QAV 731 – Getting High with VIT

QAV 731 Club

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

[00:00:09] Cameron: Welcome to QAV.

[00:00:10] Tony: I was trying to,

[00:00:11] Cameron: right,

[00:00:12] Tony: sorry.

[00:00:13] Cameron: when you’re done.

[00:00:14] Tony: I’ll just keep talking over

[00:00:15] Tony: you.

[00:00:17] Tony: Say something.

[00:00:18] Cameron: And welcome to Q, uh, welcome to QAV episode 731, 20, no 30th of July, uh, 2024. How are you TK?

[00:00:29] Tony: Good, thank you. Sorry for talking over you then.

[00:00:31] Cameron: That’s okay. You’re obviously getting ready to practice for your debate against Kamala Harris, getting your, uh, talking over the top of a strategy

[00:00:39] Cameron: ready.

[00:00:41] Tony: Oh, I don’t think I’d debate her. I’m looking

[00:00:43] Tony: forward to a debate between her and Trump.

[00:00:46] Cameron: Yeah, well, that’ll be his strategy.

[00:00:47] Cameron: Just interrupting and talking over the top of her all the time. Well. Um, uh, FND, Tony, one of our favourite stocks down 19%. Uh, yesterday, anyone I looked at it, um, now the CEO, uh, who reached out to us after you did a pulled pork on it and said he wanted to come on, still hasn’t come on, um, and maybe this is why.

[00:01:13] Cameron: My gosh.

[00:01:14] Tony: I

[00:01:16] Cameron: Uh, dear me, it was, uh, trading at 4. 80 on the 15th of July. Dropped down to 3. 40 yesterday, back up to 3. 70 today. I couldn’t see anything in the news when I looked. Apart from, mysteriously, something did go out. Something was in the Stock Doctor announcements, uh, on the 26th of July, saying FY25 earnings guidance and market update invitation.

[00:01:48] Cameron: But the share price has been falling since, uh, the middle of the month when they announced their upcoming Annual General Meeting. I’m wondering if, uh, somebody’s leaked something, uh, or somebody knows something is coming out for the share price to drop that much. What does it smell

[00:02:03] Cameron: like to you?

[00:02:05] Tony: Yeah, I don’t know. It could be. It’s, um, it’s confession season, so they should be confessing to something like that, but, yeah, I’m not sure. I did some research. I looked at some, um, at their figures, looked at their most recent presentations, and it was all pretty good, uh, and in line with what the market expected.

[00:02:24] Tony: All I could see was on the day that it dropped 10%, There was a notice saying that someone called Jack Yetiv, Y E T I V, had taken a stake greater than 5%. And I don’t know if that’s coincidence or relative or what, but that was the only news coming out that day and, you know, bad timing, Mr. Yetiv, if your stock’s gone down 10 percent after you’ve just bought 5%.

[00:02:51] Tony: More than 5 percent of it. Um, and I wondered, I mean, I’m drawing some long bows here. I don’t know this person. Uh, looks like they work for a company called Seeking Alpha. They have taken stakes in other, even though they’re US based, they have taken stakes in other ASX companies. Um, I’m wondering if it’s, Yeah, I really, I’m speculating here whether he’s an activist investor or building a stake for a takeover or what, uh, but, um, that’s all I could see that, um, that was pertinent around the time of the decline.

[00:03:26] Tony: Um, it could also, you know, be viewed by the market as challenging the founders’ stakes because I think Uh, they have, even though they have, uh, directors have holdings in the company, I think there’s three of them who have combined about nine percent. So perhaps, uh, the market is liking that the founders could, could be challenged by a new shareholder.

[00:03:48] Tony: This is all speculation on my part, I don’t know if it’s the case and don’t know this person, but it’s the only thing I could see that happened on the day that this shares went

[00:03:57] Tony: down. Yeah. Yeah.

[00:03:58] Cameron: uh, Seeking Alpha is like a Stock Doctor type of a tool. It’s like a stock analysis tool. So, uh, I’m just looking at his bio. Jack Yetev, Seeking Alpha Analyst since 2008, Value, Growth at a Reasonable Price, Dividend Investing. After college, Jack obtained MD and PhD degrees from Ohio State, then practiced emergency medicine for about 20 years, from which he retired in 2003, then he obtained a law degree in the late 90s, uh, interested in alternative energy, no formal financial training, but has been a stock investor for more than three decades, and has made all the mistakes that can be made, some of them more than once.

[00:04:37] Cameron: I like that. Good on you, Jack. Um, so he’s taken a significant stake, has he, in, uh,

[00:04:45] Cameron: Findi.

[00:04:46] Tony: Mmm. Substantial shareholder notice on that day. Could be coincidence, um, but it could also have sparked the sell off. I’m not sure. And happy to talk to him and find out too. I’m not, um, not, I’m looking around for a reason why the stock was sold off. I’m not

[00:05:03] Tony: saying that he was the reason.

[00:05:06] Cameron: the notice says he became a substantial shareholder on the 26th of July. It, looking at the chart, it started falling a bit before that. It sort of peaked on the 15th of July and started dropping. Uh, after that I think it was down to like 3. 80 by the 26th of July, down from 4. 80, sort of dropped 20 25 percent before he bought in.

[00:05:36] Cameron: So,

[00:05:36] Cameron: um, I don’t, yeah.

[00:05:38] Tony: May not be him. It was certainly down 10 percent on the day he

[00:05:41] Tony: bought in, or the day the announcement

[00:05:43] Tony: hit.

[00:05:44] Cameron: Oh, yeah. Okay. So looking at the little table in there, he started buying 15th of February. He’s been acquiring shares since February.

[00:05:56] Cameron: He’s been

[00:05:57] Tony: yeah, it’s a fairly it’s a, yeah, it’s a fairly small ADT stock, so I can’t imagine he bought 5 percent on one day.

[00:06:03] Cameron: Yeah, right. So he, uh, yeah. Oh, wow. So he started buying, uh, 13th of February at 1. 70 and, uh, continued buying all the way up to the peak and then back down to 3. 70. So interesting. All right. Well, uh, that’s, yeah, so we don’t know, but that’s a big, that’s a big dip. I hold it in, uh, I think one of the light portfolios and it’s still above water, uh, hasn’t breached any of the, uh, selling, uh, triggers, but still a big shock.

[00:06:41] Cameron: It went up and then it went back down, went up very quickly and then came down just as quickly. So

[00:06:47] Cameron: that’s always disappointing.

[00:06:48] Tony: Well, we’ve seen it before though, nothing great, no tree grows to the sky. Someone’s taken some profits, I would probably guess. Someone thought this has been a good run, up from a dollar in January or whatever it was, to four bucks, I’m going to take some money off the table.

[00:07:02] Cameron: I was hiking, uh, with my mum and Chrissy and Fox on, uh, Saturday afternoon up at Mount Coot tha. There’s some pretty big trees. They’re growing all the way to the sky.

[00:07:15] Cameron: As far as I can see. Alright, maybe they, they’re not getting smaller.

[00:07:21] Tony: Well, they will eventually fall down.

[00:07:23] Cameron: Okay. Trying to push the analogy too far. Um, tell me about Karoon

[00:07:30] Cameron: Tony.

[00:07:32] Tony: Yeah, so we spoke about Karoon a couple of times, um, it was on the buy list, I think I might still be on the buy list, but anyway, um, And it’s looking at its chart, it’s not quite a buy yet, it was a buy in the past, I think I did a pulled pork on it. Um, but, and we also talked about them earlier in the year because an activist investor took a stake in Karoon and was upset that they kept acquiring new oil and gas fields in the US where most of their business is.

[00:08:05] Tony: Um, and. Whether it’s because of that activist investor or the board just thought it was a good idea, that they’ve just announced a dividend and or a share buyback worth between 20 and 40 percent of profit going forward. So the activist investor decided that Uh, shareholders weren’t being looked after enough and that management incentives were tied to too much to growth and it was easy for management to meet the hurdles by going out and buying using the, you know, the company’s resources to expand the, the oil fields that they have, which is not a, not an invalid rule.

[00:08:42] Tony: Strategy for this kind of company. But anyway, they decided to, um, to start giving money back to shareholders at about 30 percent of their profit going forward. If they pay back as a dividend, it’s going to be about 5 percent according to some calculations I saw, which is not bad. And if they decide to conduct a buyback instead of making a dividend payment, the board has said that they consider the share price does not reflect the true value in the in the company.

[00:09:14] Tony: So there’s a little bit going on there. I was kind of, my interest got piqued because Macquarie Group, their analysis of the company suggests that it’s worth 2. 50 and Stock Doctor have a consensus value of the company at 2. 37, even though it’s trading at 1. 85. So substantial discounts to what the analysts are thinking.

[00:09:39] Tony: So not quite a buy yet, but one to watch for when it turns.

[00:09:45] Cameron: Hmm, unfortunately, um, I don’t hold Karun. Looks like I let it go back in April’s the last time I had to get rid of it. Rule one sell.

[00:09:58] Cameron: Do you hold any Karun?

[00:09:59] Tony: I don’t,

[00:10:00] Tony: no, I’m not spruiking my own

[00:10:02] Tony: cheese.

[00:10:03] Cameron: Hmm. Um, well, not spruiking, it’d just be nice to get that dividend, wouldn’t it? If it came in, if it comes in.

[00:10:11] Tony: Yeah,

[00:10:11] Cameron: list this week.

[00:10:13] Tony: okay, it has been though.

[00:10:15] Cameron: Yeah, I’m just gonna see when the last time it was on the buy list. Historical buy list. Oh, well, yeah, last week it was. There you go.

[00:10:30] Tony: Big difference.

[00:10:32] Cameron: Yeah,

[00:10:33] Cameron: it was

[00:10:33] Cameron: last week, not this week.

[00:10:35] Cameron: Uh, alrighty, um, what else have you got in the hopper

[00:10:39] Cameron: for today, Tony?

[00:10:40] Tony: Yeah, in my hopper, number two cab off the rank is today’s quote from O’Shaughnessy, the What Works on Wall Street book. I’m going to keep trotting these out because I’m still reading through it and like every time I turn the page it’s like, yeah, that’s exactly right. And he says it so much better than I can, so I’m just going to quote.

[00:10:59] Tony: So this week, this week’s quote is, uh, he’s referring to David Faust, who wrote in his revolutionary book, The Limits of Scientific Reasoning, and quotes, Human judgment is far more limited than we think. We have surprisingly restricted capacity to manage or interpret complex information. Studying a wide range of professionals, from medical doctors making diagnoses, to experts making predictions of job success in academic or military training, fast found that the human judges were consistently outperformed by simple actuarial models.

[00:11:35] Tony: Like traditional money managers, most professionals cannot beat the passive implementation of time tested formulas. So I thought that was a good quote, um, so I guess it follows on from last week about staying the course and looking at a system that’s worked in the long term, which, uh, no, yes, I guess it’s a spoiler alert, but no surprises that Ashanti sees value on besting as being the system that’s worked in the long term or worked the best in the long term.

[00:12:08] Tony: Um, but the point he’s making here is. It’s probably an answer to the question you asked me a little while ago, is why do 70 percent of fund managers underperform the market? And O’Shaughnessy’s, if I’m paraphrasing here, but O’Shaughnessy’s answer is that they, uh, they either get spooked by a quarter of underperformance and see some of the outflows leaving their fund.

[00:12:30] Tony: And so they change strategy or they, uh, they decide to use gut feel. and deviate from the strategy. They don’t apply it slavishly because they just can’t stand to see periods of

[00:12:41] Tony: underperformance.

[00:12:42] Cameron: They can’t

[00:12:43] Cameron: or their

[00:12:45] Tony: Well, they’re investors. Yeah,

[00:12:47] Cameron: investors can’t.

[00:12:51] Cameron: Yeah. I

[00:12:54] Tony: And it’s an interesting sort of concept because, um, what they’re espousing is you have a system and you apply it diligently, which is exactly what a quant trader or an AI implementation of a fund manager would do. Um, but it, it doesn’t stop people from leaving the fund during periods of underperformance.

[00:13:14] Tony: Um, and then further on in the book, O’Shaughnessy points out that people tend to leave at exactly the wrong time. You know, they leave in 2009 at the end of the GFC and then 2010 is the best period for value investing in the last

[00:13:29] Tony: 15 20 years, so

[00:13:32] Cameron: so they should be locked in when they sign up. You say, listen, if you, if you’re joining our fund, you got to leave your money in there for 20

[00:13:39] Cameron: years. You can’t pull it out.

[00:13:41] Tony: Which is exactly what Buffett did in his original partnership. Um, people should go back and read that. It’s about 19, it’s about as old as me, it’s about 63, I think, when he put his, um, original partnership together and he set out some rules, and one of them was, your money’s in for 10 years, um, you can’t take it out.

[00:13:59] Tony: So, uh, he knew that people were going to lose, lose their nerve at some stage. He couldn’t always outperform the index over that period, so he locked them up.

[00:14:09] Tony: For their own good,

[00:14:09] Cameron: Q, that’s what we should do with QAV

[00:14:11] Cameron: memberships.

[00:14:13] Tony: offer a 10 year membership.

[00:14:16] Cameron: Yeah. You just can’t get out. You’ve got a, we’ll call it the Hotel California membership. Um, no, but seriously, like, uh, you know, we’ve seen it. People come in and they’re all excited and they’re going to do it. And then they get a couple of years into it and things go south for a year or two. And they’re like, Oh, I can’t handle it anymore.

[00:14:40] Cameron: We, maybe we need to create lock ins to, for their own benefit. To stop them from, uh, you know, wigging out when times are tough, going, no,

[00:14:50] Tony: Yeah.

[00:14:51] Cameron: no, it’s, uh, there’s, it’s like, it’s like a, a poison pill option, a poison pill. You can’t get out, you know,

[00:14:59] Cameron: once you’re in, you’re locked in.

[00:15:01] Tony: Yeah. Well, we, we charge a very high

[00:15:04] Tony: exit fee.

[00:15:06] Cameron: Yeah. Yeah. Yeah.

[00:15:08] Tony: It’s hard for you to reprogram the membership system to, uh, let people leave. So you have to pass on that charge.

[00:15:15] Cameron: Sorry. Yeah. You’re stuck in. It’s like China. I’ve been, um. Unsubscribing from all my streaming services, uh, over the last week. And, uh, it’s not easy to unsubscribe from some streaming services. I don’t know if you’ve noticed that or things like Amazon Prime, you know, they’re like, Oh, sorry, you can’t unsubscribe from the app.

[00:15:38] Cameron: You have to go here and then you have to dig through millions of options. And then you’ve got click on an email that they’ll send you. Then you’ve got to speak to somebody and See a justice of the peace and go to

[00:15:52] Cameron: confession.

[00:15:54] Tony: called Jeff Bezos.

[00:15:56] Cameron: yeah,

[00:15:57] Tony: Apologize.

[00:15:58] Tony: yeah.

[00:15:59] Cameron: Yeah, they make it really, really difficult to get out. Um, all right, what else

[00:16:05] Cameron: you got?

[00:16:06] Tony: I pulled pork.

[00:16:09] Tony: I have a pulled pork on,

[00:16:10] Cameron: week,

[00:16:11] Cameron: Tony?

[00:16:12] Tony: uh, VI Health Limited. VIT is the A SX code. It’s um. It’s a small speculative stock, so bear that in mind when you’re listening to this. Company’s currently a buy, but it is close to its sell price. And its share price has been on a wild ride. It’s down 90 percent since October 2022, when it was at its highs.

[00:16:37] Tony: It’s currently trading at 0. 09 a share, but it has ticked up in the last few weeks and it’s back on our buy list. Three areas of operation for this company. Essentially it’s a, it’s a supplier of cannabis to both individuals via a prescription type platform, but also to distributors like pharmacies. So it has three areas of operation.

[00:17:03] Tony: Uh, Canview, which is the platform I just spoke about. It’s for prescribers of cannabis products, customers and pharmacies to order cannabis products online. Cortexa, which is the distribution centers and network for supply of cannabis and psychedelic products to pharmacies. And a company they acquired a little while ago called Doctors on Demand, which allows you to Contact the doctor via telehealth and they have something like 150, 000 patients using that service. Uh, I’m kind of indebted to an article by Tim Borham on the company from March 15 this year, uh, for a bit of insight into the company and he wrote that article on Stockhead. Um, and here it goes. Futura was formerly known as Kronos Australia. Kronos Australia was a 50 50 joint venture between Canadian.

[00:17:58] Tony: Medical cannabis giant Kronos Group, and a private equity fund owned by an Australian doctor called Rodney Cox. And living in, just as an aside, living in Toronto, when I did, when cannabis was being deregulated, uh, the cannabis stocks went on a wild ride. They were, they were like dot com stocks. They were going through the roof.

[00:18:20] Tony: Um, and people were telling me I should invest in them, and they were putting all their money into them, and of course, as I left Canada, they were all worth a bet. 0. 10 in the dollar from what they had been at their highs. Uh, and, and I ran these kinds of stories about, oh, we need to get, it’s all greenfields.

[00:18:38] Tony: We need to get the first market move. We have to open the stores before anybody else does, uh, and get our, get our patch of turf defined. And then of course the government decided it was going to sell cannabis through its own. Retail Network of Stores, in the same way it sells liquor in Canada, or at least in Ontario, very archaic way of doing it, but that’s how they do it, and all those retail stores had to be shut down and write offs taken by those cannabis companies, and of course it was also, um, With so much competition in the market, the margins in cannabis were eroded quite quickly as well, so what looked like a really good business idea at the start turned out not to be at the end.

[00:19:21] Tony: Anyway, so Kronos, the history of this company was, uh, was a company in Canada that, uh, partnered with the Australian, um, uh, Investor guy by the name or doctor by the name of Rodney Cox. He was CEO of the company for six years, but resigned, uh, earlier this year and finished up at the end of June. Uh, he is reasonably well known and, and certainly well respected.

[00:19:44] Tony: He was Victoria’s Australian of the year in 2005, attending to injured bombing victims in Bali and at Baghdad’s you UN headquarters. Uh, and he also held roles at Lin Fox and Boston Consulting Group.

[00:19:59] Cameron: Did he just give them weed? So he just went over there and he’s just like, listen, smoke up, you know, you’ll just feel

[00:20:05] Cameron: better.

[00:20:07] Tony: Yeah, possibly not.

[00:20:09] Cameron: Okay.

[00:20:11] Tony: Anyway, Kronos listed on the ASX in late 2019 with a market cap of 20 million at 0. 50 a share. They had originally planned to build a cannabis manufacturing facility, but in 2021 they decided to merge with CDA Health. which was founded by another doctor, Dr. Janssen, and CDA stands for Cannabis Doctors Australia.

[00:20:36] Tony: And they, they operated under a full telehealth model nationally, and that seemed more attractive to, uh, to Kronos. Um, at the time, the IP agreement with Kronos in Canada was terminated by mutual agreement, and in February 2023, the company became Vitura Health. Uh, the little, uh, bit on the Australian medicinal marijuana industry, um, a couple of years ago in 2022, which were the latest stats that, uh, this article saw, uh, it grossed about 244 million in sales, uh, and that was up 41 percent from the first half of the year to the second, so fast growing.

[00:21:15] Tony: 80 percent of prescriptions were for chronic pain. or as an alternative to opioids. And Dr. Cox says the typical patient is a female in her 50s who has never touched cannabis before. Uh, moving on, the company expanded into the telehealth field, having acquired the private Doctors on Demand platform last October.

[00:21:37] Tony: Doctors on Demand facilitates around 300, 000 consultations a year and was founded by a couple of Mount Isa families. Pharmacist, um, as a way of, uh, improving access to health and regional areas. And that was back in 2015 that they founded that, uh, Dr. Cox reckons that 50 to 70 percent of general practitioner visits could be satisfied by telehealth, um, notably being repeat prescription, uh, type, uh, uh, uh, interactions with a health professional.

[00:22:08] Tony: Um, as another aside, uh, Vitura paid 25 million for, for, for, uh, Doctors on Demand, while Westfarmers shelled out 135 million for one of their rivals called Instant Scripps. So, um, I think I saw somewhere that Vitura paid one times revenue and Westfarmers paid three times revenue. So the, uh, the bore that Vitura was, uh, was quite canny with that investment, it looks like.

[00:22:33] Tony: However, uh, after initial success in financial year 23, Ventura recorded a sharp nearly 60 percent profit decline in the first, uh, in the half year to December 2023, and profit was down to 3. 1 million. This was attributed to industry wide decline in the average CBD selling price, gross margin pressures and costs related to the doctor’s on demand purchase.

[00:22:57] Tony: However, there was some good news with the. Uh, second half results in 2023, uh, with the company moving a record number of 498, 000 units, with the prescribing doctor base increasing from 423 to over 1, 400, and dispensing chemists on the platform growing from 530 to 4, 244. Additionally, the company has called out that they hope to take advantage of the recently announced federal government’s crackdown on imported nicotine vapes to thwart their rampant abuse of these devices among young people, and now requiring that nicotine vapes are sold by prescription. On top of the decline in revenue, and perhaps because of it, uh, there has been board reduction during the last 12 months. Dr. Janssen, the, the person from the, the, um, uh, original merger with CDA and one of his colleagues, Mr. Tanner, were directors post CDA purchase. Uh, and in fact, Mr. Tanner chaired the company, but stepped down in April 22, and Dr.

[00:24:01] Tony: Jansen quit in September of 2022. The Jansen camp, uh, have concerns, um, with the current board, uh, in terms of how much they’ve issued the new shares, and the terms of performance based shares issued to Dr. Cox and Mr. Headley. As well as their remuneration. The board hotly defended the particular arrangements, but the company did receive its first REM strike at the last AGM, largely on the, the, uh, votes of Mr.

[00:24:31] Tony: or Dr. Jansons and Mr. Tanner. Um, and as stated before, Mr. Cox eventually resigned in, uh, ending 30th of June, 2024, and it currently doesn’t have a full, uh, doesn’t have a permanent, uh, CEO, the CEO is, uh, an interim one and is, uh, is, uh, uh, the job is being performed by the CFO. So there’s a lot going on at the top of this company, um, and, uh, I guess not surprising given the share price tanking as much as it has, but, uh, certainly something to watch.

[00:25:05] Tony: The QAV numbers, the share price is 9 cents, which is only 13% of the consensus share price, which is still at 70 cents, which is, um, not far off the all time high. Uh, VIT trades at its IV one price, but way less than IV two, which is 29 cents. So that means it’s a stock that trades below. Half of its IV2 price, so it gets an extra point for that.

[00:25:31] Tony: ADT for this stock is only 26, 000, so it’s not going to suit a lot of investors, um, but it’s, um, it’s, I guess it’s there for small, uh, cap or microcap investors. Yield is 10%. Um, which gets the one on our checklist and the yield is also greater than the P. E. ratio, so it gets an extra point on our checklist for that.

[00:25:53] Tony: Stock Doctor Financial Health is strong, and the trend is steady, so it scores for that. P. E. is only 5. 6, which is the lowest in the three years, again scoring for that. Price to operating cash flow is 4. 8 times, which is good. Debt equity per share is 7 cents. Book plus 30 is 0. 09, so that’s around the share price.

[00:26:14] Tony: However, I note the NTA is only 0. 01, most likely because of the goodwill booked in acquisitions. So we’ve seen that before when companies merge and take over other companies, the equity can be higher than the NTA. Forecast earnings for share growth is a whopping 81%, which means that growth over P. E. is 14 times.

[00:26:35] Tony: When we’re looking for companies that score better than 1. 5 times, so we give it a score of 2 points on the checklist. Directors hold more than 10%. Uh, even though, uh, uh, the CEO resigned, the, there’s still Guy Headley, one of the founders, uh, of the company. He is on the board still, and he holds still 17.5% of the shares.

[00:26:58] Tony: Uh, share price has ticked up recently, so we score it, uh, as being a recent buy for that, possibly following a presentation by the board on their strategies to improve the financial performance. Equity is consistently increasing over the last six halves, so it scores for that. So, the score, company scores very well from a quality point of view, in fact, from a QAV point Point of view.

[00:27:19] Tony: It scores 19 points out of 17 items because it gets two points for some. We’re giving it a quality score of 112 percent and a QAV score of 0. 23. So it’s reasonably high on our buy list.

[00:27:34] Cameron: Ha Ha

[00:27:35] Tony: positives and negatives. Ha

[00:27:37] Cameron: Is that a, weed joke?

[00:27:38] Cameron: It’s, it’s relatively

[00:27:39] Tony: ha ha, No,

[00:27:41] Cameron: that where you’re going with that? Oh, come on, Tony! Come

[00:27:44] Cameron: on!

[00:27:44] Tony: no,

[00:27:45] Cameron: that’s what, that’s gonna be the episode, the name of this episode is reasonably high. Getting reasonably high with VIT.

[00:27:52] Cameron: I

[00:28:17] Tony: psychiatrist prescription of psychedelics as a, as a particular growth for them as well. So plenty of growth opportunities for the company. On the risk side, they need to sort out their board ructions. And I guess they come to terms with the fact that, uh, because there is.

[00:28:36] Tony: Growth opportunity and the interest in the industry, the competition is trading away the margins in the cannabis side of things and so they need to trim their costs and reflect that in their strategies going forward. So that’s it, the IT, have a look.

[00:28:53] Cameron: think the risks also include, have to include, like, decriminalization. I think the I mean, we don’t seem to be close to that here, I know that the Greens and a couple of different politicians are talking about it, they’re trying to push it through, but I mean, it just amazes me how far behind the US we are with those sorts of things.

[00:29:16] Cameron: Like the US has decriminalized and or legalized weed in, I don’t know, how many states? I think half of the states over there, um, over the last couple of years. Canada’s obviously

[00:29:27] Cameron: done it. A lot of countries have done it.

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

[00:29:30] Cameron: you know, we’ve been over, oh, a couple of

[00:29:31] Cameron: years ago, the last time I was in Arizona.

[00:29:35] Cameron: Like the, the weed stores in Arizona are like Apple stores, uh, don’t know if you’ve ever gone into

[00:29:41] Cameron: one of them over there, but,

[00:29:43] Tony: And Apple Store?

[00:29:44] Cameron: no, a weed store, it’s like, they’re like, uh, high end, boutique y fashion establishments, you get greeted, at the front and everyone’s waiting on your hand and fist and you know, they’re friendly, hip, young people, staff who can answer all your questions and make recommendations and walk you through dosage.

[00:30:06] Cameron: You say, listen, I’m from Australia where it’s not legal. We don’t know what we’re doing. They’re like, Hey, no problem. Let me, let me talk you through, like, start with this gummy, take half a gummy. Well, you know, and work your way up, give it a couple of hours, see how you feel. And, you know, it’s just very, it’s an amazing experience, um, in terms of Customer experience.

[00:30:25] Cameron: Also trippy the first time you go in, if you come from a place like this, and it’s like, hello! Imagine like what it was going to

[00:30:32] Cameron: Amsterdam 30 years ago, but

[00:30:34] Tony: I was just going to

[00:30:34] Tony: say that. Yeah, 30 years

[00:30:36] Cameron: it’s, it’s very, very civilized. And so anyway, my point is that

[00:30:42] Cameron: eventually, Eventually, like we did with gay marriage and not so well with the voice, but eventually, you know, at some point in the next couple of years, some politicians got to grow a pair and go, you know what, let’s just, I mean, I don’t know who’s holding it back.

[00:31:02] Cameron: Chrissy and I talk about this all the time. Like she’s been, she got a medical license, I think during

[00:31:08] Cameron: COVID a few years ago. She

[00:31:10] Tony: a medical license.

[00:31:11] Tony: She’s,

[00:31:12] Cameron: Yeah, no,

[00:31:13] Tony: a practicing doctor,

[00:31:14] Tony: is

[00:31:14] Cameron: she’s She’s, she’s, she’s, a practicing doctor, Yeah, yeah.

[00:31:19] Cameron: What’s, I was going to say a gynaecologist.

[00:31:21] Tony: Dr. Dunaway. stat!

[00:31:24] Tony: Come to ER.

[00:31:24] Cameron: not a gynaecologist, I’m not a gynaecologist, but I’ll take

[00:31:26] Cameron: a look anyway. I don’t know what the female version of that is. I’m not a proctologist maybe, but I’ll take a look anyway. Um, but like, she takes oils to deal with her anxiety and her ADHD and, you know, PMDD and all the other D’s. That she suffers from and has suffered from her whole life. It’s been miraculous for, and her back, like, you know, I don’t know if you remember this, but like years ago, Chrissy could barely walk.

[00:31:57] Cameron: Half of the month. She, she’s got a couple of busted lower discs from when she was in her 20s and she picked up a photocopier badly and crushed her discs and as she got older, she’s 40 something now, um, 40 something, 40 something, what did I do? Six, six, six, seven, five, 45. Yeah.

[00:32:23] Cameron: And, um, you know, about 10 years.

[00:32:29] Tony: forgotten the age of your wife.

[00:32:31] Cameron: It’s not my word. Um,

[00:32:33] Cameron: She, uh, like her back was just a mess. She could barely walk. I’d have to massage her for an hour every morning for her to stand up straight. She was just like bent over like an old woman. Um, she couldn’t lift anything. She couldn’t, you know, use a broom. She couldn’t bend over to pick anything up.

[00:32:51] Cameron: It was really bad. This is when she was in her mid thirties, right? It was starting to get really bad. And then someone a few years ago, I think during COVID, someone said to her, you should try weed. I had the same thing, you know, tried weed, fixed it. We were skeptical, but she’d been to see all the doctors and, you know, they basically said, look, it’s surgery, right?

[00:33:11] Cameron: She’d been on opioids and they messed her up. So she got off of those and they were like, yeah, we’re going to have to go in and operate. That’s really the only thing. And then she, uh, started, uh, using weed and it just disappeared. Like literally. Overnight, all of the tension in her lower back evaporated.

[00:33:29] Cameron: She hasn’t had a back problem since, and now she’s doing Kung Fu. Like, we always talk about this. The idea, five years ago, that she would be able to do Kung Fu five times a week with her back the way it was, would have been ridiculous.

[00:33:42] Tony: wow,

[00:33:43] Cameron: But now, and then, because she’s been doing that, it’s also strengthened, I think, her core and her lower back muscles and all of that kind of stuff, which helps compensate as well.

[00:33:53] Cameron: But that was why she got into originally that and her anxiety and all that kind of stuff. But anyway, my point is that eventually somebody’s got to just legalize it. We’ve got to decriminalize it and legalize it here. And then what happens to all of these businesses that have built their business around the prescription model when all of a sudden, It’s legal and you can grow a couple of plants in your veggie patch or you can just buy it from retailers.

[00:34:18] Cameron: I guess

[00:34:19] Cameron: maybe they’ll try and get into the retail side

[00:34:21] Tony: yeah, well they’re supplying chemists now, so they’re set up, they’re

[00:34:23] Tony: set up for delivery to retail, would be my guess, but they’ve also got that telehealth arm, which is just straight doctors online, so I could fall back on that, but I agree with you, I actually, I just don’t want to split hairs, but I think Marijuana is decriminalized in most states.

[00:34:41] Tony: In other words, you won’t go to jail if you’re picked up for smoking, at least below a certain amount. Um, it’s, it’s legalized in Colorado, et cetera, in the US. Um, I think it won’t be the Greens who successfully do it. It’s going to be like a state like Victoria. They were going to say, you know what, we’re almost bankrupt and, uh, this is a great source of revenue. Because that’s, that’s the compelling argument to politicians is the fact that they can tax

[00:35:07] Tony: it.

[00:35:08] Cameron: Yeah. Yeah. Well, you know, fair enough too.

[00:35:13] Tony: Oh.

[00:35:14] Cameron: Why should criminal organizations be making all of the money out of it? Why shouldn’t the government be getting money and using some of that to deal with people that have, you know, don’t handle it well or have, uh, addictive, addiction

[00:35:29] Cameron: problems? Um, yeah, I’m just

[00:35:32] Cameron: looking up the,

[00:35:34] Tony: Well, it sounds, it sounds like Chrissy,

[00:35:36] Tony: sounds like Chrissy exactly fits the profile that the

[00:35:40] Tony: ex CEO was talking about.

[00:35:42] Cameron: Yeah. Um, There you go. Under Queensland Cannabis Laws outlined in the Drugs Misuse Act 1986, the possession of fewer than 500 grams of cannabis is equated to a maximum penalty of 15 years imprisonment sentence. For the possession of more than 500 grams, the maximum prison penalty is 20 years.

[00:36:04] Tony: Wow. I’m pretty sure that’s different to New South Wales and Victoria. But who’s Queensland?

[00:36:13] Cameron: Anyway, thank you for that, VIT. Did you say what their

[00:36:18] Cameron: average daily trade is?

[00:36:19] Tony: Yeah, it’s down like it’s 27, 000. I think it’s pretty low. 26, 000. Yeah,

[00:36:26] Cameron: 27, 000.

[00:36:26] Cameron: Yeah. Well, I have a pulled pork to

[00:36:29] Cameron: do, Tony.

[00:36:31] Tony: go for it.

[00:36:32] Cameron: Why should you have all the fun? I

[00:36:33] Cameron: thought to myself. Um, just hoping we didn’t pick the same company to do and we didn’t, but mine’s also a small company, but it’s an interesting one. Similar in some ways, because it’s a software platform. This is CXZ Connexion.

[00:36:48] Cameron: I don’t think we’ve ever done CXZ

[00:36:51] Cameron: before. Have we

[00:36:53] Tony: No, I haven’t heard of it before.

[00:36:54] Cameron: I don’t think so. Right. They’re right down the bottom of our buy list this week. Got a 1 score. Connexion, I say it like that because it’s got an X. Connexion. Mobility. Formerly Connexion Telematics, CXZ. Their software is a service solution for the global automotive industry.

[00:37:17] Cameron: And, uh, not knowing anything about cars, I found this interesting. They started a long time ago selling internet radio streaming products called miROAMER. To car manufacturers, internet radio. When you were going to be listening to internet radio in your car, instead of just your phone. Maybe people still do listen to internet radio.

[00:37:45] Cameron: I mean, all radio is internet

[00:37:47] Cameron: radio today, I think.

[00:37:48] Tony: Yeah, pretty much.

[00:37:50] Cameron: I don’t know. I mean, I don’t

[00:37:51] Cameron: listen to radio. I haven’t listened to radio for 20 years, so I don’t know what’s going

[00:37:54] Cameron: on in the radio world. But,

[00:37:56] Tony: I really miss Sirius Radio from

[00:37:58] Tony: North America.

[00:37:59] Cameron: yeah.

[00:38:00] Tony: really good. yeah.

[00:38:01] Cameron: Hmm. Yeah, when I go over there and I’ve got a rental, I put it on. You know, that’s the only time I ever listen to radio in a car when I’m in the US.

[00:38:10] Cameron: But then they got into the telematics space, uh, and they are big into providing a software solution around telematics. Mostly to manage fleets and trucks, uh, and some rentals and that kind of stuff. And in the US mostly is where they’re operating. For people like me who don’t know what telematics is, it’s a technology that’s used to manage all the information about a vehicle.

[00:38:37] Cameron: Obviously our cars are very much computerized these days, so there’s a lot of information about how the engine’s running and how different pieces of the car are running, it’s all digital and digitally available. But also they can plug, they can stick a little box on your car, which will tell them where it is and how far it’s driven and all those sorts of things, and they can track and monitor all of that kind of stuff.

[00:39:04] Cameron: It’s part of what they call the Internet of Things That Move. I’d heard of IOT, you know, we used to talk about that 20 years ago back in my Microsoft days, but this is IOTTM, the Internet of Things That Move, tracking things that move and being able to provide visibility of them. I know that’s kind of big in the mining and now in farming.

[00:39:28] Cameron: In fact, on Futuristic coming up, Steve and I are going to have a guest on, Martin Murray, who’s a listener of ours, and he’s a farmer. I think in New South Wales and he’s been doing a lot of testing of ChatGPT on his farm, using it for different stuff. He’s going to come and talk about how he uses technology on his farm, which be interesting because again, like cars, I know nothing really about how farms work.

[00:39:53] Cameron: So that I’m looking forward to hearing more about that. But the benefits of telematics apparently is that you can reduce fuel costs by using telematics to come up with better route planning, route, route. I’m never sure how you say that. How do you say R O U T E?

[00:40:09] Cameron: Root? Route? Is

[00:40:11] Tony: I say RAT.

[00:40:12] Cameron: Route?

[00:40:15] Cameron: Um, they can also do things like cut engine idling. They can detect unauthorized use of a vehicle, all that kind of stuff. I guess they can shut it down too. I think they do that with insurance companies. They’re able to shut your car down if they think it’s stolen. Like Apple can turn your phone off, they can turn your car off.

[00:40:36] Cameron: Um, Looking at all the mechanical issues, obviously, of the car, better communication with drivers and operators out in the field, enhanced safety, you know, they can look at the, um, monitor the operating side of the equipment and figure out if it needs to be serviced and what’s going wrong with it so there are less accidents, um, also, Being used increasingly in major cities to deal with introducing things like smart cities.

[00:41:09] Cameron: Who was it? My mum was telling me, my mum was in China, I don’t know, earlier this year, late last year, can’t remember, earlier this year, she was in China, I think. And, um, she was telling me that in, I think it was in Beijing, you’re only allowed to drive your car. every other day or something like that. You have allocated days that you can drive your car.

[00:41:33] Cameron: And I was like, why don’t we do that here? That seems like a brilliant idea. I said, what do you do? How do you get to work in the other days? And she didn’t know, but I figure you just carpool on the other days. If you have to go somewhere, you carpool with a neighbour or we should, we should have apps that just organize carpool, just cut down on the amount of cars on the road.

[00:41:50] Cameron: I think that was a great idea. Anyway. They can use telematics for all this kind of stuff, and what this company, Connexion, do is sort of provide solutions for that. I think they provide the hardware. Honestly, their website’s not great. I tried to go through their website to figure out exactly what parts of the solution, because they’re called Software as a Service.

[00:42:12] Cameron: But then I was trying to figure out, do they actually supply the boxes as well? And I couldn’t figure that out on their website or reading their annual report. I asked ChatGPT and it said, yeah, they do, but it could just be making that up. I don’t think, I don’t know how it knows. I asked for a source and it didn’t really give me anything that was, uh, too convincing.

[00:42:32] Cameron: Um, so they’ve got a couple of different products. They’ve got, their main thing is called OnTrack, which stands for on time, reliable, accurate, courteous. Which is also my nickname. Uh, confusingly, there are two other businesses in the U. S. that have the same name, OnTrack, O N T R A C. There’s a big delivery service company, like a FedEx y kind of thing that’s called OnTrack.

[00:43:01] Cameron: And there’s one, there’s another company called OnTrack Telematics Corp., which is a separate business to Connexion that has an OnTrack Telematics product, separate businesses. So from a branding perspective, it’s a bit of a mess. But General Motors uses their on track to manage the largest courtesy transportation program in the us A CTP baby.

[00:43:26] Cameron: You know me, I thought ct. I thought courtesy transportation would be like if you’re a shitfaced drunk in the middle of the night, you know, you jump on that bus that takes you home. Uh, the drunk bus?

[00:43:38] Tony: The Knight Rider.

[00:43:39] Cameron: Uh, yeah, yeah, yeah. The night

[00:43:41] Cameron: Rider.

[00:43:42] Cameron: But no, it’s um. If you drop your car off at a car dealership to get serviced and you need a car to, they loan

[00:43:49] Tony: Yeah, right, right.

[00:43:51] Cameron: the day that they sort of manage that.

[00:43:52] Cameron: So if you steal the car, they know where you are.

[00:43:56] Tony: yeah, they track everything.

[00:43:58] Cameron: Yeah. Yeah, Um, they also have a, uh, OEM agnostic version of that called CXZ track that General Motors and clients like that can white label if they want to put their own branding on them. So they say that, um, they’ve got, um, They manage the fleets of more than 4, 000 dealerships, I think mostly in the US.

[00:44:21] Cameron: Their software is already used by over 20 percent of all franchise dealerships in the US. They say they’ve got 12, 000 plus active users, 720, 000 vehicles contracted, and 7 million customers contracted. I don’t know how you have 7 million customers with just 720, 000 vehicles. I don’t know who those customers are that don’t have Vehicles, maybe they’re people renting cars.

[00:44:48] Cameron: So maybe those cars get used multiple times and they’re classified as a customer. Not exactly sure. Anyway, I like this. Their overarching strategy according to the annual report is come for the tool, stay for the network. And I thought we could steal that for QAV, right? Come for the buy list, stay for the banter on Facebook.

[00:45:13] Cameron: It’s mostly stay for the buy list, I think, for most people. Um, and the way that they pitch it, and this is the story. that this is how they’re pitching the story in their annual report is the tool is kind it’s it’s it gets back to drug dealers um the the the tool is really what people buy but then once they have the network that’s where the real money is reminds me of what I’ve heard Elon say about Tesla people think they’re selling cars but what they’re doing is really building a network of basically four um robots and cameras that are That have all of this information about what’s happening on the roads, on the streets, because they’ve got, you know, 360 degrees cameras that are videoing everything, and that’s all getting captured and going into their systems, and they can do a whole bunch of intelligent stuff eventually on that.

[00:46:09] Cameron: It’s also going to feed their AI, I’m sure. You know, Tesla slash Grok AI, whatever he’s calling it these days. So that’s the story. They say they have, they have a visibility of a lot of fleets and that’s where the long term value is. Now I couldn’t find Founders, which is interesting. I suspect it sort of got sold off and acquired.

[00:46:30] Cameron: But one of the interesting things is all of the, all of the guys on the board all seem to be investors. They’re all venture capitalists, or they come out of investing firms that have, they’ve all seen an opportunity in this and jumped on board. In fact, the CEO is a guy called Aaryn Nania. Double A R Y N.

[00:46:51] Cameron: Aaryn. Aaryn Nania. He looks like he’s about 23, uh, in these photos on the website. Uh, I don’t know how old he is, but prior to Connection, he’s been, he’s been a director of the company since 2018. Prior to that, he co-founded Lucerne Investment Partners, an active long term investor in both listed and unlisted companies globally.

[00:47:14] Cameron: Prior to that, he was a portfolio manager at Canadian investment bank, Canaccord Genuity.

[00:47:21] Cameron: You know them? Are you

[00:47:22] Tony: Oh, I’ve heard of

[00:47:22] Tony: them. Yeah.

[00:47:25] Cameron: Where he established and successfully managed the Absolute Return Portfolio. Um, he holds about 6. 33 percent of the stock. Another guy, Nicholas Keffler, holds 8. 2, 8. 62 percent of the stock.

[00:47:41] Cameron: He’s described as a full time capital allocator and the executive director of Graham Newman Pty Ltd, a private investment company based in Melbourne. You ever heard of them? You know

[00:47:54] Cameron: who Graham Newman is?

[00:47:56] Tony: No, never heard of them. Except on Seinfeld.

[00:48:01] Tony: You man!

[00:48:02] Cameron: That Newman, uh, um, there you go. I, I don’t know, um, who they are, but they’re, yeah, some sort of an investment company. He apparently owned and operated a family business before selling it to an ASX 100 company in 2019. Has been a long term investor in Connexion. So. Yeah, a company that’s, you know, run by a bunch of, uh, professional investors, basically.

[00:48:30] Cameron: Now, I’m wondering, is that a good thing for us as investors if the company’s run by other investors? Are they going to be looking after the shareholders as their major shareholders? We, you know, we like owner founders or CEOs that have skin in the game. These guys have quite a

[00:48:44] Cameron: lot.

[00:48:46] Tony: Yeah, no, I think it’s a good thing.

[00:48:48] Cameron: their June quarter report, uh, Q4 revenue was 2.

[00:48:54] Cameron: 6 million. So they’re not huge, but I say that was up 4 percent over the previous quarter, gross profit up 1. Uh, gross profit of 1. 92 million, which was up 1 percent over the prior quarter. Uh, net profit before tax, 800, 000 up 6%, operating cash flow of 550, 000 up 6 percent for the quarter. But from a QAV perspective, price to operating cash flow is 7.

[00:49:21] Cameron: 54. So it’s getting up there, just below our cutoff. Uh, financial health is strong, according to Stock Doctor. Health trend is steady, consistent financial health all along the way. They’re, they get a score for record low PE. Their directors hold about 16 percent all up. Those two guys I mentioned before, I’ve got about 15 between them.

[00:49:44] Cameron: And then the rest of the board have about a percent. So quite a big, uh, holding in the company by the directors. Uh, so they score 8 out of 11, quality score of 73 percent and a QAV score of 0. 1, so down the bottom. And their average daily trade is again small, I think it’s about 17, 000. So not really going to be suitable for anybody but small investors, but an interesting business based out of Melbourne.

[00:50:13] Cameron: But mostly operating in the US, that’s where they’ve got all the fleet stuff happening, so. And the sort of numbers they mentioned before, like all of those, what is it, million, 7 million customers, 720, 000 vehicles. But relatively small revenues, 10 million in revenues, judged by the quarterly numbers, which I was surprised by, so.

[00:50:35] Cameron: Anyway, that

[00:50:36] Tony: How does it,

[00:50:37] Cameron: XZ.

[00:50:39] Tony: thank you Cam, how does that compare to E Road, another company that we’ve, I’ve done a Pulled Pork on, it’s on our buy list, doing essentially the same thing.

[00:50:48] Tony: Putting black boxes in trucks and then allowing fleet managers to optimize their fleet.

[00:50:54] Cameron: Yeah, good question. Let me see, where did you talk about E

[00:50:58] Cameron: Road last?

[00:51:00] Tony: January, I think it was, or December. It

[00:51:03] Tony: was a question from one of our listeners, I think, to do a Pulled Pork on E Road.

[00:51:07] Cameron: yeah, episode 651 was when we got asked the question, but you didn’t do it then, so it must have been probably 652. Let’s see, yes, E Road. I don’t know, I’ll have to go through and have a look at

[00:51:25] Cameron: your notes,

[00:51:26] Tony: Yeah, it sounds very similar.

[00:51:29] Cameron: yeah, right,

[00:51:31] Cameron: looking at what, E Roads, uh, cashflow is like, uh,

[00:51:39] Tony: I think I made the point,

[00:51:42] Cameron: 48 and a half million. So yeah, they’re, you know, quite a bit bigger.

[00:51:49] Tony: still a small company, and I made the point that, um,

[00:51:53] Tony: I couldn’t, I could see competitors. easily getting into the market because those vehicle black boxes are out there. Um, a lot of cars when I was in Canada and North America have them because their insurers will offer a cheaper rate if you drive with the black box that captures your driving statistics.

[00:52:13] Tony: You know, how, how often you pump the brakes, how fast you, you know, how often you go over the speed limit, that kind of thing, um, or not. So you get a better insurance rate. Uh, so the technologies. Widespread, it’s out there, and it then comes down to the fleet management software, which I can’t imagine is that difficult to build.

[00:52:34] Tony: So, low barriers to entry, which is, I guess, why we’re seeing two of these companies, um, on

[00:52:40] Tony: the buy list in the same year.

[00:52:42] Cameron: And I think, um, as AI progresses, I expect to see more and more AI built into cars and maybe these Companies are going to be well placed to do that if, if the, um, automobile manufacturers aren’t building it in themselves, but I fully expect in the next In a decade, cars will increasingly have AI built into the core of the brain of the car that’ll be monitoring all of its mechanics and its performance and it’s, you know, how it’s being used and who’s using it.

[00:53:23] Cameron: And we’ll be able to provide a lot of information back to whoever owns the car about what’s going on or it’s or the mechanic and that kind of stuff who monitors the car. So I don’t know if that’s an opportunity for businesses like E Road or Connexion or if it’ll just be something that will be done at a automobile manufacturer level and may negate the need for these businesses in some way.

[00:53:51] Cameron: Maybe the AI will just come over

[00:53:52] Cameron: the top of it.

[00:53:54] Tony: Yeah, certainly cars, if they don’t go driverless, they’re going to go very close to driverless, which is probably where I think they’ll finish up. You know, when I’m cruising on the highway in my car, it pretty much drives itself.

[00:54:06] Cameron: Yeah.

[00:54:07] Tony: Radar control, cruise control and brakes quicker than I can, gives me a warning if I’m drifting out of the lane, all that kind of

[00:54:15] Tony: stuff.

[00:54:15] Tony: So that’ll just improve.

[00:54:18] Cameron: I don’t think we’ll own

[00:54:19] Cameron: cars. I always tell Fox, I don’t think you’ll ever need to get a driver’s license. I don’t think you’ll ever need to own a car. I can’t imagine, you know, he’s 10. I can’t imagine by the time he’s 20, we won’t have just fleets of self-driving cars. It’ll be Uber or Tesla.

[00:54:36] Cameron: I mean that’s, you know, both of those companies stated visions for the future is you just see you need to go somewhere, you pull up your app and a driverless car turns up two minutes later and takes you wherever you need to go and you don’t have to worry about petrol or maintenance or the The capital cost of buying a car or any of that kind of stuff.

[00:54:57] Cameron: I think owning a car in the future will be sort of a luxury for machine heads. And, you know, be like owning a Harley Davidson today. Like you don’t really need one. You’re just doing it cause you’re, you know, going through a midlife

[00:55:11] Cameron: crisis or something, but, uh,

[00:55:13] Tony: Thank you for spending the weekend. Yeah, look, I hope so. I’m not sure. I’m not sure I’m that bullish on it as you are, but, uh, uh, yeah, I’m not sure. I mean, the human element of giving over trust for your family while the car drives for

[00:55:27] Tony: you has got to be overcome.

[00:55:30] Cameron: Oh yeah,

[00:55:32] Tony: And, you know, the technology’s

[00:55:34] Cameron: that will

[00:55:34] Tony: go through a step change to do that

[00:55:37] Cameron: I think that will happen really quickly. I mean there’s already plenty of studies that I’ve seen that say that even with some of the issues that they’ve had with the self driving car. functionality in like Tesla and some of the other places in the US. Uh, it’s still way safer than humans driving a car.

[00:55:58] Cameron: I don’t think that’s a huge leap for people to make. I mean, having a computer driving the car that’s talking to all of the other cars on the road is going to be a safer proposition. I mean, there’s going to be a period of transition where you’ll be obviously have a combination of. Humans and computers on the road, but computers should be able to, they should have better reflexes in dealing with emergency situations than humans will.

[00:56:25] Cameron: Pretty quickly, I imagine. I think, I don’t think that’ll be a big hurdle for most people to

[00:56:28] Cameron: get over.

[00:56:30] Tony: Yeah, we’ll see. Um, you know, there are still limitations. I mean, the CrowdStrike problem last Friday, whenever it was, or the Friday before, when everything got shut down. Um, there’s got to, I think there’ll be a big transition period which allows for human override, which, um, in the controls, which means that there’ll be a longer period before it’s fully

[00:56:50] Tony: self driving.

[00:56:53] Cameron: Imagine that if you had a CrowdStrike thing with all of the cars in the

[00:56:57] Cameron: world just all of a sudden

[00:56:58] Tony: I am imagining

[00:56:59] Cameron: screen of death. Ha

[00:57:01] Tony: of the, it’s one of the hurdles that driverless cars has to overcome.

[00:57:05] Cameron: That was insane.

[00:57:08] Cameron: I mean, we’ve both got an IT background. I mean, for that to happen is just unfathomable to me that something like that could happen and wasn’t even a terrorist attack

[00:57:21] Cameron: was just stupidity.

[00:57:23] Tony: to me, I mean, look at, look at the, uh, Boeing, what was it, Boeing 737 SD Max falling from the sky. It’s just a, you know, when capitalism’s put under pressure, cut corners get cut, so, it’s, it’s. Been around for as long as, or longer than I have, and it will continue to be around, so it’s going to be an issue, I think, when we start to rely a lot more on technology that we could get spinning pizza wheels and blue screens more than we’d like.

[00:57:52] Tony: I remember one of the jobs I had at, uh, Coles Myer was business manager for a rollout of NT point of sale devices, which was the first one in Australia, built on the NT Windows platform, and one of the things we had to be aware

[00:58:08] Tony: of was that it could crash,

[00:58:11] Cameron: Did anyone tell you that NT stood for not today

[00:58:15] Cameron: or next time? Windows

[00:58:17] Tony: Next time? Yeah.

[00:58:19] Tony: Yeah, Windows next time.

[00:58:21] Tony: Yeah, so, yeah, it was a live issue for us back then.

[00:58:26] Tony: And it will continue to be, unfortunately.

[00:58:29] Cameron: Well, that’s the lesson is don’t build stuff on Windows.

[00:58:31] Cameron: I mean, that’s the

[00:58:33] Tony: It is, yeah.

[00:58:34] Cameron: Paying takeaway from all of this.

[00:58:36] Cameron: We’ve got some questions. Uh, Paul asks, if Tony had to sell a stock to raise some money for life expenses, which of the following two QAV stocks would he sell? Fleet Partner. This stock was purchased two years ago and is appreciated by 60 percent in terms of a capital gain.

[00:58:53] Cameron: The stock is still showing healthy economic results, has significantly reduced its share count by share buyback, and is expected to start a dividend within the next 24 months. The share price keeps climbing slowly upwards. Or Clearview Wealth. This stock was purchased two years ago and the share price has stayed flat but pays a gross yield of 10%.

[00:59:14] Cameron: Management have stated they intend to increase the dividend in the financial year to come. The business has just gone through a transformation, is taking market share, is profitable and is showing improving economics in the business. Commentators are popping up saying it is due for a re rate. But they’ve been saying that for two years.

[00:59:31] Cameron: I guess the question is, would Tony sell the winner, Fleet Partner, and take a profit and hold on to Clearview and hope for the re rate or the other way around? And then Paul said that just after we recorded last week. And then he sent me a follow up saying, I think Tony’s answer might be, you should have sold FPR because it dropped 5 percent after you posted the question.

[00:59:54] Tony: Uh, no, Paul, I would sell Clearview, and I’m not that familiar with Clearview, I think I did a Paul talk a couple of years ago on it, and the basic, my basic logic is that to sell fleet partners incurs capital gains tax in the scenario you’ve outlined, whereas selling Clearview doesn’t, and so that’s why I would pick Clearview.

[01:00:17] Tony: Um, if you force them to make. a sale of one or the other, and I would always pull the weed and sell the one that incurs less CGT.

[01:00:24] Cameron: That

[01:00:25] Cameron: makes sense, because

[01:00:27] Tony: think Fleet Partner is probably one of the most successful stocks on our buy list. It’s, it’s been grinding ever upwards. I think, A, because it’s a good company, but B, it’s also undertaking a share buyback.

[01:00:38] Tony: Program which has supported the price and I’m disappointed to hear that they’re expected to start paying a dividend because I could, I can’t question why they would do that. I guess they have franking credits on their balance sheet they need to get rid of but um, but the buyback programs uh, has been working for them so well I’m not sure if it’s a good thing that they start paying a dividend.

[01:00:57] Tony: But no, definitely avoid the CGT or pay as little as you can because it eats into profit and um, sell clear view. Not giving personal financial advice but. If that was the, that’s the way, the rule I always apply when this kind of situation occurs, and it has occurred for me many times, sell the stock with the lowest CGT.

[01:01:19] Cameron: you keep your capital

[01:01:20] Cameron: invested that way, right?

[01:01:21] Tony: Well, yeah, you do. You’re pulling your weed rather than lopping off your, um, your flower,

[01:01:26] Tony: yeah.

[01:01:29] Cameron: Don’t chop off your flour, Paul. Rule number one. Never chop your flour. Uh, other question is from Rob. Would be great if you guys can talk us through what it was like to trade the QAV method through the COVID dip. How did the system behave? Did it limit losses? How did you manage three PTL cells? Still wait to see what happens the next day?

[01:01:53] Cameron: Question mark. Thanks, Rob. So Rob obviously wasn’t around during COVID. Well, not around with QAV during COVID. Um, I mean, I can tell you from my experience, it was, uh, shocking. initially, because, you know, our portfolio had been running for six months, four months or something. And we started to get hit early because we had companies that were exposed to China.

[01:02:20] Cameron: And when it hit China in sort of January, 2020, some of our stocks started to take a hit. And then of course, by the time it hit the world in March, April and everything shut down, everything fell off the cliff. And I can remember, and yeah, so, um, you know, to, if you don’t mind me, uh, butting in, you know, from my perspective to answer Rob’s question, yeah, we just followed the rules.

[01:02:44] Cameron: And, you know, I remember we were talking to you about it at the time, you were like, yep, we follow the rules. And listeners at the time were asking questions about, should we make exceptions? Because this is a, an extreme situation. And you were like, nah, yeah, we just follow the rules. So we sold off, 40, 50 percent of the portfolio in that first couple of months.

[01:03:06] Tony: At least.

[01:03:07] Cameron: And,

[01:03:10] Tony: case, I’d sold all but one of my stocks.

[01:03:13] Cameron: right. And, uh, you know, you said we’re just going to wait it out. We’re just going to wait it out and the system will tell us when to buy back in. We’ll just apply the normal rules. And I thought it could be a year of just sitting on our hands. We used to talk about beta

[01:03:31] Cameron: funds, just sit on

[01:03:33] Tony: Yeah.

[01:03:34] Cameron: Uh, And then, all of the, uh, mechanisms were put into place by governments to boost the economy and everything roared back into life way sooner than I expected. And, I remember being sceptical when the market started picking back up and I was like, oof. This seems crazy because, you know, we still, like, this is a year before we had a vaccine.

[01:04:09] Cameron: You know, Melbourne was shut down for a year as, uh, people down there will obviously probably remember. Um, and, uh, you know, the U S was, you know, completely screwed and people were, they were like shoveling bodies into holes in New York city. And it was like a

[01:04:28] Cameron: complete, Cluster,

[01:04:31] Tony: Trump was taking Clorox injections. Chloroquine. Yeah.

[01:04:37] Cameron: Um, but the system said to buy back in and, and so we did and we had an absolute boomer year.

[01:04:45] Cameron: We were up 40 percent I think by the middle or the end of that year or early 2021, mid 2021. 2020, mid 2020 to mid 2021 was absolutely bonkers. We were doing four times The performance of the benchmark at one point. And I remember you saying, don’t get used to it. This isn’t going to last and be thinking, ah, he’s just being humble.

[01:05:11] Cameron: What does he, he’s just being humble. This is, this is the greatest thing ever. And, uh, surprisingly it didn’t last and, uh, in the market. crashed in 22 with, uh, you know, Ukraine and trade wars and, uh, supply chain issues and interest rates going back up and all of that kind of stuff. And our portfolio came back down to doing double market.

[01:05:40] Cameron: So, you know, from four times market to double

[01:05:43] Cameron: market is where we settled in,

[01:05:45] Tony: Yeah. But the, but that’s what the system was designed to do. That’s what it’s done in the past for me. It’s exactly what it’s meant to do. On the box says what it does or does what it says. Um, but, you know, putting some context around all this Cam, um, we had no idea what was going on. I remember, I think you and I, you were in Sydney.

[01:06:04] Tony: There’s some meetings and we drove around Sydney and we’re going, how many, how many people is this going to kill? And some people were pointing back to the Spanish flu outbreak after World War One

[01:06:16] Tony: saying, yeah, this could kill millions in Australia.

[01:06:20] Cameron: I was actually in

[01:06:20] Cameron: Sydney for the premiere of our film, Marketing the Messiah. I did, I did a premiere in Melbourne, which was sold out. About four days later, we had the premiere in Sydney and only half the people who bought tickets turned up. And I had a premiere scheduled for Brisbane. Two days later and all of the cinemas were shut down by then.

[01:06:43] Cameron: So in a week we, and then I had premieres booked out in the US. I was supposed to be going to Austin and places like that to screen the film. And of course, everything got shut down that week. So I was in Sydney and you and I were doing some meetings and we were there for the premiere of the film and we were driving around going, wow, like what’s going to happen?

[01:07:02] Cameron: Yeah, it’s, this is,

[01:07:03] Tony: So was it,

[01:07:04] Tony: it was an act of God to shut down the marketing, the

[01:07:07] Cameron: I’ve always taken responsibility for that. Yeah, It was

[01:07:11] Cameron: It was payback. It was

[01:07:12] Tony: wasn’t

[01:07:13] Tony: Wuhan. Wasn’t Wuhan.

[01:07:14] Tony: It’s act of God. Yeah,

[01:07:21] Cameron: I got to get that on a t shirt. I made COVID. Yeah, it’s my fault.

[01:07:26] Cameron: Anyway, please continue.

[01:07:27] Tony: Yeah, but I mean, that was the, that was the whole context of what was going on. No one knew what was going to happen. The market was selling off quickly. We started, it didn’t take us long, maybe a month to liquidate most of the portfolio, at least half. And it didn’t take much longer than a month for us to start buying back in.

[01:07:45] Tony: And in between, we were getting questions from listeners going, you know, how long did the GFC last and how long were you out of the market for on the GFC and is this going to be the same? Turns out, it lasted for about a month before we started buying back in. And it was a great time to buy back in. So yeah, so I think to me that was the making of QAV that proved the system worked because it was under duress, it was extreme, no one knew what was going on, human emotion was running high, it was fraud, um, there were all sorts of debates about whether printing money was a good thing or a bad thing and whether this was the beginning of MMT for life and all this kind of stuff and uh yeah so you know no one knew what was going on economically either as well as Epidemically.

[01:08:36] Tony: And, uh, but we just kept applying the system

[01:08:40] Tony: and it worked out really well for

[01:08:41] Tony: us.

[01:08:42] Cameron: I’ve got the, our transaction history, um, up on my screen. So I can tell you that we bought something on the 26th of November, 2019. And then we didn’t sell anything until the 10th of February. It was Horizon Oil and, but we replaced it with MFD. Then a week later, we sold BPT and bought AQG. A couple of days later, we sold UNV and bought SFC.

[01:09:13] Cameron: And then it just started. Um, we got a couple of buys in. We, there’s another sell on the 24th, on the 25th, on the 28th, three, four on the 28th. Four sells. Bought a couple of things on the 3rd of March, FMG and IFN. And then it was just early March, 12th of March, we sold CCP, SMR, BFG, R& D, MML, IFN. I feel like I’m just doing the alphabet now.

[01:09:41] Cameron: Um, two parcels of IFN, CUE, KSL. Then, so that was the 18th of March. So, between the like 12th of March and the 18th of March, We sold 1, 2, 3, 4, 5, 6, 7, 8, 9

[01:09:57] Cameron: stocks.

[01:09:58] Tony: In a 15 stock portfolio from memory too.

[01:10:02] Cameron: 15 to 20, I don’t know how many it was, but yeah, something like that. So half, give or take. Then, so that’s the 18th of March was the last sale, which was KSL. Then it stopped, and then on the 3rd of April, we bought STO. On the 15th of April, we bought BFG, CRN, NHC, and KOV, 17th of April RRL, 21st of April VIM, 21st of April AGD, 23rd of April HAW, 5th of May EWC, and yeah, so between the beginning of April and the, uh, beginning of May, we bought 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 stocks.

[01:10:46] Cameron: Please subscribe. And then we had a few more sells actually that day and it sort of, you know, it was kind of choppy a bit there.

[01:10:53] Tony: Yeah.

[01:10:53] Cameron: from May, 28th of May, we didn’t sell anything until September because it was going absolutely bonkers in that period. And then it went back to the usual sell a couple, buy a couple kind of thing every week or couple of weeks and that kind of thing.

[01:11:12] Cameron: Yeah, so I was, like in that one month period between March and April, it went from holy shit we’re probably going to be in cash for a year or five years, to we couldn’t spend money quickly enough.

[01:11:26] Tony: Yeah. I know. I mean, that’s like every sort of downturn in the market. Um, it’s the only time when this time it’s different applies, they usually are all different. Um, it’s different to the GFC, people were going back to the GFC as their template for what to do during COVID, but it was all over in a month.

[01:11:44] Tony: From an investing

[01:11:45] Tony: point of view,

[01:11:46] Cameron: And you know, and this is where I guess I learned this lesson in real terms. You always say stay fully invested if the system will let you. And it was gloomy, obviously, in April 2020, it was still gloomy out there, the, everything was shut down, um, and, you know, we didn’t know how long we were going to be shut down for, you know, in Queensland it was a couple of months, I think the same in Sydney, Melbourne it was a year, more or less, but, um, We didn’t know, I mean, we had no idea how long the world was going to be shut down for, but the system was telling us to buy stocks.

[01:12:24] Cameron: And I was like, really? Okay. You know, if that’s what it tells us to do. And as I said, you know, we ended up doing like four times the benchmark over the next year. So you had to be in it to win it. Emotionally, most people wouldn’t have been buying stocks at that time because it was, it was sort of chaos and doom and gloom out

[01:12:45] Cameron: there.

[01:12:47] Tony: and that’s the, that’s the, that’s the important point. It was, the system took the emotions out of it. Um, and we, and we didn’t know if it was a dead cat bounce, whether it was, the market was full of government support and therefore crash again and all that kind of thing. But we just said, we don’t care, we just,

[01:13:04] Tony: we like the numbers and we’re going to start buying again.

[01:13:07] Cameron: Well, don’t question the system, you know, was my rationale. It was like, okay, system tells us to do it, do it, don’t try and be smarter than the system.

[01:13:15] Tony: Yep. Which is

[01:13:18] Cameron: Rob, that was the story. Yeah,

[01:13:21] Cameron: the system got us out and got us back in and did what it’s supposed to do, you

[01:13:30] Cameron: know.

[01:13:32] Tony: And you could argue that we’re only out for a month, why didn’t we just hold on and ride it through? But if you look at the, look at the graph of the All Ords, um, during that period, it didn’t have that sort of 40 percent rebound. That we did from having cash to deploy at the right

[01:13:48] Tony: time.

[01:13:49] Cameron: Yeah, which is why we did four times the benchmark, the SDW, right? Yeah.

[01:13:55] Cameron: All right. Thanks, Rob. That’s the questions for this week. After hours, Tony, what do

[01:14:01] Cameron: you got?

[01:14:02] Tony: Yeah. Just, uh, finding my, here it is, finding my list. A little, uh, little arbitrage story, um, in the US election. So after the, after the Joe Biden speech debacle, I looked at the markets and Kamala Harris was 8 to be the next US president. So I put a very small amount of money on her, which I thought was a reasonable bet, given I didn’t think Biden was going to last as the candidate, or there was a chance he wouldn’t last, uh, and now she’s been, uh, now she’s been, uh, or being nominated.

[01:14:38] Tony: Her odds are into 2. 30 from eight bucks and Donald Trump has drifted out to 1. 70. So yesterday I put some money on Donald Trump and I can’t lose now from an arbitrage perspective. It doesn’t matter who wins. I, uh, I bank a profit. So I thought that was, um, interesting, interesting and illustrative of how you can often use.

[01:14:58] Tony: Um, situations that are coming to a head when something drifts to, to back it and then

[01:15:04] Tony: back the other side when it gets closer.

[01:15:06] Cameron: Of course, she doesn’t have the nomination yet for the Democrats. She has to go through the convention, so she may not get it, but I don’t think she’s got any serious

[01:15:15] Cameron: competition right now, right?

[01:15:17] Tony: No, you’re right. It’s my risk in the strategy is that she doesn’t get a nomination at the convention and someone else does. And then my bets on Harris, and then I’m relying on Trump to win to, to wash my face on the bets and make some money. But, um. I might be able to arbitrage that

[01:15:32] Tony: if he doesn’t get the, the nomination.

[01:15:35] Cameron: You’d be hoping Trump

[01:15:36] Cameron: wins. That’s an emotionally dicey

[01:15:38] Cameron: situation to be in, isn’t it?

[01:15:39] Tony: Yeah. I had to, had to hold my nose when I took that other side of the deal, but, uh,

[01:15:46] Tony: Yeah.

[01:15:46] Cameron: hoping Karma doesn’t catch up with you on that. Um, so you,

[01:15:51] Tony: Mm-Hmm.

[01:15:51] Cameron: you backed it at eight, you backed Kamala at 8 and now it’s down to 2. 30. if it stays there and she wins, how

[01:16:01] Cameron: does that work? I still don’t understand

[01:16:02] Tony: I get paid out $8 times my initial bet.

[01:16:07] Cameron: Right.

[01:16:08] Tony: Yeah. Um, and, uh, so, and I also have a bet on Trump. So if he wins, I get, uh, I basically make a 25% profit either way, regardless of who wins. I get $80 on a small bet for Harris, and I get a dollar 70 on a larger bet

[01:16:24] Tony: for Trump.

[01:16:26] Cameron: So you get paid at 8. It means if you, like if you bought, if you, if you bet 10, you get

[01:16:38] Cameron: 80.

[01:16:39] Tony: correct. Profit of 70. And then if I 35 odd dollars on Trump. Um, I’ve spent 45 and I get 80 less than 45 if Harris wins and I get, um, whatever 35 times 1. 7 is,

[01:16:59] Tony: it’s about a 25 profit either way, if Trump wins.

[01:17:02] Cameron: a What did you put, like,

[01:17:03] Cameron: 10 mil down on it?

[01:17:05] Tony: Nah. 10 bucks

[01:17:10] Cameron: Well, if you’re so

[01:17:11] Tony: I was just playing around. I know

[01:17:13] Cameron: 10 mil on it?

[01:17:14] Tony: I should’ve. Well, the market wouldn’t, market wouldn’t support that. But yeah,

[01:17:18] Cameron: No? Oh, okay.

[01:17:20] Cameron: And how are your horses doing this week?

[01:17:22] Tony: well, Quello Dorato, which is be patina’s. Half brother ran third for his first start last Friday, and it was a good run. So I’m looking forward to him going onwards and upwards after

[01:17:37] Tony: that.

[01:17:38] Cameron: my Italian tells me that Quello means that, but what’s Dorato in

[01:17:43] Cameron: Italian?

[01:17:45] Tony: Golden one. The Golden one.

[01:17:48] Cameron: The golden one.

[01:17:49] Cameron: Dorato, really?

[01:17:51] Tony: Hmm.

[01:17:53] Cameron: How do you get

[01:17:54] Cameron: the golden one out of that?

[01:17:57] Tony: I think is that gold. The Aura,

[01:18:02] Cameron: D’oro. Yeah, D’Oro. Yeah. Okay. Dorato.

[01:18:13] Cameron: Hmm. Okay. Good.

[01:18:14] Tony: yep, and then Caster’s back in getting close for a run. She ran well in the trial last week on Friday as well, and will probably run in two weeks time, two or three anyway, in Melbourne. So looking forward to her coming back. So yeah, getting exciting for the Spring Carnival, which is coming up.

[01:18:34] Cameron: Oh, that’s right. That’s coming up. Yeah. And you didn’t like the Ministry of Ungentlemanly Warfare.

[01:18:42] Tony: No, I mean, you should watch it for a laugh, but, um, it, and it’s great cast, but, uh, probably the closest thing it reminded me of was The Kingsman. So that sort of slasher, slasher for laughs type approach to the movie. So, um, yeah. Yeah, didn’t really appeal to me that much. And I thought it was actually really jarring at the end when they show you, I mean, it’s based on true life, true story of the progenitors of the SAS and commandos going in to do things that the British government can’t allow.

[01:19:18] Tony: itself to be seen doing, like going into neutral territories for raids. And then that tells you the story of the four or five leads in it, and I’m thinking, oh, if I was in the family of that person, I would not want to be portrayed as this, you know, killing, killing Nazis for laughs character.

[01:19:37] Cameron: Yeah.

[01:19:38] Tony: yeah, that jarred for

[01:19:41] Cameron: I mean, in our Cold War show, Ray and I talked about Churchill’s organization that did this, and I think Ian Fleming is supposedly part of it, and

[01:19:52] Cameron: yeah,

[01:19:53] Tony: and he’s a key character in the movie.

[01:19:55] Cameron: Oh right,

[01:19:56] Cameron: but you know, another Guy Ritchie kind of failure, just not, doesn’t have the thing he used

[01:20:02] Cameron: to have. I’m not a

[01:20:04] Tony: Missing a note. Yeah. Missing a note. But yes, I mean, stellar cast. Carville’s in it. And, um, his name? Richson.

[01:20:14] Tony: Okay.

[01:20:15] Cameron: Richardson?

[01:20:16] Tony: Richson. Yep.

[01:20:17] Cameron: yeah,

[01:20:18] Cameron: that guy from, um, that thing. Yeah, the Reacher thing. I’m

[01:20:22] Cameron: not a big fan of that either. I watched a couple of episodes. I thought it was good. My boys liked it. I thought it was

[01:20:27] Cameron: kind of just,

[01:20:27] Tony: I liked it.

[01:20:28] Cameron: predictable.

[01:20:28] Tony: The first series in particular, second series, was again a bit sort of bloodthirsty. Um, but he’s kind of, he’s kind of a new Schwarzenegger in acting, or he

[01:20:38] Tony: will be.

[01:20:38] Cameron: Yeah, right. Cavill’s one of those guys who’s very good looking, but, uh, I just, he’s never impressed me as really that interesting an actor. He’s just good looking. That’s all he does. He’s good looking, you know. I mean, I haven’t seen The Witcher or anything like that, but whatever I’ve seen in films, like, Superman, it’s just boring.

[01:20:57] Cameron: I mean, mate, it’s not his fault. It’s just, the Superman movies really sucked, but, uh, yeah.

[01:21:03] Tony: it was good in The Man From U. N. C. L. E. I think that’s probably the best of all

[01:21:06] Tony: his movies, in my opinion. Um,

[01:21:09] Cameron: Is that another Guy Ritchie

[01:21:10] Cameron: one?

[01:21:11] Tony: oh, could have been.

[01:21:12] Cameron: off sider?

[01:21:14] Tony: That was Armie

[01:21:15] Tony: Hammer, I think, was in it too.

[01:21:17] Cameron: Oh yeah, it was directed by Guy

[01:21:18] Cameron: Ritchie.

[01:21:19] Tony: Yeah, right. Yeah, I quite

[01:21:21] Cameron: He’s guy Ritchie’s new, uh,

[01:21:24] Cameron: whatever the guy was. Who’s the

[01:21:26] Tony: Vin Jones.

[01:21:27] Tony: Oh,

[01:21:29] Cameron: the other one. The main one from Lock, Stock and Two Smoking Barrels. He became a big star after that. The professional Olympic diver.

[01:21:37] Tony: Jason

[01:21:38] Cameron: Yeah, Statham.

[01:21:40] Cameron: He’s his new

[01:21:40] Cameron: Statham. Hmm.

[01:21:42] Tony: Yeah, quite possibly. Um, anyway, and I’ve read another Len Dighton book called The Billion Dollar Brain, which I’ve loved the Len Dighton books. It’s about the third I’ve read now in the Ipcris File series. Um, highly recommend them. They’re really well written, really well written.

[01:22:00] Tony: Um, just tense, terse prose. Uh, the lead character is a spy. Bye. Um, but fairly cynical, um, and, you know, half the time he’s making sure he’s not cut off at the knees by the, his own government and his own bureaucracy, um, whilst having a lot of experience in, in, um, in spy craft. It’s actually a really good breed.

[01:22:28] Cameron: I don’t think I’ve ever read a Len Dayton. Hmm. book you know I’ve seen it I’ve seen like

[01:22:33] Cameron: the Ipcris file and

[01:22:35] Tony: The movies are nothing like the books. They were really bad adaptations in my opinion, even though I’m a fan of Michael Caine. Um, yeah

[01:22:44] Tony: but the books are great.

[01:22:45] Cameron: which Michael Caine are you a fan of? Are you a fan of the younger Michael Caine? You’re only supposed to blow the bloody doors off! Or the older Michael Caine. I say, you know, you’re only supposed to talk like this.

[01:23:00] Tony: Oh, I’m a fan of all of Michael Caine throughout his life. The Bruce

[01:23:05] Cameron: So we’re

[01:23:06] Tony: Alfred the Butler Michael Caine, and uh,

[01:23:08] Cameron: Oh yeah,

[01:23:09] Tony: Italian Job Michael Caine.

[01:23:11] Cameron: just want to see the

[01:23:11] Cameron: world burn. Where do you, uh, where do you recommend I should start

[01:23:16] Cameron: with Len Dayton books?

[01:23:18] Tony: The Ipris File.

[01:23:20] Cameron: Oh,

[01:23:20] Cameron: okay.

[01:23:21] Tony: Yeah, so these are all series. I forget now who the main character is. It doesn’t, you know, he gets named very often, but these are all part of a series. Billion dollar brains is like the third or fourth book. Yeah,

[01:23:32] Cameron: right. Good. I’ll check those out. I’ve got a bunch of books I’m queued up to read. An Australian author, McGarn, Andrew McGarn.

[01:23:41] Cameron: You ever heard of him?

[01:23:43] Tony: I have. And I used to work with his cousin, I think.

[01:23:47] Cameron: Wow.

[01:23:48] Tony: I went to university with his sister.

[01:23:51] Cameron: Wow.

[01:23:52] Tony: love Andrew McGahn. Um, uh, what’s the one that he’s first one in, um, set in Brisbane? Um,

[01:23:59] Tony: oh, I can’t think of it now.

[01:24:02] Tony: It’s a great,

[01:24:03] Cameron: with a,

[01:24:04] Tony: book. Great movie too.

[01:24:07] Tony: Um,

[01:24:09] Tony: I’ll just

[01:24:09] Tony: look it up.

[01:24:12] Cameron: so, um, friend of mine, uh, who’s a journalist slash author, Praise, is that the one you think of?

[01:24:20] Tony: Yeah. Praise. Great book. Great, great movie too.

[01:24:25] Cameron: He was recommending, uh, McGann’s stuff to me recently. So I got, I got Last Drinks. Uh, I couldn’t get, I couldn’t find an ebook copy of Praise that easily, but I, Last Drinks. And his last one, I think, um, The White Earth,

[01:24:40] Tony: Hmm.

[01:24:41] Cameron: awards for, but yeah. So they’re queued up, but I’ve been reading, uh, well, Radical Abundance.

[01:24:51] Cameron: I’ve been reading, uh, still reading, uh, The Singularity is Nearer by Kurzweil, sort of on and off. Um, yeah. And, and then he mentioned K. Eric Drexler’s most recent book, Radical Abundance, which I hadn’t. Heard of, I read Drexler’s original book, uh, Engines of Creation, that he wrote in the late 80s. I read it in the 90s.

[01:25:17] Cameron: It’s the original book on nanotechnology. He’s sort of the father of nanotechnology. And about 10 years ago, 2013, he came out with a book called Radical Abundance, where he was sort of updating where nanotechnology is and where it was going to be and what it was going to do. Kurzweil was quoting that in his book.

[01:25:39] Cameron: And, um, You know, it’s, it’s a really maximalist view of where tech, nanotech is going to take us still in the next couple of decades in terms of not only, uh, um, manufacturing, but medical technology. And, you know, in the futuristic, I keep a track of, um, nanotech news. It’s something that I’m always keeping an eye on.

[01:26:01] Cameron: And we did a story a week or two ago about some, small robots that have been put into mice that kill cancer in mice, nanotech, you know, robots that can find the cancerous cells and kill them and that sort of thing. So progress is being made, but there’s this great example that he used in the book about how, uh, the idea of how a car will be made in the future.

[01:26:28] Cameron: He was talking about, uh, uh, think about a building the size of a garage, normal house garage. In the middle of it, you’ve got sort of robots, robot arms that you would expect to see in a normal automobile factory today for taking relatively large bits and pieces. pieces of things and assembling them. Yeah.

[01:26:48] Cameron: He said, but the back wall behind that is just floor to ceiling of boxes, the size of sort of microwaves, some bigger ones on the bottom and then smaller ones on the top. And inside of those boxes are smaller versions of those robot arms that are assembling the components that go together to make up the thing.

[01:27:10] Cameron: But inside those boxes, there are smaller boxes with smaller robot arms. And it’s like a Matryoshka doll, inside all the boxes there are small, right down to the smallest box, which is basically just doing atomic or molecular level manipulation, spitting out tiny components, electronics mostly, chips and that kind of stuff, which then get fed to the next box, where they get some other things done, and that gets fed to the next box, and he said the whole car gets manufactured in minutes, from beginning to end, Because it’s so quick to Anyways, talking about the world where, um, food and, and material goods and clothing are all manufactured locally from raw elements using nanotechnology and robots to assemble them.

[01:28:00] Cameron: They’re not going to get built in China and put on a ship and delivered. They’ll just be built locally. locally by these machines. And of course, these machines will build copies of themselves as well, so they can proliferate. But it’s one of the things, like Kurzweil, when he was mentioning this, the point he was making was, he was talking about like the computers that we had in the 40s.

[01:28:23] Cameron: The amount of MIPS that they could do and what they cost to build. And then, you know, the sort of computers that we have as in an iPhone today, and the MIPS that they do actually, he was also comparing it to, you know, one of the super computers at Google that they have and the MIPS that it can do. And just talking about that progression of, of Moore’s law over the last 90 years.

[01:28:48] Cameron: But he was saying that, you know, we haven’t seen that same sort of exponential. Uh, cost reduction in other avenues, like the cost of food and clothing and whatever has decreased dramatically in the last century for a whole bunch of reasons, but not to the same level that

[01:29:10] Cameron: computation has. It’s like a 200 billion fold price reduction in MIPS in, in computation.

[01:29:18] Cameron: And he says the reason is, is that information technology builds on itself. It’s, uh, um, you know, the, the, the next generation of information technology gets built by this generation of information technology and so on and so forth. So today’s chips help design and build the next chips, which help design and build the next chips, and it builds on top of itself that hasn’t been applied, you know, uniformly across, uh, other products or services.

[01:29:49] Cameron: But he says, but they will be. As we start to have AI and nanotech that enable us to apply those sorts of information technology solutions to manufacturing food, manufacturing white goods, manufacturing electronics, manufacturing clothing, etc., that we will soon see that same sort of insane reduction in the price.

[01:30:19] Cameron: that you develop these things for. So anyway, a very maximalist view, but I’m also reading, as the counterpoint to that, Václav Schmil’s How the World Really Works. I think we’ve talked about Václav Schmil before, Bill Gates’s favorite author. I read one of his books on energy in the last couple of years.

[01:30:40] Cameron: Um, he’s from, uh, he’s Czech Canadian, Distinguished Professor Emeritus in the Faculty of Environment at the University of Manitoba. He’s into disciplinary research interests in Compass Energy, Environmental, Food, Population, Economic, Historical, and Public Policy Studies. He’s written like, I don’t know, 40 books or something like that.

[01:31:07] Cameron: But yeah, this is, I think, his most recent one. It came out in 2022. I saw an interview with Gates recently and somebody asked him, if there’s one book everyone should read, what is it? He said, you need to read this one, How the World Really Works. And basically, it’s kind of depressing. He’s talking about fossil

[01:31:22] Cameron: fuels, um, for most of the book.

[01:31:25] Cameron: And he’s saying, yeah, there’s no way we’re getting rid of fossil fuels. And he said, like, people, he said, I hear all of this, you know, stuff about, we’re going to get net zero by 2050. He’s like, there’s no chance we’re going to even come close to that in 2050. And he’s talking about the role of fossil fuels in electricity, but it’s like, that’s just a small part.

[01:31:45] Cameron: One of the things that he points out, I’m just reading this chapter last night, was on ammonia.

[01:31:50] Tony: Mm hmm.

[01:31:51] Cameron: he was talking about the amount of food that the world produced in, after World War II and the amount of food the world produces today. And the population is, what, trebled

[01:32:02] Tony: Mm hmm.

[01:32:03] Cameron: period of time, but we’re producing like, I don’t remember what the numbers are, but it’s like eightfold, tenfold the amount of food that we were able to produce back then.

[01:32:11] Cameron: And it’s largely due to ammonia, which is a byproduct of

[01:32:16] Cameron: fossil fuels. It’s like, so if we take away

[01:32:19] Tony: Twiggy was trying to bring in green hydrogen to, uh,

[01:32:23] Tony: make nitrates from.

[01:32:26] Cameron: Yeah, he

[01:32:26] Cameron: does talk about that, um, how there’s some early work being done on that, but it’s a long

[01:32:31] Cameron: way away from, you know,

[01:32:32] Tony: Yeah.

[01:32:32] Tony: or Twiggy shut it down. Yeah.

[01:32:35] Cameron: Yeah.

[01:32:35] Cameron: Right. But, you know, the flip side to that, and he’s also sort of, uh, I haven’t got up to this chapter yet, but in his early chapter, he says he’s, he’s, uh, not, uh, He’s not a big believer that AI is gonna revolutionize everything the way that the Maximalist think it will either.

[01:32:54] Cameron: I think he’s probably the counterpoint to Kurtzweil on that. Um, so I’m looking forward to getting into that chapter and seeing what his arguments are. But, but of course, you know, one of the counterpoints too, getting rid of fossil fuels is, you know, once we start throwing super intelligent ais at it on mass, hopefully we’ll be able to make a lot more progress.

[01:33:14] Cameron: Now, Kurts, while makes the point that most scientific. Advancements we’ve ever had are usually the result of accidents. Oh, what’s this mold growing on this piece of bread? Oh, penicillin. Yeah, it saves the lives of whatever, 200 million people a year or something. Um, but you know, once we can have AIs doing billions or trillions of virtualized experiments, uh, to come up with the short list of things to actually trial in a laboratory, we should be able to make a lot more rapid progress in a lot of things.

[01:33:50] Cameron: But anyway, so there are two, it’s two or three really interesting books, two that are super positive about how different the world’s going to be 10 years from now, and Vaclav Schmel going, no,

[01:34:02] Cameron: it’s

[01:34:02] Tony: Hmm.

[01:34:03] Cameron: going to look good.

[01:34:03] Tony: I think I’ll read the Buck, Love,

[01:34:04] Tony: Schmill.

[01:34:05] Cameron: Yeah, I thought it’d be,

[01:34:07] Tony: me. Yeah.

[01:34:08] Cameron: I thought that’s more, uh, well you like Kurzweil though, right?

[01:34:10] Tony: I do love Kurzweil. Yeah, look, it’s kind of, it’s going to be a meld of both, probably. I don’t, I don’t for a minute think that, um, I can’t see a world without fossil fuels, um, by 2050. I mean, unless, I could be wrong. AI might come up with some radical new way of making plastic, for example,

[01:34:31] Tony: which comes out of the fossil fuel industry, um, and is so

[01:34:34] Cameron: other things he

[01:34:35] Cameron: talks about is plastics. Yeah,

[01:34:37] Cameron: it’s one of his, one of his big things about fossil fuels is, you know, the role of plastics. Yeah,

[01:34:44] Tony: Yeah.

[01:34:45] Cameron: a quote here that I can steal, um, from Vaclav Schmil’s

[01:34:51] Tony: Yeah. And notwithstanding, uranium might be the solution, but it’s got to be a provider of baseload electricity. Um, even if we go to full, um, battery storage, it’s got to be a backup to that. Comes back to my argument again about CloudStrike, right? You can’t put your whole network, um, without a backup. You can’t, you can’t bet the network on, on batteries.

[01:35:17] Tony: It’s got to have a backup somewhere, which will be fossil

[01:35:20] Cameron: the real, We are a fossil fueled

[01:35:22] Cameron: civilization whose technical and scientific advances, quality of life, and prosperity rest on the combustion of huge quantities of fossil carbon, and we cannot simply walk away from this critical determinant of our fortunes in a few decades, never mind years. He talks about the four pillars of modern civilization are ammonia, steel, concrete, and plastics.

[01:35:47] Tony: Yeah, and there’s certainly been some work done in trying to, um, take fossil fuels out of all of those. I’m not familiar with plastics, but certainly concrete and, um, steel and, and fossil fuels. So, I mean, I, I think there’ll be less fossil fuels by 2050, but

[01:36:02] Tony: they won’t be eliminated.

[01:36:04] Cameron: Yeah. And he, well, he’s saying there will be less, but he’s talking like it’s going to go from 80 percent down to 70 percent or something like that will be generated by fossil

[01:36:14] Cameron: fuels.

[01:36:16] Tony: I wouldn’t be

[01:36:16] Cameron: nations, the complete reliance

[01:36:19] Cameron: on these renewables would require what we are still missing, either mass scale, long term, days to weeks electricity storage that would back up intermittent electricity generation, or extensive grids of high voltage lines to transmit electricity across time zones and from sunny and windy regions to major urban and industrial regions.

[01:36:39] Cameron: concentrations. Could these new renewables produce enough electricity to replace not only today’s generation fuelled by coal and natural gas, but also all the energy now supplied by liquid fuels to vehicles, ships and planes by way of a complete electrification of transport? And could they really do so as some plans now promise in a matter of just two or three decades?

[01:37:01] Cameron: He’s talking about planes. This is a big one

[01:37:02] Tony: Yeah.

[01:37:03] Cameron: And ships, you know, you running those off electricity, you know, how impractical that

[01:37:09] Cameron: seems to

[01:37:09] Tony: well, yeah. If you’re going to have a plane that flies from Perth to London, the battery’s going to weigh it down for a start, so

[01:37:17] Tony: it’s, yeah. Yeah. Okay.

[01:37:20] Cameron: but you use wind power

[01:37:21] Cameron: because it’s up in the sky. There’s a lot of

[01:37:22] Tony: Uh huh, he could, yeah,

[01:37:24] Cameron: fans.

[01:37:25] Tony: it a

[01:37:26] Tony: dirigible,

[01:37:29] Cameron: there you go. Uh, anyway, uh, yeah, so a couple of really great books. Um, one is quite cynical, uh,

[01:37:38] Cameron: and then

[01:37:39] Tony: I don’t think it’s cynical, Cam, I think it’s a

[01:37:41] Tony: realistic analysis.

[01:37:43] Cameron: it’s what all cynics say,

[01:37:45] Cameron: Tony.

[01:37:46] Tony: I don’t want to be so cynical.

[01:37:48] Tony: Well,

[01:37:52] Cameron: Um, on the other side of things. When Conrad Zeus built the first working programmable computer, the Z2 in 1939, it could perform around 0. 0000065 computations per second per 2023 dollar. In 1965, the PDP 8 managed around 1. 8 computations per second per dollar. When my book, The Age of Intelligent Machines, was published in 1990, the MT486DX could achieve about 1700.

[01:38:24] Cameron: When The Age of Spiritual Machines appeared nine years later, Pentium III CPUs were up to 800, 000. Loved my Pentium 3. And when the Singularity is near debuted in 2005, some Pentium 4s were at 12 million. As this book goes to print in early 2024, Google Cloud TPU v5e chips are likely around 130 billion operations per second per dollar.

[01:38:53] Cameron: It’s

[01:38:53] Cameron: not bad.

[01:38:54] Tony: my little snapshot on that was when I went to university, back in the 80s, and people would use the analogy of walking around with a Texas Instruments calculator, which had more processing power than the computers that sent man to the moon in the

[01:39:12] Cameron: Yeah,

[01:39:13] Tony: And you can put them in your pocket. Oh,

[01:39:15] Cameron: Let alone an iPhone 15 Pro. Anyway, there you go. That’s all I got.

[01:39:22] Cameron: Nothing else.

[01:39:24] Tony: interesting. That’s good All right.

[01:39:28] Cameron: TK.

[01:39:29] Tony: Thank you, Cam.

[01:39:30] Cameron: Have a good week.

[01:39:31] Tony: Have a good week. Happy ASX.