QAV 732 — Water Off A Duck’s Back

QAV 732 Club

[00:00:00] Cameron: This is episode 7 3 2, QAV. Enti­tled, Water Off A Duck­’s Back, Tony. Because I just saw that on the ABC’s cov­er­age of what’s hap­pen­ing in the mar­ket. It’s just Water Off A Duck­’s Back for the record. We’re record­ing this on the 6th. August, 2024, 2:06 PM The RBA is due to meet and prog­nos­ti­cate on inter­est rates today, but I thought it was amus­ing that some­body last week, uh, who was it last week, asked us to talk about how we han­dled the Covid

[00:00:45] Cameron: sell off.

[00:00:46] Cameron: And, uh, let me see who that ques­tion was. Uh, Rob. I want to know what Rob knew. How did Rob know what was com­ing this week? Rob has a crys­tal ball, I think. Good job, Rob.

[00:01:03] Cameron: Good job,

[00:01:03] Tony: Well, I think, I think you do too, because you’ve been say­ing for the last cou­ple of weeks, ignore the mar­ket, ignore the mar­ket. And it’s come out and gone. Look at Moi. Look at Moi.

[00:01:15] Cameron: And I’m still ignor­ing it, large­ly. I look at my alerts. If I’ve got to do some­thing, I’ve got to do some­thing. If I don’t I was just hap­py in my light email this morn­ing. I got to use the Fonzie. Badge again, just sit on it. Noth­ing to buy, don’t wor­ry about it, just sit on it like War­ren Buf­fett has been sit­ting on it, which we’ll get to lat­er in the episode.

[00:01:36] Cameron: So any­way, of course the big sto­ry is The mar­kets around the world have crashed over the last few days. The ASX is recov­er­ing a lit­tle bit today, but it’s still down a lot from where it was. What caused all of the pan­ic in the streets? The blood, I’ve heard it referred to as the ASX apoc­a­lypse, I’ve heard it referred to as a blood­bath, I’ve heard it referred to as a bru­tal bear pan­ic, which I first read as a bru­tal bear pic­nic, and I thought,

[00:02:11] Cameron: I’d like to see that.

[00:02:12] Cameron: No Bru­tal Bear Pic­nic? Uh, is that like the Beren­stain Bears? Beren­stain Bears, when they’ve

[00:02:19] Cameron: been on the Coke? You remem­ber the Beren­stain Bears, Tony?

[00:02:23] Tony: No, no. Who are

[00:02:25] Tony: they?

[00:02:26] Cameron: Clas­sic kids books about a fam­i­ly of like, uh, brown

[00:02:30] Cameron: bears, the Beren­stain

[00:02:31] Tony: Up bears,

[00:02:32] Cameron: Well, in my ver­sion, it’s like tak­ing the kid’s

[00:02:35] Cameron: sto­ry with Cocaine Bear, that movie from a year or so ago.

[00:02:39] Cameron: And that’s a bru­tal, that’s how you get a bru­tal bear pic­nic. No, this, this joke has worn itself out. Uh, what’s, so tell us all what led to the, uh, the crash, Tony.

[00:02:52] Tony: I don’t think there was any one theme. that led to the crash. I think it’s a num­ber of

[00:02:56] Tony: things. I think there’s a,

[00:03:00] Tony: as we’ve talked about near­ly all year, there’s a strange

[00:03:04] Tony: or strange

[00:03:05] Tony: back­ground to the mar­ket, par­tic­u­lar­ly in the US where

[00:03:08] Tony: every time bad news comes out, the mar­ket goes up because they think that’s going to be a trig­ger to reduce inter­est rates.

[00:03:16] Tony: So it’s kind of strange now that they’ve react­ed bad­ly to The release of some unem­ploy­ment num­bers last Thurs­day in the States, which were a lit­tle bit high­er than what the mar­ket thought. Uh, it did, those num­bers did trig­ger what’s called the SAHM rule, which I’d nev­er heard of until recent­ly. It’s, it’s, it’s great how, Peo­ple trot out all these, uh, ratios.

[00:03:42] Tony: You know, I’ve been invest­ing for 25 years. I’d nev­er heard of the SAHM rule until the last week or so. But the SAHM rules is appar­ent­ly a good pre­dic­tor of reces­sions. And I’ve even heard dif­fer­ent def­i­n­i­tions of the SAHM rule in the last cou­ple of days. But basi­cal­ly it’s almost like a mov­ing aver­age, whether the short term, three month unem­ploy­ment num­bers go below the long term trend.

[00:04:05] Tony: Um, that’s it in a nut­shell. I think One def­i­n­i­tion which seems to have been repeat­ed a few times is the three month aver­age goes below the low­est point in the in the pre­ced­ing 12 months for unem­ploy­ment. So it’s sup­posed to be a pre­dic­tor of reces­sions as we know pre­dic­tors of reces­sions get it right.

[00:04:22] Tony: Sev­en out of five times, so we’ll see if the U. S. goes into reces­sion or not. But it did seem to have peo­ple head­ing towards bonds, which is always seen as being the safe haven when things hap­pen like this. But there’s oth­er things going on too. I mean, the mar­ket was very high in the U. S. And the last quar­ter­ly num­bers came out last week for the MAG 7 stocks, and I think five of the sev­en.

[00:04:49] Tony: Sold off because of that. A lot of num­bers did­n’t meet ana­lysts expec­ta­tions, um, which is, you know, not sur­pris­ing giv­en the lofty val­u­a­tions on these com­pa­nies. Uh, so some, some, some A lot of peo­ple are rotat­ing out of MAG 7 stocks now. Uh, it’s, that’s the real­ly inter­est­ing thing, I think, out of all that’s going on.

[00:05:11] Tony: You know, I think about 2 or 3 weeks ago, I pulled apart the num­bers for the world index­es and the US index. And from mem­o­ry, The MAG 7 was about 10 per­cent of the world index. It may even have been high­er than that. It may have been 20%. Uh, and in the U. S. it was, I think it was half the index or more than half the index was in those sev­en stocks, which are weight­ed by mar­ket cap.

[00:05:33] Tony: So, if they’re down, some of them are down 20%, All these, you know, who’d want to be an index fund man­ag­er at the moment? You, you are forced to sell those stocks and then forced to buy some­thing else because you’re meant to be rebal­anc­ing and back­ing the index. And I think there’s a fair bit of ampli­fi­ca­tion of the sell off going on because of index funds.

[00:05:53] Tony: Um, and, and it’s a bit like a plane not know­ing where it needs to land because the index­es are in tur­moil at the moment. So they’re sell­ing because they have to and then they’re try­ing to buy in but they don’t know where because Toky­o’s down and Seoul’s down and Um, the US is down, obvi­ous­ly Aus­trali­a’s down.

[00:06:10] Tony: So it’s a very tough thing to do to try and bal­ance an index fund at the moment. So I think that’s part of the tur­moil and I think what may have kicked things off was Japan. Japan raised inter­est rates recent­ly and even though it was only 0. 25 per­cent that was enough because inter­est rates have been close to zero in Japan for a long time and it’s allowed Fund man­agers to to take or to bor­row in Japan, so to buy bonds in Japan with­out much of a yield, and then invest the or sell bonds in Japan with­out much of a yield and then to take the pro­ceeds from that and invest it any­where else in the world basi­cal­ly and make a prof­it from doing noth­ing.

[00:06:50] Tony: The thing about that though is if you buy or if you issue bonds in Japan, you’ve got a Do that in Japan­ese cur­ren­cy, and when the inter­est rates went up in Japan, even though it was only like 25 basis points, the yen rose dra­mat­i­cal­ly more than that, um, because peo­ple stopped issu­ing these bonds in yen, which means there was less demand for the yen, any­way, and prob­a­bly oth­er things at play, and the yen rose, which com­plete­ly unwound all the prof­its for these car­ry trade arbi­trages, and so Um, there’s been a lot of sell­ing around the world because of that too.

[00:07:25] Tony: So there’s a lot of things going on. It’s tur­moil. Um, you know, if you look at the Aus­tralian mar­ket, the PE for the Aus­tralian mar­ket was 20 times, which is above aver­age. I’ve always thought of the, the, the aver­age PE of Aus­tralia of about 16 to 16. 16 to 17 is about aver­age. So it’s been high­er, high­er, uh, it’s trad­ing high­er than that.

[00:07:48] Tony: Um, and there’s also been a rota­tion out of resources in Aus­tralia, which I think may have, um, accel­er­at­ed because of the, the, uh, rest of the mar­ket going down. And that’s large­ly based on a view in Aus­tralia that the Chi­nese econ­o­my has dete­ri­o­rat­ed a bit. In the last set of num­bers that came out there, and I’m talk­ing about resources exclud­ing gold, gold min­ers are going up because, um, again, bonds and gold are safe havens in, uh, in this

[00:08:17] Tony: Okay.

[00:08:18] Cameron: had to sell RRL

[00:08:19] Cameron: today. Goal is turned around. Alex in her buy list yes­ter­day flagged that it had become a Josephine. I mean, gold had been

[00:08:27] Tony: Mm hmm.

[00:08:28] Cameron: the roof for a while, but in the U. S. it became a Josephine. It was a lit­tle bit low­er than it was at the end of the month. But yeah, RRL has, uh, come back a

[00:08:38] Cameron: lit­tle bit.

[00:08:38] Cameron: I

[00:08:41] Tony: declines, gold improves because peo­ple sell the mar­ket and put it into gold, which is seen as a store of val­ue. So it’s not going to, it’s not going

[00:08:49] Tony: to, like Bit­coin, Bit­coin’s down a lot. I noticed it was down some­thing like 15, 20, 000 US. Yeah. Yeah, well, I mean, um, it’s, it’s an inter­est­ing sit­u­a­tion when a lot of, you know, mar­ket rules, so called mar­ket rules, break down when the, when the blow­torch goes to the bel­ly, as Neville Rand used to say, and, uh, it’s, um, it’s, yeah, it’s inter­est­ing what holds up, what goes down, yeah, but I think, you know, a cou­ple of inter­est­ing things, it was the first time I can remem­ber that page two of the AFR I’ve only had two stocks advanc­ing on their advances list, you know, on the inside front cov­er they have advances and declines.

[00:09:31] Tony: The high­est, I think it’s five or six for the day, and there’s only two on the advances list, so a lot of across the board sell­ing, which to me says instos are just rotat­ing out of stocks and going into bonds. Um, holist Ballers. just, just to be safe. Um,

[00:09:50] Tony: the oth­er thing too, is I just think the mar­ket has been over­val­ued.

[00:09:54] Tony: Um, I know that there are good rea­sons. I’ve seen graphs say­ing that the increase in the MAG7 stocks this year has tracked their earn­ings increas­es but. Which is fine. And the per­son who post­ed that graph was basi­cal­ly say­ing, look, it’s earn­ings based. It’s not PE expan­sion. But I thought to myself, well, the PE’s can’t real­ly expand any­more.

[00:10:15] Tony: They’re trad­ing on such high odds. And I kind of had a thought today about it. I mean, if you think about going to the race­track and look­ing and back­ing an odds on horse. That’s the same, it’s actu­al­ly, that’s actu­al­ly bet­ter odds than putting your mon­ey into some of the Mag 7 stocks, which are, you know, some of the, even the stocks on our, on our index of trad­ing at PE’s of 100 times.

[00:10:40] Tony: That’s a dol­lar one in terms of rac­ing par­lance, and the book­ies don’t write tick­ets at a dol­lar one. You know, you know, you can’t. You can’t put a bet on when it’s that short. Black Caviar would often go to about 1. 05, and prob­a­bly should have been low­er, but peo­ple would, with 5 on, on the, with the book­ie, so they had a tick­et to use as a sou­venir.

[00:10:59] Tony: But they were there when Black Caviar ran at 1. 05. But if it’s, if a PE is 100, you’re going to the track and putting your hard earned mon­ey into a book­ie. on a race­horse that it will return you a dol­lar one because it will take a hun­dred times that that horse runs to return your mon­ey. If that horse hap­pens to lose a race, let me tell you there’s all sorts of rea­sons why good race­hors­es lose races includ­ing bad jock­eys, wet tracks or bar­ri­er draws or what­ev­er, you don’t get your mon­ey back.

[00:11:29] Tony: And, and yet, yeah, and so peo­ple, the rac­ing par­lance, the rac­ing say­ing is odds on, look on, um, because it’s just not worth the risk, and, and, you know, there’s odds on favorites that went down at Flem­ing­ton on the week­end, um, and yet peo­ple are quite hap­py to put their super­an­nu­a­tion, their retire­ment, into com­pa­nies that are trad­ing with P’s of a hun­dred times, which is a dol­lar one, in terms of, uh, your return, and then, Los­ing their mind when they fall 5%.

[00:11:59] Tony: It’s just,

[00:12:00] Cameron: Yeah.

[00:12:01] Tony: it’s, it’s a, it’s a great dis­play of the foibles of human nature, I think, the last few days in the stock mar­ket.

[00:12:08] Cameron: I can tell you why you’ve nev­er heard of the psalm rule before. It was only invent­ed five years ago.

[00:12:16] Tony: And we haven’t had a reces­sion. You think, you think it would have got trot­ted out dur­ing the COVID down­turn though. Real­ly?

[00:12:24] Cameron: Yeah,

[00:12:24] Cameron: well,

[00:12:25] Tony: But also too, if it’s only invent­ed five years

[00:12:27] Tony: ago, I’ve seen graphs that say that pre­dict­ed every reces­sion for the last 30 or 40 years.

[00:12:33] Tony: So

[00:12:34] Cameron: Yeah,

[00:12:34] Cameron: so it’s named, it’s named after a rather young econ­o­mist, Clau­dia Psalm. Who, accord­ing to Wikipedia, runs Sahm Con­sult­ing. She was for­mer­ly Direc­tor of Macro­eco­nom­ic Pol­i­cy at the Wash­ing­ton Cen­ter for Equi­table Growth and a Sec­tion Chief at the Board of Gov­er­nors of the Fed­er­al Reserve Sys­tem, best known for the devel­op­ment of the SAHM rule.

[00:12:58] Cameron: A Fed­er­al Reserve Eco­nom­ic Data Indi­ca­tor for Iden­ti­fy­ing Reces­sions in Real Time. So she went back and looked, I think it goes back to 1949. The SOM rule states when the three month mov­ing aver­age of the nation­al unem­ploy­ment rate is 0. 5

[00:13:14] Cameron: per­cent­age points or more above its low over the pri­or 12 months, we are in the ear­ly months of reces­sion.

[00:13:22] Cameron: She said the SOM rule is an empir­i­cal reg­u­lar­i­ty. I thought that’s King Charles when he goes to the bath­room. That’s an empir­i­cal reg­u­lar­i­ty too. not

[00:13:38] Tony: reg­u­lar­i­ty.

[00:13:40] Cameron: It’s not a propo­si­tion, it’s not a law of nature. She fur­ther explains, I cre­at­ed the SAHM rule to send out stim­u­lus checks auto­mat­i­cal­ly. The idea was to

[00:13:50] Cameron: act fast to make the reces­sion less severe and help fam­i­lies.

[00:13:54] Cameron: The star was always the stim­u­lus check, not the indi­ca­tor that oth­er peo­ple named after me. So it was like, as soon as they hit this num­ber, stim­u­lus checks go out. Cause we, we’ve hit a reces­sion.

[00:14:08] Cameron: There you go.

[00:14:09] Tony: Okay, well, it’s, look, and she could be right and the rule could be, could hold. I think the oth­er inter­est­ing thing, it’ll be

[00:14:15] Tony: what cen­tral banks do, because it was only a day before the mar­kets cor­rect­ed last week that. that the infla­tion num­bers came out or two days before in the US, which were back or at least trend­ing very close to the cen­tral bank’s range of what they want­ed infla­tion to be.

[00:14:32] Tony: And I made a note at the time that peo­ple, econ­o­mists like Paul Krug­man were start­ing to say it’s time to cut inter­est rates. And in fact, the mar­ket went up 2%. When that infla­tion num­ber came out, that must have been Wednes­day night, I think, last week, Aus­tralian time, uh, because the, the, the Fed chief came out and said, yep, we’re very like­ly to, to, uh, cut inter­est rates in Sep­tem­ber, a month away.

[00:14:54] Tony: So, you know, who do you believe in all this? Which, which econ­o­mist do you believe, Ken? Oh, Yeah. Yeah.

[00:15:06] Tony: Yeah.

[00:15:09] Cameron: over the last few years, but you know, as part of my, the edu­ca­tion about the mar­kets and invest­ing, just like how things can change on a dime. Every­one’s, the mar­kets are super, super, super crazi­ly buoy­ant one day, and then man­ic depres­sive the next day. It’s all over!

[00:15:30] Cameron: Every­one jump out of a win­dow. Um, and it’s, it’s just, it’s become amus­ing to me just watch­ing it over time. I got an email from Elio D’Am­a­to yes­ter­day about our upcom­ing Stock­o­pe­dia webi­nar we’re doing next week. And he said, uh, some­thing about, you know, I hope you’re doing okay. Not, you know, stand­ing on a roof or any­thing like that.

[00:15:53] Cameron: And I was like, I’m not even pay­ing atten­tion, mate. Tony’s told me not even to pay atten­tion. Don’t even care. You know, busi­ness as usu­al. That’s what it is. Like, it real­ly is. Like, it’s, it’s like ridicu­lous lev­els of opti­mism, par­tic­u­lar­ly like for the Mag 7 or what­ev­er. One day, and then, oh shit! The next day, got­ta dump it all!

[00:16:15] Cameron: Dump it! Dump it! It’s like, it’s like one of those old Wall Street movies from the 80s, like Gor­don Gekko

[00:16:22] Cameron: or Bud Fox, you know? Buy! Buy! Sell! Sell! I just imag­ine Guys run­ning around in 80s hair­cuts, in the pit, with flip phones, well they would­n’t have been in the 80s, just scream­ing buy, buy, sell, sell, it’s just like mass

[00:16:37] Tony: in fun­ny, in fun­ny coats, trad­ing places,

[00:16:41] Cameron: Yes!

[00:16:42] Tony: old guys in fun­ny coats and chalk­boards, yeah, mak­ing hand sig­nals to each oth­er.

[00:16:48] Cameron: I mean, it is, it’s just kind of, it’s like, the oth­er thing, I’ve watched this a num­ber of times recent­ly, I was show­ing my boys when they were over here the oth­er day, I think we talked about on the show, the um, the last like 10 or 15 min­utes of Blues Broth­ers, where they’re being chased by like 20 mil­lion cops, who are all just smash­ing into each oth­er, there’s just pile up after pile up after pile up of cop cars, and then, then they’re storm­ing the, the build­ing

[00:17:17] Cameron: where the Boys have gone in to pay the 5, 000 check to stop the orphan­age from being default­ed on or what­ev­er. And there’s just like hun­dreds

[00:17:27] Cameron: and hun­dreds of mil­i­tary and police and they’re armed to the teeth and they’re, you know, falling all over

[00:17:32] Cameron: each oth­er. It’s that kind of like slap­stick,

[00:17:36] Cameron: um,

[00:17:37] Cameron: Ben­ny Hill esque com­e­dy, the way the mar­ket

[00:17:40] Cameron: reacts to things.

[00:17:42] Tony: And then the Blues Broth­ers turn around and they see it all for the first time stand­ing behind them. After they make the pay­ment, yeah.

[00:17:49] Cameron: And who accepts their pay­ment? Do you

[00:17:51] Cameron: remem­ber?

[00:17:52] Tony: Oh, no. No, who is it?

[00:17:55] Cameron: Steven Spiel­berg

[00:17:55] Cameron: is the clerk

[00:17:56] Tony: Ah,

[00:17:57] Cameron: accepts their pay­ment.

[00:17:59] Cameron: Spiel­berg

[00:18:00] Tony: As if it As if he needs the mon­ey.

[00:18:04] Cameron: Exact­ly.

[00:18:05] Tony: Yeah, but look, you know, look, there are so many hair trig­gers. Uh,

[00:18:09] Tony: the stock­bro­kers are try­ing to move as quick as pos­si­ble. So if some­one gives them an

[00:18:14] Tony: order to exe­cute, they exe­cute as quick­ly as pos­si­ble. There are fund man­agers try­ing to pro­tect their ass­es and they’re act­ing as quick­ly as pos­si­ble.

[00:18:22] Tony: But, you know, bear in mind, uh, what, what War­ren Buf­fett said, he said, you don’t have to have a high IQ to be a good investor. Um, and I think these kinds of moments. It proves there are a lot of fund man­agers out there with aver­age IQs, I think, who aren’t sort of self aware enough to know that they don’t need to act with a hair trig­ger when things hap­pen like this.

[00:18:46] Tony: And they don’t have to act with a hair trig­ger on every piece of eco­nom­ic data that comes out of the cen­tral banks.

[00:18:54] Cameron: Just look­ing at the 30 days, uh, we are up 0. 31 per­cent per annum, where­as the STW is down 1. 73%, near­ly

[00:19:10] Cameron: 2%. So we’ve fall­en a bit from where we were like a week ago, but we’re still doing bet­ter. We, you know, we’ve, um, our shares have respond­ed bet­ter. And that’s even, that’s still with me, still hold­ing onto ASG.

[00:19:27] Cameron: It’s 3 PTL came down this week and it was only like a cent or two below it on Mon­day morn­ing, but now it’s two or three cents below it again, but it’s get­ting close. It’s get­ting close. I can feel it. Um, the light port­fo­lios in the last 30 days are down 2%, 1. 95, um, ver­sus the 1. 73 for the STW. So they have fall­en a lit­tle

[00:19:55] Cameron: bit more, but, uh, Gen­er­al­ly speak­ing, every­thing is, uh, not that bad, real­ly.

[00:20:04] Cameron: Well, uh, what else? I want­ed to talk about the US check­list, but if you got any­thing else you want to talk about first?

[00:20:12] Tony: I did have some things, where are my, where are my notes?

[00:20:15] Cameron: Oh, before you get to that, I did get an email yes­ter­day from Jor­dan. One of our club mem­bers, he said, Hey Cam, just want­ed to say thank you to you and Tony. I lost 5 per­cent of my port­fo­lio val­ue today. Glad he did­n’t stop there, but felt strange­ly serene about the whole thing. I watched my alerts, noth­ing crossed the line, so I

[00:20:35] Cameron: did­n’t do any­thing. I think if I’d been

[00:20:38] Cameron: work­ing with­out a sys­tem like QAV, I would have found it hard to avoid the pan­ic that affect­ed the rest of the mar­ket. Hope­ful­ly this

[00:20:44] Cameron: sale will lead to some good growth oppor­tu­ni­ties in the future, Jor­dan.

[00:20:50] Tony: Well done, Jor­dan.

[00:20:51] Cameron: Jor­dan. Jor­dan is all zen. Good

[00:20:55] Cameron: job.

[00:20:56] Tony: well done, sit­ting on it. Jor­dan’s a Fonzie.

[00:20:59] Cameron: He’s the Fonz. Yeah, he gets the Fonzie badge for this week.

[00:21:04] Tony: and and these kind of down­turns are a great time to be val­ue

[00:21:07] Tony: investors. They real­ly are. Um, A, because val­ue stocks tend not to fall as much as the Mag 7 type stocks.

[00:21:15] Tony: I think, I think on the Aus­tralian mar­ket yes­ter­day, Block was the biggest decline.

[00:21:20] Tony: Um, but B, you know, brings things back, brings more things onto the buy list as their price goes down.

[00:21:27] Cameron: Although I did see, um, I saw an arti­cle some­where today talk­ing about some of the biggest win­ners and the biggest losers late­ly. I saw

[00:21:35] Cameron: Zip. Fell

[00:21:38] Cameron: a lot, but I also saw it was up like 300

[00:21:40] Cameron: per­cent this year. Yeah, Zip had a big fall, but for the year it’s gone from like 41 cents, it’s now trad­ing at 1. 71. So, if you rode it all the way, yeah, then hope­ful­ly not too

[00:21:56] Cameron: wor­ried.

[00:21:57] Tony: and that’s what’s prob­a­bly hap­pen­ing Cam, if you had done that and it’s down a bit today, you’re prob­a­bly going, I’ll take some prof­it.

[00:22:04] Cameron: Yeah, Yeah.

[00:22:07] Tony: Which is, which is caus­ing the sell­ing to

[00:22:08] Tony: increase. Uh, well, good way to kick off report­ing sea­son, Cam,

[00:22:13] Tony: with the mar­ket going down. Wel­come to report­ing sea­son. August is report­ing sea­son. Um, the first stock off the rank that con­cerns us is Cred­it Corp (CCP) and that report­ed last week, last Wednes­day, in fact, and on fol­low­ing its num­bers, the stock was up 14 per­cent and became a buy.

[00:22:33] Tony: Um, there was a few things dri­ving that, even though in that prof­it. was down a lit­tle bit, um, which would have been fore­cast. They were return­ing to growth in FY25, so they were fore­cast­ing that, which was received well by the mar­ket. How­ev­er, I noticed this morn­ing it’s crossed back below its sell line today, so, um, in line with the gen­er­al down­turn.

[00:22:56] Tony: Excuse me, but it might be one to watch. But it is report­ing sea­son. You’ll see lots of rapid move­ments. Keep your alerts up to date. You may need to down­load some buy lists your­self, um, dur­ing the week of stocks report. Check alerts, uh, it’s a new month, so check your three PTL alerts. And also, Watch out for div­i­dends.

[00:23:16] Tony: Um, most stocks take about a month or so between declar­ing and pay­ing, but some­times you get sums which, which will start pay­ing in the sec­ond half of the month. So just make sure you’re tak­ing that into account. If you’re work­ing out when to buy­ing and sell. When to buy and sell.

[00:23:32] Cameron: Yeah,

[00:23:33] Tony: So that’s report­ing sea­son.

[00:23:34] Tony: Uh, stay alert

[00:23:35] Tony: peo­ple,

[00:23:36] Cameron: check your alerts. Yeah, I think every­one’s been check­ing their alerts the last cou­ple of days. I don’t think, I don’t think any­one needs a reminder this week to check their alerts Yeah,

[00:23:59] Tony: what works on Wall Street.

[00:24:02] Tony: And it’s again a lit­tle bit ger­mane to what’s going on in the mar­ket.

[00:24:06] Tony: This is a bit of a longer one today because I pulled out the whole, um, the whole cou­ple of para­graphs. This is from what works on Wall Street by O’Shaugh­nessy, and it goes like this. Most sta­tis­ti­cal pre­dic­tion tech­niques use base rates. For exam­ple, 75 per­cent of uni­ver­si­ty stu­dents with grade point aver­ages above 3.

[00:24:27] Tony: 5 go on to do well in grad­u­ate school. Smok­ers are twice as like­ly to get can­cer. The aver­age 70 year old in the Unit­ed States can expect, based on actu­ar­i­al tables, to live anoth­er 13 and a half years. Stocks with low P. E. ratios out­per­formed the mar­ket 99 per­cent of all rolling 10 year peri­ods between 1964 and 2009.

[00:24:50] Tony: The best way to pre­dict the future is to bet with the base rate. that is derived from a large sam­ple. Yet, numer­ous stud­ies have found that peo­ple make full use of base rate infor­ma­tion only when there is a lack of descrip­tive data. In one exam­ple, peo­ple were told that out of a sam­ple of 100 peo­ple, 70 are lawyers and 30 are engi­neers.

[00:25:11] Tony: When pro­vid­ed with no addi­tion­al infor­ma­tion and asked to guess the occu­pa­tion of a ran­dom­ly select­ed 10 peo­ple, peo­ple used the base rate infor­ma­tion, say­ing that all 10 are lawyers. By doing so, they ensure them­selves of get­ting the most right. How­ev­er, when worth­less yet descrip­tive data were added, such as Dick is a high­ly moti­vat­ed 30 year old mar­ried man who is well liked by his col­leagues, peo­ple large­ly ignored the base rate infor­ma­tion in favour of their feel for the per­son.

[00:25:41] Tony: They’re cer­tain that their unique insights will help them make a bet­ter fore­cast, even when the addi­tion­al infor­ma­tion is mean­ing­less. We pre­fer descrip­tive data to imper­son­al sta­tis­tics, because they bet­ter rep­re­sent our indi­vid­ual expe­ri­ence. Then, when stereo­typ­i­cal infor­ma­tion is added, such as Dick is 30 years old, mar­ried, shows no inter­est in pol­i­tics or social issues, and likes to spend free time on his many hob­bies, which include car­pen­try and math­e­mat­i­cal puz­zles, peo­ple total­ly ignore the base rate and say that Dick is an engi­neer.

[00:26:15] Tony: Despite a 70 per­cent chance that he is a lawyer. This bias has been proven time and again with numer­ous tests over a range of sub­jects. Peo­ple always default to mak­ing pre­dic­tions based upon their indi­vid­ual expe­ri­ence and intu­ition. It’s dif­fi­cult to blame peo­ple. Base rates are bor­ing. Expe­ri­ence is vivid and fun.

[00:26:37] Tony: The only way any­one will pay a hun­dred times a com­pa­ny’s earn­ings for a stock is if it has a tremen­dous sto­ry. Nev­er mind that stocks with high PE ratios beat the mar­ket less than 1 per­cent of the time over all rolling 10 year peri­ods between 64 and 2009. The sto­ry is so com­pelling that you’re hap­py to throw the base rates out the win­dow.

[00:27:01] Cameron: it’s fas­ci­nat­ing, isn’t it? Just, Yeah, the way human psy­chol­o­gy Works.

[00:27:08] Tony: Yeah, yeah, we, we’re attract­ed to the bright shiny things, aren’t we? You know, that AI is going to rev­o­lu­tion­ize the world and

[00:27:18] Cameron: It

[00:27:18] Cameron: is.

[00:27:19] Tony: that, well, yeah, okay, but

[00:27:22] Tony: do you pay, what’s the PE of

[00:27:24] Tony: NVIDIA? Upwards of 50 times, I guess. Is it pay­ing too much for it? And, and yet, and yet O’Shaugh­nessy’s analy­sis shows you’ve got a 1 per­cent chance of beat­ing the mar­ket if you bought NVIDIA at PEU 50.

[00:27:37] Tony: If you bought it 10 years ago when the PEU was prob­a­bly 10, yeah, great chance. Go for it. Hold on to it. But if you did­n’t,

[00:27:45] Cameron: And even then, you had no idea

[00:27:48] Cameron: that it Was going to end up as the engine

[00:27:49] Cameron: for the AI rev­o­lu­tion because they did­n’t even know that then. Speak­ing of which, I mean, it’s, it’s some­what relat­ed, but I was watch­ing a recent inter­view with, uh, your, your best friend, Elon Musk, last night

[00:28:04] Cameron: on Lex Fried­man’s show, talk­ing about Neu­ralink,

[00:28:07] Cameron: most­ly,

[00:28:08] Tony: he strik­ing a cat? A white cat?

[00:28:12] Cameron: and he, he was talk­ing about Neu­ralink and he was talk­ing about the robots and, um, but he, he had this real­ly inter­est­ing thing, which kind of remind­ed me of you in a way, he said, he has a mantra.

[00:28:24] Tony: Which one, the Neu­ralink or the robot?

[00:28:31] Cameron: he has a mantra, um, that he said he repeats to him­self all the time when he’s talk­ing about engi­neer­ing. And it’s when it’s, this is how he solves engi­neer­ing prob­lems. When you’ve, they’ve got a sticky thing, uh, like some­thing that they’re work­ing on that’s caus­ing a prob­lem. His, his first thing is let’s get rid of it.

[00:28:52] Cameron: Or he says, delete it. Just delete that whole, delete the part, delete that process. Just get rid of it. Remove the whole thing. Um, he says, if you delete it and then you need to put it back, that’s okay. You can put it back. But, um, often he said, he was talk­ing a lot about how we’re dri­ven by our lim­bic sys­tem and we, we have all of these jus­ti­fi­ca­tions that sort of jus­ti­fy our actions, lim­bic sys­tems at any, he said, it’s, he said, for engi­neers, there’s this fear.

[00:29:31] Cameron: that they’re going to for­get some­thing or leave some­thing out and it won’t work because they did that once. They for­got to add some­thing into the prod­uct and then it did­n’t work. And, and it’s pro­fes­sion­al­ly and per­son­al­ly embar­rass­ing if as an engi­neer you leave some­thing out. He said, so they tend to over­com­pen­sate to make sure that they won’t do that again or won’t be accused of doing that again.

[00:29:55] Cameron: But con­se­quent­ly, things tend to be over engi­neered. So his approach is, Get, can we get rid of this? If it’s caus­ing a prob­lem, let’s just get rid of it and not do it at all. He says, you can always put it back lat­er, but it’s sim­pli­fy. He, he was talk­ing about most engi­neers make the mis­take of opti­miz­ing some­thing that does­n’t need to be there in the first place.

[00:30:13] Cameron: And he says he’s done it him­self way too many times, opti­miz­ing or automat­ing some­thing, but his process is delete it, speed it up, opti­mize it, and auto­mate it. And there was a fifth one. Can’t remem­ber what the fifth one was. He’s, uh, oh, fifth one is auto­mat­ed. Yeah, uh, miss­ing one there. Maybe it’s put it back in.

[00:30:34] Cameron: Maybe that’s the sec­ond one. But he was talk­ing just about how, uh, it gets back to this idea that it’s, it’s our emo­tions

[00:30:43] Cameron: that tend to dri­ve behav­iors and we jus­ti­fy it with all sorts of log­ic. But real­ly, I mean, it’s fear of miss­ing out when it comes to

[00:30:52] Cameron: buy­ing

[00:30:54] Tony: mm hmm,

[00:30:54] Cameron: or high P. E. stocks. It’s, you know, it’s that embar­rass­ment or, you know, what if some­body says, why, why did­n’t you invest in NVIDIA in 2024?

[00:31:04] Cameron: You know, you don’t want to get caught out. You don’t want to feel that embar­rass­ment that you, you should have done some­thing that you did­n’t do. And then we jus­ti­fy it with all sorts of sto­ries. But real­ly it’s the fear of embar­rass­ment or the fear of, I mean, he, uh, he said what I’ve been say­ing for decades,

[00:31:25] Cameron: 99 per­cent of every­thing humans do is just to get laid. It’s a jus­ti­fi­ca­tion for real­ly want­i­ng to get laid, par­tic­u­lar­ly for men. I think that’s true. Every­thing that we do in life is pret­ty

[00:31:36] Cameron: much all about just get­ting laid, which again is our lim­bic sys­tem, right? We’re, we’re gene machines, as Richard Dawkins says,

[00:31:45] Tony: So, so we’re doing,

[00:31:46] Cameron: for get­ting

[00:31:46] Tony: so we’re, we’re pod­cast­ing as a way to get laid. I’ve got to tell you it has­n’t, has­n’t quite worked for me

[00:31:54] Cameron: Well, okay. The

[00:31:55] Cameron: ratio­nale for me

[00:31:56] Tony: I’ll go for anoth­er five years, see how I go.

[00:32:01] Cameron: Maybe you’re doing it wrong. I could explain to you how it works for me, but I don’t want you to feel, I don’t want you to feel bad.

[00:32:08] Tony: Oh, you

[00:32:08] Tony: have to give me some lessons.

[00:32:10] Cameron: Yeah, it’s too late. Can’t teach an old dog new tricks. Any­who, back to invest­ing. I feel like we’ve got­ten off track here. Did you have any oth­er

[00:32:21] Cameron: sto­ries?

[00:32:22] Tony: I’ve got lots.

[00:32:24] Cameron: Okay.

[00:32:25] Tony: Well, what you’re describ­ing about engi­neer­ing is true for the mar­kets though, isn’t it? No one wants to be the fund man­ag­er left in the Mag 7 stocks when they cor­rect. You look like a fool. No one wants to look like a

[00:32:36] Tony: fool or

[00:32:37] Cameron: Like, if every­one else is invest­ing in them and they do well and your boss is like why weren’t you in on that? And yeah,

[00:32:42] Tony: Yeah.

[00:32:43] Tony: Yeah, exact­ly. I did. I’ve got some more stuff to talk about. Speak­ing of, oh no, I should­n’t say speak­ing of fools. Not nec­es­sar­i­ly a fool. Um, the head­line was, uh, Fortes­cue could use some new friends.

[00:32:55] Tony: This was an arti­cle in the Fin Review

[00:32:57] Tony: last week, and Fortes­cue is get­ting very close to a sell

[00:33:02] Tony: on our buy list.

[00:33:03] Tony: Uh, it’s still on the buy list, but it’s, it’s, uh, Josephine, it’s get­ting close to a sell. But one of the Cor­ner­stone investors, Uh, sold out last week. So Fortes­cue stock dropped like a stone yes­ter­day, which I think was Tues­day or Wednes­day, down 10%, tak­ing the bench­mark S& P ASX 200 down with it. Why? Because it lost one of its two big long term back­ers.

[00:33:26] Tony: The sort of share­hold­er that picks and sticks and helps some­one like Andrew For­rest have the cer­tain­ty and plat­form to cre­ate a 63 bil­lion min­er. The share­hold­er was US fund man­ag­er Cap­i­tal Group, a rust­ed on Fortes­cue bull. It came as investors are still try­ing to work out what’s going on with Fortes­cue’s ener­gy arm. So I thought that was inter­est­ing. We’re not the only ones who are a lit­tle bit bear­ish on Fortes­cue. One of its cor­ner­stone investors sold out last week.

[00:33:54] Cameron: and they’re LA based. Cap­i­tal Group, right?

[00:33:57] Tony: Okay,

[00:33:58] Cameron: Hmm.

[00:34:00] Tony: I was going to talk about a post from Paul Krug­man, um, say­ing that the US econ­o­my had soft land­ed and the New York Fed’s mea­sure of under­ly­ing infla­tion is now just 2. 06%, and his tweet, or X, or what­ev­er you call it now, said the Fed should cut rates now, now, now. The Fed should cut rates now, now, now, but that’s for the oth­er, oth­er rea­sons that, uh,

[00:34:26] Cameron: that?

[00:34:28] Tony: so this was And I see a date.

[00:34:31] Tony: It was a day before the mar­ket cor­rect­ed. It

[00:34:34] Cameron: Live update, Tony RBA leaves inter­est rates on hold at 4. 35 per­cent in its 6th straight meet­ing fol­low­ing mar­ket volatil­i­ty.

[00:34:44] Tony: No, that’s prob­a­bly a good thing.

[00:34:47] Tony: It does, it does, you know, I think, yeah, I think we’ll see cen­tral banks start to be active again over the com­ing month. But,

[00:34:54] Tony: um, it makes sense for the RBA not to be the first.

[00:34:58] Cameron: Okay.

[00:35:00] Cameron: What else you

[00:35:00] Tony: And it was just, it was just like a week, up to a week ago where peo­ple, a lot of econ­o­mists were say­ing the RBA should have had inter­est rates high­er. We had lagged inter­est rate ris­es around the world and that was a bad thing.

[00:35:13] Cameron: Hmm.

[00:35:13] Tony: It’s always fun when the mar­ket has these kind of down­turns to see all the bears start crow­ing and the

[00:35:19] Tony: econ­o­mists who got it right start to say that they’re, they’re Nos­tradamus with a uni­ver­si­ty degree.

[00:35:26] Tony: Um, it’s a bit of fun watch­ing all that stuff and then they all have their day in the sun, but they tend to rotate out again.

[00:35:33] Cameron: Yeah, they were right 2

[00:35:35] Cameron: times.

[00:35:36] Tony: Yeah, I was going to talk about Buf­fett. I think we have a ques­tion from Ally, which we can do at the same time. Uh, but it came out over the week­end that, um, Buf­fett halved his stake in Apple and sold 116 bil­lion of stock.

[00:35:55] Tony: Uh, and it was also report­ed. This was report­ed, Berk­shire Hath­away’s cash pile reached a record US 276.

[00:36:04] Tony: 9 bil­lion, which is 425 bil­lion in Aus­tralian dol­lars. In the sec­ond quar­ter, as bil­lion­aire War­ren Buf­fett slashed its Apple stake by almost 50 per­cent and con­tin­ued to hold off on acqui­si­tions. That was inter­est­ing, so he got out of Apple before it. It’s crazy. Results came out and its num­bers weren’t great and the share price went down.

[00:36:29] Tony: So he, he real­ly is the, uh, Ora­cle of

[00:36:32] Tony: Oma­ha. Yeah, he real­ly is the Ora­cle of Oma­ha.

[00:36:37] Cameron: do you think he, uh, set off the down­ward trend in Apple shares? When War­ren pulls out,

[00:36:43] Cameron: do oth­er peo­ple fol­low?

[00:36:45] Tony: Entire­ly pos­si­ble. It’s entire­ly pos­si­ble, but he only has to, he only has to report things once a quar­ter. Um,

[00:36:52] Tony: so he gen­er­al­ly keeps his share trad­ings as secre­tive as pos­si­ble to avoid either

[00:36:58] Tony: caus­ing a run of the stock he’s sell­ing or to make it hard­er for him to buy the one he’s buy­ing.

[00:37:03] Cameron: Yeah.

[00:37:05] Tony: He speaks about that at length. I mean, you know,

[00:37:08] Tony: I

[00:37:10] Cameron: Sor­ry, I

[00:37:10] Cameron: was just going to Ques­tion why War­ren was hoard­ing cash and whether or not that was at odds with the QAV phi­los­o­phy.

[00:37:23] Tony: think it’s in line with the QAV phi­los­o­phy, which is to be ful­ly

[00:37:27] Tony: invest­ed if you can. But I think if I use

[00:37:30] Tony: QAV terms, um, War­ren would be look­ing for very large

[00:37:35] Tony: ADT stocks. and I’m guess­ing there’s none on his buy list at the

[00:37:39] Tony: moment. So in his words, in his terms, he wants invest­ments that can move the nee­dle on Berk­shire Hath­away earn­ings.

[00:37:46] Tony: Um, not, you know, not small, small­er com­pa­nies that might be buy­ers nor­mal­ly. He just, he just says it’s not, not worth buy­ing. Um, that’s the first thing. Sec­ond thing is, I think in the last prob­a­bly five years, um, he’s made, He’s put more of an empha­sis on Berk­shire being what he calls unques­tion­ably strong.

[00:38:07] Tony: So he wants Berk­shire to be Fort Knox, so to speak. And he’s often used terms like, I want it to be the lender of last resort. So when these kind of down­turns do hap­pen, he finds it’s use­ful that he can get a good return by going in and lend­ing mon­ey to, say, banks that are hav­ing prob­lems. And he did this dur­ing the GFC.

[00:38:27] Tony: Where he would, um, do a deal with a, a bank or a large com­pa­ny. I think he may have done some­thing with GE. I could have that wrong. But, uh, some of the large com­pa­nies in the US where he would offer them a life­line in terms of a loan, it would usu­al­ly be at very high inter­est rates, sort of 8% plus that they had to pay.

[00:38:45] Tony: And this is when they could­n’t get financ­ing from reg­u­lar sources. Uh, and then he would often back­end the deal with some kind of con­ver­sion to equi­ty. Twist in it. So if you think about what hap­pens in Aus­tralia with bank hybrids, that kind of thing, it’s you’re invest­ing, um, your part, it’s part loan and it could turn into equi­ty under cer­tain con­di­tions.

[00:39:10] Tony: Um, so he’s well reward­ed if he just gets the loan, but if he does get to con­vert to equi­ty, he’s bought it at a good price. Um, and so he’s, he’s always kept a bit of mon­ey aside for that too. So yeah, they’re the two rea­sons, Ollie. Um, I think he, he would like to be ful­ly invest­ed. He cer­tain­ly bought back into Berk­shire Hath­away, re bought his own shares to use some of that cap­i­tal if he thought the price was right.

[00:39:35] Tony: So he’s not averse to spend­ing the mon­ey. He’s just find­ing it hard to find some­thing big enough and cheap enough to, um, to suit his invest­ment needs.

[00:39:44] Cameron: And fun­ni­ly enough, a cou­ple of days after Ali asked that ques­tion, the mar­ket crashed and things are sud­den­ly 10 per­cent cheap­er than they were a week

[00:39:52] Cameron: ago.

[00:39:53] Tony: But not only that, but, um, it was only in the last, I think before Char­lie died, it was in the last, uh, AGM, they were talk­ing about their big invest­ment in Japan­ese stocks, uh, and how that was

[00:40:04] Tony: a a great under­val­ued mar­ket to invest in, and I think he bought shares in the top five or top 10 Japan­ese com­pa­nies, I’m not sure what the num­ber was from mem­o­ry, but he bought into them, and that mar­ket’s down 20 per­cent from its high.

[00:40:18] Tony: So he’s not always the Ora­cle of Oma­ha, and he is con­strained about this, you know, by the size of the cash he has to deploy as to what he can buy.

[00:40:26] Cameron: And I read an arti­cle in the New York Times over the week­end about him resign­ing as a trustee of the Bill Melin­da Gates Foun­da­tion, which I think is now just the Bill Gates Foun­da­tion, because I think Melin­da Gates has left as well, um, and they were sort of talk­ing about the future of the foun­da­tion, because his dona­tions Appar­ent­ly he’s giv­en Berk­shire Stock worth 41 bil­lion

[00:40:54] Cameron: dol­lars over, uh,

[00:40:58] Cameron: to five foun­da­tions, non prof­it foun­da­tions

[00:41:03] Cameron: that he’s donat­ed mon­ey to.

[00:41:05] Cameron: That’s a lot of mon­ey,

[00:41:07] Tony: Yeah.

[00:41:08] Cameron: bil­lion dol­lars, and I think about half of the mon­ey that’s gone into the Gates Foun­da­tion has come from War­ren over the years.

[00:41:17] Tony: won­der why he’s resigned. Just get­ting too old to go along to board meet­ings, per­haps?

[00:41:23] Cameron: Well, no, I think he said recent­ly that, um, his chil­dren are going to be man­ag­ing the Buf­fett Phil­an­thropy, uh, from now on. They’ve got their own foun­da­tion and that’s what they’re pas­sion­ate about. And so, yeah, I think he’s had a, I don’t know if it is any reflec­tion on his rela­tion­ship with Bill. This arti­cle did say that, uh, with Bil­l’s newslet­ters that he writes, every year for years, he men­tioned War­ren, and he has­n’t for the last three or four years

[00:41:57] Cameron: men­tioned War­ren in his newslet­ters.

[00:41:59] Cameron: So whether or not there’s been a falling out between the two of them over, I don’t know, Jef­frey Epstein

[00:42:08] Cameron: or his affairs or

[00:42:10] Cameron: what­ev­er led to his divorce from Melin­da, I don’t know,

[00:42:14] Cameron: but, uh, any­way, it’s nei­ther here nor

[00:42:16] Cameron: there.

[00:42:17] Tony: No, and I think Bill still sits on the board of Berk­shire Hath­away as well. So there’s still a rela­tion­ship.

[00:42:22] Cameron: Right. Any­who, uh,

[00:42:23] Cameron: what else you got?

[00:42:25] Tony: I saw Bill sit­ting in the stands for the Olympic Games. Dou­bles ten­nis final,

[00:42:30] Cameron: Oh,

[00:42:30] Cameron: yeah.

[00:42:31] Tony: Aus­tralia took gold off the US, so bad luck Bill,

[00:42:34] Cameron: Hmm.

[00:42:35] Tony: did­n’t get a win then, we did. What else have I got? Uh, I think that’s it for me.

[00:42:42] Tony: Yep, just that you have some ques­tions I think now,

[00:42:47] Cameron: No,

[00:42:47] Tony: we done those

[00:42:48] Tony: too? That was it?

[00:42:49] Tony: Alright.

[00:42:50] Tony: Well I’ve got a pulled pork.

[00:42:52] Cameron: oh, okay. Are we going to talk through my US check­list today or not?

[00:42:55] Cameron: Yeah.

[00:42:58] Tony: I’ve only giv­en it a, like a quick eye. I would­n’t mind spend­ing some

[00:43:02] Cameron: that’s all. I thought we

[00:43:02] Cameron: could,

[00:43:03] Tony: it. Yep, okay. I

[00:43:04] Cameron: that on the show. Have a quick look at it. Cause I fin­ished

[00:43:06] Cameron: my recod­ing of it yes­ter­day and ran a new list. So I thought we could

[00:43:10] Cameron: take a quick look and See See if it pass­es

[00:43:12] Cameron: the ear­ly sniff test. Okay, you want to do your pulled pork first? You’re doing an, you’re doing an Aus­tralian pulled pork, not a US pulled pork then. Okay.

[00:43:23] Tony: MCP.

[00:43:25] Cameron: Okay. Baby, you

[00:43:26] Tony: What do you want?

[00:43:28] Cameron: That’s good, do your pulled

[00:43:29] Cameron: pork. Yeah.

[00:43:30] Tony: Bull­dog? Alright.

[00:43:31] Cameron: Yeah.

[00:43:32] Tony: Yeah, so this is McPher­son­’s. Um, McPher­son­’s is a stock I’ve owned in the past,

[00:43:38] Tony: going back sort of 10 years or more. It’s too small for me now. Um, and the ADT is only 37, 000 these days, so it’s a small­er com­pa­ny than it was in the past as well. McPher­son­’s are an

[00:43:49] Tony: importer and sup­pli­er of health and beau­ty prod­ucts.

[00:43:52] Tony: to super­mar­kets, chemists and oth­er retail­ers. And from their own web­site, McPher­son­’s is an ASX list­ed sup­pli­er of essen­tial health, beau­ty and well­ness prod­ucts. McPher­son­’s prod­ucts touch three out of four Aus­tralian house­holds, accord­ing to inde­pen­dent research, and include some of Aus­trali­a’s best loved brands, includ­ing Mani­care, Lady Jane, Dr.

[00:44:15] Tony: Lewin’s, Swis­pers and Fusion. In addi­tion, McPher­son­’s has a sup­port­ing port­fo­lio of pop­u­lar brands. in attrac­tive seg­ments of the mar­ket includ­ing hair care, vit­a­mins and sup­ple­ments, fra­grance and nutri­tion. It had a his­to­ry of sup­ply­ing oth­er, so that’s that’s the end of its descrip­tion from its web­site, and I know it also had a his­to­ry of sup­ply­ing oth­er prod­ucts out­side the health and beau­ty aisle, but announced an end to that with the sale of the last of these lega­cy brands called Maltics.

[00:44:46] Tony: And, uh, they’ve just divest­ed Maltics, and this is from an ASX announce­ment from McPher­son­’s. McPher­son­’s Lim­it­ed today announced, this is 28th of June this year, today announces that it has com­plet­ed the sale of its Maltics brand and inven­to­ry to Inter­na­tion­al Con­sol­i­dat­ed Busi­ness Group. The amount was for 19 mil­lion, sub­ject to agreed post com­ple­tion con­trac­tu­al adjust­ments.

[00:45:09] Tony: McPher­son­’s and ICBG, Inter­na­tion­al Con­sol­i­dat­ed Busi­ness Group, have also entered into a tran­si­tion­al ser­vices agree­ment, esti­mat­ed for three months, under which McPher­son­’s will assist ICBG with the tran­si­tion of Maltics to ICBG. The sale fol­lows the com­ple­tion of a strate­gic review of the Maltics brand, announced in Novem­ber 2023, as part of McPher­son­’s strate­gic re sip.

[00:45:33] Tony: The Novem­ber 2023 announce­ment set out that McPher­sons would focus on a core port­fo­lio of its lead­ing con­sumer brands, specif­i­cal­ly in health, well­ness and beau­ty, as a high­er growth and high­er mar­gin cat­e­go­ry. McPher­son­’s is cur­rent­ly assess­ing the impact of mate­r­i­al items for FY24 result­ing from its trans­for­ma­tion.

[00:45:56] Tony: As a result of the divest­ment specif­i­cal­ly, the pend­ing final­iza­tion of the com­pa­ny’s FY24 audit­ed results, McPher­son­’s expects to incur a one off non cash asset write down in the order of 10 to 11 mil­lion in FY24, relat­ing to the Mul­tics brand and asso­ci­at­ed good­will. The pre tax costs of the Maltics divest­ment are expect­ed to be approx­i­mate­ly 1.

[00:46:20] Tony: 5 mil­lion. And I should call out, McPher­son­’s will announce their full year results on the 23rd of August. So, when I talk about num­bers fur­ther on, uh, these are near­ly six months old. A cou­ple of inter­est­ing things about McPher­son­’s. One of the largest share­hold­ers is Chemist Ware­house, which Aus­tralian lis­ten­ers will be famil­iar with.

[00:46:43] Tony: CW Retail Hold­ings, a Chemist Ware­house divi­sion, hold near­ly 10 per­cent of the com­pa­ny. And this was because of a deal they did a cou­ple of years ago, back in 2022. And I’m going to quote from an arti­cle from a mag­a­zine called Inside FMCG, March 25, 2022. Chemist Ware­house will take a 10 per­cent stake in con­sumer prod­uct sup­pli­er McPher­son­’s as part of a broad­er strate­gic dis­tri­b­u­tion part­ner­ship between the two com­pa­nies.

[00:47:16] Tony: McPher­son­’s will become an exclu­sive long term dis­trib­u­tor. of a port­fo­lio of health and beau­ty brands owned or con­trolled by Chemist Ware­house out­side of the Retail­ers Aus­tralia and New Zealand net­work. The range includes Wag­n­er Vit­a­mins, Wag­n­er Body Sci­ence, Bon­di Pro­tein, Boster­grant, Inc. and Micro­gen­ics, all of which will now be avail­able to all of McPher­son­’s whole­sale cus­tomers.

[00:47:41] Tony: The dis­tri­b­u­tion rights will be for an ini­tial 50, 000. term of five years com­menc­ing July 1, the same date as the shares are issued to Chemist Ware­house. McPher­son­’s will have three five year options to extend the arrange­ments, sub­ject to cer­tain min­i­mum per­for­mance thresh­olds on a brand by brand basis, which McPher­son­’s con­sid­ers it as well placed to meet.

[00:48:01] Tony: Chemist Ware­house will also expand the range of McPher­son­’s brands, which the retail­er ranges in Aus­tralia and New Zealand. This is a Chemist Ware­house, Moose­head, Mass­er, Fusion Health, Strat­ton, Sug­ar Baby, and Hap­py Flo­ra will be added. So a cou­ple years ago it’s done a deal with Chemist Ware­house just to car­ry more of Macpher­son­’s brands and Macpher­son has access to Chemist Ware­house brands.

[00:48:26] Tony: And that was in exchange for Chemist Ware­house tak­ing 10 per­cent of the shares in the com­pa­ny. It’s a kind of an inter­est­ing deal there. A bit on the his­to­ry of Macpher­son­’s, the web­site, uh, proud­ly trum­pets that it’s been around since 1860 and it was found­ed by a chap called Thomas Macpher­son, the man who found­ed the busi­ness lat­er known as Macpher­son­’s, emi­grat­ed from Scot­land to Aus­tralia with his wife Jessie in about 1853.

[00:48:53] Tony: He set up as an iron mer­chant in 1860, sell­ing pig iron to the Mel­bourne foundries. By 1870, he was referred to as an iron mer­chant with steam sawmills, and the busi­ness became known as Thomas Macpher­son Sons. In 1863, Macpher­son opened an office in Syd­ney. By 1900, uh, The mc, the mc McPher­son descen­dants, uh, set up the Acme Bulk Com­pa­ny to pro­tect local man­u­fac­tur­ers from exploita­tion by over­seas bulk pro­duc­ers.

[00:49:27] Tony: The brand Ajax was adopt­ed and in 1924, the bulk works were trans­ferred to a new mod­ern build­ing in Rich­mond in Mel­bourne. Between 29 and 32, the com­pa­ny Bolt works sup­plied 5 mil­lion riv­ets weigh­ing 300 tons for the con­struc­tion of the Syd­ney Har­bor Bridge. Dur­ing the First World War, the com­pa­ny began the man­u­fac­ture of lath­es, and became a lead­ing builder of machine tools that were pre­vi­ous­ly import­ed.

[00:49:54] Tony: Uh, There’s a lot to do with the con­tin­u­a­tion in the steel busi­ness, but I’ll skip through to 1938. A com­pa­ny called Aus­tralian Abra­sives Pty Ltd was set up and McPher­son­’s acquired the Tool Equip­ment Com­pa­ny in Syd­ney. The Asso­ci­at­ed Machine Tools Aus­tralia Pty Ltd was also formed. To sep­a­rate Macpher­son­’s machine tool man­u­fac­tur­ing inter­ests from its mer­chan­dis­ing activ­i­ties.

[00:50:22] Tony: In 1939, a foundry and pump man­u­fac­tur­ing plant was estab­lished at Tot­ting­ham, Mel­bourne, and the Ajax, Bolt and Riv­et Co. com­menced man­u­fac­ture in New Zealand. After the out­break of the Sec­ond World War, Macpher­son­’s fac­to­ries worked at full capac­i­ty and were cru­cial to Aus­trali­a’s war efforts. On Decem­ber 5, 1944, McPher­son­’s con­vert­ed to a pub­lic com­pa­ny named McPher­son­’s Ltd.

[00:50:46] Tony: As time went on, man­u­fac­tur­ing in Aus­tralia began to decline, and imports of every­day tools began arriv­ing from Asia. So William David, who was a descen­dant, retired in 1984, and even­tu­al­ly parts of the com­pa­ny were divest­ed, such as the Rich­mond Bolt Works, which closed in the ear­ly 1990s. Since the 1980s, McPher­son­’s has diver­si­fied into house­wares, Print­ing and health and beau­ty care prod­ucts.

[00:51:12] Tony: And that was from a web­site called the Uni­ver­si­ty of Mel­bourne archives, which had a very detailed list of the com­pa­ny. The, the last bit I want to talk about is the print­ing that was men­tioned there. In, uh, and when I owned the com­pa­ny, it, uh, owned a large print­ing divi­sion, which was Demerge. In 20, 2012, MCP announced that they pro­posed to Demerge, uh, a The print­ing busi­ness MCP, um, uh, from McPher­son­’s MCP and, uh, oper­at­ed as a sep­a­rate com­pa­ny.

[00:51:45] Tony: MPG Print­ing and its sub­sidiaries, which own and oper­ate one of Aus­trali­a’s lead­ing book print­ing and com­mer­cial print­ing busi­ness­es, um, at the time and a sep­a­ra­tion of the MPG Print­ing Group from the MCP Group, will place MPG, MPG Print­ing into posi­tion to active­ly pur­sue growth. oppor­tu­ni­ties in the print­ing indus­try.

[00:52:06] Tony: So MPG print­ing list­ed sep­a­rate­ly and after a lit­tle while changed its name to Opus Group. And the code was OPG, but in 2018, OPG was tak­en over by a com­pa­ny called Top­Co, which was list­ed on the Hong Kong Exchange. So, I guess a case with­in six years of the com­pa­ny sug­gest­ing the print­ing side was­n’t receiv­ing the kind of val­ue it should be, they merged it, and then it was tak­en out.

[00:52:34] Tony: So that’s the his­to­ry of McPher­son­’s. Um, the QAV num­bers. Again, bear­ing in mind that, uh, they’ll, we’ll get some new num­bers this month. The stock price I used was 42.5 per, uh, 42.50 cents, which is above iv one of 11 cents, but less than IV two of 47 cents. Uh, net equi­ty per share is 76 cents, and book plus 30 is 99 cents, which are well above the share price.

[00:53:00] Tony: How­ev­er. A lot of that is good­will, um, from tak­ing over oth­er brands, and the NTA is only 22 cents per share, so we’ve seen this before where com­pa­nies have grown by acqui­si­tion, the NTA is dif­fer­ent to the net equi­ty per share, and it real­ly, if you’re going to buy a com­pa­ny like this on book val­ue, you’ve got to have a good analy­sis of whether the good­will is worth what it’s, uh, what it’s priced in at, and as we saw, With their announce­ments of the sale of the Maltics brand, they will take a write down because of good­will impair­ments on that one.

[00:53:34] Tony: Uh, this com­pa­ny at 42 and a half cents is well below con­sen­sus price tar­get. How­ev­er, I think there are only one or two bro­kers pro­vid­ing a tar­get. Mar­ket cap is only 63 mil­lion, so it’s a small com­pa­ny. Div­i­dend yield is 7%, which is above the aver­age mort­gage rate, so we can score it for that. Stock Doc­tor finan­cial health is strong and the trend is recov­er­ing, which scores an extra point.

[00:53:58] Tony: We like recov­er­ing com­pa­nies. PE is 20. 3. Which is high ish, but not the high­est, or low­est in the last three years, so we can’t score it for that. Uh, Prop­Caf is only 3. 21 times, so regard­less of what’s hap­pen­ing with Good­will, this com­pa­ny can be bought at a very cheap price, uh, based on its cash flow.

[00:54:18] Tony: Earn­ings per share is fore­cast to grow by 134%. And so EPS growth over P is 6. 6 which is high and scores well for us as well. Inter­est­ing­ly enough direc­tors hold very lit­tle stock which is a con­cern and the founders are long gone so we can’t score it for hav­ing anoth­er founder. The stock price is not a recent uptrend and has been in gen­er­al decline for a long time but is Back above its buy line, but be care­ful, it’s just trad­ing above its sell line, so have a look at that if you’re inter­est­ed in buy­ing the com­pa­ny or tak­ing it fur­ther.

[00:54:52] Tony: All in all, the com­pa­ny scores a qual­i­ty score of 14 out of 16, or 88%, which is high, and the QAV score is 0. 27. Um, I guess on from the risk point of view, it’s a small com­pa­ny, so they can be buf­fet­ed, um, by, you know, um, kind of swings in their sales or their, their prof­it mar­gins, which, uh, big com­pa­nies can ride through a lot bet­ter.

[00:55:18] Tony: But, but one of the biggest risks, I think, is, is just the nature of the indus­try it’s in. It’s their sup­ply­ing. Uh, brands to FMCG super­mar­kets in par­tic­u­lar, and it’s a dif­fi­cult task for a small com­pa­ny. Just ask farm­ers about that. Super­mar­kets could replace any of the MCP brands that they like with own brands at some stage in the future, which could hurt McPher­son­’s.

[00:55:41] Tony: And I guess the oth­er risk I think is the low own­er­ship of shares by man­age­ment and direc­tors, and that’s a par­tic­u­lar con­cern. The CEO is already fair­ly new though, so hope­ful­ly over time he’ll build up a stake in the com­pa­ny. So that’s MCP.

[00:55:55] Cameron: Hmm. Thank you Tony. Did­n’t know much about them before that. Seen them on the buy list over the years. I use some of their prod­ucts. Nail file. They do a great nail file. Made of glass. Real­ly good.

[00:56:08] Cameron: Chris­sy rec­om­mend­ed it to me. Kung Fu. Got­ta keep your nails nice and uh, smooth. Cut so you don’t slash peo­ple.

[00:56:17] Cameron: when you’re out there. So yes, check out their glass nail files. Mani­care glass nail files if you’re into doing your nails, boys and

[00:56:26] Cameron: girls. Yeah,

[00:56:32] Tony: do you? It’s just,

[00:56:35] Tony: well, don’t take a knife to a gun fight. Take a nail file.

[00:56:40] Tony: Yeah.

[00:56:41] Cameron: Don’t take a gun to a knife fight either. That’s just unfair. That’s not sports­man­like, you know. All right, thank you for that. Let’s talk about the US. So,

[00:56:53] Tony: stocks. Yeah.

[00:56:55] Cameron: US stocks. I went through and com­plete­ly rebuilt my check­list based on our last dis­cus­sion. Um, and ran a new buy list on Mon­day, yes­ter­day, and then fil­tered that with the nor­mal things that I do, Prop­Caf, etc.

[00:57:20] Cameron: But then also fil­tered it. on stock rank equal to or greater than 96. Because, so one of the things that I did, we talked about this, uh, I think last time, is, ow, ow, ow, ah, oh, cramp in my right thigh mus­cle, oh, uh, I need some elec­trolytes. Um,

[00:57:45] Cameron: I did the whole down­load, all six and a half thou­sand stocks, and then I looked at the stock, the, I stack ranked by stock rank, and looked at what the top 200 were.

[00:57:57] Cameron: And they were about 96 and above. And then I stacked ranked by the F score

[00:58:04] Tony: hmm.

[00:58:04] Tony: Mm hmm.

[00:58:05] Cameron: and they were about eight and

[00:58:06] Cameron: above. So what I’ve built into this is after I fil­ter it, I’m fil­ter­ing the fil­tered list, what’s left by those com­pa­nies that have a stock rank of 96 or above and an F score of eight or above.

[00:58:24] Tony: So when you say stock rank, is that the over­all Stock­o­pe­dia rank­ing or is it qual­i­ty?

[00:58:29] Cameron: It’s the over­all.

[00:58:31] Tony: Okay,

[00:58:32] Cameron: And that has left me, uh, with, um, and I’ve got the qual­i­ty rank on here as well. So the qual­i­ty rank, uh, goes down out of this list. There’s about 20 stocks I end­ed up with. Um, so it’s fair­ly cut down. I think the qual­i­ty goes down as low as 68, but most of them are in their 80s and 90s in terms

[00:58:55] Cameron: of the qual­i­ty rank. Um, so yeah, so, I mean, a cou­ple of these were on my last list. Uh, buy list,

[00:59:02] Cameron: and in that orig­i­nal port­fo­lio, TK, fun­ni­ly, is the high­est score. Uh, so there you go.

[00:59:13] Tony: Ter­rif­ic val­ue.

[00:59:16] Cameron: Uh, 98 per­cent qual­i­ty rank, so what more can you say?

[00:59:21] Tony: Yeah, I’d like to know what the 2 per­cent is that I need to change.

[00:59:28] Cameron: So if um, and I think from mem­o­ry they’re like a ship­ping com­pa­ny, aren’t they?

[00:59:36] Cameron: Let me

[00:59:37] Tony: so, yeah.

[00:59:38] Cameron: TK uh, Inter­na­tion­al Crude Oil and Oth­er Marine Trans­porta­tion Ser­vices, based in Bermu­da, that’s how you know. They’re good, because they’re based in Bermu­da. Um,

[00:59:54] Cameron: so, you know, one of the things that we picked up last time when we looked at it was the bank­rupt­cy risk for a lot of the stocks that we were pick­ing up was high.

[01:00:05] Cameron: High risk, they’re in the dis­tress. This one is sort of in the mid­dle, it’s at the bot­tom of the green range, which is the safe range.

[01:00:13] Tony: right.

[01:00:14] Cameron: And I notice that a lot of them sort of sit there. A lot of them are in the bot­tom of the safe range. Some of them are a lit­tle bit high­er in the safe range, but when I was look­ing at it last night,

[01:00:26] Cameron: that’s sort of, um, the low­est.

[01:00:29] Cameron: Um,

[01:00:30] Cameron: so, I want­ed to get your thoughts

[01:00:34] Cameron: on that. Do you think if they’re in the bot­tom

[01:00:36] Cameron: of the safe range, that’s safe enough for us? Or do we want it to be high­er? This is their Z2 score.

[01:00:44] Tony: I’d have to have a look, Cam. I don’t know.

[01:00:46] Cameron: Okay.

[01:00:48] Tony: Can I get, can you point me to where Stock­o­pe­dia has its Zed score.

[01:00:53] Tony: range?

[01:00:54] Cameron: Yeah.

[01:00:54] Tony: I look at, if I look at TK,

[01:00:57] Cameron: It’s on the right hand side, halfway down the screen. Bank­rupt­cy risk.

[01:01:01] Tony: oh yeah, um, yeah, it’s on the bor­der­line between cau­tious and safe, isn’t it?

[01:01:07] Cameron: Yeah,

[01:01:09] Tony: Which I think would be good enough. I mean, you would­n’t want it to go any low­er than

[01:01:12] Tony: that.

[01:01:13] Cameron: no, we want it to be in the green,

[01:01:17] Cameron: but you

[01:01:17] Cameron: know, this is,

[01:01:19] Tony: bank­rupt­cy risk is, is between, at the bot­tom of safe, but the health trend F score is nine out of nine.

[01:01:26] Cameron: yes,

[01:01:27] Tony: It’s as high as it can get. So it’s strange you can have a health trend, per­fect health trend score and still be head­ing towards cau­tious on the

[01:01:37] Tony: bank­rupt­cy risk score. That’s inter­est­ing.

[01:01:39] Cameron: and I don’t know why

[01:01:40] Cameron: that is.

[01:01:41] Tony: No, me nei­ther.

[01:01:43] Cameron: But a cou­ple of oth­er things I want­ed to run past you, so, in build­ing this, so one of the things that I’ve added is I have the new three point upturn score in there now. I’ve writ­ten a script to fig­ure that out as I do with the Aus­tralian man­u­al data stuff. PE, low­est PE still escapes me though because I thought I might be able to get it off their home page, but even if you look, because they don’t give me a num­ber for PE his­to­ry, but even if you look on their home page and you look at PE ratio, you’ll see they’ve only got 2023 and TDM.

[01:02:27] Cameron: They don’t have

[01:02:27] Cameron: any PE his­to­ry before 2023 even on their home page. So for sum­ma­ry, I don’t know why. LEO

[01:02:38] Cameron: could­n’t explain it to me when I asked, but that’s just not some­thing that they do as report PE. Now, I could prob­a­bly work it out though, right? If you have

[01:02:48] Cameron: the price his­to­ry and the earn­ings his­to­ry, you could, I could prob­a­bly back end it.

[01:03:05] Tony: well, it’ll be the end of the finan­cial year, which will be, because it’s US, it’ll be, you know, Decem­ber 31st. So if you did get the price on that day, you’d be able to cal­cu­late the P.

[01:03:16] Tony: E. ratio your­self. So it’s sur­pris­ing that Stock­o­pe­dia can’t do that.

[01:03:23] Tony: I’m just look­ing at EK, it’s down a lot in the last few days.

[01:03:28] Cameron: Well, I’m sure every­thing is there. Yeah. Like I, I ran the num­bers on this. I did the down­loads on the 2nd of August. So obvi­ous­ly a lot’s changed since then. I mean, I’m not sug­gest­ing we buy any of these. It’s just the

[01:03:44] Cameron: process I want­ed to, run through with you. So yeah, I want to think about how to get the PE.

[01:03:49] Cameron: Um,

[01:03:50] Cameron: one of the

[01:03:50] Cameron: oth­er things that I did, I think you were telling me a cou­ple of weeks ago that you thought their EPS

[01:03:56] Cameron: growth. was too far out. The fig­ure that they were report­ing was like three years.

[01:04:04] Tony: Yeah, so this gets down to, um, Fore­cast EPS growth, and it’s not out three years, it’s out, it’s, it’s out, um, so say we’re in 2023

[01:04:19] Tony: now, or 2024 now,

[01:04:21] Tony: it’s giv­ing you what they’re fore­cast­ing earn­ings per share growth will be in 2025. Um, oh, in fact, if I look at these num­bers in Stock­o­pe­dia, they’re still giv­ing us 2023 and then the growth.

[01:04:32] Tony: So, okay, my, my point is that, um, At the moment, you can, uh, there’s no hard and fast rule about what a fore­cast growth is for EPS, and It can relate to, um, either the growth that’s fore­cast for the next results, which in the case of like McPher­son­’s that we just talk about, we just talked about, mean that the fore­cast is only going to last for three weeks because we’re going to get 2024 earn­ings per shares out then, or as Stock­o­pe­dia do it, it’s fore­cast­ing what the earn­ings per share will be in FY25.

[01:05:11] Tony: So it’s going out 12 months plus the three weeks left in 24. So it’s always going to be, at its worst, like in a mon­th’s time, it’ll be near­ly two years out, and at its short­est, it’ll be 12 months out, or 12 months in a day out. I’ve always found that that can be quite elas­tic, that num­ber, if you go with the FY25.

[01:05:37] Tony: Earn­ings per share fore­cast and then work out growth. Um, so when I do my cal­cu­la­tions in the check­list, I’m using the FY24 fore­cast num­ber, which means at this time of year, it should be a fair­ly sol­id, reli­able fore­cast because it’s only a few weeks away from when they report the num­bers. And we’ve gone through con­fes­sion sea­son.

[01:05:57] Tony: So if the mar­ket was hold­ing in the wrong fore­cast, then the com­pa­ny is kind of oblig­ed to come out and say that. They don’t always, but they’re meant to. Um, yes, and I found that hold­ing, bas­ing deci­sions based on the FY25 fore­cast is a bit rub­bery, and it changes a lot. Um, so I use FY24. I use the fore­cast for the next annu­al results, if that makes sense.

[01:06:23] Cameron: Yeah. So I’m try­ing to look it up here because they, they do have an EPS fore­cast one year.

[01:06:35] Tony: And when I dug down on that, when you gave me your buy list last time, it was the one year fore­cast meant, in this case, FY25, so it’s a bit over a

[01:06:44] Tony: year. Because that’s, because that made a big dif­fer­ence, right? So

[01:06:47] Tony: I for­get now which com­pa­ny it was that I was look­ing at, but if we use the FY24 fore­cast, so the fore­cast for the end of this finan­cial year, it was one num­ber, but the FY25 fore­cast was like growth of 300 per­cent and it was scor­ing it high­er and putting it onto our buy list because of that, because it scores a 2 for that.

[01:07:11] Tony: And I did­n’t like that because, like I said, a fore­cast of a 300 per­cent growth in 12, 12, at least 12 months out is, is a big call. A lot can hap­pen between now and then. And gen­er­al­ly it’ll get, um, it’ll get moved down.

[01:07:30] Cameron: Right. And that’s sort of the case with TK. So if I look, so what I did was, yeah, take those two, I took their cur­rent EPS. And I took their EPS fore­cast and then cal­cu­lat­ed the dif­fer­ence between the two. Although now I’m look­ing at the num­bers here. I actu­al­ly look at the down­load, it’s got their EPS and their fore­cast EPS is But my for­mu­la is still giv­ing them a score. Okay, so I need to look at my algo­rithm.

[01:08:06] Cameron: For that, Um, but from what you’re say­ing, does it mean that we can’t even use EPS growth then?

[01:08:14] Cameron: yes, I don’t think we can, cause Stock­o­pe­dia uses the. FY25 num­ber, or the num­ber more than 12 months out. And remem­ber we spoke a lit­tle while ago, I’ve been run­ning some checks on Stock Doc­tor because it does mea­sure earn­ings per share revi­sions dur­ing the year, and, um, I can’t check for TK in Stock Doc­tor, but A lot of stocks will have big move­ments in their earn­ings per share fore­casts, which changes the growth num­ber if you were look­ing, if you start­ed off using the FY25 fig­ure.

[01:08:48] Tony: Dur­ing FY25, that fig­ure can be halved or it could dou­ble. It’s that rob­bery.

[01:08:53] Cameron: And that means we can’t use IV 2 either, because it’s based on the future EPS.

[01:08:59] Tony: In Stock­o­pe­dia, yes, we have to change it. Cal­cu­late it our­selves, I would guess.

[01:09:04] Cameron: How do we cal­cu­late it our­selves?

[01:09:07] Tony: I’m just look­ing at the page for, okay, I’m look­ing at the page for TK

[01:09:13] Tony: in stock­o­pe­dia, And there’s a col­umn in the finan­cial sum­ma­ry which has 2024 E esti­mate and 2025 E. They’re blank for tk, but I’m assum­ing in oth­er com­pa­nies cas­es they won’t always be blank.

[01:09:30] Cameron: Right.

[01:09:32] Tony: So it’s the 2024 E num­ber over the um, cur­rent earn­ings per share. The 2023 earn­ings per share will give us the growth.

[01:09:42] Cameron: And if they are blank, then We

[01:09:44] Cameron: just have

[01:09:45] Tony: We can’t give it an IB2. Yeah.

[01:09:48] Cameron: we just blank it out of our results.

[01:09:51] Tony: Yeah, and that hap­pens a lot, as we know, we don’t get, um, ana­lyst cov­er­age of every stock, which can be to our advan­tage.

[01:09:58] Cameron: So if you look at GSL, Glob­al

[01:10:01] Cameron: Ship Lease, which is

[01:10:03] Cameron: the sec­ond stock on my new buy list. It does have 2024E

[01:10:09] Cameron: for EPS.

[01:10:16] Tony: of plus 9. 05.

[01:10:20] Cameron: Yep.

[01:10:21] Tony: And then for FY25, it’s say­ing it’s going to go down. It’s minus 8. 18%. So that’s a big dif­fer­ence to our check­list, right? Cause one’s a fore­cast growth and one’s a fore­cast con­trac­tion. And we score a con­trac­tion with a minus two on the check­list. So it may swing some of these stocks off our buy list.

[01:10:41] Cameron: But I’m just look­ing at, so let me look at GSL in my down­load and see what it said.

[01:10:52] Cameron: So, Yeah,

[01:10:54] Cameron: okay. EPS fore­cast one year 9. 523,

[01:11:01] Cameron: which is

[01:11:03] Cameron: the same as what it has in that front page for 2024e.

[01:11:11] Tony: So that’s the cor­rect growth. Yeah.

[01:11:14] Cameron: we’re assum­ing that’s the, that’s good. If, if, if it’s giv­ing us that num­ber, we can use it for EPS growth and for IV2.

[01:11:23] Tony: Yeah. Which is inter­est­ing because the one I looked at last time you did a down­load was using the FY25 fore­cast growth num­ber.

[01:11:31] Tony: So I don’t know if you’ve changed some­thing or that was a one

[01:11:34] Tony: off or there’s rules around when it rolls over to

[01:11:36] Tony: FY25, but yeah, it

[01:11:40] Tony: looks like it’s the right num­ber.

[01:11:43] Tony: Although the front page of Stock­o­pe­dia is say­ing 24 growth for this com­pa­ny is 9. 05%. And if I’m look­ing at the right col­umn. In the buy list you sent me, it’s say­ing 9. 267. Is it col­umn AB?

[01:11:59] Cameron: Uh, 9. 2657 is the cur­rent, um, EP, uh, EPS. AB,

[01:12:10] Tony: where’s the EPS growth?

[01:12:13] Cameron: Okay. So the EPS growth? is col­umn AI.

[01:12:19] Tony: Oh, got it. Okay. It’s say­ing 3%.

[01:12:21] Cameron: Yeah.

[01:12:23] Tony: So where’s that com­ing from? Because it’s say­ing it’s either 9, plus 9, accord­ing to the front page of Stock­o­pe­dia.

[01:12:31] Cameron: Yeah. I don’t know. Cause I’m, I’m, I, well, I’m, I’m, yeah, I’m cal­cu­lat­ing it myself. It’s just, uh, you know, fore­cast less the cur­rent. divid­ed by the cur­rent,

[01:12:44] Cameron: right?

[01:12:45] Tony: Right. Okay.

[01:12:46] Cameron: That’s how I’m cal­cu­lat­ing it. So I don’t know why they’re giv­ing me a dif­fer­ent result, but I can check my calcs, check GSL. All right. I want­ed to check that with you.

[01:12:59] Cameron: Um, what else? Book plus 30. Oh, just the, the

[01:13:04] Cameron: neps and the book.

[01:13:05] Cameron: price. So, um, they don’t, Elio

[01:13:09] Cameron: told me they don’t do equi­ty. But they do have a, um,

[01:13:18] Cameron: price to book func­tion.

[01:13:21] Cameron: It’s

[01:13:21] Tony: Yeah, they’ve got book. Okay.

[01:13:26] Cameron: So

[01:13:26] Tony: I can see book val­ue on their front page.

[01:13:31] Cameron: yeah. So he told me they

[01:13:32] Cameron: don’t do equi­ty, but then I fig­ured out they do price to book and book is

[01:13:37] Cameron: basi­cal­ly net equi­ty. So I’ve reversed engi­neered

[01:13:41] Cameron: their price to book

[01:13:43] Cameron: to work out, the equi­ty,

[01:13:46] Cameron: and then I could do book val­ue

[01:13:48] Cameron: growth, book plus 30, that kind of stuff based on that.

[01:13:52] Tony: Yeah, well, it looks like their book val­ue cal­cu­la­tion is the, Is the net equi­ty per share cal­cu­la­tion that we nor­mal­ly do.

[01:13:58] Cameron: Yes.

[01:14:00] Tony: Yeah, it’s, I just looked at the def­i­n­i­tion, it’s total assets minus total lia­bil­i­ties, which is what I would say is net equi­ty per share.

[01:14:08] Cameron: Yeah. Okay. Good. Book val­ue. Um, any­way, so, uh,

[01:14:17] Tony: Look­ing good.

[01:14:18] Cameron: I think these com­pa­nies look stronger and, you know, we’ve, I mean, Obvi­ous­ly, the mar­ket’s in tur­moil, so I don’t know how many of these 20 would actu­al­ly be buyable, but in the nor­mal course of events, if

[01:14:30] Cameron: I can end up with a list of 20 to

[01:14:32] Cameron: 50 stocks on that buy list, we should be able to, you know, add stuff that, that have a very high qual­i­ty rank, a very high stock rank, a high F score, um, yeah, should be good.

[01:14:49] Tony: Yeah. Have you run this for the Aus­tralian stock list as well from Stock­o­pe­dia?

[01:14:55] Cameron: Not this ver­sion of it. I, I, that’ll be my next step after I just check this, um, IV2, uh, this EPS fore­cast stuff. Yeah. So then I’ll run it and do a com­par­i­son to the Aus­tralian buy list again. But, as I said to you the oth­er day, um, off air, the first ver­sion I built of the Stock­o­pe­dia check­list I built for Aus­tralia, and it com­pared.

[01:15:21] Cameron: very well with the Stock Doc­tor buy list. And then I went and applied it to the US and the com­pa­ny sucked. So I’m not exact­ly sure why the first ver­sion of it did, you know, look like pret­ty much a repli­ca. There’s a cou­ple of

[01:15:39] Cameron: stocks that were on Stock­o­pe­dia that weren’t on Stock Doc­tor,

[01:15:42] Cameron: like Vysan. Which has just been an absolute killer.

[01:15:50] Cameron: I wish it was in my port­fo­lio Vysan. Um, I bought and it was up 15% today.

[01:15:59] Cameron: Um,

[01:15:59] Cameron: it’s

[01:16:00] Tony: bought it? You bought it?

[01:16:02] Cameron: I added

[01:16:03] Tony: for the

[01:16:03] Tony: Stock­o­pe­dia port­fo­lio?

[01:16:05] Cameron: The Aus­tralian Stock­o­pe­dia port­fo­lio back in July last year. It’s up 147%. since then

[01:16:13] Cameron: up 15 per­cent today

[01:16:16] Tony: Oh,

[01:16:17] Cameron: for some strange rea­son.

[01:16:20] Tony: wow.

[01:16:21] Cameron: Bought it at 17 cents. It’s cur­rent­ly trad­ing at 42 cents. So, you know, you know, but any­way, again, bro­ken clock can be right, et cetera, et

[01:16:31] Cameron: cetera.

[01:16:32] Cameron: So,

[01:16:32] Tony: yeah, yeah. yeah. And that’s right. They’re not every stock list. Not every buy list isn’t going to go up dra­mat­i­cal­ly as well.

[01:16:39] Cameron: yeah. And if I look at the, the Stock­o­pe­dia Aus­tralian port­fo­lio that I built, um, has­n’t done great. I mean, that is sort of the one that’s shoot­ing the light out. SXC is in there. It’s up 90%, but it was on the oth­er buy list. Most of the oth­er stocks were on the oth­er buy list. Aba­cus Prop­er­ty Group might be the oth­er one.

[01:17:02] Cameron: It’s down 5%. Um, but you know, you know, look, if I, the stocks that end­ed up on the Stock­o­pe­dia Aus­tralia buy list, ASG, Boom Logis­tics, MacMa­hon Hold­ings, Vysan, NAB, Viva Leisure, SXE as I said, serv­er stream SSM, JYC, FPR, ABG, Aba­cus Prop­er­ty Group, NZM, nzme, Shape Aus­tralia Cor­po­ra­tion, SHA, which is up 38% since Decem­ber.

[01:17:36] Cameron: And PRN Par­en­ti, uh, which I only added in May actu­al­ly.

[01:17:46] Cameron: I thought Par­en­ti was sort of on the shit list because of all of their acqui­si­tions and stuff. Maybe

[01:17:50] Cameron: not. Any­way. So gen­er­al­ly, gen­er­al­ly speak­ing like that, out of that

[01:17:53] Cameron: list

[01:17:54] Cameron: of com­pa­nies out­side of maybe Vysan and Aba­cus Prop­er­ty Group, which has been on and

[01:17:58] Cameron: off our buy list, none of those are a big sur­prise, right?

[01:18:01] Cameron: They’re just

[01:18:03] Cameron: stan­dard

[01:18:03] Cameron: QAV stocks, more or

[01:18:04] Cameron: less.

[01:18:06] Tony: Yeah, they’re all fair­ly small caps. That’s prob­a­bly the only oth­er thing I’d say about them. Um,

[01:18:12] Tony: but often­times stocks at the top of our list are small cap stocks.

[01:18:16] Cameron: yeah, NAB being the excep­tion there.

[01:18:19] Tony: Yep.

[01:18:20] Cameron: Maybe Fleet Part­ners. I can’t

[01:18:22] Tony: Mm hmm.

[01:18:22] Cameron: Part­ners is. But yeah, if I’m. Yeah, but you know, most of the stocks in a Stock Doc­tor buy list are going to be small cap stocks too,

[01:18:32] Tony: Yep.

[01:18:33] Cameron: And most of the big ones, as you say, down

[01:18:35] Cameron: the bot­tom, they’re scor­ing 0. 1, 0. 11, some­thing like that, usu­al­ly. Any­way, so yeah, I’ll run it over the Aus­tralian and

[01:18:41] Cameron: see what I come up with, but I’m feel­ing bet­ter about it. Um, I think I’ve plugged some of the holes. And so thank you for your, uh, guid­ance on

[01:18:50] Cameron: that.

[01:18:52] Tony: You’re wel­come. 98 per­cent qual­i­ty. TK.

[01:18:56] Cameron: Yeah, the 2%. That’s when you, that’s in your drink­ing days, was the

[01:19:00] Cameron: oth­er 2%.

[01:19:01] Tony: Yeah.

[01:19:04] Cameron: You’re still off the booze?

[01:19:06] Tony: Yep.

[01:19:07] Cameron: After hours? I think we’re after hours?

[01:19:10] Tony: Yes, we are. Yep.

[01:19:12] Cameron: Hour and a half in, we should be in after hours by now. How’s that, how’s the uh, house sale going?

[01:19:21] Tony: I would­n’t, I strug­gle to be opti­mistic because you

[01:19:24] Tony: nev­er know, but we’ve had some­one back twice and they’re com­ing back for a third time

[01:19:27] Tony: tomor­row, so hope­ful­ly there’s a bit of inter­est start­ing to appear,

[01:19:33] Tony: which is good, but we haven’t had any dis­cus­sions on price or

[01:19:36] Tony: any­thing like that, yet, so we’ll see.

[01:19:38] Cameron: What else have you been up to this week?

[01:19:41] Tony: I watched a lot of Olympics, um, espe­cial­ly the golf, so that was good. But a few things hap­pen­ing on the horse front. So we had a horse called Wilder, which we bred, named after Gene Wilder. And like Gene, we’ve retired, we’ve retired Wilder. Yeah, so it did­n’t show much promise. He was out of Heurich, our Group 2 win­ning May­er, so we thought he may have done bet­ter, but he just has­n’t, uh, he was very sick as a child and he just real­ly has­n’t recov­ered, so he’s retired.

[01:20:13] Tony: Uh, speak­ing of good hors­es, Karst, uh, won her tri­al. Yes­ter­day? Yeah, yes­ter­day. So, uh, big, big name hors­es in her tri­al. I know it’s only a tri­al, so you can’t real­ly go on tri­al form, but she’ll go off to the races after run­ning in a tri­al and win­ning yes­ter­day against hors­es like Mr. Bright­side, and she’ll race on August 17th.

[01:20:39] Tony: She’ll kick off her cam­paign for the spring, so I’m look­ing for­ward to that. She, uh, she is a good horse, but got injured last year and did­n’t see much of the spring, so we’re hop­ing that she stays sound and can get through. Spring this year. And Quel­lo Dora­to, who ran third at the last Art War Run again this Fri­day at Gee­long.

[01:20:59] Tony: So she’s, uh, out of Bel­la Orfana, who’s Furyk’s mum. So we’re kind of keep­ing this all in the fam­i­ly with our breed­ing. And, uh, or he is. And, um, he, he ran third on his first run, so I think he might, uh, do well. We’ll see how he goes, too, on the, on Fri­day.

[01:21:18] Cameron: good luck with

[01:21:18] Cameron: those.

[01:21:19] Tony: Thank you.

[01:21:21] Cameron: What else?

[01:21:22] Cameron: That’s it?

[01:21:23] Tony: I think that’s it. Yeah, still read­ing Bil­lion Dol­lar Brain by Len Dighton, which is good. Read­ing, uh, What Works on Wall Street again. It’s very, very good. High­ly rec­om­mend that.

[01:21:34] Cameron: After we spoke last time, I went and got a copy, I went to get a copy of the IPCROS file by Len Day­ton

[01:21:40] Cameron: and real­ized I already start­ed read­ing it I’m like three

[01:21:43] Cameron: chap­ters into it.

[01:21:44] Tony: Oh, okay.

[01:21:45] Cameron: I, I don’t know when, uh, I’d for­got­ten. I was read­ing where I was up

[01:21:48] Cameron: to. I was like, I don’t remem­ber any of this, so I’ve got to go back to the begin­ning and read it again.

[01:21:53] Cameron: But I have been read­ing a book, which I won­dered if you’d ever heard of, The Star’s My Des­ti­na­tion by Alfred Bester.

[01:22:00] Tony: No, I don’t think so. The name does­n’t ring a bell. Alfred Bester does, but, and I may have read it and for­got­ten it, but, um, you know, going back to the gold­en age of Sci

[01:22:10] Cameron: yeah. Yeah, the 50s. His most famous book is called The Demol­ished Man, which I haven’t start­ed yet, but some­body rec­om­mend­ed this one to me. The Star’s My

[01:22:20] Cameron: Des­ti­na­tion. It’s good. And he’s con­sid­ered like one of the, you know, ear­li­est, uh, sci­ence fic­tion guys. Appar­ent­ly William Gib­son cites him as a major

[01:22:32] Cameron: influ­ence

[01:22:32] Cameron: and peo­ple like that.

[01:22:33] Cameron: So, yeah, I’d nev­er heard of him before. All this book and it’s, it’s

[01:22:38] Cameron: fun. I’m enjoy­ing it.

[01:22:39] Cameron: Um,

[01:22:40] Tony: good. Go back and

[01:22:42] Cameron: got­ta give a shout out to your daugh­ter, Alex, for putting me on to not only the, the

[01:22:49] Cameron: woman you men­tioned last week that I lis­tened to and I real­ly

[01:22:51] Cameron: liked, but, and I sent her an

[01:22:54] Cameron: email and said I real­ly liked it, and she put me on anoth­er one, Amyl and the

[01:22:57] Cameron: Snif­fers.

[01:22:58] Cameron: Did she

[01:22:58] Tony: Oh, yeah. The punk

[01:22:59] Tony: band.

[01:23:00] Tony: Oh, I knew about them any­way. Yeah.

[01:23:03] Cameron: Real­ly? Why are you hold­ing out on me?

[01:23:05] Cameron: That’s been my sound­track for the last week. Oh my god, I love this band.

[01:23:13] Tony: Hmm.

[01:23:14] Cameron: Mel­bourne, female led punk band, sound like the Stooges,

[01:23:20] Tony: Mm hmm.

[01:23:20] Cameron: MC5, like just raw, grit­ty, angry punk. Lovin it! Lovin it! Okay,

[01:23:31] Cameron: I

[01:23:31] Tony: No, I agree. They’re good.

[01:23:32] Cameron: stop hold­ing out on me,

[01:23:33] Cameron: Alex,

[01:23:35] Tony: I’m sur­prised she likes them. That’s not usu­al­ly her. She’s more Grace Cum­mins. Who was the oth­er? Oh, that? she rec­om­mend­ed. Yeah.

[01:23:42] Cameron: I liked Grace Cum­mins too, a real­ly great voice, real­ly deep, earthy sort of voice. Um, my boys took me to see Dead­pool and Wolver­ine on Sun­day

[01:23:54] Tony: Oh, yeah. How’s that?

[01:23:55] Cameron: it. Loved it.

[01:23:57] Tony: Real­ly? Good.

[01:23:58] Cameron: Oh yeah, if you like the, if you like the Dead­pool films, you know. But one of the things, Chris­sy want­ed to go see it, and I said to her after­wards, I don’t think you’d get 98 per­cent of the jokes in it because it’s, it’s very heav­i­ly built for the fan base.

[01:24:14] Cameron: So, if you haven’t been fol­low­ing all of the, um, issues with Mar­vel films and DC films and the sale of Fox to Dis­ney and the rights issues and, um, there’s a lot of in jokes. He men­tions his real life wife a cou­ple of times and in jokes about oth­er films that he was in. And she was in, and Hugh Jack­man’s been in.

[01:24:38] Cameron: It’s just like, absolute­ly packed full of

[01:24:42] Cameron: in jokes of the Mar­vel Uni­verse, and You know, Mar­vel and Dis­ney and Fox and Kevin Feige and the Mur­dochs. And it’s just, it’s full of, you know, ref­er­ences to the greater sort

[01:25:01] Cameron: of

[01:25:02] Cameron: goings on in the indus­try, and You know,

[01:25:05] Cameron: all that kind of

[01:25:05] Cameron: stuff and he gets away with it.

[01:25:08] Tony: I guess they weren’t men­tion­ing, uh, Wolver­ine’s wife

[01:25:12] Tony: in real life.

[01:25:13] Cameron: He does.

[01:25:14] Cameron: He,

[01:25:15] Tony: did? Real­ly?

[01:25:16] Cameron: they, they, there was a, no, there was a crack about,

[01:25:21] Cameron: um, how he’s put on weight or got slow­er since the divorce or some­thing like that, Hugh Jack­man. Yeah, there’s a crack about his divorce, um, Yeah, it’s just full of inside jokes and ref­er­ences and all that kind of stuff. Hen­ry Cav­ill turns up at it in one point in a cameo and he makes a crack about try­ing to get him to

[01:25:43] Cameron: leave DC and come to Mar­vel and, the, you know, it’s, it’s just, if you’re into that kind of thing, which I, I don’t fol­low it as close­ly as my boys do, but close enough that I got, I think 90, 98 per­cent of the jokes, but, uh, yeah, it was, it was very, very fun­ny.

[01:26:01] Cameron: Very enter­tain­ing.

[01:26:03] Tony: Oh, excel­lent. I’ll look for­ward to it. Because the last few Mar­vel Uni­verse films have flopped, so this was seen as a bit of a,

[01:26:11] Tony: well hope­ful­ly a water­shed.

[01:26:12] Tony: Not that I real­ly care for those movies, but um,

[01:26:16] Tony: yeah, if this one failed, they were done, I think.

[01:26:19] Cameron: And well, and he refers to that because he refers to him­self as Mar­vel Jesus through­out the film.

[01:26:27] Tony: I would have thought Robert Downey Jr. was Mar­vel Jesus.

[01:26:31] Cameron: He is. Did you see his

[01:26:32] Cameron: announce­ment the last

[01:26:33] Tony: I did. Dr. Van Doom. Yes.

[01:26:37] Cameron: Which is kind of fun­ny because I’ve always thought of Dr. Doom as like a ridicu­lous char­ac­ter. Oh, and there’s a, there’s a, there’s a fan­tas­tic four ref­er­ence in this too, which I won’t spoil it for you, but yeah, it’s good. It’s, uh, it’s, it’s a pret­ty good, it’s pret­ty good.

[01:26:54] Cameron: I’d give it a 10, actu­al­ly. The boys asked me

[01:26:56] Cameron: when we left the cin­e­ma, what would you give it out of 10? I’d say a 10. Like in terms of enter­tain­ment for two hours, absolute­ly enter­tain­ing for two hours. It’s just ridicu­lous. Like stu­pid. lev­el of enter­tain­ment up there with a good Bol­ly­wood film lev­el of stu­pid enter­tain­ment

[01:27:15] Tony: Yeah, right. I real­ly liked the first two. They were good.

[01:27:19] Cameron: yeah, I thought so

[01:27:21] Cameron: too. Um, and this one again, just knocks it out the park and you got to give cred­it to the direc­tor, Sean Levy and, um, to Ryan Reynolds, man. He’s absolute­ly fig­ured out. The, the algo­rithm for these films, you know,

[01:27:40] Cameron: uh, they do

[01:27:41] Tony: Well, that’s his, all his parts these days are pret­ty much the same. He’s a wise­crack­ing smar­tass.

[01:27:47] Tony: Either he’s got super­pow­ers or not, but he’s

[01:27:49] Tony: just cracks his way through the movies. Yeah.

[01:27:52] Cameron: Yeah. And it works. It’s enter­tain­ing, you know.

[01:27:55] Tony: Mm

[01:27:56] Cameron: And then I men­tioned before Elon, yeah, been watch­ing this long inter­view with Elon on Lex Fried­man’s pod­cast, uh, talk­ing about Neu­ralink and robots and his vision for Neu­ralink, which is real­ly fas­ci­nat­ing. They’ve just done their sec­ond patient. And he said they’ve got a very, uh, much high­er per­cent­age of the nodes work­ing than they did with the first guy.

[01:28:19] Cameron: I think with the first guy, they only got 10 to 15 per­cent of the nodes work­ing this time. And then they learned a lot from that because these ear­ly patients are basi­cal­ly alpha testers of the prod­uct, real­ly. They’re using them as learn­ing expe­ri­ences. The new guy, he said they’ve got a much high­er per­cent­age work­ing at this stage.

[01:28:36] Cameron: But he’s talk­ing about the vision for it. Like he’s, he’s always said the long term vision is for us to, for humans to

[01:28:42] Cameron: inte­grate with AI. Because he says his big con­cern is that AI’s bit rate is so much high­er than humans. He said, imag­ine some­body who’s try­ing to

[01:28:52] Cameron: talk to you a thou­sand times slow­er than you can think and how frus­trat­ing that would be.

[01:28:59] Cameron: That’s how

[01:29:00] Cameron: AI is going to

[01:29:01] Tony: Bris­bane, Bris­bane cir­ca 1975. Yeah.

[01:29:05] Cameron: Or now, that’s the same joke I made to Chris­sy. I said, I would basi­cal­ly just move into Bris­bane. Um,

[01:29:14] Tony: improved a lot. I’ll admit that. I enjoy going back there now.

[01:29:18] Cameron: but he was talk­ing about when. Peo­ple have Neu­ralink, you know, 10, 15 years from now in their brain, how much faster they will be able to absorb infor­ma­tion and how much faster they’ll be able to com­mu­ni­cate with their com­put­ers but also with oth­er peo­ple with the implant. Because he’s basi­cal­ly say­ing it’ll be wire­less com­mu­ni­ca­tion.

[01:29:45] Cameron: And they were talk­ing about how com­mu­ni­cat­ing ideas is very low band­width for most peo­ple. Now, we’re talk­ing about lis­ten­ing to pod­casts on one and a half or two times speed, which I do a lot, um, and how you can, you know, you can up your bit rate of com­mu­ni­ca­tion, but he was say­ing when peo­ple have neur­al, like the, you know, 10 15 year ver­sion, ver­sion 15 of Neu­ralink in their brains, they’ll be able to com­mu­ni­cate with each oth­er wire­less­ly in real time, it’ll be chip to chip com­mu­ni­ca­tions and how fast you’ll be able to think faster, absorb infor­ma­tion faster, com­mu­ni­cate faster than peo­ple with­out.

[01:30:30] Cameron: The chip. And I was remind­ed, I was remind­ed of a talk I gave at the Sin­gu­lar­i­ty Con­fer­ence in Mel­bourne about eight or nine years ago.

[01:30:41] Cameron: There was an AI researcher who I was on stage with and he was talk­ing about how he believed that the next world war would be fought between the humans that have upgrad­ed and the humans who weren’t.

[01:30:57] Cameron: And who were try­ing to stop humans from being upgrad­ed.

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

[01:31:01] Cameron: be this big divi­sion in soci­ety between those that feel it’s wrong to get upgrad­ed. But of course, the eco­nom­ic oppor­tu­ni­ties will prob­a­bly be there for the peo­ple that have upgrad­ed, and the ones that haven’t upgrad­ed will strug­gle to com­pete in the mar­ket­place.

[01:31:19] Cameron: This is assum­ing AI has left any jobs for us any­way at that point. Any­way, that was a real­ly inter­est­ing con­ver­sa­tion. The oth­er inter­est­ing con­ver­sa­tion was Elon talk­ing about robots hands. He said about 50 per­cent of their engi­neer­ing spend on Opti­mus, the Tes­la robot, is on hands and how inor­di­nate­ly dif­fi­cult hands are to get right for robots.

[01:31:45] Cameron: He said it seems sim­ple. They’re real­ly not, and he was talk­ing about fin­ger length too and how you might get, he said, you might think, well, why do we have dif­fer­ent length fin­gers? Can’t your fin­gers all be the same length? What does it real­ly mat­ter? He said, turns out fin­ger length is absolute­ly crit­i­cal.

[01:32:03] Cameron: Like your pinky, you might think it’s a waste of time, but in terms of your dex­ter­i­ty, the pinky is absolute­ly crit­i­cal. Which I would­n’t have fig­ured. He said, if you lose your pinky, you’ll, you’ll real­ize how hard it is to do so many things with­out a pinky. And it remind­ed me of a con­ver­sa­tion, Steve and I did a Futur­is­tic on Fri­day and we had a farmer, Mar­tin, who’s a farmer from North­ern New South Wales, came on.

[01:32:27] Cameron: He was telling us about his, uh, exper­i­ments with AI on the farm, and we were talk­ing about the future of AI and robot­ics on a farm, and what that might mean for agri­cul­ture. But he was talk­ing about how you can buy trac­tors today, and ag equip­ment that have got the lat­est GPS tech­nol­o­gy in them so they can dri­ve them­selves, and they can do all sorts of advanced things.

[01:32:52] Cameron: But they cost. You know, half a mil­lion dol­lars for these equip­ments where you’ve got your old trac­tor, that’s fine. But a human needs to be dri­ving. And he was say­ing how farms are built around the human form fac­tor. So he’s say­ing if he could get a humanoid robot to work on the farm, that would just be a game chang­er for him if you could have, and he said, you know, ’cause we were talk­ing about how Jensen, Huang, the CEO of Nvidia and Elon said the same things.

[01:33:23] Cameron: They reck­on 10 years from now, you should be able to get a humanoid robot for about the cost of a low end car, so 20, maybe US, um, once they start build­ing them in

[01:33:37] Cameron: mass num­bers, um, so he said, hell, he said, if I could get one for

[01:33:42] Cameron: 10, 000, Cou­ple of hun­dred thou­sand dol­lars to work on my farm that would be a good deal for me.

[01:33:47] Cameron: And we were just talk­ing about the impact that could have on food pro­duc­tion costs

[01:33:51] Cameron: and all that kind of stuff. Because he was say­ing the hard­est

[01:33:52] Cameron: thing for him to get is staff, right?

[01:33:56] Tony: Yeah,

[01:33:57] Cameron: work on the

[01:33:57] Tony: yeah, but, yeah, but like, and it’s, I mean, my broth­er lives on a dairy farm and same prob­lem, but then they don’t pay much to their staff because their price, their milk out­put is being screwed down by the super­mar­ket. So they can’t afford to pay much for staff. So

[01:34:17] Tony: it’s a bit of a vicious cir­cle on that one.

[01:34:20] Tony: Whether,

[01:34:22] Tony: yeah, if they can afford it, giv­en they can’t afford to pay the staff, maybe they can’t afford to buy a robot I

[01:34:28] Cameron: oh yeah,

[01:34:29] Cameron: maybe.

[01:34:30] Tony: think it’ll be inter­est­ing how all this stuff plays out eco­nom­i­cal­ly, apart from how it all plays out sci­en­tif­i­cal­ly.

[01:34:35] Cameron: too. Any­way, Neu­ralink.

[01:34:41] Tony: So, get­ting back to the, uh, neur­al, what’s it called? Neur­al net? Neur­al link, thank you, I kept, oh, I said Skynet. Neur­al link.

[01:34:51] Tony: I won­der, you know, if things hap­pen as Elon thinks they’ll hap­pen, whether the brain, when it oper­ates much quick­er, will start to devolve things to autonomous, oper­a­tion. So it won’t actu­al­ly, it’ll think so fast it won’t con­scious­ly think about it.

[01:35:09] Tony: Much the same way as we do when we have reflex actions or, you know, we lift our hand to drink some water or what­ev­er. We don’t think about that. It just hap­pens.

[01:35:19] Cameron: Yeah, well, that reminds me of one of my favorite sci­ence fic­tion books, Acceleran­do. Ever

[01:35:23] Cameron: read that? Acceleran­do. Charles Stross came out 20 years ago, 25 years ago. Um, and one of the main char­ac­ters in it, uh, at the begin­ning of the book, he walks around with a vest that has like 20 moth­er­boards on it.

[01:35:48] Cameron: They’re all con­nect­ed to his brain. He’s, he’s sort of engi­neered this thing. And he’s, he’s a, he’s an entre­pre­neur that comes up with busi­ness ideas, but then open sources them. He’s just giv­ing them away. And that’s how he’s, uh, sort of, and peo­ple just give him mon­ey to keep him func­tion­ing because he keeps com­ing up with those ideas, but he’s out­sourced a large per­cent­age of his think­ing to these off, off bor­dered,

[01:36:13] Cameron: uh, brains that he wears.

[01:36:15] Cameron: And then he gets mugged. And some­body steals all of his brains

[01:36:20] Cameron: and then he can’t remem­ber who he is, where he is, what he’s sup­posed to be doing,

[01:36:26] Cameron: who any­one, like, who his emer­gency con­tacts are. Because over the years he’s just offloaded too much of his basic cog­ni­tive

[01:36:33] Tony: right.

[01:36:35] Cameron: through this, uh, these machines.

[01:36:37] Cameron: Yeah, that’ll be the

[01:36:38] Cameron: risk.

[01:36:39] Tony: Yeah. What was that sci fi? Book I read that was like that, um, was made into a Net­flix series.

[01:36:48] Tony: Um, but basi­cal­ly peo­ple were uploaded into a disc in the top of their

[01:36:52] Tony: spine, would get pulled out and put into a new body

[01:36:55] Tony: when it was, um, when the body died. Yeah, sim­i­lar sort of

[01:36:58] Tony: thing.

[01:36:59] Cameron: I watched the first episode of that, nev­er real­ly got into

[01:37:01] Cameron: it, but um, I

[01:37:02] Tony: Real­ly good book. Mm. Mm

[01:37:06] Cameron: Any­way, it’s an inter­est­ing world. Like Elon’s, obvi­ous­ly, as he is, but he’s very bull­ish about this stuff. And

[01:37:13] Tony: hmm.

[01:37:14] Cameron: again, like, it’s inter­est­ing, when you watch these inter­views on Lex, like he’s not the, uh, Guy is on Twit­ter just mouthing a bunch of crazy

[01:37:24] Cameron: con­spir­a­cy shit.

[01:37:25] Cameron: He’s, uh, he’s the very qui­et, nerdy, autis­tic

[01:37:28] Cameron: engi­neer talk­ing about engi­neer­ing issues

[01:37:32] Cameron: and just talk­ing about how hard it

[01:37:34] Cameron: is to do this stuff with the brain, how hard

[01:37:36] Cameron: it is to build robots, um, just engi­neer­ing prob­lems con­stant­ly that

[01:37:43] Cameron: they’re work­ing

[01:37:44] Cameron: on. But, um, yeah, that’s, uh, Fas­ci­nat­ing stuff where it’s all going.

[01:37:52] Tony: Inter­est­ing news in the last week about, uh, all of the, uh, Car man­u­fac­tur­ers in the world are rethink­ing their re V strate­gies. So

[01:38:01] Tony: I think all of them, includ­ing Tes­la, but

[01:38:03] Tony: includ­ing Vol­vo and Mer­cedes Benz, are down like 20 per­cent on sales

[01:38:09] Tony: ish. You know, for each com­pa­ny it’s slight­ly dif­fer­ent, but, but they’re, um, The pro­ject­ed EV take­out are not what they thought for var­i­ous rea­sons, which I thought was inter­est­ing.

[01:38:22] Tony: I kind of got ahead of the curve on that one. Even though in Aus­tralia, EVs are still rid­ing a bull­ish wave, prob­a­bly because of tax rea­sons, but Mer­cedes came out with a down­grade prob­a­bly most recent­ly.

[01:38:35] Cameron: When you men­tioned ear­li­er in the show that the Mag 7’s rev­enues were down, um, or no, what’d you

[01:38:44] Cameron: say that they’re,

[01:38:45] Tony: Did­n’t meet expec­ta­tions.

[01:38:46] Cameron: that’s right. I looked at Tes­la’s. So 2018, 21 and a half mil­lion, 2019, 25 mil­lion, 2020, 31 and a half mil­lion, 2021, 54 mil­lion, 2022,

[01:39:00] Cameron: 81 mil­lion. 2023, 97 mil­lion, and TTM is 95 mil­lion. 2024 esti­mate 99

[01:39:12] Cameron: mil­lion. So it’s going up, just does­n’t have the same sort of

[01:39:17] Cameron: growth that,

[01:39:19] Tony: and not, not meet­ing Wall Street expec­ta­tions. Yeah,

[01:39:23] Cameron: And then net prof­it is expect­ed to come down as well. Net prof­it in 2023 was 15 bil­lion. Mil­lion, um, mil­lion?

[01:39:33] Cameron: No, mil­lions, bil­lions. So these are all bil­lions. 2024 prof­it is sup­posed to be eight bil­lion, so down from 15 by quite a lot.

[01:39:41] Cameron: But any­who, cer­tain­ly their, their rev­enue is still going up, just not as

[01:39:47] Cameron: much.

[01:39:48] Tony: yeah, and not meet­ing Wall Street’s tar­gets for them as well.

[01:39:53] Tony: Let’s see if I can find the arti­cle on, uh, EVs. I thought that was inter­est­ing. Yeah,

[01:39:59] Cameron: Elon’s prof­it, uh, Tes­la’s prof­its are prob­a­bly down because he’s spend­ing bil­lions on buy­ing, build­ing a super­com­put­er to against Ope­nAI.

[01:40:10] Tony: no, I can’t find it. Was in the, uh, was in the, um, the FIN?

[01:40:17] Cameron: he’s got a F score of only 4 out of 9 on Stock­o­pe­dia too by the way,

[01:40:23] Cameron: Tes­la.

[01:40:24] Tony: What’s the, what’s the bank­rupt­cy pre­dic­tion?

[01:40:27] Cameron: Just in the green, a lit­tle bit high­er than TK, but not by much.

[01:40:34] Cameron: 10.

[01:40:34] Tony: here we go. I found the arti­cle. It’s in the Fin, Novem­ber 14th, last year. Oh, this must be an old one.

[01:40:43] Tony: I saw it more recent­ly. Car mak­ers and lead­ing West­ern mar­kets have sig­nif­i­cant­ly increased the range and scale of dis­counts they offer on elec­tric vehi­cles in the bid to counter weak­er than expect­ed appetite for bat­tery mod­els amongst main­stream buy­ers.

[01:40:57] Tony: Let’s see if I can find a rea­son. I know Chi­na was cer­tain­ly tak­ing up the slack.

[01:41:04] Cameron: right,

[01:41:04] Cameron: with

[01:41:05] Tony: Bru­tal price war.

[01:41:07] Cameron: Hmm,

[01:41:08] Tony: in Ger­many, and VW delayed plans for the fourth bat­tery fac­to­ry, cit­ing slug­gish EV demand in Europe, while Mer­cedes Benz plans to pro­duce a bru­tal price war in Chi­na for falling prof­its.

[01:41:21] Cameron: do you want to guess what Tes­la’s val­ue rat­ing is on Stock­o­pe­dia by the way?

[01:41:27] Tony: so this is rank? It’s got­ta be around 50, I would have thought.

[01:41:30] Cameron: It’s val­ue rank­ing.

[01:41:32] Cameron: Out of

[01:41:32] Cameron: 99?

[01:41:33] Tony: Yeah. 50?

[01:41:39] Cameron: Just one zero

[01:41:40] Cameron: off.

[01:41:43] Tony: Oh wow,

[01:41:45] Cameron: It’s stock

[01:41:46] Cameron: rank is 21. So it’s, it’s not going to be appear­ing on our buy list over there any­time

[01:41:51] Cameron: soon.

[01:41:52] Tony: no, we could, I could have said that with­out using Stock­o­pe­dia.

[01:41:57] Cameron: Alright TK,

[01:41:58] Tony: Yeah. Any­way,

[01:41:59] Cameron: for this week. QAV a good week every­one. Don’t pan­ic. Fonzie it. Be the Fonz. It’s all, all going to be okay.

[01:42:06] Tony: As O’Shaugh­nessy says, stick with the sys­tem.

[01:42:09] Cameron: Yeah. Thank

[01:42:10] Cameron: you Tony.

[01:42:11] Tony: All right. Thanks, mate.