QAV Weekly Update 2023-06-20

 

Cameron  00:06

Wel­come back to QAV, episode 624, record­ed on the 13th of June 2023; the day after the birth­day of some­body called Mr King. I don’t know who this Mr King is, no friend of mine, but appar­ent­ly every­one down south had a hol­i­day for him yes­ter­day, so you must all be big fans of this Mr King Guy.

 

Tony  00:27

Yeah, it’s not even his birth­day, I don’t think, although we call it that. We just say, “no, it’s your birth­day. Just sit back and take it.” Relax.

 

Cameron  00:33

Shut up.

 

Cameron  00:36

Didn’t have one for him up here, so I’m work­ing. The mar­kets not open. That’s always kind of weird.

 

Tony  00:42

Yeah, it isn’t.

 

Cameron  00:44

The AFR at 7am this morn­ing, Tony, pre­dict­ed a rise in the mar­ket today. Yes­ter­day, they were say­ing that the US is in a bull mar­ket because of AI stocks, which we’ll talk about a lit­tle bit lat­er on. It said the mar­ket was going to be up today.  Wasn’t when I looked before. Oh, It’s gone up a lit­tle bit. Gone up a lit­tle bit since lunch, but today it’s a lit­tle bit on the upside by the looks of it. But it hasn’t been very excit­ing. It’s been the usu­al kind of depress­ing non­sense from the mar­ket of late. I had a look yes­ter­day when I was doing the week­ly report. I think the ASX is up 6% for the year, the All Ords is up 6%, sor­ry, for the year. It’s bare­ly, bare­ly moved.

 

Tony  01:30

Was it up 16% at some stage?

 

Cameron  01:33

The STW is up.

 

Tony  01:35

Oh, right.

 

Cameron  01:35

Actu­al­ly, the All Ords over a twelve-month peri­od is not up. For the finan­cial year it’s up 6%, because it dropped at the end of the finan­cial year last year. But if you look at the one year, right back to mid-June, it’s yeah, it’s pret­ty much a straight line. Over the last two years you’re look­ing at pret­ty much a straight line. It’s gone up, it’s gone down, one foot for­ward, one foot back­wards for two years now. But any­way. But one thing I did see in the AFR this morn­ing in the same arti­cle that said the AFR, sor­ry, the ASX was going to rise, it said that oil was drop­ping. And when I went and had a look at the oil price about an hour or so ago, I think oil is now a sell. Would you mind bring­ing up oil and hav­ing a look for me? See what you think.

 

Tony  02:25

I did have a look at oil today. This is ear­li­er on, but I’ll look at it again now. And just bear in mind that we nor­mal­ly use Brent and the AFR will prob­a­bly be using the US oil price, and US oil was a sell this morn­ing and Brent was a buy, but it may have changed. Let me have a look.

 

Cameron  02:44

Well, I was look­ing at Brent in Stock Doc­tor, and it’s hard to draw an L2, but I think there’s one there. It’s only a trough by a cent from mem­o­ry.

 

Tony  03:00

Oh yeah, its dropped off today.

 

Cameron  03:02

Yeah, L1 is obvi­ous­ly the March 2020 COVID cough. L2, you know, it’s got of a lit­tle bit of a dip at the end of May, but I don’t know. It’s still falling after that, so that’s not real­ly a trough. But if you go back to March 23, it closed March 23 at 79.5. It closed April at 79.51. So, that makes March tech­ni­cal­ly a trough even though it kind of looks flat on the graph. So, yeah, I think it’s a sell, which turned out not to be a big deal because I don’t own any oil stocks. So, it just means that we’re not going to be buy­ing any until it turns around.

 

Tony  03:42

Yeah, I had to sell Karoon Ener­gy. It wasn’t because of that, actu­al­ly Karoon went through its sell line as well, because I think prob­a­bly it’s more dri­ven, could be dri­ven more by the US oil price, which was a sell when I had a look this morn­ing.

 

Cameron  03:57

Yeah, I don’t seem to own Karoon or any oil stocks in any of the port­fo­lios. I was — and there’s a ques­tion I’m going to ask you a lit­tle bit lat­er on — I was look­ing at brook­side, BRK, I think, yes­ter­day or late last week actu­al­ly, but doesn’t mat­ter now. I’ll talk about it any­way. Tin is a buy though, so bought a lit­tle bit of MLXtoday. MLX is on the buy list and it’s in the tin biz. Now inter­est­ing­ly, when I was doing a lit­tle bit of research on tin and what could be affect­ing the tin price, I came across one of Tim Treadgold’s arti­cles from back in March. I know you read a bit of Tim­my Tread­gold from time to time. He pro­vid­ed a pret­ty pes­simistic analy­sis of tins prospects at the time, but we don’t lis­ten to fore­cast. But it was worth a read though, because it talked a lit­tle bit about what dri­ves the tin price, and one of the things that it gets used a lot in is GPUs — CPUs and GPUs. And I was won­der­ing if its price is on the rise at the moment because of the GPU mar­ket, which is going kind of nuts because of AI at the moment. So, GPUs for peo­ple over the age of twen­ty-five, are graph­ics pro­cess­ing units designed orig­i­nal­ly for gam­ing sys­tems, Xbox con­soles, that kind of stuff. They process graph­ics real­ly quick­ly. Turns out they’re real­ly good for AI, Chat GPT, LLMs, that kind of stuff. So, they cost about, I think, $10,000, a GPU, the high-end ones, and Open AI and the like are buy­ing them in the tens of thou­sands to run their LLM engines. So, they cost a pret­ty pen­ny if you want to build an LLM. If you’re think­ing of build­ing your own LLM, Tony, after you buy your Apple Vision Pro — I’m sure you’ll be the first per­son to buy an Apple Vision Pro when they come out next year. You’re about the only per­son I know that can afford one. Yeah, it’ll cost you, set you back a few bil­lion if you want to buy the GPUs to build your­self an LLM. So yeah, I thought that might be a thing. And Nvidia, tech­ni­cal­ly an Amer­i­can com­pa­ny, but real­ly, they’re all made in Tai­wan, their GPUs are made from…

 

Tony  06:29

For how much longer?

 

Cameron  06:29

Well, they’ll keep being made in Tai­wan it just depends, you know, who owns Tai­wan, I think. They’re made from “alu­mini­um, cop­per clad lam­i­nates, glass fibres, ther­mal sil­i­ca gel, tin, tan­ta­lum, and tung­sten.” Accord­ing to their web­site, “many of these mate­ri­als are out­sourced from sup­pli­ers in Indone­sia and Chi­na.” “Tin, tan­ta­lum, and tung­sten are con­flict min­er­als that have been tied to fund­ed violence/human rights vio­la­tions.” That’s not a fair web­site. I got that off anoth­er web­site,

 

Tony  07:05

Par­tic­u­lar­ly in Tas­ma­nia, where Met­als X is based.

 

Cameron  07:11

I wouldn’t know any­thing about that. Yeah.

 

Tony  07:13

I’m just jok­ing. You’ve lost me on a lot of that stuff. So, LLM: large lan­guage lunar lan­der mod­ule?

 

Cameron  07:20

Large Lan­guage Mod­ule. Gen­er­a­tive AIs are a form of, well, par­tic­u­lar­ly the chat ver­sions of it, are large lan­guage mod­els. That’s how they’re trained, around a large lan­guage mod­el.

 

Tony  07:34

Okay. So, you’re sug­gest­ing that because the LLMs are using lots of these — gee, I’m get­ting the lin­go now, these graph­ics GPU, there they go — that tin might be on the rise, the price of tin.

 

Cameron  07:48

You’ll be able to give a TED Talk on it in a week.  I don’t know, something’s dri­ving the tin price up any­way. I don’t know if it’s GPUs, but it’s just some­thing that I thought when I was doing some research on it.

 

Tony  08:00

I had a look at the arti­cle, and Tim Tread­gold gold was actu­al­ly, I think, argu­ing against that. He was say­ing that last year the price was ris­ing because peo­ple thought it was gonna get a lot of use in AI. But he point­ed out that there was a sup­ply imbal­ance, and once that right­ed itself the price came down, and he still thought it might con­tin­ue to go down from here. Again, it’s inter­est­ing from the point of view of he’s done a deep dive into one com­mod­i­ty and explained the sup­ply chain and looked at var­i­ous mines, which are com­ing online, in, I think, Peru from mem­o­ry, etc., etc., and thought the price would there­fore keep drop­ping because there was a lot of sup­ply. And that’s the kind of analy­sis that is prob­a­bly, you know, a much bet­ter pre­dic­tor of price then look­ing at the graphs and look­ing at the trends. In a lot of cas­es, it’s basic sup­ply and demand. But com­modi­ties work that way. And I’m remind­ed of, I think it might have been an arti­cle I read on the week­end, but cer­tain­ly one that’s been around for a long time, that Black­rock I think it is, when they got going, made a lot of mon­ey out of look­ing at satel­lite pho­tographs of oil stor­age tanks. The big oil stor­age tanks at ports around Aus­tralia and around the world have float­ing ceil­ings on them, so you don’t get any air in the tank. So, as they get full of fuel, the ceil­ing ris­es. And they could tell from the satel­lite pic­tures that most of the stor­age tanks around the world, the ceil­ings are dropped. So, there was going to have to be a restock­ing which would dri­ve the price up, and they invest­ed in oil and rode that wave. And that’s typ­i­cal­ly what some­one who does a deep dive in com­modi­ties will do. They’ll try and work out where the sup­ply demand imbal­ance is at the moment. And you know, Tim was say­ing it’s more on the sup­ply side with tin. With­out hav­ing the abil­i­ty to do that, because I know noth­ing about the tin mar­ket, all that stuff gets baked into the price. And so, we see it in the graphs. And the graph is a tus­sle in tins case between peo­ple who think that AI’s gonna soak up lots of GPUs and need lots of tin, and the more tra­di­tion­al ana­lysts who are say­ing, well, there’s lots of tin com­ing on the mar­ket. So, you do often see that kind of analy­sis baked into the price in the graphs as well. That’s what I rely on, any­way.

 

Cameron  08:00

So, we still rely on the charts.

 

Tony  09:12

Yeah, I cer­tain­ly don’t have the abil­i­ty to analyse every com­mod­i­ty mar­ket in depth and look at satel­lite images for mines com­ing online, and oil tanks and where their stor­age is, etc.

 

Cameron  10:27

You have the abil­i­ty; you just don’t have to give a shit fac­tor.

 

Tony  10:30

Exact­ly. You could be wrong, you could do all that analy­sis and still be wrong, right? Because the day after you do it, the mine could col­lapse and the whole things thrown out the win­dow, so who knows?

 

Cameron  10:45

As you’ve said many times before, if ana­lysts and econ­o­mists real­ly knew what they were doing they’d all be rich.

 

Cameron  10:51

Most of them aren’t, so they don’t real­ly know what they’re doing.

 

Tony  10:51

Yeah.

 

Tony  10:52

And Tim wouldn’t be writ­ing arti­cles for Eure­ka Report for a jour­nal­ist wage. And no dis­re­spect to Tim, I don’t know him. He may well be, you know, sit­ting on a pile of gold and writ­ing for fun, who knows?

 

Cameron  11:09

Sure, like you’re doing for this pod­cast.

 

Tony  11:13

Yeah, help­ing you pay your back tax­es.

 

Cameron  11:17

Don’t bring that up, you’ll depress me. Before we move on to Brook­side, I want­ed to let every­one know that we launched our end of finan­cial year cam­paign, end of finan­cial pro­mo­tion today. Dis­count let’s just say that. There’s also a Stock Doc­tor EOFY pro­mo­tion on at the moment, too. So, have a look at my blog post that went out today or yes­ter­day by the time you get this, it’ll run to the end of the finan­cial year. If you want to save some mon­ey on your sign­ing up or upgrad­ing your club mem­ber­ship, or if you’re think­ing about becom­ing a mem­ber and you want to save a few bucks on us and Stock Doc­tor, go check that out.

 

Tony  12:00

Sor­ry, thank you for that. And by the way, my pulled pork today is going to be on Met­als X, on tin.

 

Cameron  12:07

Oh cool. That’s nice. Well, it’s gonna be the tin show, the Tin Man.

 

Tony  12:12

The Tin Man, yeah.

 

Cameron  12:14

Brook­side Ener­gy, Tony. Now this one bam­boo­zled me a bit. I was look­ing at them, as I said, the oth­er day. They were on the buy list and in the break­down in my Comm Stocks tab I had them as list­ed, sort of, half/half LNG and crude, but one of my sheets said 51/49 the oth­er ones had 60/40. I don’t know where those num­bers came from, or why they were dif­fer­ent, so I went to their web­site, their annu­al report, and couldn’t find a break­down any­where on their rev­enues. They just said, “rev­enue from oil and gas,” “rev­enue from oil and gas,” “rev­enue from oil and gas.” So, I post­ed a ques­tion on Face­book. Now Richard G said, “by my read­ing no LNG. Just oil, nat­ur­al gas and nat­ur­al gas liq­uids like butane and propane. So, they are sep­a­rat­ing the com­po­nents by heat­ing and then strip­ping off the lighter saleable com­po­nents, but def­i­nite­ly no liq­ue­fied nat­ur­al gas by these guys on those wells from my read­ing.” Now, this I found inter­est­ing because I did not know that nat­ur­al gas, nat­ur­al gas liq­uids and liq­ue­fied nat­ur­al gas were in fact sep­a­rate things. I just thought it was all “get the nat­ur­al gas, then you liq­ue­fy it, and you sell it.” Appar­ent­ly, these are dif­fer­ent things, Tony. Now nobody knows more about nat­ur­al gas thank you, can you explain to me the dif­fer­ence between all of these?

 

Tony  13:38

I can’t. I can explain the gas­es, the butane and all that, they are part of the dis­til­la­tion process. But when I had a look to answer your ques­tion, I thought the nat­ur­al gas was liq­uid nat­ur­al gas myself. Which again is dis­tilled from the refin­ing process from oil, but it’s gen­er­al­ly put under pres­sure and trans­port­ed in a liq­uid form under pres­sure, which has a lot more cost in the sup­ply chain than sim­ply refin­ing oil and putting it in a truck and tak­ing it to a ser­vice sta­tion. What I found when I was look­ing at this par­tic­u­lar com­pa­ny was, like you, I couldn’t find any­thing on their web­site in their annu­al report about the breakup, but I did find on their web­site the bro­kers report, which I’ll try and find for you. So, it’s in the investors link on the Brook­side web­site, and it’s a broker’s report. It’s from the Aus­tralian Research Inde­pen­dent Invest­ment Research. It’s lit­er­al­ly called Aus­tralian Research and then Inde­pen­dent Invest­ment Research, so I guess it’s Aus­tralian Research. No, Inde­pen­dent Invest­ment Research. Nev­er heard of them. Any­way, they’ve done a deep dive into Brook­side, and on page three there’s a graph of the breakup between oil, NGL — which I thought was going to be the same as nat­ur­al gas, but I’ll take it on notice that it’s not — gas, and then the total BOE, bar­rels of ener­gy. And it breaks it down, and impor­tant­ly, gives a unit price. So, all of these dif­fer­ent types of dis­til­lates have dif­fer­ent prices. And so, what I came up with was the oil sec­tion was 54% and the gas and dis­til­lates were the rest.

 

Cameron  13:50

Let me add that in my thing for next time. So, 54% for oil, which would make 46% for the gas.

 

Tony  15:39

Yeah, but what’s called NGL, which I assumed was nat­ur­al gas, but it may not be, but cer­tain­ly the oth­er one, which is called gas, has a dif­fer­ent price accord­ing to this analy­sis. So, we can’t use the LNG graph for the oth­er half, we have to use the oil graph for this one. And just last thing is that it’s a welder in the US, so it’s going to be in US price. It won’t be the Brent, which is the one we use in Aus­tralia. It’s going to be the US crude oil price.

 

Cameron  16:08

Well, the Stock Doc­tor Brent price does say Brent Crude North Amer­i­ca, isn’t that an Amer­i­can price, there­fore?

 

Tony  16:15

It’s an Amer­i­can price, but Brent crude is… So, oil from dif­fer­ent parts of the world has dif­fer­ent char­ac­ter­is­tics, and Brent is typ­i­cal­ly from Aus­tralia or some parts of the Mid­dle East, and US oil is dif­fer­ent again. And the oil wells that this com­pa­ny owns are in the US, so we need crude oil futures in Stock Doc­tor.

 

Cameron  16:36

And that’s not what BRT‑N is? Oil Brent Crude North Amer­i­ca?

 

Tony  16:42

No, that’s if you’re sell­ing Brent crude using US dol­lars. And we want the one called crude oil. And that’s sim­ply because this company’s oil wells are in the US. Yeah, so we use Oil Brent Crude North Amer­i­ca, and I would think the most rel­e­vant one for this com­pa­ny is crude oil futures, which is also a sell, so they’re prob­a­bly not going to be too dif­fer­ent.

 

Cameron  17:07

And so, as far as how we rate it in our checks, we’re just using oil from now on.

 

Tony  17:16

Yep, it’s a sell.

 

Cameron  17:18

Okay, well, because I want to dri­ve up the price of tin, I went to Chat GPT and I asked it to tell me the dif­fer­ence between LNG nat­ur­al gas and nat­ur­al gas liq­uids. And here’s what it said: “nat­ur­al gas LNG and nat­ur­al gas liq­uids, NGL…” It’s fun­ny, when my kids right NGL it’s Not Gonna Lie: NGL I’m feel­ing like shit today. NGL.

 

Tony  17:42

Oh, nev­er heard that.

 

Cameron  17:43

“…Are all relat­ed com­po­nents of the oil…” Yeah, Alex prob­a­bly doesn’t use hip lin­go like that, she’s too edu­cat­ed. My boys dropped out of uni, so they speak, you know, Gen Z speak. “…All relat­ed com­po­nents of the oil and gas indus­try but they have some impor­tant dif­fer­ences. 1) nat­ur­al gas: this is a fos­sil fuel form from plants and ani­mals that lived mil­lions of years ago. It is pri­mar­i­ly com­posed of methane but can also con­tain small amounts of oth­er hydro­car­bons such as ethane, propane and butane…” “Propane and propane acces­sories.” “…white vapour and var­i­ous oth­er gas­es.” That’s a King of the Hill ref­er­ence for any­one who’s nev­er watched that. “It is pri­mar­i­ly used as a fuel…” Mike Judge’s show. Mike Judge cre­ative Beav­is and Butthead and Sil­i­con Val­ley and Office Space and Idioc­ra­cy. Very fun­ny guy Mike Judge. “… pri­mar­i­ly used as a fuel for heat­ing, cook­ing, and elec­tric­i­ty gen­er­a­tion. Nat­ur­al gas is often found in reser­voirs beneath the earth’s sur­face, and it can be extract­ed through drilling to liq­ue­fied nat­ur­al gas, LNG. This is a nat­ur­al gas that has been cooled down to liq­uid form for ease and safe­ty of non-pres­surised stor­age or trans­port. When nat­ur­al gas is cooled to a tem­per­a­ture of approx­i­mate­ly minus 162 degrees Cel­sius, it con­dens­es into a liq­uid. In its liq­uid state it takes up much less vol­ume than in its gaseous state, around six hun­dred times less, which makes it eco­nom­i­cal for stor­age and trans­porta­tion over long dis­tances where pipelines may not be fea­si­ble. Once it arrives at its des­ti­na­tion, it is regasi­fied,” there’s a great word, “and dis­trib­uted as nat­ur­al gas. 3) nat­ur­al gas liq­uids, NGL,” not gonna lie. “These are hydro­car­bons in the same fam­i­ly of mol­e­cules as nat­ur­al gas and oil that are often found along­side dry nat­ur­al gas, methane, in wells. While the terms nat­ur­al gas and NGL are often used inter­change­ably, they are dis­tinct­ly dif­fer­ent. NGLs are heav­ier com­pounds that remain liq­uid at room tem­per­a­ture, includ­ing ethane, propane, butane, isobu­tane, and pen­tane. NGLs are valu­able as sep­a­rate prod­ucts, and they are there­fore often sep­a­rat­ed from nat­ur­al gas and used in a vari­ety of prod­ucts includ­ing plas­tics, heat­ing appli­ances and as addi­tives in motor gaso­line. In sum­ma­ry, nat­ur­al gas pri­mar­i­ly refers to methane gas, while LNG is that same gas cooled to a liq­uid state, and NGLs are the heav­ier, liq­uid at room tem­per­a­ture hydro­car­bons often found along­side nat­ur­al gas.” So, there­fore, I would assume that nat­ur­al gas and LNG are the same thing.

 

Tony  20:25

In dif­fer­ent states.

 

Cameron  20:27

1. A) Chat GPT could be lying to me. So, if Richard or any­one else lis­ten­ing to this who actu­al­ly knows what’s going on could explain that to us at some point, that would be handy, see­ing as Tony appar­ent­ly isn’t the expert on the top­ic that I thought he would be hav­ing worked for Shell for a long time.

 

Tony  20:45

Yeah, well nat­ur­al gas/LNG was just com­ing in as I was leav­ing, was becom­ing the big thing.

 

Cameron  20:51

That’s fun­ny. Nor­mal­ly when you enter a room, nat­ur­al gas enters. 

 

Tony  20:57

Nah, it was there, but I’d left. Didn’t get the blame.

 

Cameron  21:01

Well, Brook­side Ener­gy, crudes a sell now, so it’s just a sell any­way. All right, Steve Mabb. We need to clar­i­fy some­thing. So, last week, I brought up a point that Steven Mabb, chair­man of the ASA, made about maybe putting our cash when we’re sit­ting on cash into some of these ETFs, so at least it’s earn­ing for us. And he sent us this email dur­ing the week. “Just lis­tened to this week’s episode. As a point of clar­i­fi­ca­tion, I sug­gest­ed AAA as a way to improve your returns when you have cash in the port­fo­lio. Why? Because AAA has funds in major Aus­tralian banks at the 30 BBSW rate. They’re not bonds, it’s cash in the bank, albeit through a third par­ty. So, it’s close to invest­ing your cash in your own bank account, albeit they don’t get the $250,000 gov­ern­ment guar­an­tee. The inter­est rate is now over 4% paid month­ly, which is why the price drops by that much each month when it goes exdiv. It wasn’t that much twelve months ago, of course, before the RBA start­ed lift­ing rates, and they charge a 0.18 man­age­ment fee that comes out of the price auto­mat­i­cal­ly. Whether you want to do that or you trust Beta Shares is your call, but for me, it’s bet­ter than tak­ing a cou­ple of days at a time to trans­fer cash to and from a broking account from your own bank account ver­sus being able to access it in sec­onds by sell­ing AAA to buy some­thing else. TVIL is short term US Trea­suries and is sub­ject to cur­ren­cy swings, so maybe not as good as AAA secu­ri­ty wise. I believe this is what Buf­fett parks Berk­shires cash in the T bills, not the Aussie ETF, of course. Thanks, Steve.” So, 4% paid month­ly is less than 0.18%, is bet­ter than a poke in the eye with a blunt stick. How does that change your view of putting our cash into these AAA ETFs when we’re stuck in cash, Tony, from what you said last week?

 

Tony  22:56

Yeah, per­haps it does. So, thanks, Steve, for clar­i­fy­ing that. I’m not famil­iar with these at all. Cou­ple of things is that 4% is the annu­al yield, so pay­ing it month­ly is not going to be a big amount.

 

Cameron  23:09

Real­ly? It’s not month­ly? That’s annu­al?

 

Tony  23:11

One-twelfth of 4%, yeah.

 

Cameron  23:14

I mean, it would be a lot to pay month­ly, wouldn’t it.

 

Tony  23:16

Yeah, you’d be get­ting 48% annu­al­ly if you got 4% month­ly.

 

Cameron  23:20

Aww, that’s why I got excit­ed.

 

Tony  23:23

Yeah. So, it’s one-twelfth of 4%. Yeah, it’s noth­ing to sneeze at, I guess. But it’s been going up recent­ly. So, if you look at the last twelve months, it’s only about 2.5%, 2.6%, I think, if you annu­al­ize all the month­ly pay­ments. It is sub­stan­tial now, 4% per annum is pret­ty good. So, thanks for that, Steve. And if Steve uses them, a cou­ple of ques­tions. What’s the tim­ing of the pur­chase? Par­tic­u­lar­ly with a short term, if you have a short-term hold­ing of cash, so it’s only going to be in there for a cou­ple of weeks, you could still not get a div­i­dend and face a drop, poten­tial­ly, in the in the share price. Or does Steve wait until it’s paid a div­i­dend and put the mon­ey in and hold it there for at least a month? Or does he bor­row just before it gets paid as a div­i­dend? I’m not quite sure how it’s gonna work if you’re doing it short term. But look, yeah, if you’re get­ting 4% per annum, and we have cash sit­ting there for twelve months, it’s worth doing, because that’s 4%.

 

Cameron  24:15

Yeah, it’s unlike­ly we’re gonna have cash sit­ting there for a year, right?

 

Tony  24:19

No.

 

Cameron  24:19

I mean, it’s usu­al­ly a cou­ple of weeks. Maybe late­ly, you know, a month or so. So, you’re get­ting 4% divid­ed by twelve, which is too hard for my brain to work out.

 

Tony  24:33

0.0375 or some­thing like that.

 

Cameron  24:36

Right. A month.

 

Tony  24:37

Yeah.

 

Cameron  24:38

So, bet­ter than noth­ing, par­tic­u­lar­ly if you got a lot of mon­ey.

 

Tony  24:42

Yeah, so thanks, Steve, for point­ing that out. It makes more sense now. And just for peo­ple, the BBSW, or the 30 BBSW, is a bank bill swap rate for thir­ty days, which is basi­cal­ly the rate at the banks all agreed to lend each oth­er mon­ey. over a thir­ty-day peri­od, which is usu­al­ly the RBA rate, plus a mar­gin.

 

Cameron  25:05

Glad you explained that, because my dirty mind went some­where com­plete­ly dif­fer­ent with BBSWs, so I’m glad that you pulled my brain out of the gut­ter, Tony.

 

Tony  25:16

Yeah, so thanks Steve. So, Cam, try it. It does seem to have lim­it­ed down­side as a risk. I think the only risk I can see now is just tim­ing it. If we put mon­ey in for two weeks and the share price moves around wait­ing for anoth­er div­i­dend, we might pull it out at slight­ly less or slight­ly more than we put it in for, but it won’t be mate­r­i­al, I don’t think.

 

Cameron  25:34

All right. Well, I’ll start doing that. If it goes wrong, we’ll blame Steve. I saw his arti­cle in the Fin late last week: “Arti­fi­cial Intel­li­gence pow­ers US shares into a bull mar­ket,” is the one I men­tioned ear­li­er. “Surg­ing enthu­si­asm for tech­nol­o­gy giants build­ing con­sumer prod­ucts based on arti­fi­cial intel­li­gence cat­a­pult­ed the US bench­mark S&P 500 into a tech­ni­cal bull mar­ket on Thurs­day. On Fri­day, the blue-chip Bell­wether index was up more than 20% from its lows and at its high­est lev­el since August, since the tech heavy NASDAQ index chas­ing sev­en straight weeks of gains to a 27.4% year to date. Heavy­weight tech­nol­o­gy dar­lings includ­ing Google par­ent Alpha­bet, Microsoft, Nvidia, Adobe, and Face­book own­er Meta have all jumped as investors bet that com­pa­nies can build more valu­able prod­ucts using AI.” Unfor­tu­nate­ly, we don’t have any AI plays in Aus­tralia of that cal­i­bre that I’m aware of. We prob­a­bly have some small com­pa­nies that are play­ing around the edges with AI, but nobody who’s going to real­ly play on the scale of those com­pa­nies. But it’s inter­est­ing. I was just going to ask if these sorts of… I guess this is a black swan, but in a pos­i­tive sense. I mean, six months ago, nobody real­ly saw AI as being some­thing that was going to push the US into a bull mar­ket, all of a sud­den, it’s just seem­ing­ly come out of nowhere. It hasn’t real­ly, I mean, all of those com­pa­nies have been work­ing on AI behind the scenes for, well, for­ev­er in Microsoft’s case. But in this LLM sense, LLM start­ed to become a thing in AI research cir­cles in 2015. So, it’s been eight years they’ve been build­ing this func­tion­al­i­ty behind the scenes. Just from an invest­ing per­spec­tive, Tony, when these sorts of things dri­ve the US mar­ket up, do you expect to see a lift in the Aus­tralian mar­ket as well? I know when the US mar­ket col­laps­es, we col­lapse. When the US mar­ket booms, do we boom?

 

Tony  27:44

Oh, I think in very, very broad terms, yes. But I don’t think we will in this case, because I did see some­one analy­sis; if you back out those com­pa­nies, tech com­pa­nies, the large scale tech com­pa­nies, the US mar­kets gone nowhere, much like ours. So, I think we’re fol­low­ing the US mar­ket ex-big tech, because we don’t have any large-scale tech in Aus­tralia, as you’ve said. And that’s a bad thing and a good thing. It’s a bad thing right now because the NASDAQ’s up 27%. But maybe a good thing when peo­ple move on to the next thing or the bub­ble bursts with AI stocks. May not, but if his­to­ry unfolds the way it always has, it will, and it’ll fall spec­tac­u­lar­ly.

 

Cameron  28:25

Well, you know, if his­to­ry plays out, what I expect to see over the next year is hun­dreds of bil­lions of dol­lars of ven­ture cap­i­tal being spent on hun­dreds and hun­dreds and hun­dreds of AI based start-ups. You’ll have the pets.com of AI and, you know, there will just be a tonne of hype, a tonne of mon­ey every­where fly­ing around crazy. And yeah, a lot of mon­ey will be made, and a lot of those will go bel­ly up. 98/99% of those start-ups will get trade sold as a quick exit at some point or will just col­lapse, and a cou­ple will make it and sur­vive.

 

Tony  29:08

And in every slide deck of every Pow­er­Point pre­sen­ta­tion from now on, slide one will say “what we’re doing with AI.” “How we’re using AI.” “How we’re ben­e­fit­ing from AI.” Just like, you know, a few years ago, it was all “agile”, agile devel­op­ment. “We are an agile com­pa­ny.”

 

Cameron  29:22

Yeah, every brand will just tack AI onto the name of their brand.

 

Tony  29:26

Yeah. Dot AI. It will have, as we’ve talked about before, mean­ing­ful impacts on the world and pro­duc­tiv­i­ty, and all that kind of stuff. But from an invest­ing point of view, it’s anoth­er bub­ble that we’ve seen a hun­dred, if not a thou­sand times before.

 

Cameron  29:43

Yeah, that’s just human nature bub­bles, right?

 

Tony  29:46

Yeah.

 

Cameron  29:46

Every­one gets excit­ed about all the mon­ey to be made.

 

Tony  29:49

All the head­lines are on AI and how the NASDAQ is up 27%. If only it had been a head­line this time last year when the NASDAQ wasn’t up 27%.

 

Cameron  29:59

Well, it’s like lithi­um at the moment. One of my sis­ters texted me this morn­ing and said, “do you charge for finan­cial advice?” And I said, “well, I don’t, because I’m not a finan­cial advi­sor, and I can’t give finan­cial advice. Why?” And she said, “oh, I was think­ing about buy­ing this lithi­um stock.” And I said, “well, I can teach you how we think about invest­ing in stocks on our pod­cast,” and sort of talked about the dif­fer­ence between… I said, the first thing to know is there’s a dif­fer­ence between invest­ing and gam­bling. I just sort of cov­ered the basics of your approach to invest­ing, which is, you know, to back up your deci­sions with as much log­ic, rea­son, sci­ence as you can. And that, fun­da­men­tal­ly, we believe that com­pa­nies that have a good track record of gen­er­at­ing a lot of prof­its, if you can buy them at a dis­count to what you think their val­u­a­tion is, more often than not, they should do well, and your invest­ment in them should do well. And then looked at this lithi­um stock that she was inter­est­ed in, LTR, which has nev­er gen­er­at­ed any rev­enue, but its share price has gone up by, like, 250%, in the last year or so. And I think it’s sub­ject to take over offers, and it’s all bub­bly, and you know, there’s all that kind of excite­ment going on. And yeah, I mean, it’s, you know, it’s one of those things when, you know, peo­ple hear on the street that there’s these booms on these stocks and they want to get in on it. And so I sort of point­ed out, “yeah, look, lithi­um is going through this boom at the moment,” and some of the rea­sons why: bat­ter­ies etc., and wars, rare earth min­er­als, all that kind of stuff. And some of those com­pa­nies are going to do well, and some aren’t. Hard to know unless you’re an expert on the lithi­um indus­try, which com­pa­nies are going to do well and which aren’t, and even the expert’s prob­a­bly going to get it wrong most of the time. So, it’s real­ly in the cat­e­go­ry, you know, it’s not some­thing that I would look at, because to me it’s in the cat­e­go­ry of gam­bling, if you can’t put any sci­ence and log­ic behind why you think this com­pa­ny is par­tic­u­lar­ly a good invest­ment. But that’s not finan­cial advice.

 

Cameron  1:35:44

The QAV Pod­cast is a pro­duc­tion of Space­craft Pub­lish­ing Pro­pri­etary Lim­it­ed, autho­rised rep­re­sen­ta­tive of AFS sell 520442, AFS rep­re­sen­ta­tive num­ber 001292718. Please don’t make any invest­ment deci­sions based sole­ly on lis­ten­ing to this pod­cast. This is pre­sent­ed as gen­er­al advice only and not per­son­al finan­cial advice. We don’t know your per­son­al finan­cial cir­cum­stances. Please see a finan­cial plan­ner before mak­ing any invest­ing deci­sions.