Transcript QAV 430

QAV 430 

Cameron  00:06

Well, here we are. TK QAV 430. How are you going today?

Tony  00:12

Yes, good. Lock­down con­tin­ues. Oh, man and for a long time to come I think so.

Cameron  00:22

I think there Gladys is sup­posed to be giv­ing an update soon but 145 new cas­es in New South Wales yes­ter­day I think.

Tony  00:26

Yes. Plus big protests in the streets which I’m think­ing is going to spread it fur­ther.

Cameron  00:36

No, that could nev­er hap­pen. There was a big protest up here to sev­en and a half thou­sand peo­ple on the week­end and of course, we’ve got a guy who we found out, flew from Syd­ney to Bal­li­na while infect­ed. An air stew­ardess, host­ess I don’t know what their flight atten­dant– I think that’s the offi­cial term these days, drove across the bor­der. She flew up as a flight atten­dant, drove across the bor­der, pick him up from Bal­li­na, got infect­ed her­self, drove him back across the bor­der and then they were both walk­ing around here for a week, lying to the author­i­ties about his com­ing from Syd­ney. Went to Churn side, a num­ber of big loca­tions here. It’s only a mat­ter of time before we’re locked down here too. I don’t know.

Tony  01:39

What are they protest­ing? What are they protest­ing about him?

Cameron  01:47

Who the hell knows. We haven’t had any lock­down. That’s what I want to know. They’re protest­ing the fact that there might be one day if they do a good enough job with these protests not wear­ing masks, there will be a lock­down there. They’re pre protest­ing the fact that they’re going to send us into lock­down by being a bunch of morons.

Any­way, I want to thank Gary, for leav­ing a review on Apple pod­casts for the pod­cast. Appre­ci­ate that, Gary. I’ve been beg­ging peo­ple to leave us reviews for the last cou­ple of weeks and as far as I know, Gary’s the first per­son to do that. Thank you, Mae­stronow for doing that. It’s Gary’s user­name.

Tony  02:06

You mean, you haven’t been log­ging on under false names and leav­ing reviews.

Cameron  02:11

No, I don’t feel des­per­ate enough to have to do that. But I haven’t even done that for the film or the book Tony. But if any­one wants to leave us a review, there’s a link in the bot­tom of the week­ly news let­ters. Just go and click on that. Apple or Spo­ti­fy, just leave us a review. It helps. Because peo­ple, if they go ran­dom­ly search­ing, they see a pod­cast, should I lis­ten to this? I don’t know. It’s going to depend on how many pos­i­tive reviews it has. Take a minute, give us a review. We’d appre­ci­ate it.

03:00

Empha­sis of mat­ter time, Tony. MIL, Mil­len­ni­um ser­vices. Now I was doing my own score­card last week because I had to sell some­thing. MTO I think and fig­ure out what I was going to replace it with and then I was look­ing at MIL and I noticed this empha­sis of mat­ter thing which I did­n’t think you’d men­tioned when we did a bit of a deep dive on MIL a cou­ple of weeks ago. It says empha­sis of mat­ter relat­ed to going con­cern but read­ing through I could­n’t real­ly tell if it was a prob­lem or not.

Tony  03:18

Yes, I think it is. Well, yes and no. I mean, I think I’ve stuffed up quite frankly. I think it should­n’t be on the top scor­ers list because that empha­sis of mat­ter is a high­light by the audi­tors telling you to look at the notes in the finan­cial state­ments which say that there’s a ques­tion mark over the com­pa­ny’s abil­i­ty to con­tin­ue trad­ing as a going con­cern. That is the clas­sic red flag qual­i­fied audit state­ment. I don’t know how I missed it but I did. I know when I was doing the deep dive last week, I did­n’t check the audit report because I assumed I’d done it cor­rect­ly in the past when it was added to the top scor­ers list and even added as a stock in a dum­my port­fo­lio. A com­plete over­sight on my part, I’m not sure how to explain it. I’ve been wreck­ing my brains try­ing to recre­ate my think­ing back then but I just think it’s an over­sight.

Cameron  04:13

It’s just gross. It was the grainy time.

Tony  04:17

I don’t think so. But I yes, I stuffed up. I’m going to fess up. I think– Look, I think it’s going to be– It high­lights the fact to do your own research and check things for your­self and don’t rely on me or you or any­body else. Do it for you. But I think this kind of prob­lem will hope­ful­ly be solved over time if we can auto­mate check­ing the audit report some­how. That’s got to be some­thing we direct some atten­tion to. Yes, try and get a way of doing it auto­mat­i­cal­ly.

Cameron  04:50

Well, I do. I mean, I think it’s a good thing in a way as you just said, like we’ve been urg­ing peo­ple for the last few weeks to share this score­cards and I’d say the rea­son I came up with MIL is because it was­n’t on my score­card and a cou­ple of peo­ple, I think it was Alli­son and Cos­man actu­al­ly, who point­ed out that it was­n’t there and asked why I had skipped it and when I went back in check that I noticed that I had it down as in my man­u­al data from the last time, I looked at it prob­a­bly a month ago, I had it down as hav­ing a qual­i­fied audit and I total­ly for­got­ten when you did you deep dive on it.

But again, it was the fact that I picked it up this time when I went to dou­ble check it because the com­mu­ni­ty checked my score­card and point­ed out a cou­ple of emis­sions. I went back to dou­ble check the emis­sions and then I could go back to you. This, it bloody works, Tony. This– There’s pow­er of hav­ing 150 odd, real­ly smart peo­ple on our Face­book group that are check­ing each oth­er’s work and review­ing stuff. It’s ter­rif­ic. I mean, I’m real­ly excit­ed by the fact that they’re pick­ing up mis­takes and errors and we’re fold­ing it all back in so we’re all get­ting bet­ter results. It’s real­ly true. Ter­rif­ic stuff.

Tony  06:19

Yes, I agree. It’s– Well, it’s helped us in this occa­sion. It’s good. Yes, good, just prob­a­bly should go on to say that I’m leav­ing it in the dum­my port­fo­lio and that was a deci­sion I had to think about because nor­mal­ly I take it out, it’s a red flag event. It’s a go, no go, pull it out. But I sus­pect giv­en the cir­cum­stances with this par­tic­u­lar com­pa­ny, the going con­cern ques­tion was raised because there was a lot of cur­rent debt and not enough cur­rent assets to cov­er it.

How­ev­er, there was a lot of cur­rent debt because appar­ent­ly there’s an account­ing rule which says, if you have long term debt which is being rene­go­ti­at­ed dur­ing the 12 months that the report– The finan­cial report refers to then you have to clas­si­fy it as cur­rent debt and there was lots of things like $20 mil­lion worth of debt had been trans­ferred from long term to cur­rent and there was only a cou­ple of mil­lion dol­lars worth of cur­rent assets and they were say­ing well, you can’t pay your debts.

But real­ly, I guess, as we saw with this com­pa­ny, they’ve had a restruc­ture, they’ve had lots of job keep­er pay­ments, they pay down a lot of debt since their audit report and they’re on a bet­ter foot­ing going for­ward. I sus­pect that the audit will won’t– I think it’ll dis­ap­pear with this next report­ing peri­od which comes up next month. We’re wait­ing to see if it’s still there. I think I’ll prob­a­bly sell it. But at the moment, the share price is going up and there’s a rea­son why I think the qual­i­fied audit may go away. I’m just going to hold it until we see.

 

 

Cameron  08:05

It’s come back a lit­tle bit over the last day or so. I think it’s dropped 3% today. Three and a half, 3.3% today so far still up 1.75% since we bought it but we should keep an eye on it.

Tony  08:23

Yes.

Cameron  08:24

1. MXI, I think it was Cos­min on the Face­book group also point­ed out last week, was the first per­son to point out that MXI had been put into a trad­ing halt and then a day or two lat­er, they announced they were sell­ing their trail­er busi­ness, it’s shot up 30 odd per­cent in the day which made me very hap­py and Tay­lor very hap­py because we held it in our port­fo­lios and his mate Chris are very excit­ed. I know a lot of oth­er QAV folks out of hold­ing it as well. That was a nice one.

Tony  08:55

Yes, good. Must have been a bad busi­ness, that trail­er busi­ness to sell it and shoot the share price up.

Cameron  09:12

Yes. I want­ed to ask you, is that some­thing that you think has any­thing to do with QAV pick­ing up that it was right for that turn­around or is it just pure­ly coin­ci­den­tal luck thing?

Tony  09:32

Good ques­tion. I don’t know. It’s– I think it’s due to like when we see com­pa­nies pop up on our QAV top scores list. Man­age­ment, I got to work pret­ty hard to release– To get the share price up and get the price back to where they think fair val­ue is. We’re look­ing at com­pa­nies which are under­val­ued. I think this is an exam­ple of action tak­en by man­age­ment to try and improve the share price of the busi­ness.

Cameron  10:05

They think it’s under­val­ued as well band they’re sit­ting around going, OK, we have a respon­si­bil­i­ty as direc­tors of the com­pa­ny to work out what we can do. Why are you laugh­ing?

Tony  10:17

They’re not think­ing about direc­tors’ respon­si­bil­i­ties again, shit, our options are on the water, let’s get the share price up or some­thing like that. Well we own shares in the stock, let’s get this pup­py on the road. Come on.

 

 

Cameron  10:30

Well, when we have a respon­si­bil­i­ty to the share­hold­ers, they mean them­selves to release the val­ue in a busi­ness and they fig­ured in this case, the best way to do that was to sell the trail­er busi­ness.

Tony  10:42

Yes, exact­ly.

Cameron  10:45

There is some mer­it in say­ing that QAV is uncov­er­ing these busi­ness­es that we think are under­val­ued and if we think they’re under­val­ued, it’s good chance that oth­er peo­ple do as well, either the direc­tors or oth­er inter­est­ed par­ties in the case of acqui­si­tions or that stuff.

Tony  11:07

Yes, as we’ve seen before it’s fair­ly com­mon that a QAV stock gets tak­en out by some­one else. I think the most recent exam­ple was Aus­tralian phar­ma­ceu­ti­cals, API, which is the under takeover offer from Wes­farm­ers. It’s the chemists chain. Right. It was on our top scor­ers list that it did– It’s dropped off the bot­tom I think because of price ris­es. But yes, I mean, a com­pa­ny who’s made a whole career out of tak­ing over oth­er com­pa­nies and see­ing the val­ue just like we have.

Cameron  11:35

And the oth­er exam­ple would be Maya.

Tony  11:37

Of course.

Cameron  11:38

I added it to my port­fo­lio and then Sol­ly Lew who we know is a big fan of the show snapped it up and start­ed dri­ving the price.

Tony  11:48

I think Sol­ly pays some­one to lis­ten to the pod­cast for him.

Cameron  11:50

Of course. As I do. In fact, I’m– This isn’t actu­al­ly me right now. This is some­body imper­son­at­ing me. I’ve hired an imper­son­ator to imper­son­ate me. I’m actu­al­ly lying on the– Lying in a ham­mock drink­ing Negron is out the back. Alright. MTO breached its Sell Line.

 

Tony  12:11

I was going to ask who you hide to imper­son­ate you?

Cameron  12:14

Oh, it’s just a guy. I found him on fiverr. Just does­n’t a per­son. No, he does­n’t have to do any­thing. Just has to read ques­tions and tell some bad jokes and it’s all good. MTO breached itself on Thurs­day. I sold it out of my per­son­al port­fo­lio but I got to tell you, I was a lit­tle bit unsure as to whether or not I real­ly want­ed to because the chart looks good. It’s still going up and then it came back. But I thought it did breach the Sell Line. But I was like, it’s one of those charts that’s breached the Sell Line but it’s still gen­er­al­ly going upwards towards the right here. If you look at it over. Well, since the start of COVID cough right, it’s been build­ing back up and lis­ten­er Dan send me an email about it to over the week­end.

Hey, mate. MTO has breached its sell line but I’m feel­ing a lit­tle reluc­tant to sell it on the basis. I think it’s doing quite well. I’m still learn­ing that could be quite wrong but there’s some big plus­es for me and a cou­ple of slight neg­a­tives. They’ve been accu­mu­lat­ing a lot of cash on the bal­ance sheet. That cash has been used to pay down long-term debt to zero. Came out with an earn­ings update which they think will be of around 50%. On the last results, expand­ing mar­ket share by open­ing new stores which are appar­ent­ly doing well, added sub­sidiary finan­cial lead depart­ments mak­ing them more prof­itable. Mar­gins are expand­ing, mak­ing them more effi­cient.

The down­side look­ing for an M&A which can turn into a diver­si­fi­ca­tion and then tail­winds of COVID lock downs will tail off. Like I said, I’m only just start­ing out could be way off in terms of my analy­sis. I’m want­i­ng to hold off until Sep­tem­ber 28 on this one when the new fig­ures come out. Although it has breached its Sell Line, would love to hear some feed­back from the main man him­self. OK, breach is the rules is rules is what I said to Dan, rules. I sold it because rules is rules, Dan but I was– I was reluc­tant like Dan is. I was like it looks good but yes.

Tony  14:27

Yes. Also that analy­sis stands down is good but the share price has dropped from 290 to 260 this month. It’s– That analy­sis isn’t count­ing for much with the cur­rent share price and if you look at the graph, it’s start­ed off steeply after COVID. Now, it’s taper­ing off and even turn­ing over. Look, take– I take Dan’s point. I take your point. It’s– I think you said 29th of Sep­tem­ber were the results but I think it’ll be August rather than Sep­tem­ber. I think unless it has a– There’s a– Have a– What’s its report­ing date? Yes, and I will get– We’ll get your results from this one before the end of August. You can poten­tial­ly wait until then I keep– Very much keep­ing an eye on the share price because there’s been a cou­ple of– There’s been a fair few cas­es I think in the last month or so where we’ve seen stocks bounce off the COVID low and even though they’re in a gen­er­al uptrend, the steep­ness I guess of that uptrend is start­ing to taper off and some­times turn­ing over and I’m think­ing of stocks like VUK and ANZ at the moment and even with socks like we spoke about last week, the retail­ers like Adair’s and JB Hi-Fi, they’re in a bit of a down­turn at the moment.

Of course, that might turn around with new fig­ures and JB Hi-Fi and Adairs haven’t crossed their Sell Lines where­as Vir­gin UK and ANZ have. Vir­gin UK and ANZ, they’re basi­cal­ly telling us that we should sell when they cross the three-point trend line because they both remained beneath that the share price when they crossed. Oth­er ones that I spoke about last week, CBA bumps up and down against the sell price. I’m hav­ing to watch that day by day and I think we spoke about CBA last week. It crossed itself price by a cou­ple of cents and now it’s back above it. I haven’t sold any, just as an update on that one but it could eas­i­ly turn around.

It’s so close to the sale price, it could turn around today or tomor­row. Yes, I think rules is rules that you might want to wait for a lit­tle bit, give your­self a cou­ple of per­cent­age points tol­er­ance and just see if it does turn around. But look­ing at the MTO graph, I think it’s a rea­son­able con­clu­sion to say that some of the wings going out of that share price.

Cameron  16:57

Real­ly, even though it’s been going up rel­a­tive­ly con­sis­tent­ly since the COVID cough.

Tony  17:03

Yes, it has been going up con­sis­tent­ly and it may well keep going up. There’s nev­er a black and white answer to this sit­u­a­tion.

Cameron  17:11

Yes.

Tony  17:12

Yes and if– Like I said, if you want­ed to wait and give your­self a bit of a mar­gin, then you might wait till it’s a cou­ple per­cent below the sell line before you sell. But in case it turns back up again but– Yes, I’m not con­vinced. In the last month, it’s dropped 30 cents on a three bucks dropped 10% in the last month.

Cameron  17:30

Yes.

 

Tony  17:31

It’s a bit of a trend I think, for me.

 

Cameron  17:32

It has dropped a cou­ple of cents since I sold it late last week. I’m feel­ing OK about– I replaced it with Cog which is come up a cou­ple of points I think since I bought it. It’s all good on my end but yes, OK. Thanks for talk­ing us through that. Let’s talk about the sell line for MML, if we can, Medusa. Hey, by the way you told us last week to check our sell lines every month. I went through and did that when I was doing my score­card last week and I’m glad I did because some of them had changed real­ly– Some of them had­n’t changed a great deal but some of them and changed real­ly dra­mat­i­cal­ly since the last time I looked at them. They’ve real­ly going up as the graph moves to the right and yes, glad I did.

Tony  18:24

Yes, good. Occa­sion­al­ly [Crosstalk 00:18:28] a trough or a peak will drop off the left-hand side of the graph as well, which will dri­ve dra­mat­i­cal­ly. Yes.

Cameron  18:36

MML. If I look at the five-year month­ly chart for that, the low is June 2017, ran about 28 cents, then it goes to Sep­tem­ber 2017 to 29 cents but those with­in an eight per­cent vari­ance. I’m start­ing L1 at Novem­ber 2018 at 31 cents.

Tony  19:09

No, I think that’s L2.

Cameron  19:10

Well, what are you tak­ing is L1?

Tony  19:14

The sec­ond side. OK, let me just go through it. Yes. I’ve got– June 17 is 28 cents and we want a share price, it’s no more than 8% above that which is 30 cents. If we’re going to move the trough to the right because of the flat bot­tom and Novem­ber 18 is 31 cents. That’s why I’m using Sep­tem­ber 17 which is 29.

Cameron  19:41

Yes, you’re right. OK, I want to start there and I want to go through Novem­ber 18.

Tony  19:50

Yes.

Cameron  19:51

Which gives me a sell price of around 33 cents and it’s cur­rent­ly at 91 cents.

Tony  20:00

Cor­rect.

Cameron  20:01

OK, that’s a big drop. OK, good to know. I don’t know why I thought it was L1 but when I was doing last week, must have been hav­ing chart fatigue.

Tony  20:17

Well, just one thing to note too. I know we talked about using the seg­ment line draw­ing fea­ture of Stock Doc­tor’s graphs. I have noticed that, and that gives us a per­cent­age when we click on it.

Cameron  20:29

Yes.

Tony  20:30

Which can help but I have noticed when you’re draw­ing these, you have to be care­ful that you’re anchor­ing to the right price. Because I’d say, for exam­ple, we look at draw­ing an anchor on Sep­tem­ber 17, we want the price to be 29 cents but you can actu­al­ly anchor the side of that seg­ment any­where from about 28 to about 30 cents and still look like you’re at the bot­tom of that trough there. Just be care­ful when you’re anchor­ing to a point on the graph. What I’m doing now is look­ing at the clos­ing price for that par­tic­u­lar month which in Sep­tem­ber 17, case for MML is 29 cents and I’m look­ing across to the right side of the graph and as I move my cur­sor, I’m try­ing to get 29 cents on the right side of the graph and then I anchor it. If you don’t get that exact [Crosstalk 00:21:20], it can– I can make the per­cent­age look wrong.

Cameron  21:10

Yes. OK, good tip. OK. Let’s talk about all the new shared man­u­al data sheets that we’ve post­ed up on Google sheets for QAV club mem­bers. Want to shout out cheers again, to Gary for post­ing some­thing on that. I think apart from you and I, he’s the only per­son that’s updat­ed some data there last time I checked late last week. Thanks, Gary.

Tony  21:49

Can we just talk about that man­u­al data sheet?

Cameron  21:51

Sure.

 

Tony  21:53

I know this that– I think it was for Cog actu­al­ly. You must have done this when you were buy­ing it. There’s the new three-point trend line check­list item to sell is a one or a zero, not yes or no. Just be care­ful that we’re fill­ing it out cor­rect­ly.

Cameron  22:11

Oh. What was that? I’m just bring­ing that up. What was the col­umn?

Tony  22:18

It’s, is the share price in the new three-point trend upturn or is it a recent buy? I think it might be cool. It’s basi­cal­ly look­ing to whether the most recent buy is since the last finan­cial results.

Cameron  22:34

OK, some­body’s sort­ed the sheet alpha­bet­i­cal and removed the head­er col­umn.

Tony  22:43

That would be me, sor­ry.

Cameron  22:44

It would be you. Let me just fix that.

Tony  22:48

Which was my next ques­tion.

Cameron  22:51

Which is what?

Tony  22:53

Which is how do– Did you have an idea of how we use this Google Sheet? What I did when I sort­ed it– Sor­ry about that. I thought I’d put it back the way it was. I sort­ed it by the date that the last change was made so I could go to the bot­tom and pick out the two or three changes that have been made since I last­ed the down­load.

Cameron  23:14

OK.

Tony  23:16

Is that how you see it doing?

Cameron  23:17

Well, I’ve just been search­ing for the stocks that I’m look­ing at. See what the last per­son said but what I found was I did­n’t trust where it was at because I thought well, qual­i­fied audit’s OK but at least with sen­ti­ment, I need to recheck the sen­ti­ment because it may have changed because some­times you’ll– The last time you looked at it was sev­er­al months ago like march in some cas­es.

Tony  23:45

Yes.

Cameron  23:48

I end­ed up sort of check­ing most of them myself any­way, par­tic­u­lar­ly if they’re on my score­card. But yes, if I can check the man­u­al fur­ther the qual­i­fied audit thing, if they haven’t put out a new finan­cial report since the last time it was checked, it should be valid. Assum­ing some­body’s checked it.

Tony  24:08

Yes, I’m just think­ing how I would– I’m going to use this. I haven’t used it yet because I haven’t done a down­load since you post­ed the Google Sheet. But I’m mere­ly going to use it one of two ways. Either copy the whole spread­sheet and just down­load it into my local ver­sion of the man­u­al­ly entered data tab on my mas­ter spread­sheet which will allow me to do a down­load and then it’ll give me a new top scor­ers list auto­mat­i­cal­ly or sort it and look for the most recent changes and update my spread­sheet.

Cameron  24:39

OK.

Tony  24:40

Which way have you done it?

Cameron  24:43

Well, as I said, I was just– When I was doing the man­u­al data sec­tion of mine last week, I was just search­ing for each stock and see­ing if peo­ple had done it or if you did­n’t because it was only you and copy­ing and past­ing it where I thought it was safe to do so.

Tony  24:59

Yes, OK. Yes, I think the only issue will be is, as a cou­ple I think it’s EVO maybe? No, WWR or WRR. Any­way, there’s a cou­ple of addi­tions that have been added to the spread­sheet which you may not pick up if you’re doing it. If you’re look­ing through man­u­al­ly for stocks that you want to find out whether they’ve been updat­ed recent­ly.

Cameron  25:22

Well, if they’re not there, I just add them in now, right?

Tony  25:25

You’re– What are you doing? Are you doing a sort on priced oper­at­ing cash flow, com­ing up with your list, and then check­ing each one of those for three-point trend line sen­ti­ment. Are you?

Cameron  25:37

I do the sort on price to oper­at­ing cash flow and then in the man­u­al data tab, I’m using the Flit­man  ver­sion of the check­list. I stack rank in terms from for QAV score and go from the top down and I’m also just check­ing, get­ting rid of any that have been picked up as hav­ing qual­i­fied audit pre­vi­ous­ly.

Tony  26:08

Yes.

Cameron  26:09

Yes and then I’m just mak­ing sure that the top sort of 30 stack ranked by QAV score, I’ve got their man­u­al data done and I’ll just go down that until I find one that I don’t already own and make sure that there’s– And go down a few below it, do their man­u­al data as well because some­times that can kick them up above but–

Tony  26:30

Yes, exact­ly.

Cameron  26:31

Once I’ve got a bit of a buffer there and I know that it’s the high­est– It’s Cog, for exam­ple, in this case then that’s it. I buy Cog and I’m done.

Tony  26:42

1. Yes. That’s not a bad way of doing it.

Cameron  26:46

It’s quick means I spend as lit­tle time as pos­si­ble.

Tony  26:49

Yes. OK.

Cameron  26:51

ABA are back. Just with one B this time. I think this turned up on [Crosstalk 00:27:01] my score­card. Yes, that’s it. ABA. Can we have a look at their chart for a sec­ond? I got a lit­tle bit con­fused about this one because it’s a bit wacky. Again, the low point, COVID cough $4.32. This is Auswide Bank.

Tony  27:23

Right.

Cameron  27:23

The next point, April 2020 is only 1% above that 436. If I go up to July 2020, that’s a 4.85% gap from the first low point so I’m using that as L1

Tony  27:43

Sor­ry?

Cameron  27:44

July 2020.

Tony  27:45

Yes, July 2020. That’s what I’ve got too.

Cameron  27:48

OK.

Tony  27:49

Yes.

Cameron  27:51

OK, if I then extend that through Octo­ber 2020.

Tony  28:01

Yes, I agree.

Cameron  28:03

It’s giv­ing me a sell price of about six bucks. It’s cur­rent­ly at 623 and it’s been drop­ping since March 21. It’s come up a long way since the COVID cough but I’m still check­ing that as like– Well, it’s not neg­a­tive sen­ti­ment but it’s in a down– Pos­i­tive sen­ti­ment with a down­turn. We need a bet­ter name for that. What do we call that?

Tony  28:30

Well, I don’t know. Wait, maybe a wait to buy. Like I would­n’t rush into buy Auswide Bank wal­lets in this down­town. I want­ed to turn up before I did that.

Cameron  28:40

Yes.

Tony  28:42

And it may be– The new fig­ures might give us that but it’s approach­ing it’s sell line and it’s trend­ing down. I’d be in no hur­ry to buy it.

Cameron  28:53

Yea. Well, wait isn’t very catchy term, Tony. We need to come up with some­thing sex­i­er than just a wait.

Tony  29:03

OK, that’s your depart­ment.

Cameron  29:07

OK, I’ll come up with some­thing of that.

Tony  29:08

Can you go and get Cameron from his ham­mock and come in and?

Cameron  29:12

This is the real Cameron guy. He told me that he told me he does­n’t want to be dis­turbed. OK, let’s look at WWG. I picked up WWG and it had a rel­a­tive­ly good score. I think it was 0.19 or some­thing but very low ADT about six grand.

Tony  29:31

Right.

Cameron  29:32

High­er than GLE but not by much and I’ve already owned GLE and you you had a look at WWG and Wise­way group. You con­firmed that you think that’s a buy for peo­ple with a very low amount to invest maybe?

Tony  29:50

Yes, I had a look at it looks fine. Yes. A good pick­up. It’s been a buy for a while. I think prob­a­bly.

Cameron  29:56

It’s got a bit of an uptick too. It’s going up at the moment. Look­ing Nice. That’s one if peo­ple have got rel­a­tive­ly small invest­ment port­fo­lio like myself, you might want to have a look at WWG. Run your own num­bers. Do your own work on that? Make sure I haven’t screwed any­thing up. OK. Paul wrote in, says that he believes you’re well on your way to earn­ing an order of Aus­tralia for your time and gen­eros­i­ty putting into the finan­cial future of oth­ers. TK for the OA is the new cam­paign that we’re ser­vic­ing.

Tony  30:33

[Inaudi­ble 00:30:34].

Cameron  30:36

He also says, this is about the home the prop­er­ty lever­ag­ing stuff I think that you talked about in detail last week. First­ly, pur­chas­ing a first time is becom­ing more like a 10 to 15-year jour­ney for many young cou­ples, let alone sin­gles. Tony’s often spo­ken about it as the first step before begin­ning to seri­ous­ly invest in shares which must be rather demo­ti­vat­ing for younger lis­ten­ers for whom a decade feels like an eter­ni­ty. I would have thought 10 years of QAV is the more like­ly path­way to a size­able deposit for first home buy­ers these days, per­haps Tony might like to speak about that and par­tic­u­lar­ly tim­ing around taper­ing off derisk­ing when the house pur­chase becomes immi­nent and also any wis­dom on stock mar­ket and prop­er­ty cycles to time the exit from shares and the entry into real estate.

Tony  31:29

Yes, I was­n’t. I’m not try­ing to demo­ti­vate peo­ple by shar­ing that exam­ple of what I did. It’s– I think it’s prob­a­bly it’s help. I think it’s moti­vat­ing. I hope it moti­vates peo­ple rather than demo­ti­vates them. Yes, start off with QAV if you like and get your deposit togeth­er. But I think there’s also– Cer­tain­ly it prob­a­bly does­n’t have to be the start of your invest­ing– Your invest­ing life. It can be– It should be a part of it I think. It’ll help– The gear­ing will help any­way. It’s much eas­i­er to gear against the house and it is the gear against shares because the shares come with mar­gins which mar­gin calls which can hap­pen, which can can work against you but any­way, just yes.

A cou­ple of points they’re raised by Paul. If I think about how I first start­ed in prop­er­ty, the first own­er occu­pant– The first own­er occu­pi­er– I’m sor­ry, the first invest­ment prop­er­ty I bought and this would have been in the about 87 or 88, was a prop­er­ty in Syd­ney in Mel­bourne in a sub­urb near Yarrav­ille and for this grey and we paid $100,000 for that prop­er­ty and I looked it up recent­ly on realestate.com.iu and it has a price esti­mate of 1.2 mil­lion.

That’s in line with what I shared last week, it’s gone from 100,000 to 1.2 mil­lion over 33–34 years and it’s about what we said last week. I said a mil­lion dol­lars to 13 mil­lion. That’s pret­ty sim­i­lar and gives you an idea of how things will grow over time. But when I bought that house, I did it with a friend of mine and we com­ple­ment­ed each oth­er. I had a good job which was pro­vid­ing enough income to ser­vice the mort­gage and he had just split with his part­ner and they were, they’d sold the house. He had lots of cash and did­n’t have the job I had. We put one on one togeth­er, I bought the house, he put in a lot of equi­ty and I put in less equi­ty in and I paid the line’s share of the inter­est and it was neg­a­tive­ly geared.

I think there’s an ele­ment of prob­lem solv­ing you need to do with prop­er­ty and I’m not say­ing it’ll suit every­one but the old 1950s idea of want­i­ng to get mar­ried and sav­ing for deposit is not the only way of get­ting into the prop­er­ty mar­ket and then the sec­ond point I want­ed to make was after we sold that place and I use some of the equi­ty that accu­mu­lat­ed and it was­n’t very much at that stage because we sold it about three or four years lat­er.

I bought an own­er occu­pi­er and I helped to pay that– The mort­gage on anoth­er own­er occu­pi­er and I guess some of the equi­ty maybe but main­ly the mort­gage by rent­ing out two of the rooms to friends so I was able to neg­a­tive­ly gear two thirds of the mort­gage which helped me and of course, you do go into for sav­ings when that hap­pens. But that’s a good thing because it helps you to bud­get and save and think about trad­ing off things like a new car ver­sus an appre­ci­at­ing asset invest­ment like a house.

If I think about how Jen my wife start­ed, she bought a lit­tle two-bed­room flat in a red brick apart­ment block in Mel­bourne and it was­n’t a very attrac­tive build­ing to look at. But that got her into the prop­er­ty mar­ket. There are ways of get­ting into the mar­ket and the impor­tant thing is to get into the mar­ket and it does­n’t have to be the house you live in for the rest of your life but get start­ed and work out a way to make it work for you using poten­tial­ly neg­a­tive gear­ing, rent­ing out rooms, all that stuff. That’s the first thing, I’m not sug­gest­ing that peo­ple are going to fork out 200,000 and buy a mil­lion-dol­lar place and live in it for the rest of their lives. Peo­ple have to get a bit cre­ative, I think with their cir­cum­stances and work­ing out how to get into the prop­er­ty mar­ket and cer­tain­ly, invest­ing in QAV might be there way. Hope­ful­ly it won’t take them 10 years but it might.

The sec­ond point is though is to be care­ful about invest­ing in the share mar­ket with respect to sav­ing up for a deposit in a house because as Paul points out, the clos­er you get to your goal, the more sen­si­tive you’re going to be to move­ments in the share mar­ket going — Par­tic­u­lar­ly going down and that’s always a risk and he’s talk­ing about taper­ing. I’m not– I have no expe­ri­ence with that. I can’t real­ly com­ment on it but I think if you’re– It’s almost impos­si­ble to time the cycles, either the share mar­ket or the prop­er­ty mar­ket in the short term except to say they both go up in the long term.

I think if you’re invest­ing in the share mar­ket in par­tic­u­lar, you’ve got to be flex­i­ble, at least in terms of one vari­able or two vari­ables a time and goal. If you’re say sav­ing for to try­ing to save $200,000 in the next five years to buy a prop­er­ty, you’ve got to be flex­i­ble with one of those things. It’s– If you’re invest­ing in the share mar­ket, it might be that in five years time, you haven’t got $200,000 because there’s been a reces­sion in between or it might be that you get there in six years or it might be that you get there in four. You’ve real­ly got to be flex­i­ble in terms of your tim­ing or in terms of your finan­cial goal. But you can’t be rigid in both because even though over the long term, the share mar­ket goes up at 9–10 per­cent and we’ve been get­ting– I’ve been get­ting bet­ter than that– Dou­ble that in the mar­ket. Not every year it’s dou­ble and you can’t have a short term goal.

There’s a cou­ple of points I want­ed to make. I can’t real­ly answer Paul’s ques­tions any more than that about my expe­ri­ence with how you taper out of the share mar­ket if you have a goal of sav­ing for deposit and a house, oth­er than to say, just don’t be rigid. Just– If you haven’t hit your deposit in five years, you might have to wait sev­en years and if– You might get there in four. Yes, just be flex­i­ble.

Cameron  37:47

We’ll just add to that, when I was on a walk with Tay­lor the oth­er day and we were talk­ing about what you’d said in last week’s episode. Tay­lor said, well, what about his mom? The house that she and I bought here in Bris­bane when we moved up here from Mel­bourne 13 years ago. We bought just before the GFC and she got it val­ued I think about a year or 18 months ago and it had­n’t appre­ci­at­ed at all in that time.

Tony  38:22

Wow.

Cameron  38:23

I should prob­a­bly poured it, we prob­a­bly– She bought it. I was still in Mel­bourne but we prob­a­bly bought it at the height of the prop­er­ty mar­ket pre-GFC and then in the last cou­ple of years, she’s– It’s come up with it needs to be restamped. There’s a lot of things that have a lot of work that needs to be done which is prob­a­bly reduc­ing the val­ue of it as well. I guess, part of it is you need to be care­ful what you buy and when you buy it.

Tony  38:49

Yes, def­i­nite­ly. Right. Yes, I mean, it’s a bit– I mean, we could do a whole pod­cast series on res­i­den­tial prop­er­ty as well and what to look for and there are pod­casts out there about it and newlet­ters and Face­book groups, etc and yes, it’s– But yes, like I said, it’s hard if you need a house and it’s just before the GFC. You don’t know it’s just before the GFC. You got to buy. Right, yes. But I mean, that does­n’t change the fact that I’m guess­ing she would have paid down some of the mort­gage so she can still release some equi­ty. I’m not giv­ing her finan­cial advice here. I’m say­ing if some­one’s caught in that sit­u­a­tion where the house has­n’t moved in val­ue over 10 years or 13 years or what­ev­er.

Cameron  39:35

Yes.

Tony  39:36

You poten­tial­ly still can release equi­ty and invest that out­side of the house.

Cameron  39:41

Yes, right. OK. You would still have paid off some equi­ty in that peri­od of time?

Tony  39:45

Yes, I will. I think so. Yes.

Cameron  39:47

Yea, good point. Sec­ond part of Paul’s email. I think we all wish we had the matu­ri­ty to take up QAV at 25. But for most of us, the moment has come lat­er. Instead of wish­ing those 10 to 20 years back, how­ev­er, why not encour­age peo­ple to take them back? It’s quite real­is­tic these days with a dis­ci­plined approach to diet and exer­cise to wind the bio­log­i­cal clock back 10 to 15 years. QAV com­pound­ed returns in this respect is a big health and fit­ness moti­va­tor for me. Buf­fet­t’s wealth was impres­sive at 70 but far more so at 90. He may have done it on coke and can­dy but for most of us and he’s not talk­ing about the good coke and can­dy. He’s talk­ing about the main­stream coke and sea can­dy. Not coke and nose can­dy, which is the same thing. But for most of us a healthy innings like that is going to be built on apply­ing QAV style dis­ci­pline to the way we invest in our bod­ies. Good point he made there.

Tony  40:48

Yes. If Paul has any health tips too, I’d be glad to have him on the show and pass them on. Espe­cial­ly if I can wind the clock back 15 years, that’s for sure.

Cameron  40:59

Yes.

Tony  41:00

I’m guess­ing the grannies aren’t part of it, though.

Cameron  41:07

Well, maybe we need to start a QAV Life Exten­sion club.

Tony  41:13

Yes, right.

 

 

Cameron  41:14

You should be invest­ing in– What’s his face thing? Methuse­lah Foun­da­tion, the guy I had on my show almost years ago, my old show. What’s his name?

Tony  41:22

Anoth­er guy I mean, Aubrey de Grey.

Cameron  41:24

De grey. That’s it. Yes.

Tony  41:27

Well, the moti­va­tor for me was Kurzweil in tran­scen­dent men.

Cameron  41:33

Yes.

Tony  41:37

Which was a great book and I came about that book through your g’day world pod­cast which was excel­lent.

Cameron  41:41

I had right on many years ago. Yes.

Tony  41:44

Yes. I actu­al­ly met him at a con­fer­ence after that too which was–

Cameron  41:48

Right. Yes.

Tony  41:49

But that was my inspi­ra­tion for a long time was if you’re healthy and can live long enough, you’ll live for­ev­er. Yes. It’s going to be all hokum who knows but he preach­es the rap­ture of the nerds and how if you can live long enough, your brain will get uploaded to the Inter­net and you’ll live for­ev­er and there’s prob­a­bly an ele­ment of truth in there some­where that might not hap­pen for hun­dreds of years but that was moti­va­tion­al for me. But yes, I’m more impulse camp now that just see­ing the sort of returns I’ve got­ten over the years as moti­va­tion­al and you think about the com­pound inter­est of liv­ing for 10 extra years, it’s quite spec­tac­u­lar and as he said, I think you– Don’t know if it’s still there but at one stage you post­ed on our web­site, Buf­fet­t’s wealth over the years and it’s a graph that looks pret­ty flat and unim­pres­sive right up until his lat­er stages when it goes up almost ver­ti­cal­ly and that’s how com­pound inter­est works.

Cameron  42:48

I mean, if you drill down into the graph and you reduce the y‑axis, I think it’s still pret­ty good in those first few decades. But yes, big dif­fer­ence between 100 mil­lion and 100 bil­lion on the y‑axis.

Tony  43:00

Yes. But now it’s a real­ly good com­ment from Paul. I whole­heart­ed­ly endorse it.

Cameron  43:07

Alright, well, we’ve got a ques­tion from, might be the same Paul, might be anoth­er Paul. He said ANZ.

Tony  43:15

Sor­ry, before you do that, we haven’t done stock of the week. Did you want to do that or just skip it?

Cameron  43:18

Oh no, we do. I skipped all your stuff and acci­den­tal­ly skipped that. Do you have any pulled pork for us this week, Tony?

Tony  43:26

Yes, a pulled pork pull apart. My pull up– My pull apart this week is an old favorite Hori­zon oil which was on our list way back at the start of our pod­cast and then if you recall, the AFR did an exer­cise into them which alleged that they were brib­ing Papua New Guinea offi­cials to obtain oil licens­es and the share price tagged and we took it off. With­in the dum­my port­fo­lio, I think in just in the last lit­tle while it’s made a resur­gence and a cou­ple of things have hap­pened in the inter­im.

I want­ed to bring us up today and I guess on that, I had­n’t watched it for a while because I think that was going back almost two years ago or 18 months ago that we took it off the port­fo­lio. But since then and this is what the hori­zons chip has said at their Novem­ber, AGM. He’s– I’m quot­ing; we are pleased now that we have sub­stan­tial­ly put the alle­ga­tions of 2011 cor­rup­tion in PNG behind us. The board back in Feb­ru­ary reac­tive rapid­ly and appro­pri­ate­ly by set­ting up an inde­pen­dent board Com­mit­tee which then com­mis­sioned a thor­ough inves­ti­ga­tion con­duct­ed by Her­bert Smith free hills and assist­ed by the Lloyd. The inves­ti­ga­tion which reviewed near­ly a mil­lion doc­u­ments as well as foren­sic analy­sis of all elec­tron­ic devices failed to estab­lish any breach of Aus­tralian for­eign bribery laws.

There you go.

They give them­selves a tick but I cer­tain­ly haven’t heard any­thing more about the bribery alle­ga­tions since then. That is cleared up. This year, they have sold off their PNG assets and then they are oper­at­ing with a new oil well in Chi­na and one in New Zealand. They’re just wiped their hands of PNG com­plete­ly, both because of the lega­cy issues and they sold off their oil assets there. Two things have hap­pened recent­ly, they’ve announced that they are going to do a return of cap­i­tal. Orig­i­nal­ly, they said they would do a 1.4 cents per share return.

I think that’s right. But they upped it to three cents in the last lit­tle while and that’s with the share price up and they’ve high­light­ed the fact that the oil price has been going up this year as we renew that from San­tos which is our dum­my port­fo­lio and as we recall, your price tanked dur­ing the COVID cough and it’s now back up over 70 bucks a bar­rel and that’s helped. They’re fund­ing their return of cap­i­tal because of the ris­ing ship– Sor­ry, oil price which has put them in real­ly good finan­cial posi­tion. But then also too, I noticed that a com­pa­ny called Samuel Ter­ry Asset Man­age­ment bought near­ly 20% of the com­pa­ny in June and they’ve added a direc­tor to the board. That may lead to cor­po­rate action. Some­one tak­ing a 19.5% or 19.9% stake in a com­pa­ny could be a pas­sive investor but usu­al­ly it’s the start of some takeover bid for the com­pa­ny. But either way, it’s a big vote of con­fi­dence in the com­pa­ny and I guess, I want­ed to high­light that this is a clas­sic buf­fet style con­trar­i­an invest­ment.

Take a good com­pa­ny which we knew was good because it was on our top scor­ers list a cou­ple years ago and when the man­age­men­t’s dis­tract­ed by some­thing extra­ne­ous to the busi­ness, like, in this case, it was a bribery scan­dal. It depress­es the share price and can often make it an even more com­pelling invest­ment. Any­way, that’s the gen­er­al learn­ing that we can draw from this case. But it’s cer­tain­ly– It’s had a recent three-point trend up turn, it’s now back up to almost where it was before the bribery scan­dal. It’s a cou­ple of neg­a­tives, it’s now trad­ing on a very high PE.

Its high­est in the last three years. It gets a minus one in there man­u­al­ly entered data for that. It does­n’t have con­sis­tent­ly increas­ing equi­ty, it gets to zero for that and I’m using a share price here of 12 and a half cents which it was this morn­ing which is Mon­day, the 26th of July and the share price makes a big dif­fer­ence to this com­pa­ny, in terms of its QAV score, but the QAV score is cur­rent­ly around 0.1 and it’s on the bot­tom of our list. Last week, when I came across it again, it was actu­al­ly about 0.1, three, or four. Half a cent increase in share price makes a big dif­fer­ence on the QAV score. It has a qual­i­ty score of 58%. Sev­en out of 12.

How­ev­er, the fact that this new direc­tor has a 20% share­hold­ing has­n’t come through in Stock Doc­tor data yet, poten­tial­ly because it’s part of an asset man­age­ment com­pa­ny rather than just that indi­vid­ual direc­tor. But we could actu­al­ly score up a lit­tle bit because the direc­tors hold­ings is now up over 20%. Price to oper­at­ing cash flow is five which is good. PE 14 is good. It’s the book plus 30% is actu­al­ly 12 cents per share, it’s just above that now. But if it drops back, again, the QAV score will go up. We don’t have any stock­bro­kers’ con­sen­sus fore­cast here. We don’t know what the growth is going to be and the thing to be care­ful of I think is that is to time this. If you’re think­ing about buy­ing and if you’re buy­ing now, you’ll get the 3% return of cap­i­tal but the share price may drop three cents as well because of that. But it’s also pos­si­ble that the share price drops a bit big when the return of cap­i­tal hap­pens but all oth­er peo­ple start buy­ing in as well and the share price keeps going up because it’s a com­pelling sto­ry oth­er­wise. But that’s the– That’s some­thing peo­ple might want to have a look at. Not a rec­om­men­da­tion but back on the top scor­ers list.

Cameron  49:36

Right, there you go pulled pork of the week Hori­zon oil.

Tony  49:41

Just one more thing before we go back to ques­tions. I spoke before about Com­mon­wealth Bank flirt­ing with its sell line. It’s back above it. Last time I looked this morn­ing. It was Mac­quar­ie Group is a stock I own. It’s get­ting close to its sell line. It’s been doing the same dance at Com Bank as it goes above it one day and back below the next thing and back above it. I may well sell my hold­ing in Mac­quar­ie Group this week, time will tell and the last one was last week and I’ll do a bit of a, maybe a deep­er dive about oil when we have a week when there’s not many ques­tions. But the ore price was get­ting close to its three-point trend sell as a com­mod­i­ty. It’s now back up above that. It got down to I think about 68 bucks last week and my cal­cu­la­tion of the sell was 66 and I’m talk­ing Brent crude there in US dol­lars. It’s now back up over 70. It’s flirt­ing with its sell price. Just be aware of that. It may reach again, before I noticed that.

Cameron  50:50

All right. Any oth­er news you want to talk about?

Tony  50:56

No, I think that’s enough, Cam. There’s a few ques­tions to get through.

Cameron  50:59

All right, let’s get to Paul’s ques­tion. Says, ANZ have just announced a share buy­back and Com Bank is swim­ming in cash appar­ent­ly ahead of an August report. I won­der where the Tony would con­sid­er those issues or coun­ter­ing the share price down­turn.

Tony  51:16

No, I would­n’t. No, share price down­turn as if it’s gone past the sell line, it’s a sell. Because the oth­er flip side to the analy­sis is that with the banks in par­tic­u­lar is with Delta COVID com­ing out and shut­ting down. GE prob­a­bly the major­i­ty of Aus­tralia as we speak. The banks are putting a pause on writ­ing back their bad debt pro­vi­sions in case there are bad debts aris­ing in the mort­gage mar­ket and the ana­lysts were fac­tor­ing into their num­bers, how much div­i­dends might be raised and how much would be giv­en back by the banks because of their high cash hold­ings.

I’m guess­ing that’s all going to be paused unless some­thing dra­mat­ic hap­pens to improve the lock­down sit­u­a­tion before the num­bers come out next month. But I– My gut feel says we’re not going to see div­i­dends increase or pro­vi­sion­ing get released the way we thought we were before we went into lock­down and the share prices are going up.

Cameron  52:16

Right. Rules is rules.

Tony  52:18

Rules is rules. Yes. I think we’re just one fur­ther com­ment about all this one, we’re see­ing com­pa­nies like Com bank which are flirt­ing with their sell lines and that– And the sell line is hug­ging that upward trend in the graph. We spoke about before with motor­cy­cle Hold­ings as well. If Paul wants to hold them because he thinks they got busi­ness­es for the long term and because he thinks that they’re– They got lots of cash and they’re going to increase their div­i­dends or do share returns or what­ev­er or start share buy­backs. Go with it. I mean, we– The three-point trend line is a line on the graph, no one in Mac­quar­ie street or Collin street sit­ting there going, well, we’re close to a three-point trend line let’s do some­thing there. That’s not how busi­ness­es are run. Over the long term and on aver­age, the three-point trend line is, has done a great ser­vice to my port­fo­lio but it may not work in every case because it’s a sta­tis­ti­cal thing. Just be aware of that too.

Cameron  53:24

You won’t excom­mu­ni­cate Paul from the fel­low­ship of the queue.

Tony  53:28

No, and if he wants to come back and crow in six months’ time because he’s held on to ANZ and it’s now worth twice what it is now. More pow­er to him. That’s fine.

Cameron  53:36

Good luck to him. It’s not easy to get excom­mu­ni­cat­ed from the cult of the QAV.

Tony  53:38

It’s QAV mem­bers, it’s a low bar to entry.

 

 

Cameron  53:51

OK, yes. You’re say­ing you let me in. Mark says, he’s back to CBA here. A lot of CBA ques­tions, regard­ing CBA and the 8% flat line rule for the buy line, instead of using APR 2017, $87.40 in Jan­u­ary 2020, $85.26 which has a 2.45% dif­fer­ence. You’re using Jan­u­ary 2020 85, 26. In Jan­u­ary 21, 83, 51 with a 2% dif­fer­ence, both are less than a per­cent.

Tony  54:27

What are you think­ing about the buy line here? Isn’t it for CBA?

Cameron  54:30

Buy line. Yes.

Tony  54:32

OK.

Cameron  54:34

I’m just– I think I dou­ble checked that and I think he was right. I think my buy line was dodgy.

Tony  54:43

No, I think your buy line is cor­rect. We’re con­flat­ing two rules here though. One is the 8% Flat Top rule and the oth­er one is the fact that the bot­tom line should come after the sell line. We may have to have a prece­dence order for the rules here, like brack­ets come first and then mul­ti­pli­ca­tion and divi­sion and then addi­tion and sub­trac­tion. But why I drew this buy line. I’ve got the CBA graph in front of me is that, well, the high­est price is around the cur­rent price and we don’t have a peak there. You can’t draw a buy line cur­rent­ly. I go and draw the sell line in, first of all, and we spoke about the sell lines get­ting close to the sell price now. We have a sell line. I’m look­ing for a buy then that occurred before that sell line.

Cameron  55:38

Yes.

Tony  55:39

I’m going back­wards. The next high­est point on the graph goes back to April 2017. The sec­ond point, which should be h2 is Jan­u­ary 2020 and they’re with­in 8%. Then, the next one I would look at would be– I’d start with h1 being Jan­u­ary 2020 and I look across to Jan­u­ary 2021. That point I think is Mark’s point­ing out is still with­in eight per­cent of the orig­i­nal h1 back in April 17. Then, I will ignore it and I would, if I– Sor­ry, if I then use Jan­u­ary 2021, I can’t get a peek to the right of that. I have to back up and then if I’m look­ing if I’m look­ing at that one. The next low­est point to the right is that peak we just spoke about. You can do a buy line in there if you don’t want to do that because you don’t want to use that peak because it’s with­in the 8%. You can work through it as going down from h1 of Jan­u­ary 2020 h2 of July 2020 and then that gives you buy that crossed at some stage dur­ing Sep­tem­ber of 2020 and that’s then– That’s occurred after the sell line was drawn. That’s all good.

Cameron  57:12

Sor­ry, that the sell line goes from L1.

Tony  57:17

Sor­ry L1.

Cameron  57:17

March 2019 through Decem­ber 2019. is how I’ve drawn it. How you draw?

Tony  57:24

March 2019 through to Decem­ber. March 2019. Talk­ing about the sell line here?

Cameron  57:32

Yes, L1. March 2019. It’s $70.64.

Tony  57:37

Yes, this is work­ing back­wards to get a sell line before the buy line for sure. Yes. It’s cross­ing. It’s going through Decem­ber 19, as you said and then you get it across in Feb­ru­ary. Draw­ing a line after that. Yes. Then you get the sell line then going in at March 2020. Sep­tem­ber 2020, but they are with­in 8%. Sep­tem­ber 2020 becomes L1 and then Feb­ru­ary 2021 becomes L2 and that line’s drawn after that cross. Yes, that’s how I’m draw­ing it. I think the buy line would be Jan­u­ary 2020, h1 and then July 2020, h2. But you could also– I think equal­ly you could do it as Jan­u­ary 2020 and Jan­u­ary 2021, as well.

Cameron  58:37

And just ignore the fact that they’re both with­in the 8% vari­ance because [Crosstalk 00:58:43].

Tony  58:44

What takes prece­dence here?

Cameron  58:47

Yes.

Tony  58:49

I think I’m inclined to take it back to that Novem­ber 20. Sor­ry, h1, Jan­u­ary 2020, h2, July 2021.

Cameron  59:00

Yes, that’s how I’ve got a drawn on my chart here. OK. Thanks, Mark. Thanks for dou­ble check­ing our work, Mark. Always, good to see peo­ple dou­ble check­ing our work. Ques­tion from Daniel. I know TK has the sys­tem to buy from the top of the list but some­times sees tail wins such as a spike in the com­mod­i­ty prices or gold as pre­vi­ous­ly men­tioned. I want to know if he’s ever been influ­enced by some­thing like heavy buy backs or insid­ers buy­ing heav­i­ly which is relat­ed to some good suc­cess or any oth­er mem­o­ries or insights he could share. Thanks, Daniel.

Tony  59:46

Yes, I think from mem­o­ry, the only time I can think that we’ve gone down the list is two things, com­mod­i­ty prices which Daniel’s men­tioned. We’re look­ing for– Like a cop­per price may have just turned up. We’re look­ing for a cop­per com­pa­ny on our list which might not be at the top but it’s worth buy­ing because of the com­mod­i­ty under­ly­ing it is going up. But the oth­er one I can think of was, when a real­ly good qual­i­ty large cap comes on the list like a JB Hi-Fi, for exam­ple, they nor­mal­ly come on at the bot­tom of that list, like a QAV score around 0.1 to 0.2 num­bers and you can be tempt­ed to buy some­thing in that range because I expect it’ll drop off the buy­er list pret­ty quick­ly as the share price goes up and I know it’s a good qual­i­ty com­pa­ny and would be a good long term hold.

That’s what I’m tempt­ed to get to buy from the bot­tom as well. Terms of buy­backs or large direc­tor hold­ings. I can’t think of any exam­ples of those except to say that cap­i­tal move­ments like buy­backs or returns of– Cap­i­tal returns or things like that or increased div­i­dends or what­ev­er or spe­cial div­i­dends. We’ll prob­a­bly see that in the share price appre­ci­at­ing and it might bring some­thing back on to the top scor­ers list, like a Hori­zon oil, for exam­ple, is a clas­sic exam­ple of that. But would I go down the list and buy Hori­zon oil that’s at the bot­tom of the list? Just on the strength of those cap­i­tal moves. No, prob­a­bly not.

Cameron  1:01:17

Right. But if there was a recent turn­around in the oil com­mod­i­ty price maybe?

Tony  1:01:24

Yes. I can’t think of any oth­er exam­ples except for the fact that I have been tempt­ed when a JB Hi-Fi or some­thing like that comes along– Gets on the bot­tom of the list.

Cameron  1:01:33

Yes, thanks Daniel.… Mur­ray. The bro­ker I use often quotes a mul­ti­ple of EV over EBITDA val­ue shares. EV for the lis­ten­ers being enter­prise val­ue. EBITDA stand­ing for bull­shit earn­ings accord­ing to Char­lie Munger. I haven’t quite got my head around the val­ue of this met­ric but it seems like it might be good as it com­bines pre­tax earn­ing with bal­ance sheet val­ue. I won­der what Tony’s thoughts on this. Thank you, Mur­ray.

Tony  1:02:03

I think I have to address the Char­lie Munger com­ment, first of all, and pret­ty sure from mem­o­ry, he made that com­ment dur­ing the dot-com boom in the late 90s when a lot of stock bro­kers were push­ing inter­net com­pa­nies based on their EBITDA num­bers.

Cameron  1:02:19

Right.

Tony  1:02:20

Because they want­ed peo­ple to ignore the debt that was being used to lever­age them and that’s when shall we call them bull­shit earn­ings? And to cer­tain­ly and he’s right, they are and then Buf­fett would go on to a big expla­na­tion about why depre­ci­a­tion was impor­tant which it is. The rea­son why I don’t place a whole heap of empha­sis on depre­ci­a­tion and amor­ti­za­tion is because again, a lot of times they’re– Or they’re either gov­erned by account­ing rules which they are to a large extent but they’re also– A lot of them are under the pre­rog­a­tive of man­age­ment. How much pro­vi­sion­ing you take up for those things? And that can—

That is just anoth­er exam­ple of why I don’t think bot­tom line prof­it is nec­es­sar­i­ly a great thing to use one day in your com­pa­ny because it is sub­ject to man­age­men­t’s manip­u­la­tion. To look at the EBITDA is actu­al­ly a rea­son­ably sim­i­lar met­ric to oper­at­ing cash flow. It’s a– Basi­cal­ly, it’s a– It’s before inter­est is before tax. It’s basi­cal­ly the what you’ve been sell­ing less the cost of goods. Some­times it’s called oper­at­ing prof­it. It’s close to oper­at­ing cash flow.

The dif­fer­ence I think, from mem­o­ry is that oper­at­ing cash flow is the cost of the under­ly­ing busi­ness­es oper­at­ing prof­it less the cost of get­ting that prof­it but it does­n’t include some things which can be an EBITDA which is one-offs or income or prof­it. It’s derived from things which aren’t the core busi­ness. If they’ve sold some­thing, they’ll go through into EBITDA but it won’t be an oper­at­ing cash flow, for exam­ple. That’s why again, I pre­fer oper­at­ing cash flow to EBITDA but it’s a– In most cas­es, we’re split­ting hairs there.

In fact, enter­prise val­ue which is the mar­ket cap plus the cash minus the debt is if you take enter­prise val­ue on a per share basis and you take EBITDA on a per share basis, it’s in the same ball­park as price to oper­at­ing cash flow. Right? It’s because the mar­ket cap is divid­ed by num­ber of shares as the share price. Its share price adjust­ed for the debt cash and its oper­at­ing cash flow with oth­er things added in if they’re not– If they one-offs or not the main busi­ness. It’s a sim­i­lar met­ric, I guess, I’m try­ing to say. I think it’s a legit­i­mate met­ric. It’s not one that I use. It’s a lit­tle bit hard­er to cal­cu­late than price to oper­at­ing cash flow but I think if you were using it, you prob­a­bly have sim­i­lar results to the QAV met­ric.

Cameron  1:05:10

Rough­ly, ball­park you get the same val­ue out of look­ing at that met­ric as you do priced oper­at­ing cash flow?

Tony  1:05:17

Yes, I think so and I think price oper­at­ing cash flow, we’re look­ing for a ratio of sev­en or bet­ter. I’m not sure what EV it to– Sor­ry, EV to EBITDA would be but it’s prob­a­bly going to be 10 some­thing like that. It’s– Again, it’s like using PE ratio except I don’t like PE because its prof­it and prof­it’s open to inter­pre­ta­tion. It’s halfway between PE and priced oper­at­ing cash flow, I guess, or part of the way along.

Cameron  1:05:44

Thanks. Thank you, Mur­ray. Ridge. Ridge says, he’s talk­ing about XERO which he bought for $38 and does­n’t want to give too much away if it starts to drop. It’s on a PE of 121. Great prod­uct XERO. I use XERO. I think you use XERO.

Tony  1:06:09

I do.

Cameron  1:06:10

Great prod­uct.

Tony  1:06:11

And share site is based on XERO as well or affil­i­at­ed with XERO.

Cameron  1:06:15

Good lit­tle Aussie com­pa­ny. Aussie New Zealand. Aussie. Yes.

Tony  1:06:20

Aussie’s now New Zealand. Yes.

Cameron  1:06:22

If it qual­i­fied on QAV para­me­ters which it would­n’t, but if it did, it would be a buy pret­ty well now?

Tony  1:06:30

Yes.

Cameron  1:06:31

There has­n’t been a recent sell. That would be the lat­est buy line and the sell line would be shown with a sell of around just above $75 which seems too low for me to set a stop loss there. What do you reck­on?

Tony  1:06:47

Well, I think the sell lines even low­er than that– I’ve got it at $47 when I did the analy­sis this morn­ing. Well, your com­pa­ny’s like XERO, I think can fall into a lit­tle bit of your port­fo­lio. If you like Peter Lynch, come across a new com­pa­ny and think this is real­ly good. I’m going to buy it regard­less of the val­u­a­tion met­ric. I’ve spo­ken about that in the past and I think it’s fine to have a cou­ple of stocks in your port­fo­lio like that. I spoke in the past about if I wish I’d bought Apple when I first start­ed using an iPhone, I wish I’d bought Ama­zon when I first start­ed order­ing books with them and cer­tain­ly XERO, I thought pret­ty hard about buy­ing the share price when I con­vert­ed across to using XERO because it’s a great prod­uct. Just the val­ue investor side of me just would­n’t let me do it but it would have been a great invest­ment. I think they have a price to have a place in the port­fo­lio. If you’re doing that Peter Lynch, one up on Wall Street.

Hey, I’ve dis­cov­ered a new prod­uct. I’m going to put some of my invest­ment into it and see how it goes and then the three-point trend line is actu­al­ly a good way of man­ag­ing that invest­ment. If it turns down, sell it. If it does­n’t, great. But the graph of XERO is so impres­sive, it’s pret­ty hard to find what the buy line and the sell line is. Just let me have a go at it. I’ll call it up.

Cameron  1:08:09

I’ve got the load point back in Octo­ber 16 around $16.61. But then if I start to use the seg­ment tool and I drag it across March 2017 is about a 3.7% vari­ance.

Tony  1:08:26

Yes.

Cameron  1:08:27

The next low tro­phies I think, August 2017 which is 39% high­er. I’m using March 2017 is L1 and Octo­ber– August 2017 is L2 which gives me a sell price of about 75 bucks. Yours is low­er?

Tony  1:08:44

Yes, I actu­al­ly went with Feb­ru­ary 17 and march 17. I think Feb­ru­ary was the last time I got with­in 8% of that low point and if I use Feb­ru­ary and March, then I’m get­ting some price of 50 or 47 or some­thing like that.

 

Cameron  1:09:01

Oh, OK. I see.

Tony  1:09:02

What you do look it’s so hard to see what the graph is because it’s gone up so much on the right that the check­points on the left are real­ly hard to read in this graph.

Cameron  1:09:11

Yes.

Tony  1:09:14

Whether it’s 47, 50, or 70, it’s a long way from the cur­rent share price of 144.

Cameron  1:09:21

I said to Reg in my email back, I think two with the three-point trend line stuff like the com­pa­nies that pass QVA must have got real­ly sol­id fun­da­men­tals been gen­er­at­ing cash along time, etc. and under­val­ued and if there’s a mar­ket down­turn and they start to come back, they’re only going to come back so far because they’ve real­ly got strong fun­da­men­tals. They’re real busi­ness­es gen­er­at­ing real prod­ucts or they’re min­ing stuff out of the ground or they’re man­u­fac­tur­ing stuff or they’re banks. What­ev­er it is. Real busi­ness­es. My ques­tion around soft­ware busi­ness­es, inter­net busi­ness­es is, in a crash of that affects tech stocks, do they fall back faster and quick­er in your expe­ri­ence than quote unquote real busi­ness­es or do they?

Tony  1:10:25

I think they do. I mean, the PE is what are the 800?

Cameron  1:10:29

21 he said.

Tony  1:10:30

Price to oper­at­ing cash flow of 100 times. Yes, I think there prob­a­bly will.

Cameron  1:10:37

When we draw the three-point trend lines, we’re draw­ing them for busi­ness­es that have passed QAV muster. Three-point trend line for stop like this might have to be dif­fer­ent. Your stop loss might need to be a lot high­er because the stock may not obey in a cat­a­clysmic event. The stock may not obey the same prin­ci­ples of physics that QAV stocks do.

Tony  1:11:06

Yes. Well, I think that’s the case. I think. I mean, XERO is a good com­pa­ny. I just think the val­u­a­tions wrong and then when you have a– And that’s my opin­ion. I know there’s plen­ty of ana­lysts out there who will tell me about it’s all their prof­its being put into mar­ket­ing and grow­ing in the busi­ness and when that share stops and it’ll be a prof­itable com­pa­ny. I get that, you’re bank­ing on the future. Bank­ing on the cur­rent strat­e­gy, get­ting to that future point which I think is always has a cer­tain amount of risk involved in that strat­e­gy and after­pay is anoth­er exam­ple that comes to mind with that strat­e­gy and there­fore, I think when you get pull­backs, they can be quite large because the fun­da­men­tals cur­rent­ly don’t sup­port the cur­rent share price.

Every­one’s bank­ing on it being a much more prof­itable com­pa­ny in the future and get­ting into some Nir­vana when they can stop putting all their prof­it into expan­sion and then they’ll throw off lots of cash and that’s all fine but it’s got to hap­pen and good luck to Reg, he’s bought it at $38 and it’s now 144. That’s fine and also to I think, in terms of three-point trend­lines. If Reg wants to turn the buy line up a bit and use some points which are clos­er to the upward trend and get a high­er buy– High­er sell price. I think quite legit­i­mate. Depends on his risk appetite.

Cameron  1:12:37

Yes.

Tony  1:12:37

I think it eas­i­ly– You could eas­i­ly use say some­thing like March 2020 as his sec­ond point and maybe use some­thing around Octo­ber 18. You’re going to get a buy price which is about 100 bucks. That might be more real­is­tic for a sell price going up so quick­ly.

Cameron  1:13:00

Sor­ry, sell price.

Tony  1:13:01

Yes.

Cameron  1:13:02

But again, you just fudg­ing it to suit your appetite for risk. Pulling your feet, pulling a num­ber out of your ass and going well, that’s all. It’s not real­ly any three-point trend line log­ic behind that apart from– Well, what do you reck­on’s a fair thing?

Tony  1:13:22

No trades. Exact­ly.

Cameron  1:13:24

Yes, well, it is a good busi­ness and I’m sure there is a whole bunch of log­ic behind why it’s that the price it is but the flip side is we know that the last five years, these tech stocks have just been ben­e­fit­ing from the cer­tain state of eupho­ria which his­to­ry tells us has to end at some time.

Tony  1:13:44

Yes, and I’m guess­ing as soon as inter­est rates start to rise, they’ll get test­ed which haven’t for a while now. We’re in lock­down again but yes, it’ll hap­pen at some stage.

Cameron  1:13:54

Yes. Thanks, Reg. Alice wants to know, would it be bet­ter to wait until report­ing sea­son to buy new stocks? I also have anoth­er query. Tony has men­tioned before that if a stock is a buy but is still close to the sell line, you can wait for an uptick. Could you per­haps quan­ti­fy what is an uptick? OK, let’s start with num­ber one. Right about now, we’re record­ing this on the 26th of July 2021.

Tony  1:14:17

Which is only days away from the start of the report­ing sea­son. Yes, I guess my gen­er­al com­ment would be, if I had to com­mit a lot of mon­ey to the mar­ket now, I’d wait. If I was start­ing in my invest­ing now or if I came into a large lump sum through inher­i­tance or what­ev­er, then I’d wait. But I do trade at the moment. I’m buy­ing and sell­ing so we spoke about that. Poten­tial­ly we’ll be sell­ing Com­mon­wealth Bank and then I’ll replace it with anoth­er stock. But that is prob­a­bly only going to account for five or 10% of my port­fo­lio. I’m not mak­ing big changes to the port­fo­lio now. But yes, I think if you had a lot to com­mit, I’d wait for report­ing sea­son and use new fig­ures.

Cameron  1:15:11

Right. But for any­thing less than 20 mils you just get straight in there like any small amounts, you just play mon­ey.

Tony  1:15:19

Right.

Cameron  1:15:20

Yes. Monop­oly mon­ey.

Tony  1:15:21

Yes.

 

Cameron  1:15:23

You’re not going to wor­ry too much about that all right. Alice’s part two, uptick if– We’ve talked about upticks a few times in the past. It’s an upturn since the last. OK. It’s not a new upturn but an uptick. OK, an uptick since the start of the month?

Tony  1:15:44

Yes. What’s a good exam­ple here? If I look at CBA, again, which is flirt­ing with its sell line. Where is it? I’ll just call up the graph and I’m try­ing to find an exam­ple here I can talk about exact num­bers. If you look at CBA, right, but the start of the month, the share price will close that– For the end of last month, it closed at 99.87. Today, it’s 99.09 and its sell price is 98 some­thing, 98.50 or 60ish. It’s in the la– In this month, it’s turned down. I would want– Since it closed last month at 99.87. It had been an uptick if it was above 99.87. I would­n’t be buy­ing it new for any­thing less than a 100 bucks.

Cameron  1:16:38

Well, one cent above 99.87, two cents 10%.

Tony  1:16:45

No, I don’t have any hard and fast rules. I’m just look­ing for it to be not below 99.87.

Cameron  1:16:49

Right. Any amount above its pre­vi­ous close. Month.

Tony  1:16:56

Yes, I want to see the share price going up, not down when it’s that close to the sell line which it is.

Cameron  1:17:01

OK.

Tony  1:17:02

And that’s because if it’s that close to the sell line, it’s in a down­trend. It’s head­ing towards a sell price. You might be sell­ing out of it again straight­away. That’s a bit of a point­less exer­cise I think because he’s pay­ing trans­ac­tion costs. Yes, I’m going to wait until I see it in an uptrend.

Cameron  1:17:20

All right. Thank you, Alice. All right. Well, we did have a few more ques­tions that came in this morn­ing. But we’ve got an inter­view with Ali­son Har­ring­ton com­ing up in a minute. I think we might push those till next week. Apolo­gies to John and Elma and Dave from Newey on those but we’re– I think we’re an hour and 22 this already plus the inter­view, so we’ll get to those. They’ll be top of the list next week ajd have a great week, folks. You too, Tony. Enjoy anoth­er week of lock­down.

Tony  1:17:58

Yes. Oh my god. Thank good­ness, the Olympics on. I can watch TV a lot more. Yes. Well, it’s– I don’t mind watch­ing the Olympics like watch­ing sport. What else did I watch? Gosh, it’s been– My TV habits are get­ting worse dur­ing lock­down. I watched Loki which was­n’t too bad.

Cameron  1:18:26

Start­ed off as a good premise I thought but rapid­ly just went nowhere. It’s just became matrix lev­el con­vo­lut­ed silli­ness I thought. Yes, Owen Wilson’s always fun and Tom Hid­dle­ston is great but they did­n’t give you much to do. I think he’s much bet­ter when he’s been cun­ning and evil. When he’s just the nice vari­ant. I did­n’t think it did­n’t work as well.

Tony  1:18:51

Yes. No, I agree. He was being a bit redeemed. Was­n’t good.

Cameron  1:18:55

Yes.

Tony  1:18:56

Yes and the bad one came back in because it was oth­er ver­sions of Loki with­out giv­ing too much away but which was good.

Cameron  1:19:04

It’s good to see the old With­nail and I.

Tony  1:19:07

Oh, yes.

Cameron  1:19:09

Richard E. Grant. He’s always fun to watch.

Tony  1:19:12

Yes, it’s always a huge over reac­tor.

Cameron  1:19:14

Yes.

Tony  1:19:16

That’s a good bit loves a leg of ham which.

Cameron  1:19:20

I’ve always said he would have been a good doc­tor. They should have made him the doc­tor. I think he’d be great. He’s got that lev­el of campi­ness and over the top of.

Tony  1:19:27

Yes.

Cameron  1:19:28

Which would be great.

Tony  1:19:29

Yes. No, I agree and Ella Wil­son remind­ed me of the oth­er actor, the gray haired guy from Mad Men.

Cameron  1:19:37

Oh, yes. Yes, I know you mean yes.

Tony  1:19:42

Richard, that was him when I first saw it.

Cameron  1:19:44

Yes, right. Bit of a sil­very spiky hair­do.

Tony  1:19:47

You know exact­ly. He was good. Not in mind but haven’t found much else to rec­om­mend. I got sucked into watch­ing Lux list­ings in Syd­ney.

Cameron  1:19:58

That was.

Tony  1:19:59

Yes. Prob­a­bly the first time I’ve ever watched a real­i­ty TV show but it was a good post­card for the area I live in. It was

 

 

Cameron  1:20:07

Do I need to stage an inter­ven­tion for you before you start watch­ing Real House­wives of Bev­er­ly Hills or some­thing like?

 

Tony  1:20:16

What chan­nels are they?

Cameron  1:20:17

I don’t know. I don’t have a TV. All right. Well, as I told you off here, we watched a– Well, I watched Oliv­er Stones Pla­toon final­ly over the week­end which I’d nev­er got­ten around to watch­ing and I kicked myself because it is bloody great. What a great pow­er­house per­for­mance from every­body. Great film, good art. Good one

Tony  1:20:41

One of those movies, I went back and watched it about a week after I first saw it.

Cameron  1:20:44

Yes, right. Good film. Char­lie Sheen before he went nuts.

Tony  1:20:51

And check out Sal­vador. That’s prob­a­bly even bet­ter I think than pla­toon. Fan­tas­tic movie.

Cameron  1:20:56

Back to Pla­toon though, like inter­est­ing Char­lie made that about 10 years after his father made Apoc­a­lypse now and it’s a very sim­i­lar role in some ways. He goes on his jour­ney in Viet­nam and comes out of a just– Has to kill an Amer­i­can offi­cer and comes out of it just, is like what­ev­er, broke– A lit­tle bit bro­ken, a lit­tle bit despon­dent or giv­en up on the dreams and the illu­sions. Nice to see him almost replay­ing his father’s role.

Tony  1:21:32

Yes.

Cameron  1:21:33

1. [Crosstalk 01:21:34]

Tony  1:21:35

Speaks about that and he’s chas­ing the white book which is real­ly good too.

Cameron  1:21:40

I’m going to read that. I’ll watch Sal­vador and then get a copy of that. I’ll report on Sal­vador next week. Let you know what I think. All right. Cheers, Mate. See you. Bye.

Today, we’re joined by a guest, Ali­son Har­ring­ton. I had the oppor­tu­ni­ty to meet Alli­son at a Bris­bane Aus­tralian share­hold­ers Asso­ci­a­tion meet­ing sev­er­al months ago and she talked about her expe­ri­ence as a val­ue investor of many decades and shared with me her thoughts on women as bet­ter investors than men and I thought we absolute­ly need to get Alli­son on the show because we have been right­ly crit­i­cized by Tony’s wife and oth­ers for not hav­ing enough women guests on the show. In fact, any women guests on the show. I think you’re first Alli­son. Maybe you can help start a trend of cor­rect­ing that. Wel­come to the show, Ali­son Har­ring­ton. Ali­son, if you don’t mind, give every­body a lit­tle bit of a back­ground on your­self and your invest­ing expe­ri­ence.

Ali­son Har­ring­ton  1:22:48

We’ve been an invest­ing fam­i­ly for two or three gen­er­a­tions, more on my hus­band’s side and in the 90s, my hus­band became very unwell and at around about the same time, my moth­er in law was intro­duced to the Aus­tralian Investors Asso­ci­a­tion.

Appar­ent­ly, were bought up north of Juli­et Creek, 90 miles from the near­est town. They– My moth­er in law was very pleased to actu­al­ly be able to see face to face oth­er investors and she bought her entire fam­i­ly along to Aus­tralian Investors Asso­ci­a­tion con­fer­ences and because I was in Bris­bane, I end­ed up start­ing to go to the meet­ings and that was 1999. I’ve been going for 20 odd years and now most of my time is spent with the Aus­tralian Share­hold­ers Asso­ci­a­tion. But I’ve been an active mem­ber of both since 1999 and the first event I went to lis­ten­ing to them talk­ing about fun­da­men­tal and tech­ni­cal and psy­chol­o­gy of invest­ing and I’m think­ing, Oh, hang on there’s words here I don’t real­ly know not being and from there, I got involved and I sat there very qui­et­ly for five years.

I did­n’t say a thing. I used to sneak into the meet­ing, sit at the back and peo­ple laugh when they know me now and then even­tu­al­ly I was asked to be part of a strate­gic review of invest­ing edu­ca­tion and from there, I just got more and more involved and I think the advice that was giv­en at that first con­fer­ence was prob­a­bly still the most impor­tant advice that I’ve ever had. It was, under­stand your psy­chol­o­gy, have a goal, know what you’re doing, know what you want out of invest­ing, and have sys­tems. Have a review process.

Set up a sys­tem that you can review and then you can amend and change it. If you’re an emo­tion­al investor, you have noth­ing to grip to actu­al­ly come back and say, what went wrong and it’s been an evolv­ing expe­ri­ence since then and of course, it used to be– You basi­cal­ly relied on your stock­bro­ker for infor­ma­tion and read­ing the finan­cial papers and now, of course, we have an amaz­ing range of infor­ma­tion. But in an odd way, a lot less active retail investors.

There seems to be so many peo­ple out there advis­ing, that con­cept that the indi­vid­ual does­n’t real­ly know what to do is almost a stronger one than it used to be. It’s chang­ing all the time. I love it. I love being involved in know­ing, see­ing what’s hap­pen­ing, work­ing with the changes that are hap­pen­ing in our soci­ety, work­ing with the eco­nom­ic changes, and the val­ues, and the new gen­er­a­tions that come through and the new tech­nol­o­gy. It gets you involved in every sin­gle day and of course, I love being finan­cial­ly inde­pen­dent. That’s the best answer.

Cameron  1:26:16

Here. Do you remem­ber who it was that gave you those start­ing tips that you talked about?

Ali­son  1:26:23

Well, that was inter­est­ing because not one per­son had the whole lot. There were a bit from this one and a bit from that one. Every­body had their own lit­tle box and plat­form that they were speak­ing from. The guy that was the most impres­sive was a psy­chol­o­gist from Tas­ma­nia called Har­ry Stan­ton. I think he called his book, let the trade winds blow. But he made the com­ment that there are two things that test you as a human, get­ting mar­ried and being a respon­si­ble investor and he’s right.

Cameron  1:26:58

I think you men­tioned to me after the ASA meet­ing that you’re quite close with Roger Mont­gomery in his ear­ly years.

Ali­son  1:27:06

Oh, Roger. Roger was one of the pre­sen­ters on that night. That’s 20 odd years ago. Roger was a baby then and he– It’s been fas­ci­nat­ing to watch Roger’s jour­ney as a major influ­encer in the invest­ing stream and the ups and downs and the jour­neys we all take is almost a mir­ror of every­thing that we all do and of course, his book, valu­able, is a great read for peo­ple who real­ly want to think about val­ue invest­ing. He used to have a– Damn what was it called? He used to have a for­mu­la so that you pur­chase this for­mu­la for $99 and then you went into every share that you’re inter­est­ed, a com­pa­ny that you’re inter­est­ed in. You extract­ed all of the data and then you’ve punched it all into and put Roger’s for­mu­la on it and it gave you the mag­ic fig­ures of the range that you should buy that share if you’re inter­est­ed in buy­ing. It was great fun. It actu­al­ly was real­ly good tool. I enjoyed it. Of course, that’s long gone. Now I could do all that just with algo­rithms quick­ly.

 

 

Cameron  1:28:22

You learn a lot from Tony’s– From Roger’s book. Did­n’t you Tony? We had a great book just before the COVID crash, actu­al­ly, and you talked about it.

Tony  1:28:31

Yes. No.

Ali­son  1:28:32

I’ve actu­al­ly done a 14 hour, one-day course with Roger. It was only meant to be 10 but he did­n’t stop talk­ing. We kept buzzing, Roger, we’ve got to go. Won­der­ful.

Tony  1:28:43

Yes, good book and yes, he’s– I think he ran climb invest­ment man­age­ment I think?

Ali­son  1:28:50

Yes, he start­ed to climb.

Tony  1:28:51

Yes.

Ali­son  1:28:51

And then he moved over to Scaf­fold.

Tony  1:28:53

Yes, that’s right.

Ali­son  1:28:54

He said, this is [Inaudi­ble 01:28:56]. This is shades of life. That’s why he had the book because between it, he was­n’t allowed to prac­tice. He had that year to write the book.

Tony  1:29:03

Right. Yes and he used to be a reg­u­lar on the ASX Pod­cast Series when pod­casts first came out, which was a great resource as well.

Ali­son  1:29:15

He also put me in line of anoth­er lit­tle book and I can’t remem­ber it’s called, but it was writ­ten under­stand­ing cash flow and it was writ­ten for the point of offense. You have offense and the what each post stand for and what each rail stands for and it’s a great way of of think­ing about where you real­ly focus on your cash flow because it was one of the dif­fi­cul­ties that so many peo­ple make in busi­ness. They think that their cash flow is prof­it and that’s def­i­nite­ly not the case. And– But it was a great. It was nev­er– It was a pri­vate­ly pub­lished book. It was nev­er out there on the mar­ket but it was a fab­u­lous tool as well.

Tony  1:30:02

And I’m guess­ing if you’re a fan of Roger’s, you’re a val­ue investor. Why val­ue invest­ing over oth­er forms of invest­ing?

Ali­son  1:30:10

It’s a lot more than just val­ue invest­ing. I mean, I’ve read a lot of stuff on Buf­fett and in fact, my first intro­duc­tion to Buf­fett was read­ing Katharine Gra­ham, who owned the Wash­ing­ton. Post her by auto­bi­og­ra­phy which was one of the best reads I’ve ever had and she talked about War­ren Buf­fett because he came in and worked with her and that was my– That was actu­al­ly long before know­ing about Buf­fett through Roger.

I think it’s more than just val­ue invest­ing. Now, you’ve real­ly got to under­stand what val­ue is. But val­ue is not just a fig­ure, it’s a clar­i­ty of pur­pose, its strat­e­gy, it’s good man­age­ment, it’s hav­ing a future and know­ing how to build on that future. Val­ue is actu­al­ly work­ing out. Yes, is this com­pa­ny over­val­ued if you want to buy it. But val­ue is so much more than that. It’s not just, is it the right time to buy? Quite often at times, I’ve made the deci­sion not to buy some­thing because I thought it was over­val­ued. CSL is the clas­sic one of that, that I can espouse on that one and thought it was over­val­ued at $6 and $30 and $60.

It’s a lot more than that but it is an essen­tial tool to actu­al­ly under­stand what you’re doing as far as an invest­ing. As far as a com­pa­ny goes, but it’s also about how the direc­tors real­ly under­stand what they’re doing and whether they have clar­i­ty and then the oth­er word for val­ue is do they have good val­ues as human beings? And then tech­ni­cal is real­ly all about your emo­tion, it’s about when do you buy and who else is get­ting involved in this mar­ket? And, each stock has its own tech­ni­cal sto­ry as well. It’s a comp– It’s a com­pli­men­ta­ry tool, both of them.

Cameron  1:32:21

Can you take us through your process then Alli­son when you’re ana­lyz­ing the stock? I think you men­tioned to me at the same meet­ing that you have some form of a check­list that you work your way through?

 

 

Ali­son  1:32:33

Yes, the clas­sic three is it big enough and liq­uid enough and do I under­stand the busi­ness would be the first three things that you look at so and then start­ing look­ing at what I’ve end­ed up over the years work­ing out which one and I can’t remem­ber off the top of my head now. But which one of the main things? But it’s real­ly con­sis­tent growth and if there isn’t con­sis­tent growth and expla­na­tion of why there is not. I think, if you remem­ber, Wes­farm­ers was doing real­ly well and then they bought Kohl’s and every­body said, Oh, they’ve messed up now. The share price almost halved. And– But they– Because they weren’t con­sis­tent­ly get­ting that return on equi­ty.

But of course, in the end that was a way of com­ing down and then build­ing up it up again. The– It’s that I pre­fer a 10 year his­to­ry so I can actu­al­ly see how long it’s tak­ing for a com­pa­ny how they’re going over a longer peri­od and we’ve been 2007 of course, we had the GFC and now we’ve just got COVID so you real­ly you need to make sure that you’ve always got those major events and see­ing how peo­ple have respond­ed to those major events and also to see how they share all those val­ues have changed over dif­fer­ent man­agers and dif­fer­ent way the com­pa­ny is being run.

It’s real­ly con­sis­tent­ly and if there’s not a con­sis­tent sto­ry, there’s a glitch some­where, why? And said like Wes­farm­ers as your clas­sic one, why that glitch hap­pened? It’s because they’re bought in to calls and some­times– And then look­ing at how they val­ue the share price and the num­ber of– Whether they they’re keep­ing on increas­ing the num­ber of share­hold­ers your val­ue but I’m par­tic­u­lar­ly inter­est­ed– It’s a val­ue for the share­hold­ers. I’m par­tic­u­lar­ly inter­est­ed in, are they gen­er­at­ing enough prof­it that once they’ve paid me a div­i­dend, are they going to steal be able to grow? I want a com­pa­ny to be twice as big in 10 years time so that they’ve got to have cash flow to do that. The old cash is king but it’s also how you man­age it and how you put val­ue into it.

Cameron  1:35:16

There’s some of the key things that you look at. When you over that 10-year peri­od, are you pulling down their finan­cial data and then throw­ing it all into a spread­sheet and just mak­ing sure that it all looks good? How do you– What’s your actu­al process?

Ali­son  1:35:29

I just use a tool. Some­body else pulls it all out there and it’s all there and I just look– I’m look­ing for pat­terns. I’m not drilling down fussed about par­tic­u­lar­ly indi­vid­ual. Because I’ve done my first fil­ter with the top, the first three, size, liq­uid­i­ty, and do I under­stand the busi­ness and then as you go through each line, you can actu­al­ly start fil­ter­ing oth­er com­pa­nies out, it’s very quick to then start off, look their free cash flows just going nowhere.

Their sales per share is not increas­ing. You can start pulling all of those things out and you start­ing with a very small num­ber of shares. Then it gets good, gets eas­i­er. Then when you’ve done that, then you start look­ing at your big­ger pic­tures like debt to equi­ty, how they use their cash flow, and just mak­ing then start­ing to look at how the com­pa­nies run their cul­ture, the val­ues. I don’t real­ly go into those at the ear­li­est stage. They’re more once you nar­row that down to a num­ber of dif­fer­ent com­pa­nies.

Cameron  1:36:42

Right. Tony, you have any ques­tions for Ali­son about her process?

Tony  1:36:47

You said the one I want­ed to focus in on was under­stand­ing what the com­pa­ny does. Do you have any par­tic­u­lar indus­try exper­tise that you rely on or oth­er indus­tries you just give up on because you’ll nev­er under­stand them? Is that part of the process?

Ali­son  1:37:04

I mean, if you look around in your dai­ly life, there are so many busi­ness­es you under­stand. I mean, you under­stand how banks work and you under­stand how real estate works, you under­stand how retail works and you under­stand how what– You know what prod­ucts you’re using, whether you’re buy­ing beds or toi­let pans or what­ev­er. There’s a lot of stuff. Gen­er­al­ly, the min­ing indus­try– I was brought up in the gen­er­a­tion where the mines– Min­ing indus­try was incred­i­bly large part of our coun­try, we’ve lost a lot of our man­u­fac­tur­ing. Look­ing at what min­er­als are out and about, we ran a sem­i­nar once called mind the min­ers, which was won­der­ful.

Just talk­ing about how you under­stand the cycles of min­ing and when to pick up and when to back off onto the min­ing indus­try because every­thing is cycli­cal. Look­ing at some shares or our that they’re– High volatil­i­ty– Their oppor­tu­ni­ty to buy and sell is very sol­id busi­ness­es but they’re influ­enced by exter­nal fac­tors. You might want to buy into them when they’re low and incre and when they’re high, they’re cycli­cal. That gives a dif­fer­ent type of stock.

Oth­ers, you can see them just grow­ing and get­ting to the point. You’ve got to think about what I’m going to get. I’m mov­ing side­ways out of that one. There’s the stocks you keep in stock you move through stocks you spec­u­late on and stocks you just got to have a bit of fun with. You’ve always got to have a cou­ple of splurges there that you just want to watch and see what they do. But I think for my gen­er­a­tion, the boom in the last 10 years in the tech­nol­o­gy indus­try and I’m in the ASX, All Techs sec­tor is. It was start­ed with 25 stocks begin­ning of last year and there’s now near­ly 100 stocks. The boom in the tech­nol­o­gy stock is just anoth­er whole game because it’s there’s so much hap­pen­ing there so that you don’t see all this, like Atlas­sians all that soft­ware pro­gram behind that as a per­son sit­ting in front of your com­put­er, you don’t real­ly see all of that and but also when a com­pa­ny is grow­ing like Xero and Ama­zon, they don’t make prof­its for years and years because every­thing goes back in. Well, when you bought up to always look at a com­pa­ny that’s got prof­its, then it’s chang­ing the way we’re look­ing at those com­pa­nies is a dif­fer­ent ball­game.

Tony  1:39:51

Does that mean when I buy shares in Xero or on Ama­zon or are they com­pa­nies you just don’t real­ly under­stand?

Ali­son  1:39:59

Oh no, I under­stand them. I just nev­er talked about what I own. It’s one of the rules with­in the orga­ni­za­tion, the ASA and AIA. Nobody should feel oblig­ed to talk about what they own. That’s up to you. If you want to but I just have a rule, I don’t talk about what I own. I find to be hon­est, as soon as you start talk­ing about what you own, the area of com­pe­ti­tion comes in. Peo­ple want to always tell you the sto­ry about how they got into a bet­ter or barter or what­ev­er. It’s just eas­i­er to stay out of that. Invest­ing is such a per­son­al jour­ney that to be influ­enced by oth­er peo­ple’s com­pet­i­tive­ness is not going to bode you well and that’s real­ly under­ly­ing why women are, accord­ing to research make at least 1% bet­ter return than men because they’re not actu­al­ly com­pet­ing with each oth­er or with the mar­ket. They’re just work­ing away at it and I know some very smart women investors.

Cameron  1:41:08

Well, I want­ed to talk about that because you men­tioned that study to me. Can you tell us a lit­tle bit more about what you’ve read about why women are bet­ter investors than men is it just because they make bet­ter deci­sions because they’re not as com­pet­i­tive?

Ali­son  1:41:24

I think that’s one thing but I also think they’re just a lit­tle more qui­eter about it because they’re not inter­est­ed in being at the front and being look at me. I find that most of the women I know that invest, don’t talk about it, they keep it very qui­et and then every now and then, there are groups. I don’t belong to the oth­er group where you actu­al­ly talk about your own invest­ments and I said, it’s just my per­son­al­i­ty. But there are some very smart investors but they just tend to just qui­et­ly work away and keep their own thing. I think the sad thing is there are not enough women invest­ing for them to be in. I’ve got a lit­tle cohort of women that are friends who invest and that’s about all I real­ly inter­act with. Nev­er know when that next piece of joy­ful infor­ma­tion that helps you choose the next good win­ner stock is going to come through it. It can come through from any­where.

Now I think women to be hav­ing now observed the invest­ing indus­try and see­ing many– I mean, I’ve been to so many con­fer­ences and sem­i­nars and we’ve had so many speak­ers to just see. I mean, some of the wom­en’s speak­ers have just been extra­or­di­nary. I mean, I’ve heard many times that some of the best speak­ers in Aus­tralia and I think that we real­ly are tar­get­ed with an under­ly­ing image that women– That that mon­ey is men’s busi­ness and I’ve actu­al­ly heard men say this, that mon­ey is men’s busi­ness and I think that that’s an under­ly­ing phi­los­o­phy that it’s eas­i­er there­fore for a woman to just keep her own coun­sel and do her own thing.

Pick the brains and get along– Get on with it and it is I think becom­ing even more so because there is so much mon­ey around that’s being man­aged through the super­an­nu­a­tion indus­try which of course changes the dynam­ics about invest­ment com­mu­ni­ty as well. But they’re all per­son­al opin­ions. There are many– Prob­a­bly oth­er women are not run­ning into who are very active com­mu­ni­ca­tors with each oth­er.

Tony  1:44:13

What do you think you would change to encour­age more women to man­age their own finances?

Ali­son  1:44:19

I have asked that ques­tion so much. I actu­al­ly did spend time for a few years devel­op­ing a web­site that was aimed just for women and it was based around the con­cept that women do need to learn and be con­fi­dent before they will speak out. They do need to learn in a qui­eter sit­u­a­tion. I think that just or every vol­un­teer orga­ni­za­tion, every per­son who is edu­cat­ing peo­ple about invest­ing, even peo­ple who have knowl­edge bases that are teach­ing peo­ple. They real­ly need to focus on how to get through to more women. It’s well doc­u­ment­ed now that Amer­i­ca, the gen­er­a­tion of women, over 55 are now man­age more than 50% of the wealth of Amer­i­ca and they are not being heard.

That’s a lot of it through inher­i­tance, a lot of it through their own busi­ness­es. But that’s not being heard. I think there’s a huge need for the indus­try to real­ly think about how women can be empow­ered and edu­cat­ed and it’s about that empow­er­ing women to make them under­stand, you actu­al­ly can do it, you don’t have to be a genius at math­e­mat­ics, you don’t have to be a genius at under­stand­ing how busi­ness runs, you just have to have a sys­tem and not be fright­ened to ask ques­tions and that sys­tem should be eval­u­at­ed and changed and adjust­ed as you learn more and as you become more and more expe­ri­enced and even if you just know enough sys­tem to be able to real­ly get your advi­sor to fight for you and give you the best deal and not be some­one of that they don’t real­ly care so we won’t push them into that extra rate or ETF that just might make them that bit of extra mon­ey. Yes, don’t under­val­ue women is real­ly what the indus­try needs to do and the media.

Tony  1:46:43

What can we do to attract more female sub­scribers to our show on invest­ing?

 

 

Ali­son  1:46:47

I real­ly think if you were real­ly keen on it, have an intro­duc­to­ry ses­sion on a reg­u­lar basis. That’s focus­ing on those bar­ri­ers to entry for women and don’t talk down to them. In that sense of empow­er­ment that women can do it. It’s– We see so much adver­tis­ing, that you go and buy a $1500 pair of shoes or a glitzy piece of jew­el­ry, you just don’t see those sto­ries out there about that $1500 pair of shoes could be worth when you’re 50, 60, 70, thou­sand dol­lars. It’s not there. In our lan­guage, it’s not there in the con­ver­sa­tions of dai­ly life.

Cameron  1:47:45

We need to make a TV show like Sex in the City but it’s just the four women sit around say­ing, no, we’re not going to waste mon­ey on Manublu­nic shoes. We’re just going to invest that and start talk­ing about com­pound returns. For those peo­ple lis­ten­ing to our show who aren’t mem­bers of the Aus­tralian share­hold­ers Asso­ci­a­tion, what would you say the pitch­es for becom­ing a mem­ber and going along to your get togeth­er and mee­tups and con­fer­ences etc.?

Ali­son      1:48:14

You don’t need to know any­thing to start being a mem­ber. There is no expec­ta­tion of knowl­edge, you can do what I do. I did sit there for five years and say noth­ing and num­ber, the most impor­tant thing is that they are not pitch­ing a par­tic­u­lar sto­ry. It does­n’t mat­ter what type of investor you are, whether you– Or how much you’ve got to invest. There will be resources that come through the ASA that you’re going to grow as an investor. One week, we might have some­one talk­ing about green invest­ing. Next week, we’ll have some­one talk­ing about bonds. The next week, we’ll have some­one talk­ing about their sys­tem for select­ing shares.

Next time, we might have some­one talk­ing about the min­ing indus­try. Bit­coin invest­ing in tech­nol­o­gy. It just goes on and on, the range of things and that’s just in one meet­ing and then you throw into that, the webi­na­rs that are avail­able, the read­ing avail­able, and then the sem­i­nars and the con­fer­ence. Sem­i­nars don’t hap­pen as much since COVID. But we used to have three sem­i­nars a week, a year, half day or all day sem­i­nars as well as the annu­al con­fer­ence.

Great oppor­tu­ni­ties to just pas­sive­ly learn and you nev­er know which meet­ing is going to make you that bit of extra mon­ey. I remem­ber one meet­ing going to it and dis­cov­er­ing that there was this one lit­tle thing that so that you had that one oppor­tu­ni­ty and I made $15,000 just by tweak­ing my tax return and anoth­er time there was an advi­sor some­one was look­ing at some­thing dif­fer­ent­ly and I made enough mon­ey in four months to buy a new car so there weren’t stocks I want­ed to be in long term.

But they were just under­val­ued and I made an oppor­tu­ni­ty and you nev­er know, then you might go for a year or so and not know any­thing and it’s just the joy of being with like-mind­ed peo­ple who care about being finan­cial­ly inde­pen­dent and valu­ing their own abil­i­ty to be able to man­age their own finances and that’s that under­ly­ing being with peo­ple who actu­al­ly have the con­fi­dence to do it is just a phe­nom­e­nal feel­ing and it’s a delight­ful, both Aus­tralian share­hold­ers and Aus­tralian investors Asso­ci­a­tion about delight­ful orga­ni­za­tions, they both have the same val­ues. Aus­tralian share­hold­ers, has the extra role of advo­ca­cy and com­pa­ny mon­i­tor­ing of com­pa­nies and they’ve made some quite con­sid­er­able dif­fer­ences in how boards per­form in Aus­tralia.

Cameron  1:50:56

At the few Bris­bane meet­ings that I’ve been to and also the annu­al con­fer­ence, the age of the atten­dees, the demo­graph­ic seems to be on the old­er side. Do you have younger peo­ple join­ing the orga­ni­za­tion or that I’ve just not vis­it­ed to have done a vis­i­bil­i­ty? Or is that some­thing you’re try­ing to do more as attract?

Ali­son  1:51:18

It’s def­i­nite­ly some­thing that we need to work out how we’re going to do it and it’s– There is a lit­tle bit of a restric­tion in that we because we don’t have a sys­tem that we advo­cate, we just expose you to every­one who has sys­tems or ideas and all dif­fer­ent forms of invest­ing. We– It’s hard to actu­al­ly cre­ate, this is what you should do as a brand new investor. It’s not impos­si­ble and then– But we’re a vol­un­teer orga­ni­za­tion. Find­ing peo­ple who are will­ing to not only run what is already been run but and in for­mal work and the Aus­tralian share­hold­ers are just start­ing to move into that area to actu­al­ly cre­ate a new posi­tion that will be respon­si­ble for edu­ca­tion and then we need, we’ve done a big sur­vey on women and when– What’s it called? Win­vest is a new orga­ni­za­tion that they’ve– Sec­tion of the orga­ni­za­tion that they’ve start­ed but they need to work out what to do with the young ones.

They move much faster, they’re so much more tech savvy than gray haired gen­er­a­tion and they need some­thing to cap­ture them that bit quick­er, they have that very short atten­tion span. But it is essen­tial that young peo­ple start because they’re the ones that get the com­pound­ing– The val­ue of com­pound­ing, it’s such a dif­fer­ence if you can actu­al­ly get mov­ing ear­ly and have mon­ey in the bank that you know, hit your 40s and instead of think­ing, oh my gosh, I’ve got noth­ing to retire on.

To see that your mort­gage is start­ing to come down, your invest­ments are grow­ing and you can actu­al­ly start see­ing you have choic­es in your life and that’s– I think that’s the joy of invest­ing young, you can actu­al­ly a) Have time to make mis­takes and b) You can have the joy of see­ing the growth of com­pa­nies that are grow­ing with you and your net worth is grow­ing and that gives you those choic­es and hope­ful­ly along the way you’ll find that stock that you’ll pick up for 20 cents and or CSL $2.50 now $280. There these stocks do come through and but you can’t invest in them unless you’re actu­al­ly in the stock mar­ket and I think the oth­er thing I would say for young peo­ple, the ASX learn­ing to invest and their com­pe­ti­tions are phe­nom­e­nal. But I only think you learn if you put mon­ey in the stock mar­ket. You can the­o­rize as much as you like but unless you actu­al­ly are will­ing to put mon­ey in the stock mar­ket, you’re not real­ly going to learn and it’s a bit like going to the horse races. What’s the point of going through horse races if you don’t have a bet on a horse? It’s the same thing.

Cameron  1:54:43

That’s one of Tony’s favorite pas­times. Isn’t it Tony?

Tony  1:54:45

It is. Yes. Although I did go to the horse races in Dubai once. We’re not allowed to put a bid on because of the Mus­lim reli­gion but that’s a dif­fer­ence.

Cameron  1:54:54

But they have races any­way.

Tony  1:54:56

World cup. Yes.

Cameron  1:54:58

Oh wow. Do you have any last ques­tions for Ali­son before we let it go, Tony?

Tony  1:55:04

I think you’re going to ask Alli­son about her bio­med­ical expe­ri­ence. Is that right? Yes.

Cameron  1:55:09

Yes. You’re involved in orga­ni­za­tion doing some inter­est­ing work that you told me about? Could you tell us a lit­tle bit about that before you go, Alli­son?

Ali­son  1:55:18

Yes, it’s inter­est­ing when you go. If you went to a doc­tor and you had symp­toms of dia­betes, they would ask you all their clin­i­cal ques­tions and then they would send you off to a blood test and they would decide which would tell you that you have dia­betes and how severe it is and that would be used then reg­u­lar tests to man­age the dia­betes. If you have men­tal health issues and you go to a doc­tor or a psy­chi­a­trist, they have no objec­tive mea­sures that says, yes, you have changes in your body, phys­i­o­log­i­cal changes, we can put a mea­sure on those, we can then give you a treat­ment plan and then we can retest to see how your body is phys­i­cal­ly respond­ing to the treat­ment pro­gram and we’ve been involved in orig­i­nal research, we have some bril­liant researchers in Queens­land and we’ve actu­al­ly done world lead­ing research.

We actu­al­ly have the begin­nings of just a very sim­ple process that gives some very nice tools for the med­ical pro­fes­sion to work with. The most impor­tant and bet­ter thing about it is that, when you become sui­ci­dal, or depressed or what­ev­er, you just think, why me what’s hap­pen­ing and if some­body says, look, let’s mea­sure this, oh, this one is way off the tree, let’s do some­thing about it. It’s empow­er­ing. You feel like you’ve got some chance of actu­al­ly repair­ing your sys­tem and it– But we won’t hear about us because we don’t, we’ve been qui­et­ly doing this research and there’s no point in research­ing, it’s no use until it’s actu­al­ly hap­pened and we’re just at the begin­ning where we’re start­ing to actu­al­ly talk about it and teach peo­ple about it.

We have online cours­es for doc­tors now that actu­al­ly qui­et­ly teach about this. I can’t rush into it because it takes a while to under­stand how to man­age object adding these objec­tive mea­sures. It’s been immense­ly reward­ing for every­body involved and hope­ful­ly, we will end up being part and par­cel of the sys­tem when you come, when you have issues with men­tal health. If we can do any­thing to reduce sui­ci­dal ten­den­cies that would make an enor­mous dif­fer­ence. But this research and all of this is all ahead, we have to prove the bio­chem­istry of the phys­i­ol­o­gy. Start with the sci­ence, start with the base, the ground­work, and that’s where we’re work­ing at the moment. That’s why you don’t hear about us. We’re just doing the rock sol­id stuff behind the doors.

Tony  1:58:06

Is this a com­pa­ny that you have set up or chair or what’s your rela­tion­ship?

Ali­son  1:58:11

I’m a chair of the orga­ni­za­tion’s and not for prof­it char­i­ty.

Tony  1:58:15

What’s it called? Are you able to say?

Ali­son  1:58:17

Biobal­ance health.

Tony  1:58:19

Biobal­ance.

Ali­son  1:58:21

Biobal­ance health, we are run online pro­grams for med­ical doc­tors. We have new– We train new doc­tors and then we con­tin­u­al­ly upgrade the work for doc­tors already done the train­ing. It’s and they were pret­ty impres­sive. Bunch of doc­tors.

Tony  1:58:41

And you let us know ahead of the IPO.

Ali­son  1:58:46

One of our doc­tors actu­al­ly did a research paper, he was deal­ing with a lot of schiz­o­phre­nia scripts, schiz­o­phrenic suf­fer­ers and he found that 650 patients, I think about 180 of them fin­ished his pro­gram using the objec­tive mea­sures and the aver­age stay in hos­pi­tal went from 20 days a year to two days a year just by being able to look at the objec­tive mea­sures and man­ag­ing those and allow­ing encour­ag­ing the body to repair itself. That was pret­ty good out­come.

Cameron  1:59:26

They– It stops them from think­ing that there is some­thing wrong with them, they’re a bad per­son, they’re a bro­ken per­son. But no, there’s just some­thing going on with your bio­chem­istry and we fix them and you’ll be back to nor­mal?

Ali­son  1:59:39

Yes. With dia­betes, yes.

Cameron  1:59:42

Yes, that’s great. Well, get­ting in on the ground floor of the IPO would do some­thing about my depres­sion. I can’t say that but I don’t want to make light of it.

Ali­son  1:59:50

That’s your return on your invest­ments is very good for your depres­sion as well.

Cameron  1:59:57

That sounds like a ter­rif­ic research. Well, lis­ten. We’ll let you go, Alli­son. Thank you so much for com­ing on. Con­grat­u­la­tions on the great work that you’re doing with the ASA and on your own invest­ing as well and hope­ful­ly, we’ll be able to fig­ure out how to get some more women on our show and involved in invest­ing. Tony, and I’ll have to sit down and fig­ure out how we posi­tion our­selves to get more of the allowance. And

Ali­son  2:00:21

[Inaudi­ble 02:00:21]. I put a huge amount of thought about into this. Always hap­py to chat to you and encour­age you guys.

Cameron  2:00:30

Thank you.

Ali­son  2:00:31

Thank you for invit­ing me on and get those women invest­ing.

Tony  2:00:37

Thanks for your time and talk to us and if you have any oth­er col­leagues or peo­ple you invest with who you think might be good to come on the show, please point them our way.

Ali­son  2:00:48

Yes, I actu­al­ly do have a cou­ple of ideas. They’re quite qui­et so they might not but there are some quite smart women.

Tony  2:00:54

Right.

Cameron  2:00:54

Yes. Fan­tas­tic. Well, we look for­ward to hav­ing some of those ladies on. Have a good after­noon. Thanks for lis­ten­ing. Thanks.