QAV AU 908 — Blowing the Doors Off

QAV AU 908

Cameron: [00:00:00] Wel­come to QAV Aus­tralia, episode nine 908. 24th of Feb­ru­ary, 2026. Yes, tk. I have a new look.

Tony: Break­ing Kings Cross.

Cameron: Yeah, but no, but the,

Tony: it’s boy’s Mar­di Gras week this week.

Cameron: the thing is, Don­ny, when I put these glass­es on, I start to talk like Michael Kane. I have to. I have to say you’re only sup­posed to blow the bloody doors off Tony.

Tony: You do

Cameron: No,

Tony: You do look like Michael. claim with those glass­es.

Cameron: that’s why I bought the glass­es, Tony. ’cause I watched the I Crest fo and I said I want some six­ties glass­es. Big, big Michael Kane six­ties glass­es. But I have to talk like this when I have these glass­es

on.

Tony: I, I I get lots of clips from Michael Kane on my streams now. Inter­est­ing. One last

night. So, you know, he was born [00:01:00] in an area called the Ele­phant and Cas­tle

after a pub called the Ele­phant and Cas­tle.

Cameron: I did not know that.

Tony: Yeah.

But, and it’s a cock­ney area, but the his­to­ry of that is that it’s actu­al­ly named after Charles. Must be Charles ii. What’s Charles now? King Charles ii. Oh. Any­way, the cur­rent king, the last king that was called Charles, had a mis­tress called the, who was nick­named the Castel­li infant par­ty. So the, and that’s where the area was named after, but no one gave a damn about that. And they

changed it from Castil­ian F Ele­phant and

Cas­tle. That’s

why the pub is called the Ele­phant and Cas­tle

Cameron: Right.

Tony: after

the Charles II’s Mis­tress

Cameron: Wow.

Tony: Hmm.

Cameron: Wow. I’m already get­ting slow. Upload mes­sages from your end. Tony

Tony: no.

you know, blame me, Elon, because I’m

using star­link. It’s,

Cameron: Eon,

Tony: me I’m good.

Cameron: damnit Eon. [00:02:00]

Tony: Yeah,

Cameron: Well, Tony, um, got a lot to talk about this week. I have a lot of notes. It is report­ing sea­son. We did­n’t have a lot to buy last week. I did have about

sev­en or eight stocks today when I ran a new buy list. I think there was four yes­ter­day, five or six today, although one of them was. Rex or Reg or some­thing.

But then when I went to check it, it was actu­al­ly a Josephine, so

had to scrap that. But um, it’s start­ing to, start­ing to pick up, start­ing to get some reports out.

Tony: I am find­ing that too, not only are they volatile, but we are get­ting more num­bers

into the Stock Doc­tor now. So my B is, today was longer than what it has been for

a while.

Cameron: I got­ta start by, well. I, I actu­al­ly, I’ll stop by doing a port­fo­lio update. Let me do that. Um, port­fo­lios have been going well. Uh, I did the light sum­ma­ry [00:03:00] yes­ter­day for the light group for the last 30 days. It was only up about 1% ver­sus the index up two and a half. But, uh. The week before I had said that the best stock in the live port­fo­lios for the pre­vi­ous 30 days was South­ern Cross Elec­tri­cal Engi­neer­ing SXE.

It was up 13% for the month. When I checked yes­ter­day, it was still the best stock for the month, but it was up 42% for the month.

Tony: I’m, I’m guess­ing it had good results. it did have good results and for once good results actu­al­ly helped and did­n’t make it go down as we often see. Um, yeah, 42% when its results came out and, uh, that we, we have two hold­ings of it, which were up respec­tive­ly, 318% and 340%. Since we’ve held them, so, uh, good, good job. South­ern Cross. I dun­no what you’re doing, but good job.

Cameron: Uh, the light port­fo­lio is up 20 Oh no, is up 40% for the [00:04:00] last 12 months ver­sus the index up 13. And since incep­tion it’s up 22 ver­sus 11.

Tony: Mm-hmm.

Cameron: Um, so that’s doing all right. Uh, the dum­my port­fo­lio, let’s have a look at that. For the last 30 days, the dum­my port­fo­lio is down 1% ver­sus the index up 2%.

Best return in the last 30 days in the dum­my port­fo­lio is PPM Pep­per mon­ey.

Are they being acquired or some­thing? At the moment? Isn’t chal­lenger

Tony: they’ll

Cameron: our stock of the day?

Tony: pulled pork today.

Cameron: Yeah, yeah, yeah.

Uh, they’re down a lit­tle bit. They’re, but they’re up 15% in the last month as a result of that.

But for the last 12 months, the dum­my port­fo­lio is up 30% ver­sus 13% for the index. Oh my. That’s crazy. [00:05:00]

Um, this finan­cial year dum­my port­fo­lio is up 23% ver­sus eight, and if I do sort of last five years, the dum­my port­fo­lio is up 16.5% ver­sus 9.6.

Not quite dou­ble. It’s come down a lit­tle bit in the last month or so, but still. Doing okay, Tony. And what I hear from the mem­bers. Every­one’s port­fo­lios are doing great. Every­one’s hap­py. Hap­py lit­tle q AAVs.

Tony: See ya. I’m off

to the golf course.

Cameron: Jor­dan has built a regres­sion test­ing script, which he’s been send­ing me all this stuff and I, every time I try and read through it, it just gives me a headache. So I’m like, ah, I’ll put it off and do it lat­er, and I nev­er get around to it. I sent him an email this morn­ing say­ing, look, sor­ry. Uh, I haven’t got into this.

It’s just too much and too heavy and too deep, and I got too much oth­er stuff on and he [00:06:00] sent me a great response. Hey Cam, to be hon­est, I spent the last week mak­ing a rank­ing sys­tem using the data from the report and ran a test overnight, and it seemed to just pro­duce mar­ket results. Mar­ket returns. So at the moment I’ve learned noth­ing and it may just be noise.

So far, pret­ty much all of the tests I have run pro­duce QAV or worse results. I had one test that was 5% bet­ter CGA than QAV, but I don’t nec­es­sar­i­ly think this is repeat­able in the real world and may have just been a quirk of the way it’s select­ed stock. So I need to inves­ti­gate it fur­ther, but I’m not hope­ful.

I’ll try to get around to writ­ing a sum­ma­ry of what I found at some point and pass it over to you. I will sum­ma­rize it. Tony’s done a great job cre­at­ing QAV, and it’s real­ly hard to find tweaks to improve it. Thanks.

Tony: Uh, that’s the old, uh, evo­lu­tion, beat­ings beat­ing sci­ence. Is it that, uh,

it’s

evolved to be the opti­mal?

Cameron: Well, you know, I just think you have done a real­ly good job. I mean, I said to him, I expect that we’ll have super intel­li­gent AI at some point, and I’ll say, have a look at this. And [00:07:00] it’ll go, eh, it’s pret­ty good. You know, real­ly, it’s, it’s doing pret­ty good.

Tony: Yeah. I’m still try­ing to do regres­sion test­ing for

The growth over PE changes. So if,

Cameron: The gr.

Tony: a back test­ing that can

help with that, that’d be

great.

Cameron: Well, I wan­na ask you a,

oh, sor­ry. Go on.

Tony: devot­ing an hour in here and there, but I’m real­ly

only get­ting through a cou­ple of trans­ac­tions

Cameron: Yeah,

Tony: So, yeah, it’s just real­ly

slow.

Cameron (4): Wheat.

Tony: Mm-hmm.

Cameron (4): Wheat.

Tony: crop.

Cameron (4): I was, um, hav­ing a look at the wheat com­mod­i­ty chart, the wheat cell line, and was­n’t quite, was­n’t quite sure how to track it. Now when I go into trad­ing eco­nom­ics, it won’t let me, uh, even open the bloody thing. Um.

Tony: So we’re look­ing at lines of wheat.

Cameron (4): Wheat lines blow­ing through my mind and all the while I think of [00:08:00] you. You know this song, white Lines Grand­ma Flash and The Furi­ous Five. Come on man. What? Uh, okay.

Tony: them. I

just dun­no that song.

Cameron (4): White lines. Ah, clas­sic. Duran Duran did a cov­er of it in the eight­ies, nineties, two thou­sands maybe. So if you look at the, um, month­ly thing for the wheat thing, uh, the wheat chart.

Tony: he sound like Rod­dy.

Cameron (4): Yeah, I know

Tony: with him. I have to request pro­nouns.

Cameron (4): Uh, so the low, the, the trough for wheat is Decem­ber, 2025. Um, 507 USDA bushel. And then the line goes straight up from there, uh, to, um, Feb­ru­ary 26th of 5 81. So, I mean, I can, if I go back in time, typ­i­cal­ly what I’ll do when I’m draw­ing my three point trend lines in my coat­ing these days is if there’s no.

Easy line to [00:09:00] draw if, if the trough, the low­est trough is The most recent trough and is there’s no easy sec­ond trough or even sec­ond month to draw a cell line through. You see, if you drew one from this, it just goes straight up the price line any­way, which is, kind of point­less if you go back in time and try and find a pre­vi­ous cell line.

It’s also dif­fi­cult ’cause the price has been com­ing down for the last few years. So I have had this down as a sell because I think it’s been declin­ing and it has­n’t real­ly bro­ken through. When you have a look at this, how would you eval­u­ate wheat?

Tony: The prob­lem is, I can’t look at it like, uh, it’s, I’m get­ting a week­ly graph right now. If

I need, if

I go to month­ly, it asks me to log in.

Cameron (4): All right, well, yeah. Let me, um, give you a

Tony: if I look at, if I look at the week­ly graph, um, there’s a, a trough as you said, but in the, in a, in the fol­low­ing weeks, there’s a sec­ond cell line.

[00:10:00] So you can draw a

line and it’s above, price is above that, but, um, we nor­mal­ly

use month­ly

rather than week­ly.

Cameron (4): I’m gonna, uh, share my screen with you so you can see what I’m see­ing.

Tony: Yep. Good.

Cameron (4): Can you see that?

Tony: Yeah, I can,

Cameron (4): So that’s the month­ly chart. Um. You can see the, uh, this is the low­est point here, Decem­ber. It just goes straight up. It goes straight up from there. So it’s pick­ing up, it’d be above its byline if I draw a byline down here, but I, I strug­gle to draw a cell line for this, so I want­ed to get your thoughts on it.

Tony: Um, yeah. Good, good ques­tion. I, I

think it’s above its spy line, so I’d say it’s a buy and we treat, I would treat it as

being on

cell line, but not below it.

Cameron (4): You’d just draw the cell line, straight up there.

Tony: yeah. Yep. But I also think, uh,

a good ques­tion. I would,

Cameron (4): Hmm.

Tony: we’ve got [00:11:00] anoth­er one, but no

L two,

haven’t we?

Cameron (4): Unless we go back. Into a ret­ro­spec­tive cell line, and then it’s, gonna be, even that’s gonna be dif­fi­cult because, you know, you can’t real­ly draw one, out of Sep­tem­ber 25 either or there, like the, they, it.

the troughs keep get­ting low­er And low­er all the way down here. Maybe July 24.

Tony: Yeah. Okay. I was gonna say even back to the

left hand

side of the graft before the

peak.

Cameron (4): Right, right.

Tony: Yeah.

Cameron (4): If I drew it from July 24, it might be above that, But, You know it, it would’ve breached it here. I don’t know. It’s kind of messy.

Tony: the way I do it is you’ve got L one,

which is Decem­ber 25.

You’ve got

a month after that,

Cameron (4): Yeah,

Tony: kind of L two,

Cameron (4): yeah. You just draw it straight up. Yeah.

Tony: Yeah.

Cameron (4): It’s a bit of a Schro­ding­er, I think kind of It’s sort of above the byline kind of below or on the cell line.

Tony: Mm

Cameron (4): I’m not sure there’s any wheat stocks on that buy list any­way, that it mat­ters. I [00:12:00] just thought I’d ask. Alright. Enough of that non­sense.

Alright, well okay with that.

Um, what else have I got here? Where’s my notes? Too many screens open.

Tony: Yeah, same. I’m clos­ing all

mine down

this because of the, uh, drain on the

Cameron (4): all, you’re all pix­e­lat­ed here.

Tony: Oh.

Cameron (4): NWH, anoth­er good report. It jumped up. Every­one was hap­py about that. Um, Par­en­ti on the oth­er hand, came out with its results, dropped at least 13%. Might have been a lit­tle bit more than that. Um, did you have a look at the NWH or the PRN results in any detail?

Tony: I did­n’t look at NWH, but I, I own

Par­en­ti, so I had a look at them in detail. Um,

inter­est­ing. I dun­no what it’s done

today. Have you seen what the share price has

done today?

Cameron (4): Yeah, it’s con­tin­ued. Con­tin­ue to drop today. Yeah. [00:13:00] 2 33 It is today? ’

Tony: Okay. Okay. So my take on the prof­it was it was­n’t too bad. So, uh, prof­it was up 12%.

I think what peo­ple are focus­ing on is two things. Rev­enue was rea­son­ably flat com­pared to the first half last year. Uh, they’ve done some good things. They’ve reduced their debt, they’ve increased their div­i­dends, so the num­bers aren’t too bad. I think what’s hap­pen­ing is this busi­ness, even though it’s known as a drilling ser­vices in the min­ing sec­tor, uh, ’cause it’s done a lot of rollups with drilling com­pa­nies.

It’s basi­cal­ly about 70% a con­tract min­er at the moment. And, so it’s got these con­tracts to run and oper­ate mines and there’s a few in South Africa. Oh, sor­ry. In, in West Africa, um, it’s expand­ing into the US as well. Uh, it’s got a cou­ple in Aus­tralia, but they’re large­ly locked in rev­enue, so there’s not much, unless they pick up a new mine con­tract, uh, [00:14:00] or lose a mine con­tract, there’s not much change in rev­enue, um, year on year.

So that’s what I think is hap­pen­ing is that even though it’s, uh, steady as she goes, the, the busi­ness, the ana­lysts are say­ing, well, where’s the growth? The growth is in the drilling side, which con­tin­ues to increase. Um, but that’s only about a quar­ter of the busi­ness now, so it’s real­ly got­ta increase a lot to move the, move the dial and then the oth­er, so the five to 10% is min­ing tech, uh, ser­vices, which is also grow­ing.

But again, it’s a very small part of the busi­ness, about 5%. the oth­er thing that’s hurt­ing this com­pa­ny is that a lot of their con­tracts, because they’re inter­na­tion­al, are done in US dol­lars and the US dol­lar is drop­ping, uh, against the Aus­tralian dol­lar any­way. So when. Repa­tri­ate, um, income into Aus­tralia, they’re los­ing a lit­tle bit because of appre­ci­at­ing Aus­tralian dol­lar.

Um, sounds like they’re unhedged on that basis. Uh, so they did, they did the con­ser­v­a­tive thing and they updat­ed their guid­ance and, um, [00:15:00] dropped the top end a lit­tle bit. Um, which I think has spooked the mar­ket, but, uh, has­n’t spooked me because Par­en­ti has got a his­to­ry of, um, over promis­ing, or sor­ry, under-promis­ing and over deliv­er­ing. so last year they said that the FY 26 rev­enue will be between 3.45 and 3.65 bil­lion. The, at the lat­est half results, they’ve updat­ed that to be between 3.45 and 3.55 bil­lion. So no change to the bot­tom and just a slight change, a decrease to the top. because of their wor­ry about, um, this dif­fer­en­tial in the US dol­lar to Aus­tralian dol­lar con­ver­sion. Um, and like­wise with EBIT guid­ance, they’ve dropped it from a range of 3 35 to three 55 mil­lion, down to 3 35 to three 50 mil­lion. So again, not much of a, not much of a change to the range. Um, and you know, I don’t know why ana­lysts were fac­tor­ing in the top end into their mod­els any­way, you’d nor­mal­ly fac­tor [00:16:00] your me the medi­an of that range into mod­els. Uh, but for some rea­son peo­ple haven’t liked that change to guid­ance and they’ve sold the stock. But look, every­thing else looks good to me. It’s a cash gen­er­at­ing busi­ness. It’s got long-term con­tracts to run mines. It’s got the drilling busi­ness, which is surg­ing. It’s got the tech busi­ness, which is nascent. Um. You know, they’re for, even though they’ve, um, fore­cast down, uh, slight down­grades at the top, at the top end of rev­enue and ebit, they’re, they’re increas­ing free cash­flow guid­ance, um, from being 160 mil­lion to $170 mil­lion, um, in FY 26. So I’m not see­ing any big move­ments that would spook me. Um, they’ve decreased debt, they’ve increased div­i­dends. Um, they’re, they’ve decreased CapEx a lit­tle bit, so, um, they’re actu­al­ly called out their fore­cast a decrease in CapEx that was being fore­cast at $340 mil­lion spend, and now it’s $325 mil­lion spend. So all of those things are gonna help cash [00:17:00] flow, oper­at­ing cash flow, and free cash flow. So I think it’s still a good com­pa­ny with low debt and large cash flows.

Um, con­tin­ue, I’m con­tin­u­ing to hold it, um, and I’m gonna watch for any con­tract min­ing wins, which seems to be the big things that move, guid­ance for this com for this com­pa­ny.

Cameron (3): Mm. Okay, so you’re not con­cerned.

No

gnash­ing of teeth. No gnash­ing of teeth.

Tony: as Dave Allen would say.

Cameron (3): Dave Allen said gnash­ing of teeth.

Tony: Yeah, the yeah. The old sketch where he, he pre­tends to be Rev­erend Pais­ley. There’ll be a protest in Belfast and there’ll be gnash­ing of teeth.

Cameron (3): Uh, good old Dave Allen. My mom sends me a Dave Allen clip at least once every cou­ple of months.

Tony: Mm. Flash­back to our child­hood.

Mm-hmm. Um, the only oth­er thing I had to talk about, Tony was, uh, AFR arti­cle. I saw the hid­den cost of the pas­sive [00:18:00] invest­ing boom. Jonathan Shapiro, I know this is one of your favorite talk­ing points,

Cameron (3): the size of the pas­sive funds.

He says, in tough times, act of fund man­agers have to stick togeth­er. And that’s pre­cise­ly what a trio of the world’s top funds are doing in this week in Syd­ney, Mel­bourne, and Auck­land. Bai­ley, Gif­ford, MFS, and Aus, who over­see around $1.5 tril­lion of assets. It’s near­ly as big as your port­fo­lio, a host­ing of their third joint gath­er­ing in six years to pro­mote the virtues of active man­age­ment.

The theme of the active Advan­tage forum is total beyond the bench­mark and is tak­ing place at a time and place where the bench­mark is in dan­ger of eat­ing every­thing. For the past 10 years, stock pick­ers have lost the active ver­sus pas­sive debate as beat­ing the mar­ket has proved chal­leng­ing for the indus­try in aggre­gate.

But in the past five years, Aus­tralia has become the land of the bench­mark due to the your future, your super regime. The intro­duc­tion of per­for­mance test­ing [00:19:00] has meant the indus­try in aggre­gate has deemed it too risky to fall behind its tar­gets, and so they’ve teth­ered hun­dreds of bil­lions of dol­lars of cap­i­tal to the appro­pri­ate share and bond indices.

The virtues of low-cost index invest­ing have well and tru­ly been proven, and the intro­duc­tion of per­for­mance tests to weed out under­per­form­ing super­an­nu­a­tion funds has large­ly worked. But warn­ings are grow­ing that this bench­mark dri­ven indus­try is cre­at­ing unin­tend­ed con­se­quences for the mar­ket and super­an­nu­a­tion mem­bers.

In short, nobody wants this. I’m not sure about this. Uh, they’ve weed­ed out under­per­form­ing super­an­nu­a­tion funds. Every time I look at the rank­ings, they’re all under­per­form­ing except two or three.

Dun­no,

Tony: Well, they all have to have, um, an

offer­ing now, which, uh, to a default offer­ing, which can be bench­marked against. Um, this my right? um, list­ing. So it has

result­ed, I think, I think from mem­o­ry though, the bot­tom 5% have to show how they can improve or be tossed, um, close down or merge with [00:20:00] some­body else.

Cameron (3): Wow. So it has, it has,

Tony: achieved results at the bot­tom end. But Yeah.

it’s, it’s, even the active man­agers now are like, as we said, they, they find it hard to be the bench­mark because basi­cal­ly they’re try­ing to hug the bench­mark, but in like, eek out two or 3% beat, um, and try and stay on their bad years, two or 3% below Yeah. they can hold onto funds.

Because

as we know

from QAV, um, his­to­ry, it’s if you want to, um, not care about the bench­mark and just care about mak­ing mon­ey, uh, you’ll have years where you’ve under­per­formed. You’ll have a lot of years where you’ve out­per­formed, and over time you’ll mas­sive­ly out­per­form. But if you’re in the, if you’re in, um, the pub­lic space and you are hav­ing a bad year, you’ll lose, um, fund you’ll have funds, redemp­tion.

So that’s the Yeah, Um. Um, I, we’ve cre­at­ed

all the ben­e­fits of

index invest­ing and low cost ETFs, um, they’ve cre­at­ed [00:21:00] this mon­ster where, uh, peo­ple won’t write out a bad half or a bad quar­ter for an active man­ag­er. They’ll just take their mon­ey yeah. And it’s

also, there are oth­er oth­er unin­tend­ed, oth­er unin­tend­ed con­se­quences going on because there’s a lot of peo­ple, um, tak­ing their mon­ey out of, uh, indus­try funds and, and retail funds, so large funds and putting them into self-man­aged super fund port­fo­lios, which they’re man­ag­ing them­selves, which is good

unless they dun­no what they’re yeah,

and then you have the first guardian and

shield prob­lems where they’re lis­ten­ing to bad advice. Um, and even though they were get­ting bench­mark returns in a large fund, they’ve lost a lot of mon­ey by doing it them­selves and lis­ten­ing to bad advice. So there, there are un unin­tend­ed con­se­quences in what’s going on too.

Cameron (3): share of Aus­tralian mar­ket cap, and it’s goes over the last 10 years. Back in 2015, it looks like it was about 6.57%. Today it looks like it’s 19%, [00:22:00]

uh, is in pas­sive funds. That’s

crazy. In 10 years.

Tony: Yeah. If it keeps cry­ing at that rate, what hap­pens? I mean, even­tu­al­ly, look, I, oh, it’s. I guess you only need one active man­ag­er to set the price, don’t you? To, to be able to say, I’ve just had these results announced and there­fore I’m gonna buy BHP or sell BHP or Par­en­ti or what­ev­er. Um, and then the pas­sive funds fol­low as the index rate needs to rebal­ance.

But, um, you know, if, if that per­son­’s being squeezed out of the mar­ket because they’ve had a bad half and peo­ple are redeem­ing, then who, who sets the price index funds can’t set the price.

Cameron (3): Hmm.

Tony: All they can do is fol­low the price, fol­low momen­tum.

So

that’s, that’s an issue. Um, I, I sus­pect that, you know, it’ll, it’ll arrive itself.

That, edu­ca­tion will hope­ful­ly improve that peo­ple will know they’ve got two choic­es, um, index or pas­sive fund­ing, in which case they get mar­ket returns and don’t, don’t com­plain and, um, Or go into active man­agers, [00:23:00] but be aware of volatil­i­ty and you just have to, you know, shut your eyes when you, the, the man­ag­er you like has a, a call to where they’ve Or the mar­ket splits between peo­ple and pas­sive funds and QAV sub­scribers.

Yeah. Well, you know, I think that’s exact­ly what should hap­pen. But you know, you, you, you know, from our his­to­ry that, um, as soon as we, uh, have a, a bad half, you know, peo­ple give us all sorts of excus­es while they want to, uh, cease being a sub­scriber.

Cameron (3): Even though we tell them every week when the, when things aren’t going well,

just stick with the sys­tem. Stick with the rules. It’s okay.

Tony: yep. still pan­ic. Um, Yeah. he start, he fin­ish­es this thing by say­ing the free mar­ket purists might argue that the sys­tem will take care of itself. I should be doing this as Michael Kane.

Cameron (3): I dun­no why I’m not a Dar­win­ian hope­ful to get into, get into char­ac­ter. Only sup­posed to blow. Yeah, that’s it. [00:24:00] The free mar­ket purists might argue that the sys­tem will take care of itself. Tony. A Dar­win­ian purge of the weak­est activist man­agers will leave the strong ones, the Feast Off, the Abun­dant oppor­tu­ni­ties cre­at­ed by I Volatil­i­ty and a price agnos­tic and price agnos­tic pas­sive investors.

But then the ques­tion is where the super funds will find them­selves on the wrong side of the trade. Some peo­ple, Tony, just wan­na see the World Burn

Tony: Yeah,

Cameron (3): Mas­ter Wayne. if you are doing Michael, if, yeah, I was

Tony: gonna say, if you’re doing Michael Wayne.

that makes me Bat­man.

Cameron (3): Yeah, that’s okay. Yeah, that tracks.

Tony: Yeah. Um, yeah, it’s inter­est­ing, isn’t it? I actu­al­ly think what might hap­pen is some­thing like QAV, where if you are an active man­ag­er, You’ll dis­ap­pear from the pub­lic view, which is what hap­pens in the us You look at Renais­sance Cap­i­tal and peo­ple like that, they don’t give a toss about [00:25:00] retail share­hold­ers.

They’ll just take, um, their net­works of peo­ple who know that they’re a good investor and take their mon­ey and say, well, you can’t redeem it for five years and give it to me and I’ll give you two or three times Mm. You know, your mon­ey in the Like Buf­fett in the ear­ly days. Berk­shire.

Cameron (3): Yeah. Yeah. exact­ly. mon­ey

Tony: how and then just

Cameron (3): don’t talk to me for 10 years.

Tony: Yeah. And look, you know, Bit­coin’s a real­ly good exam­ple of the, of what might hap­pen with pas­sive invest­ing in the stock mar­ket if it gets too big, And it may already be too big now in that, uh, if, if, you know, Comm­Bank, comes out with a bad result, but it’s, it’s not that bad, but the shares go down 1% and Comm Bank’s the biggest share in the index.

So all the pas­sive fol­low­ers have to sell Comm­Bank to, you know, rebal­ance their port­fo­lios by 1% that sell off. Comm­Bank down 2%, it just becomes an ampli­fi­ca­tion of the momen­tum in the mar­ket. And get these wild swings that you can’t explain [00:26:00] because it’s just pas­sive invest­ing, hav­ing to fol­low the momen­tum.

And it’ll become an ampli­fy­ing of both uptrends and down­trends, which is not And how does that impact QAV long term?

Gives us bet­ter buy­ing oppor­tu­ni­ties. ’cause,

because if just like, just like

now, as we’ve said with, with some fund man­agers, a lot of fund man­agers who are tied to a man­date, you know, I’ve got­ta, I’ve got­ta be a, um, a val­ue man­ag­er. I’ve got­ta be a growth man­ag­er, I’ve got­ta be an inter­na­tion­al man­ag­er. I’ve got­ta be a, know, um, a top 300 man­ag­er or what­ev­er.

Um, they’re boxed in. Um, if they can’t find they’ve got­ta try and max­i­mize what’s avail­able, which, which, um, you know, when­ev­er some­one’s box­ing against you with one hand tied behind the back, it cre­ates an oppor­tu­ni­ty for us as, um, investors to take the oth­er side and ben­e­fit from it.

Cameron (3): Sor­ry, I’ve been watch­ing too much. Paul Lind on Hol­ly­wood Squares. Do you, do you remem­ber Paul Lind?

Tony: I do. Yeah. I went through

I, that’s, that’s God. Sor­ry,

Cameron (3): so I was just gonna Mabb [00:27:00] make anoth­er King’s Cross

well after you said, tied to a man­date. I had Paul Lind in my head going, I got tied to a man­date once, took me hours to get him to untan­gle me. Um, I

I was watch­ing. Bye bye birdie. So over the week­end I watched Viva Las Vegas. On SBS and I was like, oh, I haven’t seen any­thing else that Ann Mar­garet did in the six­ties and Bye­bye birdie’s on SBS.

So I start­ed, I’d nev­er seen that, so I start­ed watch­ing it.

Um, no, it’s ter­ri­ble, but Paul Lind,

Tony: nev­er oh, it’s ter­ri­ble. But Paul Lin’s in it as her father and I, and I was say­ing to Chris­sy, oh my god, Paul Lind, I loved him in the sev­en­ties.

Cameron (3): And he did all these voic­es on ani­mat­ed shows, and he was in, he was Uncle Arthur and Bewitched, but he did all he did.

It’s the wolf. And then I went and start­ed watch­ing, uh, it’s the Woolf from the Chat­tanooga Cats, the ani­mat­ed show in the late six­ties. And then I start­ed watch­ing clips of him on YouTube for Hol­ly­wood [00:28:00] Squares. Mm-hmm And they’d always, you know, he was, he always had this real­ly quick quip­py, you know, answer to a ques­tion always with a do blonde tom or some­thing in there.

And he was so quick and so fun­ny. But then last night I was just talk­ing like Paul Lin for hours, like in between Michael Kane and Paul Lind, I was pos­sessed any­way. Tied to a man­date. Yeah.

Tony: With your thick black glass­es and your that’s right.

Cameron (3): Blonde. Wish it was blonde. One of the kids at kung fu the, uh, the oth­er day asked me if I’d dyed my hair.

I said, why would I dye it white? What? What’s the pur­pose? Would that serve any who, uh, stock pole of the week. Tony, mov­ing right along, you sug­gest­ed that we do a stock Stop of the week, a pole of the week. Pick a stock.

Tony: Yeah. I did­n’t see it in the email though. Have you say

Cameron (3): I did it in the week­ly email on Fri­day. Uh, FF

Tony: Oh, I five a total, a whole five peo­ple

Cameron (3): respond­ed to it

Tony: What did the lucky first and you [00:29:00] weren’t even one.

Cameron (3): Um,

I

said, see it. which stock from our buy list this week do you think will be the best per­former over the next 12 months? There were only two stocks in the buy list, so it was easy to pick which 2D, SK and SRV and, uh, DSK got one vote. SRV got four. Scott com­ment­ed after today’s pod­cast lis­ten­ing, how can I buy DSK

’cause I was bag­ging on DSK.

Um, so there we go. So over the next 12 months, we’ll see. Um, there’s no win­ners. It’s anony­mous, so you just get to know if you

were a win­ner or not

Tony: 12. Is 12 months the right time peri­od? Or you would just do it for a a week. What’s the point of doing it for a week?

well, it’s just ran­dom

Cameron (3): Okay, well. and We get the results

Tony: We get the Yeah,

Cameron (3): you get to see who, who did the best over the last week. So let’s see. DS, K one week. DSK, uh, went from 98 cents to 97 cents. [00:30:00] SRV went from 98 cents. No, sor­ry, did­n’t click on that. Went from $7 64 to $7 69.

Hey,

Tony: so four. Four of our sub­scribers

Cameron (3): Yeah.

it’s prob­a­bly Scott that picked DSK after post­ing that

Tony: Yeah. him­self an out.

For 80% of our sub­scribers are smart. Sor­ry, Scott. Dun­no why Tony just threw you under the bus there, Scott, back to Bye bye, birdie. The crazy thing about Bye bye birdie. The whole plot of Bye bye. Birdie is based on Elvis going to Korea. Uh, it’s all about a rock­star. They call Con­rad Tit­ty, who is, um, like basi­cal­ly Elvis and he is, you know, been called up and he’s going off to war.

Cameron (3): And then they come up with this pro­mo­tion­al stunt on Ed Sul­li­van for him to kiss one girl from the fan club as a [00:31:00] farewell present to all the girls. The film was made in, I think, 62, 63. The, the girl that the Elvis char­ac­ter kiss­es is Anne Mar­garet. The very next film Anne Mar­garet made was Viva Las Vegas with the real Elvis and they end­ed up hav­ing an affair for a rela­tion­ship for like a year, even though he had Priscil­la installed at Grace­land at the time, um, with Anne Mar­garet.

So she went from. Play­ing in a film about a girl who gets a date with Elvis to actu­al­ly dat­ing Elvis the next year. So there you go. It was crazy

enough of them.

Tony: would­n’t be the first Hol­ly­wood romance, would it

Cameron (3): No.

1. But you look at the two of them in Viva Las Vegas, and you’re like, oh yeah, they were total­ly bang­ing.

Oh man. yeah, Oh appar­ent­ly I read that they record­ed three duets for that film.

The colonel would only let the film use one out of the three because she was too [00:32:00] good and he felt that she over­pow­ered

Elvis. She had more charis­ma than Elvis,

and he was like, well, we can’t have that. She’s too, she’s too good.

Oh man. She is good in that film. dancer. Oh, incred­i­ble. Every­thing. Dancer, singer. So much per­son­al­i­ty.

She was, oh man. Bonkers. Any who? That’s it. What do you got?

Tony: it’s hard to fol­low that up. Um.

Cameron (3): The stock pick of the week. Yeah, that was big. Yeah.

Tony: What,

Cameron (3): Big news. at least, at least the

Tony: result isn’t that, uh, one of us gets to kiss the win­ner,

Cameron (3): Well,

you ne with these glass­es, Tony. You nev­er know.

Tony: Hmm.

Cameron (3): Yeah. Uh, I

Tony: got a cou­ple of things. Um, so I spoke last week about Mag sev­en stocks and how I could­n’t find depre­ci­a­tion on their bal­ance sheets, even though were invest­ing heav­i­ly in data cen­ters and the chips that were required for ai.

Cameron (3): Yeah. [00:33:00] And so I asked I. to

Tony: look into it for me

and tell me where­abouts to,

to find it on their bal­ance sheets.

And it said there’s no spe­cif­ic place for it. Um, and that it was often spread across cost of goods, r and d and admin expens­es, and it was­n’t explic­it­ly being called out. So, um, that’s what I sus­pect­ed, which is not good trans­par­ent account­ing. Um, but the rea­son for rais­ing it again now is it cov­ers up one impor­tant fact, and that’s that the Mag sev­en stocks who are get­ting heavy into AI are no longer cap­i­tal like busi­ness­es, which is the rea­son why they’ve always trad­ed so high­ly and, and on high PEs. They’re, they’re cap­i­tal heavy busi­ness­es now, just like rail­roads and man­u­fac­tur­ers. And I think when the mar­ket catch­es up with that, I expect them to re-rate down. So I don’t see a bright future for those stocks at all.

Cameron (3): Hmm.

Tony: And they’re

hid­ing the fact that they’re now no longer cap­i­tal life busi­ness­es, which is even Well, they’re not real­ly, once there’s enough

[00:34:00] pres­sure once

there’s enough pres­sure on them to call it out as exact­ly what they’re spend­ing uh, CapEx and what it’s cost­ing to the appre­ci­ate, I think there’ll be a rerat­ing.

Cameron (3): I mean, every­one knows that they’re rais­ing bil­lions of hun­dreds of bil­lions of dol­lars to build data cen­ters out.

It’s not real­ly a secret.

Tony: Yeah. But that’s like, so that’s the clas­sic CEO going, look at this, we’re gonna be num­ber one in the AI field. look at all the cap­i­tal we’re spend­ing. Don’t look at, uh, the fact that we’re like, we’re worse in a rail­road now in terms of our ROE and you know, our future prof­it mar­gins and all the rest of it.

But we’re gonna be num­ber one in the Well, there’s plen­ty of, and even­tu­al­ly the mar­ket catch­es up there’s plen­ty of, talk about, I mean, peo­ple have been say­ing it’s an AI bub­ble for like a year, and there’s a lot of dis­cus­sion about the fact that, you know, Chat­G­PT open AI is nev­er gonna be able to gen­er­ate enough rev­enue to make up for the amount of mon­ey that they’re spend­ing.

Cameron (3): And you know, they just intro­duced ads recent­ly into the free [00:35:00] ver­sion of Chat­G­PT to try and cre­ate some sort of extra rev­enue com­ing in. But yeah, I mean, yeah,

one of them’s gonna win. Uh.

Tony: Yeah. But I guess, I guess what I’m say­ing is that, um, the, the, wind’s got­ta hap­pen before the, the mar­ket catch­es up with the bad finan­cial pro­files for these com­pa­nies now,

Cameron (3): Well, y you know, we know because we’ve seen this before, it only takes one hic­cup for the whole house of cards for every­body to come tum­bling down, and then some­body sur­vives and they turn it into a busi­ness. Ide­al­ly. Although I think this time it’s dif­fer­ent. Tony, oh, did you see the Allen Kohler thing that hap­pened last week?

The AI video of Alan Kohler.

Tony: Yeah. He spoke about it on his, uh, on your mon­ey Right.

Cameron (3): That was amaz­ing

for peo­ple who did­n’t see it, and I’m sure every­one did ’cause big news, but some­body cre­at­ed an AI fake video of Alan Kohler and I think the CEO of the Com­mon­wealth Bank Coman. a fight and the CEO get­ting up and storm­ing off the [00:36:00] set or some­thing. And Alan Cole, I saw him being inter­viewed about it on the A, B, C, and he said.

It was so real­is­tic. Even he could­n’t tell that it was­n’t real­ly him in the video. That’s where we’re at with

1. Fake videos now. So

buck­le up for elec­tion sea­son folks.

Tony: Yeah. No one can tell what’s real any­more. Fun. Fun, fun? Mm,

Yeah. Any­way, so that was my Mag sev­en gripe this week. mm-hmm. one good result that came out for me, I own

QBE in my port­fo­lio and it’s, it was up 8% of its results and uh, I think it’s still going up, so that’s Good Uh, and they announced a, uh, more than a 20% lift in prof­it, um, which was bet­ter than the expec­ta­tions, both on the top line and the bot­tom line.

So pre­mi­um income was grow­ing and invest­ment returns had also improved. So that was good job. QBE.

Cameron (3): Quibi.

Tony: Insur­ance com­pa­ny. And the last thing I’ve got is a pulled pork [00:37:00] on Chal­lenger, to be called Chal­lenger. just called Chal­lenger.