QAV 736 — RECENCY BIAS

736 Club

[00:00:00] TK: All right, I’m record­ing. 1, 2,

[00:00:09] TK: 3.

[00:00:11] CR: Guess I bet­ter hit record. Wel­come back to QAV.

[00:00:16] CR: This is

[00:00:16] CR: episode 736, I think. And I’m so pre­pared I don’t even have my notes open. Um, 736, here we go. Uh, how are you, Tony Kynas­ton? Windy down in, uh, Vic­to­ria, I believe.

[00:00:31] TK: Well, it was. It’s actu­al­ly quite still and sun­ny now, but um, yeah, cyclonic over the last few days.

[00:00:38] CR: Wow.

[00:00:40] TK: I took, uh, so my broth­er in law War­ren was his, he was down stay­ing at Cape Schanck with me and Rud­dy and we went out to play golf. And it was actu­al­ly, I think, pos­si­bly his first game of golf or first real game of golf. I think he’s mucked around before, um, he’s decid­ed to take it up now he’s retired.

[00:00:56] TK: And, uh,

[00:00:57] TK: he went down to Flinders, a nice course near­by and played in, uh, 85 kilo­me­tre an hour

[00:01:04] TK: wind, so it

[00:01:05] TK: was a bap­tism of fire.

[00:01:08] CR: Did he give up on golf imme­di­ate­ly? Like

[00:01:10] TK: No, no, he was very

[00:01:11] TK: frus­trat­ed, but no, he was good.

[00:01:14] CR: Hit the bull, it comes back and hits you in the

[00:01:15] CR: head.

[00:01:16] TK: Just

[00:01:17] CR: Are those sorts of wins?

[00:01:18] TK: Just about. Yeah, very

[00:01:20] TK: Scot­tish.

[00:01:21] CR: Yeah. Yeah, Well fit­ting, I guess.

[00:01:23] TK: Yeah.

[00:01:24] CR: Well, uh, it’s hot. As I was say­ing to you off air, 36 degrees in Bris­bane on the

[00:01:29] CR: last day of win­ter. So that was fun. We know what we’ve got com­ing in the next few months, I guess.

[00:01:36] TK: Bris­bane’s

[00:01:36] CR: Well, speak­ing of things heat­ing up, let’s get into port­fo­lio updates.

[00:01:42] CR: There’s a lazy segue. Um, last 12 months across our

[00:01:46] CR: port­fo­lios. I’m doing last 12 months because that’s kind of where we’re up to with the Stock­o­pe­dia port­fo­lios.

[00:01:53] TK: Ah, I won­der why you were

[00:01:54] TK: doing that.

[00:01:56] CR: Yeah, it’s cause I think I start­ed them about Sep­tem­ber,

[00:01:59] CR: uh, last year.

[00:02:01] TK: Yeah, right.

[00:02:01] CR: The, um, the US ver­sion is up 44%, uh, in a year ver­sus the S& P up 27%.

[00:02:11] CR: And I just invest­ed more cash, uh, yes­ter­day, uh, bought two new, cause we were sit­ting on some cash for a while I was rejig­ging the.

[00:02:20] CR: Buy list. And so bought two new com­pa­nies yes­ter­day, UBS and JXN, both finan­cial ser­vices com­pa­nies, UBS, obvi­ous­ly every­one knows JXN is a small­er one, but it’s like half of the port­fo­lio over there now, I think of finan­cial ser­vices com­pa­nies and the rest are ship­ping com­pa­nies, more or less. Um, but inter­est­ing­ly, the.

[00:02:41] CR: Aus­tralian Stock­o­pe­dia pro­file, that’s also been run­ning about a year, is up about 10%, which is the same as the Stock Doc­tor dum­my port­fo­lio over the last 12 months. It’s also up about 10%. So, I don’t know what to, Take from that, but they both did pret­ty much exact­ly the same over the last year. I haven’t even looked at what the crossover is of the stocks, but obvi­ous­ly the dum­my port­fo­lio has been run­ning for a lot longer.

[00:03:12] CR: The, um, S& P, uh, also up 10%, um, over the same peri­od as the, um, Aus­tralian port­fo­lio. Uh,

[00:03:26] TK: the S& P is up

[00:03:26] TK: 10%?

[00:03:28] CR: S& P 200

[00:03:31] TK: In Aus­tralia.

[00:03:32] CR: to. In Aus­tralia, yes, there’s a verse, the,

[00:03:35] CR: the US one, which is up

[00:03:36] CR: 27%.

[00:03:37] TK: I was going to say, yeah, Okay,

[00:03:39] CR: but that’s not a total, um, what­ev­er they call it,

[00:03:43] CR: accu­mu­la­tion met­ric. Yeah, so when I do it in Stock Doc­tor ver­sus the STW,

[00:03:49] CR: it’s up 16

[00:03:50] CR: per­cent ver­sus our 10%. So we’re under­per­form­ing that a lit­tle bit for this year. But of course, um, since incep­tion, our W port­fo­lio in Aus­tralia is up about 15, clos­er to 16, uh, 15. 77 or some­thing, I think, ver­sus about nine for the STW. So it’s not, not a hun­dred per­cent bet­ter. It’s about 60. Five, some­thing like that. Over the five years, um, it was dou­ble for a while there, but it’s pulled back a lit­tle bit over the last year or so.

[00:04:20] CR: In the dum­my port­fo­lio recent­ly bought MSV, sold MSV, sor­ry, and bought SRG. And I just today, um, before going on air, Stock­o­pe­dia one too. I think it was MME. Which is always a weird one. I had to go back and look at your pulled pork from the begin­ning of the year on MME reminds me of RMC Res­i­mac, which we’ll talk about, uh, in a minute.

[00:04:49] CR: MME, and um, uh, p some­thing. Can’t even remem­ber what I bought five min­utes ago. That’s how my mem­o­ry is. Uh, some­thing begin­ning with a let­ter P.

[00:05:02] TK: that nar­rows it down.

[00:05:03] CR: Street.

[00:05:04] TK: None of

[00:05:05] TK: these trades are per­son­al rec­om­men­da­tions either. It’s just what

[00:05:08] TK: suits the dum­my port­fo­lio at the moment.

[00:05:10] CR: Yeah. These are both, uh, uh, uh, quite low.

[00:05:13] CR: Um, a DT stocks too. Any­way, so it’s been very busy in the port­fo­lio front, um, I’ll

[00:05:22] TK: Not unusu­al giv­en its report­ing sea­son.

[00:05:25] CR: yeah, well, in fact, look, I had, you know, bare­ly sold any­thing out of the dum­my port­fo­lio

[00:05:32] CR: for months. Um, the, the Stock­o­pe­dia one, a lit­tle bit more volatile as it’s estab­lish­ing itself, uh, both in the US and the Aus­tralian front, but, um, it’s been rel­a­tive­ly qui­et, I found both from a super port­fo­lio, from all the port­fo­lios actu­al­ly over report­ing sea­son.

[00:05:52] CR: I haven’t had to sell much. What about. you

[00:05:55] TK: Exact­ly the same for

[00:05:56] TK: me. Yeah, absolute­ly. I haven’t, I haven’t bought

[00:05:58] TK: or sold any­thing for a long time.

[00:06:01] CR: There’s been a cou­ple of crazy things hap­pen that we’ve

[00:06:03] CR: talked about which have affect­ed the light port­fo­lios a lit­tle bit, but you know, sud­den drops of 19 per­cent and stuff like that. I think MSV was one of those, but rel­a­tive­ly speak­ing, fair­ly steady as she goes. I saw this arti­cle in The Fin this morn­ing, Tony.

[00:06:19] CR: Win­ner takes all cycle, Dash’s hope of ASX small cap revival. It’s by, uh, Alex Glyus, uh, The largest com­pa­nies on the Aus­tralian share mar­ket flexed their mus­cle in the August earn­ings sea­son as investors reward­ed blue chips for nav­i­gat­ing tough macro­eco­nom­ic con­di­tions bet­ter than their small­er com­peti­tors.

[00:06:45] CR: The com­bi­na­tion of a slow­ing econ­o­my, sticky infla­tion, And ele­vat­ed inter­est rates cre­at­ed a win­ner takes all theme accord­ing to UBS, speak of the dev­il, as the strongest oper­a­tors cement­ed their mar­ket posi­tions even as small and medi­um busi­ness­es suf­fered. That dynam­ic has dashed hopes for a revival in small cap stocks this year, with the S& P ASX Small Ordi­nar­ies Index drop­ping 2.

[00:07:11] CR: 2 per­cent in the August report­ing peri­od, while the S& P ASX 200 was flat. It goes on, uh, lat­er to say that, uh, the S& P ASX 200 is now trad­ing at a price to earn­ings ratio of around 17. 5 times up from 15. 4 times a year ago and far above its long 5. I thought you said it was like 16 or some­thing.

[00:07:44] TK: Yeah, so they’re refer­ring to for­ward PE ratios. So, um, fore­cast earn­ings per share is what they’re using for their PE ratio. I tend to refer to trail­ing ones because they’re actu­als. Yeah, so, yeah, um, that’s what I think they’ll be doing. Uh, yeah, I mean, I, I, well, my note when I read this arti­cle was I put a note beside my notes, which says eco­nom­ic puff piece, because that’s pret­ty much what it is.

[00:08:14] TK: It’s like, um, Look, I read the arti­cle. I think the last sen­tence is cru­cial to be fair to the, to the author. Um, so this is, the last two sen­tences read, Instead, the share mar­ket’s direc­tion over the next year will be large­ly dic­tat­ed by the deliv­ery of earn­ings growth, which sits at just over 4 per­cent for FY25.

[00:08:38] TK: We see that as mod­est and achiev­able, Mr. Shell­back said. I think he’s the UBS ana­lyst. Chal­lenges remain, how­ev­er, and much will depend on how respon­sive the RBA is in cut­ting rates and whether Aus­tralia can remain detached from the cur­rent Chi­nese eco­nom­ic slow­down. So basi­cal­ly, the whole arti­cle is around caps out­per­form­ing small caps unless there’s an inter­est rate cut or Chi­na’s econ­o­my picks up or any­thing else hap­pens between now and then.

[00:09:10] TK: Look, I take the point the arti­cle was mak­ing about the mar­ket being slight­ly over­val­ued I take the point about, I would­n’t say, I would­n’t draw a line between big caps and small caps. I draw a line between com­pa­nies like, I guess, larg­er ones, but just resilient com­pa­nies, com­pa­nies with a moat that can ride out any down­turn in the econ­o­my.

[00:09:30] TK: Um, I keep hear­ing anec­do­tal­ly from peo­ple I know and in gen­er­al that small busi­ness­es are doing it tough. So that prob­a­bly means small caps are too, but as we know, there are good and bad small caps and good and bad large caps. So. Um, I, I hate to make

[00:09:49] TK: fore­casts about whether large caps will out­per­form small caps or micro caps or indus­tri­als

[00:09:54] TK: or resources or what­ev­er and just look at, look at the

[00:09:57] TK: whole thing, stock by stock.

[00:10:00] CR: And they’re look­ing right across the board and our job is to find the big caps and the small caps that are per­form­ing well but are under­val­ued. So it does­n’t real­ly mat­ter to us what the entire mar­ket is doing, we’re try­ing to pick the eyes out of the mar­ket. As is every investor, I guess.

[00:10:18] TK: Yeah, and I mean, um, yeah, it does, it does mat­ter to me because I’m after more big, you know, larg­er ADT stocks than small­er ones, but it does­n’t mean I make a call on whether big caps are going to do bet­ter than small­er caps. Just a word of cau­tion here, I think the whole indus­try cycles around these kinds of pre­dic­tions.

[00:10:34] TK: Um, you know, going back a while, I had friends who were finan­cial plan­ners who would say things to me like, I think it’s time to get out of Aus­tralian shares and into US shares, or I think it’s time to get out of, you know, Large cap stocks for small cap stocks. It’s all just designed to make you trade. Um, so if you’re out there lis­ten­ing to this in a finan­cial plan­ner or any­body’s try­ing to tell you to cycle out of one sec­tor into anoth­er because of a pre­dic­tion, um, feed it with a grain of salt,

[00:11:02] TK: real­ly.

[00:11:04] TK: Get a new finan­cial plan­ner.

[00:11:06] CR: it’s a bro­ker­age play, is that what it is? Or a

[00:11:09] TK: Well, yeah, any sort of, it’s bro­ker­age, it’s, it’s fund man­agers, it’s any­one involved in the finan­cial ser­vices indus­try who’s using your

[00:11:16] TK: mon­ey, basi­cal­ly. Gets paid when You

[00:11:19] CR: to pay to,

[00:11:20] CR: yeah, you got to pay

[00:11:21] CR: to play.

[00:11:22] TK: Yeah, cor­rect. Yeah, so they’ll be, they’ll be trot­ting out the UBS arti­cle for, for weeks say­ing, Hey, have you seen this? It’s time to rotate out

[00:11:31] TK: of big caps or rotate out of small

[00:11:33] TK: caps.

[00:11:33] TK: Sor­ry, but yeah. And in the six months time, they’ll be have some oth­er rota­tion or in three months time, they’ll have

[00:11:38] TK: some oth­er

[00:11:38] TK: rota­tion for you as well.

[00:11:41] CR: So that’s the thing to remem­ber is these peo­ple are in it for the

[00:11:44] CR: fees. They’re not, not in it for your best inter­ests.

[00:11:48] TK: Mm hmm.

[00:11:49] CR: in it for

[00:11:49] CR: their fees and their salary and their

[00:11:51] CR: bonus.

[00:11:52] TK: No finan­cial plan­ner ever takes Hip­po­crat­ic oaths. Like a doc­tor. And even doc­tors these days, have you noticed every time I go to the doc­tor I get referred for a blood test or

[00:12:01] TK: some form of pathol­o­gy and it just hap­pens to be a pathol­o­gist in the same med­ical cen­ter? How

[00:12:06] TK: about

[00:12:06] TK: that?

[00:12:08] CR: Uh, that does­n’t hap­pen with me, but, uh, okay. They’re always send­ing me for blood tests, but it’s always Sul­li­van Nico­laites around the cor­ner or some­thing.

[00:12:18] TK: well there you go, yeah,

[00:12:20] TK: yeah.

[00:12:22] CR: well that’s just con­ve­nient. You’re

[00:12:24] CR: sug­gest­ing that there’s some sort of a nod and a wink going on there

[00:12:28] TK: Well in, in my case they’re in under the same roof so there’s at least a rental arrange­ment

[00:12:32] TK: going on there. And they have, you know, got to make sure the pathol­o­gists can pay the rent this month, can’t get a

[00:12:37] TK: blood, I mean, I

[00:12:38] TK: mean, uh, that snif­fle needs to get test­ed out at

[00:12:41] TK: the pathol­o­gists.

[00:12:43] CR: At our ages, I think reg­u­lar blood tests are prob­a­bly a good thing, right?

[00:12:47] TK: Oh, for sure.

[00:12:48] CR: Ear­ly can­cer detec­tion, all that kind of

[00:12:50] CR: stuff?

[00:12:51] TK: Yeah. Once a year.

[00:12:52] TK: Yeah.

[00:12:54] CR: Well, if you came down with some ill­ness and they had­n’t sent you for a blood test, you’d be

[00:12:58] CR: like, you know, Doc­tor should have sent me for a blood test. I would have picked it up six months ear­li­er. They can’t win. But, no, back to the finan­cial plan­ning indus­try, I think it is, you know, You know, there’s so much, uh, built up around all of these sorts of things. It is hard prob­a­bly for peo­ple to remem­ber that that’s what’s going on a lot of the time is it’s, it’s a con job, you know, a large, large per­cent­age, I’m sure there are good and hon­est bro­kers and what­ev­er’s finan­cial plan­ners out there and all that kind of stuff.

[00:13:29] CR: But a large per­cent­age of the indus­try is about, uh, trick­ing you into doing things, being, uh, being active because that’s how they make the mon­ey. If you just. Sit and hold. don’t make any mon­ey. They’re not

[00:13:45] TK: An index fund.

[00:13:46] CR: of your port­fo­lio. Yeah, right.

[00:13:48] TK: Like how you just spoke, you spoke about them, the STW’s up a tremen­dous amount this

[00:13:52] TK: year and long term is run­ning at

[00:13:55] TK: least 10 per­cent but doing noth­ing.

[00:13:58] CR: Yeah. And as we know, beats most pro­fes­sion­al fund man­agers. Yeah. Well, mov­ing right along. Things to be care­ful of this week. Uh, Res­i­mac. Um, I was talk­ing to a new mem­ber, Rod, last week about why it had such a high QAV score. And I knew we’d talked about it, but I could­n’t find it in my notes. Thank you to Andy, who Found the pulled pork that you did back in episode 702 for me.

[00:14:26] CR: Don’t know why it did­n’t turn up in my search­es. Um, the CEO resigned sud­den­ly in July, uh, with, you know, no suc­ces­sion plan in place and, you know, I know we always look at that as a red flag, but I had a look at the share and the share price sort of col­lapsed in July, but then it’s recov­ered since then quite well too, but they have, one of these com­pa­nies with weird finan­cials, their Prop­Caf is 0.

[00:14:53] CR: 2. Um, which reminds me of MME, because I think MME’s is like 0. 3, they’re these finan­cial ser­vices com­pa­ny where their Prop­Caf’s are weird. But, um, you did a pulled pork on it, as I said, back in 7. 02, and you sort of explained how that works, but they’ve been at the top of our buy list for the last cou­ple of weeks.

[00:15:17] CR: Um, do you remem­ber much about them from when you did the pulled pork?

[00:15:21] TK: Well, not a whole lot. I remem­ber them. They’re a small sort of, um, a lender, uh, but I did look at, look at their annu­al report, uh, when you raised the issue today. I, I’m not sure what’s going on. I haven’t had enough time to drill down and get a detailed expla­na­tion, but their oper­at­ing cash flow surged last year, which is why I think they have a very low QAV score and they’re on our buy list.

[00:15:48] TK: When I looked at their, uh, Their cash flow report in Stock Doc­tor and then also in the annu­al report. Looks like there’s a line item which is called some­thing like repay­ment of loans. So it looks like they’ve had some kind of big income of cash, uh, which they’re call­ing some kind of repay­ment of loan. I don’t know the detail of it.

[00:16:09] TK: I don’t know if there was like a, you know, a large com­pa­ny that sold a build­ing and paid off an office tow­er to them or some­thing like that. I’m not sure. Quick­ly went through the annu­al report and could­n’t see any notes about it, but it lasts for the 12 months. It does look unusu­al com­pared to its long term

[00:16:26] TK: his­to­ry.

[00:16:26] TK: So, um, this is the, I guess we’ve. Well, it is, it is a good one because there’s more oper­at­ing cash flow in there, right? So, um, I sus­pect a cou­ple of things. I sus­pect one, that it won’t last for­ev­er. It’ll go back to being off the buy list, prob­a­bly this half or next half. Cause, prob­a­bly next half. Cause this half, remem­ber Stock Doc­tor and the num­bers we use are a rolling 12 months.

[00:16:47] TK: So, there’s still six months of high oper­at­ing cash flow.

[00:16:52] TK: in the cur­rent num­ber, even though I think the last half was much low­er. So I think if they have anoth­er half in the future, like they just did, then they won’t have a, they won’t be on our buy list because the Prop­Caf leader would be too low or it might even be neg­a­tive.

[00:17:08] TK: So there’s some­thing going on there with mon­ey com­ing in and going out. Um, could be about large projects repay­ing loans, or it could just be about, um, you know, they bor­rowed I’ve got­ten more lend­ing facil­i­ties avail­able, which they’ll even­tu­al­ly lend out, which they, which banks often do. Issue a bond or arrange, um, you know, with some­one to, uh, loan them mon­ey, which they can then loan out at a high­er rate to res­i­den­tial mort­gage hold­ers.

[00:17:37] TK: So I sus­pect it’s some­thing like that. I sus­pect it’s tem­po­rary, but, you know, influx of cash, we’ve said before, is a good

[00:17:44] TK: thing if man­age­ment can, you know, rede­ploy it well. So, um, that’s what I

[00:17:49] TK: think I’m going to rely on in this case. But I don’t think Res­i­mac will be around for a

[00:17:52] TK: long time on the buy list.

[00:17:55] CR: And the sud­den res­ig­na­tion of the CEO back in July, and the mar­ket, or the

[00:18:00] CR: price dipped, and then as I said, sort of recov­ered. In terms of red flags, how would you take some­thing like that a cou­ple of months, six weeks after the event?

[00:18:12] TK: Yeah. I haven’t looked at that issue, but if it was a, if

[00:18:14] TK: it’s pri­ma facie, it’s a red flag.

[00:18:17] TK: So let me just see if I

[00:18:19] TK: can find some­thing about it.

[00:18:21] CR: Well, I’ve got the

[00:18:23] CR: I’ve got the announce­ment in, um, Stock Doc­tor’s announce­ment, it just said. Sort of pret­ty abrupt. Uh, 9th of, uh, sor­ry, 7th, no, what, 9th of July, 9 7, um, just try­ing to bring it up here. It says, uh, Res­i­mac Group advis­es that Mr. Scott McWilliam has resigned from his employ­ment with Res­i­mac after 21 years of ser­vice, been CEO for six years, before that was joint CEO.

[00:18:51] CR: It is mutu­al­ly agreed that Mr. McWilliam will take a peri­od of leave Before his employ­ment con­tract ends on the 1st of Sep­tem­ber 2024, so it was two days ago, uh, then it says they’re going to com­mence a search immi­nent­ly to find a per­ma­nent replace­ment CEO. So,

[00:19:10] TK: that’s inter­est­ing. I mean, there could be any sort of rea­son for that, but that’s the sort of announce­ment that gets made if he’s got a job some­where else.

[00:19:18] TK: You know, he’s gone to work for a com­peti­tor or some­thing, so they’re ask­ing him to leave straight away. But it could be, it could be any­thing.

[00:19:25] TK: It’s pret­ty, you know, pret­ty light on infor­ma­tion there, isn’t it?

[00:19:29] CR: Yeah, I’m look­ing up, uh, the

[00:19:32] CR: inter­webs to see if I can find out what’s going on, see if there’s any news about uh, Mr. Williams resign­ing, McWilliams, sor­ry, Mc. And, um, here we go, Bank­ing Day, resign sud­den­ly. Look­ing for Scut­tle­butt.

[00:19:49] TK: Yeah, so am I. I think I’ve got the same arti­cle open.

[00:19:52] CR: Scut­tle­butt.

[00:19:54] CR: Scut­tle­butt.

[00:19:55] TK: Yeah, I mean, there’s a few inter­est­ing points in there, but there’s no rea­son. Talks about the share price being 60 per­cent of what it was when you took

[00:20:01] TK: over, um, but still that would be,

[00:20:04] TK: uh, a rea­son to move the CEO on, but to do it

[00:20:06] TK: in a man­aged way.

[00:20:08] CR: Yeah, nev­er a good look

[00:20:09] TK: they ask you to leave straight away.

[00:20:11] TK: Well, we don’t know if he was asked, yeah, we don’t know if he was asked to leave straight away or he just resigned and

[00:20:17] TK: left.

[00:20:19] CR: well it was agreed that he was going to take a peri­od of leave for sev­er­al months. The move The move comes amid a peri­od of upheaval at Res­i­mac, with the lender recent­ly hav­ing with­drawn from the New Zealand mar­ket and had a change in sev­er­al senior lead­er­ship posi­tions this year.

[00:20:35] CR: Any­way, noth­ing obvi­ous there, um, so there you go. So, I’ve, I’ve sort of, bot­tom line is I’ve been sort of turn­ing a blind eye to it in the last, uh, week. I’ve got a, I’ve got a vibe about it. I don’t know how you’d feel about it, but yeah, I just got a vibe.

[00:20:53] TK: Yeah,

[00:20:54] TK: look, it’s, um, it gen­er­al­ly is a red flag for me, but it’s hard to know what’s going on, isn’t it,

[00:20:59] CR: Yeah,

[00:21:00] TK: to me, I mean, there’s anoth­er arti­cle here, which, where the chair says that, um, uh, where is it now? is, it’s not the chair, sor­ry, it’s the man­ag­ing part­ner of First Point Mort­gage Bro­kers. He’s say­ing, I’ve known Scot­ty for 20 years and I’ve worked with him and dealt with him on the oth­er side in broking at Res­i­mac. He’s some­one who’s a won­der­ful peo­ple man­ag­er. He’s also strate­gi­cal­ly strong.

[00:21:21] TK: He’s seen the busi­ness through the merg­er of home loans and the real estate of Res­i­mac. He stripped down, stripped away some unprof­itable busi­ness lines and sold them off. He’s also set up Res­i­mac Asset Finance, which has been a real­ly won­der­ful suc­cess. Com­mit­ting on his depar­ture after 20 years. Troy Phillips said that he thinks that McWilliam has one more grand final left in him.

[00:21:43] TK: I think he’s a good oper­a­tor. I think it’s prob­a­bly good tim­ing for him to move on and see what else is out there and use all the skills he’s learned to see if he can, uh, if it can take him to the next lev­el. Um, yeah, I’m read­ing from that that he’s seen green­er pas­tures some­where else and decid­ed to leave.

[00:22:00] CR: right,

[00:22:02] TK: Which, you know, that’s fine. Peo­ple have to man­age their own careers.

[00:22:06] TK: But again, like it’s, it’s strange if the CEO, if that was going to hap­pen, you think the CEO would be say­ing to the board, hey, let’s work on a suc­ces­sion plan. I’m going to leave or some­thing like that. Who knows?

[00:22:17] CR: yeah. Yeah, alright,

[00:22:20] TK: as, as we know, with these small caps, we oper­ate in the vac­u­um in terms of that infor­ma­tion, don’t we?

[00:22:26] CR: yeah, just not a good look, either way,

[00:22:29] TK: Yeah,

[00:22:30] CR: any­way, mov­ing right along. ACL, this has been bug­ging me for the last few days, um, it’s, uh,

[00:22:40] CR: on our buy list, Aus­tralian Clin­i­cal Labs Lim­it­ed. Their finan­cials came out on the 29th of August, the share price shot up 10%, but their finan­cials aren’t loaded in Stock Doc­tor.

[00:22:57] TK: well, that’s not unusu­al. We

[00:22:59] TK: see that a lot.

[00:23:01] CR: real­ly, how long does it nor­mal­ly take?

[00:23:03] TK: can take up to a week usu­al­ly.

[00:23:06] CR: So you can’t do any­thing.

[00:23:08] TK: Cor­rect. So, but they’re on the buy list. Are they on the buy list or not?

[00:23:14] CR: they were on the

[00:23:14] CR: buy list yeah, but with out­dat­ed finan­cials.

[00:23:17] TK: Yeah, right.

[00:23:19] CR: Um, and I’d want to look at their new finan­cials. I could go through the

[00:23:22] CR: annu­al report. I even went to Stock­o­pe­dia and they did­n’t have their finan­cials either loaded,

[00:23:27] TK: Right.

[00:23:27] CR: finan­cials. So

[00:23:29] CR: any­way,

[00:23:30] TK: that’s a data provider issue. I think who­ev­er’s doing their data

[00:23:33] TK: pro­vi­sion then has­n’t loaded it.

[00:23:34] CR: I’m sure that’s true. it does­n’t make it any

[00:23:36] CR: eas­i­er for me to buy them. So just, uh,

[00:23:42] CR: Word of warn­ing, I guess, for every­one out there, because I’ve seen this a cou­ple of times, as I men­tioned, I think, last week, where finan­cials come in and, or don’t come in, you see things jump­ing around, and just make sure that the num­bers that you’re look­ing at in your check­list are the most recent num­bers.

[00:24:01] CR: You don’t want to be mak­ing deci­sions. I mean, I guess you can assume if the If the results come out and the share price jumps 10%, they were prob­a­bly good finan­cials.

[00:24:11] TK: Yeah. No, that’s, that’s a good point. But, um, I’ve also seen the case where, you know, fund man­agers are at the results announce­ments

[00:24:19] TK: or wait­ing for the results announce­ments and

[00:24:20] TK: then plac­ing their orders. And then a cou­ple of days lat­er, when they have a sober review, they’re

[00:24:26] TK: going, Oh, we should­n’t

[00:24:27] TK: have done that.

[00:24:29] TK: The upturn can

[00:24:30] CR: and also, and our buy­ing cri­te­ria are quite often dif­fer­ent too. we want to buy some­thing that’s under­val­ued, not just buy it because, you

[00:24:40] CR: know, it’s got good results. You know, we want to see how the num­bers stack up, so. Any­way,

[00:24:45] TK: and also too, I think, um, I think in a lot of cas­es, maybe even the major­i­ty of cas­es, if you’re a fund man­ag­er who’s fol­low­ing a stock like ACL, and there prob­a­bly

[00:24:55] TK: isn’t many, you’ve got a DCF in front of you say­ing you think the earn­ings are gonna go up

[00:24:59] TK: by X per­cent. And if it,

[00:25:02] CR: come Fri­day.

[00:25:03] TK: and if they come out, um, and it’s

[00:25:05] CR: That’s what Scott McWilliam, that’s what Scott McWilliam got, he got a DCF. Don’t come Fri­day.

[00:25:11] TK: they know, well, this is a dis­count­ed cash flow. But,

[00:25:13] CR: Oh, that DCF.

[00:25:15] TK: yeah. Um, if, uh. Yeah, if the, if the, your fore­casts are below what the com­pa­ny announces, you’re prob­a­bly just going to say buy straight away.

[00:25:25] TK: If you’re a fund man­ag­er, right? Because it’s, yeah, you don’t want to miss out on that first lit­tle bit. But again, my expe­ri­ence is I can’t pos­si­bly do that across every stock.

[00:25:35] TK: Um, I got to wait for the num­bers and base my deci­sion based on that. I may miss out on the first 10% But, um, I’ve also seen cas­es where it goes up 10 per­cent and comes back and then I buy it and it rebal­ances and it takes off

[00:25:48] TK: again. So,

[00:25:51] CR: Um, I’m just hav­ing a look to see what it actu­al­ly has done. ACL. Let me see. Oh no, it’s still going up. Oh, bas­tards. It was at 2. 67 before the results came out last week. It’s now 3. 20. Ah, bas­tards. Any­way,

[00:26:11] TK: buy list last week. Did you think about buy­ing it then before the results came

[00:26:14] TK: out?

[00:26:16] CR: Uh, I did­n’t have any­thing to buy last week. No, I did­n’t, yeah, it was­n’t, was­n’t an issue. Um, speak­ing of weird stuff in Stock Doc­tor, when Alex sent me the, her buy list yes­ter­day, SCL

[00:26:32] TK: Hmm.

[00:26:32] CR: at the top of the buy list and she put a ques­tion mark beside it because some of the charts did­n’t work and I, it was­n’t on my buy list when I com­pared hers to mine.

[00:26:43] CR: And, um, I noticed that she had a Prop­Caf of 6 and mine had a Prop­Caf of 30. So, I went dig­ging into that and there was a weird down­load issue in her Stock Doc­tor down­load. Down­load. I think it was the share price. The share price in her down­load was like 10 cents when the share price was actu­al­ly like 48 cents or some­thing like

[00:27:13] TK: Oh, wow, okay.

[00:27:15] CR: And then I think you did a down­load and there was some prob­lem with the mar­ket

[00:27:19] TK: Yeah, mar­ket cap

[00:27:20] TK: was blank, which is wrong, clear­ly. It’s list­ed and it’s got a decent mar­ket cap. So, yeah.

[00:27:26] TK: Um, again, data provider issues.

[00:27:29] CR: Well, no, I don’t think so

[00:27:32] CR: because. I did a down­load from Stock Doc­tor on Fri­day

[00:27:36] CR: night and the share price was right. Alex did her down­load some­time over the week­end and her share price was com­plete­ly wrong. She had a mar­ket cap, I had a mar­ket cap, you did a down­load yes­ter­day and did­n’t have a mar­ket cap.

[00:27:49] CR: So it’s not data provider issues, it’s Stock Doc­tor

[00:27:52] CR: soft­ware issues, I think. Any­way.

[00:27:56] TK: data provider.

[00:27:58] CR: Well, they’re not chang­ing the data over the course of the week­end, are they? They could be, you could be right. Any­way, my, I’m not, I’m not

[00:28:06] CR: try­ing to beat up on Stock Doc­tor. My point

[00:28:07] CR: is that I’ve learned the hard way over the last few years that If some­thing, what do they used to say?

[00:28:14] CR: If, uh, if you see some­thing sus­pi­cious, report it. Um,

[00:28:19] TK: be alert not alarmed

[00:28:21] TK: Yeah.

[00:28:22] CR: not that

[00:28:22] TK: If you see

[00:28:23] CR: If you see some­thing, say some­thing. That’s it. Yeah,

[00:28:25] CR: yeah. If some­thing looks fishy,

[00:28:29] CR: it pos­si­bly is. Like, if a stock you’ve nev­er seen before is sud­den­ly at the top of the buy

[00:28:33] TK: Mm hmm. Mm

[00:28:34] CR: There might be some­thing going on, look into it.

[00:28:36] CR: And like Rod, uh, you know, who’s new, as I said, and is doing a deep dive on the check­list and all that kind of stuff, he’s doing a great job. Um, if some­thing like Res­i­mac has a real­ly low Prop­Caf, um, look into it. You go, oh, that’s weird. You don’t often see Prop­Cafs that low. What’s going on? And it’s good to, you know, have an orange alarm go off and say, yeah, maybe I need to drill down on this a lit­tle bit rather than just press the but­ton.

[00:29:05] CR: I had

[00:29:06] TK: and that’s, that’s true, because we’ve had oth­er exam­ples where account­ing stan­dards have changed from one half to the oth­er, and that’s changed Prop­Caf and things like that, so, as the case was with ASX, the com­pa­ny, not the share mar­ket, the oper­a­tor, um, uh, and there’s been cas­es of, um, I for­get now what the com­pa­ny was.

[00:29:24] TK: It was a sup­pli­er of soft­ware to oth­er com­pa­nies, a reseller of soft­ware and hard­ware, and

[00:29:30] TK: their Prop­Caf depend­ed a bit on tim­ing of when they got bills from their

[00:29:35] TK: cus­tomers and they had to

[00:29:36] TK: pay their sup­pli­ers, that

[00:29:37] TK: kind of stuff.

[00:29:39] CR: yeah, so it’s worth tak­ing a beat. I was, uh, when I was look­ing to buy stuff for the US port­fo­lio yes­ter­day, iHeartRa­dio was at the top of the list. I H R T. They’re like an online radio, kind of thing. Big com­pa­ny, like

[00:29:54] TK: Mm hmm.

[00:29:55] CR: of rev­enue. But, um, when I was look­ing, for some rea­son, oh, when I went to check their bank­rupt­cy, score, their Z score, it was quite

[00:30:05] CR: low, like in the bad way.

[00:30:08] CR: And I thought I bet­ter dou­ble check that when I was read­ing through the press announce­ments, there was some talk of them hav­ing nego­ti­a­tions with, uh, um, what­ev­er, like a liq­ui­da­tion firm or a bank­rupt­cy firm to come and sort out their cred­i­tors. And, but their F score was actu­al­ly quite high as we talked about.

[00:30:29] CR: Last week, I think in the US show, um, F scores about recov­er­ing health, Z scores about liq­uid­i­ty issues, poten­tial bank­rupt­cy risk. And I was like, look, I’m, I’m after that con­ver­sa­tion and that analy­sis, I’m will­ing to for­give a com­pa­ny with a low Z score if they’ve got a, got a good F score and a good qual­i­ty score.

[00:30:53] CR: But if there’s talk about them hav­ing this, you know, poten­tial­ly enter­ing nego­ti­a­tions with some­one to help them orga­nize their cred­i­tors, um, you know, I was like, yeah, I don’t think so. I think I might just. Leave that one

[00:31:06] TK: Yeah.

[00:31:07] CR: There’s a, there’s a line.

[00:31:08] TK: Yeah. no, I agree. And that, I think that, it’s been both­er­ing me since our dis­cus­sion last week that I just don’t know enough about Z scores or F scores to com­pe­tent­ly make a call on them. I know we talked about it last week and kind of land­ed on the fact, based on Elio’s advice, that the Z score, even though it’s a fore­cast of bank­rupt­cy in the next two years, may not hap­pen because Com­pa­nies are grow­ing or what­ev­er.

[00:31:34] TK: Um, yeah, I just can’t com­ment on

[00:31:37] TK: it with­out doing some more

[00:31:38] TK: research.

[00:31:40] CR: I’ll have to get a Zed score expert on,

[00:31:44] TK: Yeah. Good.

[00:31:45] CR: I’ll reach out to some peo­ple. Uh, what have you got on your list of stuff

[00:31:50] CR: today, TK?

[00:31:51] TK: Well, speak­ing of com­pa­nies that went down and came back up again, um, one of the stocks on the buy list, one of the ones I own is called Macmil­lan Shake­speare. And, uh, it report­ed, and then the share price dropped, and it’s been recov­er­ing since then. And just a quick clip from the AFRI, from Invest­ing. com, uh, 28th of the 8th.

[00:32:15] TK: Uh, Citibank adjust­ed its finan­cial out­look for Macmil­lan Shake­speare Lim­it­ed, MMS, reduc­ing the fir­m’s price tar­get from 22. 50 to 20. 05. While still rec­om­mend­ing the stock as a buy, the reval­u­a­tion comes amid antic­i­pa­tions of a chal­leng­ing fis­cal year 2025 for the com­pa­ny due to the impact of los­ing a sig­nif­i­cant gov­ern­ment con­tract.

[00:32:37] TK: Macmil­lan Shake­speare’s forth­com­ing fis­cal year is expect­ed to be demand­ing as the com­pa­ny grap­ples with the reper­cus­sions of los­ing the South Aus­tralian gov­ern­ment con­tract. This loss is pro­ject­ed to cre­ate an earn­ings gap that may not be entire­ly com­pen­sat­ed for in the future. by the increased demand for elec­tric vehi­cles and novat­ed leas­ing.

[00:32:55] TK: So that was kind of the note that Citibank set out and I guess oth­er bro­kers did too. I read it and scratched my head because months and months and months ago the com­pa­ny announced that it had lost the South Aus­tralian gov­ern­ment con­tract and that was fac­tored into the share price straight away. I think it dropped like, 15 or so per­cent, um, when the con­tract loss was announced.

[00:33:19] TK: I think Smart Group was the oth­er com­peti­tor that picked it up and their share price has gone up. So, you know, if Citibank has­n’t been awake, bad luck, but, um, If they’ve just worked out there’s going to be a hole in the earn­ings going for­ward for MMS, because they’ve lost a con­tract three or four months ago, which was called out at the time and backed into the share price, and they’ve missed it.

[00:33:42] TK: And of course, what’s hap­pen­ing now is the share price is recov­er­ing, and I think large­ly because peo­ple are work­ing out the fact that the loss of the SA gov­ern­ment con­tract was already in the price, um, and MMS still, still looks pret­ty attrac­tive at the cur­rent lev­el. Uh, still a sol­id com­pa­ny and, you know, again, who knows what’s going to hap­pen in the next 12 months.

[00:34:04] TK: They’re going to be work­ing hard to pick up a con­tract to replace the SA gov­ern­ment one. And they may well be able to plug that gap with anoth­er big win. So, you know, I’ve seen this before and you would have too work­ing for Microsoft. Some­times big con­tracts just rotate and revolve around the play­ers, revolve among the play­ers in that par­tic­u­lar mar­ket.

[00:34:24] TK: And this year it’s your turn to get it, next year it’s, next time it’s my turn to get it. And there’s only three or four com­pa­nies oper­at­ing in this space, so, um, yeah, I sus­pect if they, it’s a bit like the old fuel game that when I was at Shell, there were five big, uh, oil com­pa­nies, and if I picked up a ser­vice sta­tion that was pre­vi­ous­ly sup­plied by Mobile, then they’re not going to take one off me that Shell sup­plied, so it’s a bit of a zero sum game.

[00:34:50] TK: You know, the only growth in the over­all sys­tem is when new ser­vice sta­tions get built. And they only get built as the pop­u­la­tion grows. So it’s like a GDP thing, real­ly, GDP growth sort of play. Oth­er­wise you’re just rotat­ing around between the play­ers. And, and I sus­pect the same will be the case with MMS.

[00:35:08] TK: And cer­tain­ly the mar­ket’s com­ing to that real­iza­tion too, I think, but yeah. Um, it came close to a, uh, sell for me. I’m not sure how it was com­pared to the 3PTL. I did have a look at it at its worst and it was get­ting very close to a sell, but I think it’s Let me just get the num­bers up. I think it’s way above that again now.

[00:35:29] TK: No, sor­ry, it’s way above its sell. It must have been close to a rule 1 for me, but it’s turned up again just recent­ly. So,

[00:35:35] TK: um, yep, it’s, I think it’ll recov­er, but

[00:35:38] TK: can’t pre­dict. I liked it when I bought it,

[00:35:40] TK: still like it now.

[00:35:41] CR: Well, speak­ing of Stocks that are above their sell line, ASG,

[00:35:47] CR: you lit­tle beau­ty, ticked back up. It’s above its sell

[00:35:52] TK: Ah, you were wait­ing

[00:35:53] TK: for that, weren’t you, weren’t you? We’re next to the end.

[00:35:56] CR: Well, it was up above

[00:35:57] CR: it and then it dropped back below it again last week because the share price came back a lit­tle bit and

[00:36:03] CR: its sell line moved,

[00:36:04] TK: Mm hmm.

[00:36:05] CR: but then the price ticked back up again. So the sell line’s read­just­ed and it’s back above it

[00:36:10] CR: again now. So

[00:36:12] TK: So you pack for some, you

[00:36:13] TK: pack some fudge and the fudge tast­ed good.

[00:36:18] CR: Well, it’s not good yet.

[00:36:21] CR: It’s, uh, you know, it’s back

[00:36:23] CR: above it’s 3PTL and it’s real one. And, but, uh, uh, yeah, um, um, when it, when it’s 30, 40 per­cent up, then I’ll cel­e­brate. But, uh, yeah,

[00:36:34] TK: Well, when I say

[00:36:35] CR: I don’t have to keep

[00:36:36] TK: it’ll be It’ll be ex div­i­dend time next

[00:36:38] TK: half, and you’ll be going through the same cycle, prob­a­bly. Yeah,

[00:36:42] CR: Yeah,

[00:36:43] CR: True. Uh, all right. MMS. What works on Wall Street? Tony.

[00:36:48] TK: so this week’s quote, again from Shaugh­nessy’s excel­lent book, What Works on Wall Street. Con­tin­u­ing on from, I guess, a bit of behav­iour­al eco­nom­ics obser­va­tions. So, This is the quote from O’Shaugh­nessy. Being a suc­cess­ful investor runs con­trary to human nature. We love to make the sim­ple com­plex and fol­low the crowd.

[00:37:09] TK: We allow our love of a sto­ry about some stock to inflame our emo­tions and dic­tate our deci­sions, buy­ing and sell­ing based on tips and hunch­es. We approach each invest­ment deci­sion on a case by case basis, with no under­ly­ing con­sis­ten­cy or strat­e­gy. We are opti­misti­cal­ly over­con­fi­dent in our own abil­i­ties, Prone to hind­sight bias, and quite will­ing to ignore over 80 years of facts that show these things.

[00:37:33] TK: To be so, when mak­ing invest­ment deci­sions, we do every­thing in the present tense, and because we time weight infor­ma­tion, we give the most recent events the great­est import. Indeed, behav­iour­al econ­o­mists call this ten­den­cy Recen­cy Bias, which is the ten­den­cy to remem­ber more recent events or obser­va­tions more clear­ly, and to over­weight recent infor­ma­tion and under­weight events from the more dis­tant past.

[00:38:00] TK: We then extrap­o­late any­thing that has worked well recent­ly, very far out in time, assum­ing that it will always do so. How else could the major­i­ty of investors have con­cen­trat­ed their port­fo­lios in large cap growth stocks and tech­nol­o­gy shares right before the tech­nol­o­gy bub­ble burst in 2000? And the biggest bear mar­ket for the Nas­daq since the 1970s ensued.

[00:38:21] TK: More recent­ly, on the heels of the mar­ket crash of 2008 2009, investors have learned a far dif­fer­ent les­son. Because the decade from 2000 through 2009 was the worst for US stock per­for­mance in 110 years, investors have pulled tril­lions of dol­lars from stocks and moved their invest­ments into bonds, the asset class that has done the best recent­ly.

[00:38:44] TK: Ignor­ing the fact that 110 years of mar­ket his­to­ry shows us that bonds almost nev­er out­per­form equi­ties over long peri­ods of time. It’s extreme­ly dif­fi­cult not to make deci­sions this way. Think about the last time you real­ly goofed. Time pass­es and you say, What was I think­ing? It’s so obvi­ous that I was wrong.

[00:39:02] TK: Why did­n’t I see it? The mis­take becomes obvi­ous when you see the sit­u­a­tion his­tor­i­cal­ly drained of emo­tion and feel­ing. When the mis­take was made, you had to con­tend with emo­tion. Emo­tion often wins since, as John Junor said, an ounce of emo­tion is equal to a ton of facts.

[00:39:20] CR: Hmm.

[00:39:21] TK: she was writ­ing after the GFC then and was point­ing to the fact that Peo­ple got out of stocks, um, after the GFC and that was the wrong thing to do because stocks went on a bit of a tear since then and they’ve been up ever since.

[00:39:35] TK: So, um, clas­sic behav­iour­al eco­nom­ics, eco­nom­ics cov­er­ing both the recen­cy bias but also too the fact that we can have peri­ods where our sys­tem under­per­forms but does­n’t mean we should­n’t. Get rid of the sys­tem and change our, our approach, um, and, um, I guess that’s per­ti­nent. As you point­ed out, dum­my port­fo­lios

[00:39:58] TK: under­per­form the STW, but over the long term, it’s, um,

[00:40:03] TK: 50 to 100 per­cent above the

[00:40:05] TK: STW.

[00:40:06] CR: Yeah, and with the US port­fo­lio, you know, it’s mas­sive­ly

[00:40:10] CR: out­per­form­ing at the moment. Well, not mas­sive­ly. I

[00:40:13] CR: mean, it’s like, it’s not even dou­ble, you know, it’s close to dou­ble though, um, whether or not that will last. Over the course of the year, it has­n’t always per­formed that well. It’s been up and down. So yeah.

[00:40:27] CR: You know, I don’t expect over per­for­mance to that lev­el of over per­for­mance to last for­ev­er too. But I, you know, my expe­ri­ence with the W port­fo­lio over the five years shows that, you know, over time it’ll under­per­form, it’ll over­per­form and then it’ll sort of bal­ance out, hope­ful­ly to close to dou­ble per­for­mance.

[00:40:45] TK: it’ll regress to the main. And that reminds me of when we first start­ed QAV and our dum­my port­fo­lio went on a tear and you’re like, Oh, how easy is this? This is great. We’re going to out­per­form for­ev­er. And then I think the fol­low­ing year we under­per­formed and came

[00:40:58] TK: back to the medi­an sort of per­for­mance that

[00:41:02] TK: I’ve expe­ri­enced over the years.

[00:41:04] TK: So I guess the point is,

[00:41:05] CR: say­ing.

[00:41:06] TK: As Shaugh­nessy would say,

[00:41:09] CR: No, you go, yeah, sor­ry.

[00:41:10] TK: As Shaugh­nessy would say, the wrong thing to do at the moment is to take mon­ey out of the Aus­tralian mar­ket and put it in the U. S. dum­my port­fo­lio. It’s more like­ly, regres­sion to the mean more

[00:41:19] TK: is, you know, means, it’s more

[00:41:22] TK: like­ly that the Aus­tralian dum­my port­fo­lio will improve and the U. S.

[00:41:25] TK: one will come back.

[00:41:26] CR: Yeah. I remem­ber when, uh, dur­ing COVID, uh, the COVID recov­ery, when we were

[00:41:30] CR: doing like 40 per­cent and you were like, it won’t last for­ev­er,

[00:41:34] CR: and I just thought

[00:41:34] CR: you were being hum­ble, although you were just like, uh, ah, sure. You’re try­ing to like talk down expec­ta­tions because it was hum­ble, but no, it came down.

[00:41:44] CR: You’re right.

[00:41:46] TK: Yeah. one of my rare pre­dic­tions

[00:41:48] TK: that came

[00:41:49] TK: true.

[00:41:49] CR: Yeah. Yeah. All right Thank you for that. What else you got? Paul

[00:41:55] TK: pulled pork, pulled pork time. Inter­est­ing com­pa­ny, I’m going to do Judo Hold­ings, JDO, which just came onto our buy list as well. Um, this, this week, uh, after its results, and they were good results. And, again, it’s a finan­cial ser­vices com­pa­ny, so I, um, haven’t had a chance to, um, Do a deep dive into their oper­at­ing cash flow, but it could also be one of these com­pa­nies that, you know, they’ve raised mon­ey and I’ve got it sit­ting there wait­ing to lend out, which could be a rea­son why I’ve got cash sit­ting there and had a good half for that.

[00:42:26] TK: But, um, like I said, I haven’t gone through the details of why, but at the moment it has good Prop­Caf and that’s usu­al­ly all. I’m that wor­ried about because, uh, uh, it is a good com­pa­ny, um, well run, uh, it’s just recent­ly been includ­ed in the ASX 200 index, so that’s one of the rea­sons why the shares are up as well, um, it’s, it’s back­ground’s inter­est­ing, so to give a Let me talk about the com­pa­ny first and give its his­to­ry.

[00:42:56] TK: So Judo Hold­ing, JDO, is a busi­ness lender focus­ing on the SME mar­ket, that’s small to medi­um enter­prise mar­ket. And as they say, ser­vic­ing a gap between pri­vate cred­it. So these are Non bank lenders who have real­ly sprung up in the last cou­ple of years as inter­est rates have risen and the banks have retreat­ed back to being more like mort­gage busi­ness­es, but pri­vate cred­it tends to ser­vice the high risk, high mar­gin loan mar­ket, often­times with unse­cured offer­ings, and in big banks, which are in the SME mar­ket, but tend to have a high­ly auto­mat­ed, heav­i­ly secured approach to the mar­ket, which gen­er­al­ly means they’re focused on SMEs, which are tak­ing out lines of 10 mil­lion or more, so that they can be, you know, the bank­ing sys­tem can process them eas­i­ly.

[00:43:52] TK: Judo sits between those two. Seg­ments in the mar­ket and, um, they run a rela­tion­ship based mod­el. Uh, so they have lots of advi­sors out there talk­ing to SMEs and win­ning busi­ness, um, through rela­tion­ships. Uh, they have, um, uh, IT, which is from, uh, built recent­ly and from the ground up, so they’re not encum­bered by bank­ing lega­cy sys­tems, which, um, it’s prob­a­bly one of the big issues in the Aus­tralian bank­ing world is that the big banks have lega­cy.

[00:44:22] TK: Sys­tems which go back decades, they’ve got patch­work over­lays on them. It’s prob­a­bly only Comm­Bank which has made a bit of a fist of improv­ing that sit­u­a­tion from an IT invest­ment point of view, but gen­er­al­ly speak­ing they’re not as good as mak­ing fast deci­sions as small banks like Judo are. So Judo have a rela­tion­ship man­age­ment approach and can make a quick assess­ment as to whether the loan can be approved or not.

[00:44:48] TK: And that’s, um. That’s their oper­at­ing mod­el and has giv­en them a bit of an advan­tage in the space. Uh, they, they say they have 2 per­cent of the mar­ket. Now, I’m not sure whether, how do you define mar­ket here? Is it SMEs over­all? Is it SMEs below 10 mil­lion in loans? But any­way, at 2 per­cent of the mar­ket, they’ve got plen­ty of room to grow.

[00:45:10] TK: Uh, one of the founders of the busi­ness, and the busi­ness was found­ed back in 2018, a guy called Joseph Healy, uh, used to work in, um, some of the big banks with the oth­er founder, David Hornery. Uh, he recent­ly stepped down, and I’m going to say recent­ly, I think it was about six months ago, as CEO. And he and the oth­er founder wrote a book called Black Belt and the com­pa­ny’s called Judo.

[00:45:33] TK: The book’s called Black Belt and real­ly the theme here is that they, they’re a small oper­a­tor. The anal­o­gy is if you’re a judo, in a judo match and you’re a small play­er, you can still use lever­age to over­throw a big­ger oppo­nent. Any­way, a quote from, um, from the book, uh, goes like this. Dis­il­lu­sion with the big four Aus­tralian banks, cul­ture and strat­e­gy.

[00:45:56] TK: Joseph Healy and David Hornery start­ed think­ing about a start­up that would improve and dis­rupt the immov­able bank­ing sec­tor. Although they were self pro­fessed and no spring chick­ens who fell out­side of the usu­al mil­len­ni­al start­up entre­pre­neur demo­graph­ic, they forged a plan to start a new bank that would serve small and medi­um sized busi­ness­es, a sec­tor the big banks were neglect­ing, in a high­ly reg­u­lat­ed indus­try monop­o­lized by four of Aus­trali­a’s biggest com­pa­nies.

[00:46:21] TK: Inspired by the Net­flix mantra that And that will nev­er work. Joseph and David found­ed Judo Bank in 2016 and dis­rupt­ed the Aus­tralian bank­ing mar­ket against all odds. The name is a nod to the fact that in judo, the small­er, weak­er per­son can over­pow­er a stronger oppo­nent through effi­cient use of ener­gy.

[00:46:42] TK: In Black Belt, the authors share key lessons from the judo jour­ney and their decades in busi­ness pri­or to the start­up. This is a true mas­ter­class in plan­ning, launch­ing, and scal­ing a busi­ness. So that’s from the blood. From the book, uh, there was also an inter­est­ing review which I’ll just quick­ly cov­er now.

[00:46:59] TK: Uh, Joseph Healy who led divi­sions at NAB and ANZ. Uh, had a dif­fer­ent expe­ri­ence, which they describe in black belt. Uh, the root caus­es of the prob­lems were crys­tal, crys­tal clear to them. Even though they were in very senior posi­tions inside major banks, their abil­i­ty to influ­ence direc­tion had been a grow­ing source of frus­tra­tion in what a high­ly polit­i­cal, heav­i­ly siloed, rigid­ly bureau bureau­crat­ic and path depen­dent orga­ni­za­tions where the cul­tur­al con­crete was set and defined by a chron­ic and inter­nal­ly focused bureau­cra­cy.

[00:47:33] TK: They wrote, Healy and Hornery decid­ed over drinks at a Syd­ney pub. They want­ed to start a dif­fer­ent kind of bank, a bet­ter bank for staff and cus­tomers. They want­ed to return decen­cy to bank­ing. They say through­out 2011 to 2014, they reg­u­lar­ly dis­cussed how the bank­ing indus­try was indus­tri­al­iz­ing and how to dri­ve for con­stant prof­it growth had result­ed in pro­gres­sive poor­er cus­tomer expe­ri­ences.

[00:47:58] TK: Healy and Hornery deserve huge cred­it for cre­at­ing a bank from an idea. Due to those lend­ing to small­ish busi­ness­es is good for com­merce and the econ­o­my. They are right­ly proud their lenders have an aver­age of only 26 clients. They all, all staff, that all staff have equi­ty in the bank. And their cus­tomers almost always repay their loans.

[00:48:18] TK: Healey is CEO and Hornery is on the board. Accord­ing to this arti­cle by Aaron Patrick back in 2023. So yeah, so, um, start­up found­ed by two bank­ing exec­u­tives late in life, who were pret­ty dis­il­lu­sioned with the bank­ing sec­tor. And I’ve heard that from a num­ber of peo­ple. We’ve prob­a­bly both expe­ri­enced that work­ing for large orga­ni­za­tions, they can be some come solo path depen­dents.

[00:48:46] TK: I think. Uh, was called in black belt, uh, and they decid­ed to do some­thing about it, which was good. So, they launched it in 2018, gained a bank­ing license in 2019, which was quite quick for bank­ing licens­es. Back then the line book was 200 mil­lion, today it’s 10. 7 bil­lion, so they’ve been grow­ing real­ly well.

[00:49:08] TK: They list­ed on the ASX in 2021 and have been prof­itable since 2022. In their lat­est results, they call out the fact that their growth in lend­ing is at three times the sys­tem, which is very good. Income was up 12%, under­ly­ing prof­it up 11%. I hate terms like under­ly­ing prof­it because it means there’s a, um, an abnor­mal in there some­where.

[00:49:30] TK: And sure enough, their statu­to­ry prof­it before tax was down 3%. And when I looked into it, that was due to high­er impair­ment charges due to Uh, writ­ing off some of their bad loans and late repay­ments, but hav­ing said that, uh, their 90 days plus impaired assets is reduc­ing. So, uh, my take on that is that, um, they’re sort of bed­ding down that large growth and will have Prob­a­bly some more strin­gent process­es in place to make sure that the loans they’re writ­ing are going to be repaid.

[00:50:03] TK: They’re not big write offs, so it’s not wor­ry­ing. They’re in the pro­vi­sion, so banks, you should always look at how much banks are pro­vid­ing for impaired loans. And that’s a key met­ric for banks. I think what they wrote, uh, what they, what they pro­vid­ed for last year is about the same as this year. So,

[00:50:22] TK: um, the same amount, even though the loan book is grow­ing.

[00:50:26] TK: So it means that, you know, it’s prob­a­bly a one

[00:50:28] TK: off prob­lem as they improve their pro­ce­dures.

[00:50:31] CR: Sor­ry. Can I stop you there? Impaired loans. Does that

[00:50:34] CR: just mean Loans that prob­a­bly aren’t going to be paid back on time?

[00:50:38] TK: Yeah, cor­rect. Yep. Which is a key met­ric for bank­ing. Yeah.

[00:50:44] CR: It’s nice

[00:50:45] TK: Yeah. So, um, uh, in bank­ing terms, what a bank has to do is if it becomes aware that

[00:50:50] CR: words.

[00:50:51] TK: they’re not going to

[00:50:52] TK: get 100 per­cent repay­ment on time, they

[00:50:54] TK: have to raise a pro­vi­sion to their bal­ance

[00:50:56] TK: sheet, and that’s, you know, because of dou­ble entry book­keep­ing, that’s a hit

[00:50:59] TK: to prof­it when they do that.

[00:51:01] TK: How­ev­er, hav­ing, hav­ing raised

[00:51:03] CR: bad loans

[00:51:04] CR: that.

[00:51:04] CR: can’t be just bad loans or dodgy,

[00:51:07] CR: it’s impaired. It’s just, what does impaired mean? Like maybe

[00:51:12] TK: 100 per­cent repay­men­t’s impaired. It’s not going to be repaid.

[00:51:16] CR: Right.

[00:51:17] TK: And it could be, like, it’s, it could just be that it’s not going to be repaid quick­ly. It might get the mon­ey back still. And they often go on to, what they point out in their results is they go on to a nego­ti­at­ed set­tle­ment. So they get some­thing

[00:51:27] TK: back. Might not be 100 per­cent of what was bor­rowed, but they get some­thing

[00:51:32] TK: back.

[00:51:33] CR: Sor­ry. Impaired. Did­n’t mean to, I just want­ed to clar­i­fy that. I don’t,

[00:51:38] TK: Oh, that’s okay.

[00:51:38] CR: with that term exact­ly. Impaired loans.

[00:51:40] CR: Okay.

[00:51:41] TK: Yeah. Um, yeah. And so once they, Put a pro­vi­sion on their bal­ance sheet once for that. They don’t need to do it again. They may have to increase it if they find it, you know, the econ­o­my turns down and they need to raise a big­ger pro­vi­sion or in some cas­es they can some­times write a back to prof­it and that’s a bumpy year when they can reduce impair­ments from their bal­ance sheet.

[00:52:02] TK: So it’s some­thing to watch. It’s now in a steady state, but they went through a bit of a hic­cup dur­ing growth. Any­way, the QAV num­bers are quite good. This is a large ADT stock with over 3 mil­lion dol­lars trad­ed on aver­age per day. I’m using a stock price of 1. 64. 5, which is over IV1 and IV2. IV1 is only 34 cents, IV2 is only 73 cents.

[00:52:29] TK: So it’s a long way over. But it’s close to Net equi­ty plus 30%. So book, net equi­ty per share is 1. 41. Net equi­ty per share, so book plus 30 is 1. 83. So the share price of 1. 65 ish, it’s in between those two. So you’re basi­cal­ly pay­ing for book val­ue of the com­pa­ny. Inter­est­ing­ly, this is prob­a­bly the first com­pa­ny on our buy list which I’ve seen for a long time, which has a share price above con­sen­sus tar­get.

[00:52:57] TK: So we can’t score it for that. It’s one of the few I’ve seen for a while. Uh, zero yield on this com­pa­ny, which is not sur­pris­ing. They’re a small, or they’re a grow­ing stock, but they’re rein­vest­ing in the busi­ness rather than pay­ing div­i­dends. Uh, Stock Doc­tor Finan­cial Health and Trend is strong and steady.

[00:53:14] TK: Looked up the Stock­o­pe­dia for this one. The score is, the F score is 5 out of 9 and there’s no Z score and I think that’s Yeah, I’ve seen enough of this now to sug­gest that there’s no Z score for finan­cial com­pa­nies in Stock­o­pe­dia or an Alt­man Z score. So, um, that’s a thing. Stock­o­pe­dia, all your rank is only 50, and total rank is 83.

[00:53:35] TK: So I think, you know, as I’m becom­ing more famil­iar with Stock­o­pe­dia, if it’s a finan­cial com­pa­ny, it’s not going to get as high a score, I think, because of, um, it’s get­ting a zero in the Z score for what­ev­er rea­son that is. And as I’ve learned here in the past, and Stock Doc­tor was like this up to a point when they decid­ed to rejig their met­rics when it came to banks.

[00:53:58] TK: So for a long time, maybe the first 10 plus years of Stock Doc­tor, you would­n’t get a finan­cial health score for the banks or finan­cial ser­vices indus­tries because the bank­rupt­cy met­rics are built up on indus­tri­al com­pa­nies, but then they rejigged it. So they did that. Obvi­ous­ly Alt­man has­n’t. PE for this com­pa­ny is high, 24.

[00:54:19] TK: 6, but not the high­est. So we can, we’re not giv­ing it a score there, but it’s inter­est­ing that we’re get­ting a good Prop calf for it, even though it’s a high PE stock. Uh, so prop calf for this stock is 2.8 times, uh, which is low earn­ings per share. Fore­cast growth is 14%, which is good, but uh, if I put that over the high PE of 24 times growth over PE is only 0.5 and we’re look­ing for, um, 1.5 or bet­ter.

[00:54:48] TK: So I can’t score it for that. Inter­est­ing­ly enough, I found this one of the inter­est­ing. Met­rics and I did some research and could­n’t work out why, but the board only holds 3%, even though there’s two own­er founders. Joseph Healy stepped down as CEO, but did­n’t go on the board. I could­n’t tell what he’s done with his equi­ty, but I could­n’t see it in the cur­rent share­hold­ers.

[00:55:13] TK: Now, some­times They’re still there as a nom­i­nee com­pa­ny or through a, you know, a busi­ness name or a blind trust or some­thing. But pri­ma facie, the direc­tors are only hold­ing 3 per­cent of the com­pa­ny, which I found to be inter­est­ing. So, um, we can’t score it for own­er founder, even though one of the founders still sits on the board, Joseph Healy.

[00:55:32] TK: Oh, sor­ry, um, the oth­er, oth­er founder, uh, which was Mr. Hornery. Um, Oth­er QAV met­rics, uh, it’s a new 3 point trend­line uptrend, equi­ties are con­sis­tent­ly increas­ing, uh, and so the qual­i­ty score for this is 9 out of 16, or 56%, and the QAV score is about 0. 2. So, scores well for us. Again, finan­cial ser­vices com­pa­ny, Prop­Caf may have a dif­fer­ent mean­ing here.

[00:56:00] TK: Which means it may not stay on the buy list for­ev­er, um, but, you know, all the oth­er met­rics are good and it’s, um, this year price is going up, so I’m, I’m hap­py to look at it. Uh, a cou­ple of risks for this com­pa­ny, um, com­pe­ti­tion for oth­er banks is obvi­ous­ly a clear one, but I think that might go hand in glove with a takeover, um, oppor­tu­ni­ty as well.

[00:56:19] TK: So, if Judo Bank does grow dra­mat­i­cal­ly and they become a thorn in the side of some of the major play­ers, They might just decide to get into the space by tak­ing over Judo Bank rather than try­ing to com­pete head to head and that I would­n’t say it was a like­ly case, but it’s prob­a­bly helped by the fact that the Judo Bank have good IT sys­tems in this space, which the big banks don’t seem to have because of lega­cy issues, so it might be cheap­er to take over Judo Bank than to invest in IT.

[00:56:53] TK: That’s the first com­ment to make. This kind of com­pa­ny is always going to have a prob­lem if the econ­o­my does turn down, and as You said before, UBS was say­ing that small caps are doing it tough, um, and this is the mar­ket that this com­pa­ny plays in, so, you know, it may be unsur­pris­ing if the econ­o­my turns down that that pro­vi­sion for bad and doubt­ful debts and impair­ments goes up, so that could be a risk.

[00:57:16] TK: On the plus side though, these guys are focus­ing on, um, cul­ture, which I think is good in bank­ing. You know, it’s a bit face­less in the big banks, um, it seems to be, uh, they get good cul­ture scores that they call out dur­ing their, um, annu­al report, and it’s a rela­tion­ship bank­ing mod­el which seems to have gone out of a lot of the big bank­ing, um, uh, envi­ron­ment, so,

[00:57:39] TK: you know, it was a I mean, gone are the days when,

[00:57:42] TK: I

[00:57:42] TK: mean, way

[00:57:43] TK: back when I was a kid, you build a

[00:57:44] TK: rela­tion­ship with your local bank man­ag­er and then got a home loan from

[00:57:47] TK: them based on the fact that they knew you, and you,

[00:57:50] CR: you got a home loan when you were a kid?

[00:57:52] TK: no. When I was a

[00:57:54] CR: know that you’re

[00:57:55] TK: Peo­ple who are get­ting

[00:57:56] TK: home loans, you, the per­son,

[00:57:57] CR: Oh,

[00:57:59] TK: indi­vid­u­al­ly,

[00:57:59] CR: okay. I knew you start­ed in real estate ear­ly, but I did­n’t real­ize it was that ear­ly.

[00:58:05] TK: By the time I did start in real estate, that was­n’t the case. But what was the case was that I had, you know, I was assigned a rela­tion­ship banker. You know, fair­ly ear­ly on. And, um, but that’s dis­ap­peared now. Pri­vate banks are a thing of the past, at least in terms of my expe­ri­ence with them. We still have a pri­vate banker.

[00:58:24] TK: I hard­ly ever talk to them. Um, where­as, you know, along the way, they were there ask­ing me ques­tions and how’s it going and can we help you, et cetera. So that’s gone by the by. Um, they used to be a good source of peo­ple to tap for dona­tions to char­i­ty auc­tions in the past, but that’s no longer hap­pen­ing.

[00:58:40] TK: Um, so yeah, so they’ve gone, it’s kind of the wheels turn full cir­cle and now a small up and com­ing bank is using that mod­el to fos­ter rela­tion­ships with more com­pa­nies. Um, the oth­er plus for this com­pa­ny is that it’s not offer­ing res­i­den­tial mort­gages. So, uh, one of the prob­lems that, um, the small, some of the small banks like, you know, um, Bendi­go Ade­laide, uh, my state, maybe even Bank of Queens­land to some extent, um, they’re hav­ing a prob­lem because they’re offer­ing res­i­den­tial mort­gages, but they’re not a big play­er.

[00:59:12] TK: So APRA is mak­ing it hard­er for them to do that, uh, when they com­pete with the big large­ly through what’s called cap­i­tal ratios. So, um, a large bank. Well, we went through this once before in a, in a detailed way, but large banks have the low­est oblig­a­tions to hold cap­i­tal for what they lend out. And this all comes back to APRA want­i­ng to make sure that in a down­turn, banks can sur­vive a run on the banks and poten­tial down­turns in peo­ple’s abil­i­ty to repay loans.

[00:59:45] TK: So big banks or any bank is required by APRA to hold a cer­tain amount of cap­i­tal in reserve in order to pay out. Depos­i­tors who get antsy or to cov­er bad loans as they get worse. Um, but the big banks as a per­cent­age have to hold less of a pro­vi­sion, um, or less cap­i­tal than the small banks. Uh, and that gives the big banks an advan­tage.

[01:00:08] TK: So think of it this way. If I’m a small bank and I’m, um, And just say I’m fund­ing every­thing through deposits, which isn’t the case. We know that banks will issue bonds and there’ll be a mix of ways that they raise mon­ey to then repack­age as res­i­den­tial mort­gage loans. But if I’m, if I’m tak­ing in 100 per­cent of my Assets or, um, assets I’m going to lend out as a deposit and I pay, um, deposit rates of, I don’t know, 2 per­cent and I can then, um, lend all that mon­ey out to mort­gages, um, who are, uh, res­i­den­tial mort­gages and I’m charg­ing 6%, I make 4 per­cent to do that.

[01:00:45] TK: APRA steps in and says, no, no, no, you can’t lend out 100%, you’d bet­ter have some­thing for a rainy day on your bal­ance sheet. You’re not a big bank, you’re a big bank you might have to hold, I’m just pick­ing out some num­bers here I’ve seen in the past but they may have changed, big bank you might have to hold 12 per­cent of those deposits up your sleeve, and a small bank might have to hold 15%.

[01:01:04] TK: So, it’s a, it means, it’s a hit to their prof­itabil­i­ty, So, it’s a hit to their prof­itabil­i­ty, And it means that, um, if I want to make the same sort of return as a big bank, I have to get a big­ger mar­gin, um, on the 85 per­cent I’m lend­ing out, com­pared to the big bank, um, and that makes me less com­pet­i­tive in the mar­ket.

[01:01:25] TK: So that’s, it’s a bit more intri­cate than that, but that’s, um, that’s it in a nut­shell. Any­way, long way of say­ing, um, Judo don’t have to wor­ry about that because they don’t offer res­i­den­tial mort­gages. So they have an advan­tage in the space when they’re com­pet­ing against the small­er banks who are also active in this space and that they’ve got less encum­brances on their cap­i­tal that they can allo­cate to loans.

[01:01:48] TK: So yeah, so it’s an advan­tage for them. They do take deposits, and they do raise mon­ey by offer­ing bonds and get­ting oth­er sources of income. That’s a plus for them, I think, when they’re com­pet­ing against the small­er banks. Um, again, it may come to be a prob­lem if, if, um, as it seems to be, if inter­est rates are going to get cut

[01:02:08] TK: and come down, there could be a fight for deposits, which might affect them some­how as

[01:02:13] TK: well.

[01:02:13] TK: So it could be a risk. But at the moment, it’s a plus. So that’s Judo

[01:02:16] TK: Bank.

[01:02:17] CR: What­ev­er you do, don’t upset the chair­man,

[01:02:20] CR: Peter Hodg­son. I’ve got an arti­cle here, I don’t know if you saw

[01:02:24] CR: this. It was from Octo­ber last year in The Fin. Tudor Bank Chair­man Peter Hodg­son and Chief Exec­u­tive Joseph Healey lashed out at investors. Who they claim crushed the lenders val­u­a­tion, say­ing they are var­i­ous­ly frus­trat­ed and dis­ap­point­ed that the share price does not accu­rate­ly reflect the per­for­mance of the busi­ness.

[01:02:47] CR: Mr Hodg­son said the board was tak­en aback. By the fall, espe­cial­ly after a 107. 5 mil­lion pre tax prof­it in the 2023 finan­cial year and attacked short term vicis­si­tudes in the mar­ket dur­ing his annu­al address to share­hold­ers. As a board, we express our dis­ap­point­ment at the mar­ket’s reac­tion and the per­for­mance of our share price against these sol­id achieve­ments.

[01:03:13] CR: I think he knows how we feel when we see com­pa­nies come out with good look­ing results and then the share price drops by 20%. We’re like, the hell?

[01:03:21] TK: I think that was a pri­or year, was­n’t it? That was­n’t

[01:03:22] TK: the cur­rent year. I saw that one as

[01:03:24] TK: well.

[01:03:24] CR: That was Octo­ber last year, was that arti­cle. Yeah,

[01:03:27] TK: yeah.

[01:03:28] CR: the share price is doing well at the moment. So obvi­ous­ly all of the investors don’t took heed of what he was say­ing and was like, Oh, sor­ry, Mr. Hodg­son. Well,

[01:03:39] CR: well, we’ll treat your share price with more respect in the future.

[01:03:44] TK: Yeah, it’s um, it’s, I mean, it’s, he’s frus­trat­ed and he’s let­ting the mar­ket know about it. He, um,

[01:03:54] TK: not sure if, um, if you’re a chair­per­son, if you’re bul­ly­ing investors, whether

[01:03:58] TK: that’s the best way

[01:03:59] TK: to get peo­ple to take notice of you, but it seems to have

[01:04:02] TK: worked, so maybe it is.

[01:04:04] CR: Share price was around 85 cents at the time. It’s up to 1. 65 now. It’s

[01:04:09] TK: No, it def­i­nite­ly

[01:04:09] TK: works. I’ll have to start bul­ly­ing things more. I’ll have to

[01:04:12] TK: be more bull­ish, more

[01:04:13] TK: bul­ly­ing.

[01:04:14] CR: I was, we should buy some and then ask him to yell at investors again. And yeah, appar­ent­ly that’ll see if that works.

[01:04:21] TK: Yeah.

[01:04:22] CR: All right. Judo. I love the brand. I think that’s a good brand.

[01:04:24] TK: Mmm. Thought you would.

[01:04:27] CR: Nev­er. And yeah, I’ve nev­er real­ly heard of them before, but I like that.

[01:04:31] TK: Maybe you should launch a com­pa­ny and call it Sifu or

[01:04:34] TK: some­thing.

[01:04:35] CR: no Wing Chun, the Wing Chun Bank. Use your oppo­nen­t’s force

[01:04:38] CR: against them.

[01:04:39] TK: Mmm.

[01:04:40] CR: Go to the blind side, small

[01:04:41] CR: cir­cles. Come up with lots of

[01:04:43] CR: ways to pre­tend that it makes sense. Well, thank you, Tony. I think that’s all for that side of things. Got one ques­tion this week from Robert. Um, should we treat SMSF any dif­fer­ent to the gen­er­al invest­ing, keep­ing in mind I’m 57 and only have 300, 000 in my super that I per­son­al­ly con­tribute to with employ­er con­tri­bu­tions.

[01:05:06] CR: Thank you, Robert. Well, we’ve talked about S M S F, on and off over the years. Um, any­thing dif­fer­ent to invest­ing via an SMSF, Tony, from your per­spec­tive? Not

[01:05:23] TK: I don’t think so.

[01:05:24] CR: but the way that you would

[01:05:25] CR: han­dle it?

[01:05:26] TK: I can’t give Robert finan­cial advice, um, I can give gen­er­al advice and talk about how I han­dle it, as you say. Uh, over the years, I’ve had invest­ments in fam­i­ly trusts, um, in per­son­al names and, uh, SMS­Fs. I guess you could also have them in com­pa­nies as well. And I don’t Dif­fer­en­ti­ate between the class of asset as to how I invest, I guess from time to time, per­haps the only excep­tion to that is, um, I have a mort­gage and so if I have a choice of buy­ing some­thing out­side an SMF and it’s got a good yield, I’ll do that so I can use the div­i­dend to help pay off the mort­gage and to live off the div­i­dends.

[01:06:07] TK: So if I have, like if I’ve sold a few things and I’m going to buy two stocks and one has a good yield and one does­n’t, I’ll prob­a­bly put them on with­out the good yield in the SMSF for now and use the oth­er one to have div­i­dends fund, uh, inter­est on my debt or on liv­ing expens­es, but, um, you know, that, that’s just my per­son­al cir­cum­stances.

[01:06:29] TK: Oth­er­wise I treat them both the same, but giv­en, um, Robert’s age, I’m hop­ing he’s get­ting some finan­cial advice from his accoun­tant on, on SMSS because, uh, yeah, he will be get­ting to a stage where he, he can, um, Think about what role the SMSF will play in his retire­ment, I guess. There are tax advan­tages for putting things in SMS­Fs.

[01:06:55] TK: Um, he may want to con­tribute more than he’s talk­ing about he’s putting employ­er con­tri­bu­tions in. Um, uh, I know there’s one strat­e­gy which is that if he’s got assets and invest­ments out­side of the SMSF, he may want to run those down. Um, as he con­tributes more to the SMSF for tax pur­pos­es. But again, that’s, I don’t want to strain the per­son­al advice here.

[01:07:18] TK: I don’t know his cir­cum­stances and he should go and talk to his accoun­tant about it. But in terms of which buck­et I invest in, it does­n’t,

[01:07:26] TK: does­n’t

[01:07:26] TK: wor­ry me real­ly,

[01:07:28] TK: um, which one I buy

[01:07:29] CR: the strat­e­gy does­n’t change.

[01:07:31] TK: No.

[01:07:32] CR: I hope that helps, Robert.

[01:07:34] CR: And that’s it for ques­tions this week. Tony, what’s going on in After Hours? How are the

[01:07:40] CR: hors­es?

[01:07:42] TK: Yeah, we’re run­ning a bit slow­ly at the moment. We had Caste run­ning on the week­end. She ran sev­enth, I think, which is prob­a­bly two sev­enths in a row. So not show­ing the form she’s show­ing at the train­ing track, but that’s okay because we thought she’d be bet­ter off fur­ther out in dis­tance and maybe third or fourth start.

[01:07:59] TK: So

[01:08:00] TK: she’ll run again Sat­ur­day week at Flem­ing­ton. So I’m going to stay on at Cape Schanck and go up and have a look at her run

[01:08:07] TK: then. Um,

[01:08:10] CR: Do you wear a top hat and tails?

[01:08:12] TK: No, I could­n’t do that.

[01:08:15] TK: Could­n’t do that. I had the chance of going to Ascot and just could­n’t bring myself to do it.

[01:08:20] TK: To go and hire a morn­ing suit. Um, yeah, I strug­gle to wear a suit these days.

[01:08:26] TK: I hate doing it, going to the mem­bers even. So any­way, um, I must have, I’ve always strug­gled all my life with dress codes. Like it’s like, you know, who are you to impose a dress code on me? Um, and you want my mon­ey to be a mem­ber? So any­way, um, when I was younger it made sense because, you know. The girls dressed up and the guys dressed up and we min­gled and it was fun.

[01:08:50] TK: Um, I don’t mind dress­ing up, but yeah, any­way. So no, I’m not wear­ing a top hat and tails. Um, I’ll be going to Flem­ing­ton. I’ll be chaf­ing at the bit to get back to the car and take my tie off when it’s all over. But, um, uh, Sat­ur­day week, Cas will run and also Poi­fect will prob­a­bly have her first start. And they may even run in the same race.

[01:09:11] TK: So that’ll be inter­est­ing. Um, there’s two options for both of them, so they may run in dif­fer­ent races, but they may be up against each oth­er, which, you know, hope­ful­ly they’ll run one and two. Um, Quel­lo Dora­to, the horse that’s had a cou­ple of starts at Gee­long and run third both times, unfor­tu­nate­ly has a bone chip in its knee, so.

[01:09:29] TK: Now she’s, or he’s out for six months, which means we’ll miss the spring with him. That’s Bel­la Nipati­na’s younger broth­er, or half broth­er. So, um, we had been look­ing for­ward to start­ing him again because, um, after a cou­ple of thirds we thought he might win some­thing, but, um, we’ll have to wait and see on that, which is a bit of a shame, but that’s rac­ing.

[01:09:47] TK: And I’m sor­ry to report, but, um, again, very, very emo­tion­al morn­ing for me. I was on the phone a lot with one of my part­ners. We have a brood­mare called Load­ing Zone. And peo­ple may recall, if I lis­ten to this, uh, we sold one of her prog­e­ny at auc­tion ear­li­er on in the year, the sales for about 95, 000. Um, she was due to foal over the next cou­ple of weeks, but became sick overnight.

[01:10:12] TK: And, um, they oper­at­ed on her ear­ly this morn­ing and had to euth­a­nize her, unfor­tu­nate­ly. Um, and, uh, a lot of to and fro­ing, um, where the vets were say­ing we can oper­ate and there might be a chance of suc­cess. Or if we leave a bee, the foal might die and we might. You know, she’ll have a 30 per­cent chance of liv­ing.

[01:10:31] TK: She had some kind of col­icky obstruc­tion in her intes­tine and when they opened her up this morn­ing on a table, it was worse than they thought. Um, they did a cae­sare­an and took the fall out, who’s now in inten­sive care, so the fall may not sur­vive. So it’s just been a very emo­tion­al morn­ing for us, um, this morn­ing.

[01:10:48] CR: god. That’s So sad. Mmm.

[01:10:52] TK: as we’re com­mer­cial oper­a­tors, it does have a, you know, humane side to it. It was pret­ty sad. Yeah.

[01:11:00] TK: Yes, and the per­son who I was talk­ing to who oper­ates the stub was clear­ly very shook up by it all.

[01:11:06] CR: Mmm.

[01:11:07] TK: Yeah, so dif­fi­cult.

[01:11:09] CR: Mmm.

[01:11:10] TK: um, thank you, um, to the horse, it was,

[01:11:15] TK: you know, it’s, emo­tion­al­ly it was hard for us, but, um, you know, obvi­ous­ly hard­er for the horse, but I think the, the right thing to do was prob­a­bly to, Put her down while she was on the oper­at­ing table.

[01:11:25] TK: Look, the prog­no­sis was­n’t good, um, she’d lost a baby, she would have been stitched up, um, hav­ing to recov­er from that, and, you know, she may have just blinked through and then died, so it just was­n’t, it was a hard deci­sion to make.

[01:11:39] CR: Mmm, I bet.

[01:11:42] TK: Yeah, I’m at Cape Schanck oth­er­wise, um, Jen­ny’s gone back today, back to Syd­ney. I’ll prob­a­bly play a cou­ple of days of golf and I’ve got some more mates com­ing down on the week­end, which will be nice. And then, um, yeah, get some time to myself next week and catch up on the main­te­nance and stuff that has to be done.

[01:11:58] TK: Once a year down there, a bit of gar­den­ing, that kind of stuff, and then Flem­ing­ton on Sat­ur­day week, and then prob­a­bly back out after that, back to Syd­ney. But it’s been a good trip, lots of weath­er, lots of bad weath­er. And I found, well I’ve been sort of, leave some books down at Cape Schanck, and I came across one I start­ed read­ing, and uh, it was Dave Grohl’s auto­bi­og­ra­phy that came out a year or two ago, and I was halfway through it last time I came down, left it here, and picked it up again.

[01:12:23] TK: It’s not bad, good light read. It’s cool, the sto­ry­teller. I’m guess­ing he named that him­self. I’m not sure I’d say he was an A1 sto­ry­teller, but still an inter­est­ing read. Obvi­ous­ly ghost­writ­ten by some­one, but, um,

[01:12:36] TK: you know, great to relive those kind of ear­ly days of grunge and Nir­vana and

[01:12:43] CR: Real­ly?

[01:12:43] TK: punk in the US.

[01:12:44] TK: Yeah.

[01:12:46] CR: I did­n’t pick you as a grunge Dave Grohl Foo Fight­ers fan.

[01:12:50] TK: Um, I am, but prob­a­bly not as much of a Foofight­ers as I was around when Nev­er­mind came along and

[01:12:58] TK: prob­a­bly a big­ger Pearl Jam fan than Nir­vana, because they weren’t

[01:13:01] TK: around for a long time, but big Pearl Jam fan, yeah.

[01:13:04] CR: Real­ly? There you go.

[01:13:07] TK: Seen them many

[01:13:08] TK: times,

[01:13:10] CR: Real­ly? Chris­sy ever told you her Pearl Jam sto­ries?

[01:13:13] TK: She did actu­al­ly, yeah. Did­n’t she play a vio­lin with them or some­thing

[01:13:17] TK: at one stage?

[01:13:18] CR: Not with them. She opened for them, um, at some char­i­ty event in Seat­tle once where she was in a band, play­ing vio­lin in a band that opened for them and went to the house of the gui­tarist, I think at the time, took it, you know, had a par­ty or some­thing, but yeah, she got to know them a lit­tle bit. Um, very good.

[01:13:40] CR: I do love, I mean, I’m a big Nir­vana fan back in the day, still like Nir­vana, nev­er real­ly got into Foo Fight­ers that much, but I do love watch­ing Dave Grohl play drums. I mean, no one,

[01:13:51] TK: yeah,

[01:13:52] CR: since Pete Moon, I don’t think there’s been a more enter­tain­ing drum­mer than Dave Grohl. He,

[01:13:56] TK: maybe Tay­lor

[01:13:57] CR: so

[01:13:57] TK: who replaced him, yeah, he passed away recent­ly too unfor­tu­nate­ly, yeah, no I agree, and it goes, um, I mean he talks about his drum­ming style and how it start­ed when he was, you know, 12 or 13, just lov­ing heavy met­al and hit­ting the pil­lows in his room, try­ing to learn the drums from the records and turn­ing it up and all that kind of stuff.

[01:14:17] TK: But the inter­est­ing, the real­ly inter­est­ing bit I thought was when he joined his first band Scream who took him on the road and great sto­ries and anec­dotes from that about, you know, liv­ing on five bucks a day and all that kind of stuff in squats and trav­el­ing to Ger­many and liv­ing in squats over there.

[01:14:33] TK: But, um, I He said an epiphany for him was when the bassist who he real­ly admired and had a good rela­tion­ship with in Scream took him aside one day and said we’re just going to play togeth­er for half an hour and every time you play on the drums don’t put a fill in just play the beat and he said I’m going to play a bass line you play with me and just play the beat because the Grohl was kind of Kei­th Moon just rolling across the drum kit all the time and he said the bass gui­tarist start­ed up he start­ed lay­ing into the drums bass gui­tar would look over and shake his head bass gui­tarist would look over shake his head and Dave would go oh okay get back to just thrash­ing out the beat bass gui­tarist would nod five min­utes would go past Dave Roy­al could­n’t help him­self, would start play­ing into it.

[01:15:24] TK: Bass gui­tarist would shake his head. Roy­al would go, Oh, okay. And after half an hour, he

[01:15:28] TK: real­ized that, you know, even though it could be loud, less was more in play­ing

[01:15:33] TK: the drums. And that’s how his style got bet­ter down.

[01:15:36] CR: Hmm. Inter­est­ing.

[01:15:38] TK: Yeah.

[01:15:39] CR: I saw a video on YouTube recent­ly of him play­ing along to Smells Like Teen Spir­it. I think it was, um, just, you know, it was being played through speak­ers and he was just drum­ming along to it and it was just, it was so delight­ful just to see him beat the hell out of the drums to that track.

[01:15:58] TK: And that open­ing

[01:16:00] TK: cel­lo of the drum beat,

[01:16:01] TK: it’s just, I mean, it’s a part of

[01:16:05] TK: the sound­track to our lives, real­ly, isn’t

[01:16:06] TK: it

[01:16:08] TK: Yeah. Ah,

[01:16:10] TK: yeah.

[01:16:12] CR: my ear­ly twen­ties when that came out and it was like, it was so huge. Um, well this week, Chrissie and I watched The Room

[01:16:18] CR: again, um, for about the 50th time and it’s just nev­er fails to bring us joy and delight. And I’ve been read­ing Greg Ses­tero’s book, The Dis­as­ter Artist, that the Fran­co film was based on just, you know, Learn­ing more of the behind the scenes sto­ries of the mak­ing of the film.

[01:16:39] CR: And it’s just, it’s just astound­ing. It’s just real­ly astound­ing stuff. So it’s been fun. Oh, I lis­tened to the Man of Steel sound­track after you rec­om­mend­ed it last week, I’ve lis­tened to it sev­er­al times

[01:16:49] TK: Yeah, it’s

[01:16:50] CR: real­ly great rec­om­men­da­tion. Yeah. Real­ly good, work music. I’ve enjoyed it.

[01:16:55] TK: Yeah.

[01:16:55] TK: good.

[01:16:57] CR: My oth­er work sound­track this week has been, um, Glenn Gould play­ing Brahms Inter­mezzi.

[01:17:04] CR: Uh, just a whole bunch of beau­ti­ful piano plays. I’ve been try­ing to, I’ve nev­er real­ly been into Brahms that much, so I’ve been going through Brahms quite exten­sive cat­a­logue over the last cou­ple of weeks, try­ing to find my place in Brahms. And the sym­phonies, uh, real­ly don’t get me, but the Inter­mez­zo, the Inter­mezzis, uh, quite like that, quite like that, very Beau­ti­ful music.

[01:17:27] CR: So that’s, I think where I’m at with that. Hel­lo Fox. Speak­ing of ani­mal. Um, and I’ve been watch­ing, uh, old Jack­ie Chan and old Don­nie Yen films. That’s been my back­ground stuff when I’m clean­ing the kitchen. Can high­ly rec­om­mend Don­nie Yen’s first star­ring role was in a, uh, Yuen Woo Ping film from 1984 called Drunk­en Tai Chi.

[01:17:58] CR: Don­nie Yen would have been, I don’t know, 20 or some­thing. Um, man, he was, his flex­i­bil­i­ty, and it’s sort of very Jack­ie Chan y, like a lot of com­e­dy, sort of com­e­dy kung fu, that kind of thing. But his, His flex­i­bil­i­ty and his speed and his abil­i­ty to do stuff like real­ly just astound­ing like, you know, real­ly, real­ly astound­ing stuff.

[01:18:25] CR: So, you know, I, I haven’t real­ly seen a lot of any of his ear­ly stuff, uh, until this, but, um, big fan of Don­nie Yen. Obvi­ous­ly he, uh, for peo­ple who don’t know Don­nie Yen, um, he was in the Last Matrix film as a blind guy, which was fun­ny. He was in one of the Star Wars. Side movies, Rogue One is anoth­er blind guy.

[01:18:47] CR: Blind Kung Fu guys are his go to at the moment. But,

[01:18:50] TK: one

[01:18:50] TK: who was, is he the one who

[01:18:52] TK: says the

[01:18:52] TK: force is with me?

[01:18:54] TK: I am the force or some­thing. He’s got

[01:18:55] TK: that lit­tle mantra. He’s

[01:18:57] CR: Lit­tle Mantra, yeah, and

[01:18:58] TK: Emer­ald

[01:18:58] TK: One? Yeah, that’s great. Yeah.

[01:19:01] CR: But he also, most famous­ly, I think in the last 15, 20 years, he did a series of films where he plays Yip Man, who was, who’s our

[01:19:12] CR: Grand­mas­ter in my style of Wing Chun. So, uh, my Sifu’s grand­mas­ter is William Chung. William Chung stud­ied under Yip Man in Hong Kong.

[01:19:22] CR: Bruce Lee and William Chung both stud­ied under Yip Man. So, uh, Don­nie played Yip Man. I think they’ve made like four Yip Man movies where he plays a high­ly fic­tion­al­ized account of Yip Man. Uh, includ­ing, I think in the last one, Yip Man goes to Amer­i­ca to watch Bruce in a tour­na­ment, which. He

[01:19:41] CR: nev­er did. Um, so yeah, very

[01:19:44] CR: fic­tion­al­ized, but um, yeah, I think he’s, it’s sort of those, the pop­u­lar­i­ty of those films have intro­duced a lot of peo­ple to Wing Chung and

[01:19:53] CR: to the lega­cy of Yip Man and those sorts of things.

[01:19:56] CR: Any­way,

[01:19:56] TK: that?

[01:19:57] TK: It’s on

[01:19:57] TK: YouTube. Was it Tubi?

[01:20:00] CR: Tubi or No Plex is the one I’ve been

[01:20:03] CR: watch­ing a lot of stuff on and I think very sim­i­lar. They both have all

[01:20:06] CR: of the, you know, Stuff that you would have found in the back cor­ner of the VHS store back in the day, which are my go to movies. You know, like, there’s, uh, a lot of, like, and, and, both of them, and par­tic­u­lar­ly, I think, with Plex, a lot of very, when I look up these films, like, Very high­ly rat­ed films from the 40s and 50s and 60s.

[01:20:29] CR: Things with like 94 per­cent Rot­ten Toma­toes rat­ings that I’ve nev­er heard of

[01:20:34] TK: Yep.

[01:20:34] CR: You know, um, so I’m look­ing for­ward to mak­ing my way through those. Chris­sy and I start­ed watch­ing Like Water for Choco­late on the week­end, got about halfway through that. We have to fin­ish that, which I’d nev­er seen, which again was on Plex.

[01:20:48] TK: Ah, okay. Good movie.

[01:20:49] CR: You know, yeah, free ser­vices, they’re ad sup­port­ed, um, so you get an ad every 10 min­utes or some­thing. Um, uh, usu­al­ly it’s the same ad, because they obvi­ous­ly strug­gle to find adver­tis­ers for these things.

[01:21:05] CR: But any­way, lots of real­ly old Kung Fu movies, which is, which I’m enjoy­ing. And, and, and, and old things like, a lot of Roger Cor­man films.

[01:21:14] CR: Lit­tle Shop of Hor­rors, Dark Star, Can­non­ball,

[01:21:21] TK: on Tubi,

[01:21:21] TK: isn’t it? I’ll have to look it up. I love Dark Star. Yeah.

[01:21:24] CR: I final­ly watched Dark Star,

[01:21:26] CR: like, some­time in the last year, after hear­ing Taran­ti­no and peo­ple like that talk

[01:21:32] CR: about it? for years, uh, final­ly watched it. And absolute­ly loved it. Just what a, what a fun, fun sci fi film. And for peo­ple who don’t know, the guy who wrote it, um, Dan, Dan O’Ban­non, I

[01:21:49] TK: Mm hmm. Yep.

[01:21:51] CR: was one of the writ­ers of the first alien film that Rid­ley Scott made.

[01:21:55] CR: They took Dark Star and then turned that into, well, they sort of rebound­ed off that and

[01:22:00] CR: made the alien, wrote the alien film. So that was his biggest lega­cy. But yeah, Dark Stars, like the, the, the alien.

[01:22:08] TK: Yep.

[01:22:09] CR: There’s, yeah, like a beach ball. Yeah, that’s, like,

[01:22:13] CR: talk about low bud­get when your, your,

[01:22:16] CR: your, uh, uh, scary

[01:22:18] CR: alien mon­ster is a beach ball with eyes on it, goo­gly eyes or some­thing, but yeah, no, it’s real­ly fun, real­ly well done,

[01:22:26] TK: Well, my great regret is, um, I’m friends with some peo­ple in Syd­ney and we moved there. Just after Ron Cobb passed away, who was the oth­er con­trib­u­tor to Dark star

[01:22:35] TK: with um, Dan O’Ban­non. And he lived in Syd­ney and he was friends with these friends of mine. And they’re like, Oh yeah, we could have intro­duced

[01:22:43] TK: you.

[01:22:43] TK: We see him all the time.

[01:22:45] TK: It’s a

[01:22:45] CR: wow, yeah, there you go,

[01:22:50] TK: And the oth­er, oth­er link to what you’re talk­ing about was, um, I’m pret­ty sure Glenn Gould from Toron­to

[01:22:57] TK: and at the end of our street around the cor­ner was a lit­tle par­kette with a bench with his

[01:23:02] TK: plaque on it. He must have lived in the area or played in the

[01:23:06] TK: area or some­thing. Yeah.

[01:23:07] CR: Right. I’m very famil­iar with his, uh, a lot of his Bach inter­pre­ta­tions, but, um, Yeah.

[01:23:14] CR: lis­ten­ing to him play Brahms has been love­ly.

[01:23:17] TK: We’d

[01:23:17] CR: Hunter is off yeah.

[01:23:19] TK: No, go ahead.

[01:23:21] CR: Oh, I was just say­ing, my son Hunter’s off to New York to go to Fash­ion Week again tomor­row.

[01:23:25] CR: Um, hot off his, uh,

[01:23:28] CR: uh, mod­el­ling ses­sion

[01:23:30] CR: with me a week ago, so,

[01:23:31] TK: huh. You’ve pro­pelled him to New York, have you?

[01:23:35] CR: yeah, well, he’d already been there as the guest

[01:23:38] TK: you took your,

[01:23:39] CR: months ago, but

[01:23:40] TK: you took your invi­ta­tion and said, hey, I can’t make it, I’m doing QAV,

[01:23:43] TK: here, you go,

[01:23:45] CR: right. yeah,

[01:23:46] CR: you’d go with­out me this time. Um, so I’m about to go out to cof­fee with him and his broth­er, but, uh,

[01:23:52] TK: nice, say hi,

[01:23:54] CR: be fun. It’s his first trip over­seas by him­self. He’s been over a few times with

[01:23:58] CR: Tay­lor and some friends, but his first inter­na­tion­al trip by him­self to the Big

[01:24:03] CR: Apple. So that’s kind of excit­ing, I guess, for him.

[01:24:07] CR: And as a father, it’s always excit­ing when your kids are off hav­ing adven­tures like that. You feel, wow, look at that.

[01:24:14] TK: did you give him,

[01:24:16] TK: did you give him a list, like the Blue Note Cafe, or

[01:24:18] TK: the,

[01:24:19] TK: where did we go, to the cig­ar bar near

[01:24:20] TK: the

[01:24:21] TK: Carnegie Hall, yeah, yeah,

[01:24:24] CR: you know my sons well enough, Tony, that they’re not going to do any­thing that I, any rec­om­men­da­tions I

[01:24:30] CR: have, they will go 180 degrees in the oppo­site direc­tion. No, he’s going to be hang­ing out with shal­low mod­els. Talk­ing about cheek­bones and light­ing and cam­era angles and Tik­Tok and jazz clubs, cig­ar, you know, things, um, going to the Guggen­heim.

[01:24:52] CR: No, they’re not, no, he is not going to do any of those things. No,

[01:24:56] TK: the Met, yeah, okay,

[01:24:58] CR: not, not,

[01:24:59] CR: not until he gets a lit­tle bit old­er and wis­er and more mature, I

[01:25:02] TK: Yeah, well, true. I don’t think I was in New York when I was, what is he,

[01:25:05] TK: 24, 24, 23,

[01:25:08] CR: 23, in Octo­ber. They’ll be, yeah.

[01:25:11] TK: prob­a­bly would have done

[01:25:11] CR: I don’t know, man. Like

[01:25:12] CR: I

[01:25:13] CR: was 28 the first time I went to

[01:25:15] CR: New York

[01:25:15] CR: And the first thing I did was hit jazz

[01:25:17] CR: clubs. Like I could­n’t believe that I was going to these lit­tle jazz clubs and get­ting to see some, you know, world class jazz musi­cians. Play for play a set for an hour for like 10 bucks.

[01:25:31] CR: I’m just walk­ing in off the street. No book­ing. Just walk in, buy a mar­ti­ni, sit down and see these world class, uh, Lon­nie Smith. See Lon­nie Smith played the Ham­mond B3 in a lit­tle club, uh, near the Vil­lage Van­guard. It was at the Vil­lage Van­guard, actu­al­ly. Um, for like 10 bucks, you just walk in off the street.

[01:25:51] CR: Holy shit, Lon­nie Smith’s there with his tur­ban. Came up and shook my hand after­wards. Thanked me for com­ing to the gig. Like, you know, like

[01:25:59] CR: Any­way, that was, that’s my New York Muse­ums and Jazz. My kids don’t care about such things.

[01:26:06] TK: Yeah. Mine’s muse­ums as well. Um, I don’t think I went to Amer­i­ca until I was like well into my thir­ties. Late thir­ties prob­a­bly. I had no desire to go there as a younger

[01:26:15] TK: per­son. And part­ly it was expen­sive. Like the dol­lar was so

[01:26:20] TK: high com­pared to the Aus­tralian. But I just always want­ed to

[01:26:23] TK: go to Europe

[01:26:24] TK: before I went to the US.

[01:26:26] CR: Yeah. I want­ed to go to Europe too, but Microsoft did­n’t wan­na send me to Europe. They did­n’t want to take me to Micro take

[01:26:33] CR: me Amer­i­ca.

[01:26:36] TK: well, I went to Seat­tle. My first

[01:26:37] TK: trip to the U. S. was to Seat­tle with work.

[01:26:40] CR: real­ly? Which work.

[01:26:42] TK: How was mine?

[01:26:44] CR: Oh, you went there to go to Microsoft.

[01:26:46] TK: No, no, no. I went there to a world­wide direct mar­ket­ing con­fer­ence. Yeah,

[01:26:54] TK: with one of the mar­ket­ing peo­ple from Kmart. Um, and, you know, work­ing with Fly­buys and set­ting up a big cus­tomer mar­ket­ing data­base, blah, blah, blah. And, um, yeah, went across to Seat­tle. Go to the Strict Mar­ket­ing Con­fer­ence where I sort of learned

[01:27:09] TK: that the US was­n’t real­ly ahead of us on direct mar­ket­ing.

[01:27:15] TK: I remem­ber the keynote address was by a guy called

[01:27:18] TK: Seth. Oh, I’ve for­got­ten his

[01:27:20] TK: last name

[01:27:21] TK: now. I was going to say Gor­don, but is he

[01:27:24] TK: the

[01:27:24] TK: actor?

[01:27:25] TK: No.

[01:27:26] CR: No, he’s the, he’s The

[01:27:28] CR: Seth God­in’s The mar­ket­ing

[01:27:29] TK: Yeah. So he got up

[01:27:31] CR: cow, he

[01:27:32] TK: Yes, that’s the guy, Seth Godin. I met him and had a few beers with him after­wards, and, um, his address was enti­tled, Why Ama­zon is worth 400 a share, and it had just gone to 100 a share.

[01:27:44] TK: And this would have been 2000, I think. I think it fell all the way back to about

[01:27:49] TK: 13 a share at its low point after that. Um, but yeah, like it was, Seat­tle was

[01:27:55] TK: just in the grip of dot com

[01:27:57] TK: mania at the time.

[01:28:00] CR: I, speak­ing of New York, I spoke

[01:28:02] CR: at a, at a sem­i­nar in New York at the, um, at the Copaca­bana, I think it was, with Seth, uh, with Seth Godin. We were both speak­ing at the same event in

[01:28:16] CR: 2005, I think, in New York at the begin­ning of, uh, this was when I, uh, Uh, I was on stage talk­ing about pod­cast­ing and some­body asked, what’s the ide­al length for a pod­cast?

[01:28:26] CR: And every­one was say­ing five min­utes, 10 min­utes. And I said, it’s as long as it needs to be. And I said, you know, most of my pod­casts are at least one to two hours long. And every­one laughed and guf­fawed and said, no, one’s ever going to lis­ten to an hour long pod­cast. And I said, well, you know, they got a pause but­ton.

[01:28:43] CR: I said, how, I used to say, well, how long should a book be? It’s as long as you need it to be to tell the sto­ry, right? You can put a book down and pick it up. You can put a pod­cast down, pick it up. Every­one thought I was crazy. What’s the aver­age length of a pod­cast these days? They’re all an hour long.

[01:28:59] CR: I reck­on 99 per­cent of pod­casts are at least an hour long.

[01:29:02] CR: Bloody Lex Fried­man put out a pod­cast where he was inter­view­ing Elon and a whole bunch of peo­ple from Neu­ralink recent­ly. It was eight and a half hours long, was the pod­cast, because just like all of the inter­views tacked in, you know, it was one thing.

[01:29:15] TK: And acquired guys do four in the five hour pod­casts as well.

[01:29:19] CR: Do they? Real­ly? There you

[01:29:21] TK: Yeah. Well, it’s, that’s inter­est­ing. Like you were talk­ing before about ads and Tubi, I think it’s, you know, the stream­ers are becom­ing like broad­cast tv. Net­flix is, I think in some cas­es has ads. Ama­zon’s just start­ed with ads. They’re all gonna have ads.

[01:29:34] TK: I was on YouTube, like I, I’m strug­gling to find decent things to watch as to watch on the stream­ing. plat­forms, and our TV at Cape Schanck has YouTube as one of the options, so I went to that, and I mean, that’s got ads. Like the inter­rupter videos. Tell you what, I know you know a golfer, but there’s a fun­ny one out there.

[01:29:56] TK: So a golfer called Bryson DeCham­beau has been, is one of the, I guess, prob­a­bly one of the first big influ­encers for golf, like has been post­ing for a long time on Insta­gram, etc. Any­way, he’s got a, um, a series where he tries to break 50 on a golf course. So it won’t mean much to you, but that’s a very, very good score.

[01:30:18] TK: But he’s known for being a guy who can hit the ball 350 yards, you know, so, and they play from the front tee, so it brings all of the holes into his abil­i­ty to hit them, the greens in one. Any­way, long sto­ry short, I was watch­ing one night, and he’s play­ing with John Daly, and it’s hilar­i­ous. So John Daly is a, Looks like Father Christ­mas now.

[01:30:40] TK: He was a, he was the kind of Bryson DeCham­beau from about in the 90s where he used to be able to dri­ve the ball fur­ther than any­body else and he’s always been a larg­er guy and he’s larg­er than life and he dri­ves around in his own, he’s got, you know, his knees are gone now so he can’t walk a golf course so he takes his own golf cart and he lifts the hood and it’s full of vod­ka ton­ic.

[01:31:01] TK: drinks and he that’s his warm up so he has three or four of those to warm up and plays them bare feet and just starts to sing coun­try and west­ern tunes it’s com­plete­ly off his

[01:31:13] TK: face the whole way around and it’s hilar­i­ous just to watch that youtube clip so

[01:31:18] TK: even though you don’t like golf it’s fun to watch

[01:31:22] CR: Yeah. Well, I feel the same way about the stream­ing net­works. I’ve unsub­scribed from most of them now.

[01:31:29] CR: Um, the cou­ple that we’ve got is most­ly for Fox to watch

[01:31:32] CR: stuff. But for me, it’s all about Plex and Tubi. Watch­ing all of these films from the 40s, 50s. The Mag­nif­i­cent Amber­sons, I’ve been re watch­ing. I haven’t

[01:31:42] TK: haven’t seen that. I haven’t seen it.

[01:31:44] CR: Chris­sy and I went and saw a screen­ing of it at, um, the, what­ev­er, the GOMA here,

[01:31:53] TK: yeah.

[01:31:55] CR: 15 years ago, um, but, uh, I did­n’t remem­ber much about it, so I’m re watch­ing it and, um, you know,

[01:32:03] CR: famous­ly, you know, the, the, the edit was tak­en away from Orson because he was down in Mex­i­co shoot­ing a doc­u­men­tary, um, and he kind of dis­owned it, but it, it, you know, Because it got, they, they reshot some stuff and he was­n’t hap­py with it.

[01:32:19] CR: But it, he did believe at the time it was his, uh, great­est film. It was bet­ter than Cain. And it’s sort of, even though it was butchered, peo­ple still today say it’s prob­a­bly a mas­ter­piece. And, uh, yeah, I’ve been real­ly enjoy­ing watch­ing it again. Like, it’s a ter­rif­ic sto­ry. Um, I real­ly enjoyed it. I remem­ber real­ly enjoy­ing it the first time I saw it.

[01:32:41] CR: So any­way, stuff like that, that, you know, just great clas­sics that, um, I real­ly should see before I die.

[01:32:49] TK: Yeah. I’m won­der­ing whether, like, I’m close to can­celling all my stream­ers too, but I won­der if we’re in a bit of a lull because of the Riot­ers strike. Was it last year? And, you know,

[01:32:59] TK: they’ll improve again. But for a while there, like, I could­n’t wait

[01:33:02] TK: to watch Get Back and

[01:33:04] TK: stuff like that that were being released all at once.

[01:33:06] TK: And now there’s been

[01:33:06] TK: noth­ing for the last 12 months or so.

[01:33:09] CR: Yeah. I fig­ure if some­thing, if I hear some­thing good comes in, it’s must watch, I can get a sub­scrip­tion for a

[01:33:14] CR: month and

[01:33:15] CR: watch it and then turn it

[01:33:16] CR: off, right? I’m not just going to keep it

[01:33:17] TK: Good point. Yeah.

[01:33:19] CR: all year.

[01:33:21] CR: Alrighty, got­ta go TK,

[01:33:23] TK: hi to the boys.

[01:33:24] CR: time out, Say hi to Alex, I will, and

[01:33:27] TK: We’re going to hang out for a while now. Have some din­ner.

[01:33:30] CR: love­ly.

[01:33:31] TK: Hap­py ASX.