Entangled Interests — QAV AU 911

QAV AU 911 

Cameron Reil­ly: [00:00:00] Wel­come to QAV TK, episode 9 1 1 9 11.

TK: Nine 11,

Cameron Reil­ly: is that the, is that, is that, I don’t know. Sym­bol­ic,

TK: Paul, how, how soon after the inva­sion of Iraq did nine 11 hap­pened?

Cameron Reil­ly: No, the oth­er way around.

TK: Oh, was it?

Cameron Reil­ly: after

TK: it came first, did­n’t it? Well, it was in response to some­thing. Gulf War one.

Cameron Reil­ly: nine 11?

TK: Yeah.

Cameron Reil­ly: it was, uh, a result of lots of muck­ing around in the Mid­dle East.

TK: Hmm.

Cameron Reil­ly: Uh, well you’ve kicked off the, uh, sto­ry, I guess I read this some­where yes­ter­day. Um, the IEA dot orgs report, oil mar­ket report. This is the largest sup­ply dis­rup­tion in the his­to­ry of the glob­al oil mar­ket.

1. Accord­ing to the Inter­na­tion­al Ener­gy Agency, the war between the Unit­ed States, Israel and Iran has cre­at­ed the largest sup­ply dis­rup­tion in the his­to­ry of the [00:01:00] glob­al law mar­ket. For­tu­nate­ly, Trump won the war, I think day one, day two, it’s all done. Iran

TK: It’s, it’s not a war.

Cameron Reil­ly: out of options. It’s not a war,

TK: No. Mar­co Rubio said it’s not a war.

Cameron Reil­ly: uh

TK: attacked Iran and Iran attacked the us. It’s a defense. It’s not a war. War needs Con­gress, so it’s not the war.

Cameron Reil­ly: Right. It’s like the Kore­an War was­n’t a war, it was a police action.

TK: Cor­rect.

Cameron Reil­ly: Yeah,

TK: Yeah.

Cameron Reil­ly: action. And Bill Clin­ton did­n’t have sex in the Oval Office ’cause it was­n’t Accord­ing to him and his lawyers, Aus­tralia cur­rent­ly holds 36 days worth of petrol sup­ply, 29 days worth of jet fuel and 32 days worth of diesel accord­ing to the lat­est data, accord­ing to the A, b, C.

TK: Well, it does­n’t,

Cameron Reil­ly: not gonna

TK: it

Cameron Reil­ly: a

TK: did. It did hold 36 [00:02:00] days. It’s just released 20% for the coun­try area, so we now hold three weeks worth of sup­ply,

Cameron Reil­ly: right?

TK: which is, which is like a third of what we’re meant to be hold­ing under inter­na­tion­al treaties.

Cameron Reil­ly: Well, we are hold­ing it just when it’s like that Sein­feld

TK: you can’t, you can’t buy it.

Cameron Reil­ly: I don’t think you are. I don’t think you do under­stand. Any­one can take a reser­va­tion. It’s the hold­ing. yeah, I read some­where that we’re hold­ing it in Amer­i­ca. Uh. Yeah,

TK: Yeah.

Cameron Reil­ly: it over there where they have a very sta­ble genius run­ning the coun­try.

TK: It’s not just that, but there’s a, a thing called the Pacif­ic Ocean between there and here too.

Cameron Reil­ly: uh, Iran’s nowhere in the Pacif­ic Ocean. I’m demand­ing that these coun­tries come in and pro­tect their own ter­ri­to­ry because it is their ter­ri­to­ry. Trump told reporters aboard Air Force One on the way from Flori­da to Wash­ing­ton. It’s the place from [00:03:00] which they get their ener­gy. It’s their ter­ri­to­ry. The, uh, Strait of Uz accord­ing to Trump.

TK: Whose ter­ri­to­ry? Every­body’s

Cameron Reil­ly: the

TK: there.

Cameron Reil­ly: worlds,

TK: The world’s, right?

Cameron Reil­ly: the US allies is coun­try.

TK: Yeah.

Cameron Reil­ly: their ter­ri­to­ry.

TK: Includ­ing Chi­na. He’s asked Chi­na to help as well. He did.

Cameron Reil­ly: Yeah, I know. Um, I start­ed a war and now I need help

TK: It’s not a war,

Cameron Reil­ly: the Not a war. Not a war. Sor­ry. I start­ed a

TK: a defense.

Cameron Reil­ly: Yeah.

TK: It did­n’t start it. I ran. So Israel start­ed it.

Cameron Reil­ly: Oh, Israel start­ed with­out any involve­ment from the us.

TK: No.

Cameron Reil­ly: They’re big, beau­ti­ful bombs.

TK: Mm-hmm.

Cameron Reil­ly: mis­siles

TK: Mm-hmm. No.

Cameron Reil­ly: the school was­n’t theirs?

TK: No. Israel’s.

Cameron Reil­ly: Yeah. Right. A pro­longed con­flict could also cause a fer­til­iz­er shock risk­ing glob­al food secu­ri­ty. About 33% of the world’s fer­til­iz­ers, includ­ing sul­fur and [00:04:00] ammo­nia, pass through the strait. Accord­ing to ana­lyt­ics firm, Kep­pler Iran’s con­ven­tion­al Navy has large­ly been destroyed, but the guards still have plen­ty of options, includ­ing fast attack, craft, mini sub­marines, mines, and even jet skis. Packed with explo­sives said Tom Sharp. A retired Roy­al Navy Com­man­der Ter­an has the capac­i­ty to pro­duce around 10,000 drones a month.

Accord­ing to the Cen­ter For Infor­ma­tion Resilience and Non­prof­it Research Group, Yemeni’s Houthis, a group allied with Iran, but with a far small­er mil­i­tary arse­nal at their dis­pos­al shut down most traf­fic pass­ing through the Red Sea for more than two years, despite US and EU Naval efforts. This is from, uh, a Reuters arti­cle I was read­ing last night. So any­way, fun and games, TK and the glob­al mar­kets in the last week.

TK: The, I think the, out of all that, I think the most sig­nif­i­cant [00:05:00] item I read was that the four oil majors sent their CEOs into the White House for a meet­ing yes­ter­day. I think that was in the Wall Street Jour­nal overnight. And, um, yeah, shit’s get­ting real. I, I sus­pect that, uh, a lot of coun­tries have only got weeks worth of oil sup­ply left.

And maybe that’s not the case for Mogas, but it’s prob­a­bly the case for fuel oil and diesel in par­tic­u­lar. Um, and as you say, fer­til­iz­er inputs. So when that gets crit­i­cal, uh, I think the Straits of home­own­ers will be opened. I won’t say nec­es­sar­i­ly how, but I don’t think it’ll be left closed.

Cameron Reil­ly: Are the oil majors mak­ing mon­ey out­ta this? ’cause The oil, when the oil price goes up, are they hap­py?

TK: Yeah. But that’s like. Say­ing you’re tak­ing tips when you’re fid­dling on the Titan­ic because it’s like you’ll make it for three weeks and when the oil runs out, you can’t, you can’t, uh, [00:06:00] con­tin­ue to make it. So No, they’ll be want­i­ng the straights if almost to open.

Cameron Reil­ly: Did you, uh, have a look at that Red­dit link I sent you? I’m an Aus­tralian whole­sale fuel fuel trad­er.

TK: I did. Yeah. I had a look at a cou­ple of them. Um, that prob­a­bly will linked from that one. But, uh, I mean the inter­est­ing things are around what’s hap­pen­ing with Japan and Korea and they’ve got the, some of the big super refiner­ies there. And so they’re now with­hold­ing deliv­er­ies to keep them, uh, stock­piles for their own use if they can get the feed stock, which gen­er­al­ly comes from the Mid­dle East.

So if, you know, they’re prob­a­bly the canaries in the coal mine. If they run out, we, we run out. ’cause most of our stuff comes from over­seas, from Sin­ga­pore or those two. Uh, yeah. So it’s um. It’s, yeah, it’s get­ting very, very point­ed at the moment. I think it’s, um, if hav­ing lived through the sev­en­ties and the oil shocks and [00:07:00] poten­tial, I don’t know if we ever got the fuel rationing.

I, I think from mem­o­ry we might have had odd and even num­ber plate days when you can fill up. That seems to jog my mem­o­ry as I, as I was a kid. But yeah, I mean there’s, um, there are already some of those coun­tries I just men­tioned in Asia are already telling peo­ple to work from home and don’t use their cars and tak­ing efforts to try and stop petrol from being used.

But if, if that starts to spread to the us, which is prob­a­bly the least like­ly place for it to spread ’cause they’ve got shale or they can, um, stop export­ing and keep on shore. Um, but we’ve got noth­ing. About 8% I think of our. Oil is pro­vid­ed local­ly. We’re bet­ter place for gas. We’ve got heaps of gas, although it’s all going off­shore and we’re pay­ing no roy­al­ties for it, we’re get­ting no roy­al­ties from it.

Um, and we have to, I mean, you could change an act of par­lia­ment to get it divert­ed back to Aus­tralia. So I think gas will be okay, but, uh, you know, we’re stuffed for fuel after, you know, poten­tial­ly with­in the next [00:08:00] month. I don’t wan­na paint a, a bad pic­ture, but it’s all build­ing up to some­thing hap­pen­ing.

Either Trump chick­ens out and the streets of them was open, which is entire­ly pos­si­ble. Or the, the war esca­lates dra­mat­i­cal­ly and I ran backs down is my take.

Cameron Reil­ly: All these employ­ers and gov­ern­ment depart­ments that have been try­ing to shut down work from home since we came out­ta COVID are gonna be

TK: Yeah.

Cameron Reil­ly: back on board with it again. This, this guy on Red­dit, um, I, I mean, I don’t know how this mapped to your expe­ri­ence in the fuel indus­try, but it was inter­est­ing from my per­spec­tive.

Um, he says Aus­tralian fuel is 90% import­ed these days main­ly from Asia. The Asia refin­ers are more com­pet­i­tive and have economies of scale that com­pete with Aus­tralian refiner­ies. That’s why most of ours have closed for over a decade, has not met the inter­na­tion­al­ly agreed 90 day buffer of fuel reserves in the coun­try.

We sit at rough­ly 32 days of stock. This is the fault of both labor and lib­er­al gov­ern­ments in the past. Note, [00:09:00] it’s easy to store crude oil, but much more dif­fi­cult to store refined prod­ucts like diesel and petrol. They’re flam­ma­ble and go off after a few months of sit­ting in a tank. It’s very expen­sive to build brand new stor­age tanks, which is why no com­mer­cial. Per­son is doing it. That’s why we import so much oil through­put. Not all crude oils are the same. The Asian refiner­ies are set up to refine medi­um sour crude. Far more expe­ri­enced chem­i­cal engi­neers or Google can give you more info. Uh, this is main­ly pro­duced by the Mid­dle East. It’s very hard to replace this crude oil into the refiner­ies at short notice.

So it does­n’t mat­ter how many bar­rels the US releas­es from its crude stock­piles as that is a light sweet crude and is pro­hib­i­tive­ly expen­sive on the ocean flight com­po­nent. Asian refin­ers have been can­cel­ing con­tracts and gov­ern­ments like Thai­land and Chi­na are ban­ning diesel and petrol exports to keep these crit­i­cal fuels in their own coun­tries.

There­fore, it’s got­ten very expen­sive to source alter­na­tive car­goes [00:10:00] to sup­ply Aus­tralia. The best analy­sis I am read­ing is as soon as the Mid­dle East water­way straight of Hor­muz opens up, still be one and a half to two months before the Asian refiner­ies are run­ning at full capac­i­ty. Again. Note you can’t just shut down a refin­ery.

These things are designed to run 24 7. Shut­ting down com­plete­ly puts equip­ment at seri­ous risk of dam­age. There­fore, refin­ers are choos­ing to run at say, 50% capac­i­ty to delay run­ning out of crude oil feed­stock and not dam­age refin­ery equip­ment. Any who con­clu­sion is this sit­u­a­tion isn’t resolv­ing itself any­time soon.

Unfor­tu­nate­ly, there is a say­ing in com­mod­i­ty train­ing, high prices cure high prices and low prices cure low prices. When the price sky­rock­ets, demand drops off, where pos­si­ble or sup­plies increased, when there’s super low prices, sup­ply reduces. The said sup­pli­ers can’t stay in busi­ness sell­ing at those low prices. In this cur­rent high prices sit­u­a­tion, sup­ply can’t increase right now. So the only lever [00:11:00] is to reduce demand. If the prices kept low by gov­ern­men­t’s, demand would stay around. You’d have no more sup­ply com­ing in Aus­tralia and you’d even­tu­al­ly run out­ta fuel. Nei­ther’s a good sit­u­a­tion, but run­ning out­ta fuel entire­ly is prob­a­bly worse than hav­ing some fuel at a high price, which the­o­ret­i­cal­ly destroys some flex­i­ble demand. Um, have you been fol­low­ing what’s going on in Cuba?

TK: But only from the point of view of Don­ald Trump say­ing he’s going to annex them.

Cameron Reil­ly: Well, he’s cut off all the fuel sup­ply to

TK: Ah, okay. I did­n’t know that.

Cameron Reil­ly: the last year or two has been get­ting most of their fuel from Venezuela. When, when he took over Venezuela, he can­celed all of the fuel

TK: Mm-hmm.

Cameron Reil­ly: to Cuba Cuba’s, you know, hos­pi­tals are shut­ting down, all their phar­ma­ceu­ti­cals are going bad because they don’t have refrig­er­a­tion, because they don’t have fuel.

Cuba is a coun­try that runs most­ly on petrol, still has­n’t been elec­tri­fied, they don’t have alter­na­tive sources of ener­gy and all that kind of stuff. [00:12:00] so he’s try­ing to crip­ple the coun­try com­plete­ly by cut­ting off its fuel. Rus­sia has tried to send some to them and I think their ships got stopped as well.

TK: Mm-hmm.

Cameron Reil­ly: Um, so it’s just iron­ic that, you know, he’s been doing it delib­er­ate­ly to crash Cuba’s econ­o­my

TK: Yeah. Right.

Cameron Reil­ly: now we’re all star­ing down the

TK: Mm.

Cameron Reil­ly: what hap­pens when a coun­try can’t get access to fuel through one of his oth­er, not very well thought through adven­tures.

TK: I mean, that’s the, it’s, it’s a, it’s kind of a scary time in one respect, but it’s, but it’s also play­ing into a high­er cost world because it’s this theme where I was talk­ing about before on prize shows that the world’s decou­pling, I mean, it was back when every­thing, um, had inter­na­tion­al sup­ply chains that move with­out fric­tion.

Uh, you could go for just in time sup­ply, and you could be a gov­ern­ment that said, I’m gonna hold three or four weeks worth of all reserves. Could, because that’s fine ’cause you’ll get plen­ty of [00:13:00] tankers in from Sin­ga­pore in that time to replace it. But, but, but now, if the Sin­ga­pore refiner­ies or the Asian refiner­ies can’t get the type of oil they need, which only comes from the Mid­dle East, every­thing just comes up.

Which means that to pre­vent that it, once we get through this, um, cri­sis gov­ern­ments are gonna take steps to stop it from hap­pen­ing again. Which means, um, you know, build­ing up stocks local­ly, they’re gonna, you know, find oth­er ways of get­ting oil to from the Mid­dle East. There’ll be all sorts of things put in place to mit­i­gate the risk, which will increase the sup­ply chain costs and put what, you know, the stor­age, um, bulk­heads stor­age com­po­nents, stor­age capac­i­ties into sup­ply chains, which aren’t there at the moment, which will add to costs.

So mov­ing into a high cost world.

Cameron Reil­ly: What have we done since COVID to make sure that does­n’t hap­pen again? Anoth­er pan­dem­ic that shuts every­thing down. What

TK: Uh, alright. We put RFK into the, on the job, so,

[00:14:00] uh,

Cameron Reil­ly: Well, talk­ing about, uh, things going down my super port­fo­lio has been killed. How’s your port­fo­lio going?

TK: well actu­al­ly I kind of have delib­er­ate­ly not been looked at, but I looked at it today when you put you on notes through, sent your notes through just to see is, yes. So mine’s down still, uh, run­ning at 18% this finan­cial year, but it was up like dou­ble that until recent­ly.

Cameron Reil­ly: Yeah, mine too. Like if I go back to the 1st of Decem­ber, I was at 31% ver­sus the index at 13. Now I’m at 14 for the last one year ver­sus 15 for the index. I’ve like in the last week, two, uh, since, yeah, even 19th of Feb­ru­ary, I was at 27% ver­sus 20. had start­ed to catch up, but yeah, it’s just [00:15:00] crashed. Most­ly CGF, uh, thanks a

TK: Yeah.

Cameron Reil­ly: CGF, it’s down. And I had to sell some­thing. When did I sell yes­ter­day? I can’t remem­ber now. Um, uh, MAF. crashed uh, CGF crashed any­way. Dun­no, both finan­cials got noth­ing to do with oil direct­ly, but some tie into the finan­cial sec­tor, I guess. Uh, the oth­er thing that’s crashed this week is the poll, the quiz of the week. Your bril­liant idea. Put a quiz in. Every­one loves quizzes. No, no one. I think last week’s quiz got one sub­mis­sion and it was prob­a­bly me, not

TK: you won. You won the quiz.

Cameron Reil­ly: even you did­n’t do the quiz, your idea to do a quiz. You don’t even do the quiz.

TK: Well, that’s not fair if I do it, is it?

Cameron Reil­ly: not

TK: No,

Cameron Reil­ly: why not?

TK: because we are, well, I’m asso­ci­at­ed with you and your run­ning it

Cameron Reil­ly: [00:16:00] Very short buy list for me this week, Tony. Four stocks I had after I removed josephine’s and com­mod­i­ty cells and com­mod­i­ty josephines. Uh, did

TK: be four All Ords, four all stocks. Yeah, I did sim­i­lar. Yeah.

Cameron Reil­ly: Yeah. All oil stocks. They were, that’s right. Four oil stocks, uh, crazy, crazy time, like four stocks. And I already owned most of them in one port­fo­lio or anoth­er. Oh.

TK: Yeah.

Cameron Reil­ly: them, of ’em was, uh, being acquired too, I think might have

TK: Yes. Uh.

Cameron Reil­ly: or some­thing like

TK: Hori­zons acquir­ing QI think from mem­o­ry.

Cameron Reil­ly: Oh, Q that’s who it was.

TK: Yeah.

Cameron Reil­ly: So, so there was real­ly

TK: Try­ing, try­ing to turn the car safe­ly. James q

Cameron Reil­ly: but I’ll tell you what’s killing it is the

TK: uh,

Cameron Reil­ly: Aus­tralia.

TK: with dyna­mite.

Cameron Reil­ly: [00:17:00] Yeah, very bondy, isn’t it? Jet

TK: That’s a, that’s an image. Yeah.

Cameron Reil­ly: Yeah, yeah. Um, the QAV, stock Edia port­fo­lio for Aus­tralia, which I haven’t looked at for over a year ’ cause

TK: So you,

Cameron Reil­ly: yeah,

TK: this up a year ago with what? What­ev­er the Bist had at the time.

Cameron Reil­ly: no, I set it up in March of 2025 when I had fin­ished build­ing the Wikipedia check­list

TK: Right.

Cameron Reil­ly: and I, oh, hold on. No, it goes back ear­li­er than that. Sor­ry. It was, uh, July, 2023 when I was build­ing the check­list and I want­ed to build a port­fo­lio straight from that and then com­pare the per­for­mance of that over a year with the per­for­mance of the Stock Doc­tor run port­fo­lios and see how they com­pared.

’cause it was. [00:18:00] Spit­ting up slight­ly dif­fer­ent buy lists and slight­ly dif­fer­ent stocks and all that kind of stuff.

TK: Yeah. Right.

Cameron Reil­ly: so I ran it for a while and every­thing checked out and it was track­ing along doing about the same. And so I said, okay, that’s good. And I just to ignore it, but I did­n’t shut it down and I left it there. Well, in the last year it’s gone up 38.8% ver­sus the s and p 500, which is up 10%. And ver­sus the dum­my port­fo­lio, uh, let’s see, the dum­my port­fo­lio in the last year has just come down. It was up 32%. It’s just

TK: Mm.

Cameron Reil­ly: to 23 in the last cou­ple of weeks. Um, but the oth­er one, but the Wikipedia one, which I haven’t touched, so no sell­ing

TK: Yep.

Cameron Reil­ly: ignor­ing. Gets back to Scot­t’s, uh, or some­body’s,

TK: [00:19:00] Mm-hmm.

Cameron Reil­ly: email from a few weeks ago. crush­ing it.

TK: So what are you sug­gest­ing?

Cameron Reil­ly: noth­ing, I just

TK: Uh

Cameron Reil­ly: inter­est­ing

TK: oh, yeah.

Cameron Reil­ly: this,

TK: It’s

Cameron Reil­ly: through this with Scott. I just wan­na tell you the big win­ners, Vasan,

TK: mm-hmm.

Cameron Reil­ly: this is not just in the last year, this is since I bought at all time, is up 364% Shape Aus­tralia up 280% South­ern Cross Elec­tri­cal up 226%.

McMa­hon Hold­ings up 130 SSM ser­vice stream up 120. Par­en­ti up a hun­dred, Joyce up 88. The oth­ers are Nab Viva Leisure KO Hold­ings, boom Logis­tics nz. Which is fun­ny ’cause I, well it’s only up 18% NZM Aba­cus a BG, don’t even know who they are. Diver­si­fied Real Estate Invest­ment Trust are reit. Oh. ’cause I did­n’t take REITs out of this and [00:20:00] shine jus­tice.

Well, shine jus­tice is down 20%, to be fair. So that’s the big los­er. Um, Aba­cus is down 3%, but they’re the only two stocks that are down. Every­thing else is up

TK: Mm-hmm.

Cameron Reil­ly: and, uh, gang­busters. But of course it’s been a good year and it’s all hap­pened since the mid­dle of last year, which is when our, our port­fo­lios all blew up as well.

TK: Yeah.

Cameron Reil­ly: so the les­son there is, there is no les­son, but, um, I just thought I was, I went to shut it down because, um, when I go to Wikipedi­a’s news, it, it gives me news, um, from all of the. Folios that I have include, and the Aus­tralian news was hav­ing a bunch of stocks that I did­n’t care about. I just want­ed to show me this news from the US stocks before we did the US show each week.

TK: Mm-hmm.

Cameron Reil­ly: to delete this port­fo­lio the day I thought, oh, it’s prob­a­bly time to get rid of it. And then went, oh my God, at that. crush­ing it. [00:21:00] But yes, I don’t believe that’s a good strat­e­gy. Just buy and hold for­ev­er.

TK: No. Oh, you know, maybe 12 months, three bal­anc­ing years, I don’t know. But yeah, there’s cer­tain­ly peri­ods where buy­ing and hold­ing wins and cer­tain­ly peri­ods where it losers.

Cameron Reil­ly: Well, I won’t say who, but we both know did tell me a cou­ple of years ago that he was just gonna buy Nick Scali and hold it for­ev­er. And then I had a look at Nick Scali the oth­er day when we had an email from him and it’s, uh, not had a, had a good year.

TK: There was anoth­er stock that same per­son told me years ago he was gonna buy and hold for­ev­er. I’m just, I think it was Coro­n­a­do

Cameron Reil­ly: Did­n’t they go out of, they shut down, did­n’t they? They moved off shore. They went to the US or some­thing.

TK: some­thing any­way, it

Cameron Reil­ly: Yeah,

TK: would­n’t be a stock that I would’ve bought and held for­ev­er. ’cause it’s a com­mod­i­ty stock for a start. So, yeah.

Cameron Reil­ly: Coro­n­a­do, glob­al Resources.

TK: Hmm.

Cameron Reil­ly: Yeah, [00:22:00] I think it de list. No, it’s still still going.

TK: Yeah, it has­n’t been on the buy list for a while though.

Cameron Reil­ly: Feb­ru­ary 23, it was trad­ing at $2. Now it’s trad­ing at 35 cents. So yeah. Good luck with buy­ing old for that one.

TK: Hope­ful­ly it’s had like a 10 for one share split or some­thing. But you know, I don’t think it has.

No, and that’s the risk. That’s always the risk. I mean, you know, um, with the excep­tion of per­haps Berk­shire Hath­away and maybe a few oth­er stocks, is it’s very hard to pick a stock which is gonna still be around and 20 years, let alone giv­ing you good returns along the way as well.

Cameron Reil­ly: Yeah. Speak­ing of Scott Scot­t’s got a ques­tion, um, about Perseus.