Hi QAVVERS,

I just fin­ished record­ing a cou­ple of episodes of my Cold War pod­cast (we’re talk­ing about Cas­tro and Cuba at the moment), had a piece of my sour­dough, lis­ten­ing to a Glen Hansard playlist (who sad­ly passed away yes­ter­day in a motor­cy­cle acci­dent, only seems like yes­ter­day he was play­ing at Shane Mac­Gowan’s funer­al), and now I’m ready to get­ting into my review of the QAV week.

AUSTRALIAN MARKET UPDATE

The All Ordi­nar­ies end­ed the last sev­en days up approx­i­mate­ly 1.16%, and it’s up again this morn­ing.

• The ABS released June quar­ter CPI data show­ing head­line infla­tion rose 3.8% in the 12 months to June 2026, down from 4.0% in the year to May; trimmed mean infla­tion, the RBA’s pre­ferred mea­sure, held steady at 3.6% annu­al­ly.

• RBA Gov­er­nor Michele Bul­lock told the Ani­ka Foun­da­tion that demand growth was mod­er­at­ing as expect­ed fol­low­ing three cash rate increas­es in 2026, but hous­ing and labour mar­ket con­di­tions had weak­ened more sharply than antic­i­pat­ed, prompt­ing mar­kets to push out expec­ta­tions for anoth­er rate hike from end-2026 to March 2027; con­sumer dis­cre­tionary stocks led Mon­day’s gains with a 2.7% rise.

• The ASX 200 is on track for a fourth con­sec­u­tive month of gains, up 2% month-to-date, while the Nas­daq 100 is down 10.19% for July, the Nikkei has lost 12.31%, and Kore­a’s KOSPI has suf­fered a 33.86% decline over the same peri­od.

• Thurs­day’s ses­sion saw sharp sec­tor rota­tion, with Mate­ri­als falling 1.59%, Indus­tri­als down 0.84%, and Finan­cials eas­ing 0.37%, while Ener­gy added 0.32% as renewed US mil­i­tary strikes on Iran­ian tar­gets pushed WTI crude to US$84 per bar­rel and Brent to US$92.

US MARKET UPDATE

The S&P 500 end­ed a volatile sev­en days rough­ly flat to slight­ly low­er, clos­ing around 7,316 on Wednes­day before rebound­ing toward 7,400 on Thurs­day, for a net week­ly decline of around 0.2% from last Fri­day’s close of approx­i­mate­ly 7,412:

• The Fed held its key inter­est rate steady at 3.5% to 3.75% for the fifth con­sec­u­tive meet­ing, with the FOMC vot­ing 9 to 3 to hold, the three dis­senters want­i­ng a rate hike to com­bat above-tar­get infla­tion.

• The hold failed to reas­sure investors, with Trea­sury yields surg­ing sharply, the 30-year yield climb­ing above 5.2%, its high­est lev­el since 2007, as mar­kets ques­tioned whether pol­i­cy­mak­ers were mov­ing aggres­sive­ly enough to con­tain infla­tion.

• Microsoft surged near­ly 12% after post­ing 43% growth in cloud rev­enues, the most since 2022, while Meta tanked 10% after its guid­ance missed expec­ta­tions, with mar­kets skep­ti­cal on whether its AI spend­ing will dri­ve rev­enue.

• On Wednes­day the S&P 500 fell 1.5%, pum­meled in part by a rout in chip­mak­ers, and the Nas­daq 100 extend­ed its slide from its record to 11%, enter­ing a tech­ni­cal cor­rec­tion.

• Core PCE infla­tion accel­er­at­ed from 3.0% in Decem­ber 2025 to 3.4% in May 2026, while crude oil, which peaked above $113 a bar­rel in April, rose back above $84 this week, com­pli­cat­ing the Fed’s infla­tion out­look.

So, let’s get into my week­ly updates and see where we are at.

All the Best,
Cam

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QAV MYTH KILLERS

“Don’t Overthink The Form Guide”

I’ve recent­ly been read­ing a fas­ci­nat­ing book called “Psy­chol­o­gy of Intel­li­gence Analy­sis” (1999), writ­ten by Richards Heuer, who worked for the CIA for 45 years. He wrote this book ini­tial­ly for inter­nal use at the CIA to pro­vide a method­ol­o­gy for over­com­ing intel­li­gence bias­es by using a frame­work for deci­sion-mak­ing. Heuer came up with an ana­lyt­ic process known as Analy­sis of Com­pet­ing Hypothe­ses (ACH) to improve the intel­li­gence work done inside the agency. Sad­ly, it was­n’t enough to help them pre­vent the 9/11 attacks or to avoid the quag­mires the U.S.A. found them­selves in dur­ing the wars in Iraq and Afghanistan — but that’s beside the point.

One of the inter­est­ing points the book makes is that human minds are poor­ly wired to cope effec­tive­ly with inher­ent uncer­tain­ty.

Chap­ter 5 real­ly jumped out at me as hav­ing impli­ca­tions for invest­ing. In that chap­ter, he talks about exper­i­ments done by psy­chol­o­gists to test whether experts pro­vid­ed with more infor­ma­tion make supe­ri­or deci­sions.

What they dis­cov­ered was, once an expe­ri­enced ana­lyst has the min­i­mum infor­ma­tion nec­es­sary to make an informed judg­ment, obtain­ing addi­tion­al infor­ma­tion gen­er­al­ly does not improve the accu­ra­cy of his or her
esti­mates. Addi­tion­al infor­ma­tion does, on the oth­er hand, lead the ana­lyst to become more con­fi­dent in their judg­ment, to the point of over-con­fi­dence.

As it turns out, expe­ri­enced ana­lysts have an imper­fect under­stand­ing of what infor­ma­tion they actu­al­ly use in mak­ing judg­ments. They are unaware of the extent to which their judg­ments are deter­mined by a few dom­i­nant fac­tors, rather than by the sys­tem­at­ic inte­gra­tion of all avail­able infor­ma­tion. In oth­er words, ana­lysts actu­al­ly use much less of the avail­able infor­ma­tion than they think they do.

In one exper­i­ment that TK will love, eight expe­ri­enced horser­ace hand­i­cap­pers were shown a list of 88 vari­ables found on a typ­i­cal past-per­for­mance chart, eg the weight to be car­ried, the per­cent­age of races where the horse fin­ished first, sec­ond or third, the jock­ey’s record, etc. Each hand­i­cap­per was asked to iden­ti­fy what he con­sid­ered to be the five most impor­tant items of infor­ma­tion, those that he would use to hand­i­cap a race if he were lim­it­ed to only five bits of data per horse. Each was then asked to select the 10, 20 and 40 most impor­tant vari­ables they would use. Then they were giv­en true data that had been ster­ilised so the hors­es in actu­al races could­n’t be iden­ti­fied for 40 past races and were then asked to rank the top five hors­es in each race in order of expect­ed fin­ish. Each hand­i­cap­per was giv­en the data in incre­ments of the 5, 10, 20 and 40 vari­ables that they had judged to be most use­ful. And each one pre­dict­ed each race four times, once with each of the four dif­fer­ent lev­els of infor­ma­tion. For each pre­dic­tion, each hand­i­cap were assigned a val­ue from 0 to 100% to indi­cate their degree of con­fi­dence in the accu­ra­cy of their pre­dic­tion. When their pre­dic­tions were com­pared with the actu­al out­comes of these 40 races, it turned out that the aver­age accu­ra­cy of pre­dic­tions remained the same, regard­less of how much infor­ma­tion they had avail­able.

Three of the hand­i­cap­pers actu­al­ly showed less accu­ra­cy as the amount of infor­ma­tion increased. Two improved their accu­ra­cy and three were unchanged. What’s fas­ci­nat­ing though is that all of them expressed increased con­fi­dence in their judg­ments as they were giv­en more infor­ma­tion to work with. When they were only work­ing with five items of infor­ma­tion their con­fi­dence was pret­ty well cal­i­brat­ed to their accu­ra­cy but the more infor­ma­tion they were giv­en the more over­con­fi­dent they became.

Oth­er exper­i­ments have shown the same rela­tion­ships between the amount of infor­ma­tion, accu­ra­cy and ana­lyst con­fi­dence in oth­er fields. There was one exper­i­ment with clin­i­cal psy­chol­o­gists where 32 psy­chol­o­gists with vary­ing lev­els of expe­ri­ence were made to ask, made to make judg­ments about the life of a rel­a­tive­ly nor­mal indi­vid­ual. As in the hand­i­cap­ping exper­i­ment, the more infor­ma­tion they had, the more con­fi­dent they were about their analy­sis even though there was a neg­li­gi­ble increase in accu­ra­cy. Anoth­er series of exper­i­ments worked with med­ical doc­tors diag­nos­ing ill­ness­es. Same results.

So what, you might be ask­ing, does any of this have to do with QAV?

Over the years we’ve been pro­duc­ing the show it’s always struck me how well the mod­el per­forms by using such a rel­a­tive­ly lim­it­ed set of data. We don’t spend hours, days or weeks going deep on a par­tic­u­lar com­pa­ny’s finan­cials, or man­age­ment, or their sales pipeline, their R&D, or their com­pet­i­tive land­scape, their cul­ture or their account­ing prac­tices. Lots of fund and firms, on the oth­er hand, employ lots of ana­lysts who do those sorts of things. Guess what? We out­per­form most of them. There might be a range of rea­sons we are able to do that, but I sus­pect one of them is that Tony designed a sys­tem which looks at a lim­it­ed range of data points and, from those, is able to make a pret­ty accu­rate pre­dic­tion whether or not the stock will out­per­form the rest of the mar­ket. The sys­tem does­n’t always get it right, of course, but then we have oth­er rules that accom­mo­date for those sce­nar­ios.

I used to have a stick­er on the water bot­tle I take to kung fu which said “Hold On — Let Me Over­think This”, because my Sifu was always telling me “Cameron — don’t over­think it” (you have to imag­ine that in a Scot­tish accent). Kung fu, like QAV, is built around a series of tech­niques which, if applied with dis­ci­pline, will deliv­er a good result most of the time. My brain likes to go down rab­bit holes — “what about if this hap­pens” and “what if they do X instead of Y”? I’ve had to learn not to do that. I’ve had to learn to trust the sys­tem. It works. Gen­er­a­tions of kung fu mas­ters before me have designed a sys­tem that works — most of the time.

We are only in the sec­ond gen­er­a­tion of QAV (if TK is the first and we are all the sec­ond), but he learned from the black belts that came before him. Sifu Buf­fett and Sifu Munger. They learned it from Sifu Gra­ham.

I know, I know. More kung fu analo­gies. I can’t help myself.

Don’t over­think it.

STOCK ANALYSIS OF THE WEEK

I added a stock to the AU Light port­fo­lio this week and mem­bers can read about it here.

I also added a stock to our U.S. Light port­fo­lio this week. Mem­bers can read about it here.

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BUY LIST

Each week, we pro­duce a buy list based on our val­ue invest­ing sys­tem that we share with our QAV Club mem­bers. The intend­ed pri­ma­ry pur­pose of this buy list is for club mem­bers to use as a ref­er­ence for com­par­ing their own buy list. In the­o­ry, all of our buy lists should look pret­ty sim­i­lar each week.

AUSTRALIAN BUY LIST

QAV Val­ue Invest­ing Buy List (AU) 2026-07-26

U.S. BUY LIST

QAV Val­ue Invest­ing Buy List 2026-07-26

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PORTFOLIO PERFORMANCE

We com­pare our per­for­mance to what we think is the most rel­e­vant bench­mark (SPDR 200 in Aus­tralia, S&P500 in the USA), but if you’re new to invest­ing, these com­par­isons might not mean much. Instead, you can com­pare our per­for­mance to the top-per­form­ing Super Funds in Aus­tralia and see why an ama­teur active investor (who has a sys­tem to fol­low) can out-per­form most of the “pro­fes­sion­als”.

We pub­lish a fresh per­for­mance snap­shot once a month. Week­ly noise does­n’t tell you much in a val­ue-invest­ing sys­tem — what mat­ters is the trend.

July 2026 per­for­mance snap­shot.

Aus­tralian Mod­el Port­fo­lio: No trades this week.

Amer­i­can Mod­el Port­fo­lio: No trades this week.

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Become a QAV Light Member today and start your investing on the right track

If you want to find out what we’re trad­ing in QAV Light each week, sign up to become a mem­ber. You’ll get an email from me every Mon­day let­ting you know what we’re buy­ing and sell­ing in that port­fo­lio. You can choose to copy our trades or not. It’s the eas­i­est way to start your rules-based invest­ing career… and you don’t even need to know the rules. I’ll fol­low the rules for you. It’s a good first step to even­tu­al­ly becom­ing a QAV Club mem­ber and learn­ing how to run the sys­tem by your­self.

QAV LIGHT: Some­one already cleared the way.

(Note: Amer­i­cans inter­est­ed in join­ing QAV Light or Club please go here instead.)

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Add QAV America — US stocks, the same QAV method

Already a QAV mem­ber? You can add QAV Amer­i­ca as your sec­ond mem­ber­ship at 50% off — US-list­ed stocks, the same QAV approach, billed in AUD through this site (just one pay­ment to keep an eye on). Add QAV Amer­i­ca →

Not a QAV mem­ber yet? Join QAV first, then you can add QAV Amer­i­ca at the 50% mem­ber rate.

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THIS WEEK’S EPISODES

With TK on vaca­tion, we put out the same inter­view this week as the AU and the U.S. episode. Back to our nor­mal sched­ule this com­ing week but we actu­al­ly have a cou­ple of new inter­views com­ing out.

Wild Lions and Zoo Ani­mals: The Case for Skin in the Game: QAV AU #930

Wild Lions and Zoo Ani­mals: The Case for Skin in the Game: QAV Amer­i­ca #63

STOCK NEWS AND UPDATES

COMMODITIES

This week the big changes to com­modi­ties were the fol­low­ing:

Com­mod­i­ty	Sta­tus
Cop­per	BUY
Zinc	BUY
Mag­ne­sium	BUY
Steel	JOSEPHINE
LNG	JOSEPHINE

DISCLOSURE

Please review our trad­ing and dis­clo­sure pol­i­cy.

SIGNING OFF

That’s it from us for this week. Tony took the scalpel to an Aus­tralian stock and I had a crack at one on the US side, so between us we cov­ered a fair bit of ground in the pulled pork depart­ment. On the com­modi­ties front, cop­per, zinc, and mag­ne­sium all flipped to buy sig­nals, which Tony will have thoughts on, and steel and LNG are sit­ting in Josephine ter­ri­to­ry, so we’ll watch those. Noth­ing dra­mat­ic, just the check­list doing its job.

SSDD!

• Cam

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That’s it for the week!

QAV A GOOD SHAREMARKET!

Got a ques­tion? [email protected]