QAV AU 824 — Charizards, Crypto & Capital Gains With Navarre Trousselot

QAV AU 824

Cameron: [00:00:00] Wel­come to QAV Aus­tralia. This is the, um, the, the hair episode. We’ve decid­ed, uh, we’re gonna call our­selves lots of hair, no hair, and some­where in between hair. I don’t know. My name’s Cameron Reil­ly with me as always, Tony Kynas­ton and our spe­cial guest today, Navo Trous­selot We’ve just been talk­ing about dif­fer­ent ways to pro­nounce Navar­re’s name from Navexa. Navarre Trousel­lot founder, CEO, chief Bot­tle Wash­er and [00:01:00] every­thing at Navexa, Aus­trali­a’s lead­ing stock port­fo­lio sys­tem. Is it fair to say that, can I say that? Will any­one sue me if I say that?

Navarre: I mean, we’ll find out. You’ve said it

now, so the cat’s out. of the bag.

Cameron: Yeah. Well, how, how I define lead­ing is.

Navarre: I.

Cameron: Com­plete­ly sub­jec­tive, right?

Navarre: That’s right? It’s

like Aus­trali­a’s best

pie. Yeah. Or my moth­er was telling me ear­li­er that, um, my, my, one of my, uh, cousins in, in Syd­ney was see­ing Aus­trali­a’s best psy­chi­a­trist. I’m like, is it, are they ranked? Like, how do you, how do you get to be the best psy­chi­a­trist? Is there like a, a rank­ing sys­tem? Do you have to, do they go and like sit com­pe­ti­tions to see who, That, that would be inter­est­ing. A com­pe­ti­tion.

Cameron: Hmm.

Navarre: I, I’d

watch that. How, how many of your patients killed them­selves? Uh, that’s, you failed

Tony Kynas­ton: Hmm.

Cameron: Any­way, that’s get­ting dark already. [00:02:00] Navo uh, it’s been a while since we’ve had you on the show, and as I said, off air, I think you had more hair up top and less hair down the bot­tom the last time. Um, per­haps, but I, before we get into invest­ing. Uh, I’ve been watch­ing your, is it Tik­Tok or YouTube or some­thing you were doing on your way to work?

5:00 AM every morn­ing.

Navarre: Yep.

Cameron: And I, I, I think I sent you a mes­sage on this once before, but I just want­ed to do it on air. You did a, you talked about your entre­pre­neur­ial activ­i­ties as a teenag­er with Poké­mon,

Navarre: Yes.

Cameron: which I showed to Fox my now 11-year-old son ’cause he was obsessed with Poké­mon at the time. And, uh, tell every­one that sto­ry because that I, I, I was fas­ci­nat­ing.

As a father of three chil­dren who have been obsessed with Poké­mon at var­i­ous stages, I thought your sto­ry was great. So why don’t we start with your Poké­mon sto­ry.

Navarre: Yeah, [00:03:00] well the, my Poké­mon, what do I call it, my Poké­mon

ven­ture, I guess, was the first real busi­ness I was in. Not that I knew that at the time, but look­ing back, I kind of learned all, all the foun­da­tion­al skills and it, it start­ed at school. start­ed with the trad­ing cards and I was kind of late to the par­ty with trad­ing cards, so I had to work my way from the bot­tom some­how, I’m not quite sure how this worked out. I seemed to just work out how to do good deals bet­ter than any­one else.

slow­ly Trump of Poké­mon trad­ing cards at your school.

That’s right. I had the art of the deal and so I slow­ly amassed the best cards in the school, I even

was, cards. All the best cards. Every­one told you. Your cards were fab­u­lous. They were the best. Sor­ry, I’ll, I’ll shut up now. Keep going.

Exact­ly, and, and then I was one of the first [00:04:00] to do kind of online order­ing of Poké­mon cards as well. So I some­how con­vinced my, my mom to give me her cred­it card num­ber and put it into some for­eign web­site in the US with the hopes that these Poké­mon cards would come. And I fig­ured out that cer­tain series released in the US before they did in New Zealand where I grew up. I’d order these cards in and then imme­di­ate­ly just trade them all away for every­one else’s good cards. ’cause some­how I had iden­ti­fied the sup­ply and demand dynam­ics and I knew that this series would come out soon and flood the mar­ket and the val­ue would drop. But in my kind of 10-year-old wis­dom, I fig­ured I can just trade all these away and get every­one’s good cards.

And then in a month or two they’ll come out Any­way, I’ll just get them back then. I slow­ly did that. I even­tu­al­ly end­ed up, um, I’ve still got my Poké­mon [00:05:00] cards, but I even­tu­al­ly into Drag­on Ball Z cards and sold them at school and got into a whole lot of trou­ble with the, with the prin­ci­pal. And that’s kind of anoth­er sto­ry. But all my Poké­mon cards, I still have, um, a fold­er over there in the cup­board and they should be worth some­thing. I have nev­er got them val­ued. But um, was kind of real­ly what taught me the trad­ing dynam­ics.

1. the sto­ry I remem­ber was some­thing about you get­ting, um, a Charizard or some­thing like that, uh, or some­body else hav­ing a Charizard that was per­ceived to be high­ly valu­able. And then you sort of cor­ner­ing the mar­ket on Charizards.

Yes,

Cameron: that some some­what cor­rect.

Navarre: yes. So this one kid had a Charizard right from the begin­ning. It was just one of the lucky, lucky peo­ple. And that was the big sought after card at the time. it took me many months to put a deal togeth­er to get that Charizard. And then [00:06:00] fun­ni­ly enough, once I got that, I went to a mar­ket in the city and there were a few peo­ple sell­ing Raz­za.

I actu­al­ly bought two more and then I came to school, I had three Shaz­ad. So I was the kind of super king of the school ’cause no one else had had one of those cards. then I was able to those a bit lat­er on to, to pull off some mega deals. ’cause peo­ple real­ly want­ed those. And I was able to kind of get rid of those cha ads, right as the. Trad­ing card scene shift­ed from Poké­mon to Drag­on Ball D at my school. um, yeah, I’ve, I’ve still got that orig­i­nal cha out as well.

Cameron: So what, what are the life lessons or the invest­ing lessons that we can take away from your Charizard or your Poké­mon sto­ry in gen­er­al? Navo.

Navarre: well, I think it’s kind of a, busi­ness les­son as well in gen­er­al with, with [00:07:00] sup­ply and demand and being able to put deals togeth­er that, that no one else can. And then it gives you that lever­age when you go into these sit­u­a­tions to get an out­sized return on what, no one else would’ve been able to pull off with the right kind of com­bi­na­tion of things.

So I guess that’s built for­ward into busi­ness. um, I’ve sold a cou­ple of busi­ness­es. I’ve done many kind of busi­ness deals, and just try­ing to work out what those ele­ments are that make it a sweet deal for some­one to get an out­size return ver­sus just, you know, hand­ing it over for the mar­ket price.

Cameron: So you would say, I imag­ine that that expe­ri­ence with Poké­mon, you know, my expe­ri­ence with my kids is they’ve just blown incred­i­ble amounts of birth­day and Christ­mas cash cards, which I know my old­er boys who are now in their mid twen­ties, but they had [00:08:00] thou­sands of Poké­mon cards when they were 10, 11, 12, that when. My youngest son, Fox got to the Poké­mon Age like sev­en, eight. I said to my old­er boys, do you still have your Poké­mon cards? And they’re like, ah, we just chucked them Yeah. years ago. Like it was like, but they spent like an insane amount of mon­ey on it. Fox has done the same thing, just blown ridicu­lous amounts of cash.

I remem­ber him, like he, he paid, he got birth­day mon­ey once and spent like 75 bucks on a sin­gle card from a shop. I’m like, what? What? And even his old­er broth­ers were like, dude, don’t do it. That’s stu­pid. It’s a way. And he was like, no, no, I got­ta have it. But you are some­body who’s actu­al­ly like, I actu­al­ly, it was a prof­itable expe­ri­ence for you, at least in terms of life lessons, I imag­ine busi­ness lessons.

Navarre: Yeah, well when I, I mean it was prof­itable at the time ’cause I start­ed sell­ing them as well to oth­er kids at school. So I, I, real­ized mon­ey was a bit more use­ful at the time than some Poké­mon cards, so I could actu­al­ly buy [00:09:00] some cool things if I had the cash. So I learned how to sell them then, which is what got me in a lot of trou­ble at school.

Appar­ent­ly you’re not allowed to. Start a busi­ness on school grounds, but, um, you got­ta do what you got­ta do. But yeah, it, it was a very cool expe­ri­ence and I’ve got three young boys now, the old­est being five, they’ve start­ed watch­ing the Poké­mon show, so I’m sure it’s only a mat­ter of time before prob­a­bly try and steal my Poké­mon card col­lec­tion, so I’ve been locked that away.

But, um, be into it,

Cameron: Did they know their dad was the Poké­mon King of Auck­land or

Navarre: uh,

Cameron: Wakaro or wher­ev­er you grew up in New Zealand?

Navarre: Christchurch. Um, they know

I have cards. They know I have cards, but they, they don’t know the full sto­ry just yet.

Cameron: Mm. Oh, very good.

Navarre: That’s right.

Cameron: All right.

Tony Kynas­ton: Oh, great sto­ry.

of a good sto­ry of arbi­trage. Good sto­ry of qual­i­ty invest­ing good sto­ry [00:10:00] of the cor­ner­stone of McDon­ald’s mak­ing kids want some­thing and bad­ger their par­ents into buy­ing it for them. So many good lessons from that sto­ry for investors.

Navarre: Yeah,

exact­ly.

Tony Kynas­ton: Mm-hmm.

Cameron: Sto, tell us, uh, for those peo­ple who dun­no about Navexa, most of our audi­ence will, because we’ve been talk­ing about Navexa every week for the last how­ev­er many years. But

Navarre: Good to hear.

Cameron: who’s new, why don’t, why don’t you give us the, uh, give peo­ple the quick run­down on what Navexa does and where you’re at, and any­thing new that you’ve done late­ly that we may not know about.

And then we’ll get into the real top­ic, which is what you’ve been learn­ing about how peo­ple are invest­ing from watch­ing.

Navarre: For sure. So I guess in a nut­shell on Navexa is a per­for­mance track­er and tax report­ing plat­form. So typ­i­cal­ly investors who have just been using their bro­ker­age account to track per­for­mance, bare­ly see­ing any of the infor­ma­tion [00:11:00] that I think they need to make good deci­sions with their invest­ing. So it was the first kind of goal of. Me build­ing Navexa was to be able to answer those ques­tions around per­for­mance, about how am I going at the moment? What is my annu­al­ized return, what have I earned in div­i­dends? Even basic things like, how did I per­form last year? These are such sim­ple ques­tions, but most peo­ple can’t answer them because they’re using, using the wrong tools to do it. Navexa ini­tial­ly was to solve that prob­lem. Then as the plat­form matured, and I also matured as an investor, tax side of things became, uh, a huge part of Navexa. And today, espe­cial­ly this time of year, the tax side of it is mas­sive because. I say this all the time to peo­ple that you, you do all this research and pick­ing the right stock or choos­ing the right ETFs and you [00:12:00] go through all the pain of hold­ing it for years and years and then peo­ple just sell it off willy-nil­ly with­out even see­ing what the tax impli­ca­tions gonna be. And then they end up giv­ing away all this mon­ey to the a TO that they did­n’t need to do. And it was like, what was all the, the patience and every­thing before­hand and doing all the research, com­ing time to sell it. You’re just doing it unin­formed and, and los­ing a stack of mon­ey. So the tax side of things sur­pris­ing myself has become quite an inter­est­ing part of invest­ing to me. ’cause there’s so much mon­ey you can save there if you know what you’re doing, which is just as impor­tant mon­ey as it is when you’re mak­ing it out of a, a cap­i­tal gain. So that’s what Navexa does, um, at a high lev­el.

Cameron: So do you want to talk to us about that? Tax secrets?

Navarre: Yeah, how long have we got? Like there’s a lot of [00:13:00] stuff, uh, in the tax side of things and I think if I was just to give some, some quick info to peo­ple out there, now’s the per­fect time to look at your port­fo­lio, see your cur­rent tax posi­tion and make any moves you need to before the end of finan­cial year. ’cause a lot of peo­ple treat tax as, um, I get to July or August and then I wor­ry about it then. But you’ve kind of already locked in every­thing. It gives you a lot less flex­i­bil­i­ty, now you can do some tax loss har­vest­ing or get rid of some losers in your port­fo­lio so you can off­set some of those gains. real­ly, uh, a real­ly impor­tant fac­tor with invest­ing is to, to know your cur­rent tax posi­tion. I find a lot of investors that I speak to have no idea what their cur­rent tax posi­tion is. And because it is like no one likes talk­ing about tax sounds bor­ing. all about giv­ing mon­ey away to some­one you’re begrudg­ing­ly [00:14:00] doing it to. And that’s why I think a lot of peo­ple over­look that.

Cameron: Well, of course, QAV investors don’t have any losers, so that’s not a prob­lem that they have to wor­ry about. All of our stocks always go up. Uh, we’ve nev­er had any­thing go the wrong way. Is that right, Tony?

Tony Kynas­ton: Until I do a pulled pork on them. Cam, um, I guess I, we should also give the usu­al dis­claimer when not offer­ing tax advice to peo­ple. Um,

Cameron: It’s in the, it’s at the end of every

Tony Kynas­ton: okay, good.

Cameron: in Tony.

Tony Kynas­ton: Yeah, because we do talk about this every year and. Um, Navar or Navar when um, this time of year comes around that if you have had some cap­i­tal, check out your cap­i­tal gains if you have had some, do you have any­thing that you aren’t weed too long term, it’s trad­ing, uh, at an unre­al­ized loss and then sell it off.

And there are some rules around that from the tax offi­cer’s point of view. I dun­no if you are all, you know, into those, but maybe you could give a prey on, um, you know, har­vest loss, har­vest­ing rules from [00:15:00] the a TO as well and what watch out for there.

Navarre: Yeah, well the, the wash sale one is one that, um, a lot of peo­ple dun­no about, and it catch­es peo­ple out and that’s when you, you kind of sell some­thing right before the end of finan­cial year and then you rebuy into it with­in 30 days. So you, if you could do that, it means you could real­ize a loss to help out your tax return, and then you just buy the assets straight back.

So it’s like you lost noth­ing, but you gained a, a cap­i­tal loss for tax pur­pos­es. there’s a 30 day rule around that. So you can’t, can’t get away with that. So the gen­er­al rule is if you’re sell­ing some­thing. You have to real­ly be sell­ing it, uh, for a good rea­son, not sell­ing it to try and game the sys­tem. the big one. And at this point is a good time to kind of, um, iden­ti­fy any of those loss­es. And it, it becomes real­ly [00:16:00] tricky to do if you’re not using some­thing like Navexa, because what your cur­rent tax posi­tion is quite tricky. If you’ve had a port­fo­lio that’s 10 or 20 years old and you’ve bought and sold, many dif­fer­ent parcels of the same stock, uh, if you haven’t been track­ing it, you have no idea what your cur­rent tax posi­tion is. Even if the per­for­mance sug­gests you are up, you might actu­al­ly be run­ning at a cap­i­tal loss depend­ing on the parcels you’ve sold in the past. So gets quite tricky and that’s where some­thing like Navexa eas­i­ly pays for itself in the, in the tax moves that you can do.

Tony Kynas­ton: I guess a cou­ple of oth­er points to be aware of there is that we are allowed to car­ry for­ward tax loss­es from year to year. So there’s no point sell­ing some­thing

at a loss this year if you’ve got a car­ry for­ward tax loss, and a lot of peo­ple aren’t. you know

you’ve filed your tax return 12 months ago, you can’t remem­ber whether you had a car­ried for­ward loss or not.

So, um, there’s that [00:17:00] issue, um, to check and

then this, the oth­er one is, you might shed some light on this, is that

um, you might decide that you have a large par­cel that’s in a neg­a­tive posi­tion, but you only wan­na sell part of it. So what are the rules around par­tial sales? Is it, you know, first in, first out, last in, first out, what you know, or, or is it our dis­cre­tion to sell things?

Navarre: Yeah, that’s a real­ly good ques­tion that, um, a lot of peo­ple are unaware of, of what you can do there. So typ­i­cal­ly, FIFO being first and first out is the, the default strat­e­gy that use and, uh, indi­vid­ual investors use. a lot of peo­ple mis­tak­en­ly think that’s the only thing that you can do. The a TO quite gen­er­ous in the sense that as long as you can prove which par­cel you’ve sold, they’re hap­py for you to do it. So with Navexa, we’ve got five built-in strate­gies. So you’ve got FFO, li [00:18:00] O. gain, max gain and min CGT, and they all have var­i­ous effects on your cap­i­tal gain stacks. Of course, the super com­mon one is the min­i­mized CGT strat­e­gy because often peo­ple are try­ing to min­i­mize their, their cap­i­tal gain stacks basi­cal­ly how those strate­gies work is FIFO orders every­thing by date and then you sell the ear­li­est parcels first and you work your way through until you’ve deplet­ed all of those parcels. Life o’s the exact oppo­site. You start with the last ones in and Work back­wards. The, the fun ones like min­i­mize CGT actu­al­ly order the parcels by high­est price first. But men’s CGT also fac­tors in the CGT uh, con­ces­sion rate of 50% off for indi­vid­u­als selects the parcels that will result in the lease tax first. [00:19:00] So if your goal is to pay the lease tax, you can run a min­i­mize CGT. But some peo­ple, and I get this ques­tion quite a bit, is why would I ever run the max­i­mize gain strat­e­gy? Why would I ever want to pay the most tax? the sce­nario that I, um, use to illus­trate this is. Per­haps you’ve had a par­tic­u­lar­ly low income year per­son­al­ly, maybe you lost your job or you’ve, you just took a year off, or you were made redun­dant, or what­ev­er it was. kind of a per­fect time to real­ize a big gain because you still end up being poten­tial­ly under some of those tax brack­ets. So if you had a high income year, the idea is you’re try­ing to stay under some of those tax brack­ets when you’re real­iz­ing you gain, so you pay the least amount of tax. It’s often a good idea to get rid of the, the big win­ners if you have to [00:20:00] when you have a low income year.

So max­i­mize gain does become, quite a use­ful strat­e­gy to those who know. How to use it. Uh, of course, if you’re always using a min­i­mized CGT strat­e­gy, even­tu­al­ly you have to sell your big win­ners and real­ize a big gain. So it’s not always wise to just pin it on that and, and think you’re doing, uh, you’re pay­ing the least every, every time.

So yeah, it’s, it’s quite flex­i­ble. And then the oth­er part I’ll touch on in Avera is you can go full man­u­al mode as well and allo­cate parcels, uh, how­ev­er you like. So that’s quite a pow­er­ful fea­ture that, um, some of our more advanced investors are using.

Tony Kynas­ton: I am, if I have A large par­cel of shares bought over time and I’m try­ing to look at uh, sell­ing some of those at a loss to off­set a cap­i­tal gain dur­ing the year, which report do I use? I, am I using max cgt or min CGT to work out what to sell?

Navarre: so there’s a cou­ple of [00:21:00] things there. So we have a, a whole report called the unre­al­ized gains report. I’m not sure if you’ve, you guys have checked that out, but it sim­u­lates sell­ing your entire port­fo­lio on the, on that day that you run the report. basi­cal­ly from there you can go through and see, which things are big cap­i­tal gains, which things are cap­i­tal loss­es. And if you’re try­ing to real­ize some loss­es, that report will high­light which trades if you made today would result in a cap­i­tal loss. And you can also switch the strate­gies on that report too. So it’s often depend­ing on your goal with run­ning it with a cou­ple of dif­fer­ent strate­gies to see what the out­come is and then mak­ing some deci­sions from there. I will tease a lit­tle fea­ture. So in about. or four weeks. got a big announce­ment com­ing around, um, some AI fea­tures. one of the cool things that you’ll be able to [00:22:00] do is ask it, if I sold $5,000 worth of my BHP hold­ing and it’s going to tell you what the tax lia­bil­i­ty would be on that par­tic­u­lar trade. So what we want to do is empow­er investors to, before they even make the trade, can use Navexa to essen­tial­ly test what would the tax result be if I do this? can at that point either go, ah, no, I don’t want to do that, and, and back out of the trade or go, no, I’m hap­py with that. It’s gonna be a, a cap­i­tal loss or a small gain or what­ev­er.

And then exe­cute the trade. that I’m hop­ing will real­ly round out that pic­ture of, done all your research, you’ve made your deci­sions around if it’s a good stock or not, and now you can com­plete the pic­ture with the tax infor­ma­tion about what that. That trade’s gonna do to you at, uh, end of finan­cial year.

Tony Kynas­ton: about right, Seems to me you’re, you’re in a, the dri­ver’s seat to [00:23:00] be able to know what peo­ple are sell­ing at this time of year for tax loss rea­sons, um, which might make them good invest­ments because peo­ple are sell­ing them for tax rea­sons and not fun­da­men­tal rea­sons. So do, can, what can you share in terms of the top stocks that.

are being sold at this time of year?

Navarre: I don’t have the info on what’s being sold at the moment, although that would be, that would be quite inter­est­ing. But recent­ly we’ve been, uh, look­ing at our, our data­base as a whole, because we’ve got of thou­sands of invest­ment port­fo­lios at this point. Uh, rang­ing from absolute begin­ners who have just bought their first ETF through to peo­ple man­ag­ing, you know, $50 mil­lion plus across all sorts of inter­est­ing things some of the big, um, some of the data points that we’ve got that I’ll through in a moment. On one hand, they’re not real­ly sur­pris­ing if [00:24:00] you’ve been, um, if you’re in the val­ue invest­ing And the good thing about it is the data is real­ly back­ing up What’s. I con­sid­ered the typ­i­cal advice around, you know, buy and hold invest­ing and that kind of thing. And so see­ing the data for myself from our own data set was real­ly reaf­firm­ing that, no, it’s not just like these say­ings that peo­ple always say, it’s backed up in the data and the per­for­mance. some sets we’ve been look­ing at has been over the last 12 months what’s hap­pened, and as we all know, like the last 12 months has been pret­ty crazy. all dif­fer­ent aspects. You’ve got wars, you’ve got trade wars, you’ve got AI stuff hap­pen­ing. It’s kind of been, it’s kind of been all go. So it’s an inter­est­ing test of, of the per­for­mance. But the, the first step we’ve [00:25:00] seen that was quite inter­est­ing is that 90% of our port­fo­lios and Navexa have made a pos­i­tive return over the last 12 months. So, bear­ing in mind our cus­tomers aren’t nec­es­sar­i­ly just a, a small snap­shot of the entire mar­ket. Peo­ple who use our prod­uct tend to be more seri­ous investors. So keep that in mind with some of these stats. ’cause it def­i­nite­ly won’t rep­re­sent the broad­er mar­ket of peo­ple. But I thought it was quite sur­pris­ing that that 90% of peo­ple were in the pos­i­tives because with the big dip after the tar­iff announce­ments and that kind of thing, you would’ve expect­ed. A lot of peo­ple freak­ing out and sell­ing, which I’m guar­an­teed did hap­pen, it does­n’t appear to be the case across Navexa cus­tomers. It looks like they either went through the storm and, and did­n’t make any rash deci­sions or like­ly prob­a­bly even, [00:26:00] um, bought up a bunch of stuff dur­ing that dip to, to keep the pos­i­tive per­for­mance. So what do you think about that stat? Is that kind of your being, your sense to the mar­ket or would, do you think it would be dif­fer­ent there?

Tony Kynas­ton: I guess the, you know, the, a ASX is up some 11 or 12 or 13% on, on an accu­mu­la­tion basis this year. So you’d expect that peo­ple would be up and I think the us mar­ket’s, what’s that cam? some­thing sim­i­lar or even more, it’s about 20%, isn’t it? I think the US mar­ket. I think you track it.

Cameron: the last year it’s,

Tony Kynas­ton: Yeah.

Cameron: yeah, the last year it’s, it’s been way more than that. It’s

Tony Kynas­ton: Yeah. So, um, yeah, I’m not sur­prised by it real­ly

Um, but it does, but what you’re say­ing is it does­n’t fol­low a bell curve if the mar­ket’s up 12% in Aus­tralia. Say, for exam­ple you expect it to be a bell curve and you’d have out­liers mak­ing a lot more than that and out­liers mak­ing A lot less than that. [00:27:00] But, uh, it does­n’t seem to be the case from what you’re say­ing.

Navarre: Yeah. And then, so a li dig­ging a lit­tle bit deep­er into that stat. So we had our top 10% of port­fo­lios, which is um, a few thou­sand port­fo­lios. So rea­son­ably good, good data set. There was an aver­age return of 55%,

 was super decent over the last 12 months. And the like with the ASX 200 fig­ure, our medi­an. Investor return was 12.1%. So looks like at the, the low­er end or at the mid­dle to low­er end of our, um, per­for­mance across port­fo­lios, it seems to be pret­ty close­ly aligned with the, with the ASX 200 that, that does­n’t sur­prise me since we’re major­i­ty Aus­tralian cus­tomers at the moment. We’ve got, we’ve got some for­eign cus­tomers as well, like in the US and the UK, but a major­i­ty of the [00:28:00] user base is Aus­tralian.

So I would sus­pect a lot of peo­ple are sit­ting on a bunch of ASX 200 ETFs in that spot as well. But,

Tony Kynas­ton: You,

Navarre: so

Tony Kynas­ton: sor­ry, go on. No, you go. ahead.

Navarre: So a cou­ple of oth­er things I real­ly want­ed to dig into in, into the data per­son­al­ly things like the trad­ing vol­umes Num­ber of hold­ing set peo­ple own, because I’ve seen all sorts of stuff, uh, deal­ing with cus­tomers in the v over the last few years from peo­ple who are doing just hun­dreds of trades every year across all sorts of things.

And they have port­fo­lios of, you know, a hun­dred plus, uh, stocks in cryp­to peo­ple who just buy, you know, one or two things a year and sit on it. And so I dug into those num­bers and what we [00:29:00] saw, par­tic­u­lar­ly around, uh, trad­ing fre­quen­cy, that our top 10% of, uh, port­fo­lio per­for­mance, they aver­aged about 29 trades per year. It was an inter­est­ing num­ber because I thought it might’ve been a bit less, you know, around 10, 29, 29 trades per year. And then to con­trast that with the bot­tom, bot­tom 20%, the aver­age was 65 trades per year. So that was quite sur­pris­ing to me as well, that peo­ple, and that does­n’t nec­es­sar­i­ly mean they’re begin­ners, it means they have the worst per­for­mance. So there’s, I guar­an­tee there’s plen­ty of expe­ri­enced peo­ple in that, in that bot­tom sec­tion, but 65 trades a year seems pret­ty crazy to me. how can you make that many good deci­sions in a, in a 12 month [00:30:00] peri­od?

Tony Kynas­ton: do you, do you have A port­fo­lio size to go along with those fig­ures? like how many times are the port­fo­lios turn­ing over.

Navarre: So the, the min­i­mum port­fo­lio size is $50,000, No, sor­ry. I mean, num­ber of num­ber of ho, num­ber

Tony Kynas­ton: of hold­ings.

Navarre: Ah, yeah,

Tony Kynas­ton: Yeah.

Navarre: the num­ber of hold­ings

Tony Kynas­ton: I’m, what I’m get­ting at is if some­one’s got a port­fo­lio of a hun­dred stocks, then 65 trades may not be that much, but if I’ve got a port­fo­lio of two stocks, then 29 trades is a heap. So how, how does it cor­re­late?

Navarre: yeah, well, I’ll, I’ll get to that num­ber in a sec, but I think even if you have a hun­dred stocks. still feel like 65 deci­sions is, is too many. hold­ing that many stocks would be pret­ty dif­fi­cult to man­age because you just for­get what half the stuff you’ve invest­ed in. But with the num­ber of hold­ings, so got the aver­ages across the dif­fer­ent [00:31:00] deciles there.

So the top 10%, the aver­age hold­ings in their port­fo­lio was 20.

Tony Kynas­ton: Okay.

Navarre: that sounds pret­ty good to

Tony Kynas­ton: Mm-hmm.

Navarre: sure I could keep my head around 20 dif­fer­ent things. then the bot­tom, um, ninth and 10th deciles, so the bot­tom 20%, they had an aver­age of 32 and 40 hold­ings.

Tony Kynas­ton: Right.

Navarre: again, it kind of lines up with that trad­ing stat of the bot­tom.

Per­form­ers are doing the most amount of things in, in that 12 month peri­od.

Tony Kynas­ton: Yeah, but it’s, but in terms of a ratio between the num­ber of trades and the port­fo­lio, it’s, it’s rea­son­ably sim­i­lar. the top 10% has 20 stocks and they’ve done 29 trades and the bot­tom, so they’ve turned their port­fo­lio over more than once. And the bot­tom decile or decile has, what’s, what’s 20%? I’m not sure. [00:32:00] Do decile?

Navarre: It’s, that’s right.

Tony Kynas­ton: Yeah.

they’ve got 40 stocks in their port­fo­lio. They’ve done 65, so it’s, you know, one and a half times. So it’s kind, is it relat­ed to the port­fo­lio size, I guess is what I’m say­ing?

Navarre: Yeah, and I, I don’t have the stat on what size the port­fo­lios were. ’cause we, we’ve ordered it by into buck­ets of per­for­mance basi­cal­ly.

Tony Kynas­ton: Right.

Navarre: some of those port­fo­lios will be 50,000, some will be in the mil­lions. Um, but we’re just look­ing at the total return. So that even fac­tors in not just the cap­i­tal gain, but the income return as well. So,

Tony Kynas­ton: yeah, I’m, I’m sure there’s almost every lis­ten­er lis­ten­ing to this is gonna say, tell me more about the top decile. So what could you divulge about them where they all invest­ed in cryp­to? Were they all invest­ed over­seas? Were they, uh, what can you say about them?

Navarre: yeah. So I, I did run that query on if there was a strong over­lap in, in hold­ings for that [00:33:00] top decile. What do you think the, the top hold­ing was? I.

Tony Kynas­ton: Prius.

Navarre: No. What about you, cam?

Cameron: Uh, yeah, I’m, I’m not even gonna haz­ard a guess. I have no idea.

Navarre: You’re not gonna like it. You’re not gonna like it.

Cameron: Well.

Tony Kynas­ton: Cryp­to.

Navarre: it is. So 40, 40% of the top 10 decile Bit­coin. So that’s the strongest over­lap com­pared to hold c, BA. So that’s num­ber two.

Tony Kynas­ton: Oh, right. Of course. I.

Navarre: we ran some stats a few weeks back that showed one in five of our users now hold cryp­to in their port­fo­lio, which is up from one in 10, only two years ago. So there’s a strong tra­jec­to­ry, [00:34:00] that more and more peo­ple are get­ting it into their. port­fo­lio. And, and even with a lot of the investors I’ve been speak­ing with over the years, uh, Navexa cus­tomers, a lot more of them are now hold­ing cryp­to as well, which is, has real­ly sur­prised me. ’cause anec­do­tal­ly, it seems to have moved from cer­tain char­ac­ters owned cryp­to maybe five years ago You can’t pick who owns it. So peo­ple you

Tony Kynas­ton: All right,

Navarre: nev­er expect have

Tony Kynas­ton: so,

Navarre: port­fo­lio.

Tony Kynas­ton: so there was, there used to be a cor­re­la­tion between Poké­mon carbs and cryp­to, but now it’s, it’s sort of bro­ken down. It’s every­one. Now, is it?

Navarre: That’s right. Exact­ly. So, and, and I mean, on the cryp­to side, it’s, it’s most­ly Bit­coin. Like the oth­er ones peo­ple are into all the, those oth­er coins. Um, but. The peo­ple who are mak­ing seri­ous returns seem to just be stick­ing with, with Bit­coin, uh, since it’s [00:35:00] the old­est and most proven. But after that, so the usu­al sus­pects are in there.

We’ve got CSL num­ber three, um, Tes­la num­ber four. we’ve got a Ethereum and num­ber five. So two cryp­tos there in the top five. And then you’ve got, uh, Tel­stra, BHP, apple. So there’s, there, there was noth­ing in that kind of top 10 sec­tion that was super sur­pris­ing oth­er than Bit­coin being the most over­lapped one. Um, it seems that the Aus­tralian, the clas­sic Aus­tralian port­fo­lio seems to be go and still per­form­ing quite well.

Tony Kynas­ton: what uh, can you give us a split between active and pas­sive? How many ETFs are in the, what per­cent­age or of ETFs are in there?

Navarre: I don’t have that par­tic­u­lar stat on hand, but look­ing at in that top, um, top 10, the first [00:36:00] ETF does­n’t show up until the 18th most over­lapped. out of, out of all the top per­form­ers, it does­n’t appear, that ETFs are, are fea­tur­ing that heav­i­ly. And, and with that, that’s, uh, VAS, which is not sur­pris­ing.

And only 6.7% of the, the top 10 per­form­ers hold that. So lot small­er. Hon­est­ly, I would, I was expect­ing that you’d see more ASX 200 or s and p 500 ETFs, um, with a strong over­lap, it’s not what the, the data sug­gests on those top per­for­mance.

Tony Kynas­ton: Mm, inter­est­ing isn’t it? Yeah. Over­seas ver­sus local, are they, are they hold­ing ETFs for the us stocks?

Navarre: Not, not in those top per­form­ers. Um, it seems to be a lot of local, it’s not until you [00:37:00] get down to the, the 30th most held one, which is NDQ, um, at 4.6%. So it seems from that top per­for­mance, it’s strong­ly ASX stocks and cryp­to, and then a cou­ple of us ones. So you’ve got, apple and Tes­la up there as well. So it’s quite sur­pris­ing because when you look at, at those, um, indi­vid­u­al­ly, it’s, I mean, some of them have had, had a good run, but oth­ers are kind of just doing their usu­al move­ments from what I’ve seen. looks like the com­bi­na­tion of all those has, has held up pret­ty strong­ly.

Cameron: Now, Val, how long has Navexa been around now?

Navarre: Um, we’ve been in busi­ness com­ing up six years. I think it’s

August. Six years. the data you’re giv­ing us is the last 12 months, right?

Yep.

Cameron: I’m, I’m inter­est­ed in longer time­frame results. Do you have sim­i­lar data [00:38:00] for the top per­form­ing decile over six years?

Navarre: at the moment, but that is some­thing we, we are work­ing on get­ting, because those longer term pat­terns are quite inter­est­ing. The issue is, is the dataset starts thin­ning out the longer range you go because not all the port­fo­lios have been around for kind of five years or 10 years. Um, so 12 months was the. of sta­tis­ti­cal­ly best com­par­i­son because pret­ty much all the port­fo­lios we have in Navexa had data for 12, uh, 12 months, sor­ry. look­ing at 10 years, it starts thin­ning out, and then the fur­ther you go, the less you have to play with, so the, the data becomes a bit less, um, sta­tis­ti­cal­ly strong.

Cameron: Yeah, I guess, you know, from my per­spec­tive as a, as a new­bie investor, um, [00:39:00] one year, um, is inter­est­ing, but it’s been a sort of a bonkers year on a num­ber of fronts. Um, you know, how it all falls out, what the strate­gies are that deliv­er long-term suc­cess­es, far more inter­est­ing to me than what hap­pens in a 12 month time­frame, which, you know, we all know can turn around and evap­o­rate very, very quick­ly. I.

Navarre: Yeah, def­i­nite­ly. And, and we are gonna start com­pil­ing some of that stuff to, um, show to our com­mu­ni­ty. So you’ll be able to get access to that. We’re going to build a, a sec­tion where you can go and view the data your­self and um, be able to com­pare where your per­for­mance sits with­in some of these cat­e­gories. Because as you’ll know, it’s like if you’ve got a $10,000 port­fo­lio, you’re gonna make much dif­fer­ent moves than if you’ve got a $10 mil­lion port­fo­lio. So [00:40:00] being able to com­pare your per­for­mance against sim­i­lar­ly sized port­fo­lios I think is gonna be quite impor­tant. ’cause peo­ple tend to be a bit more rash and make crazy moves the less mon­ey’s involved.

But if you’re mak­ing moves on $10 mil­lion, you’re going to hope­ful­ly a bit more thought into what you’re doing there. So. I think that’ll be quite use­ful. Um, and we’re hop­ing to get that out in the next few months, so you’ll be able to check out. I had a look at your port­fo­lio. It seems to be doing pret­ty well. The QAV dum­my one.

Cameron: Yeah, it’s truck­ing along, I think. Um, I’ve just, I can’t get Navexa to work for me right now. It’s giv­ing me zero on every­thing. Uh, I dun­no

Navarre: It’s been

a mar­ket crash. yeah,

Tony Kynas­ton: Hmm.

Cameron: that must be what it is, right across the board. if I, I did our report this morn­ing for the, for this finan­cial year, which almost [00:41:00] 12 months, I guess.

Dum­my port­fo­lio is 18.3%, uh, for the finan­cial year ver­sus I, I, it says here the s SPDR 200 is up 14.5% over that peri­od of time. So out­per­form­ing that by a bit. Not as much as I’d like, but you know, over the long term is what we look at. But yeah, so

Navarre: Yeah,

Cameron: 18.3. I dun­no how that would map against your, whether it sits in your deciles.

Navarre: it, sor­ry, got a bit of a cough. Um, I don’t have the deciles, the per­for­mance deciles in that for­mat, I think that prob­a­bly puts you from mem­o­ry prob­a­bly in the like top 40, top 40%. Um, because it, it’s the top per­for­mance ones in the top decile, par­tic­u­lar­ly with [00:42:00] the huge con­cen­tra­tion of Bit­coin if you’ve been fol­low­ing the Bit­coin price, you know, over the last 12 months it’s gone crazy. I haven’t got, I don’t know this for sure, but I would sug­gest a lot of that per­for­mance was pure­ly just from hold­ing that one thing. All the oth­er things in the port­fo­lio prob­a­bly did­n’t have as much of an impact, that will kind of lev­el out over a, a longer peri­od as well. um, yeah, I mean, 18 per­cent’s def­i­nite­ly not shab­by at all. That’s, uh, like you’re beat­ing the bench­mark and that’s quite hard to do

Cameron: Well, is it.

Navarre: if, if you’re doing 18% per annum, like I don’t think you’d be too upset in a few years time as it starts com­pound­ing.

Cameron: Yeah. Well, look, again, I, I’m new to all of this, but in the six years that we’ve been [00:43:00] run­ning QAV, it does­n’t seem that hard to me to beat the bench­mark. Um, uh, we, we had a cou­ple of dif­fi­cult years, 2022, 2023 when inter­est rates start­ed going up and the war start­ed and trade wars and that kind of stuff.

Navarre: Hmm.

Cameron: I, I, I’m inter­est­ed in, uh. Uh, you know, the sort of out­side of Bit­coin, which to me, I still does­n’t seem like a strat­e­gy to me. More and more peo­ple buy­ing Bit­coin just sounds like capit­u­la­tion to me. Not a strat­e­gy. It’s peo­ple just going, okay, I’m gonna get on the band­wag­on. uh, in all the years that we’ve been doing this and we’ve been ask­ing peo­ple to explain a ratio­nale for invest­ing in Bit­coin, I’ve nev­er yet heard one that makes any sense apart from it’s going up, which isn’t a strat­e­gy, that’s a, that’s a, of being a fol­low­er of a cult, not real­ly a, sort of a ratio­nal strat­e­gy that I can wrap my head around.

Have, in your expe­ri­ence, have you [00:44:00] heard of a, have you heard a good rea­son to invest in Bit­coin that you can artic­u­late?

Navarre: I mean, rea­son I, I don’t have a huge posi­tion in Bit­coin, but I do own some, and I was sim­i­lar to you, like I was very skep­ti­cal about it for sev­er­al years once it came on the scene because with any stocks I would buy, I want to see what the busi­ness was and what it does, and do I under­stand what the hell it’s doing and is it mak­ing mon­ey?

And you can mea­sure a busi­ness by all of those things, where­as cryp­to, you can’t. But it became a thing for me per­son­al­ly, it’s, I guess you could say jump­ing on the band­wag­on, but it was more that such a, a new tech­nol­o­gy that is dif­fi­cult to under­stand that I’m going to get some expo­sure to it. Just in case it, it hits the big time.

And I mean, since then it is [00:45:00] only going up and up and up every sin­gle, every sin­gle year it seems. Um, so I’ve been hap­py with that deci­sion, but I still would­n’t be com­fort­able putting huge posi­tion of my port­fo­lio into it because I still can’t jus­ti­fy exact­ly why oth­er than like, it’s a crazy new tech­nol­o­gy.

I don’t real­ly under­stand it. It’s clear­ly with­stood years and years at this point, so, yeah.

Tony Kynas­ton: Isn’t, isn’t, isn’t human psy­chol­o­gy inter­est­ing when it comes to invest­ing.

I mean, I, I, I accept every­thing you’ve said and I think it’s you know a per­fect­ly valid thing to do. But just to unpack it, I mean, isn’t the goal of invest­ing to put all your mon­ey where the best return is? and if you don’t under­stand Bit­coin, how do you know it’s gonna give you the best return?

But, you know, so it’s like, I I’ve had this con­ver­sa­tion with lots of peo­ple where they said, well, I’m just putting in 2% of my port­fo­lio so I can under­stand it. So I get that right. They don’t [00:46:00] under­stand Bit­coin, they wan­na know how to trade it, you know, what, what it looks like to hold, et cetera, et cetera.

So I get all that. Um, I. I guess, let me ask the ques­tion in reverse, because what you’re describ­ing is that basi­cal­ly a momen­tum trade. You, you’ve got your toe wet, it’s going up, hap­py days. what’s your rule for sell­ing when you get out?

Navarre: Well, that’s a good one, which I don’t have an answer that sat­is­fies any of us, um, oth­er than that’s why I’ve stuck to a small posi­tion. So even if it goes to zero, I, it’d be annoy­ing, but I’m not going to lose the house over it. But I think. is no plan for sell­ing at this point. It’s just to hold it for the long term and, and see where it ends up. think e ’cause cryp­to’s so volatile, even if it dropped by you look back over the [00:47:00] last few years, you like, yeah, that hap­pens all the time. It’s noth­ing to wor­ry about. Where­as if a stock drops 50%, you’re like, okay, there’s some­thing ter­ri­bly wrong here. I need to make a move. so yeah, it’s, it’s some­thing I, I need to work out still, but it’s,

Cameron: What I, drops by 75%? Like it, I’m look­ing at the chart at the moment. In, in Novem­ber, 2021, it was trad­ing at around 90,000 Aus­tralian.

Navarre: Hmm.

Cameron: By Decem­ber, 2022, it had dropped down to 25,000.

Navarre: Yep.

Cameron: Now, now it’s up around 165,000. Right. But that’s a big drop over that, you know, 12 month peri­od. That’s, uh, you know, 75% drop. You would still hold it if Yeah. Well, I mean, that’s the, the crazi­ness with cryp­to is, and like investor psy­chol­o­gy is real­ly inter­est­ing and that’s what dri­ves mar­kets,

Navarre: [00:48:00] uh, all the time. investors have been beat­en up so hard by volatil­i­ty when it drops like that, it’s just like, oh, what­ev­er. It’s just, you know, anoth­er day and the

whole, sor­ry, that that can’t be true because peo­ple are sell­ing. The price does­n’t go down yeah. aren’t sell­ing. And that, that’s, that, but it does­n’t ring true to me because a lot of peo­ple are sell­ing for the price to drop by that much. oh, yeah. of Bit­coin hold­ers were sell­ing it as quick­ly as they could the course of that 12 months.

Cameron: So is it not the big­ger guys just gam­ing the whole mar­ket, just it off the price drops. They cre­ate a run and then they buy back in and pump­ing, isn’t it? It just looks like a pump and dump from the out­side to me.

Navarre: yeah. And there is a lot of that, and I think a lot of the price over the last cou­ple of years has been dri­ven by fact that a lot of big com­pa­nies have start­ed [00:49:00] invest­ing into Bit­coin. You’ve got gov­ern­ments get­ting involved with Bit­coin as well and dri­ving

1. Yeah. And dri­ving up con­fi­dence. And you’ve got com­pa­nies like micro strat­e­gy, like

with huge Bit­coin reserves.

So even if you’re invest­ed in the s and p 500, you’re hold­ing a big

Tony Kynas­ton: Hmm.

Navarre: of Bit­coin. With it. So all of those com­pa­nies get­ting involved have dri­ven it up. But it depends to go back to your pre­vi­ous ques­tion, depends on the cir­cles you run in. So I have peo­ple who are in the cryp­to indus­try in my cir­cle and they’re doing all sorts of things with, have nev­er sold out of their posi­tions because they under­stand it at a, a tech­no­log­i­cal lev­el and what the appli­ca­tions are that they’re using it for. I think you def­i­nite­ly get the main­stream peo­ple, like I know peo­ple who’ve nev­er invest­ed in any­thing and sud­den­ly they’re talk­ing about cryp­to that they’re buy­ing and then [00:50:00] just as quick as they were talk­ing about it, they nev­er talk about it again. And, and those are the peo­ple that are com­ing in dri­ving the price.

They freak out, they sell it, there are the, the long term hold­ers of it, is seems to be get­ting more and more at an insti­tu­tion­al lev­el and, and com­pa­nies hold­ing it on their bal­ance sheet. See?

Tony Kynas­ton: Oh yeah, there are whole ETFs. There are whole ETFs devot­ed to it now as well, so that’s, there’s cer­tain­ly sup­ply side demand at the moment.

Cameron: Trump, Trump get­ting involved in it. Does not. Instil con­fi­dence in me that it’s a, it’s a good long term strat­e­gy. But, you know, the, do you know the Mooch

Tony Kynas­ton: Mm-hmm.

Cameron: Trump’s uh, for­mer, I dun­no what role he had in the first Trump admin­is­tra­tion, but he, he put out a book, the Lit­tle book of Bit­coin about six months ago that I got and read. ’cause I saw a video where he was like, yeah, I was a skep­tic. And then I got my head around it and I spoke to all the key guys and then I became super pumped up about [00:51:00] it. I was like, all right. So I got Mocha’s book and I read it look­ing for, you know, some sort of expla­na­tion for it. And it was, it’s going up.

That was it. I read the whole book and the strat­e­gy was, it’s going up.

Navarre: Yep.

Cameron: That’s why I’m get­ting in. And I’m like, well that’s, that does­n’t help. So I don’t know. No, it’s not. It’s not a good rea­son. the guy who pro­duced our doc­u­men­tary,

Tony Kynas­ton: Mm-hmm.

Cameron: Hoff­man, has pro­duced two doc­u­men­taries cryp­to. He did one like, I don’t know, was six or

Tony Kynas­ton: Mm,

Cameron: ago.

Then he did anoth­er one a cou­ple of years ago, an update. He inter­viewed all of the key peo­ple across cryp­to and Bit­coin and blah, blah, blah. And we had him on the show. I actu­al­ly, I don’t think we put it to where, ’cause it was too embar­rass­ing. But we had Tot­ten on a cou­ple of years ago ’cause he’d been giv­ing me a hard time, if you’re not buy­ing cryp­to, you know you’re an embar­rass­ment and blah, blah, blah, blah, blah. I was like, okay, so, so give us the ratio­nale for why we should buy cryp­to. And he is like, well, it’s going up. And I’m like, yeah, Jesus

Tony Kynas­ton: gonna be worth $500,000 a coin in a cou­ple of [00:52:00] years. Yeah.

Cameron: like, there’s just, apart from it’s going up. I’ve nev­er had any, like any­one go every, any­way, I’ll stop ran. And It is.

our lis­ten­ers have heard Yeah. about this end­less­ly over the years.

Tony Kynas­ton: And, and the, and the behav­ioral finance psy­chol­o­gy applies to us as equal­ly as it applies to an investor as well. We’re not invest­ing because we don’t under­stand it. But, but you know, some­one out there, as Cameron said, I think is doing a pump and dump. So they’ve got, if not an under­stand­ing of Bit­coin, cer­tain­ly under­stand­ing of the way the mar­ket responds to Bit­coin and their

Cameron: Con­sumer psy­chol­o­gy.

Tony Kynas­ton: psy­chol­o­gy.

And they’re, they’re trad­ing Poké­mon cards, right? They’re pump­ing and dump­ing, Yeah,

Cameron: yeah,

Navarre: yeah.

def­i­nite­ly.

And Poke­mon’s a big busi­ness.

it is an, and it, I have per­son­al­ly done some trans­ac­tions in cryp­to, um, that were a con­ve­nience thing, so an actu­al appli­ca­tion of it, um, doing cross bor­der pay­ments, which was actu­al­ly easy and bet­ter than trans­fer­ring through [00:53:00] the, the SWIFT sys­tem or what­ev­er, and like wait­ing a few days to get the mon­ey at the oth­er end and that kind of thing.

So there are

some prac­ti­cal. drugs, sor­ry, Exact­ly. So

Tony Kynas­ton: And,

Navarre: some

Tony Kynas­ton: and look, you’re right. I mean, and, and pay­ing the bank you know what­ev­er it is

50 bucks for a trade of for­eign cur­ren­cy is, is,

Cameron: ridicu­lous.

Tony Kynas­ton: bad as trad­ing in Bit­coin as far as I can see. real­ly.

Yeah.

Navarre: Yeah. But as, as for how that jus­ti­fies the val­u­a­tion, like I can’t give you why that would jus­ti­fy it, but it, it’s just, yeah. It’s a such a crazy thing. And I’ve been say­ing recent­ly that thing that cryp­to has done on the tech­no­log­i­cal side is it pushed chip mak­ers like Nvidia to work on bet­ter and bet­ter chips to help the min­ing oper­a­tions and that kind of thing, which then formed a real­ly good base for all the AI [00:54:00] stuff com­ing in. like, oh, the, these chips worked well for cryp­to. Now we can just kind of. them for the AI side of things. So the AI side of things is very, you can

jus­ti­fy how

Tony Kynas­ton: So, so you think when AI becomes our over­lords, nos­tal­gi­cal­ly, they’ll own Bit­coin? We’ll all have to, we’ll all have to con­vert to Bit­coin.

Navarre: Yeah, exact­ly. But like per­son­al­ly, um,

 the, the AI thing is real­ly inter­est­ing because I’m a soft­ware engi­neer and I use AI every day in devel­op­ing Navexa itself. so the appli­ca­tions I’ve seen I’m doing have been so pow­er­ful. I’ve, I’ve had a few moments late­ly where I’m like, oh, should­n’t have been able to do that. Like, that was a bit too good. Um, so short term, I’m real­ly excit­ed about it long term. [00:55:00] I am quite ter­ri­fied of it. So plan is just to use it in the short term to, to, you know, gain an advan­tage, whether that’s in soft­ware devel­op­ment or, or or what­ev­er. But long term, I don’t know how it all ends up because, um, what the main­stream aren’t see­ing is it is get­ting rid of jobs already through­out the tech sec­tor and that kind of thing. And it’s like, it’s sud­den­ly peo­ple will just see it for what it is and they’re like, holy crap, this is, this has come for my job and I was­n’t pay­ing atten­tion. So.

Cameron: How do you think it’s gonna change invest­ing? So it’s a ques­tion we get asked a lot and we’ve, we’ve talked about it a bit.

Navarre: Yep.

Cameron: I don’t have a clear answer.

Navarre: No, well that’s a real­ly good ques­tion because that’s exact­ly what I’m doing at the moment. Um. With Navexa. So we are releas­ing a bunch of AI fea­tures next month, we are kind of try­ing to bridge that gap of how do you use AI [00:56:00] and invest­ing to pro­duce good out­comes. The prob­lem I’m see­ing from a pure­ly AI play­ers that the AI mod­els are not very good at maths, which sur­pris­es a lot of peo­ple because their lan­guage pre­dic­tion engines, they’re not actu­al­ly doing the cal­cu­la­tion.

So if you give it one plus one, it and it’s knowl­edge goes well. Usu­al­ly that’s fol­lowed by two and gives you the right answer. But you can

give it, tend to write a Python pro­gram and cal­cu­late all the maths using some Python script that they have run­ning in the back­ground.

you can do that. But a lot of

the maths equa­tions you put in, it will give you the wrong answer. you’ll chal­lenge it and it’ll be like, ah, you’re right. I’m gonna try the, a Python script and do it that way. it’s not super reli­able yet on that front. So what, what we are try­ing to do is bridge AI and the code we actu­al­ly have that we know the [00:57:00] cor­rect out­put and kind of inter­face them togeth­er so that you get the ben­e­fits of using ai.

But the, the solid­ness of hav­ing actu­al proven code doing the cal­cu­la­tions,

Cameron: Which is, which is, you know, I do a pod­cast on AI I, Futur­is­tic with, uh, mate of mine, Steve San­ti­no, who’s a futur­ist. And what I’ve been say­ing for the last cou­ple of years is I, I see LLMs as a lan­guage user inter­face, a, a lure,

Navarre: mm.

Cameron: know, it’s, um, a, a way of com­mu­ni­cat­ing with com­put­ers using nat­ur­al lan­guage in that we will get to the point where they will inter­face with expert sys­tems like Navexa to extract reli­able knowl­edge.

So you have, rather than the ai, the LLM being the font of all knowl­edge, they’ll, they’ll be able to do a lot of things very well, but they’ll have to inter­face in with expert sys­tems to be tru­ly reli­able. But ide­al­ly, expert sys­tems like Navexa should have a lan­guage user inter­face on the front of it. I can go to chat GPT and say, gimme some data [00:58:00] out of Navexa and it’ll go to your web­site and go, Hey, can you pull this data out for me? And. I can give it to Cameron and it’ll go. Sure.

Navarre: Yeah, well stay tuned

 ’cause that’s.

Cameron: was gonna say, like with all of the data that you’ve been talk­ing about, that you have like this high lev­el, uh, data on what peo­ple are doing, it’d be great if we could get a dump of all of that in raw num­bers that we could drop into a AI and say, you know, find me pat­terns, find me this, et cetera, et cetera.

Is that, is that where you’re going with this stuff? Like, give us the abil­i­ty to data mine

Navarre: Yeah. So ver­sion one, no. Um, we are just lay­ing the kind of infra­struc­ture to be able to inter­act with your port­fo­lio, ver­sion 2,

3, 4, that’s where we’ll start iter­at­ing into, into that space because the, the cal­cu­la­tions with­in a tool like Navexa, AI could fig­ure them out. But there’s so [00:59:00] many gates at the moment, like the data feeds on, um, mar­ket data and the cor­po­rate action feeds, and there’s still a lot of com­pa­nies with a, a wall around that data, which the LMS don’t have access to. Yet any­way. So even if they could do maths, they would­n’t be able to to pull that num­ber. we are hope­ful­ly going to use some of the insights that we’ve just talked about to build kind of an aggre­gat­ed com­mu­ni­ty insights sec­tion and then over­lay that with AI so that you can kind of relate your deci­sions ver­sus what the com­mu­ni­ty, the Navexa com­mu­ni­ty is doing. think that we’ll be able to help peo­ple, um, see that, oh, okay, the top per­form­ers are not doing tons of trades and heaps of things. Maybe I should change my approach to not do that. Or maybe they are doing tons of trades and I’m not doing any­thing at the moment. Am [01:00:00] I miss­ing out on things I need to get, get

into gear and, and. Sor­ry. Buf­fet was asked about AI at the Berk­shire, a GMA year or two ago, and how it was gonna change. And he said, you know, the, the biggest mis­take peo­ple are make in invest­ing is like greed and short term think­ing, and AI’s not gonna change that.

Yeah.

Cameron: It’ll, it’ll just make peo­ple make greedy short term deci­sions or some­thing like that. Well, you know, I don’t see peop peo­ple chang­ing the way that they trade based on, um, hav­ing access to data because Buf­fet’s been try­ing to tell ’em how to invest for 50 years. And a few peo­ple lis­ten, but not many.

Tony Kynas­ton: but that could be a legit­i­mate use for ai, whether it’s pro­vid­ed by Navexa or not, is if I’m, you know, I’m about to exe­cute a trade on my port­fo­lio and I get a mes­sage say­ing, Hey, did you real­ize that this com­pa­ny’s being

tak­en over? Or, um, uh, you know, you if you buy this [01:01:00] com­pa­ny, it’s the large, it’ll be the largest or the small­est posi­tion in your port­fo­lio.

Do you real­ly wan­na hold 25 stocks when, you know, uh, my research says fif­teen’s a bet­ter num­ber, for exam­ple. So it’s almost like a guardrail on our trad­ing to stop us from falling for behav­ioral finance.

Cameron: There’s no, there’s no ratio­nal rea­son to own Bit­coin. You go, shut up ai. What do you know? It’s going up.

Navarre: that’s right. it’d be the reverse. If it used Navexa, if it was using the VX ray, I’d say, Hey, you.

Tony Kynas­ton: haven’t got any Bit­coin in your port­fo­lio.

Cameron: Yeah. What are you doing? You’re an Exact­ly. The top per­form­ers

Tony Kynas­ton: Yeah.

Navarre: hold­ing it. But it’s um, I think in

the short term, in the short term, AI will pro­vide oppor­tu­ni­ties for peo­ple to get ahead in invest­ing.

Tony Kynas­ton: Mm-hmm.

Navarre: then like any­thing, once every­one has that tool, then it will just, every­one will be mak­ing deci­sions with the same tool set and then it will come back to like the buf­fets of the world apply­ing their, their [01:02:00] think­ing on top of what every­one’s already doing to get that advan­tage. So can look at it in terms of, oh, that’s the, the end goal, so I’m not gonna both­er with it. Or you can look well in the short term. If I use it, I can get an advan­tage now before every­one gets on it. then lat­er when it aver­ages it out, I’ll have to change my strat­e­gy again. But I’m

Tony Kynas­ton: Uh,

Navarre: in

Tony Kynas­ton: yeah.

Navarre: that camp of using it while there’s an advan­tage.

Tony Kynas­ton: Oh, and when it does­n’t become an advan­tage, it becomes A hygiene fac­tor. So you have to use it. If you’re not using it, every­one else is using it, you’re about to dis­ad­van­tage. But I’m see­ing in the mar­ket the mar­ket’s chang­ing now through those kinds of games. I mean, um you look at some stocks that don’t, that are fair­ly thin­ly trad­ed, and you find out that the price is set by one stock trad­ing in the last

half hour, um, of, of the busi­ness day.

Um, just to try and game the price to, to force it up or down for what­ev­er rea­son, the quant wants it to do that and buy or sell the next day when [01:03:00] some­one trades based on that clos­ing price. Um, for exam­ple and there are oth­er ones too. I speak to fund man­agers who tell me that you know, they make sure that the par­tic­u­lar com­pa­ny that they, they might be involved with has cer­tain met­rics to pass the quant screens, whether it’s, you know.

P/E ratio, div­i­dend yield or what­ev­er. Um, so it cer­tain­ly, there’s a lot of gam­ing going on already because of the lev­el of quant trad­ing that’s in the mar­ket. So this is gonna get big­ger with AI, I think.

Navarre: Yeah, and peo­ple will be able to fig­ure out, uh, what data to feed into AI at some point to get it to tell peo­ple cer­tain

Tony Kynas­ton: Cor­rect.

Navarre: And peo­ple are active­ly work­ing on that at the moment for, um, search engine opti­miza­tion type

Tony Kynas­ton: Yeah, exact­ly.

Navarre: to opti­mize ai. So it’ll be a mat­ter of time for the influ­ence invest­ing that way.

Tony Kynas­ton: Hmm. what’s um, get­ting back

to Navexa com­mu­ni­ty, what, I mean, it’s almost like an evo­lu­tion­ary growth algo­rithm here, isn’t it? What’s the what does the opti­mal port­fo­lio look like from your expe­ri­ence.

at look­ing [01:04:00] at Navexa,

Navarre: I

Tony Kynas­ton: uh, com­mu­ni­ty as a whole?

Navarre: I mean,

look­ing at, it’s, look­ing at the, the data we’ve run through, there was noth­ing real­ly in there that was, um. Sur­pris­ing to me in the port­fo­lios from an Aus­tralian investor point of view, it was all the, the usu­al sus­pects. And I think it goes back to if you look inside the ASX 200, it’s like the top 10 are doing all the heavy lift­ing and, and a con­sid­er­ably big­ger than the, the next 190. So it would seem most peo­ple are just look­ing at those top 10 and, and hold­ing onto those and then throw­ing in some bit­coin

there, which is, which is help­ing them as well.

Tony Kynas­ton: Hey, you can’t mock it.

It’s a, a satel­lite strat­e­gy, core satel­lite strat­e­gy,

Navarre: it is, it is, and and the core satel­lite approach is, is super com­mon across our user

Tony Kynas­ton: right. [01:05:00]

Navarre: Um, lots of peo­ple with a core ETF hold­ing then doing their kind of stop picks around the edge. So I think, um, Bit­coin is just falling into that, uh, quite nice­ly for those peo­ple.

Tony Kynas­ton: so giv­en that the you know, peo­ple are focus­ing on top the top 10 stocks is that why you are see­ing port­fo­lio size of sort of 20 ish because they’re hold­ing the top ten­ant and they’re hold­ing Bit­coin and some­thing else as well?

Navarre: Yeah, it would kind of appear that way. Um, ’cause 20 hold­ings is like, you have to, have to be quite inten­tion­al with what you’re buy­ing in that case because 20 is not that many at the end of the day. Um, I think peo­ple, yeah, just look­ing for that, uh, appears they’re look­ing for that secu­ri­ty of the, the biggest, hold­ings on the, on the ASX and in the US as well.

You got in there, which is like the behe­moth. So we did­n’t [01:06:00] see any kind of crazy risky, uh, risky small micro caps or any­thing up in that top sec­tion. So oth­er than you could maybe say Bit­coin falls into that cat­e­go­ry, but

Tony Kynas­ton: So peo­ple are, peo­ple are hold­ing 20 stocks on aver­age, um because of the the, a core satel­lite strat­e­gy look­ing for the top 10 stocks in the mar­ket Rather than say­ing, I think the opti­mal port­fo­lio I want to man­age is 20 stocks. ’cause, ’cause there’s a whole, there’s a whole, you know, branch of research that says, you know, you hold more than 20 ish stocks and you get index per­for­mance and

if you hold two stocks, you, you get huge alpha but you might get vol.

Huge volatil­i­ty as well.

Navarre: Yeah. And, and like at the end of the day, I can’t speak to why they’ve done it. I can, all I can do is see the data and, and that’s what it is. So, um, it will, I’m sure over the next few years we’ll be. Um, doing some more sur­veys and things to try and under­stand the why [01:07:00] behind a lot of these, a lot of these deci­sions.

Because at the end of the day, it’s the, the why that’s most inter­est­ing. ’cause some­one can own what­ev­er. it’s like with Bit­coin, it’s like, why, why do you own the Bit­coin? I want to know if, is there a rea­son?

Tony Kynas­ton: When are you gonna sell it? Under what con­di­tions will you sell.

it?

Navarre: That’s right. And, and that’s kind of, that’s the most inter­est­ing part to me any­way,

Tony Kynas­ton: Yeah, no, I agree.

Navarre: yeah.

Tony Kynas­ton: what what I mean there’s, you can answer a lot of invest­ing myths, I guess, through this kind of analy­sis too. And, and one that we’ve tack­led before we’ve had ques­tions about before, is rebal­anc­ing. do you see. do you see extra port­fo­lio trad­ing at this time of year, like at an annu­al basis or at a month­ly basis when peo­ple rebal­ance their port­fo­lios?

Or is it pret­ty even dur­ing the year.

Navarre: Um, the trad­ing vol­umes are, are pret­ty even. I think the events that trig­ger, um, more trades than usu­al are like what we’ve [01:08:00] seen the last few months with the, the tar­iff stuff and things. But I know a lot of peo­ple are doing rebal­anc­ing through­out the year, par­tic­u­lar­ly like SMSF hold­ers and that kind of thing. I haven’t noticed any spikes of it. that would be some­thing inter­est­ing to look into to Hmm

was a, was a fac­tor because this time of year, par­tic­u­lar­ly these last cou­ple of weeks, if peo­ple are try­ing to get rid of some loss­es, um, that will, I’ll keep an eye on that, see if there is a spike in trades over the next cou­ple of weeks. hmm. And at month end too, I would think. Or quar­ter end or some­thing like that. Yeah. inter­est­ing one. Yeah. Uh, ’cause I, I’ve, you know, I’ve always found rebal­anc­ing to be. A bit like index invest­ing. it’s like you you’re not sure what you’re doing so you’re rebal­anc­ing rather than

Tony Kynas­ton: you you know, you’ve got the con, you’ve got the courage of your con­vic­tion ’cause you under­stand the com­pa­ny you’re buy­ing into to to hold.

it even though it’s gone up. Yeah.

Navarre: [01:09:00] Because there’s that buf­fet quote, isn’t there? If you would­n’t, um, side­line your best play­er

Tony Kynas­ton: would­n’t be Michael Jor­dan.

Navarre: would ’cause he’s too good. You

Tony Kynas­ton: Yeah.

Navarre: it out over the team.

Tony Kynas­ton: Cor­rect. Yeah.

Navarre: a true, it’s.

Tony Kynas­ton: No. Yeah. Very inter­est­ing.

Cameron: Alright, nav, we’ve prob­a­bly tak­en up enough of your time. Any, any final words of wis­dom for lis­ten­ers that you

Tony Kynas­ton: I.

Cameron: leave with?

Navarre: I mean, obvi­ous­ly come check out Navexa. Um, it’s

end of end of finan­cial year, so a real­ly good time to kind of get on and, and get your, sort­ed so you can make some good tax deci­sions and, um, and then in the long term, make some good invest­ing deci­sions as well. So, um, there is a 20% off QAV code I believe, which I don’t have on hand, but I’ll get for you. chuck it in

the show notes if you like.

Tony Kynas­ton: That’s great. thank [01:10:00] you.

Navarre: is.

And um, Ter­rif­ic.

yeah, but no, it was a lot of fun and we will be able to unpack some more data in the next few months as well, um, and get a, get a lit­tle bit deep­er into some of these things. I’ll try and get you And long term yeah, and, and tell us how you’re mon­e­tiz­ing that Dar and you must be sit­ting there going, this is the Poké­mon car I can hold onto and, and trade from watch­ing what every­one’s buy­ing and sell­ing. I mean, it’s, it’s, it’s deal flow, isn’t it? I mean, poten­tial­ly, per­son­al­ly, I’m most­ly invest­ing in one stock at the moment, and that’s Navexa itself. Uh, so, um, in terms of diver­si­fi­ca­tion, I’m, I’m not very diver­si­fied, um, that’s, that’s just the nature of, of run­ning your own busi­ness is, is you got­ta back your­self. So I, we, we don’t use any of the data to, we don’t mon­e­tize any of that data. Uh, in fact, this is the first time we’ve kind of aggre­gat­ed the [01:11:00] data to look at, look at some of those trends. So goal with it is to, um, feed it back into the Navexa com­mu­ni­ty itself so that peo­ple con­tribut­ing the data to the aggre­gat­ed results, and then they get val­ue back from it as well. Of course.

Yeah, that’s how we’re, how we’re doing it.

Tony Kynas­ton: Well, I appre­ci­ate you shar­ing it here. I think it’s fas­ci­nat­ing and, uh, it real­ly inter­est­ing dis­cus­sion. thanks.

1. Yeah. No prob­lem at all.

Navarre: It’s good fun. Thank Dis­claimer: This pod­cast is an infor­ma­tion provider and in giv­ing you prod­uct infor­ma­tion we are not mak­ing any sug­ges­tion or rec­om­men­da­tion about a par­tic­u­lar prod­uct. The infor­ma­tion has been pre­pared with­out tak­ing into account your indi­vid­ual invest­ment objec­tives, finan­cial cir­cum­stances or needs. Before you decide whether or not to acquire a par­tic­u­lar finan­cial prod­uct you should assess whether it is appro­pri­ate for you in the light of your own per­son­al cir­cum­stances, hav­ing regard to your own objec­tives, finan­cial sit­u­a­tion and needs. You may wish to obtain finan­cial advice from a suit­ably qual­i­fied advis­er before mak­ing any deci­sion to acquire a finan­cial prod­uct. Please note that all infor­ma­tion about per­for­mance returns is his­tor­i­cal. Past per­for­mance should not be relied upon as an indi­ca­tor of future per­for­mance; unit prices and the val­ue of your invest­ment may fall as well as rise. The results are gen­er­al advice only and not per­son­al prod­uct advice. Trans­paren­cy is impor­tant to us. We will always be very open and hon­est about the stocks we own. We will also always give our audi­ence advance notice when we intend to buy or sell a stock that we are going to talk about on the pod­cast. This is so we can nev­er be accused of pump­ing a stock to our own advan­tage. If we talk about a stock we cur­rent­ly own, we will make it known that we own it. This email is autho­rised by Antho­ny Kynas­ton (AR No. 001292718). Copy­right © 2022 Space­craft Pub­lish­ing Pty Ltd trad­ing as QAV (“QAV”) (ABN 41 163 119 300) which is a Cor­po­rate Autho­rised Rep­re­sen­ta­tive (CAR 001292718) of MF & Co. Asset Man­age­ment Pty Ltd (AFSL 520442). No part of this con­tent may be repro­duced in any form with­out the pri­or con­sent of Space­craft Publishing.you.

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