QAV 727 — Great FY Results

QAV 727 Club

[00:00:00] Cameron: Wel­come back to QAV. Tony Kynas­ton, I feel like I’m just talk­ing to you all the time these days. You were on Futur­is­tic yes­ter­day, back here today. Um, Supreme Court gave a rul­ing last night, Tony, that any­thing you and I do on this pod­cast, if it’s part of our offi­cial duties, is, uh, basi­cal­ly, uh, pro­tect­ed.

[00:00:33] Cameron: We’re pro­tect­ed from any future pros­e­cu­tion by any­body for any­thing that we may do or say. Uh, in the, in the, uh, per­for­mance of our offi­cial dues. Cause we can’t be wor­ried about the, the future ram­i­fi­ca­tions of any­thing that we do while we’re doing this. What, what kind of world would that be? Where peo­ple have to wor­ry about future ram­i­fi­ca­tions.

[00:00:52] Tony: Yeah, a law­less world. It’s fun­ny how the Supreme Court of Amer­i­ca just cre­at­ed a law­less world. Yeah, I would go, yeah. It’s, um, it’s fun­ny how this, the Repub­li­cans stack Supreme Court of Amer­i­ca have cleared Trump. Isn’t that inter­est­ing? Sur­prise, sur­prise.

[00:01:10] Cameron: sur­prise. Well, let’s see what we’ve got on the talk­ing list of things

[00:01:17] Tony: Well, hap­py, hap­py new finan­cial year. It’s the

[00:01:20] Cameron: Oh, it is. Well, yeah, not so hap­py when I look at my finan­cial year final results. We’ll get to that in a minute. Um, and the ABC this morn­ing, their chief busi­ness cor­re­spon­dent Ian

[00:01:36] Cameron: Vrrrrr, had an arti­cle, Why Prop­er­ty and Stock Mar­kets Are Thumb­ing Their Noses at Rate Hikes. And he starts it off with our favorite phrase, This Time It’s Dif­fer­ent.

[00:01:46] Tony: mm hmm, mm

[00:01:50] Cameron: shout out to Ian, IanV, It’s a phrase you’ll hear through almost every boom, any fi, any­time, a finan­cial bub­ble. I can’t talk. It’s a phrase you’ll hear through almost every boom. Any­time a finan­cial bub­ble forms or with the advent of some new mar­ket phe­nom­e­non, it’s rarely the case.

[00:02:10] Cameron: When­ev­er human behav­ior gets out of whack or mar­kets out of line, there’s usu­al­ly some kind of reck­on­ing that results in a return to nor­mal­i­ty, a return to the mean. Occa­sion­al­ly, how­ev­er, things take just a lit­tle longer. To behave the way we expect. Right now, we’re in the midst of some rather strange occur­rences.

[00:02:31] Cameron: Despite a tol­er­ant round of inter­est rate hikes across the globe, and par­tic­u­lar­ly the devel­oped world, finan­cial and prop­er­ty mar­kets are still boom­ing. Even more star­tling is that employ­ment has remained incred­i­bly strong. Eco­nom­ic growth may have slowed to a crawl, but work­ers have so far been kept afloat by the best jobs mar­ket in close to half a cen­tu­ry.

[00:02:52] Cameron: And that’s not just here. Our job­less rate is about 4%, high­er than mid­way through last year, but still at his­tor­i­cal­ly low lev­els. The US also has an unem­ploy­ment rate of 4%, while the UK is sit­ting at 4. 4%. While wel­come, this has been total­ly unex­pect­ed and it’s seen cen­tral bankers scram­bling to try to nut out just why devel­oped economies aren’t react­ing to inter­est rate hikes the way they once did.

[00:03:17] Cameron: House­hold spend­ing has remained rel­a­tive­ly strong and while spik­ing inter­est rates have had a dev­as­tat­ing impact on some, most­ly younger, house­holds. Old­er gen­er­a­tions have sailed bliss­ful­ly through the storm. I seem to recall, uh, a cou­ple of years ago, Tony, um, our This Time It’s Dif­fer­ent friend, Alan Kohler, explain­ing that the unem­ploy­ment fig­ures that get bandied about are a lit­tle bit murky.

[00:03:46] Cameron: That, uh, the gig econ­o­my had a lot of peo­ple who were work­ing just a few hours a week, but they were being clas­si­fied as employed, uh, when they weren’t real­ly earn­ing the sort of income that you would expect from some­body in full employ­ment. Do you know if that’s still the case? That 4 per­cent num­ber, how much, have you seen any analy­sis to say whether or not that’s a ridgy-didge or a lit­tle bit fluffy?

[00:04:09] Tony: I haven’t seen recent analy­sis, but, um, I think Alan Cole was report­ing it still hold, uh, from mem­o­ry, if you work more than one hour a week, you’re classed as employed in the unem­ploy­ment stats, and, uh, the num­ber was about 14 per­cent was the num­ber of peo­ple who were look­ing for work or look­ing for more work, so more hours. Yeah, but you know, we had this dis­cus­sion with Alan at the time when he was on the show. There will cer­tain­ly be peo­ple in the gig econ­o­my who want more hours, and cer­tain­ly be peo­ple who are part time work­ers who are look­ing for a full time job, but the gig econ­o­my cer­tain­ly suits a lot of peo­ple as well, like stu­dents or peo­ple work­ing sec­ond jobs, so, um, yeah.

[00:04:57] Tony: You’d have to do a very deep dive analy­sis into what the real num­ber is. It’s prob­a­bly high­er than 4%. Um, but yeah, I think the point of this arti­cle is very inter­est­ing is what you do with inter­est rates. And I think the point is, as I’ve said many times, the RBA and fed­er­al reserves around the world, cen­tral banks around the world caused the prob­lem after the GFC, when they low­ered inter­est rates to, you know, Pret­ty much zero or neg­a­tive flood­ed the world with print­ed mon­ey and that caused a start of an asset infla­tion bub­ble and now they’re they’re try­ing to reduce that but the infla­tion is a prob­lem and so they don’t want to add to it too much.

[00:05:36] Tony: I think they’re actu­al­ly caus­ing infla­tion by the way, um, or adding to infla­tion which was caused by some­thing else besides inter­est rates uh and and now they don’t know what to do and you know that’s that’s a com­mon prob­lem with econ­o­mists they’re great at telling you Aca­d­e­m­i­cal­ly, how the econ­o­my works and what hap­pened, they’re ter­ri­ble at pre­dict­ing what to do or cop­ing with some­thing that, a new cir­cum­stance that comes along.

[00:06:00] Tony: Even­tu­al­ly they’ll mud­dle their way through it and luck­i­ly there’s a lot of peo­ple work­ing on it and a lot of cen­tral banks grap­pling with the same prob­lem. Um, but yeah, there’s a two speed econ­o­my going on. If they raise inter­est rates now to try and put a brake on, um, peo­ple invest­ing in assets like prop­er­ty or shares, Um, that rais­es infla­tion and if they low­er inter­est rates now, um, then the asset prices take off again because peo­ple have more mon­ey to invest.

[00:06:29] Tony: So my gut feel is inter­est rates are going to stay where they are for a while until things wash out a bit more in the econ­o­my.

[00:06:37] Cameron: He talks about the his­to­ry of quan­ti­ta­tive eas­ing here, talk­ing about Japan toy­ing with it, then Chi­na, then when the glob­al finan­cial cri­sis hit Europe and the US dived in. It says, and then he says, it worked, but we had no idea of the longer term con­se­quences. Now it seems we’re begin­ning to under­stand what they are.

[00:06:58] Cameron: Essen­tial­ly a form of mon­ey print­ing, the world’s biggest cen­tral banks pumped tens of tril­lions of dol­lars into the finan­cial sys­tem. What it did was inflate asset prices. There’s a shock. Prop­er­ty, stocks, and bonds con­tin­u­al­ly shot to new records regard­less of what was hap­pen­ing in the broad­er econ­o­my.

[00:07:15] Cameron: The prob­lem was that it was dif­fi­cult to reverse. Every time they tried, it threat­ened to choke off cred­it and cre­ate a brand new finan­cial cri­sis. So when the pan­dem­ic hit in 2020 and they opened the mon­e­tary flood­gates, the glob­al finan­cial sys­tem already was awash with cash. While they’ve man­aged to wind it back in the past two years, the glob­al econ­o­my is still swim­ming in excess cash.

[00:07:37] Cameron: To the tune of about U. S. 28 tril­lion dol­lars. So, again, I seem to recall, when we were doing the whole quan­ti­ta­tive eas­ing thing dur­ing 2020, there were plen­ty of voic­es say­ing, it’s not a prob­lem. We know how

[00:07:56] Tony: Oh yeah.

[00:07:57] Cameron: it off. It’s all, it’s under con­trol. Nobody pan­ic. Know exact­ly what we’re doing. Well,

[00:08:04] Tony: shows at least on MMT, um, Mod­ern Mon­e­tary The­o­ry, which was all about print­ing mon­ey to solve your prob­lems. And the, and the crit­i­cism that kept com­ing back at the peo­ple who were say­ing MMT is a thing and it’s going to be great and we’ll, you know, have good economies for­ev­er, was that if you print lots of mon­ey, you’ll cause infla­tion.

[00:08:24] Tony: And here we are, four years, bare­ly four years on, and that’s what’s hap­pened. Um, and, you know, now gov­ern­ments have got to deal with that prob­lem. And, you know, that’s part of the issue. Gov­ern­ments are short term focused. They had to solve the prob­lem of the GFC, and they had to solve the prob­lem of the pan­dem­ic, and so they threw cash at it.

[00:08:44] Tony: They could­n’t afford, you to give cash so they print­ed mon­ey. Um, prob­lem solved and on to the next thing. And then, you know, four years lat­er they’re now try­ing to deal with infla­tion. So that’s, that’s, I guess, a prob­lem with the short ter­mism of gov­ern­ment. Um, but the RBA is sup­posed to, you know, help with that by hav­ing peo­ple who aren’t elect­ed every four years on the board and have, you know, a longer term hori­zon to solve these prob­lems.

[00:09:10] Tony: But we’ll see if they do. Um, they’ve had a mixed bag of suc­cess so far.

[00:09:16] Cameron: the arti­cle just goes on to talk about how Aus­tralians are swim­ming in cash, rich­er than ever before.

[00:09:22] Tony: Well, some are. Some, I think that’s it. Some are. That’s the impor­tant part about the arti­cle is young peo­ple and peo­ple who don’t own a house who are try­ing to get into the hous­ing mar­ket, for exam­ple, peo­ple who are tak­ing out large mort­gages, they’re not doing it well. Um, peo­ple with large fam­i­lies who found a super­mar­ket and heat­ing bills and oth­er bills that have gone up, insur­ance bills, they’re not doing well.

[00:09:44] Tony: It’s peo­ple like me. You know, who’ve sat on assets for a long time, who are okay in this, in this envi­ron­ment. Um,

[00:09:53] Cameron: Peo­ple like me that got divorced sev­er­al times and did a cou­ple of tech star­tups who are on the bones of our arse and have noth­ing.

[00:10:01] Tony: and your costs are going up.

[00:10:03] Cameron: Yeah, and my income’s going down.

[00:10:06] Tony: yeah. So, you know, write a let­ter to the finan­cial review com­plain­ing about this cen­tral bank print­ing mon­ey. Let’s see how far you get.

[00:10:13] Cameron: And up until yes­ter­day I thought AI was going to solve all my prob­lems. You spent two hours con­vinc­ing me that it’s not, it’s not going to bring about the rev­o­lu­tion that I so very need,

[00:10:25] Tony: Well, it’s fun­ny. I’ve, I’ve been reflect­ing on that dis­cus­sion. It’s fun­ny how we bring our own frame­works to what­ev­er pre­dic­tion we’re mak­ing. Like you, you, you need, Com­mu­nism to save your arse and I need cap­i­tal­ism to keep my arse safe. So

[00:10:39] Cameron: of course,

[00:10:40] Tony: they’re the, they’re the points of view we’ve brought to our pre­dic­tions.

[00:10:42] Tony: Yeah,

[00:10:43] Cameron: yeah. We’ll see which one plays out. Um, all right, well, there you go. Michelle Bul­lock, Sher­iff Bul­lock, as I like to refer to her, because I’m a Dead­wood fan, uh, says she isn’t keen on anoth­er inter­est rate hike. She

[00:11:00] Tony: good news.

[00:11:02] Cameron: That regard­less of what hap­pens to GDP, so long as unem­ploy­ment remains strong, Aus­tralia can emerge from the infla­tion infer­no in rel­a­tive­ly good health.

[00:11:12] Cameron: So,

[00:11:13] Tony: mean, there are peo­ple out there argu­ing for a rate rise because we’ve kind of, we are out of step with the rest of the world. They, they went up a cou­ple of steps more in their rate hikes and we stayed still after they start­ed to buy here. And now we’re out of step because they’re start­ing to cut rates around the world.

[00:11:29] Tony: So I think it makes sense that we hold them where we are. a lit­tle bit longer. Infla­tion has def­i­nite­ly come down. It may have gone up. Peo­ple got spooked when the last lat­est num­bers came out because they went up by half a per­cent or some­thing, but it’s not a big move. It’s a blip, I think, in noise. So my gut feel is though, I think they’d be at this stage, giv­en what we know, I think they’d be crazy to cut or raise rates at this stage.

[00:11:53] Cameron: Well, let’s see how crazy they are.

[00:11:55] Tony: Yeah, and that’s a pre­dic­tion from me, which I hate doing. I hate pre­dic­tions. Who knows? I’d rather posi­tion myself to have a good sys­tem so that I can ignore what hap­pens with inter­est rates.

[00:12:07] Cameron: Yeah. Well, speak­ing about a good sys­tem, finan­cial year is over, as you said ear­li­er.

[00:12:13] Tony: Mm hmm.

[00:12:14] Cameron: had a look at the var­i­ous port­fo­lios. The dum­my port­fo­lio fin­ished the finan­cial year up 9%, ver­sus the STW up 12%. So, we’re a lit­tle bit behind the STW for the year, but up 9%, still a good result for the year.

[00:12:30] Cameron: Sur­pris­ing­ly for me, the light group The four light port­fo­lios bun­dled togeth­er were up 8 per­cent for the, uh, finan­cial year. um, you know, pret­ty much the same as the dum­my port­fo­lio, uh, not sur­pris­ing fol­low­ing the same sys­tem, but they were quite neg­a­tive, uh, not that long ago. And they have recov­ered a lot, um, in the last six months to get up to the 8%.

[00:12:57] Cameron: So I’m pret­ty hap­py with that.

[00:12:58] Tony: It does seem, sor­ry to inter­rupt, but it does seem to be a thing with our port­fo­lios that they sort of take a while to bed down. You, we found it with the dum­my port­fo­lio and then with the light port­fo­lios, we start one, they either go side­ways for a while or they go back­wards for a while and they sort of bed down after the process has tak­en hold, after we’ve got enough stocks in them, um, we kind of jug­gle the stocks a lit­tle bit, then they sort of go on from there.

[00:13:21] Tony: It seems to be a com­mon pat­tern I think.

[00:13:24] Cameron: Yeah, once they get through the three, sor­ry, the rule one death trap,

[00:13:29] Tony: Mm hmm.

[00:13:30] Cameron: par­tic­u­lar­ly in a volatile mar­ket, once they, once they reach escape veloc­i­ty, they get

[00:13:35] Tony: Yeah.

[00:13:36] Cameron: well, well and tru­ly over their, uh, uh, buy price and they get up 10, 20 per­cent up. Yeah, unless there’s a com­mod­i­ty cri­sis or a, um, three point trend line sell.

[00:13:47] Cameron: You know, we don’t end up doing a lot of trad­ing. In terms of all time results for the dum­my port­fo­lio, that’s sort of five and a bit years now, it’s up rough­ly 15 per­cent CAGR per annum, ver­sus the STW up 8 per­cent over the same amount of time CAGR per annum. So. Not quite dou­ble, um, but pret­ty close to dou­ble the mar­ket.

[00:14:11] Cameron: The light, uh, as a group since incep­tion, which is kind of ear­ly 2022, up 5 per­cent ver­sus the STW up 8%. So again, uh, not beat­ing it, um, but not a ter­ri­ble result either, um, con­sid­er­ing where it was a lit­tle while ago. It seems to have sta­bi­lized and is, uh, you know, show­ing some, some good gains. My super port­fo­lio, on the oth­er hand, sor­ry, yeah,

[00:14:41] Tony: say, I was just going to say, just the com­men­tary on that. It seems to be the way my, like my invest­ment expe­ri­ence is that we don’t beat the mar­ket every year. I think you did some analy­sis which said it was about 2 or 3 in 10 that I haven’t out­per­formed the mar­ket. Um, but then you get all the good years which take you up to dou­ble mar­ket.

[00:14:59] Tony: So being pos­i­tive and being a lit­tle bit below mar­ket does­n’t wor­ry me at the moment. It’s, it’ll come good. Mm

[00:15:08] Cameron: me either. My super port­fo­lio for the finan­cial year closed up about 1%, so not as good. And again, as I talked about last week, I think the big dif­fer­ence is, and I want to do some analy­sis on this, but I don’t think I have, just in terms of the volatil­i­ty of the high ADT stocks in the last cou­ple of years ver­sus the volatil­i­ty of the low­er stocks, um, It looks to me like, you know, the only real dif­fer­ence between my ADT, my super port­fo­lio and the way I man­age the oth­er port­fo­lios is the lim­i­ta­tion of the ADT and also because there’s been long stretch­es where I could­n’t, because of the ADT require­ments, I could­n’t buy any­thing, sit­ting in cash for long stretch­es because I could­n’t find any­thing to buy, um, so yeah, that’s where my port­fo­lio results are at clos­ing out the finan­cial year.

[00:16:05] Cameron: Have you done your analy­sis yet?

[00:16:07] Tony: Yeah, I had a look in Share­Site. So my Super­fund, which is the one I track now in terms of per­for­mance results, because the stocks that are in our per­son­al names are in and out all the time as we fund our own lifestyles and mort­gages and body cor­po­rate fees and what­not, um, but the Super­fund, which is her­met­i­cal­ly sealed, was up just over 6% So again, it’s, um, the mar­ket was up 12.

[00:16:29] Tony: So I’m not proud of it being up 6%, but it’s above water and it’s, um, yeah, it’s with­in ball­park of mar­ket and it’s not going back­wards yet. Um, and the most inter­est­ing thing is most of that was div­i­dends. Two thirds of that was div­i­dends, 4. 3%. rough­ly, was because of div­i­dends. So I think the cap­i­tal gain was only about one point some­thing, 1.

[00:16:50] Tony: 5 per­cent, and the rest was uh, div­i­dends. So that’s, I guess that under­lines for me, because like you, I’m buy­ing high ADT stocks, um, that div­i­dends are impor­tant.

[00:17:02] Cameron: I don’t think I’m even includ­ing div­i­dends in my super port­fo­lio.

[00:17:05] Tony: Oh, you should.

[00:17:07] Cameron: I don’t think they’re show­ing up in my trans­ac­tion. So get­ting any­thing out of an Aus­Su­per is just a freak­ing night­mare, man. Oh, but this is being done by Navexa though. I’m putting the trans­ac­tions into Navexa. Navexa should be track­ing the div­i­dends.

[00:17:20] Cameron: Can I have a look? Yeah. I stopped try­ing to get any reports out of Aus­Su­per because it was just a night­mare.

[00:17:27] Tony: Well, if it’s any­thing like Super­funds that I was a mem­ber of years ago, like about three months down the track, you’ll get a glossy report as to how good they did for you.

[00:17:36] Cameron: Yeah, but it’s not for the self man­aged bit. The self man­aged bit is, you’ve got to do it over their web­site, and the web­site’s a dog’s break­fast. Okay, accord­ing to Navexa, for my super, cap­i­tal gain was down 1%. And div­i­dends was up 2%.

[00:17:51] Tony: That’s pret­ty low. 2 per­cent

[00:17:53] Cameron: Pret­ty low. Yeah. I don’t think, I don’t think this is, uh, maybe set up prop­er­ly.

[00:17:57] Cameron: I’ll have to have a look at how I’ve got this, uh, port­fo­lio set up. I think I’m miss­ing some­thing here.

[00:18:05] Tony: Yeah, I mean, I had 1. 5 per­cent cap­i­tal gain and 4. 4 per­cent div­i­dends, and 4. 4 per­cent sounds about right because I think the mar­ket yields about that, so you should prob­a­bly be get­ting the same, I would have thought.

[00:18:17] Cameron: Hmm. I’ll look at my, um, income con­tri­bu­tions. Hmm.

[00:18:26] Tony: I think the good thing I’ve been, you know, um, in review­ing the last 12 months, I’m, I’m hap­py that things have set­tled down. It was so volatile there up until about six or so, maybe nine months ago, um, that I’ve pret­ty much got the same stocks I had. Uh, for a long, for like six or nine months now at least, haven’t trad­ed a thing, yeah.

[00:18:48] Cameron: Hmm. Well, we’ve had a few sur­vey results come in from QAV club mem­bers. Uh, not many peo­ple are actu­al­ly com­plet­ing the sur­vey form still. I think we’ve had six. Sub­mis­sions on the sur­vey form, which is, um, pret­ty sad. By the way, although most of, there’s a cou­ple of those, uh, aver­age, but most of the peo­ple who are email­ing me are the peo­ple with good returns.

[00:19:09] Cameron: And I just wan­na know, I wan­na hear from peo­ple who haven’t had such a good return, so I don’t feel so bad. Like, every­one who’s email­ing me is get­ting like 20 per­cent returns for the finan­cial year, and I’m going, come on, like, stop stick­ing the knife in. Who am I, Julius Cae­sar on the Ides of March? Like,

[00:19:25] Tony: Well, it makes me feel good to see peo­ple have good QAV results.

[00:19:28] Cameron: Well, it’s a mixed bag for me. On one hand, I’m like, well, that’s great, it’s work­ing for you. On the oth­er hand, I’m like Go to hell. Why are you doing so well and I’m not? It’s not fair. It’s not right. Um, so on the poll, we’ve had 10. 43 per­cent and some of these are CAGR, some of these are time weight­ed return, so I don’t know which is which.

[00:19:49] Cameron: Peo­ple did­n’t always tell me, but 10. 43, 5. 34, 4. 45 CAGR, 19. 57 accord­ing to Stock Doc­tor, so that’d be time weight­ed return, I think. Down 4%. And up 2%. Dave from Newey emailed me last week. I touched on it towards the end of the episode, but he says, um, Uh, I run my port­fo­lio on a spread­sheet. I haven’t cap­tured finan­cial year or cal­en­dar year num­bers as I intend to migrate to share side or sim­i­lar at some point.

[00:20:23] Cameron: But I inject­ed some new cap­i­tal in ear­ly May this year, so ruled off the books on the orig­i­nal cap­i­tal. Note the bench­mark I refer to below as the AXKOA, what I under­stand to be the ASX 300 Accu­mu­la­tion Index. I get the num­bers off Invest­ing. com and all per­cent­ages at CAGR using the cal­cu­la­tor site dot com.

[00:20:43] Cameron: My port­fo­lio num­bers are expect­ed to be Bence is paid, but don’t include tax impact. Start date 5 2 21, End date 5 5 24, Port­fo­lio 15. 95%, Bench­mark 8%. So that’s good. Pret­ty much spot on, dou­ble the bench­mark over that rough­ly three year peri­od. He says, how­ev­er, I had a brief and wild­ly unset­tling and unsuc­cess­ful for­ay using an alter­nate approach to QAV for the first few months, and I have stu­pid­ly dab­bled with a lit­tle spec­u­la­tive cap­i­tal through­out, think lithi­um.

[00:21:20] Cameron: So if I adjust my start­ing cap­i­tal, i. e. I lost mon­ey on the alter­nate approach­es and the dates I get, then Start QAV date 12. 4. 21, End date 5. 5. 24, Port­fo­lio 20. 48%, Bench­mark 6. 92. So that’s near­ly three times the bench­mark CAGR over that peri­od. Sen­sa­tion­al work, Dave. He says, and if I trim again to start from when I was ful­ly invest­ed with the QAV approach, ful­ly invest­ed date 8 6 21, end date 5 5 24, port­fo­lio 21.

[00:21:56] Cameron: 69%, bench­mark 5. 68%. I’m very hap­py as a cus­tomer of QAV. I am grate­ful I found the pod­cast. I’d like to thank you and Tony for the excel­lent work that you do and the ener­gy you bring in week in, week out. I par­tic­u­lar­ly want to con­grat­u­late Cameron on his mag­nif­i­cent hair­style. I think it is a mar­vel to behold.

[00:22:19] Cameron: Oh, sor­ry. I’ve just made that bit up. Um,

[00:22:22] Tony: Thank you, Dave. Get your eyes checked, but thank you.

[00:22:26] Cameron: Good job, Dave. Uh, Trent, Sent me an email, uh, cold, oh no, Face­book maybe, cold day in Mel­bourne, so sit­ting down to review my finan­cial year results with QAV. I had my best year yet with an 18 per­cent return, beat­ing mar­ket for the first time since start­ing this jour­ney.

[00:22:42] Cameron: This was the first year I had cap­i­tal gains, pri­or years the div­i­dends were required to keep me in the black. Cur­rent­ly hold 16 posi­tions, but have sold 8 over the peri­od, so a bit of turnover, all of which occurred in the last 6 months, with first half no changes in port­fo­lio. That’s inter­est­ing, that’s

[00:22:58] Tony: Mmm, it’s the reverse. Yeah, same.

[00:23:00] Cameron: Over the finan­cial year, I’ve held 24 stocks and 15 have pos­i­tive­ly con­tributed to over­all return. Six of eight posi­tions were sold at prof­it as share price came down to hit 3PTL. I’ve tak­en a fudge or bro­ken rules with about half of the stocks I’m cur­rent­ly hold­ing, but try­ing to track, slash, reflect on these exper­i­ments more close­ly.

[00:23:21] Cameron: Uh, here’s a snap­shot of what I cur­rent­ly, uh, he gave me a, sent me a, A pic­ture here, which for some rea­son has dis­ap­peared out of my notes. Um,

[00:23:31] Tony: I can read it out. I’ve got it in mind. So he’s got, uh, FY24 cap­i­tal gains 11. 81%, div­i­dends 6. 25%, return 18. 06%, FY23 total return 8. 8, FY22 1. 36, per annum 13. 6.

[00:23:50] Cameron: good stuff.

[00:23:51] Tony: Yeah, so well done, Trent.

[00:23:53] Cameron: yeah. And then I asked him what he cur­rent­ly holds, um, because I don’t know, what do you think about this? But I’ve been think­ing over the last few days that we should get mem­bers, uh, to not just tell us what their returns have been, but also to share with us what they’ve bought and sold, what they’ve trad­ed.

[00:24:15] Cameron: I mean, if I could throw that, if I could gath­er all of that data, Um, and throw it into, um, Chat­G­PT. I might be able to build some analy­sis of, you know, uh, where the dif­fer­ences lie, why the peo­ple who did well, what they, what they owned, when they bought it, when they sold it, the peo­ple who did­n’t do as well, what they owned, what they bought, what they sold it, break them down, slice them and dice them by ADT.

[00:24:45] Cameron: Buy, you know, start dates and end dates or some­thing else, just try to fig­ure out what lessons, like, as we have more and more peo­ple doing QAV, fol­low­ing the sys­tem, good­ly or bad­ly, um, mak­ing up their own rules with, you know, how they sell stuff, when they buy stuff, it’d be inter­est­ing to try and get all of that data and put it into our I’ll back in so we can ana­lyze it and, um, add it to the mix­ture of fig­ur­ing out, well, you know, what, what, what is this per­son doing that seems to be work­ing so well, uh, in, uh, this finan­cial year peri­od when the rest of us fol­low­ing prac­ti­cal­ly the same sys­tem did­n’t do as well? Tony’s look­ing doubt­ful there, shak­ing his

[00:25:34] Tony: No, I don’t, I don’t know. I mean, I, I think it’d be great if peo­ple gave us the trans­ac­tions to do the analy­sis, but I’m won­der­ing whether it’s just, as we’ve been talk­ing about it’s ini­tial states, it’s when did they start, what did they buy? Um, you know, do they buy it on the same day as some­body else?

[00:25:48] Tony: That can be, have a wild impact on returns between peo­ple. But yeah, it’d be inter­est­ing to know. Uh, what was the most com­mon stock that was held by QAV lis­ten­ers and how much did that con­tribute to port­fo­lios or not? That kind of thing. And what can we learn from that per­haps?

[00:26:06] Cameron: Yeah,

[00:26:07] Tony: I’m not look­ing down for. I think it, I think, you know, it’d be great if peo­ple could share it and we could do some analy­sis on here. It’d be kind of freeform. I’m not sure what we’d be look­ing for, I guess. Yeah, so it’d be freeform, it’d be like throw­ing it into the Chat­G­PT and say, tell us about this data set.

[00:26:28] Cameron: Well, look, you know, as you slice and dice these datasets and you’re look­ing for cor­re­la­tions, um, you’re look­ing for, um, some sort of, some sort of evi­dence to poke its head at. Like, the the­o­ry that we have is that it’s, You know, it’s, it’s, we’re all fol­low­ing the rough­ly the same rules. So if there are dif­fer­ences, it’s just some­what the luck of the draw when you get in to a par­tic­u­lar stock and how it’s buf­fet­ed by the volatil­i­ty of the mar­ket at the time, whether or not you get rule one’d out quick­ly or not.

[00:27:02] Cameron: Like if you hap­pen to buy it when it’s, uh, on an upswing, the begin­ning of an upswing, um, and you, you will get escape veloc­i­ty. Yeah, well,

[00:27:13] Tony: Yeah, no, look, I think you’re right. Now I think about it fur­ther, and I haven’t thought about this, but, um, you’re right, just look­ing, um, Trent did share his port­fo­lio, which was nice of him. I’m not going to read it out, but if you, if we did find that, you know, there was a big con­trib­u­tor, and we could see that that big con­trib­u­tor across port­fo­lios that did well had cer­tain char­ac­ter­is­tics.

[00:27:34] Tony: Like for exam­ple, say it’s Fleet Part­ners and we know that that’s a com­pa­ny which does lots of buy­backs, then maybe we would empha­size buy­backs in the check­list. It’s not part of the check­list at the moment. So yeah, I can see what you’re say­ing. It would­n’t make sense.

[00:27:49] Cameron: I just don’t know, uh, we’d need a con­sis­tent way of doing it. Like ide­al­ly a con­sis­tent tem­plate. Like, I don’t want to know how much mon­ey peo­ple have invest­ed. We’re not look­ing for vol­umes, just

[00:28:03] Tony: Why don’t we do this? Why don’t

[00:28:04] Cameron: bought. Sor­ry, go.

[00:28:06] Tony: why don’t we ask peo­ple for the best con­trib­u­tor in their port­fo­lio over the year? Because that’s got a, if we can find some com­mon­al­i­ty on that and if we can find out a pro­file of that, that we’re not empha­siz­ing enough in the check­list, that could be help­ful.

[00:28:22] Cameron: Hmm.

[00:28:23] Tony: Or best and worst con­trib­u­tors.

[00:28:25] Cameron: Yeah. And when you bought it at what price and when you sold it at what price,

[00:28:31] Tony: Well, they may not have sold it.

[00:28:34] Cameron: if you con­tin­ue to hold it, that’s great. Yeah. I just think like, you know, big data, man, I’m all about big data. How do we get all the data that we can?

[00:28:42] Tony: Right. Yeah, fair

[00:28:44] Cameron: it for regres­sion test­ing and, and, and see­ing, cause the, the results are all over the place from lis­ten­ers, but it could be sim­ple.

[00:28:52] Cameron: It could be, there could be some­thing inter­est­ing in there. Mov­ing along. That was Trent. Jor­dan said, um, sent me an email for the finan­cial year. I had a return of 19.77 per­cent time weight­ed return. Con­grat­u­la­tions,

[00:29:06] Tony: Very good. Well

[00:29:07] Cameron: um, since incep­tion in Novem­ber, 2022, I am up. 8. 92 per­cent ver­sus 9. 51 per­cent for the ASX 200 time weight­ed per­cent.

[00:29:18] Cameron: Over the finan­cial year I’ve held 48 stocks, 19 of which are at a prof­it or would be a prof­it if sold, and 29 of which were sold for a loss or would be a loss if sold. The num­ber of stocks held might look high because I dou­bled my invest­ed cap­i­tal in March after I’d been using QAV for over a year and was com­fort­able with the process.

[00:29:38] Cameron: Best per­form­ing stocks for the finan­cial year were as below. IRI up 144 per­cent for the finan­cial year, SXE up 97%, VYS 92%, MAH 62%, WAF 58%, MLX 46%, FPR 37%, MLG 27%, SRV 23%, ASG 17%, still hold­ing onto ASG even though its share prices con­tin­ue to fall.

[00:30:07] Tony: Your exper­i­men­tal fudge.

[00:30:12] Cameron: MSV 15, DUR 13.

[00:30:15] Tony: I’ve seen that movie before.

[00:30:17] Cameron: Hey, you, you gave me per­mis­sion to fudge that one. That’s not

[00:30:23] Tony: Ah, right. You’re like a golfer blam­ing the cad­dy.

[00:30:27] Cameron: I came to you and asked for a bless­ing.

[00:30:30] Tony: I just agree with what­ev­er you say, Cam.

[00:30:35] Cameron: Gee, should have mar­ried you. Um, that would have made life eas­i­er. Um, con­grat­u­la­tions. Jor­dan says, real­ly hap­py with QAV and how it’s going. Alright, before that, I tried to fol­low all of the rules reli­gious­ly, but I did have a cou­ple of stocks with big sin­gle day drops, which meant I lost more than 10 per­cent on them. Real­ly hap­py with QAV and how it’s going.

[00:30:59] Cameron: Thanks to Tony and your­self for all the great con­tent and teach­ing. Thank you, Jor­dan, and, um, Well done to Jor­dan and Trent, Dave, and every­body who’s had a good year fol­low­ing the rules. Like, jokes, you know, jokes aside, like, I don’t know Jor­dan’s expe­ri­ence in invest­ing before QAV, but Let’s assume he did­n’t have a lot and he’s an ama­teur like, uh, the rest of us.

[00:31:26] Cameron: To get a 20 per­cent return for the finan­cial year, um, is, you know, sen­sa­tion­al. Trent, 18%, um, uh, Dave, what did he say for the finan­cial year was? Um, No, he does­n’t, but like his over­all return over three years, rough­ly 21, 22%, first triple the bench­mark. I mean, that’s, that’s astound­ing. Like thanks to you and

[00:31:55] Tony: And you.

[00:31:56] Cameron: hair­do to be able to teach, uh, peo­ple, uh,

[00:32:01] Tony: Oh, by the way, I should tell the lis­ten­ers too, Cameron’s record­ing this on his hol­i­day, so I don’t think you’ve actu­al­ly had a hol­i­day in five years. We haven’t missed the, you haven’t missed the record­ing, have you, any week? Maybe one. Not many any­way, so well done. You’re very con­sis­tent.

[00:32:17] Cameron: I haven’t had a hol­i­day in 20 years, but yeah,

[00:32:22] Tony: Well, we’ve been to Europe togeth­er and we’ve been to the States for var­i­ous things, etc. But yeah, you don’t take hol­i­days very often, do you?

[00:32:29] Cameron: because I can’t afford to.

[00:32:32] Tony: well done. I appre­ci­ate it. I think the lis­ten­ers appre­ci­ate it too. I just want to high­light it,

[00:32:36] Cameron: thanks.

[00:32:37] Tony: than talk about your hair­do.

[00:32:38] Cameron: I’m on my shit­ty lit­tle, uh, portable mic too. Um, Yeah, no, look, I, look, I, I’ve just blown away that we’ve been able to teach peo­ple your sys­tem, and they’re hav­ing that kind of insane­ly good result, like, it’s, and, like, you know, my super sucks at the moment, but the dum­my port­fo­lio, look at that over five years, and, and, you know, I’ve been man­ag­ing it most­ly by myself for, what, four out of the last five years, you were mak­ing a lot of the deci­sions for the first year until I got com­fort­able with it, and.

[00:33:11] Tony: Till you turned it round.

[00:33:15] Cameron: Yeah. Till I turned it around and then it had a good year. Yeah. Yeah. It’s Like the

[00:33:24] Tony: You said, no more Apol­lo Tourism. I’m not going to let you buy any more Apol­lo Tourism and leisure. Give it to me. Hold my beer.

[00:33:38] Cameron: the pow­er of a sys­tem that can take mere mor­tals and just Teach us how to tame the beast. And I know, like, not every­body’s had a good year, and some peo­ple might be lis­ten­ing to this going, well, screw you, I’ve had, I’ve had a ter­ri­ble year. And we feel you, and, and, like, I, I’m sor­ry that you did­n’t have a good year, but nei­ther did Tony and I, real­ly.

[00:33:58] Cameron: Um, and it’s not, yeah, like, as, you know, as we’ve been say­ing, we think the sys­tem just, you know, um, pun­ish­es us for being, uh, dili­gent in fol­low­ing our safe­ty rules. Some­times.

[00:34:15] Tony: Saves us some­times too.

[00:34:16] Cameron: yes, they’re there for a good rea­son. You know, some­times it, it, it does­n’t look good in the short term, but they’re there to pro­tect you in the long term.

[00:34:26] Cameron: And that’s what this is about is long term

[00:34:28] Tony: Yeah. And look, what I would say is, I think it’s great peo­ple are hav­ing those results. I think it’s great what, you know, you put togeth­er in par­tic­u­lar. Um, but the real, the real pride I have is that we’ve told peo­ple how to invest. It’s not that they fol­low QAV or what­ev­er. It’s that they have a frame­work.

[00:34:47] Tony: They know when to buy and sell. They, they fol­low it with dis­ci­pline and doing just that. That is enough to beat the mar­ket usu­al­ly.

[00:34:56] Cameron: and ignore the bull­shit.

[00:34:58] Tony: Ignore the bull­shit. I mean, we, we wank on about the RBA, but just ignore it. It’s, you know, have a sys­tem that ignores it.

[00:35:06] Cameron: We need, we need, we need con­tent.

[00:35:07] Tony: we need con­tent.

[00:35:08] Cameron: some­thing. We’re as bad as Fox News. We need to talk about some­thing.

[00:35:16] Tony: but that’s what I’m proud of, is that peo­ple are switch­ing on to the idea of using data, of hav­ing a frame­work and being dis­ci­plined. That’s the impor­tant thing.

[00:35:24] Cameron: We need to get, we need to get, More merch, so I can take a pho­to of Chris­sy wear­ing our merch, doing this. This is my new This is my new I’ve got it on my watch. It’s my new thing. Took this pho­to of Chris­sy at the beach for peo­ple lis­ten­ing, doing what she calls her lep­rechaun jump, where she leaps up to the side and clicks her heels with her thumbs up.

[00:35:44] Cameron: And it’s just my, uh

[00:35:46] Tony: She’s incred­i­bly ath­let­ic.

[00:35:48] Cameron: It’s my hap­py pic­ture.

[00:35:49] Tony: Yeah, it’s a great hap­py pic­ture.

[00:35:51] Cameron: Every­thing’s good when I see that. Any­way. Alright, Tony, that’s, uh, the, all I’ve got before we get into ques­tions. What have you got for us today?

[00:36:02] Tony: I’ve got a cou­ple of things actu­al­ly. One of them was a graph I saw on the week­end. I think it was in the Alan Kohler report, the week­ly report he does. But he would have tak­en it from some­where else. But any­way, it’s a graph of the top 10 per­cent of stocks by size ver­sus the entire U. S. stock mar­ket. So it’s, it’s like, here are the top 10 stocks and how much of the US mar­ket.

[00:36:28] Tony: Are they tak­ing up by mar­ket cap weight­ing? Cur­rent­ly, accord­ing to this graph and at the end of 2023, it’s 75 per­cent of the of the index­es in in the top 10 stocks. It’s only ever been at that or above that once before. 1929 on the eve of the Great Depres­sion, and it got close to that 2000 at the top of the.com.com bub­ble.

[00:36:55] Tony: It got to like about 73%. So I hate to be the bear­er of bad news, but if that’s a pre­dic­tor, we’re not in for a good future. Um, there’s too much con­cen­tra­tion in the Tech of Mag­nif­i­cent sev­en at the top of the US mar­ket and, and because of that by all the index funds which have to buy into the US mar­ket, which are basi­cal­ly buy­ing those top 10 stocks.

[00:37:18] Cameron: yeah. So, I mean, what does that mean, Tony?

[00:37:24] Tony: I think it means there will be a regres­sion to the mean and we’ll see, um, you know, what, what hap­pened after 29 and after 2000, there’ll be some kind of, there’ll be some kind of reck­on­ing for those stocks, um, unfor­tu­nate­ly, because there’s so much more, I’ve had this debate with peo­ple, is there more index funds around now?

[00:37:45] Tony: There’s more index ETFs, but there were man­aged funds that tracked the index a while ago as well. So, but I think there is more peo­ple blind­ly trust­ing index ETFs. They’re the ones who are going to have to turn the noise off, I think, in the next cou­ple of years, because I think that Mag­nif­i­cent 7 can’t keep going up the way it has.

[00:38:01] Tony: I mean, uh, NVIDIA, I think, dropped about 12 per­cent last week, um, and that’s what’s going to hap­pen. These stocks are very top­py, um, and they hold up so much mar­ket cap that, um, if you’re invest­ed in them, might be time to take some mon­ey off the table. And I think that’s what’s hap­pen­ing. That’s one of the rea­sons why I think NVIDIA went down last week.

[00:38:19] Tony: Peo­ple are just sort of say­ing, that’s a good run. I’m going to sit out this for a while.

[00:38:24] Cameron: Well, it went down, but it’s gone back up. You know, it’s, yeah, I mean, it’s not exact­ly where, back to where it was last week, but it’s not far off it. And if you look at it for the last year, like in last year, it’s gone from 47 to 123. I mean, it’s, it’s

[00:38:42] Tony: To the moon.

[00:38:44] Cameron: Yeah.

[00:38:46] Tony: That’s a good movie. Dumb. I rec­om­mend Dumb Mon­ey to peo­ple to go and watch it. It’s good.

[00:38:50] Cameron: Yeah.

[00:38:52] Tony: And the rea­son why I rec­om­mend it is because it’s what I said before. It’s like all these peo­ple who don’t know what they’re doing or invest­ing in the stock mar­ket. They’re sud­den­ly sit­ting on some­times a mil­lion dol­lar for­tunes and they don’t know when to sell.

[00:39:04] Cameron: Yeah,

[00:39:06] Tony: Any­way, yeah, so I don’t know. I can’t pre­dict what’s going to hap­pen. This, this graph caught my atten­tion. Clear­ly, I think the U. S. stock mar­ket is in a bub­ble. Whether that means it goes up from here, goes side­ways from here, or goes down from here, at some stage it’s got to regress to the mean.

[00:39:22] Cameron: Mm. I mean, if his­to­ry is any, um, guide, right?

[00:39:28] Tony: Well, I mean, just look, take the log­ic to its extreme. If it fol­lows the curve, the top 10 stocks are going to hold 100 per­cent of the U. S. stock mar­ket. Mar­ket Cap, and that just can’t hap­pen because there are a lot more stocks on the mar­ket. I mean, it could hap­pen, I sup­pose, but it means every­body sells out of every oth­er stock.

[00:39:46] Tony: GE, Coke, you know, all the FedEx, all the big stocks on the stock mar­ket, and to buy into these things, and I can’t see that hap­pen­ing.

[00:39:56] Cameron: Mm mm Okay.

[00:39:58] Tony: So that was that. Um, there’s been a lot of news, a lot of buy sticks, buy stocks in the news in the last lit­tle while. I did­n’t get a chance to cov­er some of this last week, so Apolo­gies if some of this is a bit, get­ting a bit old, but I want­ed just to quick­ly run through three or four, maybe a bit more of the stocks that are on, on our buy list from time to time and are now in the news.

[00:40:18] Tony: So, because peo­ple might hold them or they might be try­ing to decide what to do. So, uh, Myer was, um, big in the news recent­ly. Um, and, uh, they have a new, Uh, Exec­u­tive Chair­man, even though she’s a woman, uh, Olivia Worth, uh, and looks like Solomon Lew’s final­ly get­ting what he always want­ed, the big brass ring, which was to take over con­trol of Myer.

[00:40:44] Tony: So he is, um, He’s propos­ing to merge a lot of the cur­rent appar­el brands that are in his sep­a­rate, anoth­er sep­a­rate com­pa­ny he runs called Pre­mier Invest­ments, and that’s sep­a­rate­ly list­ed on the ASX, and merge them with Myer. And so that would, Myer are going to do that by issu­ing a lot more shares and giv­ing them to Pre­mier Invest­ment share­hold­ers, and then tak­ing those brands like Just Jeans and Jay­Jays off their hands.

[00:41:12] Tony: The mar­ket loved it. The Myer stock rose 20%. And inter­est­ing­ly enough, the Pre­mier Invest­ments did as well. So Myer’s now sit­ting at 81 cents. Um, when it’s been prob­a­bly as low as in the fifties, I think dur­ing the year, it’s been on the buy list for a while. Um, we’re now start­ing to, that was the announce­ment, we’re now start­ing to under­stand more of what’s going on.

[00:41:36] Tony: And, um, This arti­cle was in the Fin Review from June 25, uh, it’s talk­ing about Solomon Lew join­ing the board. So, Pre­mier Invest­ments already holds two seats because Mr. Lew already holds a fair stake of Myer’s shares, but he’s going to, um, Join the oth­er two peo­ple on the board. Uh, Olivia Wirth joined the, uh, Myer board in March from Qan­tas, where she was head of loy­al­ty.

[00:42:06] Tony: Um, so that’s an impor­tant point, I think, because one of the, one of the ben­e­fits that the ana­lysts are see­ing in this merg­er is that com­pa­nies like Just­Jeans and, um, The oth­er ones that are part of the Pre­mier sta­ble are going to get access to the MyerOne loy­al­ty base and get a loy­al­ty pro­gram, which will have some impact on their sales, I would think.

[00:42:29] Tony: This arti­cle goes on, the enlarged group will have about 4 bil­lion in annu­al sales and more than 200 mil­lion in earn­ings. The deal was like­ly to delay the spin off of Mr. Lew’s larg­er Smiggle and Peter Alexan­dra brands, which was being explored by the bil­lion­aire retail­ers. Pre­mier had said they were look­ing at whether they should spin off their two growth brands, Smiggle and Peter Alexan­der, um, lead­ing all of the oth­er parts of, uh, Pre­mier list­ed sep­a­rate­ly.

[00:42:55] Tony: Uh, MST Mar­quis ana­lyst Craig Wul­ford esti­mates the Myer appar­el brands deal offers syn­er­gies of 55 mil­lion and leaves the high growth busi­ness­es, Peter Alexan­der and Smiggle, sit­ting inside Pre­mier. Uh, Myer have done all the hard work for the Pre­mier’s strate­gic review, he said. Myer share­hold­ers will be sig­nif­i­cant­ly dilut­ed in a trans­ac­tion, but the com­bined enti­ty will have dou­ble the earn­ings and have the oppor­tu­ni­ty of poten­tial syn­er­gies and the chance to rein­vig­o­rate growth.

[00:43:26] Tony: So he’s say­ing you are going to be dilut­ed, but he thinks that you’re going to have that made up for you by increas­ing prof­itabil­i­ty. Anoth­er ana­lyst, Ben Gilbert, Head of Aus­tralian Research at Chardon, esti­mat­ed that Pre­mier share­hold­ers could end up own­ing about 70 per­cent of Myer and flag sig­nif­i­cant syn­er­gies by lever­ag­ing Pre­mier’s sourc­ing and rolling out appar­el brands with­in Myer stores.

[00:43:51] Tony: Greater scale would pro­vide scope to cut store space more quick­ly, while reduc­ing over­heads, includ­ing rent. Mr Gilbert said a com­bined larg­er group could also lever­age the Myer One loy­al­ty scheme, one of the largest in the mar­ket, with Pre­mier not hav­ing an equiv­a­lent pro­gram in place. Uh, uh, Anoth­er per­son, Uni­fied Cap­i­tal Ana­lysts, said a poten­tial merg­er could result in a lean­er, more fit retail­er, I guess they mean fit­ter retail­er, able to take advan­tage of loy­al­ty.

[00:44:20] Tony: They esti­mat­ed that Pre­mier could unlock about 40 mil­lion of syn­er­gies dri­ven by a small­er foot­print of stores and high­er Myer gross mar­gins, which would boost earn­ings per share by 30%. This would arrive at a low point in the cycle that would also see Myer emerge as With a 1 bil­lion plus mar­ket cap and index inclu­sion, they said.

[00:44:39] Tony: And then last­ly, Angus Aitken of Aitken Mount told his wealthy clients, not the, not the ones who can’t rub two cents togeth­er, but told his wealthy clients they should buy both Myer and Pre­mier shares. We think you buy both stocks, this is what Aitken says. We like Olivia Wirth and think she is a win­ner at Myer.

[00:44:57] Tony: They can triple from here over time. The press sug­gests she does­n’t have enough retail­ing expe­ri­ence, but that’s com­plete rub­bish, he said. After gain­ing 20 per­cent on Mon­day, Myer’s shares advanced 5. 8 per­cent to 82 cents on Tues­day. Pre­mier shares were 1. 9 per­cent high­er. So, I mean, we’ve talked about this before.

[00:45:18] Tony: Um, Sol­ly Lew is long cov­et­ed, uh, get­ting back into con­trol of Myer and now it appears why because he wants to merge his oth­er appar­el brands in there, reap economies of scale and you know, take best, best of prac­tice sourc­ing across all those brands and put it into the com­bined group. So it seems like a good deal.

[00:45:38] Tony: Um, Myer share­hold­ers might be wor­ried about dilu­tion, but all the ana­lysts seems to think there’s more upside in, Prof­it from the merg­er than, um, than not. So, um, they don’t seem to be wor­ried about share­hold­er dilu­tion in Myer. So that’s Myer. Um, anoth­er, um, Buy list, stock, which was in the news, uh, this is going back again a week or so, June 17. Uh, this is our old friend Twig­gy at Fortes­cue Met­als Group, and the arti­cle, uh, is, uh, the head­line is Mon­ster 1. 1 bil­lion block trade in Fortes­cue. An insti­tu­tion­al investor pressed sell on a 1.

[00:46:16] Tony: 1 bil­lion stake in Andrew For­rest’s Fortes­cue after Mon­day’s clos­ing bell, send­ing out JP Mor­gan to find buy­ers on its behalf. The shares were being offered at 21. 60 apiece, and the par­cel rep­re­sent­ed 1. 6 per­cent of the com­pa­ny. The sell down comes after Fortes­cue’s share price has dipped 21. 8 per­cent year to date amid a slump in iron ore prices as Chi­na’s stim­u­lus to revive con­struc­tion has failed to boost steel demand.

[00:46:46] Tony: Mean­while, the con­ga line of execu­tors fil­ter­ing out of its top ranks has con­tin­ued. Ear­li­er this month, Julie Shut­tle­worth, a trust­ed for­est atten­dant for a decade, And one time Deputy Chief Exec­u­tive Offi­cer resigned. Last­ly, his depar­tures includ­ed long time, long serv­ing Chief Finan­cial Offi­cer and for­mer Reserve Bank of Aus­tralia Deputy Gov­er­nor Guy DeBelle, who last­ed just five months as CFO of the Green Ener­gy Divi­sion, and he has sev­er­al, and sev­ered his final links to Fortes­cue last Sep­tem­ber.

[00:47:15] Tony: So we’ve talked about this one before. I think it is a red flag that all these qual­i­ty peo­ple are leav­ing. Fortes­cue, um, I think per­haps some of the instos are see­ing that now too, share prices down by the odd per­cent this year, admit­ted­ly because the iron ore price is down, but again, I think the play­book in this sit­u­a­tion that I’ve seen before is when the qual­i­ty peo­ple leave, it’s the red flag, and um, I think I would­n’t be sur­prised, maybe not in the short term, but maybe this half or next half they come out with some kind of prof­it down­grade because they just don’t have the qual­i­ty of man­age­ment that they had run­ning things.

[00:47:54] Tony: So, but we’ll see. So that’s my opin­ion on FMG. Uh, I feel like that guy in the meme who sits there with the chair and the lemon­ade stand say­ing, This is my opin­ion, con­vince me I’m wrong. Five cents. Come along and debate me. But any­way. Uh, Com­pe­ti­tion Fears tie up Namoi Cot­ton Bid. So we haven’t done a Pulled Pork on Namoi I don’t think yet.

[00:48:17] Tony: It’s been on my list, but um, I have avoid­ed it because it’s in play. Um, and this is a, an arti­cle which says that, uh, Namoi Cot­ton’s share price plunged after a takeover bid from Sin­ga­pore based O Lan, reg­is­tered three red lights with the com­pe­ti­tion reg­u­la­tor, New South Wales, and New South Wales farm­ers said that mem­bers had con­cerns about any change of con­trol.

[00:48:38] Tony: Namoi stock fell almost 8 per­cent to 64 cents in trad­ing yes­ter­day. Before recov­er­ing close to 4. 3%, uh, down to 66. 5 cents. OLAM and rival suit­or French agribusi­ness giant Louis Drey­fus are fac­ing major hur­dles gain­ing takeover approval from the ACC. The ACC said it was con­cerned an OLAM offer, uh, of the takeover of the oper­a­tor of the coun­try’s largest net­work of cot­ton gins would reduce com­pe­ti­tion.

[00:49:08] Tony: ACC Com­mis­sion­er Stephen Ridge­way told the Aus­tralian Finan­cial Review that if nei­ther OLAM nor Louis Drey­fus was able to over­come com­pe­ti­tion con­cerns, the takeover bat­tle for Namoi could all fall over. So this stock is up. It’s on our buy list, but it is being held up by poten­tial takeover activ­i­ty.

[00:49:27] Tony: So I’m just going to make peo­ple aware of that if they’re think­ing about buy­ing into Namoi now. Just, um, you know, do a bit of a Google search and see where the takeover bids are at because, um, you can go back­wards just as quick­ly as you go for­wards in a takeover bid sit­u­a­tion. It’s in play.

[00:49:45] Cameron: What’s the code for Namoi? I’m

[00:49:47] Tony: Uh, good ques­tion.

[00:49:48] Tony: NAM, I think. I’ll just con­firm that for you.

[00:49:51] Cameron: just going to add it to my notes of things to be care­ful of in my buy list.

[00:49:57] Tony: Yes, it is NAM Nam Nam Saigon. I’m only back in Saigon. Uh, two more. Um, this one is a inter­view with, uh, the, uh, fund man­ag­er for one of, uh, Jeff Wilson’s Wil­son Asset Man­age­ment Sta­ble of funds. Might even be wham, I think. Yes, he is. Uh, so Oscar Oberg is the lead port­fo­lio man­ag­er of Wil­son Asset Man­age­men­t’s Cap­i­tal Fund. It’s got $5 mil­lion in assets and he was going through his.

[00:50:34] Tony: Tips, and the head­line is Wilson’s Oberg tips 50 per­cent upside in small cap stock, and the stock he’s tipped is G8 Edu­ca­tion, which was a pulled pork a cou­ple of weeks ago. Um, it’s a child­care cen­tre, uh, with a long his­to­ry. GA Edu­ca­tion is Aus­trali­a’s largest child­care oper­a­tor with over 400 cen­tres.

[00:50:54] Tony: This is, um, Oberg speak­ing. His­tor­i­cal­ly, it has strug­gled with neg­a­tive earn­ings per share revi­sions and debt issues over the last decade, which cul­mi­nat­ed in the cap­i­tal rais­ing in 2020 through COVID. Our inter­ests, so Oberg’s inter­est and WAM’s inter­est. Our inter­est was sparked last year after the appoint­ment of GH’s new Chief Exec­u­tive from Big W, Pedge­man, Oka­vatt.

[00:51:17] Tony: Oka­vat­t’s strat­e­gy is rel­a­tive­ly straight­for­ward. Boost occu­pan­cy, sta­bi­lize costs, and divest under­per­form­ing cen­ters. With G8 hav­ing a very strong bal­ance sheet, we also think the busi­ness could eas­i­ly buy back 5 10 per­cent of the shares on issue. Putting this all togeth­er, we think the strat­e­gy can allow G8 to achieve 10 15 per­cent organ­ic earn­ings per share growth each year, Over the next five years, G8’s val­u­a­tion of 12 times on a 12 month for­ward P.

[00:51:43] Tony: E. is cheap, and we think the strong lev­el of organ­ic growth can allow the share price to re rate high­er. We see 50 per­cent upside in the share price in the next 12 to 24 months, and for these rea­sons G8 is a large weight­ing in the port­fo­lio. So I thought that was inter­est­ing that QAV and the pro­fes­sion­al fundy both came to a sim­i­lar con­clu­sion on G8.

[00:52:06] Cameron: Is this the one where we talked about the, uh, inter­est­ing, uh, his­to­ry of the

[00:52:13] Tony: No, that was the com­peti­tor. So the exec­u­tive who had been an exec­u­tive of G8 went across and is now set­ting up a com­pa­ny in oppo­si­tion to it. Uh, he used to run G8, um, and did a good job of it, uh, until the, until COVID came along and there was an issue with, um, you know, with many com­pa­nies at the time, but cer­tain­ly the com­pa­ny that was, um, rolling up child­care cen­ters. And the last one I’ll talk about quick­ly is, uh, Head­line, Check Bid for AX Min­er Col­laps­es, and this is about Coro­n­a­do Glob­al Resources. Bil­lion­aire Czech busi­ness­man Pavel Tikacs, out of mon­ey bid to take con­trol of ASX list­ed coal min­er Coro­n­a­do Glob­al Resources, has col­lapsed after his fam­i­ly office has SEV.

[00:52:59] Tony: N, SEVN. SEVN Glob­al Invest­ments failed to secure For­eign Invest­ment Review Board approval in time. The Queens­land and U. S. cok­ing coal pro­duc­er is trad­ing at a 30 per­cent dis­count to when SEVN agreed to the 1. 5 bil­lion deal on Sep­tem­ber 26. SEVN had agreed to buy 51 per­cent of Coro­n­a­do from Ener­gy and Min­er­als Group, a Hous­ton pri­vate equi­ty firm that float­ed the min­er on the ASX in 2018.

[00:53:25] Tony: SEVN. It has remained a major share­hold­er. So again, um, you know, this, this idea of, um, it’s been in play. They could­n’t get, uh, For­eign Invest­ment Review Board approval and the share price has gone down. I have noticed that CRN, that’s the code, has gone up again. Um, so I don’t know if that’s a sign that peo­ple think it’s dropped enough that it’s worth buy­ing or that there might be some oth­er M& A

[00:53:53] Tony: But again, just high­light­ing that for peo­ple to be care­ful with M& A, com­pa­nies that are in play when you’re buy­ing things on the buy list. Because what we found, this is what, three or four com­pa­nies, um, that insti­tu­tions often have the same play­book we do and they see val­ue in the same stocks we do. Um, but I don’t like buy­ing into a takeover sit­u­a­tion because it can, it can go up, but it can go down.

[00:54:15] Tony: And I think it’s a spe­cial skill set in trad­ing takeovers, which I don’t pro­fess to have.

[00:54:21] Cameron: But if we own them when they go into play, it’s often a good

[00:54:25] Tony: Great. It’s a great thing. Yeah.

[00:54:27] Cameron: Yeah.

[00:54:28] Tony: Yeah. Okay. So that’s my news. And the last thing I’ve got to talk about is a pulled pork.

[00:54:34] Cameron: Who are you pulling for us today, Tony?

[00:54:36] Tony: AWJ, Auric Min­ing, A U R I C. So

[00:54:40] Cameron: yeah.

[00:54:42] Tony: Auric, does that ring a bell for you? Yeah, gold min­er. Yes. Wel­come to Ams­ter­dam, Richter Bond. Auric Goldfin­ger. Auric was the first name of Goldfin­ger in the Bond book and film. It’s the first thing I thought of when I

[00:54:57] Cameron: I was gonna say, um, one of the third Doc­tor’s com­pan­ions, uh, fifth Doc­tor’s, but I think that was Adric. Not Auric, that was Adric. Yeah.

[00:55:07] Tony: Yeah, so Auric I think is some kind of Latin for gold, maybe. Any­way, yes, uh, so I, I, I, I like doing this pulled pork, doing the research for it, it’s, um, it’s, I’m not famil­iar with the com­pa­ny, it’s, uh, only, I guess it’s been around for four or five years on the ASX, but it’s, um, uh, nev­er made mon­ey, so it has­n’t been on our buy list, it has­n’t been on my radar, and it’s fair­ly small.

[00:55:31] Tony: Uh, it’s, uh, it’s a WA based gold explor­er and devel­op­er, uh, they’re cen­tered on the, uh, Wigi Mutha. Norse­man Gold Dis­trict in WA. Cer­tain­ly Norse­man I’ve heard of. I had­n’t heard of Widgey Mortha, but it’s a gold dis­trict in WA. They have a cou­ple of exist­ing mines and they have lots of explo­ration licens­es.

[00:55:52] Tony: In the Widgey Mortha dis­trict, this com­pa­ny has two mines, Munder­gold and Jef­freys Find. So, uh, Two par­tic­u­lar gold mines. One has pro­duced some gold, which is why they have pos­i­tive oper­at­ing cash flow. They sold some gold, but I want­ed to just read from a sum­ma­ry of the com­pa­ny rather than go on about it myself.

[00:56:15] Tony: This is from an ana­lyst, uh, by the name of Canary Cap­i­tal. I haven’t heard of them, um, but, uh, and this is a small com­pa­ny, so it does­n’t have many peo­ple, um, review­ing it, but, um, or ana­lyz­ing it. But this is a cou­ple of things I want­ed to call out. It was a good sum­ma­ry. So, uh, under the head­ing key achieve­ments to date, uh, remark­ably progress, progress from ten­e­ment acqui­si­tion to being list­ed on the ASX to min­ing and gen­er­at­ing cash in under three years.

[00:56:42] Tony: AWJ banked 4. 77 mil­lion in cash from Stage 1 of the Jef­feries Fine Gold Project, where 9, 741 ounces of gold were mined and sold. And then the last thing is, com­plet­ed a scop­ing study that proved the strong eco­nom­ic via­bil­i­ty of the Mun­da Gold Project and a con­ser­v­a­tive path to gen­er­at­ing 77 mil­lion in cash prof­its.

[00:57:06] Tony: So, uh, I’ll go on, it’s worth, um, high­light­ing what they’ve said. A scop­ing study announced to the mar­ket on Mon­day in June 2023 out­lined excep­tion­al eco­nom­ics with a pro­ject­ed pos­i­tive cash flow of 76. 9 mil­lion over a 13 quar­ter mine life based on a con­ser­v­a­tive gold price assump­tion of Aus­tralian 2, 600 per ounce.

[00:57:28] Tony: The poten­tial sur­face cash flows are sub­stan­tial­ly high­er at cur­rent gold prices around 3, 200 Uh, based on a scop­ing study, AWJ will com­mence oper­a­tions at Mun­da with a starter pit with a mine life of three months and a low cap­i­tal invest­ment of 1. 3 mil­lion. The starter spit will also, the starter pit.

[00:57:49] Tony: Sor­ry, will also require a work­ing cap­i­tal invest­ment of approx­i­mate­ly 6 mil­lion and is expect­ed to pro­duce 8. 7 mil­lion in sur­plus cash. These num­bers may change based on results from the cur­rent grade of gold. Dur­ing the past six months, the focus has been on pro­duc­tion from Jef­feries Fine Gold Mine under a joint ven­ture with BML Ven­tures.

[00:58:11] Tony: and Expe­ri­enced Min­ing Con­trac­tor. Stage 1 of the project is now com­plete and 9, 741 ounces were pro­duced. AWJ has now received 3 cash sur­plus pay­ments total­ing 4. 8 mil­lion from Jef­frey’s Fund. The cash is expect­ed to suf­fi­cient­ly fund AWJ dur­ing 2024 while Stage 2 is being devel­oped. Stage 2 is expect­ed to gen­er­ate between 6 and 8 mil­lion in cash for AWJ based upon a gold price of 3, 050 per ounce.

[00:58:40] Tony: Despite the sig­nif­i­cant cash flow poten­tial of the com­pa­ny’s projects, the cur­rent mar­ket cap is just 20. 3 mil­lion. We view this as pre­sent­ing investors with an oppor­tu­ni­ty to invest in AWJ at a frac­tion of the real intrin­sic val­ue of the com­pa­ny. With its projects either oper­a­tional or about to come online, no debt, and no risk.

[00:58:59] Tony: Upcom­ing cat­a­lysts and a strong man­age­ment team, the com­pa­ny offers a com­pelling invest­ment case with sig­nif­i­cant upside. AWJ is our pre­ferred ASX list­ed com­pa­ny. So that’s, um, Canary Cap­i­tal’s take on it. What I real­ly liked about it, and I had­n’t seen this done, Before, at least to this extent, is they haven’t gone out and raised a lot of cap­i­tal or bor­rowed lots of mon­ey to get some gold out of the ground.

[00:59:22] Tony: They’ve just said we’ll take a lit­tle bit, we’ll mine a lit­tle bit, we’ll sell it, we’ll do rinse and repeat, do it again with a big­ger amount of gold this time, sell it, rinse and repeat, and just keep expand­ing through, you know, organ­ic Pro­cess­ing of what we have under­ground. And I think that’s a ter­rif­ic sort of fly­wheel, um, way of man­ag­ing cash­flow.

[00:59:45] Tony: Um, that’s pos­si­bly hap­pen­ing. I don’t, I can’t, I don’t know if I can con­tribute it to this per­son, but a real pos­i­tive for the stock any­way, is the involve­ment of Mark Eng­lish, uh, who was the found­ing direc­tor of a com­pa­ny called Bul­lion Min­er­als that went into, uh, onto IPO. There’s two com­pa­nies, one called Chal­ice Gold­mines and the oth­er called Lion­stown Resources, which peo­ple may have heard of.

[01:00:09] Tony: Two suc­cess­ful list­ings in the min­ing sec­tor. And this per­son, Mark Eng­lish, still holds 6 per­cent and oth­er man­age­ment hold a lot too. So it scores a one on our check­list for own­er. Founder, own­er, founder, which is a good thing. I’m going to go through the num­bers. That was a good sum­ma­ry from Canary Cap­i­tal of the com­pa­ny.

[01:00:33] Tony: Uh, this, the ADT for this stock is 109, 000 per day. So it’s going to suit a lot of peo­ple lis­ten­ing. It’s not a huge stock. The mar­ket cap’s mil­lion, but there seems to be a fair bit of, um, trade in it. I’m doing the analy­sis on a share price of 19 cents, and I think Today, last time I looked before we came on air, it was trad­ing at 20 cents, so it’s gone up a lit­tle bit.

[01:00:55] Tony: Uh, this is a small cap stock, um, I’ve nev­er heard of Canary Cap­i­tal, but they were one of the only ana­lysts cov­er­ing it. Uh, so we’re get­ting no con­sen­sus tar­get for the stock price, which is some­thing I like, so that’s a good thing. Uh, we have, the com­pa­ny has no yield, which is to be expect­ed because it’s in growth mode.

[01:01:12] Tony: Uh, the price of 0. 19 though, how­ev­er, is way above IV1 of 0. 05. We don’t have IV2 because we don’t have a, um, a fore­cast EPS to base it on. Uh, the com­pa­ny has, uh, strong finan­cial health in Stock Doc­tor. And the Stock Doc­tor finan­cial health trend is recov­er­ing, which is some­thing we score dou­bly in the check­list.

[01:01:32] Tony: I like to see that. And I think the rea­son why it’s, it’s get­ting a recov­er­ing score is because this is the first half where we have pos­i­tive oper­at­ing cash flow. And I haven’t done the regres­sion test­ing, but anec­do­tal­ly I’ve seen that when a com­pa­ny tran­sits to pos­i­tive oper­at­ing cash flow, it can be a cat­a­lyst for a re rat­ing of the stock.

[01:01:51] Tony: And that’s some­thing I like to see. Um, just, uh, I guess anec­do­tal­ly, I haven’t worked out how to put it into the check­list yet or how to gath­er the data, but it’s, uh, it’s, I think it’s prob­a­bly a net pos­i­tive. Uh, P for this com­pa­ny is 18. 9 times, so it’s not bad. Not low, uh, but it’s the first PE because they haven’t had pos­i­tive cash flow before, so we can’t score it.

[01:02:13] Tony: We leave that one blank. Uh, Prop­Caf is 6. 68 times, so it’s get­ting up to our sev­en cut­off. It’s just below it at the moment, and so it scores on that basis. Net equi­ty per share is 8, 000. Cents and the share price is 19. So we can’t, we cer­tain­ly can’t buy this for that, uh, asset val­ue or book val­ue plus 30, uh, we can’t score it for growth because, um, there’s no, uh, fore­cast earn­ings per share growth.

[01:02:40] Tony: So I can’t put growth over pe as I said before, direc­tors are hold­ing 16% of the com­pa­ny, so that’s great. Uh, it’s a recent three point uptrend, so we score it for that. It does­n’t have con­sis­tent­ly increas­ing equi­ty because it’s real­ly only adding to equi­ty now. Um, so we can’t score it for that. But of the things we can score, it’s 10 out of 12 items or 83%, which is a good qual­i­ty score, and a QAV score of 0.

[01:03:05] Tony: 12. So, um, from what I’ve seen in my lim­it­ed research of the com­pa­ny, I real­ly like it. I think it’s a great busi­ness mod­el to, um, to, um, You know, um, fund a lit­tle bit, dig some gold, sell it, fund a bit more, dig some more, sell it, etc., and rinse and repeat. Um, and it’s got a very, um, expe­ri­enced man­age­ment team behind it, so I think this one’s worth look­ing at, peo­ple.

[01:03:29] Tony: Have a look.

[01:03:30] Cameron: Very con­ser­v­a­tive mod­el for a

[01:03:33] Tony: Yeah, it is, isn’t it? Rather than going and rais­ing lots of mon­ey and, um, and tak­ing pot luck on your ten­e­ments. So, it’s good.

[01:03:41] Cameron: AWJ. We don’t own it in any of our port­fo­lios. So there you go.

[01:03:48] Tony: Maybe we should. We’ll see. And look, there’s still, it’s a small com­pa­ny, there’s still a lot that can go wrong. I did­n’t real­ly, um, item­ize the plus­es and minus­es for this one. The minus is that, uh, they’ve got to keep find­ing new ten­e­ments because the, of the mines they’ve got, they look like they’ve only got about three years mine life.

[01:04:07] Tony: So, um, even though it’s a great fly­wheel approach to expen­di­ture and using the cash flow to Dig more and sell more. Um, and they’ve cer­tain­ly got lots of licens­es and ten­e­ments up their sleeve. They’ve still got to keep strik­ing gold to keep expand­ing.

[01:04:24] Cameron: Yeah. All right. Thank you, Tony. Well, let’s get into ques­tions. We’ve got a cou­ple this week. First one’s from Toby. This is a left­over from last week. Thoughts on the impact of new tax rates may or may not have on per­son­al and super fund investors. Also, we know you’ve men­tioned about no buy­ing on mar­ket down days, excep­tion­al cas­es where you have com­pa­nies you want to buy that are in fact ris­ing on that day.

[01:04:51] Cameron: I’m not try­ing to fos­ter risky behav­ior like buy­ing KSL the oth­er day when they announced they’d been defraud­ed of about 10 per­cent of their half year earn­ings. I did bal­ance up my hold­ing on the news, but it just got me think­ing about the qual­i­fi­ca­tion of mar­ket ver­sus a par­tic­u­lar com­pa­ny.

[01:05:08] Tony: Yeah, look, it’s a good ques­tion. take the first one first, he asked about the impact on Invest­ments for the new tax rates. I don’t think there’s much. I did some back of the enve­lope num­bers. I think we are get­ting a tax ben­e­fit of rough­ly 2%, depend­ing on your, your income. This is basi­cal­ly due to, well, I mean, to give some his­to­ry to it.

[01:05:36] Tony: Gov­ern­ments, um, don’t link the tax brack­ets to CPI, so over time, peo­ple, peo­ple’s wages go up and they pay more tax as they move into high­er tax brack­ets. Um, and then gov­ern­ments, um, say, look, look how good we are, we’re going to cut tax­es for you. And they, they change the brack­ets and, um, they real­ly should have been adjust­ed along the way.

[01:05:55] Tony: But any­way, this lat­est change, um, in, in address­ing brack­et creep looks like it’s about a net 2 per­cent ben­e­fit, um, it depends on, again, how much you’re earn­ing. And that’s the approx­i­mate num­ber. Um, so some of the brack­ets are being reduced, like the top ti top, uh, or sor­ry, being increased. Um, so the top mar­gin­al tax rate cuts in now at 190, 000 income, where it used to be 180, 000 income.

[01:06:21] Tony: Um, and then the rates on some of the low­er brack­ets have been low­ered because orig­i­nal­ly this, this, what was 3 tax cuts were put in Third phase of tax cuts when the pre­vi­ous gov­ern­ment gave stage one and stage two tax cuts to the low­er brack­ets. They want­ed stage three just to be a raise in the cut off the high­est tax­ing brack­et which would be a tax return ben­e­fit to peo­ple on high incomes.

[01:06:48] Tony: The cur­rent gov­ern­ment said that’s not fair and they spread it a bit more even­ly across all brack­ets. Any­way, it’s um, I think its impact is going to be mar­gin­al. A cou­ple of things to note I guess is that when the tax The tax take goes down if you’re neg­a­tive­ly gear­ing things. It may mean you get less back as a rebate, but again, it’s prob­a­bly only going to be 2%, um, or there­abouts.

[01:07:12] Tony: And it also means if you’re, for exam­ple, if you have div­i­dends being paid into, um, super­an­nu­a­tion funds, where you gen­er­al­ly get a cash rebate. Because the frank­ing cred­it exceeds the tax payable by the Super­fund, um, then you’ll get a cou­ple of per­cent­age points increase in that. So it does make it a lit­tle bit more ben­e­fi­cial to have div­i­dends being paid, or invest­ing in SMS­Fs and get­ting them paid into Super­funds.

[01:07:40] Tony: But, um, You know, it’s a good thing that they did it to address Brack­et creep, but it’s a mar­gin­al sort of result, I think, for investors in this one. Sec­ond ques­tion about whether we buy on down days or up days. Um, I don’t know where we got to in the Bible on that one. I went and had a look and could­n’t see it.

[01:07:59] Tony: But I mean, as a rule of thumb, I don’t like buy­ing a stock when it’s going down. So if it’s going down on the day, I don’t buy it. I’ll wait and see if that’s the start of a trend. Um, I don’t think I was strict on whether the mar­ket’s hav­ing an up or down day. But yeah, cer­tain­ly I would­n’t buy some­thing if it was going down on that par­tic­u­lar day, just in case it’s like a KSL and they come out and announce some bad news and the stock price keeps going down.

[01:08:25] Tony: So that’s my take on that.

[01:08:29] Cameron: Yeah, for what it’s worth, I’ve nev­er paid atten­tion to whether or not the mar­ket is hav­ing a down day. It’s just whether a par­tic­u­lar stock is hav­ing a down day, then I will not buy it because I might be able to buy it for less tomor­row.

[01:08:45] Tony: That’s my rec­ol­lec­tion of what I do, but because I haven’t bought any­thing for a while, I had to sit there and think, hang on, what’s my process?

[01:08:54] Cameron: that’s my under­stand­ing of the rules, Toby, for what it’s worth. Thank you, Toby. Thank you, Tony. James, only oth­er ques­tion we’ve got today. Um, what does a notice of ces­sa­tion of secu­ri­ties mean? And what are the impli­ca­tions for share­hold­ers? Looks to me like there were shares on offer to man­age­ment based on per­for­mance, but man­age­ment failed to hit their tar­gets.

[01:09:17] Cameron: What hap­pens now to those shares that would have been giv­en to man­age­ment? And he’s got a table here from some com­pa­ny and it says, secu­ri­ty descrip­tion, per­for­mance rights, FY24, short term, num­bers of secu­ri­ties that have ceased, 17, 695. The secu­ri­ties have ceased due to lapse of con­di­tion­al right to secu­ri­ties because the con­di­tions have not been or have become inca­pable of being sat­is­fied, date of ces­sa­tion 28 of the 6th, 2024.

[01:09:47] Tony: yeah, so it’s not some­thing I pay atten­tion to, um, gen­er­al­ly man­age­ment rights are not a huge com­po­nent of a large cap stock­’s shares, um, it’s dif­fer­ent I think if it’s a start­up where, you know, man­age­ment are tak­ing lots of equi­ty in the com­pa­ny and it can be per­for­mance based, um, but, you know, what’s hap­pen­ing in a nut­shell is that as part of man­age­men­t’s Com­pen­sa­tion and try­ing to align them to share­hold­ers and their inter­ests.

[01:10:14] Tony: They, uh, get paid a long, usu­al­ly these are long-term incen­tives, um, and they can get paid out and giv­en to man­age­ment or they can lapse. Um, I, I did sort of go down the rab­bit hole on the account­ing for all this, and it’s, it’s. You know, there was pages and pages and pages of it. Um, I think, I think a cou­ple of points to make rather than out­lin­ing the account­ing for it at the moment is, Um, it could be a bad sign if large num­bers of secu­ri­ties are being can­celled because that means that the com­pa­ny has­n’t per­formed well enough for man­age­ment to get there.

[01:10:47] Tony: Long term incen­tives, but I think if that’s the case, we’re pick­ing it up in oth­er ele­ments of the QAV check­list and in sen­ti­ment, um, rather than focus­ing on this par­tic­u­lar area. Um, the oth­er point I want to make is that it’s not unusu­al for man­age­ment not to make 100 per­cent of tar­get every year. So it’s not unusu­al to see the can­celling of Longer term incen­tives because man­age­ment may have only made 50 per­cent of tar­get or 70 per­cent of tar­get.

[01:11:14] Tony: It’s unusu­al for man­age­ment to con­tin­ue to get 100 per­cent of tar­get. That’s poor tar­get set­ting, I think, on the behalf of the board if it’s not stretch­ing man­age­ment enough in that case. So it’s not sur­pris­ing to see Uh, can­cel per­for­mance rights, um, and the oth­er thing to note is that I think this might be just swings and round­abouts because every year, um, com­pa­nies have to put aside shares in case man­age­ment achieve their per­for­mance, um, enti­tle­ments and then give them the shares out.

[01:11:43] Tony: So, they’re kind of can­celling but issu­ing shares.

[01:11:50] Tony: So just to take one par­tic­u­lar snap­shot in time isn’t pro­vid­ing a good pic­ture. If you do want to look at the account­ing of it, I think the basic prin­ci­ples are that when the com­pa­ny enters into this kind of per­for­mance rights con­tract with a man­ag­er, they need to pro­vide, their best guess for what that’s going to cost in their, um, in their P& L and their bal­ance sheet.

[01:12:11] Tony: So, you know, back in the day when every­one got paid options, which isn’t as com­mon now, it tends to be per­for­mance rights to shares. They use the Black Scholes method and they say that, you know, we think these options are now worth this. And every year they would adjust the val­ue of the options as they got clos­er to expiry.

[01:12:27] Tony: And the val­ue either went up if it was like­ly that they were going to have to be exer­cised, or they went down if they were out of the mon­ey. And so the board would adjust the bal­ance sheet. of the com­pa­ny to say, if Joe Blog­gs, who’s, who’s, or Susan Blog­gs, who’s the CEO, meets their per­for­mance hur­dles, we have to pay for these new shares to be issued to them.

[01:12:48] Tony: And that’s still going on now, but like I say, it tends to be a pro­vi­sion in the bal­ance sheet. It’s based on the assess­ment of whether they’re going to pay out or not, and by pay out I mean, issue new shares and give them to the man­ag­er. Um, but it tends to be a bit of a revolv­ing line because, um, yeah, this year they may not give the shares out, but next year they might.

[01:13:08] Tony: So, it’s con­stant­ly being adjust­ed based on new tar­gets which are being set every year as well.

[01:13:15] Cameron: Right, just ignore it.

[01:13:18] Tony: I’ve always ignored it. Like I said, it might be more ger­mane to a very small tech com­pa­ny that was giv­ing out lots of these things. Um, uh, because it might dilute you when they, if they had a good year and they had to pay out all these shares, and it might actu­al­ly do bet­ter for you if they can­celled all these shares because you’re get­ting, it’s like a buy­back, you’re get­ting more of the com­pa­ny.

[01:13:36] Tony: But, gen­er­al­ly, like for a large cap com­pa­ny. com­pa­ny or a com­pa­ny with a large ADT. It’s play­ing around the edges, I think. It’s a bit like div­i­dends. You know, com­pa­nies will have to buy shares or issue shares to pay for div­i­dend rein­vest­ment plans, which is usu­al­ly just a cou­ple of per­cent­age points at the most around the shares on issue for com­pa­nies every half.

[01:13:59] Cameron: Thank you, Tony. Thank you for the ques­tion, uh, James. That’s it. We’re into after hours, Tony. What have you been after hours­ing?

[01:14:10] Tony: Well, hap­py birth­day to Rud­dy. It was his birth­day yes­ter­day. He’s a good, good

[01:14:15] Cameron: him a hap­py birth­day

[01:14:16] Tony: on the, on the 1st of July, first day of the finan­cial year. And the fun­ny thing is I know three peo­ple who would have a birth­day on the 1st of July. And I can’t think of any oth­er date where I know three peo­ple that share a birth­day on that day.

[01:14:30] Tony: So, you know, was there a thing, was there an incen­tive for hos­pi­tals or doc­tors or moth­ers to push their births into the new finan­cial year for tax rea­sons at some stage?

[01:14:40] Cameron: 65 years ago.

[01:14:41] Tony: yeah, back in the 50s or 60s, I don’t know.

[01:14:45] Cameron: And you weren’t down cel­e­brat­ing in Wag­ga with Rud­dy.

[01:14:50] Tony: I’m not. No, I have to get down there at some stage soon, but not this week.

[01:14:54] Cameron: Tay­lor, Tay­lor called me yes­ter­day and said, Hey, FYI, it’s Rud­dy’s birth­day today. I was like, well, Tony’s not down there. What’s Rud­dy

[01:15:01] Tony: Ha ha ha ha

[01:15:03] Cameron: I don’t under­stand how Rud­dy cel­e­brates any­thing with­out you there.

[01:15:06] Tony: Well, his broth­er in law has just moved back from Can­ber­ra, so he told me he was out play­ing golf with him. So he’s found a new, uh, a new golf­ing bud­dy to cel­e­brate with. I’ve been replaced.

[01:15:16] Cameron: that’s good. You’ve been dumped.

[01:15:19] Tony: yeah, a cou­ple of, uh, I watched Furiosa, rent­ed Furiosa, wast­ed 29 bucks on it, uh, the You Mad Max pre­quel, um, want­ed to like it, look it’s not a bad movie, it’s, um, it’s, um, is it Anna, Tail Your Joy, the lady from Red Queen, stars in it, and she did well, but it’s a tough ass to play a young Char­l­ize Theron, unless you’re Char­l­ize Theron,

[01:15:42] Cameron: the Queen’s Gam­bit. That would

[01:15:44] Tony: Queens Gam­bit, sor­ry, there you go, yeah, um, yeah, but she was okay.

[01:15:48] Tony: But it was just, uh, Chris Hemsworth spoiled it for me. He basi­cal­ly played his Thor love and thun­der role again and tried to play it for light gig­gles and it just, just did­n’t come off. He’s not a

[01:16:02] Cameron: Should­n’t be any gig­gles. Well, there are a few gig­gles in Mad Max films occa­sion­al­ly, but you know, like, uh, when, um, Uh, what was the boy’s name with the met­al boomerang? Um,

[01:16:16] Tony: uh,

[01:16:17] Cameron: Fer­al Kid. Fer­al Kid. When he chops off the guy’s, well the guy’s, chops his own fin­gers off. Bit of those sorts of laughs in a Mad Max film, but that’s about it, you know.

[01:16:27] Cameron: Lit­tle

[01:16:27] Tony: Yeah, you could see, I could see how the char­ac­ter was writ­ten as being like anoth­er humon­gous or, um, that kind of char­ac­ter and, um, He was a great char­ac­ter. I mean, on the page, it must’ve read real­ly well. Cause he’s, he’s like this head of the bikey gangs in the waste­land. He’s like, just com­plete­ly anar­chic, you know, every­thing’s chaos.

[01:16:48] Tony: He’s just try­ing to build a big bikey gang to go to war and, uh, with a Mortem Joe and, you know, take his resources all the time. And it could have been like a Heath Ledger Jok­er type role. Like if it was comedic, it was dark­ly comedic, but play­ing it for laughs was just a bad note, I thought. One great

[01:17:06] Cameron: days ago I saw a vehi­cle that had hauled that tanker. You wan­na get out of here? Talk to me. Sor­ry, just had to

[01:17:14] Tony: That’s okay, and that was actu­al­ly reprised by any num­ber of char­ac­ters in the movie, kept say­ing that, and the, the, you want to get out of here, you talk to me,

[01:17:23] Cameron: Real­ly?

[01:17:24] Tony: yeah, and, but the best thing in the movie is, and it’s real­ly quick and real­ly qui­et, but there’s a scene where, Um, they take the tanker out on the, on the road, and, and it’s like it pans back and I’m sit­ting on the cliff over­look­ing it, is a V8 super­car, Inter­cep­tor, with Max sit­ting there eat­ing a can of dog food, and it’s in the dis­tance so you can’t see it, it’s not Mel Gib­son, but it ties it all togeth­er, it was just, just a great homage back to Mad Max.

[01:17:53] Cameron: Right, so it’s the pre­quel to Furiosa, uh, pre­quel to, um, Fury Road, and it, that takes place dur­ing Mad Max 2.

[01:18:04] Tony: Well, Mad Max is part of Fury Road, right, but it’s played by Tom Hardy.

[01:18:08] Cameron: Yeah, so, but if, in the time­line it goes back to Mad Max 2, essen­tial­ly.

[01:18:14] Tony: Yeah, well, the end of the movie is actu­al­ly, Um, what’s her name? Anna Tay­lor Joy. Lost her arm, actu­al­ly ripped her arm off her­self to escape from some­thing. Um, got the mechan­i­cal arm, breaks back

[01:18:26] Cameron: mar­riages like that. Yeah, what? So,

[01:18:28] Tony: yeah, did­n’t go ugly, did­n’t go ugly once. Um, breaks back into the nurs­ery where Immortem Joe has his wives and puts them all into the tanker.

[01:18:39] Tony: And then as part of the cred­its, they cut to Char­l­ize Theron dri­ving the tanker with the wives across the waste­land to get away from a Mor­den show. So it’s, it’s, it’s, it’s right up against Fury Road. Yeah. So, I mean, watch it. It’s worth watch­ing. It’s, it’s spec­tac­u­lar and all that. Um, but I just thought about it the next day, said to Jen­ny, what’d you think?

[01:19:00] Tony: And she said, nut. And I said, nut. Chris Hemsworth spoiled it.

[01:19:05] Cameron: I don’t know why George has­n’t made a Mad Max sequel with Mel as just this anti Semit­ic, uber reli­gious, crazy dude out on the fringes. Just, yeah, like, Mel would­n’t need to, would­n’t need a script. It’s just like, turn him on and let him

[01:19:32] Tony: real­i­ty TV, just fol­low­ing around with a cam­era, a cam­era crew.

[01:19:39] Cameron: Uh, he, I tell you what, you know, if any­one’s a big sup­port­er of Project 2025, it’d be Mel.

[01:19:46] Tony: You think? Okay.

[01:19:47] Cameron: Oh yeah. The re Chris­tian­iza­tion of Amer­i­ca, where it’s all con­ser­v­a­tive Chris­t­ian val­ues being dri­ven home. He’d be all for that. I’m sur­prised that he’s not Trump’s run­ning mate.

[01:20:00] Tony: No wait, maybe. Trump’s not announc­ing his run­ny mate until the, uh, con­ven­tion.

[01:20:04] Cameron: would­n’t that, I tell you, would­n’t that be some­thing if it’s Mel, Mel Gib­son as, you know.

[01:20:08] Tony: Out of the waste­land. You want to get out of here?

[01:20:14] Cameron: yeah, you want to make Amer­i­ca great again? You talk to me.

[01:20:20] Tony: Yeah. Wow. There’s so much going on in Amer­i­ca. Yeah. Okay. Where do you start? Where does Joe, more impor­tant­ly, where does Joe Biden fin­ish? Pret­ty soon, I hope. I’ve

[01:20:33] Cameron: tru­ly fin­ished. Yeah. And, uh, what have you been read­ing, Tony?

[01:20:40] Tony: start­ed a few books and haven’t gone on with them, but I’m read­ing Pan­do­ra’s Box, Peter Biskin’s sto­ry about the gold­en age of TV, which I’m get­ting into because it’s, you know, basi­cal­ly sex and drugs and rock and roll and tele­vi­sion. So, um, it sort of starts with the his­to­ry of HBO and goes through Oz and The Sopra­nos and that’s about where I’m at up to the Time Warn­er merg­er.

[01:21:02] Tony: Bit of cor­po­rate intrigue and lots of cor­po­rate excess. Was­n’t only Mira­max that was going around, um, yeah, tak­ing their plea­sures with the star­lets. But, um, yeah, I mean, I’m a fan of Peter Biskin’s writ­ing. He did, um, Easy Rid­er and, what was it called? Rag­ing Bulls, Easy Rid­er and Rag­ing Bulls, which is a great book on inde­pen­dent cin­e­ma.

[01:21:21] Tony: And now he’s giv­ing, um, tele­vi­sion the same treat­ment.

[01:21:24] Cameron: Hmm. I’ll have to check that out.

[01:21:26] Tony: Yeah,

[01:21:29] Cameron: Well, for my part, apart from being on hol­i­day and doing a lot of yard work for my mum, um, I’ve, yeah, uh, final­ly watched Sophia Cop­po­la’s Marie Antoinette film, because it’s one of the DVDs that my mum has on her

[01:21:45] Tony: isn’t it?

[01:21:46] Cameron: Um, I would­n’t say that, um, I think it was inter­est­ing, um,

[01:21:55] Tony: I know you’re not a Kearn­ston Dun­st fan.

[01:21:57] Cameron: no, I’m not a, I’m a big Sophia Cop­po­la fan, not a Kirsten Dun­st fan.

[01:22:01] Cameron: And although I’ve, you know, I loved her when she was a kid, Inter­view With A Vam­pire. I liked her in the sea­son of Far­go that she did with the retard­ed Matt Damon guy who’s now a hus­band. The guy who was the, I can’t remem­ber the actor’s name, but we always think of him as, he looks a bit like a sort of men­tal­ly not quite there Matt Damon.

[01:22:25] Cameron: He was in, he was, um, uh, in Break­ing Bad, the last sea­son, he was the guy who shot the kid in the desert. Um,

[01:22:35] Tony: don’t watch,

[01:22:36] Cameron: you did­n’t watch Break­ing Bad? What are you read­ing a book on the gold­en era of tele­vi­sion if you did­n’t watch Break­ing Bad?

[01:22:41] Tony: I’ll read about it. Jesse Ple­mons,

[01:22:43] Cameron: Jesse Ple­mons, that’s him. Yeah, yeah,

[01:22:46] Tony: Okay, I know who you mean now.

[01:22:49] Cameron: he’s like Matt Damon, got dropped on his head as a baby.

[01:22:52] Cameron: Um, good actor, though. Was in a good episode of Black Mir­ror a while back too, it was like a Star Trek kind of episode, which was

[01:23:01] Tony: okay.

[01:23:02] Cameron: Um, But, you know, inter­est­ing to see it from her per­spec­tive, like it’s just a very thin slice of her per­spec­tive of the last days of being part of the French roy­al fam­i­ly and then all of a sud­den one day, the rev­o­lu­tion hap­pens and they’re like, what, what did we ever do?

[01:23:25] Tony: Yeah,

[01:23:26] Cameron: live a high­ly priv­i­leged life her entire lives, you know? We did­n’t do any­thing.

[01:23:32] Tony: I told you that Alex and I watched that when she was a kid and she cried her eyes out because that last scene when the car­riage takes them away and it’s got no con­text to why they’re being tak­en away, they’re just tak­en away. Alex went, how is that, why is that the end? What hap­pens? And I said, well, they’re going to the guil­lo­tine.

[01:23:47] Tony: She just, all her eyes out. She was invest­ed in the char­ac­ter.

[01:23:54] Cameron: Yeah, I don’t remem­ber the final, I don’t think they were going to the guil­lo­tine then, though. I think they left Ver­sailles, and I think there was a deal, they were try­ing to nego­ti­ate a deal with the, you know, the rev­o­lu­tion­ary gov­ern­ment, and then they tried to escape France and got caught and exe­cut­ed.

[01:24:18] Tony: Okay. That’s a long way of say­ing they’re on their way to the guil­lo­tine.

[01:24:22] Cameron: Yeah, not

[01:24:23] Tony: Sofia Cop­po­la was a good film­mak­er. Just say it in as lit­tle space as you can. Yeah.

[01:24:28] Cameron: I think what ruined it for me, though, is I’ve watched The Great.

[01:24:32] Tony: Okay.

[01:24:33] Cameron: Have you seen that TV show? Which is about Cather­ine the Great, sim­i­lar sto­ry, gets, you know, young, young woman, gets mar­ried off, gets sent to a strange land, every­one kind of does­n’t like her, and she has to try and fig­ure out how to sur­vive in a some­what hos­tile regime.

[01:24:52] Cameron: Um, but it’s a lot fun­nier and there’s a lot more sex and, um, swear­ing and it’s, it’s played, I think it’s far more enter­tain­ing, although not as his­tor­i­cal­ly accu­rate, I guess, but,

[01:25:04] Tony: Right.

[01:25:04] Cameron: but inter­est­ing just from her per­spec­tive, like she’s just a rich girl hav­ing a rich girl’s good old time and, uh, with a hus­band who’s sort of not real­ly into her and, uh, then she’s dead.

[01:25:15] Tony: not real­ly bright either. And, um, I just, I love that scene though, when they use Hong Kong gar­dens as the sound­track. I think that’s fan­tas­tic.

[01:25:23] Cameron: yeah, a lot of good sound­track choic­es and inter­est­ing to see a young Tom Hardy in it as some, he’s like very, right towards the end when she’s like par­ty­ing in Ver­sailles before it all goes, tits up. He’s like one of the dilet­tantes who’s uh, hang­ing out in her inner cir­cle, as is Jamie Dor­nan, um, who end­ed up in Fifty Shades of Grey, but was in a great.

[01:25:49] Cameron: Uh, series, I think it was called The Fall, was an Irish cop series star­ring Gillian Ander­son

[01:25:58] Tony: Oh,

[01:25:58] Cameron: a harsh, mid­dle aged les­bian police super­in­ten­dent brought in from Lon­don into this lit­tle Irish town, maybe it was Dublin, I don’t know, some­where in Ire­land, and um, he’s a ser­i­al cop. killer rapist that she’s hav­ing his cat and mouse game with but he was chill­ing in that

[01:26:20] Tony: No, I’ve got to look at that. I haven’t

[01:26:22] Cameron: was real­ly good Jil­lian Ander­son ter­rif­ic per­for­mance just this sort of cyn­i­cal bit­ter hard nosed a bit like Jodie Fos­ter in um

[01:26:35] Tony: Just, I was just going to say that. I was just going to say that.

[01:26:38] Cameron: But about 10 years ago, um, and look­ing, look­ing gor­geous.

[01:26:42] Cameron: Um, not as fraz­zled as Jodie Fos­ter’s char­ac­ter was look­ing. Um, but yeah, real­ly good. Any­who, and yeah, read­ing Ray Kurzweil’s book. Oh, and I saw this, Chris, you know, I watched this French film last night, Police, um, which I bought on DVD at a 2 shop in town. Um, won the jury prize at the 2011 Cannes Film Fes­ti­val.

[01:27:07] Cameron: Um, It’s It’s It was The DVD said a whole sea­son of The Wire in one movie. It’s It’s about the, uh, child Pro­tec­tion Unit police squad in Paris, um, and just deal­ing with sex­u­al exploita­tion of chil­dren and just rapid fire, all the, all the sce­nar­ios and cas­es that they’re doing, han­dling real­ly grit­ty, quite dis­turb­ing.

[01:27:40] Cameron: But if you, if you like that kind of a thing, uh, real­ly well done. Hmm.

[01:27:46] Tony: Yeah, I’m not sure. I’m not sure. I could stom­ach that one, but I’ll look it up. How do you spell it? P‑O-L-I-Z‑I or S‑I-S-S‑E.

[01:27:55] Cameron: E, Policee, Uh, yeah, or Policee, I think it is in French, just Policee, um,

[01:28:04] Tony: speak­ing of the French, do you have any, uh, take on the far right selec­tion runoff com­ing up? Mm

[01:28:11] Cameron: Christ, it’s all falling apart, isn’t it, real­ly, just, far right in Italy, far right in France, Ger­many won’t be far behind, Trump’s gonna imple­ment Project 2025 in the US.

[01:28:25] Tony: mm-Hmm,

[01:28:25] Cameron: It’s just all com­ing around again. You men­tioned 1929 before with the Alan Kohler chart. It just feels like we’re mov­ing into the 30s again around the world, a cen­tu­ry lat­er.

[01:28:40] Tony: it does. Yeah. Yeah. Almost a cen­tu­ry lat­er. You’re right.

[01:28:45] Cameron: And this time we have AI, which could either be a good thing or a bad thing if the world’s run by far right gov­ern­ments.

[01:28:53] Tony: Cor­rect. Well, it was always, could, always could always be a good thing or a bad thing. It does­n’t mat­ter who’s in pow­er.

[01:29:00] Cameron: that’s true. Yeah, yeah.

[01:29:02] Tony: Did you see, uh, did you see the arti­cle in the AFR today on the front page? Ed Husic launched, the Sci­ence and Tech­nol­o­gy Min­is­ter, backed the report from the Aus­tralian Tech Asso­ci­a­tion say­ing that AI will cre­ate 200, 000 jobs in the next

[01:29:18] Cameron: And elim­i­nate 5

[01:29:19] Tony: Did­n’t, did­n’t men­tion that. Politi­cian just want­ed to claim 200, 000 jobs. Did­n’t want to

[01:29:25] Cameron: Uh huh.

[01:29:26] Tony: talk about the ones that were tak­en away.

[01:29:28] Cameron: The jobs will all be for robots, um,

[01:29:32] Tony: Yeah. Robot man­u­fac­tur­ing plants. Yeah. Coal mines and steel mills.

[01:29:38] Cameron: Yeah, that was in the sub­text, uh, for robots.

[01:29:43] Tony: Yeah.

[01:29:44] Cameron: yeah, I’m read­ing Ray Kurzweil’s book, as I men­tioned to you on the Futur­is­tic Show yes­ter­day. Did you get it?

[01:29:48] Tony: I haven’t got it yet. It was on pre order, but it has­n’t turned up yet. Yeah. I’m real­ly look­ing for­ward to it. I want to go through his take on AI and what’s changed in his pre­dic­tions with the sin­gu­lar­i­ty.

[01:30:00] Cameron: Pret­ty, like, so far, I’m only, I don’t know, 25 per­cent of the way through it, but real­ly noth­ing’s changed. It’s just, I think he just rewrote his last book, updat­ed it with some fig­ures. It’s basi­cal­ly, I could sum­ma­rize the book in four words. It’s just, I told you so. It’s

[01:30:22] Tony: Oh, so it’s a, it’s a vic­to­ry lap, is it? A bit ear­ly? Bit ear­ly, but

[01:30:26] Cameron: Pret­ty much. Yeah, it’s

[01:30:28] Tony: He’s gone the ear­ly crow.

[01:30:29] Cameron: yeah. as I’ve been say­ing for 50 years, here we are.

[01:30:37] Tony: Well, fair enough. He deserves the kudos. He has been say­ing it.

[01:30:41] Cameron: I do like, you know, he said this in the TED talk I sent you as well, but he says this in the book, like, Um, 10 years ago or some­thing they held, Stan­ford or one of these places held a big con­fer­ence of AI sci­en­tists talk­ing about when com­put­ers would pass the Tur­ing test and they were all say­ing, well, it will, but it’ll be a hun­dred years from now or 50 years from now, ever since he first start­ed fore­cast­ing it for some­time, uh, you know, between 2020 and 2030.

[01:31:08] Cameron: back in 1990. They were like, Oh, it’s hun­dreds of years away. And every, every decade, it gets clos­er and

[01:31:15] Tony: Yeah, right,

[01:31:16] Cameron: And now they’re all say­ing it’s going to hap­pen like by 2027. And he’s say­ing 2029. So he’s say­ing now I’m, I’m the one who’s, you know, the, the con­ser­v­a­tive one. Now every­one’s think­ing it’s going to hap­pen before I’m

[01:31:32] Tony: yeah, okay, I’m sur­prised because I would have thought com­put­ers have already passed the Tur­ing test.

[01:31:37] Cameron: Okay, so, me too, but his def­i­n­i­tion of pass­ing the Tur­ing test is, uh, which he, he set up a bet. some years ago or decades ago with, uh, it was­n’t Min­sky. It was, uh, anoth­er famous, uh, neu­ro­sci­en­tist or arti­fi­cial intel­li­gence guy. I can’t remem­ber off the top of my head, but, uh, they, they cre­at­ed some very spe­cif­ic, um, cat­e­gories for what it would need to demon­strate.

[01:32:10] Cameron: And it’s the two, the two most chal­leng­ing things is it has to be, it has to be able to answer. Any ques­tion, as good as a human would, and you know, the cur­rent AIs can answer a lot of ques­tions as good as a human could, but some they can’t. Some they’re going to flop at, but it also can’t appear to be too good.

[01:32:35] Cameron: So it has to tem­per itself. So it’s not obvi­ous­ly an AI. You ask it to do some sort of, um, com­plex thing. And if it does it too well or too quick­ly, that’s the give­away. So if it can fake being a human suc­cess­ful­ly, which she says will be the most chal­leng­ing

[01:32:58] Tony: it prob­a­bly is actu­al­ly because you prob­a­bly need some degree of emo­tion, under­stand­ing of what emo­tions are to do that. You know, like I’m made, I laugh at your jokes or I’m made angry by your ques­tion. I take hum­bridge at what you’ve said. That kind of thing needs to be fac­tored in there some­how.

[01:33:14] Cameron: Oh, the LLMs already do that to a large extent.

[01:33:17] Tony: they?

[01:33:18] Cameron: Lots of exam­ples of peo­ple hav­ing fights with them and debates with them and,

[01:33:23] Tony: Okay.

[01:33:24] Cameron: LLMs get­ting insult­ed and ter­mi­nat­ing con­ver­sa­tions if they get chal­lenged too many times. And, oh

[01:33:30] Tony: I had­n’t heard that. Wow.

[01:33:32] Cameron: Yeah. That’s all, that’s already hap­pen­ing. But any­way,

[01:33:34] Tony: Uh, that’s what we need. Super­in­tel­li­gence with a tem­per. Oh, great. This is like, this is like Greek gods. We’re gonna be like, uh, AI’s gonna be up on Mount Olym­pus throw­ing light­ning bolts when it’s unhap­py at us.

[01:33:49] Cameron: This is what the chal­lenge of when you train them on human data, they’re get­ting all the human data, right?

[01:33:54] Tony: yeah, right.

[01:33:55] Cameron: Yeah. All the human, uh, emo­tions that come with it. Um, yeah. But, uh, but, uh, you know, um, Ray is very, very bull­ish about where we are head­ed and how it’s gonna be a good thing. And, um, we have nano bots, uh, con­nect­ing our brains to the cloud by the 2030s.

[01:34:17] Cameron: He’s say­ing at this stage. And that’s going to lead to an explo­sion in intel­li­gence at a human lev­el, um, where we’ll be able to do things we’ve nev­er been able to do before. So he’s fore­cast­ing like an absolute, um, rev­o­lu­tion in soci­ety in the next 10 years.

[01:34:37] Tony: I guess you prob­a­bly know the answer to this, but I guess the ques­tion I had after we had our dis­cus­sion yes­ter­day is, Dar­win’s had four and a half bil­lion years to get to where we are now in terms of human intel­li­gence. We’ve evolved human intel­li­gence to where it is now. Is, giv­en that, and giv­en that we haven’t seen Any oth­er extrater­res­tri­als in the uni­verse?

[01:35:02] Tony: Is this the peak of intel­li­gence? Will hav­ing more grey mat­ter make a dif­fer­ence? Like, we can all get our heads togeth­er now and, and solve prob­lems, but, um, but does upload­ing to the cloud or, or hav­ing more mem­o­ry capac­i­ty than the cur­rent brains hold actu­al­ly give you more intel­li­gence? Or is it just like a, maybe it’s a bit more, but not a quan­tum leap in what we have.

[01:35:27] Tony: Are we evo­lu­tion­ar­i­ly the apex of intel­li­gence? Um, of intel­li­gence.

[01:35:31] Cameron: Well, you know, the tricky thing with this is some­thing Steve and I always come back to on Futur­is­tic is how do you define intel­li­gence? It’s like, how do you define con­scious­ness?

[01:35:41] Tony: Oh, sure. Yeah. Yeah.

[01:35:43] Cameron: things, or how do you define arti­fi­cial intel­li­gence? You know, he’s, Ray’s got a pic­ture in the book of a guy sit­ting at a table furi­ous­ly draw­ing things on A4 pieces of paper, which is arti­fi­cial, arti­fi­cial intel­li­gence is, will be achieved when, and his floor is, is full of reject­ed ones that he’s put across very like it, when it can beat, when it can beat humans at chess.

[01:36:06] Cameron: Oh, that one’s gone. When it can, it’s this con­stant­ly mov­ing tar­get, right? It’s, As a lot of peo­ple say, arti­fi­cial intel­li­gence is when com­put­ers can do what­ev­er they can’t already do bet­ter than humans.

[01:36:20] Tony: Yeah. And I accept that, but like, okay, so it’s a bit like the six mil­lion dol­lar man. If it’s faster, smarter, stronger, um, is it, is it like a small leap in evo­lu­tion or is it just like a huge quan­tum leap in evo­lu­tion of intel­li­gence? It’s hard to, I think it’s hard to under­stand, because it’s like, it’s like say­ing, uh, you know, phys­i­cal­ly, I have more grey mat­ter than Jen­ny does, because she’s a female with a small­er skull size, but she’s smarter than I am.

[01:36:49] Tony: So this is, by just amp­ing up grey mat­ter, is that going to increase intel­li­gence?

[01:36:53] Cameron: How do you define intel­li­gence and smarter though?

[01:36:56] Tony: Oh, how­ev­er she wants to define it. Yes, dear, you’re smarter, which may make me more intel­li­gent.

[01:37:05] Cameron: Tony. Yeah, cor­rect answer. Yeah. Yeah. What­ev­er she says it is. Um, Look, if you define, like, just as a very loose def­i­n­i­tion, if intel­li­gence is the abil­i­ty to, um, think abstract­ly, uh, or solve prob­lems by tak­ing in infor­ma­tion, data, and apply­ing it to a prob­lem, to solve a prob­lem, then The thing that machine intel­li­gences are able to do, and will be increas­ing­ly able to do far bet­ter than us, is the amount of infor­ma­tion that a machine intel­li­gence can absorb

[01:37:48] Tony: Mm-Hmm.

[01:37:48] Cameron: and under­stand and the speed with which it can do that will be far greater, or is already far greater in many domains, but will be far greater in all domains than humans can.

[01:38:01] Tony: so I think it’s, um, IC AI has been a great. Effi­cien­cy tool, a great pro­duc­tiv­i­ty leap for human­i­ty. You know, it’ll be able to look at x rays quick­er and faster and diag­nose bet­ter, that kind of thing. But, but, what does being more intel­li­gent mean? What does it get us? Um, it’s, my anal­o­gy for it is, if I look at the evo­lu­tion of Wall Street, As tech­nol­o­gy got bet­ter and, and more data sets were able to be crunched, and they start­ed to go to, um, sci­ence depart­ments for recruits and bring in atom­ic physi­cists to pre­dict the options, trad­ing and all that kind of stuff.

[01:38:39] Tony: And then com­put­er­ized that and then get to flash trad­ing and put the com­put­ers next to the com­put­ers. Um, ASX on the same floor, so they would exe­cute trades real­ly fast. Um, okay, that’s, that’s made some peo­ple rich and it’s, it’s, it’s kind of a race to the bot­tom. But it’s not like, it did­n’t invent a new Ben Gra­ham or a new War­ren Buf­fett or any­thing like that.

[01:39:02] Tony: It just kind of improved the effi­cien­cy and opti­mized the abil­i­ty to ana­lyze stocks and trade faster and quick­er. and give some­one a minus­cule advan­tage. Is AI going to do that for soci­ety? How do we define a huge jump in intel­li­gence?

[01:39:21] Cameron: Well, in terms of the out­put of it, my expec­ta­tions, which are the same as Ray’s, I think, is in the next 10 to 15 years, so by the end of 2040, we should have solved Most dis­eases, includ­ing the dis­ease of aging.

[01:39:41] Tony: Why do you think we haven’t done that now? If it can be solved by com­put­ing pow­er, why haven’t we done it now? Like, chips are cheap,

[01:39:49] Cameron: yeah, it’s not the hard­ware, it’s the soft­ware.

[01:39:54] Tony: but if all the soft­ware is doing is mim­ic­k­ing us, why could­n’t we put a mil­lion sci­en­tists in a room and said, solve can­cer?

[01:40:01] Cameron: Because we, because we don’t have a mil­lion sci­en­tists to put in a room to say solve can­cer.

[01:40:06] Tony: Well, I think the prob­lem is also too that it’s, um, the eco­nom­ic, eco­nom­ic incen­tives aren’t there to solve can­cer, which is why Weight loss drugs are the big thing at the moment and why there’s so much mon­ey going into that. We can solve obe­si­ty and dia­betes before we can solve can­cer. I mean, it’s absurd, but that’s just how it works.

[01:40:25] Cameron: We’ve, we’ve got a lot of, there’s a lot of inter­est­ing things going on in terms of can­cer. Cures right now, a lot of, um, inter­est­ing stuff in first phase human tri­als, but you know, Sabine Hossen­felder, um, you ever, you ever fol­low her on YouTube? She’s great.

[01:40:43] Tony: I don’t fol­low any­one on YouTube. I get a few golf videos occa­sion­al­ly.

[01:40:47] Cameron: I read a book too, that she put out last year, which was great.

[01:40:50] Cameron: She’s a, she’s a Ger­man, um, a the­o­ret­i­cal physi­cist who does great YouTubes in this very dry, Ger­man style with

[01:41:00] Tony: You’ve ill split the atoms.

[01:41:03] Cameron: She’s very fun­ny. Um, but you know, I watched her recent­ly and she said, you know, um, the prob­lem that humans have is even if you are one of the lead­ing minds of your gen­er­a­tion in a par­tic­u­lar field,

[01:41:19] Tony: hmm.

[01:41:20] Cameron: So the­o­ret­i­cal physics, you can’t read all of the papers that are writ­ten, even in your field every year.

[01:41:26] Cameron: There’s just too many things being writ­ten. The machine, the AIs will be able to not only read every paper writ­ten in that field, it’ll read all the papers writ­ten in all the fields and we’ll be able to con­nect the dots. Between what peo­ple are dis­cov­er­ing in the­o­ret­i­cal physics and what they’re dis­cov­er­ing in chem­istry and

[01:41:48] Tony: Yeah, so I,

[01:41:49] Cameron: domain and

[01:41:50] Tony: it’s a good sum­ma­ry. I think I agree with you on that, but again that’s an effi­cien­cy, an opti­miza­tion of the cur­rent approach to it. So, I think that’s where AI is going to have a huge ben­e­fit on things like, Research for drugs and stuff but, I’m not sure, maybe it does, maybe emerg­ing out of all of that con­nec­tiv­i­ty is a solu­tion to solve can­cer.

[01:42:11] Tony: But maybe it isn’t, maybe it’s just that the research hap­pens faster and it’s still going on a curve to get to solv­ing can­cer.

[01:42:19] Cameron: Okay, so the first part of it is not only read­ing all of the research that’s done, but then doing its own research. And also then, this is some­thing Ray talks about, um, run­ning mil­lions, uh, or bil­lions of vir­tu­al­ized exper­i­ments. in um, the, in the cloud, right? So if there are, the same way that these LLMs work right now, this is where Deep­Mind is doing a lot of great work with Alpha, um, Alp­haZe­ro and these sorts of tech­nolo­gies in the med­ical field.

[01:42:56] Cameron: Run­ning a mil­lion vir­tu­al exper­i­ments, well what hap­pens if we You know, put these, uh, two chem­i­cals togeth­er and go after a par­tic­u­lar form of can­cer. And we do it, we run a mil­lion of those vir­tu­al­ized exper­i­ments and push it out over 10 years. And then they, it spits out the two or three best options to exper­i­ment with in the lab that can then go to human tri­als.

[01:43:23] Cameron: So the. The speed with which research will be able to be done should take a quan­tum leap. The amount of brains, if there are like 20, 000 sci­en­tists in the world work­ing on cli­mate change right now, which I think is rough­ly the num­ber, it’s 20, 000 cli­mate change sci­en­tists. All of a sud­den we’ve got a mil­lion, the equiv­a­lent of a mil­lion PhD lev­el cli­mate change sci­en­tists because the oth­er 998, 90, 80, I see, I need an AI to do maths. After talk­ing to you for two hours, uh,

[01:43:58] Tony: ha, ha,

[01:43:59] Cameron: our AI, PhDs, right? Think­ing about it, read­ing all the research, think­ing about it, run­ning mil­lions of vir­tu­al exper­i­ments, um, com­ing up with options for us.

[01:44:11] Tony: I think that’s going to be ter­rif­ic and I think that’s going to be a huge step for­ward. Um, but is it intel­li­gence? That’s an opti­miza­tion of the effi­cien­cies of what needs to be done now. I guess I’m just try­ing to define intel­li­gence here as more than just com­put­ing CPU speed or Mem­o­ry growth to get to super­in­tel­li­gence.

[01:44:30] Tony: So I agree with you. Soci­ety is going to ben­e­fit dra­mat­i­cal­ly from AI. I think, I think that med­ical exam­ple is an inter­est­ing one because I think, you know, it’s not going to be done for free. I mean, gov­ern­ments may buy AIs and put them to work on can­cer treat­ments and that’s a good thing, but, you know, um, Eli Lil­ly, who are mak­ing one of the weight loss drugs now is going to buy an AI with all the mon­ey it’s mak­ing from weight loss drugs and, and apply So, AI to pro­duc­ing bet­ter weight loss drugs and cheap­er weight or more expen­sive weight loss drugs maybe.

[01:45:04] Tony: So, there’s going to be an over­lay of the nor­mal eco­nom­ics in this. So, I’m not sure we’re going to get to that utopia with this sort of, sort of run­way that peo­ple like Kurzweil pre­dict.

[01:45:17] Cameron: Uh, we’ll have to get him on the show next week. I haven’t

[01:45:19] Tony: That’d be great.

[01:45:21] Cameron: 20 years. Get him on and we can have a chat. I

[01:45:23] Tony: Get him in phys­i­cal so we can touch his hair and see if it’s real.

[01:45:27] Cameron: think we, I think we both know the answer to that. I think he and Trump get their hair from the same pet store.

[01:45:35] Tony: That’s great. Actu­al­ly, I saw Trump’s hair­style dur­ing the debate. It looked dif­fer­ent. It’s thin­ning out a bit. Yeah, it’s

[01:45:40] Cameron: It’s always dif­fer­ent.

[01:45:41] Tony: now an obvi­ous comb over. This time it’s dif­fer­ent.

[01:45:46] Cameron: All right, my head­phones are run­ning out of bat­tery. I should go. Yeah, I’m dri­ving back tomor­row. Um,

[01:45:50] Tony: Oh, okay.

[01:45:52] Cameron: uh, by the way, lis­ten, I just, I’ll tell you on air, um, I’ve, I’ve got to drop my lap­top off at the Apple store on Fri­day because it’s back, the bat­tery’s screwed and they need to fix it or replace it.

[01:46:04] Cameron: They said they need it for a week. Um, So, uh, nor­mal­ly I run all my reports to do the buy list over the week­end. I won’t be able to do that. We nor­mal­ly, I put stuff out on Mon­days and Tues­days. We record. Every­thing may go tits up because I don’t have a spare lap­top next week. So every­thing may go tits up next week.

[01:46:23] Cameron: Just warn­ing peo­ple. I may be, uh, not. I haven’t been able to do much. I’ll be work­ing from my iPad, but there’s only a cer­tain amount of things I can do on my iPad.

[01:46:32] Tony: Okay.

[01:46:33] Cameron: tomor­row, uh, next week, I mean they may turn it around, and they’ve done this to me before, say we need it for a week and then call me 48 hours lat­er and say it’s ready.

[01:46:40] Cameron: But, um, we may need to be a lit­tle bit flex­i­ble with time­lines, etc. next week while I wait to get my lap­top back.

[01:46:47] Tony: So what’s wrong with Apple? They’re just going to put a, take a bat­tery out and put a new bat­tery in. What’s, why does that take a week?

[01:46:54] Cameron: Because they’ve got anoth­er thou­sand lap­top bat­ter­ies that they’re replac­ing out in the back room? I don’t know. They’ve got a cer­tain, they’ve got a lim­it­ed num­ber of engi­neers work­ing in the back room doing stuff,

[01:47:04] Tony: It requires an Apple engi­neer to replace a bat­tery in the lap­top?

[01:47:09] Cameron: Requires a nerd with a screw­driv­er, but

[01:47:12] Tony: Yeah, exact­ly. I think I’m look­ing at one. Just go and buy a bat­tery

[01:47:16] Cameron: Yeah. I could do that.

[01:47:18] Tony: and a

[01:47:18] Cameron: Avoid, void my war­ran­ty though.

[01:47:21] Tony: Oh, what a rack­et, Phil on your Apple, what a rack­et.

[01:47:24] Cameron: They’re doing it for free. I’m not com­plain­ing.

[01:47:26] Tony: Oh, okay, that’s why it’s tak­ing a week.

[01:47:29] Cameron: Yeah. Could be. Yeah.

[01:47:30] Tony: six days of star­ing at a pile of lap­tops.

[01:47:34] Cameron: Yeah. Yeah. Yeah. Alrighty. Thanks TK. Thank you every­body. QAV a good week.

[01:47:40] Tony: Hap­py ASX.