QAV 741 — Boringly Happy

QAV 741 Club

[00:00:00] CR: It’s QAV, TK. It’s episode 741. It’s the 8th of Octo­ber 2024. How are you?

[00:00:18] TK: Good. 8th of Octo­ber. 8th of Octo­ber. Where have I heard that

[00:00:22] TK: before? Any­way. I’m well. I was

[00:00:25] CR: of the 7th of Octo­ber.

[00:00:27] TK: I am.

[00:00:27] TK: Yes.

[00:00:28] CR: of Octo­ber. Yeah.

[00:00:29] TK: The day after.

[00:00:31] CR: Not that there’s been, not that there’s been any men­tion of the, uh, 7th of Octo­ber in, uh, the Aus­tralian media in the last week.

[00:00:40] TK: Yeah. And, and, you know, high­ly rel­e­vant date to Aus­tralia. 7th of Octo­ber.

[00:00:45] CR: Yeah. Because

[00:00:48] TK: Oh, well, respon­si­ble for a lot of sales of news­pa­pers and adver­tis­ing on net­work news shows.

[00:00:55] CR: Yes, that, yeah. Uh, what have you been up to this week, TK?

[00:01:01] TK: Well, I mean, the rea­son why 7th of Octo­ber was high on my mind is I drove back from Cape Schanck yes­ter­day and tried to find some news oth­er than

[00:01:13] TK: about the 7th of Octo­ber.

[00:01:15] CR: Weren’t

[00:01:15] TK: seemed

[00:01:16] CR: from Cape Shake last week?

[00:01:18] TK: Yeah, so what hap­pened was, uh, I think it was about Thurs­day last week. So I had two hors­es run­ning at Flem­ing­ton on Sat­ur­day.

[00:01:26] TK: And then Lind­say Park, the sta­ble who trains them, invit­ed me to the Chair­man’s Club at Flem­ing­ton for a lunch on Sat­ur­day. So, uh, I said yes. Um, Jen­ny did­n’t want to go because she was, she’s got a, she’s at a board, a board meet­ing for Bank of Queens­land now, so she was doing all the pre read­ing for that on the week­end.

[00:01:46] TK: Uh, so I took Rud­dy and um, it’s a, it’s a long week­end. I think it’s a long week­end in Queens­land and New South Wales. Uh, so the flights were hideous­ly expen­sive, good on your Qan­tas. Do not have pulled pork on you. Crash your share price, you bas­tards. But, so I decid­ed to dri­ve down, which, which works for me because then I’ve got a car down there.

[00:02:05] TK: I can go and stay at Cape Schanck, Sabon, um, accom­mo­da­tion and, uh, pick up Rud­dy on the way down and, um, have a nice five hour, six hour, sev­en hour chat with him down and back. A lot of fun. And we went to the races and, um, the hors­es did­n’t do very well, but we had a nice lunch. Rud­dy and I, uh, picked a quad­die, so we won a lit­tle bit of mon­ey.

[00:02:28] TK: Um, which made it worth­while. Uh, yeah. So it’s been nice, fun week­end.

[00:02:34] CR: I had break­fast with my boys on Sun­day and Tay­lor said, I spoke to Mark, he’s with Tony again. You know, I swear Tony spends more time with Mark than he does his wife.

[00:02:44] TK: Oh, well he is offi­cial­ly wife num­ber two.

[00:02:47] CR: Yeah, he’s your Ray. Yeah, he’s my

[00:02:49] TK: Oh, okay. Yeah. Wife num­ber two. I, I’d tell you that one day, it’s when Alex was in pri­ma­ry school, she told the teach­ers that dad­dy had two wives.

[00:03:00] CR: Wow. if you were in Utah No one would

[00:03:04] TK: I know.

[00:03:05] CR: but,

[00:03:06] CR: uh, in Cana­da? No? It was in Cana­da

[00:03:09] TK: I was

[00:03:10] TK: in, no, I was in Mel­bourne.

[00:03:11] CR: Oh, right.

[00:03:12] TK: Yeah.

[00:03:13] CR: Well, that’s nice. It’s nice to have a long friend, long time friend like

[00:03:18] TK: It is. We get on so

[00:03:19] TK: well. And he’s such a nice per­son to be around.

[00:03:23] CR: I’ve been read­ing lots of arti­cles in The Fin today on, I think it was The Fin or the ABC, about, um, the ben­e­fits of giv­ing up alco­hol, not drink­ing. The CEO who said he’s been off booze for 15 years and he’s glad and all the oth­er good ben­e­fits of giv­ing up booze, there’s like a thing going on at the moment in the media.

[00:03:43] CR: It’s like a push to get peo­ple to stop drink­ing.

[00:03:45] TK: Well, you know, trend­set­ter. Well, Rud­dy was the, Rud­dy was the trend­set­ter. He, he, and did typ­i­cal­ly, Rud­dy stayed off for three months and now he’s back on. So he got the ben­e­fit of the free booze at Flem­ing­ton on Sat­ur­day. I just had to sit there and watch him. Yeah. He was drink­ing whiskey sours, which smelled great, but I don’t get to have

[00:04:04] TK: any.

[00:04:05] CR: It’s

[00:04:06] TK: Only because I chose to. I could have if

[00:04:07] TK: I want­ed to.

[00:04:08] CR: yeah, it was like My folks when they both decid­ed to give up. My dad decid­ed to give up smok­ing and my mom said, well, if you quit, I’ll quit. And then he start­ed again after six months and she did­n’t. And he died of lung can­cer and she’s still going 20 odd years lat­er, 23 years lat­er.

[00:04:22] CR: Yeah. Fit

[00:04:23] TK: Women are so much bet­ter

[00:04:24] TK: than men, aren’t they?

[00:04:26] CR: They are. Yes. The soon­er we’re, the soon­er the coun­try and the world is run by women, I think the bet­ter off we’ll all be. Well, speak­ing of men, because I don’t have a sto­ry about a woman yet, although we do have the Bank of Queens­land com­ing up and we can talk about your wife on the board if you want, but prob­a­bly we should­n’t.

[00:04:44] CR: Um, rem­i­nis­cences, I don’t, I’ve got noth­ing for the show this week, as you know, I said to you this morn­ing, got noth­ing, no show notes. Piece togeth­er a cou­ple of things, but it’s been a qui­et week. I mean, the mar­ket is just kind of kick­ing along, noth­ing’s going on. I looked for sto­ries on our com­pa­nies and could­n’t find much, but found a cou­ple of things.

[00:05:05] CR: But I thought I’d start with a quote from Rem­i­nis­cences of a Stock Oper­a­tor. Which I’ve been read­ing through this week, bits and pieces. Got a cou­ple of quotes here I liked. This one, The spec­u­la­tors dead­ly ene­mies are Igno­rance, greed, fear, and hope. I feel like I should say this in a Yoda voice. Mmm.

[00:05:24] CR: Dead­ly ene­mies of spec­u­la­tors there are. Igno­rance, greed, fear, and hope. All the statute books in the world and all the rules of all the exchanges on Earth can­not elim­i­nate these from a human ani­mal. That’s not very good Yoda. Mmm. Mmm,

[00:05:41] TK: No, I thought it was pret­ty good. Well, you know, so the, isn’t the pup­peteer who did Yoda, did­n’t he die? Maybe they’re

[00:05:48] TK: look­ing for a replace­ment.

[00:05:49] CR: Frank,

[00:05:50] CR: Frank Oz. So did he die? Oh, that’s

[00:05:53] TK: One of them did.

[00:05:55] CR: I think it turned into Fozzie Bear, who I think was

[00:05:56] CR: also Frank Oz too. I can’t remem­ber if it was Jim Hen­son or Fozzie Bear. Um, yes. Igno­rance, greed, fear, and hope, which we try and avoid at all costs.

[00:06:11] TK: Yeah, exact­ly. I’ll nev­er pro­fess not to be igno­rant. I am con­stant­ly remind­ed of that one every day, but um, uh, Try not to hope, the trust in hope is a real­ly bad busi­ness plan. That was a

[00:06:27] TK: say­ing I always liked.

[00:06:28] CR: Yeah. Hope’s not a strat­e­gy is what I used to tell

[00:06:30] CR: my clients when I was a

[00:06:32] TK: Yeah, yeah,

[00:06:34] TK: that’s right, I’d rather rely on the stats. Yeah, um, and fear and greed, we try

[00:06:39] TK: and, try and elim­i­nate that by hav­ing a sys­tem.

[00:06:42] CR: And the sys­tem tries to elim­i­nate igno­rance too. I mean, we’re try­ing to get hard data on the com­pa­nies and bas­ing our deci­sions on hard data. The sec­ond one was, The suck­er has always tried to get some­thing for noth­ing. And the appeal in all booms is always frankly to the gam­bling instinct aroused by cupid­i­ty and spurred by per­va­sive pros­per­i­ty.

[00:07:07] CR: Peo­ple who look for easy mon­ey. Invari­ably pay for the priv­i­lege of prov­ing con­clu­sive­ly that it can­not be found on this sor­did earth.

[00:07:16] TK: You can tell that book was writ­ten in the 1920s, can’t you?

[00:07:20] CR: Heh heh

[00:07:21] TK: can you define cupid­i­ty for me?

[00:07:23] CR: No, I did­n’t even

[00:07:24] CR: get around to look­ing it up, but, uh, yeah. Cupid­i­ty, I mean, I am famil­iar with the word, but,

[00:07:31] TK: shoot­ing arrows through your heart or

[00:07:32] TK: some­thing, is it?

[00:07:34] CR: Avarice,

[00:07:35] TK: Mmm,

[00:07:36] CR: anoth­er word for greed, yeah.

[00:07:39] CR: Um, yes, but, you know, I think, I have to, you know, remind myself of that on a reg­u­lar basis when I look at booms in the mid­dle of booms and things going up. The suck­er has always tried to get some­thing for

[00:07:54] CR: noth­ing, and it’s what you see with, you know, Whether it’s Bit­coin or whether it’s, you know, the Mag7 or After­pay or what­ev­er it is.

[00:08:05] CR: It’s that per­va­sive pros­per­i­ty that you see all around you and you go, I want a piece of that. You get FOMO, but, uh, yeah, it’s the some­thing for noth­ing.

[00:08:17] TK: Yeah,

[00:08:18] TK: the quick, quick FOMO you get.

[00:08:20] CR: Yeah.

[00:08:21] TK: Yeah. Like, should­n’t you have FOMO? Should­n’t you have a fear of miss­ing out on the slow build of invest­ing? You know, using a sci­en­tif­ic approach sta­tis­ti­cal­ly proven over hun­dreds of years. You know, should­n’t you have FOMO for that?

[00:08:38] CR: yeah,

[00:08:39] TK: case you can always start and do it, but no, you have FOMO because you think you’ve got to act quick­ly.

[00:08:45] TK: And jump in because it might not, because it, it might not be there tomor­row, and isn’t that just telling you, if it’s not going to be there tomor­row, you may not want to get into it today.

[00:08:55] CR: I think, we’re impa­tient, we want quick, quick gains, and it’s like weight loss, like is it bet­ter to lose weight slow­ly but con­sis­tent­ly by chang­ing your diet and eat­ing less, or by just tak­ing a drug like Ozem­pic, which is now in Aus­tralia, I believe,

[00:09:15] TK: Mm hmm.

[00:09:16] CR: in the US.

[00:09:17] TK: Big in

[00:09:18] CR: going to change my Is it real­ly?

[00:09:20] TK: Oh Yeah.

[00:09:20] TK: Big in the east­ern sub­urbs.

[00:09:22] CR: I’m not going to change my lifestyle or my mind­set or my habits or my dis­ci­plines. I’m just going to take a drug. Quick fix.

[00:09:30] TK: Yeah,

[00:09:31] CR: Noth­ing can go wrong with that.

[00:09:33] TK: lipo­suc­tion. We should call all these things lipo­suc­tion of the mar­ket. A quick

[00:09:38] TK: fix.

[00:09:42] CR: It’s suck­ing the fat out of your bank account. And

[00:09:47] TK: Cut­ting for­ward, tak­ing some mus­cle too, I

[00:09:48] TK: think, in some cas­es.

[00:09:50] CR: yeah, well, I’ve lost it. I’ve lost a bit of that with my diet. I’ve just

[00:09:53] CR: been talk­ing to one of the guys at train­ing who, Um, used to run a gym and we’re buy­ing some pro­tein pow­der in bulk togeth­er because I need to get more pro­tein. I’m strug­gling on the sort of low calo­ries that I’m eat­ing every day to get enough pro­tein to stop my body, you know, attack­ing the pro­tein for calo­ries.

[00:10:15] CR: So I need to be build­ing it up.

[00:10:17] CR: It’s

[00:10:18] TK: And there’s, does pro­tein pow­der have calo­ries or is it delib­er­ate­ly

[00:10:22] TK: a low calo­rie way of get­ting pro­tein? Mm

[00:10:25] CR: a whey because it’s made of whey. Uh, most of them, uh, whey pro­tein. And we have a lot of whey in the house because Chris­sy makes yogurt. A cou­ple of times a week. And the whey is a by prod­uct of mak­ing yogurt. And we use that whey, I use it in my sour­dough instead of water. We use it in smooth­ies, like the one she just brought me.

[00:10:42] CR: This has been made with whey instead of water. We use it in all sorts of stuff. Uh, she uses it in fer­ment­ing her sauer­kraut, but, um, In order to get my dai­ly quo­ta of pro­tein from Liq­uid Whey, I’d need to drink three litres of Liq­uid Whey. So the pow­dered ver­sion is, uh, more effi­cient. No, there’s calo­ries in it, but it’s, it’s fair­ly low calo­rie.

[00:11:05] CR: Like, if you get the good stuff, it’s, there’s no filler in it. It’s just most­ly whey pro­tein. They’re, they’re often flavoured, which bas­tardis­es it a lit­tle bit, but yeah. It’s a, it’s a more calo­rie effi­cient pro­tein. Uh, process for get­ting pro­tein, I think. Uh, mov­ing right along, Tony. Toby

[00:11:25] TK: well you can’t, hang on, you can’t real­ly, you can’t real­ly attack the, the richie rich­es of the east­ern sub­urbs for tak­ing your Ozem­pic while you’re sit­ting there suck­ing on your whey pro­tein shake. Just have a steak.

[00:11:37] TK: Isn’t that the solu­tion? Diet and exer­cise?

[00:11:40] CR: I’m eat, I can’t afford the calo­ries of enough steaks to get enough pro­tein.

[00:11:45] TK: So there’s, so there’s less calo­ries in whey but more

[00:11:48] TK: pro­tein than hav­ing a steak.

[00:11:51] CR: the den­si­ty of it, yeah. I mean I eat, so, my diet at the moment is a lot of boiled eggs, um, grilled or roast­ed chick­en, spinach, and cot­tage cheese. Which are all high pro­tein sources. And I, that’s pret­ty much the large chunk of my diet along with nuts and fruits and a lit­tle bit of my whole grain bread and that kind of stuff every day.

[00:12:14] CR: But, and I have a cof­fee in the morn­ing with, which has some milk in it, like a lat­te in the morn­ing. But, you know, I’m sup­posed to be get­ting about 150 grams of pro­tein a day, even with all of that pro­tein, I’m get­ting 60 to 70 grams of pro­tein a day. Um, yeah, so

[00:12:33] TK: that’s healthy? Who’s, who’s telling you need that much pro­tein?

[00:12:38] CR: You

[00:12:40] TK: okay. The Ora­cle, the Ora­cle’s telling you. Did I, did I tell you my Chat­G­PT sto­ry from last week? I should,

[00:12:51] CR: told me one last week, but I don’t know if there’s anoth­er one.

[00:12:54] TK: there’s anoth­er one. I should go on the Futur­is­tic Pod­cast with me. So when you

[00:12:57] TK: ask me what inter­ac­tion with tech­nol­o­gy have I had this week, I can tell you the sto­ry.

[00:13:02] TK: Yeah. So, so for a long time, I’ve, I’ve strug­gled to, to adopt the Kel­ly cri­te­ri­on, um, to invest­ing, which we’ve spo­ken about before. Um, in a nut­shell, it’s about putting, uh, more, more assets into the most pro­duc­tive use of those assets. Um, but as a math­e­mat­i­cal for­mu­la for it, it’s sum­ma­rized by what’s called edge over odds.

[00:13:24] TK: So your edge is your edge. It’s like how much bet­ter than the mar­ket are you doing? And your odds are what kind of return do you expect from it? Um, but I’ve always, I’ve always strug­gled to actu­al­ly use it. in real life. And, um, you know, the stan­dard response when I’ve spo­ken to peo­ple who, who pro­fess that, you know, so what a good thing it is, is, oh, you haven’t cal­cu­lat­ed the odds right, or you haven’t cal­cu­lat­ed your age right, or what­ev­er, what­ev­er.

[00:13:49] TK: And they’re prob­a­bly true. Any­way, so I thought, bug­ger it, I’ll ask Chat­G­PT. So I spent quite a bit of time with Chat­G­PT going through the process of how can I use the Kel­ly cri­te­ria to invest in the stock mar­ket. And, um, you know, I said, tell me what the for­mu­la is, tell me what the edge is, tell me what the odds are, etc, etc.

[00:14:08] TK: Any­way, long sto­ry short, she gave me a for­mu­la, and I applied it. Like, look, we were work­ing through three exam­ples. I said, here’s three stocks, here’s their, their, um, Char­ac­ter­is­tics, which one should I, how much should I put into each one as an invest­ment? And I knew one of them should be reject­ed. And she came back with this cal­cu­la­tion, and I went, hang on, that’s, yeah, that does­n’t sound right, because you’re, you’re telling me, based on that for­mu­la, to put more of my port­fo­lio into a stock which is going to have a low­er return and she’s like oh yeah well okay and I went back and I said how about instead of in sum­ma­ry it was basi­cal­ly you’re putting the growth and the earn­ings per share over um the return you expect right um so she said

[00:14:56] TK: put the growth it was I keep call­ing Chat­G­PT she

[00:15:00] TK: only

[00:15:00] CR: going to men­tion

[00:15:01] TK: are smarter

[00:15:02] TK: but uh but no Chat­G­PT said

[00:15:04] CR: Do you have a female voice? Oh, you’re not using the voice, you’re typ­ing, right? Yeah. Okay.

[00:15:08] TK: Yeah, I’m typ­ing.

[00:15:09] TK: Yeah, the check sheet PT said, put the growth in the earn­ings per share over the stock price. And that’s when I said, well, you know, if it’s a high stock price, even if the growth’s high, um, it’s, you know, it’s not gonna work out if it’s a, then com­pared to if it’s a low stock price and the stock price should be real­ly irrel­e­vant.

[00:15:28] TK: ’cause like, it’s, it’s a fac­tor of how many shares are on issue and how much the mar­ket cap is not, you know, what are the things valu­able or not. So I said. How about I put, um, the growth and earn­ings per share over the P E ratio? So in oth­er words, if some­thing is cheap and it’s grow­ing a lot, it should get more of my port­fo­lio.

[00:15:47] TK: And she came back and said, yeah, yeah, yeah, you could do that. Um, that would, that would suit the val­ue investor. And like, but it was, it was like about an hour’s iter­a­tion where I sort of, I did­n’t want to tell her that was the, the answer. I want­ed her to con­firm it. And even­tu­al­ly she said, yeah, you could do that.

[00:16:03] TK: It’s not stan­dard, but it’s basi­cal­ly what’s called the peg ratio that Peter Lynch

[00:16:11] CR: P.

[00:16:11] TK: made the Lynch, yeah, made the Lynch of invest­ing and like Chat­G­PT was just like dis­miss­ing it as, yeah, you could do that, like this kind of hare­brained scheme that I could do if I want­ed to, but just because I did­n’t come out and say, it’s the Peter Lynch for­mu­la.

[00:16:28] TK: It’s a cor­ner­stone of invest­ing. She did­n’t, she did­n’t kind of like embrace it as being a good thing to do. Any­way, that’s my, that’s my, uh, involve­ment with Chat­G­PT. I just taught her how to invest, but she did­n’t agree with it.

[00:16:40] CR: Which ver­sion of Chat­G­PT are you using this week?

[00:16:44] TK: Well, I start­ed off with the cur­rent one, but it lim­its me to a cer­tain num­ber of ques­tions and then it drops back to the old­er free ver­sion. Is it 4. 0, I

[00:16:52] TK: think? Is that the one you start with?

[00:16:55] CR: Um, yeah, I’m not sure which one’s the free one now and which one’s not, but you weren’t using the PhD lev­el one, 01.

[00:17:03] TK: No.

[00:17:06] CR: Yeah, using, it’s like using a two year old ver­sion of Chat­G­PT and it’s like,

[00:17:11] TK: Okay.

[00:17:13] CR: yeah, got­ta use the lat­est one if you want the best results, man. I’ve been using

[00:17:16] CR: it over the last week to try and Turn the check­list into code. Um, the goal is to get to a point where I just press a but­ton and it down­loads the Stock Doc­tor check­list or the Stock­o­pe­dia check­list, runs all the cal­cu­la­tions and gives me a buy list.

[00:17:37] TK: Right.

[00:17:37] TK: The app we’ve always been talk­ing about.

[00:17:41] CR: So I’ve start­ed build­ing, um, that I’m about halfway through it. Um,

[00:17:47] TK: But did­n’t we have a

[00:17:48] TK: lis­ten­er who made a ver­sion of that for

[00:17:50] TK: us

[00:17:51] CR: yeah, there’s a cou­ple, um, cou­ple of dif­fer­ent peo­ple have built a cou­ple of dif­fer­ent things. Yeah, that they’ve got, but I’m, I’m build­ing my own.

[00:18:01] TK: Right. So you’ve got two work­ing ver­sions, but

[00:18:04] TK: you’ve got to do your own. Okay. Okay.

[00:18:08] CR: well, I, I want a ver­sion where I under­stand the code and I, you know, I know the code. Yeah. So it’s my code, not some­one else’s code. If some­one else’s code, you need to go, Hey, can you

[00:18:20] CR: change this or fix that? Or, you know, mod­i­fy this. So I want to have a ver­sion that I own.

[00:18:27] TK: So you have a job for life when I say, Hey, can you check this out and mod­i­fy it?

[00:18:35] CR: Uh, any­who, um, yeah, that’s been fun. It’s been fun, um, explain­ing to GPT how QAV works, uh, at this lev­el and, you know, get­ting it to, um,

[00:18:48] TK: Did you have an opin­ion about it? Did you say, did you say that’s

[00:18:51] TK: fan­tas­tic? I’m going to teach the world how to

[00:18:54] TK: invest.

[00:18:55] CR: did,

[00:18:56] TK: she, see, I’m using the polit­i­cal­ly cor­rect term. Pro­nouns Call it. She,

[00:19:02] CR: Wow. I

[00:19:04] TK: it did­n’t have a

[00:19:04] CR: basi­cal­ly, it’s basi­cal­ly a slave that does what­ev­er

[00:19:07] CR: you tell it to do and you think call­ing it she is, uh, polit­i­cal­ly appro­pri­ate? I don’t know. I think

[00:19:13] TK: that’s not how I view chat. GPT.

[00:19:15] CR: No?

[00:19:16] TK: No, it’s the, it’s the ora­cle. It’s when I don’t know how to do some­thing. I ask

[00:19:20] TK: Cha GPT

[00:19:20] CR: said how dumb it was that you had to teach it slow­ly how to, you had to mansplain a peg ratio to it.

[00:19:31] TK: Exact­ly. Yeah,

[00:19:33] CR: Wow.

[00:19:35] CR: And I hope Jen­ny does­n’t hear this.

[00:19:37] TK: Uh, what a great, I’m not get a T‑shirt print­ed. I have mansplain­ing

[00:19:41] TK: check. GPT

[00:19:43] CR: Yeah. Can I move on to WAF now?

[00:19:46] TK: Yeah, go ahead.

[00:19:48] CR: WAF. Toby sug­gest­ed

[00:19:49] TK: I’m fill­ing you, because you said this morn­ing, I’ve got no con­tent today, so I’m

[00:19:53] TK: fill­ing.

[00:19:53] CR: you’re feel­ing, this is you tap danc­ing. Yeah.

[00:19:57] TK: And

[00:19:57] CR: Tony tap dance. There’s the title for the episode.

[00:20:01] CR: Tony tap

[00:20:01] CR: dances.

[00:20:02] TK: No, mansplain­ing GPT. That’s the,

[00:20:05] TK: that’s the total.

[00:20:07] CR: Uh, I can put that down. Um, Toby sug­gest­ed we talk about. West African Resources. Is that what WAF is? West African Gold, West African Resources. Can’t remem­ber what the full name is. West African Resources Lim­it­ed. Uh, took a big, had a big plunge the oth­er day. Very, very sort of abrupt plunge. And read­ing through the news, it comes down to pret­ty much every time you’ve ever talked about West African Resources on the show over the last five years.

[00:20:38] CR: The two words that always come out of your. Mouth, uh, Sov­er­eign Risk, Sov­er­eign Risk when you’re deal­ing with these com­pa­nies that are trad­ing in places like Africa, or Burk­i­na Faso. As it is in this instance, so there was this issue, appar­ent­ly, um, accord­ing to WAF’s press release. On Octo­ber 5th, 2024, the pres­i­dent of Burk­i­na Faso, Pres­i­dent Tra­ore, spoke on Radio Burk­i­na about sev­er­al top­ics includ­ing cor­rup­tion, trans­port, agri­cul­ture, and min­ing.

[00:21:19] CR: Impor­tant­ly, with respect to secu­ri­ty, the Pres­i­dent spoke about the sig­nif­i­cant progress that is being made regain­ing ter­ri­to­ry from ter­ror­ist groups in the north and east of Burk­i­na Faso. The radio broad­cast raised ques­tions about the pos­si­bil­i­ty of the gov­ern­ment with­draw­ing min­ing per­mits. Now, as a result of that, the share price for West African resources quick­ly dropped.

[00:21:48] CR: For more UN videos vis­it From about a 1. 66 as it was on the 4th of Octo­ber down to a 1. 34. Has recov­ered slight­ly since then, because they go on to say, basi­cal­ly they’ve been in con­tact with gov­ern­ment offi­cials who basi­cal­ly said, Oh, he was­n’t talk­ing about you guys. You guys are fine. It was talk­ing about the cor­rupt min­ing com­pa­nies in Burk­i­na Faso.

[00:22:13] CR: Not you.

[00:22:16] TK: Do you take, do you take your lunch in a brown paper bag to a meet­ing like that with the gov­ern­ment offi­cials and min­ing licens­es and Burk­i­na Faso? Or do you not take it because you’re not, you don’t want to be the cor­rupt

[00:22:26] TK: one?

[00:22:28] CR: Right. Yeah. Yeah. I don’t know, Tony. So what do you think about all of this? Uh, I mean, I don’t think, I mean, I don’t hold Burk­i­na Faso. It’s not, um, I mean, West African

[00:22:41] CR: resources. I’m not respon­si­ble for Burk­i­na Faso. I’ve got, I, there’s no WAF in any of the QAV port­fo­lios or my port­fo­lios. What about you? Do you have it?

[00:22:52] TK: No, and I, I was kind of regret­ting I sold it. I think I sold it like maybe late last year, ear­ly this year, because the gold price had gone on a tear since then. Uh, but I don’t know. Yeah. But you know, I mean, a cou­ple of things, first of all. I know noth­ing about Burk­i­na Faso, and I don’t think many peo­ple in Aus­tralia do either.

[00:23:12] TK: I won­der whether West African resources shot them­selves in the foot when they put them­selves into a trad­ing hold after the, the head of Burk­i­na Faso made a speech about min­ing licences. Like, would any­one have noticed that it was an issue if they, did any­body in Aus­tralia hear about the speech of Burk­i­na Faso about, uh, about min­ing licences?

[00:23:32] TK: Ter­ror­ists and min­ing licens­es and cor­rupt min­ing. Any­way, I don’t know. But, um, it’s, it’s a case of noise dic­tat­ing the share price. I’m, I’m think­ing, I mean, the thing about com­pa­nies like Biki­ni, uh, like, uh, so I know you said it, like West African Resources that oper­ate in in that part of the world is that the fact that there’s sov­er­eign risk is already fac­tored into the share price and that’s why they often come on to our buy list because they’re cheap because there is a risk that the gov­ern­ment could do some­thing to not nec­es­sar­i­ly close the mine or it could bring in a new tax or it could bring in a pol­i­cy of rais­ing wages for the locals or some­thing like that so yeah well just as they could here I sup­pose but it’s prob­a­bly a lit­tle volatile.

[00:24:18] TK: Um, over there. Uh, so it’s in the price. If you look at the PE ratio of, um, West African resources, I can do that now and com­pare it to a gold min­er that’s, that’s min­ing in Aus­tralia, they’ll be on quite a dif­fer­ent num­ber. So the PE is, uh, 10 for West African resources. And what’s an Aus­tralian gold min­ing com­pa­ny?

[00:24:40] TK: Um, West Gold or some­thing like that oper­at­ing in WA. What’s the P ratio for that? Um, I’m just look­ing it up. Yeah, so West­co West Gold. Oh, okay. West Gold has­n’t, uh, has been delist­ed. Is there anoth­er West Gold? But it was on a P of 20 when it, when it was list­ed. WGX. Here we go. Sor­ry. WGX is still list­ed and it’s on a P of 18, so almost twice as much.

[00:25:12] TK: And that’s, and that’s the rea­son for it, because these things can hap­pen. Um, there is sov­er­eign risk, but it’s kind to me, it’s baked into the share price. Real­ly.

[00:25:21] TK: Do I know any­thing about it?

[00:25:23] TK: No.

[00:25:23] CR: Alright, let’s dive into Burk­i­na Faso, a fas­ci­nat­ing coun­try in West Africa that not enough peo­ple talk about. Pic­ture this, it’s a land­locked nation, tucked between coun­tries like Mali, Niger, Ghana, and the Ivory Coast. It’s got a pret­ty size­able area, about 274, 000 square kilo­me­tres, which is about the size of New Zealand.

[00:25:45] CR: And while it may not have beach­es, it’s rich in his­to­ry and cul­ture. The cap­i­tal is Oua­gadougou, a vibrant city that’s the polit­i­cal, cul­tur­al, and eco­nom­ic heart of the coun­try. Now, let’s hit the rewind but­ton a bit. Burk­i­na Faso Also You know, great band had a big hit in the 80s, was­n’t it? Wag­ga do do, stick your fin­gers up my nose, some­thing like that. It used to be called Upper Vol­ta, named after the three rivers that run through it, the Black, White and Red Vol­ta. It gained inde­pen­dence from France in 1960, but the coun­try real­ly start­ed mak­ing glob­al head­lines in the 1980s with Thomas Sankara. If you’ve nev­er heard of him, this guy was basi­cal­ly Africa’s Che Gue­vara.

[00:26:31] CR: Um, he became pres­i­dent in 1983 after a coup, and dur­ing his short time in pow­er, he pushed for mas­sive reforms. Sankara renamed the coun­try Burk­i­na Faso in 1984, mean­ing Land of the Upright Peo­ple, com­bin­ing words from two local lan­guages. The guy was all about shak­ing things up, wom­en’s rights, end­ing cor­rup­tion, improv­ing health­care, you name it.

[00:26:54] CR: Unfor­tu­nate­ly, Sankara was assas­si­nat­ed in 1987. And the coun­try’s pol­i­tics have been pret­ty tur­bu­lent since then. Burk­i­na Faso has gone through sev­er­al coups, the most recent being in 2022. Um, cul­tur­al­ly, Burk­i­na Faso is fas­ci­nat­ing. It’s incred­i­bly diverse, with over 60 eth­nic groups. The largest are the Mossi, who dom­i­nate the cen­tral region.

[00:27:17] CR: And despite the chal­lenges, Burk­i­na Faso has a vibrant artis­tic scene. Oua­gadougou is actu­al­ly known for Fes­pako, one of Africa’s biggest film fes­ti­vals. Burk­i­na They’ve got music, dance, and a thriv­ing film indus­try that punch­es above its weight. But today, though, the coun­try’s fac­ing some pret­ty tough chal­lenges.

[00:27:36] CR: The north­ern region has been deal­ing with grow­ing extrem­ism and con­flict, with groups linked to Al Qae­da and ISIS caus­ing unrest. This has cre­at­ed a human­i­tar­i­an cri­sis, dis­plac­ing hun­dreds of thou­sands of peo­ple. Burk­i­na Faso is one of the poor­est coun­tries in the world, with a large part of its econ­o­my based on agri­cul­ture, think cot­ton, live­stock, and sub­sis­tence farm­ing.

[00:28:00] CR: The coun­try is also a gold pro­duc­er, which has become increas­ing­ly impor­tant eco­nom­i­cal­ly. Despite these hur­dles, there’s a resilience in the peo­ple that’s almost infec­tious. You see it in their art, their music, their com­mu­ni­ties. Burk­i­na Faso might not grab the world’s head­lines all the time, but it’s got a sto­ry worth pay­ing atten­tion to.

[00:28:22] CR: So there you go. Every­thing you

[00:28:23] TK: Very good.

[00:28:24] CR: Burk­i­na Faso.

[00:28:26] TK: Yeah, I used to have a poster of a per­son in a, with a machine gun and a closed fist salute on the wall of the stu­dent union office when I was there. 1984.

[00:28:40] CR: Wow. Fan­tas­tic. Com­mies. Com­mie stu­dent unions. Joe would have loved you. So, I don’t know what else there is to say about WAF. As you say, it’s built in. Um, there’s always sov­er­eign risk when you invest in these

[00:28:57] CR: sorts of stocks. It’s just some­thing to be aware of.

[00:29:00] TK: When I did a pulled book on West African resources too, they list­ed, they pro­fessed and were at pains to talk about inte­gra­tion into the local area and soci­ety and how they, uh, all the, the mines were staffed by locals and how the con­di­tions were very, very good. Um, all of that kind of thing and how much they were pay­ing the local gov­ern­ment and roy­al­ties, et cetera, et cetera.

[00:29:21] TK: So they, at least on the sur­face, they looked like a good, A good cor­po­rate cit­i­zen, Burk­i­na Faso. So as they say in their press releas­es, chances are this might, this might actu­al­ly ben­e­fit them if they clean up the, some of the cor­rupt min­ing com­pa­nies in the area. Um, might be an oppor­tu­ni­ty for West African resources to expand.

[00:29:40] TK: Who knows?

[00:29:43] CR: All right. Uh, let’s talk about the Bank of Queens­land, Tony. Uh,

[00:29:50] TK: Hope­ful­ly I can.

[00:29:54] CR: there was an arti­cle a cou­ple of weeks ago in the finan­cial review. You did men­tion the, that the CEO was chang­ing things up there and that he thought the bank­ing indus­try in Aus­tralia need­ed to go through some mas­sive changes. They’re appar­ent­ly think­ing about buy­ing back all of their branch­es from their fran­chisees.

[00:30:16] TK: Uh huh.

[00:30:18] CR: But there was a sto­ry in, uh, the news this morn­ing that says that unhap­py fran­chise branch own­ers, uh, plan­ning on, uh, some sort of legal chal­lenge.

[00:30:36] TK: Okay.

[00:30:36] CR: They’re not hap­py with the price that the bank is offer­ing them. Says the own­ers of the branch­es are look­ing at legal action against Bank of Queens­land with help from BDO and account­ing and advi­so­ry busi­ness.

[00:30:47] CR: BDO is sug­gest­ing to the fran­chise branch own­ers that it can assist them to get a bet­ter price and give them legal and strate­gic sup­port. The AFR quot­ed from doc­u­ments that BDO sent to the branch own­er man­agers which said the bank’s deci­sion rais­es impor­tant con­sid­er­a­tions for fran­chise own­ers, par­tic­u­lar­ly regard­ing the val­u­a­tion of their busi­ness­es, the terms of their fran­chise agree­ments, and their future busi­ness.

[00:31:11] CR: BDO is look­ing to bring togeth­er all fran­chisees to strength­en their col­lec­tive bar­gain­ing pow­er and do inde­pen­dent assess­ments rather than just accept BOQ’s offer. I’m sure BDO is, um, doing this com­plete­ly gratis, and, um, they’re not mak­ing any mon­ey out of this

[00:31:31] TK: No.

[00:31:32] CR: With no ambu­lances being chased in the mak­ing of this deal at all.

[00:31:38] CR: Did

[00:31:40] TK: they rep­re­sent­ed the Mer­cedes Benz deal­er­ships who were being bought out by Mer­cedes Benz or, uh, AMP finan­cial plan­ners who were being Yeah, so, um, that is their busi­ness mod­el, or part of their busi­ness mod­el. And that’s fine. They’ve got expe­ri­ence at col­lec­tive bar­gain­ing on these kinds of cas­es.

[00:31:59] TK: Um, oh, I’ve got to be care­ful because I know, I don’t know a lot about what’s going on, but Ken­ny and I have talked about it. Um, noth­ing. Noth­ing that was­n’t freely avail­able in the press, as you’ve just read out, but, um, Uh, yeah, the back­ground is Bank of Queens­land feel the need to, um, end the fran­chise arrange­ments that they’ve been using.

[00:32:23] TK: And the his­to­ry of that is that, uh, there’s a thing called com­mu­ni­ty bank­ing where In the past when big banks were shut­ting down branch­es, par­tic­u­lar­ly in rur­al areas, these small­er banks, Bank of Queens­land being one of them, could go into a local area and say, well, if you can raise some funds and, uh, you know, you can prove a case that there’s enough busi­ness in the local area to sup­port a bank branch, then we’ll put half the mon­ey in or what­ev­er the deal is.

[00:32:53] TK: You raise half the mon­ey and then you’ll be the, you can employ a local to be the fran­chisee. And that’s how it oper­ates. And a few oth­er banks do that. The Bank of Queens­land have decid­ed that things are tough for small banks and that they need to, uh, take the oper­a­tion of those branch­es back in house.

[00:33:12] TK: I guess, I guess it’s a way of improv­ing their mar­gins rather than shar­ing them with the locals. And Jen­ny and I were just talk­ing about what’s called chan­nel realign­ment, which is a process that I went through when I was at Shell because we had a sim­i­lar sit­u­a­tion with petrol fran­chisees. So ser­vice sta­tion oper­a­tors tra­di­tion­al­ly would take out a lease and then oper­ate it them­selves and have a deal to pay your com­pa­ny a rent and then, um, Uh, you know, um, have an off­take agree­ment to take a, the fuel only from that par­tic­u­lar oil com­pa­ny on that ser­vice sta­tion.

[00:33:48] TK: Um, there, there’s a whole lot of oth­er issues there about who pays for the pumps and all that kind of stuff. Um, and then that was trans­ferred to a fran­chise arrange­ment, and then even­tu­al­ly the fran­chisees, uh, in the main ter­mi­nat­ed, um, as the oil indus­try got done. Small­er and small­er mar­gins, uh, and then, you know, the ser­vice sta­tions were, um, sold off en masse or leased off en masse to the super­mar­kets who, like Coles and Wool­worths, who oper­at­ed them for some of the oil com­pa­nies.

[00:34:15] TK: So, um, there was a process called chan­nel realign­ment, which is basi­cal­ly, uh, how do you get, you know, The peo­ple who are on leas­es to become fran­chisees, and then how do you get them to, um, sell their fran­chise back, you know, at, at the end down the track. And, and, you know, the, the busi­ness prac­tice, which, which, um, I was part of was you make it attrac­tive for them.

[00:34:35] TK: It’s got­ta, it’s got­ta be some­thing in it for them. So for exam­ple, if, uh, if a ser­vice sta­tion oper­a­tor was a lessee and their lease was­n’t up, but we want­ed them, uh, the shell, we being shell want­ed the, uh, lessee to become a fran­chise. Um. The fran­chise oper­a­tor, which was a dif­fer­ent deal, um, obvi­ous­ly you’d have to make the fran­chise agree­ment a lit­tle bit bet­ter, more attrac­tive for them than the old one, but you also did things like you nudged them towards the fran­chise agree­ment, for exam­ple, um, by hav­ing oth­er ben­e­fits to the fran­chise that was­n’t there for the lessee.

[00:35:09] TK: So things like, um, uh, accept­ing shell­card or fly­bys, that kind of thing, run­ning avail­able to the fran­chise net­work. And so, um, you know. Jen­ny said, yeah, we’re think­ing about things like that at BOQ to make it attrac­tive to end this sit­u­a­tion. So, um, my under­stand­ing is it’s a fair­ly, it’s a process which has been entered into and there’ll be nego­ti­a­tions and BDO is kind of, um, stick­ing their toe in and say­ing, uh, let’s, let’s all get the fran­chisees togeth­er and we’ve nego­ti­at­ed these things before and we’ll get you a bet­ter

[00:35:41] TK: deal.

[00:35:42] TK: So I think that’s where it’s at.

[00:35:45] CR: you watch Bet­ter Call Saul?

[00:35:47] CR: I think you did,

[00:35:47] TK: Yeah, first three sea­sons so

[00:35:49] TK: far. Yeah.

[00:35:50] CR: Oh, right. Does that get up to where he rep­re­sents the, uh Peo­ple in the old age home,

[00:35:57] TK: Yeah, that’s ear­ly on. Yeah.

[00:35:59] CR: it is, hmm,

[00:36:00] TK: yeah,

[00:36:01] CR: hmm,

[00:36:02] TK: Yeah. So, um, like, I think it’s very smart of the fran­chis­es at Bank of Queens­land not to accept the first offer that comes out of the par­ent com­pa­ny.

[00:36:10] TK: It’s com­mon sense. Yeah.

[00:36:13] CR: absolute­ly. Has­n’t been great, uh, on the share price, though we do hold them in one of the light port­fo­lios. The share price, uh, the end of Sep­tem­ber was trad­ing up around 6. 44, it’s sunk down to 6. 20 over the last week or two. So, it’s not doing well, um, the 3 point sell line for it now is 6.

[00:36:41] CR: 09. We bought it in July at 6. 14, as I said, 6. 20 now, and, uh, not that far from a 3 point sell. So, uh, yeah, hope­ful­ly they do some­thing about the share price.

[00:36:59] TK: They’re try­ing. I mean, you

[00:37:00] TK: don’t, you don’t sort of do things like, uh,

[00:37:03] CR: I don’t want their

[00:37:04] CR: excus­es!

[00:37:05] TK: your fran­chis­es if every­thing’s going swim­ming­ly.

[00:37:09] CR: Don’t want their excus­es! Just fix

[00:37:11] TK: No, fair

[00:37:12] CR: get it done.

[00:37:13] TK: Yeah.

[00:37:15] CR: Uh, that’s all I’ve got in my notes. Oh, I saw a few peo­ple have asked about the Stock­o­pe­dia, uh, using Stock­o­pe­dia as a data source. Um, uh, I am going to make a video hope­ful­ly this week, uh, now that I’ve got all the ser­vice stuff under con­trol, I think I’m going to make a video this week about the process that I fol­low for Stock­o­pe­dia and I’ll make that avail­able for peo­ple plus my check­list, et cetera, et cetera.

[00:37:43] CR: Um, I’ll do that before I turn it into code. Then I’ll turn it into code. That’ll be even cool­er. But you know, I’ll do this in the short term for peo­ple that want to look at Stock­o­pe­dia as an option to Stock Doc­tor. That’s it. That’s all I got. TK.

[00:37:59] CR: What do you

[00:38:00] TK: Okay, I’ve got a cou­ple of things, um, I’ve pulled pork to do on Adare’s ADH. And some quotes from what works on Wall Street from

[00:38:09] TK: O’Shaugh­nessy

[00:38:11] TK: So which one would you like first?

[00:38:13] CR: Yeah, let’s do the O’Shaugh­nessy stuff, I guess.

[00:38:15] TK: Yeah, okay. Okay, so, uh, last week I talked about, um, O’Shaugh­nessy’s research from, uh, tak­ing a data set from 1963 through to 2009.

[00:38:28] TK: Um, and then, uh, analysing things based on a met­ric and cre­at­ing deciles and look­ing at how the top decile com­pared to the bot­tom deci­bel. Decile and what­ev­er he was look­ing at. Last week we spoke about P ratios. The next chap­ter in What Works on Wall Street, Chap­ter 8, was about price to cash flow ratios.

[00:38:48] TK: I got­ta say, I could have saved myself a lot of time and effort by read­ing What Works on Wall Street about 20 years ago.

[00:38:56] CR: Yeah.

[00:38:56] TK: Any­way, um, So the chap­ter head­ing is Price to Cash Flow Ratios Using Cash to Deter­mine Val­ues. And he starts off the chap­ter by say­ing, Some investors pre­fer using price to cash flow ratios to find bar­gain price stocks because cash flow is tra­di­tion­al­ly more dif­fi­cult to manip­u­late than earn­ings.

[00:39:19] TK: I would hard­ly agree with that. In sum­ma­ry, 10, 000 invest­ed on Decem­ber 31, 1963 in the decile of stocks with the low­est price to cash flow ratio was worth 10, 187, 545. Dol­lars on Decem­ber 31, 2009, a com­pound return of 16. 25 per­cent a year, sig­nif­i­cant­ly bet­ter than the 1. 329 mil­lion you’d earn from the same invest­ment in the all stocks uni­verse, which had a CAGR of 11.

[00:39:54] TK: 22%. And just by way of explain­ing the All Stocks Uni­verse was kind of a sub­set of the index. It’s most of the index but he took out very small micro caps from his analy­sis because he argued that no one could real­ly buy them any­way. So, All Stocks Uni­verse, if I use that term again, means basi­cal­ly Pret­ty much the index.

[00:40:18] TK: Uh, he also found that large stocks under­per­formed. So large, this is a quote from, uh, Chap­ter 8. Large stocks are less prof­itable, less volatile. The orig­i­nal 10, 000 invest­ed in a decile of stocks with the low­est price to cash flow from large stocks in 1963, Grew to 3. 47 mil­lion at the end of 2009, a com­pound return of 13.

[00:40:41] TK: 56 per­cent a year. But that’s five times the 872, 000 you’d earn from 10, 000 invest­ed in the large stocks uni­verse, where the com­pound return was, uh, 10. 2%. Per­cent per year. So, um, I guess the, the sum­ma­ry of that, part of his analy­sis was that, uh, he we he was see­ing bet­ter returns in small­er cap stocks than larg­er cap stocks, although the larg­er cap stocks still out­per­formed the index and, um, def­i­nite­ly out­per­formed the, the high.

[00:41:17] TK: Uh, Price to Cash Flow stocks. And he says, as with the oth­er val­ue fac­tors, we see that stocks with high Price to Cash Flow ratios are usu­al­ly bad invest­ments. The 10, 000 invest­ed on Decem­ber 31, 63, in the deciles of stocks with the high­est Price to Cash Flow ratios from all stocks grew to just 48, 000 by the end of 2009, an aver­age annu­al com­pound gain of just 3.

[00:41:43] TK: 49%. So that’s.

[00:41:47] TK: Prob­a­bly equiv­a­lent to putting your mon­ey in the bank. Um, he goes on to say, Like many of our find­ings con­cern­ing pricey stocks with rich val­u­a­tions, focus­ing on the returns of large stocks with high price to cash flow ratios helps you under­stand why scru­ti­niz­ing long term results is the only way to under­stand the val­ue of a strat­e­gy.

[00:42:07] TK: This book first came out in 1996 and offered the same advice con­cern­ing high price to cash flow stocks, avoid them. Yet, if you read the book then and actu­al­ly watched your favourite stocks with high price to cash flow ratios in real time, you might have been inclined to think that while those types of stocks per­formed poor­ly his­tor­i­cal­ly, they were doing very well in the boom mar­kets of the late 1990s.

[00:42:33] TK: From the end of 1996 through to Sep­tem­ber 2000, when high price to cash flow stocks from the large stock uni­verse had their best 5 year per­for­mance, you would have seen the high­est price to cash flow stocks from large stocks gain near­ly 23 per­cent a year, com­pared to a gain of 18. 6 per­cent for large stocks in total.

[00:42:54] TK: The evi­dence from this book might have appeared to ring hol­low, yet if you under­stood the much more impor­tant long term data, you would have res­olute­ly avoid­ed them. And in so doing, miss get­ting near­ly wiped out over the fol­low­ing few years.

[00:43:09] CR: Mmm.

[00:43:09] TK: So anoth­er good point, you’re say­ing that yeah, some­times For a peri­od of time, the high PE stocks work, but then you get wiped out at the end.

[00:43:19] TK: That’s been my expe­ri­ence.

[00:43:20] CR: Yeah. And that’s what we expect to hap­pen with the, A por­tion of the Mag 7 stocks, any­way, we don’t know

[00:43:28] TK: it has to hap­pen. It has to hap­pen, right? At some stage, there’ll be a bump in the road and investors will flee. And because they’re on a high val­u­a­tion, they’ll drop like a stone.

[00:43:39] CR: Yeah,

[00:43:40] TK: Yeah.

[00:43:41] CR: yeah,

[00:43:43] TK: Yeah. So good stuff from Ocean Odyssey.

[00:43:45] CR: yeah, I remem­ber read­ing the book a few years ago and just think­ing, wow, this is QAV in a book.

[00:43:51] TK: Yeah,

[00:43:52] TK: exact­ly.

[00:43:54] CR: Yeah,

[00:43:55] TK: Yeah.

[00:43:56] CR: by the way, I just saw on our Face­book group, Gary asks, with the US dum­my port­fo­lio, are you going to rely on buys and sells to fund the port­fo­lio since div­i­dends are min­i­mal? Or maybe add funds on a time struc­tured basis.

[00:44:12] CR: For exam­ple, every three months, a bit like how a lot of us invest. Uh, no, I was­n’t plan­ning on adding funds to it, Gary. It’s like the Aus­tralian port­fo­lios, real­ly. It’s just, we start with an imag­i­nary amount of fixed cap­i­tal, 20, 000 usu­al­ly, and just invest it. All up until it’s all gone and then play it from there as it grows over time.

[00:44:37] CR: It’s just so we have a fixed start­ing point. It’s a lot eas­i­er to cal­cu­late the CAGR returns over one year, five years, 10 years, if it’s just a fixed amount of cap­i­tal that we’re play­ing with. So unless you have a dif­fer­ent idea, Tony, that’s all I’m doing with the

[00:44:51] TK: No, I agree. It’s the way to do it. And US stocks still do pay div­i­dends, they just don’t, um, favour them as much as Aus­tralian stocks. So there will still be div­i­dends com­ing into the

[00:45:00] TK: port­fo­lio from time to time.

[00:45:04] CR: All right. Pulled pork on ADH.

[00:45:07] TK: ADH, yes. So, um, any­one who’s been around for a long time will have seen ADH on the buy list, on and off, over the last five years, because it, it does, um, It tends to have a, uh, a val­ue, uh, kind of, uh, um, set of num­bers. Um, so it’s been around for a long time. I haven’t done a Pulled Pork before on it. And, uh, I mean, basi­cal­ly I haven’t done it because I don’t like the busi­ness is, is real­ly why I haven’t paid that much atten­tion to it.

[00:45:40] TK: Um, and it’s busi­ness his­tor­i­cal­ly has been, um, a cat­e­go­ry killer in a small cat­e­go­ry, which is Man­ches­ter and linen. Um, I guess what’s dif­fer­ent now, and which I guess caught my atten­tion recent­ly, is that it has branched out. into Fur­ni­ture as a bit of an adja­cen­cy or an exten­sion to what it does. So not only is it sell­ing you the bed­ding, it’s also now sell­ing you the bed.

[00:46:02] TK: Um, and uh, so they, so Adairs now owns two oth­er brands. Uh, Adairs is the name of their flag­ship net­work where you can go in and buy home­wares and, and cur­tains and bed­ding, et cetera, and, and fab­rics. Um, but they now own two oth­er brands. One’s called Focus on Fur­ni­ture and one’s called Mocha, and they’re both Fur­ni­ture Retail­ers, MOC is online only, Focus on Fur­ni­ture does have a store net­work.

[00:46:26] TK: So, um, they have expand­ed, uh, those two par­tic­u­lar busi­ness­es are mak­ing up more and more of the sales and prof­its for the com­pa­ny. So the com­pa­ny is, is chang­ing. Um, the oth­er thing which has hap­pened recent­ly is that, uh, they’re, they’ve hired a new CEO. That’s prob­a­bly what’s caught my atten­tion the most.

[00:46:45] TK: So, uh, A lady by the name of Elle Rose­by, who has been run­ning a large part of Coun­try Road, um, will start as the new MD slash CEO, uh, in 2020, ear­ly in 2025. Um, so that was kind of a cat­a­lyst, I guess, to go back and have a look at Adare’s. Um, as I said, store net­work, 170 stores in Aus­tralia and New Zealand, plus a fur­ther 23 focus on fur­ni­ture stores.

[00:47:14] TK: Uh, but inter­est­ing­ly enough, they have a very large online com­po­nent. I guess it got a boost dur­ing COVID, but online sales are now about 40 per­cent of the busi­ness. So, um, that the busi­ness has changed. I mean, it typ­i­cal­ly had the feel of a house­wife If you ever vis­it­ed the store, a house­wife going in and buy­ing things to, um, to tart up the house.

[00:47:38] TK: And so it was a fair­ly staid sort of busi­ness mod­el, but it has changed, I guess, over the, over the years. Um, and now that Elle Rose­by’s com­ing in, she’s made a name for her­self by refresh­ing Coun­try Road. And Coun­try Road, um, does have a home­wares divi­sion, which com­petes with Adare’s, so she prob­a­bly has expe­ri­ence in this area.

[00:47:57] TK: Uh, I found an AFR arti­cle. by a reporter called Car­rie LaFrenz from 17th of Sep­tem­ber this year, which says that over the past six years, L. Rose­ber­ry has dou­bled Coun­try Road­’s sales and quadru­pled its earn­ings. She expand­ed the kids and home­wares divi­sions and increased aver­age sell­ing prices. Two weeks ago, Wool­worths Hold­ings, which is the own­er of Coun­try Road, flagged its Coun­try Road brand was the only label in the group to post pos­i­tive sales growth last year.

[00:48:26] TK: So she’s a, she’s a fair­ly, a very suc­cess­ful retail­er and she starts in a cou­ple of months time. Um, his­to­ry of the busi­ness, uh, Adair’s goes back into the ear­ly 1900s. So it’s been around a long time. They opened a, one store on Chapel Street in Britain. Brann and Vic­to­ria in the ear­ly 1900s. They lat­er estab­lished them­selves as a small for­mat depart­ment store in Cam­ber­well and again focus­ing on retail­ing Man­ches­ter, Cur­tains, Ladieswear and Hab­er­dash­ery.

[00:49:00] TK: Some great old terms in that sort of space of the retail world, isn’t there? And they oper­at­ed that until 1979. And in 1981, the first incar­na­tion of a mod­ern Adair’s bou­tique was opened in Don­cast­er Shop­ping Town. Um, as the baton was changed to younger mem­bers of the Adair’s fam­i­ly. In 1984, uh, the, these, uh, mem­bers of the Adair fam­i­ly com­bined with anoth­er fam­i­ly called the McCain fam­i­ly to, um, to roll out the, uh, new Adair’s fran­chise and they opened anoth­er four stores in 84 all around, uh, Vic­to­ria.

[00:49:36] TK: Uh, in 86, the McLean fam­i­ly took major­i­ty con­trol of the busi­ness and expand­ed it theirs, uh, uh, to all the main­land stakes in Aus­tralia through till the two thou­sands. But in the 19, uh, sor­ry, 2007, the McLean fam­i­ly sold their major­i­ty stake in the busi­ness to BB retail cap­i­tal, which is, um, BB stands for blundy, one of the most suc­cess­ful retail­ers, uh, in Aus­tralia.

[00:50:03] TK: Uh, but in 2010, he then unsold Adairs to a pri­vate equi­ty firm called Cat­a­lyst, and, uh, they then in 2015 list­ed Adairs on the ASX, and there’s been, at least at that stage of, um, his­to­ry, there was a bit of a well worn path from PE firms Buy­ing retail­ers, strip­ping out the costs, um, uh, rely­ing on the cash flow to be able to gear them up and then list­ing them on the ASX and, you know, I’m think­ing of Myer when it was sold out of ColesMy­er and then flipped, um, Dick Smith, which is now, uh, bank­rupt, um, But there’s, it has­n’t been good for investors to buy these com­pa­nies off P.

[00:50:47] TK: E. when they get relist­ed. Um, P. E. is attrac­tive to these com­pa­nies for the same rea­son I am, that they have great cash flow. Um, and if they con­tin­ue to be well run, then they can sup­port a bit of gear­ing and, and, um, uh, they can be quite prof­itable. Uh, Adairs, Is trad­ing cur­rent­ly below what it list­ed at, uh, when in its IPO.

[00:51:11] TK: Um, it has trad­ed high­er, but it’s come back from that recent­ly by, by quite a bit. Um, I guess I might talk about the risks and oppor­tu­ni­ties at the MO at the moment. I’ve just cov­ered on, cov­ered off some of the risks there. Which is you’re buy­ing from PE, which often­times, you know, is not a good thing to do as they hol­low out the costs and load up the debt.

[00:51:34] TK: But it’s now a sig­nif­i­cant time since that’s hap­pened, and I think at least the cur­rent CEO has done a fair bit of work at sort of right siz­ing the busi­ness and expand­ing it. But at the moment, it’s not a big deal. Isn’t a great time to be in this kind of busi­ness because there’s tight dis­pos­able dol­lars so peo­ple are cut­ting back on their expen­di­ture in retail.

[00:51:55] TK: Although we’re see­ing from com­pa­nies like Myer that they’re start­ing to see a turn­around in spend­ing in depart­ment stores so that’s This might be a bit of a, um, chang­ing of the tide, so to speak. Uh, there, there’s cer­tain­ly sup­ply chain cost increas­es, which com­pa­nies like this are bat­tling, not just from infla­tion and wage increas­es, but of course, um, if they’re import­ing any­thing from over­seas, uh, the ship­ping costs are up, um, large­ly as a result of not being able to go through the sew­ers.

[00:52:24] TK: Canal and tak­ing longer to trans­port things inter­na­tion­al­ly. Um, I think it’s a huge risk, even though I think it’s an oppor­tu­ni­ty that there’s a new CEO com­ing in because we know, or I know from past expe­ri­ence, one of the things a new CEO is like­ly to do is to, is to take a lot of write downs in their first year.

[00:52:43] TK: Um, some­times the mar­ket looks through that for what it is, which is the CEO know­ing that they only have one chance to put a broom through the place and do all the tough stuff in the first year. Um, and it, I can be a lit­tle bit, um, cyn­i­cal and say it’s also a chance for them to low­er the entry price for their stock options.

[00:53:03] TK: Um, by low­er­ing the share price at the start, and there­fore that, you know, in five years time, this per­son might get some equi­ty in the com­pa­ny or might decide to leave and it’s going to be a big­ger mar­gin on their, on their equi­ty grant­i­ng. But, uh, who knows? Um, I think it’s a risk that they’re expand­ing into fur­ni­ture.

[00:53:24] TK: I mean, there are some, it’s not an easy mar­ket and there are Poten­tial­ly bet­ter play­ers, and I would prob­a­bly favour Nick Scali in the fur­ni­ture space. But, you know, there are big, big, big com­peti­tors like Myer and, um, um, IKEA, for exam­ple. So, you know, it’s not with­out some risk expand­ing into that. And also I’ve got to say that You look at a com­pa­ny like Adairs, or the core bit of Adairs, and you say, where’s the growth com­ing from?

[00:53:49] TK: You can only sell bed­spreads, you know, a cou­ple of times in a life­time, real­ly. Um, where’s the growth com­ing from? So, they tend to grow with, um, with, uh, the pop­u­la­tion growth or the GDP growth. in the coun­try. Uh, and so, you know, the pres­sure comes on CEOs to expand and they do things like, well, let’s expand into bed­ding and fur­ni­ture and things like that. The expan­sion is obvi­ous­ly a growth play, but it’s divid­ing the focus as well. So if your core com­pe­ten­cy is design­ing and mak­ing cush­ions and, and cur­tains, um, it’s a dif­fer­ent skill set to, you know, Then won the sup­ply chain for a fur­ni­ture com­pa­ny. So the, you know, man­age­ment may be dis­tract­ed by that.

[00:54:33] TK: I’m not say­ing they are because the, uh, the fur­ni­ture expan­sion seems to be work­ing. There were some issues in the online one, um, which they cleaned up a fair bit of in the last 12 months. Well, they said they have, um, so, but time will tell. The oth­er thing I want­ed to men­tion is that, uh, the chair of the com­pa­ny, a lady called Kate Spar­go resigned, um, fair­ly sud­den­ly.

[00:54:55] TK: I think, um, well, resigned and there’s been no, no rea­son giv­en why she’s left, um, and so I, I did think about putting a red flag on the busi­ness, but in the absence of not know­ing much about Kate Spar­go and not know­ing much about why she left, it’s hard to say. Um, it’s not like this is a large, a com­pa­ny which is cov­ered by a lot of peo­ple who would, you know, could spec­u­late as to why Kate left.

[00:55:21] TK: Um, all I know is that, uh, she resigned a week before the new CEO announce­ment hap­pened. So I could spec­u­late that she’s not hap­py with the new CEO appoint­ment, but equal­ly not know­ing what’s going on. I know that she’s been on the board for a while. She could have decid­ed to retire, but they haven’t come out and said she’s retired.

[00:55:40] TK: They just said she’s left. So. It’s a bit of a red flag, but, um,

[00:55:44] CR: um.

[00:55:44] TK: knows. Uh, but the com­pa­ny does have oppor­tu­ni­ties. Um, it’s a, I think it’s a real oppor­tu­ni­ty hav­ing the suc­cess­ful man­ag­er from Coun­try Road com­ing in. Um, she’s known for mak­ing Coun­try Road more fash­ion­able. So, uh, if any­one can, um, improve Adairs from being a sort of, you know, plus the old place that mum goes to shop for, um, for fur­ni­ture and, uh, for, for bed­ding and, and, uh, Man­ches­ter, then this is prob­a­bly the per­son to do it.

[00:56:16] TK: The oth­er oppor­tu­ni­ty which can fly below the radar is that a large pro­por­tion, and I think I read some­where about 80 per­cent of the sales are done through their loy­al­ty pro­gram called loy­al­ty club. So they’ve got a lot of data. about their cus­tomers. And I think there’s an oppor­tu­ni­ty to use that data.

[00:56:31] TK: And they say they’re using it now. So their loy­al­ty pro­gram is called Linen Lovers, and that’s got to be a ben­e­fit, you know, for them to be able to mine that data to improve their offer­ings. And, um, I think the oth­er ben­e­fit or the oth­er oppor­tu­ni­ty for the com­pa­ny is that if they’ve got such a high, uh, online, uh, pen­e­tra­tion of sales, that’s got to be a real oppor­tu­ni­ty to dri­ve their costs down.

[00:56:58] TK: So, um, you know, apart from the fact that they know a lot more about an online cus­tomer and how they shop com­pared to some­one wan­der­ing in their store, uh, it, it, they should be able to, to cre­ate a sup­ply chain for online cus­tomers, which is cheap­er than, or more cost effec­tive or high­er mar­gin com­pared to the store envi­ron­ment where you’re pay­ing for leas­es.

[00:57:18] TK: Um, on 170 stores and staff for 170 stores. So that’s an oppor­tu­ni­ty for them as well. Okay, the num­bers, uh, share price, uh, for the analy­sis is 2. 06, which I think is the share price today. It’s a slight Josephine. It’s a lit­tle bit less than what it was at the close of the month. Uh, and it trades very close to its con­sen­sus tar­get price and also the IV2, around the IV2 price of 2.

[00:57:44] TK: 04. IV1 is 83 cents, so we’re not get­ting a huge val­ue by Uh, it’s, it’s rea­son­ably large ADT, mil­lion, a mil­lion dol­lars. It’s 995, 000 on aver­age trad­ed. So it’ll suit most of our lis­ten­ers. Um, does have a strong yield of 5. 8%, but not quite high enough for us to score it as being above the, uh, the aver­age mort­gage inter­est rate.

[00:58:07] TK: Stock Doc­tor finan­cial health and trend is strong and steady. Which is good. Stock­o­pe­dia give it a qual­i­ty rank­ing of 89 and an over­all rank­ing of 91. So that’s fair­ly high up on their list as well. PE ratio for the com­pa­ny is 12. 6 times, which is actu­al­ly the high­est in the last three years. So we score it down for that.

[00:58:29] TK: How­ev­er, the prop cap is 3. 8 times. So that’s, um, fair­ly cheap which is dri­ving the QAV score on the buy list. We can’t buy it for book plus 30 which is 1. 66 and I high­light that we use net equi­ty per share for that cal­cu­la­tion which is dif­fer­ent to net tan­gi­ble assets which is actu­al­ly neg­a­tive 35 cents so I would think there’s a fair bit of good­will in the acqui­si­tion of Focus on Fur­ni­ture and what was the oth­er brand Mocha sit­ting on their bal­ance sheet so peo­ple should be aware of that.

[00:59:02] TK: Um, one thing which also struck me from the com­pa­ny, and uh, I did­n’t men­tion before, but their, their sales were down year on year, and their prof­it was down year on year, but the fore­cast earn­ings per share growth is 30%. So, uh, the ana­lysts that do cov­er this com­pa­ny do think that the cur­rent CEO has solved a lot of the, um, the cost issues in the com­pa­ny, and that earn­ings per share should grow from here.

[00:59:27] TK: And con­se­quent­ly, growth over PE is 2. 3 times, which, um, Scores well, and we give it a score for that. Uh, the own­er founders have long left the busi­ness, so we can’t score it for that. Direc­tors only hold 3%, so we can’t score it for that. It would have been nice to see like a Brett Blundy or some­one like that on the board.

[00:59:45] TK: Um, but, but he’s, he’s gone as well. So we can’t score it for own­er founder. Uh, there is con­sis­tent­ly increas­ing equi­ty, which is a good thing, so we can score it for that. So all in all, qual­i­ty score is 8 out of 15, or 53%. So not. Over­ly high and uh, at least one of the things was a neg­a­tive on our check­list.

[01:00:04] TK: Um, but the QAV score is 0. 14 giv­en it’s um, it’s, it’s strong Prop­Caf or it’s low Prop­Caf. So, uh, kind of in the mid­dle of the buy sheet, of the buy list. Um, but a large ADT stock which peo­ple can look at. Uh, I don’t think you need to rush into this one. It’s um, it’s a stock that’s uh, even though earn­ings per shares, Fore­cast to grow.

[01:00:27] TK: It’s, as I said before, it’s gen­er­al­ly a low growth busi­ness, um, and with a new CEO com­ing in, you get in now, you, you might be lucky in that the stock re rates when the new CEO starts, or if you get in now and the new CEO writes down a lot of things, um, in the first sort of six months, the stock price might go down.

[01:00:48] TK: So it’s a bit of a risky peri­od, but if you don’t get in now and the new CEO does the right things, you may miss out on the ini­tial growth from her tak­ing over as well. So, um, yeah, do your own research, have a look. Um, it’s been on the buy list for a long time, um, on and off the buy list for a long time too, I guess.

[01:01:06] TK: Uh, but, um, there’s a few cat­a­lysts going on which might lead to a rewrit­ing for

[01:01:10] TK: it.

[01:01:12] CR: Risky Peri­od was the name of a prog rock group that I was in, in the late sev­en­ties. I played flute in Risky Peri­od. Yeah.

[01:01:20] TK: Did you stand on one leg?

[01:01:22] TK: Like Jethro Tull?

[01:01:24] CR: he stand on one leg?

[01:01:26] TK: Yeah,

[01:01:27] CR: Oh, okay.

[01:01:28] TK: a look on YouTube. He was a one, one crazy dude play­ing flute in the rock band

[01:01:32] TK: stand­ing on one leg.

[01:01:36] CR: Uh, good stuff. Well, thank you for that. On Adare’s, Tony, don’t think I’ve ever been in an Adare’s store. I

[01:01:44] TK: Well, you’re not real­ly tar­get mar­ket.

[01:01:45] TK: Okay,

[01:01:47] CR: know. I buy linens and beds and bed­side tables from time to time.

[01:01:53] TK: but not from Adairs, which I guess is

[01:01:55] TK: my point.

[01:01:59] CR: There’s A Mart. There’s lots of places like that. Yeah, a lot of com­pe­ti­tion,

[01:02:04] TK: Well, yeah, get­ting in Kmart and Tar­get used to be a big com­peti­tor for Adairs. I know Kmart, the brand does­n’t, sor­ry, Tar­get, the brand does­n’t exist any­more. It’s part of Kmart, but Big W, Kmart.

[01:02:15] TK: Yeah. Big com­peti­tors to the

[01:02:16] TK: brand.

[01:02:18] CR: Tar­get does­n’t exist? There’s a Tar­get down the road from me.

[01:02:22] TK: Oh, sor­ry. Um, I think the, I think the back end of Tar­get was, was merged into Kmart, so sor­ry, you’re right, the brand, the brand still exists, but it’s run by the same com­pa­ny now, yeah, as the same busi­ness, sor­ry, it’s always been owned by the same com­pa­ny, but run as sep­a­rate

[01:02:38] TK: busi­ness­es, and now it’s being run by Kmart.

[01:02:40] CR: yeah, right. Um, and as you said, it is a Josephine for us, so peo­ple won’t be rush­ing into it any­way. It’s still a few cents. Below it’s sec­ond byline.

[01:02:51] CR: Good stuff. All right. Well, that’s Part one of the show. Now we get to the fun part.

[01:03:01] TK: Yeah. After

[01:03:02] TK: hours.

[01:03:04] CR: After hours.

[01:03:06] CR: I’ve, I’ve, I’ve had a lot of good stuff this week come across my table. I watched a film that I thought was great. It’s got very aver­age rat­ings, but I loved it. Mr. Right on Net­flix. 2015 com­e­dy. with Sam Rock­well, Anna Kendrick, and Tim Roth.

[01:03:28] TK: Wow.

[01:03:29] CR: is an assas­sin. It’s a lit­tle bit Gross Point Blank, if you remem­ber that.

[01:03:35] CR: He’s an assas­sin who’s kind of try­ing to get out of the assas­sin busi­ness, but just when he thought he was out, they dragged him back in. Tim Roth is sort of one of a bunch of dif­fer­ent crews that are hunt­ing him down. And he meets Anna Kendrick. And he’s try­ing to have a rela­tion­ship with her, ini­tial­ly bad­ly hid­ing the fact that he’s an assas­sin.

[01:03:59] CR: But it being Sam Rock­well, when he kills peo­ple, he’s danc­ing, usu­al­ly. He’s danc­ing and mak­ing it look like he’s hav­ing a good time. There’s this one scene halfway through the film where Tim Roth and his part­ner are look­ing at blood splat­ter pat­terns from a guy that Sam Rock­well’s killed in an alley.

[01:04:22] CR: And Tim Roth’s part­ner’s like This blood pat­terns don’t make any sense. It’s like they were spin­ning around and Tim­o­thy goes, no, he was not spin­ning. He was danc­ing. Cause if you know any­thing about Sam Rock­well, every movie Sam Rock­well does, he

[01:04:39] CR: dances in every role. It does­n’t mat­ter what the role is. He needs to dance. He loves danc­ing. He’s, if he’s ever on Kim­mel or Fal­lon or any of those shows, he dances. He’s a self taught. And he loves to dance and he’s very good at danc­ing.

[01:04:56] CR: So yeah, but it was good. I had real­ly bad reviews, but I loved, I love Sam Rock­well. He’s one of those guys. He’s like a Nicholas Cage or a Chris Walken. He always brings some­thing fun to every film. And Anna Kendrick, who I don’t know real­ly well, but she was good too. And Tim Roth was good.

[01:05:16] TK: Yeah, I love Tim Roth as well.

[01:05:19] CR: Yeah. And I haven’t seen him in much, you know, out­side of Taran­ti­no’s stuff. I don’t. No, what I’ve seen him in Twin Peaks, The Return. We had a great part in that. Remem­ber him in that?

[01:05:35] TK: I can’t, I, no, I don’t. Sor­ry.

[01:05:38] TK: Adairs.

[01:05:42] CR: the actress who was in Taran­ti­no’s film set in the hab­er­dash­ery, um, the one that was, yeah,

[01:05:55] TK: Die Hard Adairs.

[01:05:56] CR: yeah, I

[01:05:58] CR: can’t remem­ber her name. Any­way, the two of them in, in Twin Peaks, The Return, there were a cou­ple of assas­sins

[01:06:04] TK: Hang on, Quentin, did you say Quentin

[01:06:07] TK: Taran­ti­no made a movie in a hab­er­dash­ery?

[01:06:11] CR: Yeah, the, the,

[01:06:13] CR: his eighth film, what­ev­er it was, the, the one where we’re set in the Wild West, a bunch of, um, boun­ty hunters in a hab­er­dash­ery in the

[01:06:24] TK: The Hate­ful Eight.

[01:06:26] CR: Hate­ful Eight?

[01:06:26] CR: Yeah.

[01:06:28] TK: Okay. A hab­er­dash­ery, so you mean like a, like an out­post, like

[01:06:31] TK: a gen­er­al store.

[01:06:33] CR: Yeah, that’s what it was, it was, they called it, it was like Bet­ty’s Hab­er­dash­ery or

[01:06:38] TK: Yeah, right.

[01:06:39] CR: when you said

[01:06:39] CR: hab­er­dash­ery, that’s the first thing I

[01:06:41] TK: Right. Ah, okay.

[01:06:43] TK: I did­n’t get the ref­er­ence. I did­n’t know it was called that. All right.

[01:06:46] CR: Any­way, um, yeah, I watched that, it was good. I’m, I’m hav­ing anoth­er crack at read­ing I Will Fear No Evil, a Robert Hein­lein

[01:06:53] TK: Yeah, I love Hyn­d­man. Yeah.

[01:06:56] CR: I start­ed it,

[01:06:57] CR: I

[01:06:57] CR: it’s fun­ny, it was in my list of books, you ever do this, and I was going, oh, I should read this, and I start­ed read­ing and I’ve gone, I’ve already read this.

[01:07:06] TK: Ah, yeah.

[01:07:06] CR: But I could­n’t remem­ber where I got up to.

[01:07:10] CR: I know I did­n’t fin­ish

[01:07:10] CR: it. Turns out I read about three chap­ters and then I got dis­tract­ed. So I read them again. Yeah. It’s about a guy, an old rich guy. I thought of you while I was read­ing it. Some old rich guy whose body is giv­ing out on him. So he. goes and if he gets his lawyers to find him a new body to get his brain trans­plant­ed in.

[01:07:34] TK: Is it a how to book? Can

[01:07:36] TK: I some notes? Yeah.

[01:07:39] TK: good.

[01:07:40] CR: Yeah. Pret­ty good so far.

[01:07:44] TK: Yeah, I love Hyn­d­man.

[01:07:47] TK: Alex loved it too. She used to love, um, Time Enough for Love.

[01:07:51] CR: You

[01:07:52] TK: that the pre­quel for If You Know Evil? Or was it

[01:07:55] TK: just a part of the same series? I can’t

[01:07:58] CR: I don’t.

[01:07:59] TK: Lazarus Long?

[01:08:00] TK: Is that the char­ac­ter’s name in I Will For You no, Evil? No. Okay.

[01:08:04] CR: but I read Time

[01:08:05] CR: Enough For Love when You rec­om­mend­ed it to me years ago. Um, and I loved it. And The Moon is a Harsh Mis­tress. Was that one of his?

[01:08:14] TK: Yes.

[01:08:14] CR: Love that. You put me onto him. I mean, I’d heard of him. I think I’ve read some­thing, but I read a bunch of his five or six years ago when you rec­om­mend­ed him to me again.

[01:08:25] CR: Yeah, I loved, loved him. Yeah, real­ly good stuff. I’ve also been read­ing Fire Walk With Me by Scott Ryan. Not Mr. In Between Scott Ryan, but actu­al­ly I came across this book because I was try­ing to fig­ure out what Mr. In Between Scott Ryan was up to and then I dis­cov­ered this book by an author of the same name.

[01:08:44] CR: It’s about the mak­ing of Fire Walk With Me. Have you, um, have you seen that?

[01:08:50] TK: Yes. A long time ago, but Yes.

[01:08:52] TK: I have.

[01:08:54] CR: Yeah, well, quite famous­ly when, so for peo­ple who don’t know, Lynch, after the two sea­sons of Twin Peaks went to TV in the ear­ly 90s and it got can­celled, Lynch made a pre­quel film, before pre­quel films were real­ly a thing,

[01:09:09] TK: Mm

[01:09:10] CR: although I guess you could say The God­fa­ther 2 was part pre­quel, but he made a pre­quel film and it was Absolute­ly, it absolute­ly tanked at the box office.

[01:09:20] CR: The crit­ics hat­ed it. Every­body hat­ed it. It was like, peo­ple booed it at the Cannes Film Fes­ti­val and they walked out and it was just hat­ed. And now it’s con­sid­ered

[01:09:35] TK: Yeah.

[01:09:35] CR: great­est mas­ter­piece.

[01:09:37] TK: Espe­cial­ly after the lat­est Twin Peaks series came out. When was that? Five or six years ago? Sev­en years ago? Yeah. And peo­ple went back

[01:09:46] TK: to look at Fire walk with me. Yeah.

[01:09:48] CR: yeah. And I, I saw it

[01:09:51] CR: a long time after it came out. I don’t think I saw it until the 2000s or some­thing. I loved it from the get go, but it is hard film. Like it’s, I mean, it’s basi­cal­ly about sex­u­al abuse and it’s, uh, and it’s just bru­tal. It’s one of those films you need to go have a show­er after you watch it, cause it’s real­ly dis­turb­ing.

[01:10:11] CR: And, um, The actress who plays Lau­ra Palmer, uh, Lee, Cheryl Lee, is that her name?

[01:10:17] TK: Cheryl Lee. Yes, that’s right. That’s right.

[01:10:19] CR: Fan­tas­tic. Like she has almost noth­ing to do in the orig­i­nal Twin Peaks. And then she’s in this and she’s

[01:10:24] TK: Except look dead.

[01:10:26] CR: Yeah, well, she played Mad­dy, her iden­ti­cal twin look­ing cousin,

[01:10:30] TK: That’s right.

[01:10:31] CR: with a wig.

[01:10:34] TK: Uhhh.

[01:10:35] CR: was fan­tas­tic in it.

[01:10:36] CR: Any­way, so I’ve been read­ing a book about the mak­ing of that and the ini­tial reac­tion to it and hmm, inter­est­ing.

[01:10:44] CR: Also saw a good live per­for­mance of the Beast­ie Boys. You’re not a Beast­ie Boys fan, are you? You don’t

[01:10:52] TK: I am.

[01:10:52] CR: the rap, you

[01:10:53] CR: are?

[01:10:53] TK: I, I like, I like that kind of hip hop and rap. The sort of

[01:10:57] TK: ear­ly stuff. Yeah.

[01:10:59] CR: I dis­cov­ered this on YouTube

[01:11:01] CR: dur­ing the week. It’s a good qual­i­ty con­cert of theirs from 2015. So, um, 2015? No, might have been a lit­tle bit ear­li­er, 20, 2012, some­thing like that. I remem­ber it was just before MCA would have got his, you know, his can­cer diag­no­sis. Well, that was too, no, it must have been much ear­li­er, 2000 and, 2000 and.

[01:11:30] CR: Five, I think. Yeah, no, it goes way back. Um, there was a few years cause I think he got his can­cer diag­no­sis in 2009 and then he died of 2012.

[01:11:40] CR: Does that sound right? I don’t know.

[01:11:43] TK: I don’t know, sor­ry.

[01:11:43] CR: Time­lines. It seems too long ago, but has he been dead for

[01:11:46] CR: that long? Jeez. Any­way, I went look­ing for it cause I want­ed to find Mix­mas­ter Mike to show Fox and I still haven’t shown him, but the con­cert opens with 10 min­utes of Mix­mas­ter Mike just doing the open­ing thing.

[01:12:01] CR: And it’s insane. Like his abil­i­ties with two turnta­bles is just incred­i­ble. Like it’s just like, like it’s like watch­ing, it’s Dak Perl­man on a vio­lin. Like he is just the, he’s a mas­ter of, uh, mix­ing, mix­ing desk any­way. And then the boys came out and did their con­cert and I watched the whole thing. And it was just so much, um, joy de vive, you know, they’d always, always

[01:12:31] TK: Their ener­gy is great, isn’t it?

[01:12:33] CR: Yeah,

[01:12:34] TK: Yeah.

[01:12:35] CR: just great. And also sad, you know, know­ing what hap­pens to MCA after­wards. But, um, any­way,

[01:12:43] TK: What’s that doc­u­men­tary about them that you rec­om­mend­ed

[01:12:45] TK: last year? It’s

[01:12:46] CR: you like that? Yeah.

[01:12:48] TK: it. Yeah.

[01:12:49] CR: They did such a great job telling the sto­ry, you know? Yeah. Yeah. And, and their sto­ry is ter­rif­ic. It was just about ear­ly suc­cess and then they kind of hat­ed it and then they failed and lost every­thing and rein­vent­ed them­selves the way they want­ed to be and built it back up from scratch.

[01:13:10] CR: It was fan­tas­tic.

[01:13:12] TK: Yeah, cool, because their ear­ly suc­cess was, was, um, on the back of, uh, you got the right to, you know, fight for your right to par­ty. So they, they put, you know, they’d go on the big con­cert tour and they’d just be frat guys. wav­ing their shirts in the air and get­ting drunk and they had no con­nec­tion to the audi­ence at ever at all did­n’t want them to be the audi­ence and they just said fuck this I’m not gonna do this

[01:13:35] TK: any­more yeah and rein­vent­ed them­selves yeah

[01:13:38] CR: Yeah. Tried to do more

[01:13:40] CR: intel­li­gent lyrics and more intel­li­gent songs and, um, yeah, blend­ing phi­los­o­phy, Tibetan Bud­dhism and stuff into it. Oh, by the way, I know you don’t lis­ten to my Cold War show, but we’re in a, we’re in the mid­dle of a series about Tibet at the moment. Um, and it’s fas­ci­nat­ing, but we’re sort of talk­ing about Tibet and the Cold War and Chi­na and that kind of stuff, but going, going back as I like to do, Tibetan, uh, ear­ly part of the 20th cen­tu­ry. Had no idea, you know, I, I’ve sort of the, the, I don’t know about how much you know about Tibet, but the idea I had of Tibet that I’ve sort of absorbed through the media in 54 years is, you know, a bunch of peace lov­ing hip­pies with shaved heads walk­ing around drink­ing yak milk and ring­ing gongs and just.

[01:14:33] CR: on clifftops. Nah, nah, they were killing each oth­er, Bud­dhist, Tibetan Bud­dhist on Tibetan Bud­dhist vio­lence, fight­ing over who had the right Dalai Lama. And, you know, they had mas­sive pover­ty and wealth dis­par­i­ty and, you know, the elite and the aris­toc­ra­cy and the Dalai Lamas run­ning the stuff and just vio­lence.

[01:14:58] CR: And then of course the British are involved because of where it sits. Close to the British Raj in India. So the British are try­ing to con­trol it. The Chi­nese are try­ing to con­trol it, but the British are actu­al­ly con­trol­ling Chi­na in the late 19th and ear­ly 20th cen­tu­ry. Any­way, after, you know, the Opi­um Wars and the Box­er Rebel­lion and all this kind of stuff.

[01:15:19] CR: Yeah.

[01:15:20] TK: So it was kind of like every oth­er

[01:15:21] TK: theoc­ra­cy in his­to­ry, was it?

[01:15:24] CR: well, that was the joke that I made was, uh, you know, when the, when the 13th Dalai Lama died in 1933, I think, and they found the new Dalai Lama, who’s the cur­rent Dalai Lama, a few years lat­er, he’s the 14th Dalai Lama. He was five years old when he was appoint­ed the Dalai Lama, say to Ray. Because if our study of his­to­ry has taught us any­thing, it’s that mak­ing a five year old child the, uh, seat of all tem­po­ral and spir­i­tu­al pow­er in a theoc­ra­cy.

[01:15:53] CR: Nev­er, goes wrong. That’s, that’s, like if any­thing says the height of sophis­ti­ca­tion and civ­i­liza­tion for a cul­ture, it’s mak­ing a five year old child the head of your seat of gov­ern­ment. I mean, I think that’s sort of the pin­na­cle of human civ­i­liza­tion, right there.

[01:16:07] TK: so it’s like, it’s like putting Foxx in charge, right?

[01:16:10] CR: yeah, yeah. Which, he’s in charge of our house, so that’s bad enough.

[01:16:16] CR: Uh,

[01:16:17] TK: Yeah.

[01:16:18] CR: at least he thinks he is. He runs it like he is. Any­way, so what about you? What, what else have you been into this week apart from going down to Flem­ing­ton and

[01:16:29] TK: yeah, it’s all horse rac­ing. So dou­ble mar­ket had a win. First start last Thurs­day.

[01:16:35] CR: first start

[01:16:37] TK: Yeah.

[01:16:38] TK: So one for one, which is real­ly good.

[01:16:41] CR: run twice as fast as the rest of the hors­es?

[01:16:46] TK: No, it

[01:16:47] TK: did­n’t. No. No.

[01:16:50] TK: But, uh, earned twice as much as the aver­age horse

[01:16:54] TK: that I own, so

[01:16:55] CR: Oh, okay. That’s good.

[01:16:57] TK: Yeah. Yeah.

[01:17:00] TK: Yeah.

[01:17:00] CR: big race? What race was that? Was that

[01:17:02] TK: No, no, no, no, it was just its first, it was a maid­en, so it was­n’t at Flem­ing­ton, it was at Bal­larat on Thurs­day. It’s got to start some­where, and at one, which is not all that com­mon for race­hors­es, so that was good.

[01:17:16] TK: Uh, and Steve, that’s the one that Steve Mab­b’s in with me, so Chair­man Mabb owned two hors­es, one called Negro­nis that raced and flopped and then we sold, so it kind of got out square, and now this one, which is, you know, won its

[01:17:30] TK: first, first race, so that’s fan­tas­tic.

[01:17:33] CR: Mabb? I haven’t spo­ken to him for

[01:17:35] CR: ages. It’s time we had lunch.

[01:17:37] TK: Yeah, we, yeah, we talked recent­ly. He’s, um, remak­ing the ASA, which is, uh, good on him. So, he was, he was telling me they, they’ve been run­ning lots of pro­mo­tions and they’ve got, I think he said, 40, 000 mem­bers in it now, is fan­tas­tic. And he’s, and so they’re doing lots of, um, you know, uh, free entry tri­al.

[01:18:00] TK: type pro­mo­tions. Um, but yeah, he’s done a lot of work to get spon­sor­ship from com­pa­nies and then pro­vide an audi­ence of investors for them to talk to.

[01:18:11] CR: Right.

[01:18:11] TK: so he’s try­ing to get the ASA kind of off the sub­scrip­tion teat and more on the cor­po­rate spon­sor­ship band­wag­on. Um, which will be, he, he hopes a lot more, um, sta­ble

[01:18:24] TK: and more prof­itable for the ASA going for­ward.

[01:18:27] TK: I think they’re run­ning their, I don’t know, I, I did, he did say, he said, I think, I think he said it was like 45 plus. Cause he, he told me the stats that, I, I, I’m going from mem­o­ry, I think he said 15 per­cent of his base either becomes, men­tal­ly incom­pe­tent or dies every year. So, uh, they’re, they’re always hav­ing to find at least 15 per­cent new mem­bers just to stand still because it’s a very age skewed

[01:18:57] TK: mem­ber­ship base.

[01:18:58] CR: Yeah, yeah, that was always my expe­ri­ence at the ASA events that I went to as a very old, um, and, you know, set in their ways usu­al­ly, um, investor base.

[01:19:12] TK: yeah. Yeah. no, def­i­nite­ly. So, um, yeah, so good, good on him. He’s, um, he’s been busy doing that. I think he’s look­ing for­ward to retir­ing. He’s got to try and find a suc­ces­sor though, first. So, I guess a shout out to all our lis­ten­ers. If any­one wants to get involved in the ASA and go on their board,

[01:19:28] TK: um, Steve would wel­come you with open arms.

[01:19:32] TK: But you’d also be inher­it­ing some­thing which is worth much more sta­ble finan­cial­ly than it was when Steve took over.

[01:19:38] CR: he’s only like 51 or some­thing, so like he,

[01:19:42] TK: Yeah, but it’s, it’s like he’s not get­ting, it’s one of those things, it’s a, it’s a labour of love, and it’s, you know, a lot of work, and he’s not get­ting any, any income for it, a bit like QAV.

[01:19:54] CR: yeah, well, good stuff, good for him. What else? What have you got on this week?

[01:20:03] TK: uh, I’ve got, I Nev­er Dreamed, no, uh, next week, I Nev­er Dreamed races, uh, I think at sale in two days time, so, um, I’m hop­ing for bet­ter things from her past runs on Sun­day, so they’re back­ing her up quick­ly in the Sey­mour Cup, which should be, she should be good in. And Poi­fect will run Sat­ur­day week, so that’s on Caulfield Cup Day, not in the Caulfield Cup, but in the May­er Sprint Race, a Group 2 race, so hope­ful­ly she’ll do well there.

[01:20:35] TK: So I’m head­ing down after our record­ing next week, again, and I’ll stay down until after Cup Day,

[01:20:42] TK: spend about three weeks down there.

[01:20:44] CR: love­ly.

[01:20:45] TK: Yeah.

[01:20:48] TK: I’ll take my sec­ond wife and my first wife will

[01:20:50] CR: whoa, oh, yeah, kinky, get it all, for the man who has every­thing,

[01:20:59] TK: Right.

[01:21:04] CR: well Tony, I was think­ing sale of the cen­tu­ry there, not you, well Tony, Tony leaves today with a sec­ond wife. Um, yeah. Yes, uh, well this week, um, we’ve got our brown belt grad­ing on next week, so that’s what I’m going to be focus­ing on, just get­ting ready for that, lots of train­ing, uh, Tay­lor’s girl­friend,

[01:21:30] TK: brown belt like a Brown Trousers, do they

[01:21:37] TK: do very scary things to you?

[01:21:39] CR: Yeah,

[01:21:39] CR: they give me a white belt at the begin­ning of the ses­sion And by the end of it.

[01:21:43] TK: And then six guys jump you here.

[01:21:44] CR: Yeah,

[01:21:46] TK: You ever seen that, uh, that show that looks like a brown trouser job to me? Gra­ham Chap­man’s Doc­u­men­tary about the Dan­ger­ous Sports Club at Oxford Uni­ver­si­ty or Cam­bridge Uni­ver­si­ty, one of those two. Well, they used to do things like, uh, ride bounc­ing cas­tles down the sides of moun­tains.

[01:22:05] TK: That was

[01:22:06] TK: their club. Gra­ham Chap­man was in that. And he made a spe­cial, uh, called, looks like a brown trouser job to me, which is what he said when they, they low­ered him out into the bounc­ing cas­tle on

[01:22:19] TK: top of the moun­tain.

[01:22:23] CR: oh great, I saw John post­ed some­thing the oth­er day about, I think it was the 35th anniver­sary of Chap­man’s pass­ing, John post­ed the clip of his eulo­gy, the famous eulo­gy that he gave, yeah,

[01:22:37] TK: It’s fun­ny, isn’t it?

[01:22:38] CR: oh, hilar­i­ous, I did­n’t watch it again, but I’ve seen it many times, but uh, yeah, 35 years with­out Chap­man, that’s a long time,

[01:22:48] TK: I loved his auto­bi­og­ra­phy. It’s called the Liar’s Auto­bi­og­ra­phy. I always thought it was a

[01:22:52] TK: great title for an auto­bi­og­ra­phy.

[01:22:55] CR: Was it full of lies or

[01:22:56] CR: was it, uh,

[01:22:58] TK: Well, who knows? You could have just made the whole thing up. It sound­ed pret­ty truth­ful because it cor­re­lates with what’s in oth­er books about Python, but it, uh, yeah. A lot of it was on these ear­ly days as a doc­tor and drink­ing a lot and, um, uh, becom­ing a writer with Cleese. Doing some of the ear­ly shows.

[01:23:14] TK: I did­n’t real­ize he was one of the writ­ers on the Doc­tor series. Doc­tors, Doc­tors at Large, I think was the TV series. Yeah. Yeah.

[01:23:23] CR: I vague­ly recall that from my youth.

[01:23:27] TK: Hmm.

[01:23:28] CR: Okay. Well thank you t Kate. Quite, have a good week, every­one.

[01:23:33] TK: Yes. Hap­py ASX.

[01:23:34] TK: It’s been pret­ty hap­py late­ly too. It’s good.

[01:23:37] CR: Very hap­py. Yeah. It’s kind of bor­ing­ly hap­py, just things are

[01:23:40] TK: Oh, we like Bor­ing­ly Hap­py.

[01:23:42] CR: Bor­ing­ly hap­py. That’s

[01:23:44] TK: That’s a good title

[01:23:45] TK: for this episode. Bor­ing­ly Hap­py.

[01:23:47] CR: All right. That’s it. Bor­ing­ly hap­py. Thanks Tony.

[01:23:51] TK: See ya.