QAV AU 901 — Broccoli Investing

 

[00:00:00]

Tony Kynas­ton: Help.

Cameron: hav­ing to, to hav­ing, hav­ing to tell Kon not to talk off air. ’cause we end up hav­ing a 20 minute con­ver­sa­tion and then he goes, this should be on the record­ing. I, I know. Stop talk­ing to me off air. You are ruin­ing it. Wel­come back to QAV TK 9 0 1, sea­son nine. Although it’s only year six or sev­en, but the year sea­son nine.

’cause we had few, I dun­no, I can’t remem­ber the exact rea­son we restart­ed dur­ing COVID.

Tony Kynas­ton: three. Yeah.

Cameron: Yeah. Um, first.

Tony Kynas­ton: that. Um,

Cameron: Sure.

Tony Kynas­ton: to your inter­view with Scott while I was away recent­ly and I think that should be part of the intro series ’cause there was quite a lot of good stuff brought up again, which we haven’t spo­ken about for a long time.

Cameron: Okay. Sounds good.

Tony Kynas­ton: I’ll go back

Cameron: Um,

Tony Kynas­ton: Sor­ry.

Cameron: uh, it’s the first episode for 2026 tk, how was your New Year’s Eve? How you doing?

Tony Kynas­ton: I know you might think it’s an [00:01:00] old per­son­’s New Year’s Eve, but I went out and played golf and it’s one of the, um, one of the only times on the golf course when no one’s there ’cause like every­one’s out cel­e­brat­ing New Year’s, but, and it does­n’t get dark until nine o’clock. So I went out late and had a quick round by myself and real­ly enjoyed it.

Weath­er was great and then, uh, came back and watched a few episodes with Jen and went to bed at about 11 o’clock. But it was this

Cameron: You had a

Tony Kynas­ton: nice

Cameron: quick­ie by your­self and then you went to bed. I get it. Uh, sounds nice. No, I like, I’m, I’m an old man. I, I don’t do New Year’s Eve weeks. We were up, but what we were doing, um, but yeah, bloody, bloody blah.

Tony Kynas­ton: Sano in a, ancient con­vent that was haunt­ed. That’s how

Cameron: Wow.

Tony Kynas­ton: Year’s Eve with her boyfriend. Yeah.

Cameron: Nice. She should have been fin­ish­ing my paint­ing

Tony Kynas­ton: She is.

Cameron: Is.

Tony Kynas­ton: Yeah. But you, and you and about 10 oth­er peo­ple includ­ing me.

Cameron: Yeah,[00:02:00]

Tony Kynas­ton: But,

Cameron: she does­n’t have time. She does­n’t have time to cel­e­brate and par­ty

Tony Kynas­ton: about to, uh, she’s about to move, so she’s gonna be busy as well in the next cou­ple of weeks. Hmm.

Cameron: mov­ing. Did­n’t she just move? Oh no, I just,

Tony Kynas­ton: A year or so ago. Two years

Cameron: yeah, that’s right. I just did anoth­er, um, what do you call it? Got a thing from a real estate agent ask­ing me to give her a tes­ti­mo­ni­al

Tony Kynas­ton: yeah.

Cameron: again. That’s what, a cou­ple of weeks ago, a ref­er­ence. Well, let’s get into invest­ing, tk, um, noth­ing hap­pened in the World news this week.

Uh

Tony Kynas­ton: Are we gonna have that con­ver­sa­tion on air that we were hav­ing off air? ’cause I think our lis­ten­ers might be able to

Cameron: oh.

Tony Kynas­ton: it.

Cameron: You wan­na jump into that first? Okay. Go. Yes.

Tony Kynas­ton: Just our, writ­ten agen­da’s very, very flex­i­ble and

Cameron: US pres­i­dents, kid­nap­ping, pres­i­dents of oth­er coun­tries. Let’s ignore that. Let’s talk about val­ue invest­ing. Yes.

Tony Kynas­ton: But any­way,

Cameron: Okay. So where do you wan­na pick it up? You were talk­ing about maybe doing a val­ue invest­ing con, like maybe doing an [00:03:00] invest­ing pod­cast con­fer­ence

Tony Kynas­ton: that was

Cameron: and that mor­phed into a val­ue invest­ing con­fer­ence.

Yeah.

Tony Kynas­ton: so let’s con­tin­ue the dis­cus­sion and throw it out there for input. But, um, yeah, I mean, I’ve always liked the Berk­shire Hath­away Ag GM, which is the Wood­stock for cap­i­tal­ist. That buf­fet sort of going.

Cameron: Was

Tony Kynas­ton: It was,

Cameron: I won­der what’ll hap­pen now? Yeah. He’s now offi­cial­ly retired. Right? A year is over.

Tony Kynas­ton: over. Yeah.

Cameron: Wow. That’s, I dun­no how to process that. yeah,

Tony Kynas­ton: dying.

You’ve got a, you’re on your own from now on. Yeah. Any­way, so yeah, the

Cameron: yeah.

Tony Kynas­ton: find a base, find some like-mind­ed peo­ple, and maybe even not like-mind­ed peo­ple. I’m always hap­py to debate. The broad church of invest­ing. Um,

Cameron: You are.

Tony Kynas­ton: but uh, I don’t think they are.

Cameron: No.

Tony Kynas­ton: There are some, uh, reli­gious fun­da­men­tal­ists out there in the invest­ing world aren’t there. um, but the idea would be to get peo­ple togeth­er some­where, think some­where nice with a golf course, have a game of golf with our sub­scribers, and, um, [00:04:00] and, uh, talk about val­ue invest­ing. Um, there’s enough peo­ple who’ve been on the show that we could pull togeth­er for val­ue invest­ing side of things to, to do a sort of like-mind­ed sem­i­nar or con­fer­ence.

But, um, yeah, I mean, is there a appetite for it? Is there a loca­tion which works for peo­ple? So I guess I’ll throw it open to dis­cus­sion.

Cameron: I was talk­ing to Tony off air about the prob­lem that we always have with guests. I can’t remem­ber if I men­tioned this on the end of the year episode or not, but you know, from time to time peo­ple say you should have more guests on. I go, look, here’s my expe­ri­ence with guests over the years. There are two types of guests, those that agree with us and those that don’t, those that agree with us about, you know, the basic pre­cepts of val­ue invest­ing.

And val­ue invest­ing is a broad church. There’s a lot of dif­fer­ent ideas and what­ev­er, but gen­er­al­ly we agree on the prin­ci­ples. Find some­thing that’s at a dis­count to its val­u­a­tion. That’s well run and, and buy it and hold it as long as you can. [00:05:00] Those peo­ple are good. We have them on Collins Street invest­ment, et cetera, et cetera, on a reg­u­lar basis.

And we don’t have much to talk about, but it’s like pat­ting each oth­er on the back. Um, but then you have the peo­ple that don’t agree with us, and those inter­views tra­di­tion­al­ly have gone one of two ways. Either you push back on every­thing they say and then they get real­ly unhap­py and send me angry emails after­wards, or you are very polite and you don’t push back.

And then it’s like, what’s the point? So we just have them come on, they talk a bunch of non­sense and we go, all right, well thanks very much. Have a nice day. And I’m like, well that’s, that’s unsat­is­fy­ing for me. I dun­no if the lis­ten­ers enjoy that. Lis­ten, look, there’s a mil­lion pod­casts you can lis­ten to if you wan­na hear peo­ple.

Just spout, trendy, non­sense. Um, our pod­cast is about. The fun­da­men­tals of sen­si­ble, long-term con­ser­v­a­tive val­ue invest­ing. And I don’t know, I just kind of, it’s a bit like when I do his­to­ry shows and I found the same thing with his­to­ry shows. Like [00:06:00] some­body, one of my Cold War lis­ten­ers, um, sent me an email this morn­ing, pulled up an inter­view that Ray and I did like five years ago with some oth­er schol­ar, pod­cast his­to­ry schol­ar, where he start­ed mak­ing a lot of non­sense state­ments.

And I went, whoa, whoa, whoa a sec­ond here. And push start­ed to push back and ask him for evi­dence for his claims. And he got real­ly pis­sy with me and refused to talk to me for the rest of the episode. And then sent Ray angry emails. ’cause Ray had invit­ed him on after­wards that I pushed back on a lot of his state­ments and I was like, oh, well what am I gonna do?

I can’t just let him say this stuff and get away with it. I mean, but then obvi­ous­ly peo­ple don’t wan­na have their bull­shit pushed back on some­times, so I dun­no. I don’t like, I don’t know how to, I dun­no how to deal with peo­ple that dis­agree with me on pod­casts.

Tony Kynas­ton: I think you han­dle it quite well. You, you’re nev­er very con­fronta­tion­al. You’re always ask­ing for evi­dence and, and fair­ly respect­ful about the facts. I’m not [00:07:00] play­ing the per­son, it’s the, it’s the oth­er side that can get affront­ed.

Cameron: that’s it. They get affront­ed and then I’m like, well, what do I do? I dun­no. Just, I dun­no.

Tony Kynas­ton: Yeah. And like, I think also too, I dun­no about his­to­ry pod­cast, but in our world, lot of peo­ple who accept invites to come and be inter­viewed are peo­ple who are, you know, hop­ing to mar­ket what they, their what­ev­er ser­vice they’re sell­ing.

Cameron: And they don’t wan­na be argued with, or they don’t wan­na be made to look stu­pid. Unfor­tu­nate­ly. You just tend to make peo­ple look stu­pid when you push back. You go, well, hold on.

Tony Kynas­ton: on, you’re blam­ing me.

Cameron: Yeah.

Tony Kynas­ton: us here.

Cameron: Um, this show, you are the one that goes, well, what are your returns? And they go, oh, like 8%. You go, real­ly?

Tony Kynas­ton: an index. ETF. Yeah.

Cameron: Yeah.

Tony Kynas­ton: Any­way.

Cameron: What? What are your rules for when to sell?

Oh, just kind of gut feel it. You’re like, don’t have any, just when it vibes. Vibes Tony. Vibes it. Any­way,

Tony Kynas­ton: All right. Well

Cameron: I was just, I was also [00:08:00] say­ing to Tony when we. When we start­ed this thing, I thought, oh my God, teach­ing peo­ple how to invest that. Peo­ple are gonna love that. That’d be awe­some. Giv­ing them a sen­si­ble way to invest.

Peo­ple are gonna eat that up. And then over the years, I real­ized, hmm, they don’t want the sen­si­ble stuff. It’s like no one wants to go to the doc­tor. If you’re like 40 kilos over­weight and be told, cut back your calo­ries to 2000 a day and do 10 hours of exer­cise a week, no one wants to hear that. That’s not, they want Ozem­pic, they want the Ozem­pic of invest­ing pod­casts.

It’s like, quick, fast, no effort required, get rich quick schemes. No one wants to be told, eat your veg­eta­bles and eat less. And, and exer­cise for, we’re the, we’re the Diet and Exer­cise pod­cast. You know, do the sen­si­ble things

Tony Kynas­ton: Broc­coli pod­cast, the financ­ing Block. Finan­cial Broc­coli Invest­ment Pod­cast.

Cameron: up and Bru­el Air. Do you know, do, do you know that sketch.

Tony Kynas­ton: No

Cameron: Oh my [00:09:00] God. Um, do you know Dana Car­vey? Um, one of the clas­sic, yeah, one of the clas­sic Dana Car­vey, um, sketch­es. He’s like a, he’s on a piano. He’s like doing this like big bal­lad and it’s just about, he was chop, chop, chop. It’s just goes on and on about him try­ing to make chop­ping broc­coli.

Sound dra­mat­ic. You got­ta look it up. I’ll send you a link. It’s very fun­ny. It’s fun­nier than it sounds. Well, let’s get back to an, uh, the world news, Tony and how it affects invest­ing. So, dun­no if you’ve seen this, dun­no if any­one caught this in the news this week, but appar­ent­ly the pres­i­dent of the Unit­ed States autho­rized what he calls a police action.

Uh, which has, uh, if you’re not aware of that, that has a nice long tra­di­tion in Amer­i­ca. When [00:10:00] Amer­i­ca, um, invad­ed Korea in 1950, they called that a police action to get around a dec­la­ra­tion of war. Uh, this is a police action. He went in, well, he sent his guys in and they kid­napped the pres­i­dent of Venezuela and his wife and took them back to the US blind­fold­ed and hand­cuffed and put them on tri­al.

So, uh, with­out get­ting into the pol­i­tics of that, which I’ll do on oth­er shows, I’m sure at some point. Uh, Trump him­self has said this is all about get­ting their hands on Venezue­la’s oil. Most­ly there’s some fluff about drugs and this and that and the oth­er, but he’s quite open­ly said it’s about oil. Uh, which is nice for an Amer­i­can pres­i­dent to just admit up front.

I mean, like, or hate Trump, at least he just says what’s what he’s think­ing most of the time. Uh, so there’s an arti­cle in the fin­ra, what does this mean?

Tony Kynas­ton: first, of [00:11:00] all, do you believe

Cameron: Yeah. Uh. I believe it’s one of a num­ber of fac­tors. I think there’s the dis­trac­tion angle of it, there’s the look­ing tough angle of it. There’s the oil, there’s the petro dol­lar.

’cause Venezuela was, uh, work­ing with Chi­na to move the, uh, you know, the finan­cial basis of its all reserves to being won and not the USD. Um, we know that part of the jus­ti­fi­ca­tion for tak­ing out Gad­da and Libya was that he was mov­ing off the petro dol­lar as well. The US uh, you know, ab for good rea­son, deter­mined to keep the USD as the glob­al reserve cur­ren­cy and the cur­ren­cy that all is trad­ed in for as long as pos­si­ble because it’s what gives them free cash most­ly.

And even the Saud­is are talk­ing to Chi­na about mov­ing to Juan appar­ent­ly. So I think there was that, there’s a whole bunch of oth­er things. Yeah.

Tony Kynas­ton: I.

was gonna say, I think there’s also this fear of influ­ence, um, argu­ment. So.

Cameron: Mon­roe [00:12:00] doc­trine.

Tony Kynas­ton: Don wrote doc­trine, but,

Cameron: Done row.

Tony Kynas­ton: Don, Don wrote. But um, yeah, I mean I think it’s, the inter­est­ing thing will be that, um, and yeah, there’s been some com­men­tary that this is a deal with Putin to keep Ukraine. He gets fed to us, get Venezuela, and, and then Chi­na gets Tai­wan.

So that’s the inter­est­ing thing. What hap­pens with Tai­wan, I think in the next year or so.

Cameron: Look, you know, and I, you and I have talked about this over the years and I’ve done so many hours of this on oth­er shows, but the bot­tom line is the US econ­o­my runs on mil­i­tary key­ne­sian­ism. It has done since the thir­ties, near­ly a hun­dred years of mil­i­tary key­ne­sian­ism. You the, the Amer­i­cans need a major war.

Every decade because that’s what keeps the econ­o­my mov­ing. There are tens of thou­sands of busi­ness­es in the US that rely on mil­i­tary con­tracts [00:13:00] to sur­vive. And so they need the Pen­ta­gon to be rolling in cash. And it’s not just rolling in cash. It needs to be spent urgent­ly. So you have no bid con­tracts and you have stuff that, oh, and so every time they audit the Pen­ta­gon, we talked about this in the psy­chopath book audit, the Pen­ta­gon.

Where did that mon­ey go? Well, we don’t know where it went. How do you not know where it went? Well, we did­n’t have time to think about where it went. It was an emer­gency. We just had to spend it hun­dreds of, hun­dreds of bil­lions of dol­lars. Get any receipts. We did­n’t have time for receipts. What are you crazy?

We had to spend it quick­ly.

Tony Kynas­ton: accept­ed cash, which we can’t

Cameron: Nah, nah. And this has been going on for decades and decades and decades. Um. Ukraine is wind­ing down. So the us, the mil­i­tary, indus­tri­al, con­gres­sion­al com­plex as Eisen­how­er called it needs, uh, needs, needs mon­ey. Where’s the mon­ey com­ing from? We need, we need to get involved in some­thing that’s prob­a­bly gonna take it least 10 years.[00:14:00]

Um, let’s get going. So yeah, the whole bunch, there’s a whole bunch of things. Uh, these things are com­pli­cat­ed any­way, back to the oil price.

Tony Kynas­ton: to invest­ing.

Cameron: So it was a big enough deal that I actu­al­ly, after hav­ing already checked the oil price, uh, as I nor­mal­ly do on the week­end when I’m doing the buy list, and yes, our lis­ten­ers now have me doing it on the week­end.

Uh, who needs a week­end?

Tony Kynas­ton: your oys­ters

Cameron: Um, well I did it over the week­end, but I nor­mal­ly fin­ished it on a Mon­day, but now every­one’s like, can we have it on Sun­day?

Tony Kynas­ton: why? not give it to ’em on Wednes­day? What’s, what’s the dif­fer­ence? The mar­ket’s shut on Sun­day

Cameron: I dun­no.

Tony Kynas­ton: unless peo­ple

Cameron: Uh,

Tony Kynas­ton: free time to do their invest­ing on the Sun­day. I don’t know.

Cameron: I guess that’s some­thing to do with it. Yeah. Um, so I checked it on Mon­day. That’s true. And kung fu iss off on Sun­days. So what else am [00:15:00] I gonna do? Spend time with my fam­i­ly? Uh, uh, I did pick up Hunter from the air­port, uh, on Sun­day. Got back from LA and spent a few hours with him. It was nice.

Anyw who? Um, this is in the finan­cial review, Alex Lucius. Oil mar­kets had large­ly for­got­ten about Venezuela, at least until recent­ly. At its peak in the mid two thou­sands, the South Amer­i­can coun­try was pro­duc­ing 3 mil­lion bar­rels a day, a gen­uine pow­er­house that held the world’s largest oil reserves. But after years of gov­ern­ment cor­rup­tion and inter­na­tion­al sanc­tions, the lat­ter of those two, the one that peo­ple tend to ignore or min­i­mize, Venezue­la’s out­put, had dwin­dled to just 930,000 bar­rels a day by Novem­ber, account­ing for less than 1% of glob­al sup­ply.

And then he talks about the kid­nap­ping. While oil prices were expect­ed to spike on Mon­day, made con­cerns about sup­ply dis­rup­tions, Brent actu­al­ly fell as much as 1.2% towards $60 [00:16:00] US a bar­rel as mar­kets start­ed to price in the prospect of a return to Venezue­la’s for­mer glo­ry. Even so ana­lysts say it will take years to unlock the coun­try’s vast crude reserves giv­en the ener­gy sec­tor’s derelict infra­struc­ture, lack of human resources, and dearth of cap­i­tal.

There is also uncer­tain­ty about whether Maduro’s replace­ment will sup­port Trump’s push to revive out­put. So, uh, yeah, I don’t expect the oil price to which bit.

Tony Kynas­ton: Maduro’s replace­ment will even­tu­al­ly sup­port the Trump to get us oil com­pa­nies into Venezuela. be the 10th replace­ment, well, the third replace­ment or the first one. But they will def­i­nite­ly

Cameron: Right? Wow. Yes. I mean, I think it depends on a lot of fac­tors too, where, where Chi­na gets involved here, uh, if and when Chi­na gets involved, and I don’t expect them to do, if and when the Unit­ed States [00:17:00] com­plete­ly crum­bles into a, a, a civ­il war between the oli­garchs and the peo­ple if and when that hap­pens.

There’s a lot of, a lot of mov­ing parts here, but yeah,

Tony Kynas­ton: if we just

Cameron: I think it’s a hmm, no go.

Tony Kynas­ton: I’m just gonna focus on the oil price. Um, if we just focus on that,

Cameron: hmm.

Tony Kynas­ton: I mean the Venezuela holds some­thing like 30% of the world’s resources. Um, although it’s what’s called heavy crude, so it can’t be refined eas­i­ly in a lot of refiner­ies. But the US Coast refiner­ies already refine heavy crude out of Cana­da, the All Ords sands in Cana­da. that will be an inter­est­ing impact on Cana­da. There’s been a bit of com­men­tary say­ing that this is all about, crush­ing the Cana­di­an econ­o­my, so it can become the 51st state. I don’t believe that, but it will cer­tain­ly a lot of pres­sure on, uh, Canada’s econ­o­my because if, if Venezuela can ramp up, and that’s a big if, because, [00:18:00] know, as you said in that, um, Alex GL arti­cle, there’s been a lack of invest­ment in the infra­struc­ture in the oil indus­try since, um, uh, what’s his name?

Um.

Cameron: Which

Tony Kynas­ton: Chavez, thank you. No, Chavez nation­al­ized it. And, uh, all the, all work­ers left and they did­n’t have all work­ers with expe­ri­ence to replace them. Um, and with no clear roadmap com­ing out of Wash­ing­ton as to what’s gonna hap­pen, that might, that might take shape that your all majors aren’t gonna invest a whole heap in Venezuela until they can be sure that it’s, uh, sta­ble.

It’s worth invest­ing in because, you know, to restart an oil indus­try, take bil­lions and bil­lions and bil­lions of cap­i­tal.

Cameron: Yeah.

Tony Kynas­ton: so Chevron’s in there. So they’re, they’re the like­ly can­di­date to Kick­starter. But, um,

Cameron: Yeah.

Tony Kynas­ton: the oth­er majors will fol­low until Chevron looks like they can turn a buck out of, you know, expand­ing and restart­ing what’s down there. So it’s many years in the future I would’ve thought, um, back to any sort of [00:19:00] scale and then. To go from 1% of the world’s out­put to full capac­i­ty, which might be as much as 30%. there’s just not that much demand in the world to absorb that extra oil. So that will depress the price, but it also means that, um, it, it won’t ramp up to full capac­i­ty.

I would­n’t have thought. So I, uh, look, I think the price for all prob­a­bly will go down, but it’s prob­a­bly not gonna go down by much in the near term. again, this is all pre­dic­tion. Who knows? Um, the inter­est­ing oth­er, the oth­er inter­est­ing take is on Chi­na, because, I’ve read some analy­sis in the last, uh, or heard, heard an inter­view in the last cou­ple of weeks with some­one, um, who fol­lows ener­gy sec­tor in Chi­na, who’s say­ing, look, Chi­na wants to be self-suf­fi­cient.

They don’t have enough oil. So they’re, don’t want to be behold­ing to import it. They’re gonna get, they’re real­ly ramp­ing up elec­tri­fi­ca­tion of the econ­o­my. Um. The biggest solar farms are in Chi­na. The biggest wind farms are in [00:20:00] Chi­na. are real­ly try­ing hard to wean them­selves off oil, and, uh, that’ll take time, but that’s also going to reduce demand for oil going for­ward too.

So, um, I, it’s real­ly, if you dig down on the oil side, it’s real­ly hard to see what the clear objec­tive is for the US going into Venezuela for oil, because they’ve already got it from Cana­da. maybe it’s cheap­er, uh, to, to buy it from Venezuela or to, to refine it, uh, sor­ry to, um, export it from Venezuela or import it from Venezuela.

Maybe are oth­er things that play, out­side of the oil sphere. But, uh, it’s gonna require bil­lions of dol­lars of invest­ment. It’s gonna require a com­plete takeover of the gov­ern­ment, um, to shape, to be, you know, reli­able in terms of US invest­ment. And it’s gonna take time.

Cameron: Well, I’m look­ing at the chart, the, the crude chart. At the moment, I fig­ure the buy price for us now is around about 65 bucks, [00:21:00] and it’s cur­rent­ly up to 61 50, so it actu­al­ly does­n’t have very far to go now. I mean, it’s come down from like 116 bucks a bar­rel ear­ly in 2022, sort of halved, more or less since then, um, it has rebound­ed a lit­tle bit.

In the last cou­ple of weeks, like, but it was rebound­ing from mid­dle of Decem­ber, so before this hap­pened. Any­way, but uh, we’ll keep an eye on it. Oil might become a buy again in com­ing weeks. We’ll see what hap­pens.

Tony Kynas­ton: I guess the oth­er dimen­sion, two oth­er dimen­sions. Uh, if the Ukraine War is set­tled, does that mean that Russ­ian oil stops being sanc­tioned, in which case that’s anoth­er, know, input into the demand equa­tion. And then the third, the, well, the sec­ond oth­er fact is that, um, does OPEC do in response to all this?

Because if, uh, if there’s more prod­uct com­ing onto the mar­ket, you’d expect them to try and raise their mar­gins. may well try and crunch the mar­ket, first of all, to [00:22:00] get it below a, I don’t know what the cost com­par­i­son is between OPEC oil and Venezue­lan oil, but they may need to, have an advan­tage, in which case they’ll crunch the price, but even­tu­al­ly it’ll go up to, again, to reflect a healthy mar­gin for them. So, lots of, lots of mov­ing parts on this one.

Cameron: Well, good thing that we don’t have to pre­dict any­thing. We just play it by day by day. Speak­ing of day by day, Tony, every Wall Street ana­lyst now pre­dicts a stock ral­ly in 2026, accord­ing to the finan­cial review.

Tony Kynas­ton: has that not been the

Cameron: This

Tony Kynas­ton: if your job is sell­ing,

Cameron: well,

Tony Kynas­ton: your job is sell­ing stocks, what’s the out­look? Sun­ny for stocks.

Cameron: uh uh,

Tony Kynas­ton: always

Cameron: well,

Tony Kynas­ton: Street. That should be a

Cameron: real­ly, they’re nev­er pes­simistic.

Tony Kynas­ton: Oh, they are. But um, you know, it tends to be more opti­mistic than pes­simistic.

Cameron: Well, this is from the 30th of Decem­ber, finan­cial review. Alexan­dra [00:23:00] Ano­va and Sika Jai at the big banks and the bou­tique invest­ment shops. An opti­mistic con­sen­sus has tak­en hold. The US stock mar­ket will ral­ly in 2026 for a fourth straight year, mark­ing the longest win­ning streak in near­ly two decades.

There’s plen­ty of angst about the risks to the bull run that’s pushed the s and p 500 index up some 90% since its Octo­ber 20. 22 low. The arti­fi­cial intel­li­gence boom could turn to bust the econ­o­my and the Fed­er­al reserve’s inter­est rate deci­sions could defy expec­ta­tions. And Pres­i­dent Don­ald Trump’s sec­ond year could bring even more unan­tic­i­pat­ed shocks than his first.

But after three years, when the equi­ty mar­kets rip Roar­ing Run made a mock­ery of any bear­ish calls sell side strate­gists are march­ing in lock­step opti­mism with the aver­age yearend s and p 400 500 fore­cast imply­ing anoth­er 9% gain next year, not a sin­gle one of the [00:24:00] 21 prog­nos­ti­ca­tors sur­veyed by Bloomberg News is pre­dict­ing a decline.

The pes­simists have been wrong for so long that peo­ple are kind of tired of that shtick said vet­er­an mar­ket strate­gist and long­time bull ed Ardi­ni. Yeah. When peo­ple start say­ing, we’re tired of the pes­simism, I get pes­simistic.

Tony Kynas­ton: exact­ly.

Cameron: That’s, uh, basi­cal­ly that’s, that’s peak opti­mism, isn’t it? When it’s like, ah, shut up. You’re pes­simists.

Tony Kynas­ton: We’re

Cameron: You’ve been pes­simistic for so long. How long can you be wrong for? But the coun­ter­point to that was chant clear. Uh, on Jan­u­ary 5th. So yes­ter­day, equi­ty investors could not be more opti­mistic and it is ter­ri­fy­ing.

As the loud­est voic­es spruce anoth­er stel­lar 15% for the share mar­ket, it is well worth con­sid­er­ing and prepar­ing for what could go wrong. Mar­kets start the year punch drunk on arti­fi­cial [00:25:00] intel­li­gence, equi­ty investors, bond investors, pri­vate mar­kets, pub­lic mar­kets. Every­one’s expect­ing to make a matza from this nev­er before seen spend­ing.

Boom. The cap­i­tal invest­ment spend­ing prof­its, pro­duc­tiv­i­ty poten­tial, most­ly in the hands of a small hand­ful of tech­nol­o­gy giants has the bulls charg­ing out of the gates even hard­er than last year or the year before it. And it is tilt­ing the mar­ket con­ver­sa­tion one way. Any­way, goes on to say that. Uh, he does­n’t think that it’s nec­es­sar­i­ly all that good.

The amount of ball that there are, he talks about at the end, um, big super still large­ly over­weight Aus­tralia and under­weight the US is on the oth­er side of the trade and send­ing mon­ey off­shore to try to rec­ti­fy it. The bears are so down trod­den, per­haps too wrong for too long. Cre­at­ing a one-sided rhetoric, that is a scary way to start the year.

Let’s hope it is just a tim­ing thing and not indica­tive of how far the active equi­ties, [00:26:00] com­mu­ni­ties stocks have fall­en. So what do you think about all that dk?

Tony Kynas­ton: I think it’s rea­son­ably sim­i­lar to what the out­look was for 2025. Um. Inter­est­ing. I mean, if, if this is anoth­er pos­i­tive year and I’ve got no idea, when peo­ple ask me will I pre­dict for the stock mar­ket, they always say they’ll go up 10%. That’s its long-term aver­age. So who, who knows what will hap­pen. pre­dict it. But yeah, it has been a, a long streak for Wall Street. I guess bol­ster­ing that apart, apart from all the fan base for AI stocks is the fact that the, the com­pa­nies in that Mag sev­en are on the whole still very prof­itable and still grow­ing prof­its too. which will end at some stage. There’s no clear evi­dence for it end­ing now. And it won’t also be a bumpy, it won’t, won’t also be a straight line rise. It’ll be a bumpy ride, just like 2025 was. There’ll be inde­pen­dence days. There’ll be, um, know. [00:27:00] deep, deep, what’s it called? Deep seek, the Chi­nese knock­off of chat, GPT com­ing out. all sorts of things which will knock the mar­ket for a kil­ter, if there are, um, if the under­ly­ing big tech stocks are still mint­ing cash, then the mar­ket will go up. Um, but there’s so many ifs in there, it’s, you can’t pre­dict it. Um, and there’s also all of those arti­cles neglect­ed the polit­i­cal side. There’s gonna be midterm elec­tions, um, next year, if know that, if maybe, yeah, right. If they go ahead and if they

Cameron: Yeah.

Tony Kynas­ton: if they do result in a break of the stran­gle­hold of all three hous­es or all three arms of gov­ern­ment, that, that may send shock­waves through Wall Street, um, there’s all sorts of things that can hap­pen. I sus­pect, know, for me, the things to watch next year are the Fed and the RBA and, uh, the RBA take the RBA first, we. Stay away. It’s Tues­day the [00:28:00] 6th of Jan­u­ary, I think tomor­row the month­ly CPI fig­ure, which is, um, peo­ple are think­ing we’ll be around 3.8%, which is out­side the RBAs range. And the last one was above the RBI RBAs range.

So at some stage, the RBAs gonna have to seri­ous­ly con­sid­er rais­ing inter­est rates. And as we know from recent past that, that gen­er­al­ly gives the mar­ket pause in Aus­tralia. So that, that’s, that’s I guess some­thing to watch. Um, and the kind of reverse is hap­pen­ing in the US their infla­tion num­bers are still around 2% and like­ly noth­ing looks like stop­ping that.

Although of sur­prised tar­iffs haven’t, um, increased infla­tion in the us but they haven’t for, for what­ev­er rea­son. Uh, uh, so. The Fed is like­ly to cut rates over there it’s, if infla­tion stays at 2% or very low. And of course, there’s also threats from Don­ald Trump to replace the Fed share when his term expires dur­ing the year with a lack­ey and, um, which will give him con­trol of the fourth arm [00:29:00] of gov­ern­ment, I guess, or fourth arm of the econ­o­my. Um, and he’s not gonna raise rates. So that’ll be an inter­est­ing dynam­ic if the US is cut­ting rates in Aus­tralia is rais­ing rates, um, impli­ca­tions a myr­i­ad of on us. It’s prob­a­bly pos­si­ble that that puts our cur­ren­cy up, which will hurt exports, um, and slow things here as well. So it maybe it’s a, a year to be a US investor and I’m Aus­tralian investor, but who knows?

I’m, I’m just stick­ing to the knit­ting and watch­ing it all unfold and, uh, as you say, watch­ing the US Venezuela and see­ing what they’re doing down there.

Cameron: Yeah, and then what hap­pens in Green­land or Cuba or who­ev­er else, they decide, Hey, let’s go.

Tony Kynas­ton: the risk, I think the world is, is going back into its spheres of influ­ence. Um, that’s the par­a­digm. I think Rus­sia is gonna get pret­ty much what it wants out of Ukraine. Um, I think if it’s not tac­it, [00:30:00] there’s kind of some kind of tip for tat, there­fore that the US gets con­trol of its sphere.

And whether it stops at Venezuela, Trump’s already say­ing it’s also gonna include Cuba and Colum­bia. Um, who knows? And Chi­na will get Tai­wan. Then when Chi­na gets Tai­wan, I think that’s gonna be the real desta­bi­liz­er the share mar­ket. But, um, lots of cards to fall and domi­noes to fall before that hap­pens.

Cameron: Like if you are a sub­scriber to John Heim’s real­ist, view of inter­na­tion­al rela­tions as I am, um, spheres of influ­ence nev­er went away.

Tony Kynas­ton: cor­rect.

Cameron: You know,

Tony Kynas­ton: Yeah.

Cameron: it’s always been. The way that the major pow­ers have seen things. It’s just like you don’t put boots on the ground unless you have to. So you are con con­trol­ling your spheres of influ­ence, par­tic­u­lar­ly in your region with eco­nom­ic and trade deals, and mak­ing sure that the polit­i­cal [00:31:00] par­ties that are favor­able to your inter­ests and that kind of stuff.

And if things start to go awry, then you rack ratch­et it up a notch and, you know, you do a lit­tle bit of regime change here or there. And if that still does­n’t work out, you put boots on the ground as a last resort, which is what, at least for, that’s what I believe Putin did in Ukraine. The Trump thing’s, a dif­fer­ent ket­tle of fish.

But, um, yeah, I, I don’t think the, this, this, you know, spheres of influ­ence thing is return­ing. I think it’s just always been there, but under the sur­face.

Tony Kynas­ton: No, I agree. Except, except it, yeah. It has­n’t, it has­n’t been as overt as it’s becom­ing, um, because of. Rus­sia and Ukraine, I think, and Chi­na and Tai­wan. And I don’t, I can’t for the life of me see why Trump is going into Venezuela except to put some prof­its into the oil com­pa­ny’s cof­fers and the mil­i­tary’s cof­fers, which of course is a, rea­son, but it’s not like, um, there were mis­siles being [00:32:00] deployed on the coast of Venezuela appoint­ed at the US or any­thing like that.

So, um, yeah, I, I think Trump’s just going, Hey, I’m feel­ing left out. I’m gonna, if you guys are, if you guys are mov­ing, I’m mov­ing too. Um, and I guess that brings Green­land into play too. ’cause there’s been plen­ty of arti­cles about Chi­nese nuclear sub­marines going under the fur­ther and fur­ther under the arc­tic ice towards Amer­i­ca.

And Green­land would be a con­trol­ling point to, um, to be a gate­way for that, I guess. So that’ll be inter­est­ing.

Cameron: Oh dear me. You got some notes you wan­na talk about before I get into the rest of my sto­ries?

Tony Kynas­ton: um, cou­ple of things. Not a whole lot if. So I’ve been doing growth over PE analy­sis, which I’ve now called grope I was

Cameron: I’m not sure. I’m not sure about that abbre­vi­a­tion, Tony? Yeah. How’s, how’s the

Tony Kynas­ton: know, like

Cameron: grope going?

Tony Kynas­ton: It’s

Cameron: doing your grope analy­sis,

Tony Kynas­ton: I tried to save a, um, a spread­sheet and call it GR slash pe, [00:33:00] excel, would­n’t accept it. So I start­ed call­ing

Cameron: right?

Tony Kynas­ton: Space O, space pe and then I thought, oh, growth

Cameron: Grope.

Tony Kynas­ton: out.

Yeah. Growth over pe.

Cameron: Okay. You know, as a white male of your age, I’m not sure grope is nec­es­sar­i­ly some­thing you should be talk­ing about, but Okay. You know, you do you, I’m not gonna argue the grope episode with Tony Kon.

Tony Kynas­ton: Yeah. Well. Regard­less of what it’s called, the analy­sis has been inter­est­ing. Uh, so did a lot of one-off type analy­sis, which showed there was some­thing growth over PE being a, a met­ric which indi­cat­ed the out per­for­mance. Um, it was­n’t always a one-to-one cor­re­la­tion. Uh, some­times stocks with neg­a­tive fore­cast earn­ings did well, obvi­ous­ly, you know, sur­prise came along or a change hap­pened dur­ing the year and that their for­tunes.

Um, some­times stocks with very high growth over PE did­n’t do well for what­ev­er [00:34:00] rea­sons. some­times they exit­ed our buy list for com­mod­i­ty rea­sons as well. So and that was prob­a­bly the one of the com­mon fac­tors. A lot of growth over pe, high growth over PE stocks and min­ers. And then I was find­ing that dur­ing the year. Iron, oral coal would be a cell. Coal in par­tic­u­lar always fore­cast to grow even though the com­mod­i­ty itself went up and down. So that was very chop­py. Uh, any­way, so I’ve gone back to some of my old­est bios, which have growth over PE called out them, which I think was in 2020. And I’ve been putting togeth­er some, um, dum­my port­fo­lio since then.

Uh, which is a real­ly menial man­u­al task to put 20 stocks togeth­er and then track when to sell them, when to replace them, what with et cetera. It’s like just painstak­ing. if you’ve got any code that you use in pro­duc­ing your buy list, which could help, would be use­ful for me. but um, yeah, so I haven’t found any­thing defin­i­tive yet, but what it’s [00:35:00] look­ing like is, okay, so a cou­ple of things. Um, I put togeth­er a. A base­line buy list. So I took, I think it was August, 2020, was my start­ing posi­tion and took the top 20 stocks on the down­load the buy list from then, with­out any growth, uh, on with­out, with the nor­mal scor­ing for growth over pe. Then I, uh, changed the spread­sheet so it would score growth over PE accord­ing to what growth over PE per­cent­age was.

So if it was 20%, the score would be 20. Um, which boost­ed obvi­ous­ly those stocks. And I also includ­ed neg­a­tive. So if they had neg­a­tive fore­cast growth over PE, that would drop their score. There was­n’t a whole heap of change to the buy list. A cou­ple of stocks that weren’t on the buy list came on, a cou­ple of stocks in the buy list changed their order. Um, but I think from mem­o­ry that that buy list only had two dif­fer­ent stocks. To the stan­dard buy list. So that was inter­est­ing. So that was in the top 20 stocks on the buy list, and then the one which I’ve [00:36:00] just start­ed, which looks them, oh, sor­ry. Then I did anoth­er one, which was to just grant growth over PE and put togeth­er a buy list of those stocks, whether they were QAV scores or not. and then the last one was the bias as it cur­rent­ly stands, change the met­rics so it scores accord­ing to the growth over pe and then go from there. And that looks like it’s hav­ing the best results so far. I’m still part­way through the analy­sis and I’ve still only got sort of one start date and it prob­a­bly needs to have few start dates to be a rel­e­vant analy­sis.

But um, yeah, that’s where it’s at.

Cameron: Shoot me an email if you can, with exact­ly what you want the code to do, and I can prob­a­bly write some­thing for you that’ll do it.

Tony Kynas­ton: Yeah.

Cameron: I don’t think I have any­thing that’s reusable, but if you just give me a bul­let point list of what you need it to do, I should be able to write some­thing.

Tony Kynas­ton: Okay, thank you. Yeah, I think prob­a­bly the main thing is that’s time con­sum­ing, is using the ator to work out the three

Cameron: Yeah.

Tony Kynas­ton: cell is for it. [00:37:00] ’cause it’s kind of painstak­ing there. You look at it, you say, okay, there’s the cur­rent L one L two. I’ll go and look at those.

Cameron: mm-hmm.

Tony Kynas­ton: dates when

Cameron: Mm-hmm.

Tony Kynas­ton: it was­n’t, so you go do that, it kind of inter­acts four or five times until you find it. The only oth­er way to do it is to just scroll through month by month after you buy it and check.

Cameron: Well, I have like the, my buy list uses Yahoo Finance to cal­cu­late all of that stuff. So I could prob­a­bly take, cre­ate a ver­sion of that to iter­ate through for you, but

Tony Kynas­ton: Thanks.

Cameron: need to tell me exact­ly what you need us to do, but it should­n’t be too hard to pull togeth­er.

Tony Kynas­ton: I’ll do that. So that’s ongo­ing, but um, show­ing some results, which is good. Some pos­i­tive results. Uh. What else? So I, I come across a good quote, which I thought was worth talk­ing about. This was in yes­ter­day’s, or maybe today’s Fin Review. Uh, Doug Henin from a, a fund man­ag­er called GCQ, said the stock mar­ket is the only mar­ket in the world.

When [00:38:00] every­thing goes on sale, peo­ple run away. I thought that was real­ly good.

Cameron: Yeah. Is he a, is he a local

Tony Kynas­ton: Yes.

Cameron: Yeah. Got­ta get him on Doug Henin,

Tony Kynas­ton: Yeah. Doing a lot of invest­ment in, but doing a lot of invest­ment in tech stocks and, uh, the arti­cle spoke about him becom­ing an Uber dri­ver ’cause he thought Uber had, was under­val­ued, et cetera. So it’s not nec­es­sar­i­ly a, he’s a val­ue investor in terms of things being under­val­ued, but he’s also buy­ing what he sees as gross stocks.

But, yeah. Inter­est­ing arti­cle, quote, I thought very apt,

Cameron: Yeah.

Tony Kynas­ton: all

Cameron: Uh, Doug Tynan, is it?

Tony Kynas­ton: H‑E-N-A‑N.

Cameron: Hmm. Okay,

Tony Kynas­ton: And then the last thing I’ve got is to do a pulled pork on uh, Fenix Resources.

Cameron: why don’t you do that? Because, uh, we’re half an hour in already and I got a ton of sto­ries, so let’s, uh, do that.