Skip to content

Episode Guide

QAV Bible › Episode Guide
Ref­er­ence · By Top­ic

Quick Reference Guide by Topic

Where to go in the back-cat­a­logue when you want to hear Tony and Cameron cov­er a spe­cif­ic top­ic. Click any episode to open it.

How to calculate a sell line when a company is ex-dividend

See the Check­list Walk­through — Col­umn H cov­ers the ex-div­i­dend sell-line adjust­ment.

Dividend Reinvestment Plans

“Well, we’ve spo­ken about this before, but just a sum­ma­ry. I always take the cash rather than rein­vest because I use the cash to pay off my costs, par­tic­u­lar­ly bor­row­ing costs. But they’re also the oth­er costs of run­ning a port­fo­lio that peo­ple need to defray, like your accoun­tan­cies, any tax you have to pay. And that brings me to the point that if peo­ple do want to do a DRP, they might want to do it par­tial­ly because they will have to pay tax on the div­i­dend, which is seen as income. So, if they rein­vest a hun­dred per­cent of the div­i­dend and they’ve got no cash to pay for the tax, that’s got to come from out­side the port­fo­lio. So that’s anoth­er thing. And gen­er­al­ly, if I was going to use a DRP, I’d be look­ing for some kind of dis­count which is usu­al­ly the case. But some com­pa­nies don’t do it. So, yeah. So, if you don’t have any costs or if you’re fund­ing your cost from out­side your port­fo­lio, then sure.”

Tony Kynas­ton [50:10]

If Tony needs cash, how does he decide what to sell?

  • Sell loss­es first.
  • What I’m try­ing to do is avoid sell­ing some­thing and hav­ing a cap­i­tal gains tax lia­bil­i­ty against that sale.
  • Then sell the ones which are trend­ing down even in the short term.
  • Then prob­a­bly sell the ones which don’t pay div­i­dends.
  • Then some­thing with a low­er QAV score.

How does Tony weigh / balance his portfolio?

Tony’s thoughts on index funds

How to work out the most undervalued Top 10 stock

If you are starting to build a new portfolio from scratch

How to find financial data without a Stock Doctor subscription

How to replicate the Stock Doctor Star Stock rating

Find the data you’ll need on the Reuters Finance “Key Met­rics” page (here’s a link for their Tel­stra page).

When does Tony sell a stock?

How long does Tony hold onto a stock that isn’t going up?

How to use the different Buy & Sell order types

How to use a Three-Point Trend Line (3PTL)

How Tony processes a new Stock Doctor download

  • S03E38 (starts near the 47 minute mark)

Tony’s thoughts on ethical investing

What Tony would do with extra cash

Email from Tony on this top­ic (2022–04-19) — “From mem­o­ry, I have done the fol­low­ing when I have had addi­tion­al cash:”

  • If <20 stocks in the port­fo­lio, buy the top of the buy list. Assum­ing the addi­tion­al cash is at least the size of a nor­mal posi­tion.
  • If 20 stocks in the port­fo­lio, I will top up stocks that are now under­weight because I bought them a while ago when the posi­tion sizes were small­er.
  • Then, dis­trib­ute even­ly.

Participating in Share Purchase Plans (SPP)

Using a mortgage to turbo-charge your investing portfolio

  • Tony talks about this in S03E62 start­ing at the 27:20 mark.

Episodes where we do the checklist slowly

There are a few options, although unfor­tu­nate­ly they are all a lit­tle old. They should still help, but the order of the columns in the check­list might be dif­fer­ent to the cur­rent ver­sions. First, there are a cou­ple of videos here (the June 2020 video has Tony going through his ver­sion of the check­list — the full Stock Doc­tor down­load, copy/pasting the data into the check­list, etc.). If you’d rather lis­ten to a pod­cast where we do a sin­gle stock, try these:

Demergers and inherited stocks

How do you work out the Rule 1 and 3PTL for stocks you inher­it via a demerg­er? This is from episode #516, at the 43 minute mark, talk­ing about BHP divest­ing its petro assets to WPL:

“I think we’ve cov­ered demerg­ers and this kind of thing, and merg­ers, before. There’s two lev­els of oper­at­ing here. One is, they have pro­vid­ed enough infor­ma­tion for us to go and do a pro for­ma on what the demerged BHP looks like and what the WPL new busi­ness looks like. And just in sum­ma­ry, BHP is divest­ing itself of its petro­le­um assets, is cre­at­ing a new com­pa­ny which is going to be bought very quick­ly by Wood­side Petro­le­um, and that mon­ey is going back to BHP. And then, that will be giv­en to the share­hold­ers as a spe­cial div­i­dend which I think is going to be paid as Wood­side Petro­le­um shares. All up, if you’re pay­ing atten­tion to the demerged BHP and the enhanced Wood­side Petro­le­um there would be enough infor­ma­tion in the pro for­ma detail to be able to go through and plug the num­bers into our check­list and decide whether both were on the buy list — and Wood­side Petro­le­um is on the buy list at the moment. So, it’s nice to see that BHP share­hold­ers will be get­ting a stake in a com­pa­ny which is on our buy list. So, that’s one way to do it. That’s pret­ty hard to do — not hard to do, it’s time con­sum­ing to do. The way I nor­mal­ly approach these things is to use the three-point trend­line. So, I’ll use sen­ti­ment to tell me what to do. So, the BHP share price will con­tin­ue to have its three-point trend lines and rule 1s in place, it will pay us a spe­cial div­i­dend — I’m not a share­hold­er, but it will pay the share­hold­ers a spe­cial div­i­dend. And we’ll treat that the way we treat div­i­dends. So, we’ll add it back to the share price until we actu­al­ly get the phys­i­cal shares trans­ferred to us, which, I’m not sure how long that will take, it will take a cou­ple of days at least if not weeks, and then I’ll back it out again. So, the BHP three-point trend lines will stay in place and the rule 1s will stay in place. And Jere­my’s right, Wood­side Petro­le­um will become a new share for us and its rule 1 will be the price it was when it became a new share to us as if we had bought it with a div­i­dend. So, imag­ine that BHP paid a cash div­i­dend and then we use that cash to buy Wood­side Petro­le­um shares. So, that sets our rule 1, and then every­thing trades as nor­mal from there. If BHP drops because of the sale, then if it breach­es the line it’s a sell. If Wood­side drops soon after the demerg­er and it goes below rule 1, it’s a sell — or, 10% below rule 1. So, if the rule one is 10% below the ini­tial price for Wood­side it becomes a sell. They all stick with their trend lines going for­ward.”

Tony

“Okay, so let me just repeat that back and see if I under­stood it. So, if you were an own­er of BHP today, you would con­tin­ue to use the three-point trend­line to work out your sell line for BHP but you have to fac­tor back the spe­cial div­i­dend that you’ll be get­ting. With the WPL shares that you would get, you would use the price on the day that you get them to cal­cu­late your rule 1. Even though you’re not hand­ing over mon­ey for it, you still have a the­o­ret­i­cal rule 1 buy price — a the­o­ret­i­cal buy price. And then, after you have them you will just use the three-point trend­line of Wood­side Petro­le­um going for­wards to deter­mine your sell line.”

Cameron [46:36]

“Cor­rect, for both BHP and for Wood­side, yeah.”

Tony [47:18]

Tony on borrowing to invest (from episode #807)

  • Tony advo­cates for invest­ing as soon as pos­si­ble rather than wait­ing for a mar­ket crash, as wait­ing can be cost­ly if the mar­ket con­tin­ues to rise before a down­turn. He sug­gests a mea­sured approach to bor­row­ing, keep­ing lever­age with­in a safe range of 30% to 50% debt-to-equi­ty. His pref­er­ence is to avoid exces­sive lever­age, sim­i­lar to how he eval­u­ates com­pa­nies — he would­n’t invest in busi­ness­es that are over­ly lever­aged because finan­cial down­turns could put them at risk.
  • To finance invest­ments, Tony pri­mar­i­ly used an inter­est-only over­draft loan secured against prop­er­ty, which pro­vid­ed flex­i­bil­i­ty. This allowed him to make lump-sum repay­ments when con­ve­nient, such as after sell­ing shares or receiv­ing an annu­al bonus. How­ev­er, due to reg­u­la­to­ry tight­en­ing, banks have become more restric­tive on inter­est-only loans, see­ing them as riski­er than stan­dard prin­ci­pal-and-inter­est loans. He acknowl­edges that while they car­ry ben­e­fits, they gen­er­al­ly come with high­er inter­est rates (around 1% more than stan­dard loans).
  • He does not rec­om­mend mar­gin loans due to their high­er inter­est rates and the risk of mar­gin calls. Mar­gin loans nar­row the range of stocks an investor can buy, as they need to gen­er­ate enough yield to cov­er inter­est costs. Addi­tion­al­ly, mar­gin calls can force an investor to sell shares when prices fall, which can be a major dis­ad­van­tage. Tony only used a mar­gin loan once when man­ag­ing a large hold­ing of Coles Myer shares dur­ing a takeover but quick­ly sold them.
  • Cur­rent­ly, he uses a prin­ci­pal-and-inter­est loan with an off­set account, which helps reduce inter­est expens­es. He views this as a sec­ond-best option com­pared to his pre­vi­ous set­up but still prefer­able to mar­gin loans. His over­all approach empha­sizes lim­it­ing risk while using debt to enhance returns, ensur­ing that invest­ments gen­er­ate enough cash flow to ser­vice the debt.
Look­ing for some­thing else? This index mir­rors the Bible’s Quick Ref­er­ence Guide. The full back-cat­a­logue — hun­dreds of episodes, most with tran­scripts — is search­able at qavpodcast.com.au.
← The Glos­sary
QAV con­tent is edu­ca­tion­al and is not finan­cial advice. Tony Kynas­ton is not a finan­cial advis­er and does not pro­vide per­son­al finan­cial advice. Past per­for­mance is not a reli­able indi­ca­tor of future per­for­mance. Please con­sult a licensed finan­cial advis­er before mak­ing invest­ment deci­sions.
Secret Link