Tony: Yeah. and

[00:54:42] Tony: then back in Syd­ney.

[00:54:44] Cameron: I was at a golf course on the week­end with Fox and one of his friends

[00:54:47] Cameron: who, one of their favorite things to do is go around golf cours­es and pick up golf balls from

[00:54:53] Tony: Oh, nice.

[00:54:54] Cameron: You know, what­ev­er.

[00:54:56] Tony: Well, I should have bought some off him when he was up there then.

[00:54:58] Cameron: Well, that’s his, I keep say­ing to him, he does this like every now

[00:55:02] Cameron: and again, they go, can you take us to a golf course? And then they’ll pick up a hun­dred balls. And I’m like, and then they’ll just sit in the garage. And I’m like, what, why are we doing, why are we doing this? He goes, I’m going to sell them.

[00:55:14] Cameron: I’m going to sell them on eBay. I go,

[00:55:16] Tony: Yeah, that’s a good idea. That’s a great idea. Well, peo­ple do it,

[00:55:20] Cameron: I’m going to sell them to Tony.

[00:55:21] Tony: me. All right. Well, I’ll buy some.

[00:55:25] Cameron: I said, do you know how much,

[00:55:27] Cameron: what it’s going to cost to

[00:55:28] Cameron: ship a hun­dred golf balls by mail to some­one? It’s going to be like 50 bucks in postage, man.

[00:55:35] Cameron: Any­way.

[00:55:36] Tony: That’s great. That’s great. That’s how Buf­fett start­ed get­ting golf balls on golf cours­es.

[00:55:41] Cameron: Real­ly?

[00:55:42] Tony: Yeah. It’s one of his jobs as a kid or one of his, um, his, uh, entre­pre­neur­ial Exploit? I’m just watch­ing the um, Mag­ic Mil­lions in the back­ground. Our horse is

[00:55:55] Tony: felling at the moment.

[00:55:57] Tony: Negro­nis, the one that Steve Mab­b’s in with me.

[00:55:59] Tony: Yeah,

[00:56:00] Cameron: Oh Yeah, What’s the price at? How’s it going?

[00:56:04] Tony: It’s going up, it’s cur­rent­ly 40,

[00:56:07] Tony: 000, but hop­ing for a lot more, 50, 000.

[00:56:10] Cameron: Do you want me to

[00:56:11] Cameron: dial in and put in a fake bet for you and push the price up?

[00:56:15] Tony: as long as you don’t get caught with it.

[00:56:18] Cameron: Yeah, I get caught. You give me the mon­ey and you know,

[00:56:20] Tony: Oh, right.

[00:56:21] Cameron: you still

[00:56:22] Tony: Yeah, I’ll pay you on golf balls.

[00:56:27] Tony: Yeah, six­ty thou­sand. Come on, need more than that. Six­ty five. We’re always going to five, so that’s not good.

[00:56:35] Cameron: Oh,

[00:56:36] Tony: 80. Oh, it’s jumped to 80, that’s

[00:56:37] Cameron: whoa. Look at that.

[00:56:39] Tony: Yeah. Come on.

[00:56:40] Cameron: That was Steven Mabb.

[00:56:42] Tony: Ah, ha, ha, ha, ha, ha, ha,

[00:56:44] Cameron: on the phone push­ing it

[00:56:45] Tony: ha, ha, ha, ha, ha, Ah. It’s gone like this. It’s stalling again. 85. Come on, we need more than that. 90. Oh, this is the one. It’s the half sis­ter to the blue dia­mond win­ner this year, which is why we decid­ed to, um, put it through the ring, because it’s worth more as a

[00:57:03] Tony: Brood­mare than the race­horse. Oh, it’s sold for 90, 000. OK. Bye.

[00:57:07] Cameron: How does that match your expec­ta­tions?

[00:57:10] Tony: It’s low­er than my expec­ta­tions. I was, I was hop­ing for

[00:57:14] Tony: like, I thought we’d prob­a­bly get some­thing like 140

[00:57:18] Tony: or 150.

[00:57:22] Cameron: You did­n’t have your real estate agent sell­ing this, did you?

[00:57:30] Tony: No, don’t men­tion the war. All

[00:57:35] Cameron: All right, TK. Well, that’s it. I got to go put a loaf of bread in the oven. Um, and that’s not a euphemism. I wish it was, but my wife’s still over­seas. Um, you have a good week.

[00:57:47] Tony: All right.

[00:57:49] Cameron: I’ll talk to you next week. Cheers,

[00:57:50] Tony: Thanks. Bye.

[00:57:52] Cameron: Bye.