QAV 735 — F SCORES

QAV 735 CLUB

[00:00:00] Cameron: Wel­come back to QAV, TK,

[00:00:08] Cameron: down at uh, Cape Schanck, how’s the golf?

[00:00:12] Tony: feels good. Very windy down here at the moment though. So it’s, it’s it’s tough play­ing in the wind, but it gives you anoth­er

[00:00:19] Tony: excuse for a bad score. Yeah.

[00:00:24] Cameron: Is it hot? It’s bloody hot up

[00:00:26] Tony: No, it’s, uh, I’d say max­ing out at about 17 or 18 degrees down here. And then it’s windy and the wind chill on top of

[00:00:34] Tony: that. But it’s nice. I mean, it’s, you

[00:00:36] Tony: know, it’s fine. It’s not too cold.

[00:00:39] Cameron: It’s only 25 in Bris­bane, accord­ing to my watch, but it was 30 in my office before, so I made a last minute deci­sion and came up to the bed­room where I can have the air­con on when I do this, but I’m on my trav­el mic, so my mic’s not as good, but any­way, we’ll live with it. Um, yes, you had a week off. Um, how was that?

[00:00:58] Tony: Oh, fan­tas­tic. Yeah, I was down here play­ing golf. Love­ly. It’s, um, we’ve had, uh, it’s been fair­ly social. It’s been good com­ing down. So I spent a lot of time with Alex, um, with my sis­ter and broth­er who’ve moved to Mel­bourne. Sor­ry, sis­ter and broth­er in law who moved to Mel­bourne, Walt and Robin, and um, yeah, caught up with some oth­er fam­i­ly.

[00:01:21] Tony: Um, went out to Flem­ing­ton one day, went and saw Alex one day. So it’s been busy, but it’s been

[00:01:27] Tony: fun. Very social.

[00:01:29] Cameron: That’s, that’s

[00:01:30] Tony: yeah.

[00:01:33] Tony: Jim was meant to

[00:01:34] Cameron: shirt you’ve got on

[00:01:34] Tony: Jen was meant to come down, but, um,

[00:01:37] Cameron: Oh yeah.

[00:01:38] Tony: she, uh, so I, I drove down Sat­ur­day before last, and then she was fly­ing down Sun­day, and we were going to have, uh, a birth­day cel­e­bra­tion with her fam­i­ly on Sun­day.

[00:01:48] Tony: And she test­ed for COVID before she, um, got on the plane. And tech­ni­cal­ly these days you can still fly with COVID, but, uh, I was going to pick her up and take her straight to her father, you know, 92 year old father’s retire­ment vil­lage. So, she decid­ed to pull the pin and stay in,

[00:02:06] Tony: um. In Syd­ney, so she comes down.

[00:02:09] Tony: Day after tomor­row.

[00:02:11] Cameron: Did­n’t she have it not long

[00:02:12] Tony: Yeah, She’s had it two or three times now

[00:02:16] Tony: and, and no symp­toms. She said she had a bit of a run­ny nose. That was it, but just did­n’t wan­na spread it through the retire­ment vil­lage.

[00:02:22] Tony: So she’s test­ing neg­a­tive again, so she’s com­ing down

[00:02:26] Tony: soon, which will be good.

[00:02:28] Cameron: Oh, that’s good. Well, uh, this week on the show, I thought we would, we’ve got some ques­tions and you’ve got some Aus­tralian, uh, notes, but I thought we would take the oppor­tu­ni­ty to talk a lit­tle bit about the US

[00:02:42] Tony: mm sure.

[00:02:43] Cameron: It’s been a while. Last time we did a US show, you expressed con­cerns over the stocks that the check­list was push­ing out, so I went back and I did a lot of work on that and rejigged it.

[00:02:59] Cameron: My analy­sis, and spoke to Elio at Stock­o­pe­dia about it, and tried to work out, uh, what’s going on with this Zed score thing, and I’ll get to that in a sec­ond, some of his analy­sis on it. But, I want­ed to point out that the US dum­my port­fo­lio that I set up, back before we did all of this, is absolute­ly killing it.

[00:03:26] Cameron: It’s up like 40 344 per­cent since Octo­ber 23 when I set it up. So,

[00:03:36] Tony: So that, that gives all the sins of, uh, bank­rupt­cy

[00:03:40] Cameron: who cares? Who cares? It’s killing

[00:03:44] Tony: sound like a great growth investor. Does­n’t mat­ter.

[00:03:47] Cameron: Yeah.

[00:03:47] Cameron: does­n’t mat­ter.

[00:03:49] Cameron: One H a, I looked at it this morn­ing and one of the stocks, uh, when I looked at it this morn­ing, the port­fo­lio was­n’t look­ing as good. And I was like, oh, what hap­pened? I looked at one of the stocks, green. that we had men­tioned in ear­li­er shows, one of the ship­ping com­pa­nies, they actu­al­ly delist­ed two weeks ago.

[00:04:05] Cameron: And because I haven’t real­ly been pay­ing atten­tion to the US port­fo­lio while I’ve been doing all this stuff, I did­n’t pay that much atten­tion to it. But they bought back their shares at like 14. 20 or some­thing. And I bought in at about 10 bucks. So we made a good sort of 40 per­cent on that before it delist­ed.

[00:04:24] Cameron: So when I fac­tored that into the port­fo­lio, it went back up to its 43, 44%. This by the way is Against the bench­mark, um, of the S& P, which is about 25 per­cent over the same peri­od of time. So, look, it’s not mag 7 lev­els, but if I could get, you know, if I can get 45 per­cent in a year, I’m, I’m hap­py. I wish my super port­fo­lio was invest­ed in our US dum­my port­fo­lio instead of my Aus­tralian stocks.

[00:04:51] Cameron: So, I had a chat to Elio, as I said, so one of the things that I was strug­gling with when I rejigged, um, the weight­ing and the scor­ing with the US, because we were con­cerned about this Z score for peo­ple who don’t recall the last time we talked about it, the Alt­man Z score, which indi­cates a high bank­rupt­cy risk if it has a low score.

[00:05:14] Cameron: Alt­man Zed score, which we obvi­ous­ly want to avoid for obvi­ous rea­sons, but I rejigged the, the weight­ing and the scor­ing and, and, you know, made it because as we talked about, I think last time we spoke, because with us. Um, finan­cial health trends and finan­cial health sta­tus in the Stock­o­pe­dia scor­ing. We don’t take com­pa­nies out if they get a low score.

[00:05:45] Cameron: We just use that for part of

[00:05:47] Tony: Mm hmm.

[00:05:48] Cameron: qual­i­ty scor­ing and then it goes into the QAV score. I decid­ed to leave these in and just have a look at. You know, what the list end­ed up with rather than man­u­al­ly remov­ing com­pa­nies with a low score. So I rejigged it and then I took the same algo­rithm and I, uh, last week ran an Aus­tralian, uh, buy list out of Stock­o­pe­dia and com­pared it to my Stock Doc­tor Aus­tralian buy list.

[00:06:15] Cameron: And again, they were sort of mir­ror images of each oth­er, more or less absolute repli­cas. Cou­ple of vari­a­tions, but you know, 98 per­cent the same. So, and some of those com­pa­nies had low ZED scores as well. So I was going, what the hell is going on here? Why would Stock­o­pe­dia give some­thing a low ZED score?

[00:06:39] Cameron: Where when Stock Doc­tor is say­ing that they’ve got good finan­cial health. So I reached out to LEO, you know, if any­one’s going to know. How to com­pare these two, you’d think it would be him, see­ing as he worked at Stock Doc­tor for many years and now he runs Stock­o­pe­dia. And, um, I asked him basi­cal­ly that ques­tion, like, um, how do com­pa­nies have a low Zed score but, uh, finan­cial, good strong finan­cial health accord­ing to Stock Doc­tor.

[00:07:06] Cameron: Um, he said, I’ll get a read bits of his email reply, what you describe that is occur­ring in the US is exact­ly the prob­lem many fun­da­men­tal ana­lysts have. Debt has been cheap. Intan­gi­ble assets Real are real nowa­days and the fact com­pa­nies are rais­ing mon­ey before they are even cash pos­i­tive is scary But it is a real­i­ty in the US You see it has been this way for over 10 years and despite many point­ing to the luna­cy of it What has hap­pened is that many com­pa­nies have bor­rowed beyond their means but unlike the tech wreck They even­tu­al­ly grow into repay­ing it back.

[00:07:41] Cameron: The real­i­ty is the US investor is more adven­tur­ous than ours, often putting good mon­ey into bad stocks, but if they even­tu­al­ly come good, who cares, right? Much of the Mag­nif­i­cent Sev­en expe­ri­enced this in their jour­neys, when it would have been much bet­ter to be on them dur­ing their mete­oric ris­es, but the fun­da­men­tals just would­n’t allow it.

[00:07:57] Cameron: I can remem­ber FMG here was dis­tressed for ages, 10 plus years, but even­tu­al­ly it came good. Did that mean the risk was low­er? No, just that the stakes were high­er. Dr. Lin­col­n’s orig­i­nal cal­cu­la­tion in the sub­se­quent revi­sion, 2007 I believe, has leant heav­i­ly on the meth­ods of Pro­fes­sor Ed Alt­man, so that does­n’t sur­prise me at all.

[00:08:19] Cameron: The key dif­fer­ence though is that the Alt­man Z score, ver­sions 1 and 2, depend­ing on which indus­try you look at, are a pure num­ber. They are then ranked in the areas you see as per his approach of try­ing to find stocks that will remain sol­vent for two years. The Lin­coln score is a log­it over­lay. To keep it sim­ple, you’ll nev­er see a score beyond 1.

[00:08:40] Cameron: 00. That’s the log­it bit. The log­it over­lay also mea­sures sol­ven­cy today. That is why you nev­er see a bet­ter than mar­gin­al result for a com­pa­ny that is not gen­er­at­ing a prof­it or any cash. It is just hard cod­ed. A type 1 error stocks Where they are seen as healthy but fail, we’re a big no no, bad for busi­ness.

[00:09:00] Cameron: So we erred on the side of con­ser­v­a­tive and just hard cod­ed the result rather than let the maths do the work. The Alt­man Z score does that. But as you’ve acknowl­edged with both the US and Aus­tralian exam­ples, large and tan­gi­ble asset val­ues in this mod­ern world can play hav­oc with the scor­ing sys­tem, both Pro­fes­sor Alt­man’s score and Lin­col­n’s.

[00:09:20] Cameron: In our process, the Alt­man score is just one ele­ment of the broad­er qual­i­ty rank, which looks at more than just health. But if you find a stock in the cau­tious zone under the Alt­man score, or def­i­nite­ly if it is dis­tressed, IE will fail with­in two years if it still has these accounts, then it is imper­a­tive they grow their cash bal­ance faster dur­ing that time.

[00:09:40] Cameron: With­out it, things nev­er get bet­ter. And I had to look up what a log­it over­lay was. I got Chat­G­PT to explain that to me. Do you know about

[00:09:50] Tony: I do not know.

[00:09:53] Cameron: Ah, okay. So, um, it’s basi­cal­ly,

[00:09:57] Cameron: uh, rat­ing things as a bina­ry. As I under­stand it. So it’s either a yes or a no over­lay that goes into some­thing. So I think in the case of Stock Doc­tor, if they’re, it does­n’t mat­ter what else, um, if they’re not gen­er­at­ing cash or prof­its, as he said, they get a bad finan­cial health rat­ing.

[00:10:16] Cameron: Does­n’t mat­ter what else they’re show­ing on their books.

[00:10:19] Tony: That makes sense to me too, by the way.

[00:10:22] Cameron: Yeah, no, I get it. Uh, it does

[00:10:25] Cameron: make sense But any­way, when I, when I did the Aus­tralian buy list side by side, Stock Doc­tor and Stock­o­pe­dia, what’s, and, and I tried to find the cor­re­la­tions between the two. It seemed like the qual­i­ty rate was prob­a­bly the most impor­tant met­ric. And the sec­ond most impor­tant met­ric, this is from a Stock­o­pe­dia per­spec­tive, was, um, the F score, which is in Stock­o­pe­dia is their finan­cial health, Trend.

[00:10:52] Cameron: All of the Aus­tralian stocks that end­ed up in the buy list had a F score of 4 or above. And their qual­i­ty rank was pret­ty high, but their Z scores were all over the place. Some were bad, some were medi­um, some were good.

[00:11:11] Cameron: So I kind of came to the con­clu­sion that real­ly what we might want to be look­ing at with the US stocks, and also the Aus­tralian stocks when we’re doing a stock­o­pe­dia buy list, is um, kind of what we’re doing right now, which is look­ing at the finan­cial health trend.

[00:11:31] Cameron: And look­ing at their qual­i­ty rank, um, because that’s what we’re inter­est­ed in, right, is their future finan­cial health. We’re real­ly inter­est­ed in their finan­cial health trend. If they’re get­ting bet­ter, if their finan­cial scores are improv­ing, their finan­cial health is improv­ing, that’s, it gets back to our recov­er­ing dis­cus­sion from two weeks ago, right?

[00:11:55] Cameron: As being pos­si­bly a good met­ric to look at.

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

[00:12:00] Cameron: my regres­sion analy­sis, we’ll, we’ll dis­pute that lat­er on, but yeah.

[00:12:04] Tony: Yeah. So,

[00:12:05] Tony: So, I think, yeah, I’m hap­py to go with that. But because there’s the Alt­man score, which is a Bank­rupt­cy Fore­cast­er, but as Elio says, if the com­pa­ny’s grow­ing it, you’ve got to keep check­ing that score with each new result, of course. Um, and the one that you’re point­ing to is also called the Piotrows­ki F score, is in, um, Stock­o­pe­dia, and, and, uh, it’s a lit­tle bit dif­fer­ent, so it’s not try­ing to, Um, say whether the com­pa­ny’s going bank­rupt is try­ing to give it a more of a, uh, a check­list score.

[00:12:42] Tony: So if I just run through some of those items in the F score, the Piotrows­ki score, um, they’re check­ing for things like is the com­pa­ny mak­ing a prof­it? Is it gen­er­at­ing cash? Is it mak­ing more cash than it’s report­ing as prof­it? Is it more prof­itable than it was last year? Is the com­pa­ny’s long term debt reduc­ing or sta­ble?

[00:13:03] Tony: Is it increas­ing its abil­i­ty to pay short term debts? Is the com­pa­ny trad­ing with­out hav­ing to raise funds from share­hold­ers? Is pric­ing pow­er improv­ing and or cost reduc­ing? And is it more pro­duc­tive than last year? And there’s a whole, I guess there’s a whole um, series of ratios it looks at to answer those.

[00:13:26] Tony: Ques­tions from, you know, bal­ance sheet items and P& L items. So, um, I think that, I think they’re both rel­e­vant type scores, but yeah, if, if what my sort of pricey of what, um, Elio was say­ing is that there’s a lot more intan­gi­bles on you in US com­pa­nies, and I cer­tain­ly don’t have any, um, expe­ri­ence with US com­pa­nies to, to say how big that is.

[00:13:51] Tony: But, um, but yeah, maybe, maybe the Health

[00:13:54] Tony: Trends score, F score then is the bet­ter one to use.

[00:13:57] Cameron: And, you know, cor­rect me if I’m wrong, but we don’t mind intan­gi­bles. Like, in my mind, I’m think­ing a good man­age­ment that knows what they’re doing is able to man­age intan­gi­ble assets well.

[00:14:10] Tony: Well, yes.

[00:14:12] Cameron: heatmap, you

[00:14:13] Tony: Sor­ry, go on.

[00:14:15] Cameron: I was just going to say,

[00:14:16] Cameron: if the rest of the heatmap that we look at with their scor­ing indi­cates that This is a rel­a­tive­ly well run busi­ness or it’s a busi­ness that’s improv­ing and is recov­er­ing, you know, when we’re try­ing to gauge man­age­ment qual­i­ty as part of that, is man­age­ment doing a good job?

[00:14:35] Cameron: In my head, I think intan­gi­ble assets are prob­a­bly some­thing that a good man­age­ment is going to treat as a good asset and They’re prob­a­bly not over inflat­ing the val­ue of those intan­gi­ble assets, etc, etc. Like I’m hop­ing that it’s actu­al­ly a legit­i­mate part of the um, qual­i­ty and val­ue of the com­pa­ny rather than some­thing that’s being used to puff up a dead don­key.

[00:15:02] Tony: Well, I guess, again, this comes down to me hav­ing no expe­ri­ence in detailed account­ing prin­ci­ples in the US. In Aus­tralia, I think it’s almost every audit, if not every audit, the car­ry­ing val­ue or the val­ue that’s on the books for those intan­gi­ble assets has to be test­ed in Aus­tralian account­ing laws. So, for exam­ple, and most of our intan­gi­ble assets, if not all of them, prob­a­bly most of them, are due to good­will.

[00:15:30] Tony: Thank you. So, Com­pa­ny A has bought Com­pa­ny B, Com­pa­ny B’s book val­ue is a mil­lion dol­lars, Com­pa­ny A had to offer two mil­lion dol­lars to con­vince the board to sell, and so when it acquires Com­pa­ny B, Com­pa­ny A buys Com­pa­ny B. and trans­fer the assets and book val­ue across to its own bal­ance sheet. But then some­how it’s got to account for the fact that it paid more than the book val­ue for the assets.

[00:15:57] Tony: And that’s an intan­gi­ble asset called good­will. And then there’s tests on that going for­ward, so Um, I’m not sure of the peri­od of the test­ing, but I’m going to say it hap­pens at every order, if it’s a, if it’s a key find­ing, if it’s a key part of the bal­ance sheet, it’s going to be test­ed fre­quent­ly, and they’re going to say, right, well, you bought com­pa­ny B, how’s it worked out?

[00:16:21] Tony: Is the, Is the fact that you over­paid for that now get­ting worse, or is it get­ting bet­ter and you can actu­al­ly impair the good­will, or you can, um, you can prob­a­bly write it back in some cir­cum­stances, I guess, or write it down. So, um, it’s always been test­ed under the account­ing rules, so it does­n’t even real­ly mat­ter that much about the qual­i­ty of man­age­ment.

[00:16:43] Tony: It’s the, it’s the audi­tors, the qual­i­ty of the audi­tors that deter­mine, you know, the, that the good­will, the qual­i­ty of man­age­ment comes in when the good­will is first tak­en up, I sup­pose. Did they ever pay for the asset or not is the test of good man­age­ment. Um, there are oth­er intan­gi­bles on bal­ance sheets, like a min­ing com­pa­ny will have giv­en a val­ue to what it thinks is worth, um, for the ore under­ground it has­n’t mined yet.

[00:17:07] Tony: And again, that’s some­thing which is test­ed. Dur­ing audits. So there’s a whole account­ing regime, at least that I’ve had expe­ri­ence with in Aus­tralian com­pa­nies, where intan­gi­bles are test­ed and writ­ten down or writ­ten back, accord­ing to where, you know, how did it turn out. After that, good­will was put on the bal­ance sheet or the intan­gi­ble was raised on the bal­ance sheet.

[00:17:31] Tony: I sus­pect it works the same in the US, but I can’t, you know, I can’t con­firm or guar­an­tee that. Um, I know that there In the past, and I’m going back to the 80s, there was a lot of dis­cus­sion around whether you could, if you were a US com­pa­ny, say that the good­will you built up in your own brands could be writ­ten onto your bal­ance sheet, um, as an asset.

[00:17:53] Tony: And so if you were, you know, um, Heinz Ketchup, for exam­ple, Proc­ter Gam­ble or who­ev­er owns Heinz Ketchup back then, uh, can they actu­al­ly put an intan­gi­ble on there? Bal­ance sheet as an asset to say that they built up a lot of brand equi­ty in the Heinz Catchup brand. Now why was that impor­tant? Because banks would lend against the assets and so they could go out and bor­row ’em or, um, even if it was­n’t intan­gi­ble asset.

[00:18:21] Tony: So, uh. It might be dif­fer­ent account­ing stan­dards over there from from Elio’s descrip­tion. It’s cer­tain­ly a dif­fer­ent approach from investors to how impor­tant that good­will is. Um, so yeah, it’s hard for me to say real­ly what the impact of an intan­gi­ble like that is.

[00:18:40] Cameron: Mm.

[00:18:42] Tony: But giv­en that it’s more impor­tant for the Z score than the F score, maybe we do take the F score going for­ward and still score based on the Z score because it might tip some­thing on The buy

[00:18:53] Tony: list, um, but not make it a go, no go if it’s

[00:18:56] Tony: going to be a bank­rupt­cy risk.

[00:18:59] Cameron: I adjust­ed the weight­ings, um, to pun­ish com­pa­nies with a very low Zed score, so I give them a neg­a­tive

[00:19:06] Tony: yeah,

[00:19:07] Cameron: and slight­ly weight­ed up the qual­i­ty and F scores, and then re ran it again, and it did­n’t real­ly change the buy list a

[00:19:16] Tony: It’s just one item on The check­list, I

[00:19:18] Cameron: scores, yeah, the QAV scores changed slight­ly, but the list

[00:19:22] Cameron: was basi­cal­ly the same

[00:19:23] Tony: Yeah, right.

[00:19:24] Cameron: So, yeah, any­way, that’s where I got to, and, you know, with the port­fo­lio that I’ve already estab­lished over there doing as well as it is doing, and, and I real­ly looked at all of those com­pa­nies and, you know, they, their qual­i­ty and their, um, F scores are most­ly good. There’s some that are low­er, but most­ly good, even, you know, irre­gard­less of their Z scores.

[00:19:52] Cameron: I’m think­ing I’m just going to leave it run, um, but I need to fig­ure out what my exit strat­e­gy is if Like, do I just keep using 3PTL and, um, Rule 1 as my exit strate­gies? Uh, and I think so. I mean, I don’t have any oth­er ideas for how to get out of it. But, um, if any­thing tanks sud­den­ly, I mean, that hap­pens here, uh, as we’ve seen with ING this week.

[00:20:19] Cameron: What’s wrong with you peo­ple not eat­ing chick­en? I mean, I don’t eat much chick­en, but I thought that was just me.

[00:20:25] Tony: no, look, I think you’re right. I’m not, I’m not an expert on, on. The Z score or the F score or even the Stock Doc­tor health rat­ing. I think you, I think Elio makes sense though where he’s say­ing that Stock Doc­tor is nev­er going to rate high­er than mar­gin­al, a com­pa­ny that’s not mak­ing a prof­it. Um, where­as the Z score is going to take it into account and try and score it, irre­gard­less of whether it’s prof­itable or not.

[00:20:50] Tony: It sounds like the F score is going to be more impor­tant in that case because it’s look­ing at prof­itabil­i­ty and increas­ing in prof­itabil­i­ty.

[00:20:56] Tony: So that’s prob­a­bly more rel­e­vant. In that case,

[00:20:59] Cameron: Yeah, alright, well I’ll stick with, you know, qual­i­ty score and F score and see how we

[00:21:05] Tony: The oth­er inter­est­ing thing too is I’ll do a pulled pork lat­er on on one of the com­pa­nies which is a finance com­pa­ny. Um, Stock Doc­tor for a long time did­n’t give a finan­cial health rat­ing for banks and finance com­pa­nies because a lot of the ratios just are dif­fer­ent com­pared to indus­tri­al stocks.

[00:21:24] Tony: And, Uh, I know you men­tioned, uh, an Alt­man Type 1 score and an Alt­man Type 2 score, so poten­tial­ly it’s the same thing for them too. But I noticed in this, um, finance com­pa­ny I’m going to talk about a bit lat­er on in the Pulled Pork sec­tion, it gets a low­er, a low qual­i­ty rank­ing in Stock­o­pe­dia, and I’ve seen that before in a few of the stocks I’ve looked at, and I think that’s because it’s dif­fi­cult for these scores to rank finan­cial stocks.

[00:21:54] Tony: which don’t have the same sort of ratios that indus­tri­al stocks have. So they have, like, for exam­ple, I mean, the com­ment, the sim­plest expla­na­tion is they take on large amounts of debt, um, with the hope of charg­ing their cus­tomers more for that debt than they had to bor­row it for. Um, so it throws all the debt ratios out of whack, but even, but it’s still finan­cial­ly very healthy to do that.

[00:22:19] Tony: It just does­n’t work the same way that indus­tri­al com­pa­nies do. They would­n’t, they’d nev­er bor­row. Um, You know, 100 per­cent of their assets as debt, for exam­ple.

[00:22:30] Cameron: Yep. Mmm. I’ve got a US Paul Pork to do too, if we get

[00:22:37] Tony: Oh, OK.

[00:22:38] Cameron: but I don’t know that we will, cause you’ve got a lot of notes. Um, my, my last note, um, is just, as I briefly men­tioned, uh, so a cou­ple of weeks ago we had Con­rad on, we were talk­ing about recov­er­ing. As a met­ric to focus on, you asked me to do a regres­sion test on recov­er­ing, which I, which I did.

[00:23:00] Cameron: And it was over the same sort of time peri­od the rest of my regres­sion test­ing is done with Mat­t’s tool. Rough­ly, I think, 16 years or 17 years or some­thing like that. It came back with a CAGR of about 8%, 8. 2%, um, just iso­lat­ing recov­er­ing. Which in terms of our iso­lat­ed regres­sion test­ing, um, is pret­ty

[00:23:24] Tony: Hmm.

[00:23:25] Cameron: Um, so, I mean, I’m not sure what that means. My guess as to what that means is that recov­er­ing by itself over the long haul, as Con­rad him­self sug­gest­ed, is prob­a­bly not So, that’s it. Uh, a real­ly, um, sol­id, uh, com­po­nent of an out­per­form­ing score. You might get a bit of a bump ear­ly on. Um, but of course, you know, this would be, I weight­ed it pret­ty high­ly in the check­list.

[00:24:02] Cameron: Um, this would be. Pri­or­i­tiz­ing com­pa­nies that are recov­er­ing when you’re buy­ing, when you have to replace a stock, you’re pri­or­i­tiz­ing, um, recov­er­ing. So the way that I ran it is kept all of the nor­mal scor­ing the same, but instead of giv­ing a recov­er­ing a 2, I gave it a 10 or some­thing like that, I think, a 5 or a 10.

[00:24:26] Cameron: So it’s going to high­ly pri­or­i­tize recov­er­ing stocks when it’s com­ing up with the QAV score and fig­ur­ing out what to buy, but um, did­n’t make a huge

[00:24:38] Tony: Yeah. So a cou­ple of points. I think from mem­o­ry, the num­bers were with the regres­sion test of the mar­ket got about 6 per­cent over that time peri­od and the QAV stocks got about 12%. So recov­er­ing is kind of fit­ting in the mid­dle there. So yeah, it does­n’t. Does­n’t look good on that basis, but I’m going to, when I get some time, I’m going to go back through our own buy lists and try and man­u­al­ly put togeth­er just a recov­er­ing stock port­fo­lio, because the only ques­tion I’ve got in my mind about, about bump­ing up the score to 10 is that I know from my own man­u­al Test­ing, which is only going back a year for recov­er­ing stocks.

[00:25:13] Tony: Uh, you’re only ever get­ting half a dozen or less stocks on the buy list at one time is my expe­ri­ence, which means they’re not going to take up. They may not make up the major­i­ty of the port­fo­lio. Um, that was the first ques­tion I had. And the sec­ond ques­tion I had was just increas­ing the qual­i­ty score by 10 or by eight, because it goes from two to 10 for the recov­er­ing, um, may still not.

[00:25:38] Tony: Push things high enough on the buy list so that they’re ever get­ting into the port­fo­lio in the num­bers to, to skew it. So, um, I accept what you’re say­ing that they’re, they’re hav­ing a greater impact and the results are low­er. So it prob­a­bly isn’t good, but I’m just going to try and,

[00:25:54] Tony: um, go through a four year exam­ple myself and have a look at it.

[00:26:00] Cameron: Hmm. I can do anoth­er one. I can, I mean, I don’t know what sort of score I need to give it to real­ly have an impact, how much I’d need to bump it up by.

[00:26:07] Tony: Yeah, we’ll just leave, if you, if you think about some of the stocks at the top of the buy list, they some­times they have a QAV score of, you know, over a hun­dred. We’ve seen Atlas Pearls have that in the past. So they’re still going to get on top of the buy list or into the dum­my port­fo­lio before a

[00:26:22] Tony: recov­er­ing stock, I guess is my point.

[00:26:25] Cameron: and I will nev­er buy it again, after the last time. It’s my new Apol­lo.

[00:26:31] Tony: You’re work­ing your way through the alpha­bet of stocks, aren’t you?

[00:26:34] Cameron: Yeah, it’s most­ly the A’s. Uh,

[00:26:41] Cameron: that’s all from me, Tony. You’ve got a lot of, uh, a lot of talk­ing points.

[00:26:45] Tony: Yeah, well, it’s been a com­pa­ny report­ing sea­son. So I just sort of, uh, just pick up on some of the stocks that have been in the news over the last week or so. Uh, some of it’s been fair­ly mixed, I think, for QAV stocks. Um, and, and some of these QAV stocks, I’m not sure if they’re on the buy list. Uh, just before they report­ed, they were cer­tain­ly on the buy list, uh, you know, a month or so ago.

[00:27:07] Tony: Um, on the good news side, uh, NWH, the min­ing con­trac­tor, called NRW Hold­ings, code is NWH, uh, had a record result and their shares are up quite sub­stan­tial­ly since their results came out. Um, earn­ings per share was up 18 per­cent and they’re fore­cast­ing an even bet­ter FY25 giv­en their, their order book. So, um, Good, good result for NWH.

[00:27:34] Tony: Yankol on the oth­er hand, when the shares have gone down some 20%, I’m not sure whether coal was coal, ther­mal coal, I think was a buy lead­ing into the report­ing sea­son, not a hun­dred, a hun­dred per­cent sure of that. But Yankol has been on the buy list for a long time. Um, but what may turn out to be,

[00:27:53] Cameron: I’ll, I’ll

[00:27:54] Tony: may turn out to be okay for Yankol hold­ers, because, um, the rea­son why the shares went down when they announced their results, they decid­ed to sus­pend it.

[00:28:05] Tony: And that’s because they want­ed to cre­ate a war chest because they are expect­ing a large amount of M& A deals going for­ward and they’d rather fund that by with­hold­ing the div­i­dend and rais­ing, um, um, them rais­ing you, uh, Uh, mon­ey from share­hold­ers. So the AFR arti­cle that report­ed on this said, Coal’s con­sol­i­da­tion is heat­ing up, that’s COAL.

[00:28:29] Tony: Uh, back up the truck, the coal deals are com­ing. Big list­ed min­er Yan Coal sent the canary down the coal mine when it hoard­ed all 420 mil­lion prof­it it made in the past six months for poten­tial cor­po­rate ini­tia­tives. That’s com­pa­ny speak for M& A. And so they’re expect­ing some, um, coal mines to come up for sale, par­tic­u­lar­ly in Queens­land.

[00:28:50] Tony: And, uh, so that may turn out to be good for Yan­coal, but, uh, peo­ple who are expect­ing a div­i­dend did­n’t

[00:28:55] Tony: like it and sold the shares. Anoth­er one that went down,

[00:28:59] Cameron: ther­mal coal So it’s just ther­mal coal has been a

[00:29:03] Cameron: buy or a josephine since

[00:29:05] Cameron: Feb­ru­ary. Most­ly a buy, there’s been a cou­ple of weeks where it’s been josephines in there, but it’s cur­rent­ly a buy and has been a buy for most of the year.

[00:29:15] Tony: So unless you got into YANCOL recent­ly and got rule 1’d out, you might still be hold­ing, because I’ll just check the bread lat­er. I think YANCOL is still above its buy line, or sell line, sor­ry. No, actu­al­ly it’s a sell, I tell a lie, it’s dropped below its sell line, so there you go. You’ll have to sell it.

[00:29:33] Tony: Uh, so that was Yankol. Um, Eams had a sim­i­lar sort of, uh, response to its results. So again, the AFR report­ed on Fri­day, this Fri­day last, poul­try pro­duc­er Eams also warned about cost of liv­ing pres­sures hurt­ing con­sumers. The com­pa­ny said it ben­e­fit­ed from growth, uh, in vol­ume in New Zealand as cus­tomers switched to cheap­er options at home, while vol­umes to quick ser­vice restau­rant chan­nels declined.

[00:30:00] Tony: So, um, their share price, uh, went down some 21%. Um, inter­est­ing one though, because I, I’m sur­prised that, uh, their vol­umes, the quick ser­vice restau­rants was going down, because peo­ple, when there is a bit of a cost of liv­ing cri­sis, even though they do cook more at home, they still tra­di­tion­al­ly go and get Red Roost­er and KFC

[00:30:23] Tony: as being cheap fam­i­ly meals.

[00:30:24] Tony: So, that may not con­tin­ue. Um,

[00:30:28] Cameron: Is there any chick­en in Red Roost­er in KFC, Tony? I’m not sure.

[00:30:32] Tony: no, well, yeah.

[00:30:33] Cameron: I’m not sure if that’s been

[00:30:34] Tony: Maybe, maybe that’s why, maybe that’s why there’s declin­ing vol­umes to the fast food indus­try. There was also a men­tion of a small­er amount being sup­plied to Wool­worths as well, which might be the

[00:30:47] Tony: more impor­tant fac­tor in their fore­casts. Oth­er,

[00:30:52] Cameron: How much chick­en do you eat?

[00:30:54] Tony: not much at all real­ly, I’d prob­a­bly have it once a fort­night or so.

[00:30:58] Cameron: eat­ing much red meat? Eat­ing much meat at

[00:31:00] Tony: Yeah, I

[00:31:01] Tony: am. No, I am

[00:31:06] Cameron: We don’t! That’s the, the rea­son I ask is we, we rarely eat meat at

[00:31:11] Cameron: all these days. Um, you know, part­ly because it costs too much, but most­ly, you know, we just don’t seem to be eat­ing as much meat any­more. Not through any, you know, delib­er­ate rea­son. It just seems to be not on our, not on our menu much. I just won­der if that’s a com­mon thing or not.

[00:31:30] Tony: Yeah, I don’t know. I think, I think where I’ve land­ed is it’s, um, Jen­ny very rarely eats din­ner at night. She’ll have a snack. Um, so I’m usu­al­ly left to, to cook for myself and the health­i­est thing I can seem to, you know, do that’s easy is to buy a roast or buy a, a nice steak, um, or some lamb and then, uh, uh, steam some veg­gies.

[00:31:53] Tony: And it’s not a, not a labo­ri­ous sort of meal to cook with much prepa­ra­tion time. So that’s gen­er­al­ly what I do.

[00:32:01] Cameron: Mm.

[00:32:03] Tony: Yeah. Any­way, uh, oth­er stocks in the news. Accent, uh, Accent One, AX, AX One is the code. Accen­t’s the shoe com­pa­ny. Uh, been on and off the buy list for a long time, but their share price went down 12 per­cent on FY24 prof­it crunch accord­ing to the AFR and div­i­dend cut.

[00:32:22] Tony: Um, although I did notice their price has recov­ered a lit­tle bit since then. Uh, and they did call out dur­ing their, um, their results that Accent has start­ed FY2025 strong­ly. Total sales for the first sev­en weeks of the finan­cial year are up 8. 7%. Like for like retail sales are up 3. the same peri­od. So, uh, the mar­ket was expect­ing bet­ter, I guess, but, um, it’s not all doom and gloom, uh, in Accen­tOne, but the share price is down.

[00:32:51] Tony: And, uh, one that’s cut a bit close to home, Bank of Queens­land, um, has been on our buy list. The CEO came out and said the rivers of gold are gone. Bank of Queens­land and bank­ing’s been Bru­tal New Real­i­ty was the AFR head­line. Bank of Queens­land boss Patrick Alloway says retail bank­ing is in struc­tur­al decline and big changes are need­ed.

[00:33:14] Tony: All bank investors should heed his warn­ing. So that’s accord­ing to the AFR and Bank of Queens­land announced the Hun­dreds of job cuts and we’re buy­ing out their fran­chise branch man­agers. So they had run up a fran­chis­ing branch net­work for a while and they’re revert­ing back to own­ing them by the com­pa­ny them­selves.

[00:33:36] Tony: So their shares have gone down a bit, but, uh, Again, not a sell unit, I don’t think, so they’ve gone down a lit­tle bit, but,

[00:33:46] Tony: uh,

[00:33:47] Cameron: Yeah, we hold them in a port­fo­lio. They’re close to a three point trend sell, but not

[00:33:53] Tony: yeah, okay. I think they might have risen a bit, so I’ve got them as, um, sell price 5. 98, share price 6. 32, so come down a lit­tle bit since the results, but, um, not too bad. Lat­i­tude, LFS is the code, so they put out a good result. This is a very small ADT stock, so it was real­ly get­ting no cov­er­age. I don’t even think it was report­ed on in the AFR, but their income was up 11 per­cent and net prof­it after tax was up 140%.

[00:34:23] Tony: But again, very small ADT stock there, so not much cov­er­age and not much room to trade, but good result. Uh ANZ, a stock that I hold in my port­fo­lio, has been whacked with fines, so accord­ing to the AFR, ANZ Bank has been hit with an extra 250 mil­lion cap­i­tal charge, increas­ing its bal­ance sheet impost to 750 mil­lion after the pru­den­tial reg­u­la­tor iden­ti­fied per­sis­tent con­cerns about its risk man­age­ment stem­ming from an esca­lat­ing bond trad­ing scan­dal.

[00:34:58] Tony: So they’re under, they’re in a bit of a cor­ner at the moment. It’s been alleged that their bond traders gained the issu­ing of gov­ern­ment bonds to bet­ter their own nest. And there’s, there’s all sorts of inquiries going on inter­nal­ly, and I sus­pect it’ll come about exter­nal­ly as well into that. I think some­one’s been sacked already.

[00:35:20] Tony: There’s a lot of talk around what might hap­pen. I sus­pect when this kind of thing hap­pens, you might see it. The CEO or the chair might think it’s a good time to retire, so that might cause some turnover at the top of ANZ, who knows, um, but it’s, uh, it’s received a lit­tle bit of a, um, a fine, uh, because of that, uh, bank­ing scan­dal.

[00:35:43] Tony: Uh, it has­n’t real­ly affect­ed the share price though, um, and ANZ don’t report this report­ing sea­son, uh, because they’re, the banks tend to go on a March and Sep­tem­ber half year­ly basis, so we don’t. We don’t know yet what the prof­itabil­i­ty is going to be like for the full year, but they do, um, Do quar­ter­ly sales reports.

[00:36:06] Tony: So, um, as part of that, they were talk­ing about the fines, but their share price has gone up still. So, it’s not seen as being the end of the world for ANZ. And last­ly, the last com­pa­ny to talk about that caught my eye was Bram­bles. So, Bram­bles came on to the bot­tom of the buy list, uh, recent­ly, and they had a very good result.

[00:36:26] Tony: And, um, uh, The AFR reports oth­er notable results include Pal­let Mak­er Bram­bles which was also among the biggest gain­ers after it topped earn­ings guid­ance, its shares hit a new high of 17. 51 and end­ed more than 9 per­cent high­er at 17. 12. So yeah, a bit of a mixed report­ing sea­son. Um, I guess it pays to pay atten­tion and pay atten­tion to the AFR, I guess, and com­pa­ny announce­ments dur­ing, well, the last cou­ple of weeks, and

[00:36:58] Tony: we’ve still got anoth­er week or so to go for more reports to come out.

[00:37:02] Cameron: Going back to the Rivers of Gold com­ment from Patrick All­away, do you have any insight into why that is? Why is retail bank­ing in struc­tur­al decline? Is it just all Bit­coin now? Is every­one just using Bit­coin for

[00:37:18] Tony: No, I don’t think retail bank­ing is in struc­tur­al decline. I think per­haps the bet­ter quote would be that every major bank in Aus­tralia is now shrunk back to being just a retail mort­gage. House like a build­ing soci­ety. And So they’re high­ly com­pet­i­tive. So what was a lucra­tive high mar­gin indus­try has had all that com­pet­ed away because the big four banks are focus­ing on it.

[00:37:43] Tony: Mac­quar­ie Bank’s focus­ing on it. ANZ has a bank, which is, uh, sor­ry, AMP has a bank, which is focus­ing on it. And then the small region­al play­ers are also in there. So it’s a high­ly com­pet­i­tive mar­ket. Um, It was­n’t as impor­tant to the big four banks in the past. It was cer­tain­ly impor­tant, but when they had wealth and insur­ance, they had oth­er prof­it cen­ters to rely on.

[00:38:07] Tony: But now that they’re all focus­ing on try­ing to cut up the hous­ing mort­gage mar­ket, and with a bit of, I guess they’ve got a bit of busi­ness bank­ing and cred­it cards as well, they’re real­ly focus­ing on mar­ket share, which means they’re drop­ping their prices and mar­gins to try and retain mar­ket share.

[00:38:25] Cameron: does­n’t real­ly sound like struc­tur­al decline then.

[00:38:27] Tony: I’d say Struc­tur­al Mar­gin­al Decline was prob­a­bly a bet­ter quote.

[00:38:32] Cameron: Right. Okay.

[00:38:35] Tony: Okay, well that’s, oh actu­al­ly, I’ve got a quote from, uh, what works on Wall Street.

[00:38:42] Cameron: Oh

[00:38:43] Tony: Yeah, so just let me read that one out. So I’ve been try­ing to do this one a week and I’ve come across anoth­er good one. Uh, this has to do with sim­ple ver­sus com­plex. Uh, and uh, O’Shaugh­nessy, the author, uh, talks about sim­ple being bet­ter than com­plex, but how the human brain will often attribute more val­ue to some­thing if it’s more com­plex than if it’s sim­ple.

[00:39:11] Tony: And he has a, uh, A psy­cho­log­i­cal study to back that up. So to quote, uh, Shaugh­nessy says, we also pre­fer the com­plex and arti­fi­cial to the sim­ple and unadorned. We are cer­tain that invest­ment suc­cess requires an incred­i­bly com­plex abil­i­ty to judge a host of vari­ables cor­rect­ly and then act upon that knowl­edge.

[00:39:31] Tony: Pro­fes­sor Alex Bave­las designed a fas­ci­nat­ing exper­i­ment in which two sub­jects, Smith and Jones, face indi­vid­ual pro­jec­tion screens. They can­not see or com­mu­ni­cate with each oth­er. They’re told that the pur­pose of the exper­i­ment is to learn to rec­og­nize the dif­fer­ence between healthy and sick cells.

[00:39:49] Tony: They must learn to dis­tin­guish between the two using tri­al and error. In front of each are two but­tons marked healthy and sick, along with two sig­nal lights marked right and wrong. Every time the slide is pro­ject­ed, they reg­is­ter their guess­es as to whether the cell is healthy or sick by press­ing the but­tons I marked.

[00:40:06] Tony: After they guess, their sig­nal light will flash right or wrong, inform­ing them as to whether they have guessed cor­rect­ly or not. Here’s the hitch. Only Smith gets true feed­back. If he’s cor­rect, his light flash­es right. If he’s wrong, it flash­es wrong. Because he’s get­ting true feed­back, Smith soon starts get­ting around 80 per­cent cor­rect, because it’s a mat­ter of sim­ple dis­crim­i­na­tion.

[00:40:29] Tony: Jones’ sit­u­a­tion is entire­ly dif­fer­ent. He does­n’t get true feed­back based on guess­es. Rather, the feed­back he gets is based on Smith’s guess­es. It does­n’t mat­ter if he’s right or wrong about a par­tic­u­lar slide, he’s told he’s right. If Smith’s guess­es right or wrong, if Smith’s guess wrong, of course Jones does­n’t know this.

[00:40:48] Tony: He’s been told that the true order exists that he can dis­cov­er from the feed­back he’s left, great. He’s left search­ing for order when there is no true order to be found. The mod­er­a­tor then asked Smith and Jones to dis­cuss the rules they use for judg­ing healthy and sick cells. Smith, who got true feed­back, offers rules that are sim­ple, con­crete, and to the point.

[00:41:09] Tony: Jones, on the oth­er hand, uses rules that are out of neces­si­ty, sub­tle, com­plex, and high­ly adorned. After all, he had to base his opin­ions on con­tra­dic­to­ry guess­es and hunch­es. The amaz­ing thing is that Smith does­n’t think Jones’s expla­na­tions are absurd, crazy, or unnec­es­sar­i­ly com­pli­cat­ed, he is impressed by the bril­liance of Jones’s method and feels infe­ri­or and vul­ner­a­ble because of the pedes­tri­an sim­plic­i­ty of his own rules.

[00:41:35] Tony: The more com­pli­cat­ed and ornate Jones’s expla­na­tions, the more like­ly they are to con­vince Smith.

[00:41:41] Cameron: Cool. This

[00:41:42] Tony: I think we can, I think we can all see the, uh, the par­al­lels with the finan­cial world. I’m think­ing, what was that book that, uh, the lit­tle book that beats the mar­ket that talks about the one ratio. You should look at, and it was beat­ing the mar­ket just based on that sim­ple analy­sis. Um, and went up on Wall Street, I guess, also had a very sim­ple way of invest­ing.

[00:42:06] Tony: You, if you’re buy­ing a new prod­uct, buy the stock, that kind of thing. So, yeah. Where­as if you go along to, um, a pre­sen­ta­tion, an hour long pre­sen­ta­tion, pret­ty guar­an­teed the, uh, fund man­ag­er is going to spend an hour telling you how they intri­cate­ly ana­lyze the stock and grill man­age­ment, make pre­dic­tions about what’s going to hap­pen

[00:42:25] Tony: based on that.

[00:42:27] Cameron: baf­fle them with

[00:42:28] Tony: Cor­rect. Yes.

[00:42:30] Cameron: Reminds me of that quote that’s, uh, often attrib­uted to Albert Ein­stein, every­thing should be as made as sim­ple as pos­si­ble, but not sim­pler.

[00:42:39] Tony: and like your Elon Musk quote about

[00:42:45] Tony: pulling things out until it does­n’t work and then going with that

[00:42:50] Cameron: then putting them back in,

[00:42:51] Tony: if you need, well if you need to, yeah.

[00:42:54] Cameron: If it, if it does­n’t work, then you need to put them back in.

[00:42:57] Cameron: But yeah.

[00:42:59] Cameron: Actu­al­ly, I’ve been using that recent­ly in my cod­ing, you know, if I get stuck with a prob­lem. I was doing this the oth­er day, um, I was try­ing to write a script that will, you know, when I do my buy list on a Mon­day and Alex does her buy list and there’s always half a dozen stocks or eight stocks that we dis­agree on, that she’s got a few that I don’t have, I’ve got a few that she does­n’t have.

[00:43:23] Cameron: And it takes me a long time and a lot of ener­gy to try and fig­ure out why, usu­al­ly, where we dif­fer. Usu­al­ly, her QAV score or mine will be below 0. 1, and I want to know, well, why is hers dif­fer­ent to mine, and I have to go through all the data, and she uses your mas­ter spread­sheet, I use the Flipp­man one, so the data’s all over the place, and it’s com­pli­cat­ed.

[00:43:44] Cameron: So I was try­ing to write a script. All of that, that’ll just fig­ure it all out for me, give me the results. And I was, there was this one nag­ging prob­lem, I was, I was point­ing it at a sheet that had the list of the stocks to ana­lyze, and the first stock start­ed in A2, and it kept skip­ping it, and it would just start with the stock in A3.

[00:44:06] Cameron: And I kept say­ing to GPT or CLAW, whichev­er the AI tool was, No, no, you’ve got to start in A2, and it would give me a bunch of gib­ber­ish, and it would nev­er get it right. And I went over this for like an hour. And then I thought, Why don’t I just move the start­ing cell down one? I just moved it down one, and then it worked.

[00:44:24] Cameron: I was like, Oh, shit, I could have saved myself

[00:44:26] Tony: Can’t fight City Hall.

[00:44:27] Cameron: way was, Yeah!

[00:44:30] Cameron: Sim­plest thing was just to move it,

[00:44:32] Cameron: and not try and fix the cod­ing, just move it. You know. And then all of a sud­den, a day lat­er, it start­ed doing A2, with­out me doing any­thing. It just worked all of a sud­den. I was like, yeah, shit, now I need to move it back up again, because it’s hav­ing all these blanks at the top.

[00:44:46] Cameron: I don’t know what hap­pened. Any­way, that’s good. Thank you for the quote, and you get to do a pulled pork for us on a US

[00:44:52] Tony: I am, yeah.

[00:44:53] Cameron: nev­er heard of.

[00:44:54] Tony: That’s exact­ly right. Even though they claim to have had some oper­a­tions in Aus­tralia, I still haven’t heard of them. But the com­pa­ny is Enva, E N V A. That’s the code, E N V A. Eno­va Inter­na­tion­al is the com­pa­ny. And I pulled it out because it’s part of the U. S. E dum­my port­fo­lio that you have cre­at­ed and it was one of the bet­ter return­ing stocks since, um, since putting it into the port­fo­lio.

[00:45:19] Tony: I think it was up about,

[00:45:21] Tony: uh, do you have the num­ber there? I think it’s 39 per­cent from mem­o­ry.

[00:45:26] Cameron: Um, Enva, uh, yeah, 39 per­cent since I added it. Uh, let me see, when did I add it? Do do do do do, March this year, so up 40 per­cent since March, not bad.

[00:45:41] Tony: Pret­ty good. So, to give peo­ple who don’t know much about Enver a taste for them, and now I’m in that crowd, it’s uh, I’ll read from their web­site. Enver Inter­na­tion­al is a lead­ing finan­cial tech­nol­o­gy com­pa­ny that oper­ates online finan­cial ser­vices through our machine learn­ing pow­ered Colos­sus plat­form.

[00:46:05] Tony: Was­n’t Colos­sus the um, AI in the Forbin project

[00:46:08] Tony: that uh, impris­oned its coder? Any­way,

[00:46:12] Tony: I think it was. Uh, We Serve, sor­ry?

[00:46:16] Cameron: like, it’s a, Colos­sus is a Mar­vel char­ac­ter

[00:46:19] Cameron: as well. He’s, Uh, in some of the ear­ly Dead­pool

[00:46:22] Tony: Yeah, right. I remem­ber lov­ing that movie, The Forbin Project, when I was a kid. Very ear­ly sci fi, 60s, About an AI that impris­ons, um, its, its, uh, its coder so it can study humans and how they inter­act. Any­way.

[00:46:41] Cameron: Nice.

[00:46:42] Tony: and over, uh, goes on to say, we serve non prime con­sumers and busi­ness­es alike while offer­ing world class tech­nol­o­gy and ser­vices to, uh, dif­fer­ent to tra­di­tion­al banks in order to cre­ate acces­si­ble cred­it for mil­lions.

[00:46:56] Tony: And what else, what else did they say? ANOVA is a lead­ing finan­cial ser­vice, that’s the same thing I think. Through its world class ana­lyt­ics and machine learn­ing algo­rithms, ANOVA has pro­vid­ed more than 10. 5 mil­lion cus­tomers with over 56 and financ­ing. So, It strikes me, well, first of all, it’s, it’s a, it’s a lender to peo­ple who can’t get loans from banks.

[00:47:22] Tony: Uh, in a nut­shell, uh, start­ed out life as a pay­day lender, so peo­ple, uh, so peo­ple would take out a loan in between, uh, pay pack­ets to, to pay bills that were, were due in between and they could­n’t afford them. Uh, but it sounds a bit like, um. Lat­i­tude Finan­cial Ser­vices or Mon­eyMe, those stocks that are on the ASX, this is the US equiv­a­lent of those com­pa­nies that lend to peo­ple who are not able to eas­i­ly get loans from banks.

[00:47:52] Tony: It’s been around for a while, so a bit of his­to­ry. In 2003, it sort of came to life when two broth­ers, Albert and Alexan­der Gold­stein, joined a com­pa­ny called The Cheque Giant. And they began test­ing online con­sumer lend­ing back in 2003. 2004, the Czech giant has renamed Cash­Ne­tUSA. And by the end of the year, the com­pa­ny is pro­vid­ing pay­day loan ser­vices across 10 states.

[00:48:20] Tony: 2005, uh, The com­pa­ny turns prof­itable after only 11 months of oper­a­tions. 2006, the Cash­Ne­tUSA com­pa­ny is acquired by CashAmer­i­ca Inter­na­tion­al and, uh, becomes a mem­ber of the Com­mu­ni­ty Finan­cial Ser­vices Asso­ci­a­tion of Amer­i­ca. 2007, Cash­Ne­tUSA makes its 3 mil­lionth loan trans­ac­tion and extends over­broad with the launch of Quick­Quid, an online pay­day loan com­pa­ny in the UK.

[00:48:55] Tony: 2009, Inno­va expands into Cana­da and Aus­tralia with the launch of both Dol­lars Direct Brands and Cash­Ne­tUSA, Quick­Quid in Dol­lars. Direct col­lec­tive­ly become Ano­va Finan­cial. So I don’t recall dol­lars direct in Aus­tralia, Cam. Did you ever come across that one?

[00:49:15] Cameron: No,

[00:49:15] Tony: me nei­ther. But they claim that they were offer­ing those loans in Aus­tralia back in 2009.

[00:49:22] Tony: Uh, 2014, they, uh, branched out into B2B lend­ing. I think from what I’ve read, it’s more Busi­ness B2B lend­ing. Uh, they launched a com­pa­ny called Head­way Cap­i­tal and anoth­er one called OnStride Finan­cial in the UK. And they list offi­cial­ly on the NYSE as an inde­pen­dent pub­lic com­pa­ny under the tick­er sym­bol ENVA.

[00:49:48] Tony: 2016, uh, they achieve loan book growth of 29 per­cent year over year and become the num­ber one lender by mar­ket share in the UK. Now, I’m not sure if that’s. Unse­cured lender. It does­n’t say, but I sus­pect it is. I would­n’t sus­pect that Inno­va would be big­ger than some of the big banks over there. But any­way, it cer­tain­ly became big in the UK.

[00:50:10] Tony: 2017, Inno­va bal­ance sheet reach­es a bil­lion dol­lars in assets and reach­es a mile­stone of more than 5 mil­lion cus­tomers served. 2020, Inno­va joins forces with OnDeck and Align income share Fund­ing. So they merged. 2021, ANOVA acquires Pangea Uni­ver­sal Hold­ings, and they’re an inter­na­tion­al mon­ey trans­fer plat­form.

[00:50:33] Tony: And they cur­rent­ly, uh, uh, are still grow­ing quite strong­ly, and they oper­ate not only in the US, um, but also in Brazil. So that’s why there’s the inter­na­tion­al part of the ANOVA inter­na­tion­al name. Um, I’m just going to go through their num­bers now, if I can find those quick­ly.

[00:50:56] Tony: They’re, here we go, they’re high up on the US Stock­o­pe­dia QAV check­list. Uh, their sec­ond quar­ter results are out now and their rev­enue was up 26 per­cent year on year. Earn­ings per share was up 29 per­cent year on year. So they’re cer­tain­ly grow­ing well. And that’s been, that’s one of the rea­sons why their share price is up so much, but also too, they announced that ear­li­er on in the year that they’re under­tak­ing a share buy­back, and so the share repur­chase plan is also under­way accord­ing to the Q2 results.

[00:51:32] Tony: Uh, the num­bers, it’s a high ADT stock, so some­thing like 90 mil­lion trades each day on aver­age. The fig­ures that I’m using were the lat­est sec­ond quar­ter fig­ures, so 30th of the 6th, 2024 is the date. Share price cur­rent­ly is 83, rough­ly, 83. 43. And prob­a­bly the biggest thing on our buy list which dri­ves their high score is the price to oper­ate in cash flow, which is 1.

[00:52:04] Tony: 76 times. So, um, very good. Very cheap on that basis. Uh, in Stock­o­pe­dia, the qual­i­ty rank for this com­pa­ny is only 57, which is pret­ty low, and there’s no Z score. And I think, as I said before, ear­li­er on in the show, I think that’s because it’s a finan­cial ser­vices com­pa­ny and the Z score may have trou­ble, um, pre­dict­ing bank­rupt­cy risk with, with these kinds of non indus­tri­al com­pa­nies.

[00:52:29] Tony: And I sus­pect if it does­n’t have a Z score, it’s not going to rank high­ly in the Stock­o­pe­dia qual­i­ty rank­ing. But despite, despite that, it’s still scor­ing well in the QAV sys­tem. And even in Stock­o­pe­dia, the over­all stock rank is still 97 in total, because it has a high momen­tum score of 99 and a high val­ue score of 88.

[00:52:51] Tony: The F score that we spoke about before is 4 So, um, In the mid­dle, uh, not scor­ing great on that, but, uh, um, it, it, it does push it up the check­list a lit­tle bit for us, uh, in terms of whether we sit with val­u­a­tion met­rics. So the, the cur­rent share price is, uh, below, um, above tk, uh, the TK one iv. Um, which is 35.

[00:53:16] Tony: 29, but below TK2, which is based on the fore­cast earn­ings per share. So TK2 IV is, uh, 86 and the cur­rent share price is around 83. So, we’re expect­ing earn­ings to increase, um, at a rea­son­able rate next year. Price to book is, um, well book val­ue is 43 per share, so share price of 83, we’re not going to be able to buy it at book val­ue or book plus 30, so we can’t score it for that.

[00:53:46] Tony: Even though it’s a strong, uh, momen­tum stock in, um, in trend­ing upwards, it’s not a new 3PTL uptrend, so we can’t score it for that. Um, I get, uh, earn­ings per share growth, um, Fore­cast of 37. 1 per­cent and the PE of 13. 5. So I can score it for growth over PE. Um, so that scores well. Uh, in terms of what else can I score it for?

[00:54:14] Tony: Div­i­dend yield. Does­n’t pay a div­i­dend. It’s doing a share buy­back instead. So we can’t score it for div­i­dend yield. Um, and the Was it the Gold­stein broth­ers, Albert and Alexan­der Gold­stein, who found­ed the com­pa­ny, are no longer part of the board, so we can’t score it for Own­er Founder. So of all the things we can score it for, we have 7 out of 12 for a qual­i­ty score of 58%, and because of the low Prop­Caf, we have a QAV score of 0.

[00:54:43] Tony: 33. So that’s ANOVA. ENOVA.

[00:54:48] Cameron: ENVA. Thank you for that, Tony. Yeah, they have done well

[00:54:53] Tony: Yes.

[00:54:54] Cameron: for us. But yeah, inter­est­ing look­ing at their qual­i­ty, um,

[00:54:59] Cameron: rank­ing. It’s not that great. But their stock rank is 97, so, you know, I don’t know. It’s inter­est­ing. F score, as you said, is like a 4, so it’s right in the

[00:55:11] Tony: Yes. Um, and I just want­ed to also flag some­thing with you. I’m not sure what mort­gage rate you’re using when you test against div­i­dend yield. It was­n’t applic­a­ble on this com­pa­ny because it’s not pay­ing a div­i­dend, but, um, for the QAV Aus­tralian check­list, the Stock Doc­tor one, we’re using the aver­age of the, Big­Bank’s mort­gage rate to test against.

[00:55:35] Tony: That’s going to be dif­fer­ent in the US, so we’ll need to come up

[00:55:37] Tony: with a way of putting a US

[00:55:40] Tony: mort­gage rate in.

[00:55:42] Cameron: Yeah, right. I, um, I do have a source for that, bankrate. com. Um, it says, I’m just look­ing at it now, mort­gage rates are up slight­ly this week to 6. 62, but when I did the last US, uh, buy list, which was at the begin­ning of, August, I used 6. 85, which it was at the time. So it says, yeah, but this is, um, the aver­age, uh, they cal­cu­late.

[00:56:15] Cameron: That’s 6. 62 is the aver­age for a 30 year loan accord­ing to Bank Rates Lender Sur­vey. I think it’s come down in the last cou­ple of weeks by the sounds of it. And then we’re back up. But

[00:56:27] Tony: Okay. Well, good. Thank you. You’re one step

[00:56:28] Tony: ahead of me. That’s great. As

[00:56:30] Cameron: in the glob­al para­me­ters in the glob­al para­me­ters sheet in my US, um, ver­sion of the, the check­list, I’ve got a link to it. You can see right next to bank debt there. I looked

[00:56:44] Tony: All right. Thanks.

[00:56:46] Cameron: No wor­ries. Um, well, lis­ten, I’m going to, I’m going to talk a lit­tle bit about my

[00:56:52] Tony: Mm hmm.

[00:56:52] Cameron: um, that I did a pull book on. I’ll breeze through it, but I just want­ed to high­light it as a,

[00:56:58] Cameron: an exam­ple of some of the chal­lenges when we’re look­ing at US stocks that we don’t often see here.

[00:57:03] Cameron: So. This is a com­pa­ny that was fair­ly high up in the buy list that I did a cou­ple of weeks ago. We don’t have it in the port­fo­lio, and in fact, when I looked at the bread lat­er today, it’s slight­ly below its, uh, buy line right now, so we would­n’t buy it, but it was above it, um, a cou­ple of weeks ago. It’s called Sun­lands Tech­nol­o­gy.

[00:57:23] Cameron: The, the code, it’s New York Stock Exchange stock, and the code is STG. Sun­lands Tech­nol­o­gy Group is a Chi­na based com­pa­ny that This is pro­vid­ing online edu­ca­tion ser­vices. The com­pa­ny main­ly pro­vides the stu­dents with com­pre­hen­sive online edu­ca­tion ser­vices, includ­ing online live stream­ing, audio, video, inter­ac­tive course con­tent, record­ed pre­vi­ous live audio video course con­tent, quiz banks, online chat rooms, and oth­er edu­ca­tion­al con­tent.

[00:57:54] Cameron: It oper­ates its busi­ness most­ly in the domes­tic mar­ket, so most­ly in Chi­na, but it’s list­ed. on the New York Stock Exchange. Uh, it was found­ed in 2003 as a tra­di­tion­al edu­ca­tion com­pa­ny, shift­ed to an online mod­el in 2014, and it, you know, has PC apps and mobile apps and all that kind of stuff. Now, the actu­al, it’s it, so there’s a cou­ple of things that are real­ly inter­est­ing about this when I dug into it.

[00:58:24] Cameron: Num­ber one is it has a very inter­est­ing struc­ture. Um, and the main deliv­ery com­pa­ny for it, it’s based in the Cay­man Islands, You’re like, oh real­ly? And then the, the,

[00:58:38] Tony: Most, most of these stocks are, aren’t they?

[00:58:41] Cameron: yeah, I think so. And, uh, the name of the com­pa­ny that is the pri­ma­ry, pri­ma­ry vehi­cle for it is Bei­jing Wan­shi Wax Ele­phant Edu­ca­tion Tech­nol­o­gy Com­pa­ny Lim­it­ed. I don’t know, maybe wax ele­phant is a spe­cial thing in Chi­na, but any­way, there you go. My first thought was who will think of the chil­dren? Uh, we know Amer­i­ca’s. Obsessed with, uh, the effect that Tik­Tok is hav­ing on the chil­dren and hav­ing two chil­dren of my own that spend their lives in Tik­Tok, I can ful­ly appre­ci­ate that.

[00:59:21] Cameron: Uh, but this com­pa­ny most­ly deliv­er­ing its ser­vices, as I said, to Chi­na. So Chi­nese investors don’t care what Chi­nese com­pa­nies do to Chi­nese chil­dren, I guess. Um,

[00:59:34] Tony: And US investors don’t care

[00:59:36] Tony: either.

[00:59:36] Cameron: that’s what I said. US

[00:59:37] Tony: Oh, that’s right. I thought you said

[00:59:38] Cameron: about what Chi­nese com­pa­nies do to Chi­nese com­pa­nies. Well, they prob­a­bly don’t care either.

[00:59:42] Cameron: Yeah.

[00:59:43] Cameron: But I pulled up the lat­est annu­al report. So if you go to the web­site for this, by the way, it’s all in Chi­nese. So, um, that’s fun. But they do have an Eng­lish lan­guage indus­tri­al rela­tions site that, uh, not indus­tri­al, investor rela­tions site that I got to. ir. sun­lands. com And I read through their annu­al report.

[01:00:00] Cameron: Now, 90 per­cent of their annu­al report is talk­ing about the risks asso­ci­at­ed with invest­ing in this com­pa­ny. And there’s a lot of them. Because it’s a Chi­nese com­pa­ny, and it’s, like, it’s fas­ci­nat­ing. So, they start off by say­ing, Sun­lands Tech­nol­o­gy Group is a com­pa­ny based in the Cay­man Islands, but most of its busi­ness hap­pens in Chi­na.

[01:00:22] Cameron: Because Chi­nese law does­n’t allow for­eign com­pa­nies to own cer­tain types of busi­ness­es, Sun­lands does­n’t own its Chi­nese oper­a­tions direct­ly. Instead, it uses a legal set­up called Vari­able Inter­est Enti­ties, VIEs. These VIEs are con­trolled by con­tracts, not by own­er­ship. This means Sun­lands can run the busi­ness and include the VIE’s finan­cial results in its own reports, even though it does­n’t actu­al­ly own them. When investors buy shares in Sun­lands, they’re buy­ing into the Cay­man Islands com­pa­ny. Not the Chi­nese busi­ness­es direct­ly, and this is risky for a whole bunch of rea­sons,

[01:01:13] Tony: Not the least of which is you don’t have any assets, unless the con­tracts

[01:01:16] Tony: are count­ed as assets, which would be, it’d be

[01:01:19] Tony: risky. It’s risky. It’s good. They’re hon­est. Hon­est Chi­nese.

[01:01:25] Cameron: and one of the oth­er

[01:01:26] Cameron: risks, and they call this out over and over and over again, is the Chi­nese gov­ern­ment could change the rules at any time, and decide that the con­tracts aren’t valid. Actu­al­ly, we’re not com­fort­able with com­pa­nies with for­eign investors even, uh, hav­ing con­tracts with Chi­nese com­pa­nies pro­vid­ing edu­ca­tion­al ser­vices.

[01:01:47] Cameron: So, nah, sor­ry, you can’t do that any­more. Um, So it talks a lot about the legal risks involv­ing Chi­nese gov­ern­ment. It says the Chi­nese gov­ern­ment has recent­ly start­ed to increase its con­trol over com­pa­nies that sell shares over­seas. For our past list­ings on the New York Stock Exchange, we have need­ed to get spe­cial approval.

[01:02:09] Cameron: from Chi­nese reg­u­la­tors will go through a cyber­se­cu­ri­ty review. Accord­ing to our Chi­nese legal advi­sors, because we were list­ed on a for­eign stock exchange before the new cyber­se­cu­ri­ty rules were intro­duced, we don’t need to go through a cyber­se­cu­ri­ty review to keep our NYSE list­ing. We also haven’t need­ed to file any­thing with the Chi­na Secu­ri­ties Reg­u­la­to­ry Com­mis­sion for our cur­rent list­ing.

[01:02:31] Cameron: How­ev­er, For any future stock offer­ings or cap­i­tal rais­ing activ­i­ties, we will need to fol­low the new fil­ing pro­ce­dures with the CSRC. These new rules are still fresh and there’s a lot of uncer­tain­ty about how they’ll be applied. We can’t guar­an­tee that we’ll be able to com­plete the nec­es­sary fil­ings quick­ly or even at all.

[01:02:50] Cameron: If we can’t meet these require­ments, we might face penal­ties like fines, hav­ing our busi­ness sus­pend­ed, or los­ing impor­tant licens­es. This could also make it dif­fi­cult for, or impos­si­ble for us to con­tin­ue offer­ing shares to investors, which could cause the val­ue of our shares to drop sig­nif­i­cant­ly or even become worth­less.

[01:03:07] Cameron: So They’re putting it right out there. Now you don’t often see these sorts of com­pli­ca­tions invest­ing in Aus­tralian stocks. Then it goes through the list of risks, and this goes for pages and pages and pages, and this is just the high lev­el stuff. Then it goes into details, it breaks each one of these down, but, you know, just to read a few.

[01:03:30] Cameron: If the group fails to increase stu­dent enroll­ments, the group’s net rev­enues may decline, and the group may not be able to main­tain growth. If the group fails to man­age its busi­ness growth effec­tive­ly, the suc­cess of the group’s busi­ness mod­el will be com­pro­mised. The group is sub­ject to the uncer­tain­ty to con­tin­ue to achieve prof­itabil­i­ty in the future.

[01:03:47] Cameron: And this is all, you know, moth­er­hood stuff. This is true of any

[01:03:50] Tony: You do see that kind of word­ing in Aus­tralian

[01:03:52] Tony: risk assess­ments too in PDS. Dis­clo­sures for

[01:03:56] Cameron: But then it gets, then it gets to the PRC stuff.

[01:04:01] Cameron: Sig­nif­i­cant uncer­tain­ties exist in rela­tion to the inter­pre­ta­tion and imple­men­ta­tion of or pro­posed changes to the PRC laws, reg­u­la­tions and poli­cies regard­ing the edu­ca­tion indus­try. The group faces risks asso­ci­at­ed with the lack of a pri­vate school oper­at­ing per­mit for online edu­ca­tion­al ser­vices as well as uncer­tain­ty sur­round­ing PRC laws. And it goes on and on and on and on and on. Basi­cal­ly, um, any fail­ure by the VIEs or their respec­tive share­hold­ers to per­form their oblig­a­tions under our con­trac­tu­al arrange­ments with them would have a mate­r­i­al and adverse effect on the group’s busi­ness. And so, I’m read­ing through all this stuff going, oh my god, like. This is a night­mare. I wish I’d nev­er read all of this, you know, um,

[01:04:49] Cameron: but the flip side to this is like, they, they rate pret­ty high­ly on our check­list. Rev­enue is going down, but oper­at­ing prof­its are going up. And when you drill down and it’s inter­est­ing drilling into their annu­al report and their finan­cials, it’s not as obvi­ous as it is read­ing the Aus­tralian annu­al reports I found as to what’s going on in the busi­ness.

[01:05:13] Cameron: It’s very murky. Um, but they are say­ing that the busi­ness of post sec­ondary cours­es has been rather slow in recent quar­ters in the U. S., uh, sor­ry, in Chi­na. So they’re find­ing it dif­fi­cult, they sort of, their rev­enues peaked 2022, um, and they, uh, have been declin­ing rather sig­nif­i­cant­ly since then. Uh, like if I run through their rev­enues, give me a sec­ond here, STG. Um, so 2021 they did 2.5. Uh, what are these met­rics in here? Stock doc­tor

[01:05:57] Tony: Ah, Soc­cer­pe­dia, yeah.

[01:06:00] Cameron: This is, um, in CNYM

[01:06:03] Cameron: two. So it’s not rebi. What’s that? Chi­nese, uh, some­thing.

[01:06:09] Tony: You’re right.

[01:06:10] Cameron: Yeah, but what’s the MI dun­no what the

[01:06:13] Tony: Mil­lions of, mil­lions

[01:06:14] Cameron: Oh, okay. CMY mil­lions. Yeah, okay.

[01:06:18] Cameron: 2. 5 bil­lion one, then 2022, 2. 3 bil­lion, 2023, 2. 2 bil­lion. It’s been declin­ing slight­ly, um, but their oper­at­ing prof­it in 2021, when they did 2.

[01:06:34] Cameron: 5 bil­lion, their oper­at­ing prof­it was 153 mil­lion. 2022 it jumped to 618 mil­lion and in 2023 it was up a lit­tle bit at 619 mil­lion. So, I think, and they were los­ing a lot of mon­ey before that. Their oper­at­ing prof­it in 2018 was neg­a­tive a bil­lion dol­lars. So, I’m assum­ing because it’s,

[01:07:00] Cameron: I’m assum­ing because it’s a tech­nol­o­gy based plat­form that they were spend­ing a lot of mon­ey build­ing out their plat­form and their mar­ket­ing and all that kind of stuff. it’s, um, you know, from a stock­o­pe­dia per­spec­tive, the qual­i­ty is low. It’s a 52. Val­ue is high, 98. You want to make sure it’s not a val­ue trap.

[01:07:20] Cameron: Stock rank is 71. The health trend, though, is a 5. So it’s, uh, you know, on the, on the high­er end of the, uh, improv­ing health

[01:07:30] Tony: Mm hmm.

[01:07:31] Cameron: bank­rupt­cy risk is in dis­tress. Though,

[01:07:35] Tony: A neg­a­tive, neg­a­tive Z2 score.

[01:07:39] Cameron: yeah, neg­a­tive 0. 31.

[01:07:41] Cameron: So, you know, there’s just A whole bunch of risks asso­ci­at­ed with this. But if I look at the QAV scor­ing, does it have a qual­i­fied audit? I check for that. Aver­age dai­ly trades only about 40, 000. So it’s rel­a­tive­ly low, but the price for oper­at­ing cash flow is 1. 03. So it’s very, very cheap.

[01:07:59] Cameron: This is why the val­ue is very high. Um, It’s, uh, below TK IV num­ber one, it’s got a three point uptrend, a new three point uptrend too, um, and so, and that’s basi­cal­ly it from a scor­ing per­spec­tive. It’s just got a real­ly low Prop­Caf and a cou­ple of oth­er things going for it, but it gets, uh, It gets a QAV score of 0.

[01:08:25] Cameron: 62 when I ran it, but you know, like, if I just look at the QAV num­bers and don’t pay any atten­tion to any of that oth­er stuff, I’m like, well, okay, that looks good. Low Prop­Caf, um, pret­ty good QAV score. But then I start to read the details of it. I’m like, Oh God, it sounds like a night­mare. Um, they’re like just lots of risks, like huge, but you know, there may be noth­ing to it.

[01:08:50] Cameron: Maybe, you know, it seems to be a well run busi­ness. Like it’s doing. What’s a cou­ple of bil­lion yuan in US

[01:08:59] Tony: Yeah, I don’t know.

[01:09:00] Cameron: to USD. Oh, not much. So, uh,

[01:09:06] Cameron: one Chi­nese yuan is worth 14 cents. So a bil­lion, a bil­lion dol­lars is still, what’s that, 140 mil­lion?

[01:09:16] Tony: Yep. Okay.

[01:09:17] Cameron: So it’s still a cou­ple hun­dred, you know, a cou­ple hun­dred mil­lion dol­lars in turnover. Um,

[01:09:23] Cameron: it’s oper­at­ing prof­its are going up. Like it seems to be well run, but the risks are astro­nom­i­cal. So I don’t know man, when I got into the details of it, I was like, oof, oof,

[01:09:38] Tony: you ask­ing me what to do about it?

[01:09:41] Cameron: um, I was paus­ing for dra­mat­ic effect. What

[01:09:44] Cameron: would

[01:09:45] Tony: what will I do

[01:09:46] Cameron: you

[01:09:46] Tony: know.

[01:09:47] Cameron: Yeah, when you look at, you look at a com­pa­ny with risks like that,

[01:09:50] Cameron: like, it’s got­ta, like do we, I mean, tra­di­tion­al­ly with QAV we don’t think a lot about the details of the busi­ness, we’re just going by the

[01:09:59] Tony: Yeah, but by the same token,

[01:10:01] Cameron: look­ing at com­pa­nies,

[01:10:02] Tony: we’re deal­ing with Aus­tralian com­pa­nies that we know a lit­tle bit about, um, just from

[01:10:05] Tony: osmo­sis, um, because they’re in Aus­tralia and

[01:10:08] Tony: we’ve seen the brands, but um, and the way the

[01:10:11] Cameron: and a high­ly nan­ny, and a high­ly nan­ny

[01:10:15] Tony: yeah, reg­u­lat­ed, heav­i­ly reg­u­lat­ed, yeah.

[01:10:18] Cameron: high­ly reg­u­lat­ed, Yeah. exact­ly.

[01:10:20] Tony: Yeah. I mean, it reminds me of an old say­ing that, uh, Wash­ing­ton or Can­ber­ra can nev­er afford to pay enough for lawyers to out­smart Wall Street.

[01:10:33] Tony: You know, or Mac­quar­ie Street, but these, these peo­ple have known what the rules are, and they just found a way of con­tract­ing around them. And, you know, part of me says, they’re being hon­est and high­light­ing that risk. And the oth­er part of me says, so what? Because if the rules change, they’ll just hire

[01:10:48] Tony: more aggres­sive lawyers and come up with a dif­fer­ent struc­ture to get around it.

[01:10:52] Tony: So, um, Yeah, it’s a hard one, isn’t

[01:10:55] Cameron: Yeah, pos­si­bly.

[01:10:56] Tony: I’d prob­a­bly park it, based on what you said. But, you know, if it’s one stock in a port­fo­lio of 20 and it’s scor­ing high on a val­ue met­ric and low on a qual­i­ty one,

[01:11:04] Tony: it’s, you know, it still might be worth a look.

[01:11:08] Cameron: Yeah. There you go. Any­way, I, I, I high­light that just to show that it’s a very dif­fer­ent space when we’re play­ing in the US. Very

[01:11:18] Tony: Yeah, and, and not just that, but, um, that’s the list­ings in the US, the com­pa­ny’s owned in Bermu­da and it’s oper­at­ing via con­tracts out in Chi­na. So it’s, it’s a much dif­fer­ent space to how we’re used to

[01:11:30] Tony: look­ing at invest­ments, real­ly. Yeah.

[01:11:33] Cameron: Yeah, yeah. Alright, so that’s

[01:11:37] Cameron: that. Got a cou­ple of ques­tions. Chris asks, um, There’s been a bit of a talk around the impor­tance of the Stock Doc­tor finan­cial health sta­tus and specif­i­cal­ly recov­er­ing. Does TK have any insight into how this is deter­mined or cal­cu­lat­ed?

[01:11:52] Tony: uh, look, I actu­al­ly went to their web­site and I could­n’t, I spent a lot of time try­ing to find it and I could­n’t see it, so I decid­ed to reverse engi­neer some of the recov­er­ing stocks and I think it’s as sim­ple as The Stock Doc­tor health rat­ing is high­er this half than it was last half. So it’s gone from mar­gin­al to sat­is­fac­to­ry or

[01:12:12] Tony: sat­is­fac­to­ry to strong in the last results.

[01:12:17] Cameron: I did the

[01:12:17] Tony: Yeah.

[01:12:18] Cameron: They got that lit­tle table.

[01:12:19] Cameron: They show you the table where it goes.

[01:12:21] Tony: Yeah. But I could do that. There was no, I, you know, I went through all their FAQs and Googled and I could­n’t see any, um, any def­i­n­i­tion with­in

[01:12:30] Tony: Stock Doc­tor as to what it meant, but that’s pret­ty much what it means, I think.

[01:12:34] Cameron: yeah. Chris also says he had an idea from a YouTube video he was watch­ing that did a back of the enve­lope val­ue of a giv­en stock, the exam­ple he used was IBM, by chart­ing its share price ratio with the cur­rent inter­est rate. This was done week­ly and dis­played in a line chart. Any­way, now that there is approach­ing 3 4 years worth of QAV data, I won­dered if there was any ben­e­fit of chart­ing the week­ly QAV and or qual­i­ty scores of a giv­en stock.

[01:13:00] Cameron: For exam­ple, if you look at FMG and see it ris­ing with QAV or qual­i­ty in say 2022 and then slip off in 2023 or what­ev­er, This might tie in with the recov­ery sta­tus and if there can start to be a patent visu­al­ly detectable by a com­pa­ny that’s increas­ing its QAV or qual­i­ty score over a num­ber of halves.

[01:13:21] Cameron: And I said to him, I could prob­a­bly code that on top of all of my oth­er cod­ing projects, but I’ll have to check with Tony to see if there’s any val­ue in doing that. Um, do you see any val­ue in hav­ing a time­line of the QAV or qual­i­ty scores for a

[01:13:38] Tony: Um, first, I mean, I con­sid­ered it and I thought it was worth look­ing at, although I know from expe­ri­ence that as a stock, the stock price ris­es, the QAV score goes down, right? Because it’s it’s prop cap dri­ven. Um. Price to Oper­at­ing Cash Flow. Price goes up, QAV score goes down. So, and I know that, um, if a QAV score declines below our thresh­old, it’s still not worth sell­ing.

[01:14:04] Tony: It may not be worth sell­ing because it can go a lot high­er. The stock price can go a lot high­er. So, I’m not sure. The only rea­son I do this is if it led me to some kind of trad­ing strat­e­gy that if it, either qual­i­ty or QAV score reached a cer­tain thresh­old, it was worth light­en­ing our posi­tions in that stock.

[01:14:24] Tony: But, um, my expe­ri­ence is that that’s not the case, that some­times some­thing can go to a, from a very good QAV score, which means it’s a stock, which has a lot of val­ue to a very low QAV score, which means it’s over val­ue, but the stock can still keep

[01:14:37] Tony: going up. And that’s why the three point trend lines are impor­tant.

[01:14:43] Cameron: I thought this would have been more of a

[01:14:45] Cameron: buy­ing indi­ca­tor that if the QAV score is improv­ing over time, that it might get some sort of a, uh, I mean, it might pop up on a list of ours to pay atten­tion to it because it’s QAV score is improv­ing, but at the end of the day, you know, I don’t know if that real­ly changes how or when I’m going to buy some­thing.

[01:15:08] Cameron: I’m going to buy it when it’s. Got a high QAV score and,

[01:15:12] Tony: yeah,

[01:15:12] Tony: of 0. 1. And if, and if you, and cer­tain­ly, you know, if some­one, like we, QAV score of 0. 1 is an arbi­trary line, but if some­one, you know, can’t buy enough big ATT stocks, for exam­ple, and they want to look at a QAV score of 0. 09 or 0. 08, they can do that. And the down­loads cer­tain­ly have that data for them to look at.

[01:15:33] Tony: Yeah. So I think I’m in the, in the camp

[01:15:36] Tony: of, it’s nice to know rather than nec­es­sar­i­ly impor­tant to know. Yeah.

[01:15:42] Cameron: Yeah. If you think we’re miss­ing some­thing though, Chris, let us know.

[01:15:45] Tony: um, it may be use­ful, like if we actu­al­ly see it, it might work, but my expe­ri­ence is the QAV

[01:15:50] Tony: score can get real­ly bad, but the stock price can keep going up as peo­ple jump in.

[01:15:55] Cameron: just just remind­ed me of the, some­body who asked me if I could

[01:15:59] Cameron: pro­duce a chart each week in the buy list that shows the num­ber of buys ver­sus the num­ber of sells, which, ver­sus the num­ber of Josephines, which I’ve been tak­ing the time to do for the last year, and I don’t think

[01:16:11] Tony: Yeah,

[01:16:11] Cameron: at it or cares.

[01:16:12] Tony: I haven’t. Yeah,

[01:16:16] Cameron: ago. What do you

[01:16:16] Cameron: think? You’re like, meh, is there any val­ue in this?

[01:16:20] Tony: I don’t think so. Yeah.

[01:16:21] Cameron: so unless some­body has an argu­ment against it, I might just stop doing that because it’s one thing I don’t need to do on a Mon­day.

[01:16:27] Tony: I think you should.

[01:16:28] Cameron: Uh, all right, oth­er ques­tions from Mark, um, AFI is a 3P, uh, a 3PTL buy on the bread lat­er and is trad­ing at a dis­count to its NTA around 8 10%.

[01:16:40] Cameron: Buy, he asks. I know we’ve talked about AFIC before, but this is AFIC, right? AFI, Aus­tralian what­ev­er.

[01:16:49] Tony: so AFIC was always a good entry into the mar­ket, a good, it’s not quite an index fund because it does, it Which is a real­ly, real­ly good thing. Kind of mir­rors the index, but it does put a bit of its own sci­ence into under­weight­ing or over­weight­ing some of the stocks, depend­ing on how it feels about banks or min­ers or what­ev­er.

[01:17:08] Tony: But it’s pret­ty much an index fund. Low cost. It’s a LIC, so this is, it’s been around for over a hun­dred years, way before ETFs were a thing. But since ETFs have come out, and I guess its main com­peti­tors are going to be, The Van­guard one, VAS, um, STW that we bench­mark our stuff against. Um, and there’s prob­a­bly a Betashares one I’ve over­looked as well.

[01:17:33] Tony: Um, they, peo­ple tend to go towards those, but I think just, I had a quick look before, and they’re all about the same in terms of, Costs and impor­tant­ly yield. So that was one of the things that AFI was being sold off a lit­tle bit on is that the Van­guard’s and the STW’s had a high­er yield slight­ly than than AFI because a lot of times these stocks are being held by peo­ple who are retired liv­ing off the income But any­way, they’re all yield­ing around three and a half to I think STW is Eli 3.7%, so not too dis­sim­i­lar.

[01:18:09] Tony: Now, um, giv­en all that, giv­en that, uh, NTA is or that you can buy AFI for less than it’s NTAI tend towards, um, buy­ing a FI rather than the ETFs. I tend to pre­fer. LICs, for rea­sons I’ve spo­ken about before, if the mar­ket sells off, an LIC does­n’t have to sell the ETF sells off, they’ve got to sell shares to redeem peo­ple who are sell­ing the shares in the ETF.

[01:18:39] Tony: So, they ride the mar­ket down, but an LIC can take the view that the mar­ket’s going to cor­rect and not sell the under­ly­ing shares. So, it can come out bet­ter in that sense. It’s known as a closed end fund ver­sus an open end fund. So, yeah, I like that. Um, AFI, I like that it’s trad­ing below its NTA and I think the bread­lin­er might have it as a Josephine today, but it’s, it’s still prob­a­bly above its, um, its buy line.

[01:19:06] Tony: If you, if you wait a lit­tle while for that Josephine to, to revert.

[01:19:13] Cameron: Mmm.

[01:19:14] Tony: But look, that’s not finan­cial advice. Um, have a look at all those dif­fer­ent ETF index fund options. Uh, yeah. And we’ve done pod­casts in the past about ETS ver­sus LIC.

[01:19:26] Tony: So go back to those, lis­ten to those too.

[01:19:29] Cameron: Mmm. And any­one try­ing to lis­ten to old episodes and not being able to because I still haven’t fixed the links on them, I apol­o­gize. I know a cou­ple of peo­ple have been email­ing me. I am still try­ing to get through all of those, but it’s tak­ing a bit longer than I hoped. Uh, alright, Tony, I think we’re in after hours

[01:19:48] Tony: Good.

[01:19:49] Cameron: get­ting a bit late, but, uh, what do you want to, what, what have you been up to apart from golf and, uh, catch­ing up with peo­ple down

[01:19:57] Tony: Yeah, so I went and saw my hors­es at, um, Flem­ing­ton. Boy­fect tri­aled well. She, she’ll prob­a­bly tri­al again this Fri­day and then go to the races, um, after that. I saw Kars run. I jumped in the car at like five o’clock in the morn­ing in Syd­ney and got the Cor­fu race course in time to watch a four o’clock start by Kars.

[01:20:17] Tony: Thought maybe should­n’t have rushed because she ran

[01:20:20] Tony: sev­enth, but, um, I think I drove faster than she, she ran.

[01:20:24] Cameron: Oh you, A four, o’clock start

[01:20:27] Tony: m. race. Sat­ur­day after­noon.

[01:20:29] Cameron: Oh

[01:20:30] Tony: Yeah, and I got up

[01:20:31] Cameron: said you got up at,

[01:20:32] Cameron: five

[01:20:32] Tony: got up at

[01:20:32] Tony: 5am to dri­ve from Syd­ney to Mel­bourne on the Sat­ur­day.

[01:20:37] Cameron: Oh, right. she she was in right in

[01:20:39] Tony: Mmm. Yes, sor­ry, should­n’t have said that. Yep, so, um, that was, uh, that was fun. Uh, been down here. Um, Cass will do bet­ter, actu­al­ly. She’s gonna, she’s, look for her to win around the third or fourth start.

[01:20:54] Tony: Um, Dou­ble Mar­ket, the, the horse that

[01:20:56] Tony: Steve Mabb and I are in, um, that tri­als on

[01:20:59] Tony: Fri­day. Uh, what

[01:21:01] Cameron: Oh, was­n’t that Negroni? You got anoth­er

[01:21:03] Tony: Negro­nis, yeah, we sold

[01:21:05] Tony: Negro­nis. I think she races tomor­row, so I might put a few bob on her and see how she

[01:21:10] Cameron: You’ve got anoth­er one called Dou­ble Mar­ket. I’d nev­er heard of that one

[01:21:13] Tony: Yeah, has­n’t raced yet, so we were try­ing, we tried to call it Char­lie 99, um, but, uh, that was reject­ed, so we called it Dou­ble Mar­ket. So I got, got to go and give her a pat last, uh, last week, which was good fun. She’s look­ing well. Yeah, so a lot of golf, a lot of that, um, social­iz­ing. Rud­dy and Wal are down here at the moment with me, which is good fun. We’re about to head off down to the dri­ving range. Wal’s tak­en up golf. He’s had three lessons so far, so we’re gonna

[01:21:44] Cameron: Oh, it’s he’s new

[01:21:45] Tony: out his form, yeah, on the dri­ving range.

[01:21:48] Tony: We’re

[01:21:48] Cameron: Very good.

[01:21:50] Tony: Um, in terms of what I’ve lis­tened to and and watched, um,

[01:21:56] Tony: been hav­ing a bit of a resur­gence of Nick Drake. I real­ly enjoyed dis­cov­er­ing him this year and just start­ed lis­ten­ing to a, um, an album of cov­ers called End­less Coloured Ways, which is good fun. Um, have you, occa­sion­al­ly I come across a good sound­track, and have you heard the Man of Steel sound­track?

[01:22:16] Cameron: No, I

[01:22:17] Tony: quite liked it.

[01:22:18] Cameron: don’t think so.

[01:22:19] Tony: I must have been scrolling when I was in bed one night and some­one had mashed togeth­er all of the Super­man theme tunes from way back in the 50s black and white TV series through to the cur­rent ones. And that Man of Steel theme is quite good. I enjoyed it any­way. So I’ve down­loaded the sound­track to that.

[01:22:40] Tony: Been lis­ten­ing to it a lot. Uh, Dylan Porter and Alan Elman. About a year ago, I think now, or this year, Rough and Row­dy Ways. Been lis­ten­ing to that. Very bluesy, very old fash­ioned. Could prob­a­bly the best track on that’s called Cross the Rubi­con, which is real­ly good. Lis­ten­ing to Paul Weller and the Pet Shop Boys who com­bined in an EP called Cos­mic Fringes.

[01:23:04] Tony: That’s real­ly good.

[01:23:05] Cameron: Hmm.

[01:23:06] Tony: And then the last thing.

[01:23:08] Cameron: Inter­est­ing

[01:23:08] Tony: Yeah, it is, actu­al­ly, yeah. Kind of Tech­no and Weller, who’s more soul. Very good. And the last thing was, the oth­er night I came across a movie, which has just been released on one of the stream­ers called Ori­gin, which is, um, the sto­ry of, um, I’ve for­got­ten the first name, Pro­fes­sor Wick­er­son, who wrote the book called Cast, which is how we named the horse.

[01:23:32] Tony: And, uh, it’s a sto­ry of, um, Uh, they, I guess they could­n’t make the book into a movie ’cause it’s a not so non­fic­tion dry aca­d­e­m­ic book. So they, they wrote her sto­ry about writ­ing it and how she came to research it and write it. Um, it’s, it’s an okay movie, but it sort of caught my atten­tion ’cause of, of its, um, uh, its bonds back to the book I read.

[01:23:52] Tony: It’s a great book, real­ly is a good book. And.

[01:23:54] Cameron: What’s What’s it about?

[01:23:56] Tony: So the movie’s called Ori­gin. It’s about the writ­ing of the book called Cast. So Pro­fes­sor Wick­er­son,

[01:24:01] Cameron: What’s that

[01:24:02] Tony: okay, so Pro­fes­sor Wick­er­son is a Black, um, his­to­ri­an and, uh, she, uh, wrote a book about the great, um, Negro migra­tion from the South dur­ing the slav­ery times and then she wrote Cast and her the­o­ry with Cast was that, um, racial, racial prej­u­dice is a world­wide thing and she drew on the fact that the Nazis.

[01:24:28] Tony: in putting togeth­er the laws about racial seg­re­ga­tion used laws that were in place in the U. S. in the South to base it on.

[01:24:38] Cameron: Mm hmm.

[01:24:39] Tony: And that’s one of the themes in the book. There’s also obvi­ous­ly the caste sys­tem in India she talks about as well. But the thing that real­ly struck me was there’s one scene in the book where the Nazis real­ize if they’re going to get into pow­er and out­law the Jew­ish race, they’ve got to define it.

[01:24:58] Tony: Like, you know, because there’s lots of peo­ple who are mixed breeds and things. So they’re, they’re try­ing to work out how to, how to cod­i­fy that in their laws. So they send some lawyers over to meet with the state leg­is­la­tors in the, in the South, in the US, and they come back and they say, They were just shocked.

[01:25:15] Tony: They said we could­n’t pos­si­bly put those laws in place here. So the Nazis thought that the U. S. states had gone beyond the pale. So for exam­ple, the U. S. states, I think I’ve got the maths right, if you were 132nd of Negro descent, And you were, you were out­side the law for vot­ing and all those kinds of things.

[01:25:38] Tony: Um, I think the Nazis put in some­thing like a one 16th or a one quar­ter Jew­ish her­itage

[01:25:45] Tony: to, to fall foul of their leg­is­la­tion. They just could­n’t bring them­selves to adopt the US laws.

[01:25:51] Cameron: I remem­ber when Ray and I did our series

[01:25:53] Cameron: on the bull­shit fil­ter on the his­to­ry of the war on drugs, and this was years ago. We, because, you know, the war on drugs in the U. S. was pri­mar­i­ly a racist, uh, cam­paign. It was Uh, con­ceived as, as a way of attack­ing Mex­i­can immi­grants and, uh, blues musi­cians and jazz musi­cians orig­i­nal­ly.

[01:26:12] Cameron: Because they were all using, smok­ing weed and it was a, when Pro­hi­bi­tion was end­ing and, uh, the guy that was run­ning the Pro­hi­bi­tion task force for the Trea­sury Depart­ment looked like he was going to be out of a job. He looked around and said, okay, well, who else can we gang up on? And he hat­ed jazz music.

[01:26:31] Cameron: And Bil­ly Hol­i­day and that kind of stuff. So he, he went after blacks and Mex­i­cans basi­cal­ly, and thought weed was the eas­i­est way to tar­get them and make their lives dif­fi­cult. But I remem­ber us talk­ing about it in places like Louisiana and a lot of the laws that they had, the racial laws that they were putting in place.

[01:26:49] Cameron: And I remem­ber the Nazi sto­ries and Ray and I, we were doing this whole bit about the, the, the Nazis going back, going, lis­ten. We’re Nazis, like, hon­est­ly, we’re Nazis, but even we would­n’t try and pull this shit, like, there’s there’s a line, there’s a line that even we won’t cross, but these, these Amer­i­can leg­is­la­tors in the, down the south, it was just unbe­liev­able, when you read some of it, it was just crazy, like, real­ly, real­ly, peo­ple think the MAGA group are bad, you know, go back a hun­dred

[01:27:18] Tony: Oh yeah.

[01:27:19] Cameron: see how bad it was down there.

[01:27:22] Cameron: Inter­est­ing, I got­ta read that book. Sounds

[01:27:24] Tony: yeah. It’s good. Oh, Caste is a great book. Yeah. Um, speak­ing of MAGA, there was a great quote, if I can find it, um, quick­ly. This is from a Rolling Stone arti­cle, which was fact check­ing Don­ald Trump. I mean, he could prob­a­bly write a book on fact check­ing Don­ald Trump. But recent­ly, this is a direct quote.

[01:27:46] Tony: Dur­ing a ram­bling press con­fer­ence at his golf club in Bed­min­ster, New Jer­sey, Trump said of Har­ris, She co spon­sored leg­is­la­tion to abol­ish very pop­u­lar pri­vate health insur­ance. Which 150 mil­lion Amer­i­cans rely on, dump­ing every­one on to infe­ri­or social­ist gov­ern­ment run health­care sys­tems with rationing and dead­ly wait times, while mas­sive­ly rais­ing your tax­es.

[01:28:07] Tony: She wants to take away your pri­vate health­care. It’s the best health­care in the world, he con­tin­ued, adding. You’re all going to be thrown into a com­mu­nist sys­tem. You’re all going to be

[01:28:17] Tony: thrown into a sys­tem where every­body gets health­care.

[01:28:23] Cameron: Yeah, a lot of peo­ple have been mak­ing fun of that quote. Oh my god! Don’t throw me into the bri­ar patch. Ter­ri­ble.

[01:28:31] Tony: so hilar­i­ous. And the Rolling Stone guy goes on to say that Amer­i­cans pay for more. for health­care than the res­i­dents of oth­er non high, oth­er high income coun­tries like Cana­da, the UK, France, Ger­many, Japan, South Korea, and Aus­tralia, and expe­ri­ence the worst health out­comes. Our life expectan­cy is low­er, infant, mater­nal, and avoid­able deaths are all high­er.

[01:28:51] Tony: That’s Andrew Perez in the Rolling Stone. Yeah, just incred­i­ble. And then the last thing I want­ed to men­tion was, um, been think­ing a lot, I think it was prob­a­bly the Con­rad inter­view on, you know, using, uh, his own ver­sion of Metrix to invest. It got me think­ing that real­ly we’re kind of, you know, We’re kind of on the, maybe we are in the, um, a new trend or the cus­tomer trend that reminds me of back when I was, you know, start­ing to get expe­ri­ence and get­ting involved in per­son­al com­put­ing and, and even­tu­al­ly inter­net stocks and things.

[01:29:29] Tony: But, um, you know, when I first start­ed invest­ing, I was still get­ting paper based infor­ma­tion. Um, then it became flop­py disks that were sent out with data on them and then Stock Doc­tor came along and, and, and now we’re real­ly at the stage If you’re a, if you’re a sort of fund man­ag­er, you’re pret­ty much being dis­in­ter­me­di­at­ed.

[01:29:52] Tony: Most, most peo­ple who have enough time to do it can do as good a job, if not bet­ter than fund man­agers. We don’t have the con­straints they do, but we now have access to all the infor­ma­tion. And it real­ly reminds me of, you know, back in the day when Um, peo­ple, peo­ple like Steve Jobs were say­ing, you know, it’s the new age is going to launch where we have access to all the infor­ma­tion we’ll ever need.

[01:30:17] Tony: And what it remind­ed me of, have you ever come across the Whole Earth Cat­a­log back in the day? Yeah. It’s, it’s kind of that same sort of peri­od in his­to­ry. I’m, I think I bought one of the last. Last issues of the Whole

[01:30:31] Tony: Earth Cat­a­log back in the late 80s or 90s or some­thing, you know, before, yes,

[01:30:38] Cameron: Stu­art Brand the guy behind that? Also one

[01:30:41] Cameron: of the ear­ly inter­net pio­neers, like revered in the ear­ly inter­net indus­try, Stu­art Brand

[01:30:48] Tony: absolute­ly, and, you know, um, I remem­ber Steve Jobs call­ing the Whole Earth Cat­a­log the, the, uh, Google before Google. to be like this sort of almanac or an ency­clo­pe­dia of infor­ma­tion about where to get things to do your own research and even­tu­al­ly it became where to get things to build your own com­put­er and stuff like that.

[01:31:13] Tony: But yeah, it was an amaz­ing resource and I kind of get the same feel. You know, we’re, we’re at that kind of cusp. But will we real­ly have fund man­agers much longer? At least ones that are get­ting paid huge fees based on per­for­mance when they don’t per­form. Um, and when we have all these tools avail­able to the end users, I’m just going to read from, um, Wikipedia on the Whole Earth Cat­a­log.

[01:31:38] Tony: The title Whole Earth Cat­a­log came from a pre­vi­ous project by Stu­art Brand. In 1966, he ini­ti­at­ed a pub­lic cam­paign to have NASA release the then rumored satel­lite pho­to of the sphere of the Earth. And that’s what it used to have on the front cov­er was the blue mar­ble. Um, and, uh, That was the first image of the Earth seen as the whole Earth.

[01:31:59] Tony: He thought the image might be a pow­er­ful sym­bol evok­ing a sense of shared des­tiny and adap­tive strate­gies from peo­ple. The Stan­ford Edu­ca­tor brand with a biol­o­gist with strong artis­tic and social inter­ests believed that there was a groundswell of com­mit­ment to thor­ough­ly ren­o­vat­ing Amer­i­can indus­tri­al soci­ety along eco­log­i­cal­ly and social­ly just lines when­ev­er that they might prove, what­ev­er they might prove to be.

[01:32:23] Tony: I think I’ve got jobs as quote here too. Uh, the Amer­i­can, the Amer, the mag­a­zine fea­tured essays and arti­cles, but was pri­mar­i­ly focused on prod­uct reviews. The focus was on self-suf­fi­cient self-suf­fi­cien­cy, ecol­o­gy, alter­na­tive edu­ca­tion, and do it your­self and holism and fea­ture the slow slo­gan, access to tools, and, um.

[01:32:47] Tony: Yeah, that’s, that’s how I get that same sort of vibe for per­son­al invest­ing now, whether it’s, um, you know, what­ev­er, what­ev­er style of investor you are, we’ve, we’re real­ly

[01:32:59] Tony: get­ting to the stage where we’ve got the tools to, to do it our­selves.

[01:33:03] Cameron: Mm. Are you still read­ing Kurzweil’s book?

[01:33:06] Tony: Uh, I haven’t, I haven’t brought it down with me, so I’ve

[01:33:09] Tony: got­ten into it, but I haven’t

[01:33:10] Tony: got­ten that far into it yet.

[01:33:13] Cameron: Mm. Well, I, I spent a few hours, did a big deep dive on it, uh, last week, last week­end, I think, read­ing through it again, and, um, just, you know, it’s, it’s, I, I think the future that he’s pre­dict­ing is one where what you just said is true about most peo­ple. Indus­tries and things, AI, when you’ve got an expert in your pock­et that’s an expert on every top­ic and every sub­ject and can find out any­thing or do, almost do any­thing for you, um, how that’s going to dis­in­ter­me­di­ate large swathes of every­thing.

[01:33:52] Cameron: That’s what he’s pre­dict­ing this decade will hap­pen.

[01:33:57] Tony: Yeah, and we’ve talked about that. Um, we can’t, I mean, the way I see it is we’ve got that now with Google. If you want­ed to do your own research, you can pret­ty much find access to things. But then, you know, we, we, it’s a pow­er­ful tool and we don’t always use it wise­ly. Like Dr. Google is a good exam­ple of that.

[01:34:14] Tony: So, but I think Kurzweil is direc­tion­al­ly right. The tools will be there, and they’ll get mis­used, and they’ll get cor­rupt­ed, but even­tu­al­ly

[01:34:22] Tony: they’ll be bet­ter for human­i­ty than what we cur­rent­ly have. So yeah,

[01:34:28] Cameron: He’s cer­tain­ly opti­mistic, but he does say there’s going to be a tough

[01:34:31] Tony: right.

[01:34:32] Cameron: like there’s going to be a tran­si­tionary peri­od when jobs are dis­ap­pear­ing and we don’t have a uni­ver­sal basic income or any­thing like that to replace the income that’s being lost and it’s going to cre­ate a lot of tur­bu­lence.

[01:34:44] Cameron: And he says over and over that it’s going to depend on how good gov­ern­ments man­age the tran­si­tion process and they could do a great job or they could do a ter­ri­ble job or some­where in between and remains to be

[01:34:56] Tony: As we know, they’ll do a ter­ri­ble job, but they’ll mud­dle through. Um, and they’ve got the ace up their sleeve where they can print mon­ey and cre­ate a

[01:35:04] Tony: UBI if they need to, but it’ll prob­a­bly come too late. Yeah,

[01:35:10] Cameron: We’ll see what hap­pens.

[01:35:11] Cameron: Um, well, lis­ten, I’ve, I’ve had a lot of inter­est­ing, um, read­ing and watch­ing and lis­ten­ing expe­ri­ences. I men­tioned to you before we start­ed the show that I’ve been read­ing Andrew McGah­n’s book, Last Drinks, about a sort of a fic­tion­al account of char­ac­ters involved in the Fitzger­ald Inquiry, but that then made me want to go and read more on the actu­al Fitzger­ald Inquiry, so I picked up And Matthew Con­don’s Three Crooked Kings again, which I start­ed a year ago.

[01:35:38] Cameron: When Ter­ry Lewis died, I start­ed read­ing it and because I real­ized I did­n’t real­ly remem­ber much from that peri­od and what hap­pened. I did­n’t real­ly, I nev­er lived in Bris­bane. You know, I went straight from Bundy to Mel­bourne in the begin­ning of 88. And so, uh, and I was, you know, a teenag­er, not real­ly pay­ing that much atten­tion to any­thing out­side of Who the lead singer of Van Halen was and, uh, which girls, which girls would let me put my arm around them.

[01:36:04] Cameron: Um, but, uh, yeah, so that’s been inter­est­ing, learn­ing more about police cor­rup­tion in Queens­land in the 60s. That’s where Matthew Con­lon’s book came from. Pret­ty much starts. And, um, and I said, as I said to you, I’ve been think­ing about you and Dez and peo­ple that were in, liv­ing in Bris­bane in the 70s and 80s

[01:36:26] Tony: dif­fer­ent place.

[01:36:27] Cameron: a lot more of that than I

[01:36:30] Tony: Oh, yeah. Very dif­fer­ent place. And an open lie, an open secret, basi­cal­ly, what was going on that we all laughed about, and Joe had the ger­ry­man­der, so he knew it was­n’t going to change any time soon. In fact, it was, look­ing back, it was amaz­ing that Wayne Goss ever got elect­ed. I mean, it had to take all that neg­a­tive pub­lic­i­ty from the Fitzger­ald inquiry to dis­lodge some­body who only need­ed 27 per­cent of the vote to retain pow­er.

[01:36:56] Tony: Yeah.

[01:36:58] Cameron: Hmm, Joe’s just come into the book actu­al­ly, um, when Nick­lin, I think Nick­lin retired and then the guy who replaced Nick­lin died of a heart attack, um, and he, Joe was sort of his deputy and he sort of got pushed into pow­er, well he was like, uh, became Pre­mier when the, his pre­de­ces­sor died, I think a cou­ple of months into his term,

[01:37:25] Tony: Okay. That’s, um, that’s very for­tu­nate for Joe.

[01:37:29] Cameron: Yes. Yeah. Yeah. How inter­est­ing. Um, I final­ly watched Bedaz­zled. You ever seen Bedaz­zled.

[01:37:38] Tony: The Peter Cook and Dud­ley Moore and Raquel Welsh Sev­en Dead­ly Sins

[01:37:41] Tony: sto­ry.

[01:37:43] Cameron: She’s only in it for a minute, but it’s a good minute. Yeah. Yeah. I love it. And I, you know, I’ve been a big fan of the song from it for years. Um, when, when Peter Cooke asked the dev­il to make him sort of a famous British singer. Pop­star. And then he’s a famous pop star and he’s on TV and he’s doing this sort of Tom Jonesy sort of song in a, in a shiny jack­et, try­ing to win the love of the wait­ress that he’s hot for.

[01:38:12] Cameron: And then he does the song and she’s going gaga. And then Peter Cook does a song and it’s, you know, He just speaks his lyrics and it’s like, I don’t need you, I don’t care, I’m very self con­tained. It’s this very cold, cool, almost Sparxy thing. But I’ve nev­er seen it before and I’ve nev­er seen the clip of it.

[01:38:38] Cameron: And he is dressed in what I can only describe as a Zig­gy Star­dust out­fit. It’s a very wild, psy­che­del­ic sort of out­fit. And, but the, the film was made in 67, you know, Zig­gy did­n’t come out until ear­ly 70s. So, I, I think Bowie, I googled this, I could­n’t find any men­tion of it, but I’m pret­ty sure Bowie looked at Peter

[01:39:02] Tony: Oh, real­ly? Okay.

[01:39:04] Cameron: Oh, yeah, that’s what I’m going to do that.

[01:39:06] Cameron: That’s so cool.

[01:39:08] Tony: Glam would have been a thing though before Zig­gy

[01:39:09] Cameron: Cook’s. Yes, in a way, but, you know, Zig­gy had a par­tic­u­lar sort of style to him, and if you see this, it’s in black and white, that sec­tion of it, because they’re on TV, but, any­way, great film, not a great film, but a good, fun film, if you love Peter Cook and Dud­ley Moore as I do, Peter Cook’s fan­tas­tic, they’re both great,

[01:39:34] Cameron: great

[01:39:35] Tony: Yeah, and great com­e­dy. Like, every­one

[01:39:37] Tony: gets their wish grant­ed, but they nev­er actu­al­ly ben­e­fit from it. Yeah.

[01:39:42] Cameron: the dev­ils, and there’s a lot of reli­gious rants in it. Now, Peter Cook goes on long rants about how God, you know, how bor­ing it was just to wor­ship God all the time. And, you know, how does it, you know, it’s just bor­ing hav­ing to wor­ship. I want­ed a lit­tle bit of wor­ship as well. Why can’t I get a lit­tle bit of love?

[01:40:01] Cameron: And then, then he goes on a rant about how God’s a per­vert because he’s watch­ing him every­where, he’s in the bath­room and, um, he was chang­ing his trousers and he was ask­ing God just to bug­ger off and leave him alone for a minute so he could get changed in pri­vate and all this kind of stuff. Hon­est­ly, that would have been pret­ty, pret­ty racy, I think, for 1967 in Eng­land to be, uh, talk­ing about reli­gion like that.

[01:40:24] Cameron: Very Python esque.

[01:40:25] Tony: Yes, they were.

[01:40:28] Cameron: I’ve been lis­ten­ing to Ani­ta Lane’s, uh, last

[01:40:31] Cameron: cou­ple of albums, you ever got­ten to Ani­ta

[01:40:33] Tony: no,

[01:40:34] Cameron: You know of

[01:40:35] Tony: do not.

[01:40:37] Cameron: Girl­friend of Nick Cave, uh, for a few years, on and off, I think in like the 80s, she and Nick were a thing, and um, they did some music togeth­er, and wrote some stuff togeth­er, and then, um, he and Blix­er, and um, Uh, the Bad Seeds pro­duced music for her.

[01:41:00] Cameron: She died only last year, I think. She had­n’t been in good health for a while, but um, she put out a cou­ple of albums, uh, in the 90s, 2000s, that are very sort of Bad Seezies, Bad Seedsy, if you know what I mean. Sim­i­lar sort

[01:41:18] Tony: Yeah. Okay. I’ll have a lis­ten. All right. Thanks.

[01:41:23] Cameron: Went to see Alien Romu­lus with my

[01:41:24] Tony: Yeah. And? Has­n’t real­ly, Has­n’t real­ly,

[01:41:28] Tony: caught my atten­tion yet and

[01:41:32] Cameron: As I pre­dict­ed, I did­n’t want to go, but they, they forced me to go.

[01:41:35] Cameron: Um, you know, Alien films are just slash­er movies

[01:41:39] Tony: are, aren’t

[01:41:40] Cameron: It’s just, I’ve seen it, I guess, I keep say­ing, I’ve seen it all before. You know, it’s,

[01:41:45] Cameron: it’s, you know, it’s noth­ing new, I’m not going to learn any­thing new. There’s a cou­ple of inter­est­ing ideas in the film, which I won’t spoil for peo­ple who haven’t seen it, but there is a cam, a, A returned char­ac­ter, um, from an actor who’s dead, and they’ve recre­at­ed that actor in it, um, for quite a, quite a, no, but, uh, pick some­one else.

[01:42:12] Tony: He’s just, he’s always been one of my favourite

[01:42:14] Tony: actors, John Hurt. Loved his act­ing.

[01:42:17] Cameron: Yeah, well, you’re in the right vicin­i­ty, but not him, yeah. Um, any­way, uh, uh, that was quite good, not, and weird, and you get a sense for what the future might. B, when we start using AI to recre­ate dead actors and put them in rel­a­tive­ly sig­nif­i­cant roles, recre­at­ing roles, Look­ing as they looked in the late 70s, but in a new film.

[01:42:49] Tony: So who could that be? He could res­ur­rect Ian Holm.

[01:42:52] Tony: He was the, okay. He was the, um,

[01:42:56] Cameron: okay. Well, I will spoil it for every­body now. Yeah. So

[01:42:59] Tony: Yeah. He

[01:43:01] Cameron: he’s, he’s back as the syn­thet­ic. Um,

[01:43:05] Cameron: and, uh,

[01:43:07] Tony: he is dead, I sup­pose, now, isn’t he? I haven’t real­ly fol­lowed his career. Okay.

[01:43:13] Cameron: died a few years ago and they appar­ent­ly got per­mis­sion from his wid­ow.

[01:43:17] Cameron: Um, and she said he would have loved it because she felt that Hol­ly­wood kind of aban­doned him towards the end of his career. Appar­ent­ly after the Lord of the Rings, what­ev­er those Hob­bit films that he was in, um, for me, he’s always Claudius.

[01:43:31] Tony: Yes.

[01:43:32] Cameron: from iClaudius being a Cae­sar buff. But, um, yeah, and, and he’s the synth from the first Alien film and they bring him back as a synth in this and, uh, he’s great. I mean, it’s, but it’s kind of that weird uncan­ny val­ley thing, like, oh, am I, I had to, had to think about it. I’m like, how com­fort­able am I

[01:43:55] Cameron: see­ing a young Ian Holm in this thing?

[01:43:58] Cameron: Um, dif­fer­ent, When Scors­ese de ages Paci­no and De Niro, because they’re actu­al­ly per­form­ing it. Or they CG Mark Hamil­l’s face on Luke Sky­walk­er for a thing, it’s slight­ly dif­fer­ent. Um, although they de aged, um, uh, Princess Leia in one of those films too, in a dodgy fash­ion. But it’s weird when you see dead actors rein­car­nat­ed on screen like that.

[01:44:29] Cameron: But any­way, um, and then the oth­er thing I was going to men­tion is if you haven’t seen it is, uh, Taran­ti­no is back on

[01:44:35] Tony: Oh, okay.

[01:44:36] Cameron: YouTube show for anoth­er cou­ple of hours, and I know you love Taran­ti­no as much as I do. Just see­ing him and Bill Maher talk about deliv­er­ance, break­ing down deliv­er­ance, and what was wrong with the third act of deliv­er­ance and stuff like that.

[01:44:51] Cameron: It’s, uh, it’s great. You know, I can, I can lis­ten to Quentin talk about films till the cows come home.

[01:44:58] Tony: Yeah, great.

[01:44:59] Cameron: good. So check

[01:45:01] Tony: Yeah, thank you. I will.

[01:45:02] Tony: That’s a good one. And your boy was on TV. Tay­lor was on SBS

[01:45:06] Tony: Mm

[01:45:07] Cameron: Tay­lor was on

[01:45:08] Cameron: SBS as the boy who dropped out of

[01:45:11] Tony: hmm. Right.

[01:45:12] Cameron: And, uh, copped quite a bit of shit on the SBS Face­book page. Because there was no con­text to what he’s doing now. And I had to jump in and defend him a

[01:45:21] Tony: Oh,

[01:45:22] Cameron: like, Well, he

[01:45:26] Cameron: can’t defend him­self.

[01:45:27] Cameron: That’s not kosher, but I said,

[01:45:30] Tony: did you log on as

[01:45:31] Cameron: peo­ple are like,

[01:45:32] Tony: dad? Mm

[01:45:35] Cameron: Cameron Riley.

[01:45:36] Cameron: I’m locked on

[01:45:36] Cameron: as myself. And I was like, lis­ten, what they did­n’t, what he did­n’t get an oppor­tu­ni­ty to say was he dropped out of uni. He was doing a busi­ness course. And as he said on the show, he thought the busi­ness course was sort of a waste of time. Uh, he felt like he was learn­ing 20th cen­tu­ry busi­ness prac­tices and not 21st cen­tu­ry busi­ness prac­tices.

[01:45:57] Cameron: He dropped out. He start­ed a whole bunch of busi­ness­es and the one that he’s most­ly run­ning now is a tal­ent agency that just, it’s done over a mil­lion dol­lars in turnover just recent­ly. I think he’s done like 1. 2, 1. 3 mil­lion dol­lars in turnover. It’s doing very well. He’s very good at it. Um, and you know, he was right.

[01:46:18] Cameron: You know, he, Felt like he could prob­a­bly get his head around 21st cen­tu­ry busi­ness stuff more by going out and doing it than by learn­ing the­o­ry at uni­ver­si­ty. And so, you know, um, he, he did­n’t say, and isn’t say­ing that nobody should go to uni­ver­si­ty. Like, you know, it has val­ue for lots of pro­fes­sions. He just felt that for what, He want­ed to do it, was­n’t the right thing, you

[01:46:44] Tony: Yes. Excuse me. Um, he, he, we’ve talked about it and he admits that. If he had his time over again, he would have stayed on at uni­ver­si­ty. He may have just, you know, phoned it in and gone off and done his own thing. But that’s what you can do at uni­ver­si­ty is real­ly just, it’s the side hus­tles almost as impor­tant as the main turn­ing up to lec­tures.

[01:47:05] Tony: So, yeah, but, um, I agree he’s, he’s, he’s a very impres­sive young man and is doing well in busi­ness. So,

[01:47:13] Tony: um, I might

[01:47:14] Tony: jump onto SBS’s Face­book page and have a look at the com­ments.

[01:47:19] Cameron: and and he has said from the very begin­ning when he dropped out, look,

[01:47:23] Cameron: I could regret This This could be the biggest mis­take I’ve ever made. This could be a huge dis­as­ter, but I just feel like I’ve got to give it a shot. You know, I got­ta, I got­ta take my shot while I can, and if I regret it, I regret it, but I’d rather do it and regret it.

[01:47:38] Cameron: I’d rather have a crack and fail. I can always go back to uni lat­er on rather, or rather than not have a crack and then spend the rest of my life going, what if I’d had a crack at it?

[01:47:50] Tony: Absolute­ly.

[01:47:51] Cameron: you know, he’s got it. And, and they did that with hav­ing seen me, he and his broth­er both dropped out at the same time, hav­ing seen me try and fail at start­up.

[01:48:00] Cameron: So they knew that run­ning star­tups was no cake­walk. Then they had a lot of per­son­al expe­ri­ence of my var­i­ous fail­ures over the last 20 years. So, um, yeah, any­way. So he was on

[01:48:14] Tony: Yeah, It’s good. Check it out, peo­ple.

[01:48:18] Cameron: Oh, and I did my fash­ion shoot for Tom­my Hil­figer

[01:48:20] Cameron: on the week­end

[01:48:22] Tony: did that go?

[01:48:22] Cameron: with Hunter too. That was, that was

[01:48:25] Cameron: annoy­ing.

[01:48:26] Tony: Annoy­ing.

[01:48:28] Cameron: good.

[01:48:31] Tony: Was It like six hours of sit­ting around and then six min­utes of pho­tog­ra­phy?

[01:48:37] Cameron: No, it was con­stant pho­tog­ra­phy and Hunter look­ing at the shots and going, no, it’s not good, let’s do it again, no, and then doing his hair and,

[01:48:45] Cameron: can you go back a bit, can you come for­ward a bit, yeah, and then, oh my god, the light­ing’s all gone. Well, that’s because we’ve been stand­ing here for two hours and,

[01:48:55] Tony: oh dear.

[01:48:56] Cameron: fun.

[01:48:57] Cameron: I

[01:48:57] Tony: And did, they

[01:48:58] Cameron: So

[01:48:58] Tony: did­n’t shove a con­tract under your nose at all for

[01:49:01] Cameron: it was just Tay­lor shoot­ing it. It’s not, uh, it

[01:49:04] Cameron: was­n’t a pro­fes­sion­al thing. It was just Tay­lor shoot­ing it for Hunter’s Insta­gram and

[01:49:10] Cameron: Tik­Tok and that stuff. But Tom­my Hil­figer did send us a bunch of clothes for

[01:49:14] Tony: nice. Okay. Ah,

[01:49:16] Cameron: I’m going to go sell those for food lat­er. Uh, sell them on eBay.

[01:49:23] Cameron: All right. Thank you, TK. Enjoy Cape

[01:49:25] Tony: Yeah. Uh, great to talk to you again. See you.