Transcript QAV 440

QAV 440 Club

Cameron  00:15

Wel­come back to QAV, TK. This is Episode 440. Record­ed on the fourth of Octo­ber. 3 PM, Syd­ney time.

How has Gladys gone this week mate?

Tony  00:29

Well, she’s not fronting up to any press con­fer­ences. That’s for sure. I can’t say, Gladys you told us you weren’t going to do any more dai­ly press con­fer­ences. You’ve been doing dai­ly press con­fer­ences. We’re going to inves­ti­gate you.

Cameron  00:42

Cor­rup­tion. Yes. That was shock­ing.

Tony  00:46

She’s gone.

Cameron  00:47

Yes.

Tony  00:48

Very dra­mat­ic and I won­der whether she had to resign but any­way, that’s fine.

Cameron  00:51

Yes. Well, then nev­er a dull day in New South Wales?

Tony  00:55

No, and John Bar­i­laro is gone now too and so is– What’s his name? Mr. Con­stance– Andrew Con­stance.

Cameron  01:00

Yes, clean­ing the cup­boards.

Tony  01:01

Yes, clear­ing the decks.

Cameron  01:03

ICAC is seri­ous? Holy shit. What did we buy them off or some­thing? I thought we had an arrange­ment.

Tony  01:09

That was begged the ques­tion, if they leave par­lia­ment, are they under the juris­dic­tion of ICAC any­more?

Cameron  01:15

Did I?

Tony  01:15

Ques­tion for the lawyers?

Cameron  01:16

Yes.

Let’s get straight into it, Tony. Stocks of the week. What do you want to talk about this week?

Tony  01:21

I want to talk about coal, dirty.

Cameron  01:23

Dirty coal.

Tony  01:25

Pro­duc­ing coal.

Yes, well, it’s been on the rise as we’ve seen from its com­modi­ties graph but after doing a down­load on the week­end, our stock of the week is New Hope Coal which is back on our buy list. It’s fol­low­ing its lat­est results.

Cameron  01:41

Well, tell me all about New Hope Coal, Tony. Why should I have hope for coal? Real­ly, at this stage, I don’t have a lot of hope for coal.

Tony  01:49

This is Episode Four, A New Hope.

Cameron  01:53

Very good.

Tony  01:55

As peo­ple know, the under­ly­ing cause of the price is good for coal. I was asked a ques­tion about two or three weeks ago, should we be buy­ing com­mod­i­ty stocks even if they’re not on the buy list if their under­ly­ing com­modi­ties are going up? And I thought it’s worth try­ing but we don’t have to do now because New Hope is back on the list and it has a QAV score of 0.12 and its share price has been going up quite quick­ly.

Get­ting quick peo­ple, it may not be around for much longer. If the share price keeps ris­ing a lot, it may dis­ap­pear off the buy list. If you want to buy a well-priced qual­i­ty coal com­pa­ny, NHC is the one. Price to oper­at­ing cash flow is get­ting up on the high end. It’s actu­al­ly 6.94 when I did the analy­sis and that was done at a share price of $2.47 this morn­ing being Mon­day the 4th. It could dis­ap­pear quick­ly but it does have a qual­i­ty score of 86% which is quite strong. The div­i­dend is 4.5% which is again quite high for the mar­ket and it goes ex-div­i­dend on the 25th of Octo­ber.

This morn­ing being Mon­day, the fourth, it could dis­ap­pear quick­ly but it does have a qual­i­ty score of 86% which is quite strong. The div­i­dend is 4.5% which is again, quite high for the mar­ket and it goes ex-div­i­dend on the 25th of Octo­ber. If you’re buy­ing it now, it will go ex-div­i­dend on the 25th. A cou­ple of weeks, it may drop in price but I’m not say­ing you should wait around to the 25th and buy that price drop. I’m like­ly to buy it this week because a cou­ple of my stocks that I own have either just cross the sell line or get­ting very close to cross­ing a sell line and it’s prob­a­bly be the stock I bought next because it does have a high aver­age dai­ly trade. Just can’t see the fig­ure at the moment but cer­tain­ly quite high.

If you’re buy­ing it now, it will go ex-div­i­dend on the 25th. A cou­ple of weeks, it may drop in price but I’m not say­ing you should wait around until the 25th and buy that price drop. I’m like­ly to buy it this week because a cou­ple of my stocks that I own have either just crossed the sell line or get­ing very close to cross­ing a sell line and this would prob­a­bly be the stock I bought next because it does have a high aver­age dai­ly trade. Just can’t see the fig­ure at the moment but cer­tain­ly quite high.

It does­n’t score on the own­er founder met­ric in our check­list. How­ev­er, it does have 50% own­er­ship either direct­ly or indi­rect­ly by the Mill­ner Com­pa­ny and for peo­ple who don’t know Robert Mill­ner, he is the chair­man of list­ed invest­ment com­pa­ny called Wash­ing­ton Soul Pat­tin­son and New Hope Coal was an invest­ment by that list­ed invest­ment com­pa­ny which was spun out on its own when it got big enough to do so and it’s con­tin­ued on since then but Wash­ing­ton Soul still own a large chunk of it and then Robert Mill­ner’s the chair­man and I think one of his sons is on the board and they both own anoth­er per­cent­age or so each of the shares.

They’re giv­ing up very close to 50% own­er­ship in the com­pa­ny. It does­n’t score on the own­er founder because they would­n’t have found­ed the mine.

Rob joined the board and bit the same as War­ren Buf­fett did with Berk­shire Hath­away said, look, I can make some more mon­ey by tak­ing the cash right off by the chemist busi­ness and put it into oth­er invest­ments and that’s how the list­ed invest­ment com­pa­ny took hold and it’s been pret­ty suc­cess­ful over the years as well.

They do have quite a bit of skin in the game which is a good thing. Dan­ger­ous thing about Rob Mill­ner just as a quick tan­gent, he has been in the past some­times called Aus­trali­a’s War­ren Buf­fett and I’ll leave it up to lis­ten­ers to decide whether that’s a valid moniker or not but he became involved in the Chemist com­pa­ny, Wash­ing­ton Soul Pat­tin­son and peo­ple will have seen Soul Pat­tin­son chemists out there prob­a­bly in their local neigh­bor­hoods and the Mill­ner com­pa­ny have owned those for gen­er­a­tions.

Get­ting back to the QAV score, finan­cial health is strong and recov­er­ing in Stock Doc­tor. Lis­ten­ers will recall that if it’s a recov­er­ing finan­cial health score then we give it a two on the check­list. PE is 21, which is a record high. It gets a minus one for that but to be expect­ed, giv­en that it’s ramp­ing up very quick­ly off a low base. Strong IV2 which peo­ple will recall is the future earn­ings per share over our hur­dle rate and the IV2 for this stock is $7.87 when the share price is way below that at $2.47. It scores a check­list item on our check­list for being twice the IV2 price and also too, it’s not trad­ing too high­er than its net tan­gi­ble assets. Net equi­ty per share is $2.10 and it’s with­in book plus 30%.

All in all, yes, I think it’s quite an inter­est­ing invest­ment and I’m glad to see it come back onto the buy list.

It does­n’t score on the own­er founder met­ric in our check­list. How­ev­er, it does have 50% own­er­ship either direct­ly or indi­rect­ly by the Mill­ner Com­pa­ny and for peo­ple who don’t know Rob Mill­ner, he is the chair­man of list­ed invest­ment com­pa­ny called Wash­ing­ton H. Soul Pat­tin­son and New Hope Coal was an invest­ment by that list­ed invest­ment com­pa­ny which was spun out on its own when it got big enough to do so and it’s con­tin­ued on since there but Wash­ing­ton Seoul still own a large chunk of it and then Rob Mill­ner is the chair­man and I think one of his sons is on the board and they both own anoth­er per­cent­age or so each of the share. They’re get­ting up very close to 50% own­er­ship in the com­pa­ny so it does­n’t score on the own­er founder because they would­n’t have found­ed the mine. They do have quite a bit of skin in the game which is a good thing.

Cameron  05:42

You don’t have any qualms about buy­ing a coal com­pa­ny?

Tony  05:44

I don’t. We talked about this in depth last year, I think but I think these com­pa­nies or these prob­lems are demand– Require demand dri­ven solu­tions, not sup­ply dri­ven solu­tions and what I mean by that is, if we did­n’t have this coal com­pa­ny in Aus­tralia or if Aus­tralia stopped min­ing coal, it just gets picked up by some­body else around the world. The prob­lem does­n’t go away. It does­n’t solve any­thing except kill some jobs in Aus­tralia which I don’t think is a smart. I’m all for gov­ern­ments bring­ing in emis­sions tar­gets and emis­sions net zero tar­gets by 2050 but that’s the sup­ply side con­trol­ling, that’s not the demand side.

Cameron  06:17

And the way you’ve explained it to me in the past too is that us buy­ing shares on the open mar­ket does­n’t have any impact on the suc­cess of the busi­ness unless you’re buy­ing a new cap­i­tal rais­ing or you’re get­ting involved in a float. New Hope call does­n’t get any of our mon­ey if we buy shares on the mar­ket. It’s the per­son sell­ing shares get the mon­ey.

Tony  06:38

Yes, I’m buy­ing shares from the per­son who wants to shut down coal mine, poten­tial­ly.

Cameron  06:43

OK, what about a CVW, small cap stock?

Tony  06:47

Yes, it’s been stuck at the week before but I just want­ed to make it our small cap stock of the week. I think it’s the high­est small cap on our buy list this week after our down­load. That was­n’t a Josephine. Lots of Josephine’s this week. Peo­ple might notice that them­selves.

Think for a cou­ple of rea­sons on the Josephine issue that it’s the start of the month. It’s going to be volatile in terms of whether the share price is by high­er or low­er than the end of last month. We knocked out a few when we’re doing our down­load but yes.

Clearview Wealth, we spoke about before, it’s an insur­ance com­pa­ny. There was actu­al­ly an arti­cle on the Finan­cial Review, I think the week­end before last which spoke about a poten­tial– Being a poten­tial takeover tar­get because of its insur­ance oper­a­tion. It’s large­ly now an insur­ance busi­ness. One of the last, if not the last orig­i­na­tor of insur­ance prod­uct in Aus­tralia, all the oth­er ones have been bought out by gen­er­al­ly over­seas com­pa­nies which is look­ing to con­sol­i­date its scores hard­ly for us and it’s been going up tremen­dous­ly since we first rec­om­mend­ed it.

Cameron  07:41

Yes, if peo­ple want to know more about CVW, they can go back and lis­ten to our episode from a cou­ple of weeks ago.

Oh, the Pan­do­ra papers came out today, Tony. I think one of the biggest leaks in the his­to­ry of leaks. The Inter­na­tion­al Com­mit­tee of inves­tiga­tive jour­nal­ists pub­lished it with a whole bunch of media out­lets around the world. I think it’s run by an Aussie, the ICJJW, what­ev­er it is. The LGBQTIJW. They do a tremen­dous job and there’s a bunch of Aus­tralians, accord­ing to the Finan­cial Review in this lat­est leak with their hid­den off­shore com­pa­nies and I did­n’t see your name turn up in the Finan­cial Review. That was that was a relief.

Tony  08:27

It is. Yes, it should­n’t be a sur­prise. I would­n’t do this stuff. I think it’s absolute­ly ludi­crous.

Cameron  08:34

Every­one who engages in this stuff says, I would nev­er engage in this stuff except to the guy in Samoa that they’re hid­ing their mon­ey with includ­ing a West­pac direc­tor who’s on the com­mit­tee to clean up the ethics of West­pac. It was in the finan­cial review today.

Tony  08:54

Yes, well, you’re clean­ing up bank ethics. I’m not sure if that makes them bet­ter or worse or from their point of view. That’s just crazy. I mean, you’re going to get caught. There’s always the part for a sec­tion of the Tax Act which is so sweep­ing that any attempt to not pay tax­es is an ille­gal thing to do so. It does­n’t take long for a prece­dent to be set to some­thing new. This is like the– What was it called? The Fun­se­ca that.

Cameron  08:58

Mos­sack Fon­se­ca.

Tony  09:02

Yes, Mos­sack Fon­se­ca. There was anoth­er set of papers for those. I’m try­ing to repeat the Pana­ma Papers.

Cameron  09:25

Pana­ma Papers. We’ve also had the Pacif­ic papers.

Tony  09:29

Par­adise papers.

Cameron  09:29

Par­adise papers came out. No. Just in the last cou­ple of years with these off­shore com­pa­nies. We had the Pana­ma Papers as well or the– Sor­ry, the Pacif­ic papers. Just talk­ing about the West­pac guy, I read a quote that I post­ed on my life of Cae­sar pod­cast Face­book page. He was tak­en out of the Finan­cial Review, just try­ing to grab it here. It was a great quote I liked. Yes, there was a quote from Jef­frey Wil­son SC, a bar­ris­ter direc­tor– A direc­tor of the Cen­ter for Pub­lic Integri­ty said, “Should some­one have a Super­fund in Samoa? I would have a gut reac­tion. Well of course not. A direc­tor of a bank is like Cae­sar’s wife. They have to appear above reproach.” You know the sto­ry about Cae­sar’s wife?

Tony  10:12

Cae­sar’s wife was seen not to be above reproach.

Cameron  10:15

Yes.

Tony  10:15

Yes, I do recall.

Cameron  10:16

There was a guy called Claudius dressed up in wom­an’s cloth­ing at a wom­an’s only secret cult meet­ing at Cae­sar’s house when Cae­sar was­n’t there and he said, I nev­er touched her. Noth­ing went on but there was a rumor going around Rome that he was stoop­ing Cae­sar’s wife so Cae­sar divorced his wife and said, Cae­sar’s wife must be above sus­pi­cion at all times.

Tony  10:37

And she said, hey, look, I’m just hang­ing out with girls. What’s– [Crosstalk 00:10:40].

Cameron  10:40

OK, I just thought he was an ugly look­ing girl. I did­n’t know.

Cameron  10:44

Let’s talk about QAV and down­turns, Tony because there’s a lot of arti­cles hit­ting the media.

Tony  10:49

Yes.

Cameron  10:49

I post­ed one or two up on our Face­book page about the doom and gloom glob­al mar­kets are in for a bumpy ride in the days and months ahead accord­ing to the ABC, a com­bi­na­tion of sup­ply issues with ship­ping costs going up and then just ships not being able to move because of Delta. You’ve got the whole Chi­na ever­grande finan­cial con­cerns. You’ve got Delta just run­ning hav­oc around the world. US Con­gress not able to agree on any­thing and they’re going to run out of mon­ey in a cou­ple of weeks as usu­al.

All things going on out there and of course, as you said, a cou­ple of weeks ago on the show, his­tor­i­cal­ly, crash­es hap­pened in Octo­ber. Although there’s no real sci­ence behind why that would be except I think you talked about going away and com­ing back in the US but I want­ed to point out for new lis­ten­ers, the peo­ple that weren’t with us, when we went through the COVID cough last year, QAV actu­al­ly does well, it helps us thrive through down­turns and in fact, we love down­turns. We don’t love them because they have a ter­ri­ble effect on peo­ple’s liveli­hoods and their jobs and their sav­ings and it’s a neg­a­tive thing for many peo­ple. It’s not like we’re cel­e­brat­ing but in terms of invest­ing, it’s actu­al­ly a good time to be invest­ing if you have rules that guide you through the both the down­turn to min­i­mize loss­es and also how to get in quick­ly when it turns around.

Tony  12:16

The three-point trend line is meant to help us sell high and buy low. It won’t get us out at the top of the mar­ket but it’ll get us out at the top of the way down and it won’t get us in at the bot­tom of the mar­ket but it’ll get us in at the bot­tom of the turn up. We’ll miss the top 10–20% of either turns but we’ll get out and we’ll get back in at the right times and that’s the essence of invest­ing. It’s sell high.

Cameron  12:39

I don’t rec­om­mend that. I’ve tried sell­ing high and I just end­ed up lis­ten­ing to Pink Floyd and watch­ing the Wiz­ard of Oz. Just get dis­tract­ed real­ly easy. Yes, what was I doing there? I had the ben­e­fit and the expe­ri­ence, the adven­ture of work­ing on QAV with you through the COVID cough last year and it was real­ly enlight­en­ing and also assur­ing and calm­ing to know, OK, well, I don’t need to pan­ic. I don’t need to wor­ry. There’s– We just fol­low the rules.

Tony  13:11

Yes and that’s the real– I mean, OK, so the beau­ty of it is a set of rules so we can take our emo­tions out of it but that’s the beau­ty is tak­ing the emo­tions out of it because if you remem­ber back to the COVID cough, the mar­ket turned down, every­thing was shut­ting down. No one knew how many deaths were going to hap­pen, there was fore­cast out that there could be a mil­lion peo­ple dying in Aus­tralia, and it was com­plete doom and gloom and then peo­ple were ask­ing us, OK, we sold out when do we buy back here? And how long did the GFC take? And I said, well GFC took 18 months to two years to buy back and we could be sit­ting on the side­lines for a while here and but then, with­in about a month, maybe six weeks, we’re start­ing to buy back in so I nev­er saw that com­ing. I could nev­er fore­cast any of that but the num­bers told us to do it and it worked out well for us.

Cameron  13:54

For new folks out there. It’s not a scary thing. I guess I put it that way for me with QAV. It’s not a scary thing.

Tony  14:00

And it’s a fact of life. I mean, if I think about the times I’ve been invest­ed from the long term man­age­ment cap­i­tal debt crash, the Asian finan­cial crash, the emerg­ing coun­tries finan­cial crash, that Greek default 911, Iraq one, Iraq War Two, the list goes on and on. Mar­kets go through ups and downs, you just have to have a frame­work for deal­ing with it.

Cameron  14:25

I thought you’re going to add mar­ket­ing the Mes­si­ah to your list of great tragedies. They’re right there.

Tony  14:30

Trade down for it.

Cameron  14:32

Yes.

Tony  14:33

Yes, the Titan­ic [Inaudi­ble 00:14:37].

Cameron  14:40

Speak­ing of down­turns, your stock of the week last week was Myer and you said you might want to sell it if you hold it and I jok­ing­ly said, Don’t jinx it. Well, you jinxed it.

Tony  14:50

Yes, sor­ry about.

Cameron  14:52

What hap­pened to my Myer, Tony?

Tony  14:54

I still haven’t real­ly worked it out com­plete­ly log­i­cal­ly any­way but Wil­son asset man­age­ment which is Led by Jeff Wil­son sold off part of his stake and this is a bit of an old fund man­ag­er tricks that peo­ple should be aware of that you only have to noti­fy the ASX when you buy and sell shares if you’re an insid­er or if you hold more than 5% of the mar­ket cap. Wil­son asset man­age­ment has sold down from sev­en back to five and the trick is that then lets them sell the oth­er five when­ev­er they like with­out hav­ing to noti­fy the mar­ket about what they’re doing. That can be an advan­tage to also an asset man­age­ment but yes, they’ve sold the 2% they had or rough­ly 2% they had above 5%.

Their stat­ed rea­son for doing that was its share price has dou­bled since they bought it which is true just as it has for QAV lis­ten­ers who we’ve bought in when it appeared on the buy list first of all and Wil­son, as I men­tioned, I want to take some prof­its. Oth­er than that and the fact that they sold a big block actu­al­ly did low­er the share price. You can’t go out into the mar­ket and ask for some­one to buy 2% of the com­pa­ny and not often have a dis­count to the cur­rent share price. That was one rea­son why the share price dropped.

But oth­er than that peo­ple have been try­ing to read into it, oh it’s good for Solomon Lew, it’s bad for Solomon Lew. It’s good for Myer, it’s bad for Myer. It’s just one guy sell­ing 2% of the shares. It’s like what? 2% of the mar­ket cap sell­ing your shares. It was­n’t a big deal to Wil­son asset man­age­ment. They’ve got over a bil­lion dol­lars invest­ed in var­i­ous com­pa­nies and Myer was­n’t a mate­r­i­al part of that hold­ing for them and I don’t think is a big deal for Myer.

Cameron  16:21

The big les­son I think out of all of this as the Jeff Wil­son obvi­ous­ly lis­tens to this show. When you picked it, he was like, oh, I’m out and sold it straight­away. Thanks a lot, Jeff.

Tony  16:32

Yes, quite pos­si­bly. Yes, watch out for New Hope Coal and for Clearview Wealth.

Cameron  16:36

Well, I just checked New Hope Coal’s already down 0.41% since this morn­ing. Wher­ev­er the show has­n’t even gone out yet, it’s already tak­en effect. I tell you, they’ve bugged your offices, some­one’s bugged your offices.

Let’s talk about SDG if we can. It went ex-div­i­dend last Thurs­day. I was going to sell it. I own it in one of my port­fo­lios, I was going to sell it as a real one until I real­ized the div­i­dend and thank you to who­ev­er it was on our Face­book group recent­ly who point­ed out that there’s a fea­ture in Stock Doc­tor where you can add div­i­dends to the advanced chart­ing so it’ll appear right there. It’s very easy to spot the div­i­dend and it gives you the details of when it went x and when it was paid. That’s very help­ful but I still was a lit­tle bit unsure about the cal­cu­la­tion, I end­ed up fig­ur­ing it was prob­a­bly above it sell line if I fac­tored the div­i­dend back in.

Can you walk me through again, just how to do that prop­er­ly? I got a lit­tle bit lost in the frank­ing part of it.

Tony  17:34

Yes, all we’re try­ing to do is work out what the div­i­dends worth to you after tax with the div­i­dend is com­ing to you after the com­pa­ny is paid tax on the prof­its– Div­i­dend paid from prof­it, right?

Cameron  17:45

Yes.

Tony  17:45

Usu­al­ly, there are cas­es where a com­pa­ny has­n’t made mon­ey but it has paid a div­i­dend out of its reserves from its bal­ance sheet– The cash it holds on its bal­ance sheet but they gen­er­al­ly paid from prof­its and gen­er­al­ly, those prof­its have already had 30% tax paid on them and the law in Aus­tralia is that when you receive a div­i­dend from an Aus­tralian com­pa­ny that’s paid tax, then you get a cred­it for the tax it’s already paid. It’s com­ing to you as a share of an untaxed prof­it of the com­pa­ny and then it’s up to your finan­cial sta­tus, how you’re taxed on that basis but it’s basi­cal­ly like say­ing, you’re an employ­ee and you get paid a gross amount of dol­lars but then they take tax out, you’re get­ting a tax back and then they’ll take tax out when you put your tax return in. It’s like a two-step process for you.

Cameron  18:28

Yes.

Tony  18:30

What I do is to add that tax back in to work out what the gross pay­ment is to me when I’m work­ing out how much to add back to the price to take into account the effect of the div­i­dend and I do that by divid­ing by 0.7, the div­i­dend per share by 0.7 and that adds 30% back to the div­i­dend price.

Cameron  18:46

OK, divide by 0.7.

Tony  18:50

Yes, which adds 30% back the div­i­dend price. Can I just walk through SDG with you because I am not sure if I fol­low your num­bers? I’m just going to call it up in Stock Doc­tor. If you look at the– There’s a div­i­dend page in Stock Doc­tor which is along the sec­ond of the com­mand lines on the front page, says DIV and that tells me that div­i­dend was x date was the 14th of Sep­tem­ber that paid on the 30th of Sep­tem­ber. It was a four cents per share div­i­dend which prices up to I think about 5.7 cents per share.

Cameron  19:23

Well, I got 20 cents a share. I only got four cents a share.

Tony  19:26

Yes, this is a trick. Go into the div­i­dend page. You’ve got the annu­al amount you need the half amount. Oh no, sor­ry. No, I’m wrong. Sor­ry. There was a spe­cial div­i­dend paid on the 14th of Sep­tem­ber as well. 16 cents. Sor­ry, you’re right. I got that wrong. There were two div­i­dends paid on the 14th of Sep­tem­ber total­ing 20 cents.

Cameron  19:42

Right. How much of that you get is going to depend on how long you’ve owned the shares?

Tony  19:47

You do have to hold the share for 45 days to claim the frank­ing cred­it. That’s the law so you’ve got a test for that which– But if you held the share on the 14th of Sep­tem­ber, you got 20 cents a share.

Cameron  19:57

OK, good. I did get 20 cents a share. I would take that 20 cents and divide it by 0.7. That give me 285, 0.285 and the price at the time was 238. 2.38 plus 0.285 gives me 2.665. I had the sell at the time of about $2.

Tony  20:28

Hang on. Let me just take stock there. The cal­cu­la­tion should be– The sell price should have div­i­dend tak­en off. One rea­son why I’m con­fused is I have a very low sell price for Sun­lands. I’m not even sure what you’re doing that.

Cameron  20:39

Yes, I’m not sure either. Now, I’ve just pulled it out. I’ve got a sell price of around about $2.20.

Tony  20:46

Got one even low­er, $70.

Cameron  20:48

But it was a rule. One is what I said.

Tony  20:50

OK, what’s your rule on pric­ing [Crosstalk 00:20:53]?

Cameron  20:52

I don’t know.

Tony  20:53

You need to take the grossed up div­i­dend off your­self in rule one price is what I’m say­ing.

Cameron  20:57

Yes, I’ll take it off or add it to–

Tony  21:00

Take it off. You’re sell­ing it for a low­er price because you’ve got the div­i­dend back. In oth­er words, if the sell price was $2 on the share and it dropped after it went ex-div­i­dend but then you add back the div­i­dend per share, you’re above the sell price or if you take off the div­i­dend per share from the sell price, the share price is above the sell price.

Cameron  21:16

I bought it at $2.67.

Tony  21:18

OK.

Cameron  21:19

It had come back, I think 10% below that. It trig­gered my rule one alert.

Tony  21:26

Which is going to be about 26 cents off that so it’s going to be around $2.40.

Cameron  21:30

$2.40.

Tony  21:30

Yes.

Cameron  21:31

And I fig­ured I had a div­i­dend com­ing.

Tony  21:33

Yes. Take it off $2.40.

Cameron  21:35

Take it off?

Tony  21:36

Yes, because you want­ed the sell to be at the low­er price because you’ve got–

Cameron  21:39

Oh, you’re work­ing out the sell, right? OK, what I’m doing, I’m think­ing the oth­er way around. I’m going well, it says the cur­rent price is $2.40 but I’m actu­al­ly get­ting 268 for it because I’ve got a div­i­dend.

Tony  21:50

Oh right, yes. Sor­ry. You can. [Crosstalk 00:21:53].

Cameron  21:53

Either way, it would have stayed just above my buy price.

Tony  21:57

OK, got you.

Cameron  21:58

What is it today?

Tony  21:59

The only oth­er com­ment I want to make after con­fus­ing every­one, sor­ry about that, is I think that div­i­dends have been paid now.

Cameron  22:05

Yes.

Tony  22:05

Yes.

Cameron  22:06

The price today is 241, still.

Tony  22:09

And that’s above your sell price.

Cameron  22:12

Just.

Tony  22:13

Yes.

Cameron  22:13

By one cent just OK.

Tony  22:14

That’s gen­er­al­ly what I do is when the div­i­dend gets paid, I don’t deduct it from my price cal­cu­la­tions.

Cameron  22:20

Right.

Tony  22:21

But what I’m find­ing with a cou­ple of the shares I hold now is they’re tak­ing a bit longer to turn back up. I’m not sure if the investors who want div­i­dends and frank­ing cred­its are wait­ing for 45 days, we have to wait for 45 days or what but I am see­ing just as called out.

Tony  22:35

In most halves and every oth­er half, I can think of the div­i­dends rebound before you get paid but this time sell off is hang­ing around a bit which could be a part of what we talked about before the mar­kets get­ting sketchy or it could be because peo­ple are wait­ing 45 days before they sell to get their frank­ing cred­its. I’m not sure.

Cameron  22:50

Well, accord­ing to Stock Doc­tor, the car price is– My invest­ment in is down 2.25% from when I bought it. It’s well like my 10%.

Tony  22:59

Yes.

Cameron  23:00

Thing.

Tony  23:00

OK.

Cameron  23:00

Even with all of that tak­en into account. I’m going to have to do a spread­sheet so I don’t have to try and remem­ber how to do this every time.

Let’s talk about AMI, if we can, because when we spend three hours this morn­ing talk­ing about Josephine. It was insane. Yes, I told peo­ple when I pub­lished the list today in Face­book, for peo­ple who did­n’t see that for our club buy list– The full buy lists each week.

Start­ing next week, we’re not going to fil­ter out the Josephine’s or even real­ly list the Josephine’s because what we found over the last cou­ple of weeks in doing that is we’ll spend our entire week­ends doing the buy list based on the clos­ing price on Fri­day and then by lunchtime Mon­day, things have moved. Some things that weren’t Josephine’s have become Josephine, some things that have were Josephine’s on Sun­day by lunchtime Mon­day and then we’re fran­ti­cal­ly try­ing to rejigged the whole thing and you said to me, well, look, this is ridicu­lous. Just tell every­one to do what I do which is, before you buy it, just check if it’s a Josephine. If it’s hav­ing a down day, don’t buy it.

Tony  23:59

I think that makes sense both from the point of view of it’s a big work­load doing it for the full buy list of near­ly 100 stocks and doing it man­u­al­ly for those. Try­ing to do it in an auto­mat­ed sense but then you real­ly strug­gle to get the rules right for that and we haven’t land­ed on that square yet. Yes, I mean, I’ve nev­er made it part of my down­load before and I think it’s fine to take it out and just make it a part of the buy­ing process.

Cameron  24:19

Yes, I mean, we already tell peo­ple check the price before you buy because it might have moved. It’s just part of that but let’s talk about AMI Aure­lia Met­als because this is one that we went over a bit chat this morn­ing and I know that our think­ing on Josephine’s is flu­id at the moment but this was an instruc­tive one. If peo­ple pull up a AMI chart if you’re sit­ting at your desk and if not just imag­ine it, just do a Queen’s game but stare up at the ceil­ing and you’ll be able to see it appears for you. Appar­ent­ly that’s how it works.

Tony  24:50

Well, we can make a quick descrip­tion of the AMI graph. It’s one of those graphs where the high­est point is in the mid­dle. It rose dra­mat­i­cal­ly for a cou­ple of years and then it’s been falling for a cou­ple of years. It’s had a cou­ple of peaks on the way down so like it’s– You can draw almost like a trop­i­cal along the tops, a straight line across all the tops of the peaks. It has­n’t bro­ken above that, has­n’t reached that sell line yet but it’s very clear.

Cameron  25:11

You know how I describe it? It’s a Gladys. That’s what it is. It had a peak a cou­ple of years ago. It was look­ing real­ly strong and then it’s fall­en a long way from that peak and a cou­ple of lit­tle bumps along the way and now it’s plum­met­ing. Its cred­i­bil­i­ty is plum­met­ing. It’s just got a lit­tle tick up at the end here prob­a­bly because it’s resigned and it’s like, oh, I don’t have to wor­ry about press­es– Doing press­es every morn­ing talk­ing about COVID cough. Thank God for that. Some­body else’s prob­lem now. That’s what it is. It’s a Gladys. Told you I was going to work that into some­thing today, did­n’t I?

Tony  25:44

Yes, you did. Yes, peo­ple can think of it as being like an upside down V and on the way down to the V, there’s a cou­ple of peaks before it gets to the bot­tom.

Cameron  25:53

Yes.

Tony  25:54

[Inaudi­ble 00:25:55].

Cameron  25:55

The prob­lem that we had this morn­ing was you had it as a Josephine. I did­n’t and my argu­ment for it not being a Josephine is that it closed to Sep­tem­ber at 30 cents. This morn­ing, it’s at 32 cents. It’s picked up a lit­tle bit. I was ask­ing the ques­tion and I think some­body else has asked this recent­ly too, when do we come out of a Josephine? It’s a falling knife. It has been as you said, more or less con­sis­tent­ly since March 2019. It’s popped up a few times, have rebound­ed after COVID, back down up a bit back down. How do we know when to buy back in? Obvi­ous­ly, it’s not any uptick because you still clas­si­fied it as a Josephine this morn­ing and then you remind­ed me of the sec­ond buy line rule or fudge or what­ev­er.

Tony  26:39

Yes, well, it’s not real­ly a rule. It’s just the work­ing hypoth­e­sis at the moment. I think it’s worth­while point­ing out, if you use the buy line fol­lows the sell line. Aure­lia Met­als has been a buy for a while because pri­or to the COVID cough, there was a sell on the way down towards the COVID cough but then you draw a buy line after that which means a sell line gets redrawn using the COVID cough’s l2 and even though the share price went all the way back up to about 55 cents after the COVID cough, it’s back down to 32 today and it’s sell price is about 28.

It’s just been declin­ing since the upturn after the COVID cough. That’s why I call it a Josephine. It’s in a– I mean, you can see it just using com­mon sense. It’s in a falling knife sit­u­a­tion. It’s trend­ing down towards its buy line. How­ev­er, as you point out in the last cou­ple of days, it’s been an uptrend. Our sell line, sor­ry. In the last cou­ple of days has been an uptrend.

What I said I often do in these sit­u­a­tions to try and con­firm an uptrend is to draw a new buy line. It’s like– If you were approach­ing this from fresh and we’re just using h1 as the high­est peak in h2 was the next high­est peak to the right, you draw a buy line and h2 would have been one of the inter­me­di­ate peaks at July 2020 and you can see a peak to the right of that. You redraw using h2 at May 21 and that buy line gives you a buy price of around 36 cents and it’s been a work­ing hypoth­e­sis of mine. I guess a bit of a fair­ly unrig­or­ous test but any­way, I would con­sid­er that Aure­lia. Sor­ry, it was back into a non-Josephine state if it went above that 36 cents.

Cameron  28:16

What we’re going to have to call it? A Napoleon state.

Tony  28:18

A Napoleon State.

Cameron  28:19

Has to break through the Napoleon line if Josephine wants to get it on. She’s got to break through Napoleon, he’s got to agree to it. That’s the Napoleon line.

Tony  28:28

Up until now, Napoleon’s been dress­ing up as a girl and going into Josephine’s sewing cir­cle.

Cameron  28:34

No, he was just going on cam­paign and sleep­ing with mis­tress­es in Poland. Right.

Tony  28:40

I haven’t done enough research on this. I’ve cer­tain­ly found cas­es where it does­n’t apply and we spoke about that a bit this morn­ing with– If you look at the Fortes­cue Met­als graph, it’s one of those graphs that go from the low to the left to high­er to the right. It’s very hard to draw a recent buy line on that one until the very end, when you hit a high peak and then the low­er peak to the right because on the way up, it just kept hav­ing high peaks to the right.

You can do it when it turned down as they all do. The stock price graph isn’t going to go straight up or at an even 45-degree angle, it’s always going to have bumps and ris­es but my only hard and fast rule is not to buy things on a day when they down­turn because you don’t know if it’s going to be the start of a down­trend or not.

Cameron  29:17

Yes, right. I got anoth­er ques­tion about FMG actu­al­ly which I added to the last minute, might as well skip to it now.

Car­o­line on Face­book hap­pened to men­tion that she had been doing the same exer­cise that you talked about on the show last week look­ing at the top 20, work­ing out which one of the top 20 is the biggest gap with the IV2 and she iden­ti­fied FMG but she said, you din’t men­tion when do you buy back in. You did­n’t men­tion any­thing about look­ing at sen­ti­ment and you did­n’t talk about iron ore sen­ti­ment either. In a case like FMG, when would you buy that would the nor­mal rules apply?

Tony  29:51

Well, good ques­tion. I mean, to be hon­est, I haven’t. The cham­pi­on chal­lenger phi­los­o­phy for me has­n’t real­ly tak­en those things into account and I stopped doing it myself. I’m just doing it because peo­ple ask ques­tions about it and I need to back test it so it’ll be good to have data to go back and back test it and see if it beats QAV or not.

Top of my head, answer­ing that ques­tion I would say yes, wait for the the upturn because oth­er­wise it could go low­er, you need to mit­i­gate your risk and if it does go low­er, Fortes­cue Met­als will just become cheap­er in terms of its dif­fer­ence to IV2, I would have thought the gap gets big­ger.

Cameron  30:21

Yes, repeat all that. When would you buy it?

Tony  30:24

When the under­ly­ing com­mod­i­ty turns up or Fortes­cue met­als turns up. Right, and that’s one of the ques­tions we have lat­er on to talk about so we can talk about now if you like or we can talk about it lat­er. Yes, some­one asked when do we buy back?

Cameron  30:36

Last one of my ques­tions. BSE, I know we talked about this again this morn­ing but instruc­tive BSE, Base Resources Chart. I found real­ly hard and you walk me through some inter­est­ing think­ing this morn­ing.

Tony  30:52

BSE on Bret­t’s chart just to say quick­ly is a– Was at 28 cents a share. I’m not sure if it’s actu­al­ly– Well, I think it needs to be dou­ble checked in Stock Doc­tor with­out any dis­re­spect to Brett or his cod­ing but if I call it up. If you recall Google Finance han­dles, does­n’t han­dle dec­i­mal points as well as Stock Doc­tor does in our graph. I’ve got BSE just touch­ing its buy line now and above its sell line and the rea­son for that the way I draw the buy line is high­est point is 32 and 13 cents away back in Octo­ber 2017 but then Feb­ru­ary 2021 is just slight­ly below that so we use that because it’s with­in 8% and then August 2021 is still with­in 8% as well but if you use August 2021 being last month we can’t draw up a buy line. There’s no sec­ond thing so then we go back to the H1 before that, which was Feb­ru­ary 2021 and draw a buy line from there.

Cameron  31:29

Because we were talk­ing about the fact that this also was a Josephine, it—

Tony  31:51

Yes.

Cameron  31:51

Fin­ished August 31.5 cents. It fin­ished Sep­tem­ber at 26 cents but now it’s cur­rent­ly at 28 cents so it’s get­ting back up and I was ask­ing you, well, how do we draw the buy line that it has to pass through before it’s a buy and you said, well, we have to go back and draw cor­rect—

Tony  32:14

The most recent line we can.

Cameron  32:16

Yes, and because we’ve also got this one with the flat line between Feb­ru­ary and August. We can’t use August so we have to go back and then if we draw that buy line it is in fact on that buy line so we decid­ed it was prob­a­bly a buy this morn­ing.

Tony  32:29

Yes, just cross­ing the buy line. It’s down near­ly 2% today so it might fall below it before peo­ple hear this but it’s right on its buy line.

Cameron  32:36

Right. Got to go back­wards. It had a div­i­dend too, four cents though recent­ly but it’s been paid 29 of the night. Right.

Tony  32:45

Yes, right and it could be why it’s turn­ing up again a lit­tle bit. Yes, inter­est­ing div­i­dend sea­son. I don’t nor­mal­ly see drops keep going after the div­i­dends being paid so poten­tial­ly could be the start of a down­trend but who knows that’s only a thought and pre­dic­tion.

Cameron  33:00

All right. Thanks for that. Let’s talk about San­tos. What’s going on at San­tos, TK?

Tony  33:04

Yes, last week, the oil price start­ed to rise and it was only for about a day or two that I man­aged to buy San­tos because I thought the sell on bad news had gone away. I held San­tos. I think we may have held San­tos in the dum­my port­fo­lio.

Cameron  33:18

I hold it. I bought it last week too.

Tony  33:21

OK, but we sold it when the results were announced and they also announced at the same time a merg­er with oil search and oth­er oil com­pa­ny and the share price tanked based on that news so like I said that was a sell rule. It was a sell on bad news but the ques­tion remains it was still in its buy ter­ri­to­ry giv­en its buy line and giv­en us a QAV score. When do we buy back in and I jumped the gun last week and bought him before it got back to that sec­ond buy line and I thought I spoke about before I was speak­ing about a real­ly Aure­lia Met­als on the basis that I could­n’t find any oth­er large cap stock that had the right ADT for me to buy in. I bought San­tos and luck­i­ly it’s gone up from there and unfor­tu­nate­ly, by the time it has got back into that sec­ond peak buy line which to me is a sig­nal that the trends back into an uptrend. The share price has meant that the QAV scores fall off the buy list. I just want­ed to call that out that with San­tos, the “sell on bad news”  was being removed.

Cameron  34:15

Yes. Well, it’s up I think a per­cent since I bought it last week. I’m glad I got it.

Tony  34:19

Yes, and we’ll talk a lit­tle bit about oil lat­er on today.

Cameron  34:23

Talk about the progress on your 4e cam­paign.

Tony  34:26

Well, the progress is slow. As Steve Mabb from the ASA, The Aus­tralian Share­hold­ers Asso­ci­a­tion has quite nice­ly agreed to take it up as an issue with the ASA and he’s going to present it to them and hope­ful­ly they’ll take it up with the ASX which should car­ry more weight than they just write into the ASX myself but in a nut­shell, we spoke about it before 4e is where com­pa­nies– Every com­pa­ny list­ed on the ASX has to answer a list of I think about 17 ques­tions from the ASX. Every half com­pa­nies have got­ten a lit­tle bit slop­py on answer­ing those ques­tions, espe­cial­ly at the low­er end of that list.

One of the ques­tions at the end of the list is have the finan­cials been audit­ed? And then anoth­er ques­tion is, was the audit qual­i­fied in any way? And the third ques­tion was, if the com­pa­ny has­n’t had the fig­ures audi­tor yet, do they believe that the audit will be qual­i­fied?

Gen­er­al­ly, what peo­ple do is just say refer to the annu­al report. Some com­pa­nies do answer the ques­tion prop­er­ly and the full answer is, yes, the annu­al accounts have been audit­ed and they haven’t been qual­i­fied in any way but a lot of peo­ple will just say, yes, they’ve been audit­ed and then I guess, a small num­ber– Because there are only a small num­ber with qual­i­fied audits, actu­al­ly do say, the audits have been qual­i­fied but I guess my point that, I’d like the ASA to cam­paign on is the fact that 4e  is meant to be a quick way of look­ing at whether– What the key met­rics are for a com­pa­ny? And for me, the one of the biggest key met­rics is do the audi­tor think the com­pa­nies are going con­cern or not.

If we have to con­tin­ue to wait for the annu­al report and then wait through the audit report our­selves. First of all, find that with a text search and then go through and find the cor­rect word­ing. It’s a time con­sum­ing thing to do. It’s not over­ly dif­fi­cult, but it’s just a time con­sum­ing thing to do. When oth­er peo­ple did or answer the appen­dix 4e prop­er­ly, we could just sim­ply search on that and even then the next stage is the, it would be real­ly help­ful if the ASX set up some search­able data­base for com­pa­nies that had a healthy audit report ver­sus those that did­n’t.

Cameron  36:22

And we’re going to call this the Kynas­ton Clause in the 4e. Have you com­plet­ed your Kynas­ton clause?

Tony  36:28

In which case I’ll be on the dart boards of every com­pa­ny [Inaudi­ble 00:36:32] in the coun­try?

Cameron  36:34

Could be worse. Talk to me about RIC.

Tony  36:36

Yes, after doing a down­load recent­ly, there’s a three or four stocks which I’ll call get­ting quick stocks and the rea­son I’m call­ing them out is at the bot­tom of the QAV buy list, RIC was the one that stuck out to me and if you look at the share price graph for it, it’s going up quick­ly and a bit like San­tos you don’t get in quick. They’ll drop off the buy list and we may have missed out on buy­ing what was a good com­pa­ny at a good price.

A cou­ple of inter­est­ing things about Rid­ley coop­er­a­tion. One is that the chair­man is now the ex CEO of Ingham’s Chick­en. Guy called Mick McMa­hon and for dis­clo­sure here I knew Mick from my time at Shell and Coles Myer and he’s a pret­ty savvy bloke. I think he knows what he’s doing but I thought it was inter­est­ing as well that he’s gone from being the CEO of Ing­ham’s chick­en to the chair­man of a com­pa­ny called Rid­ley which makes feed for chick­ens for poul­try as well as for cat­tle as well.

That twigged that he knew what was going on in the indus­try. Remind­ed me of an arti­cle I read recent­ly on Livewire which is very good about what this ana­lyst called book deals and I wish I could remem­ber who wrote it. Apolo­gies to them because he did say in the arti­cle that peo­ple keep rip­ping off his idea with­out attribut­ing it to it and I’m doing it now because I can’t recall the guy’s name but it’s on live or if you want to find it but he said that a book deal was some­thing to watch for because just like a politi­cian who fin­ish­es office, they write a book, they get a book deal. They write a book and it is like a super­an­nu­a­tion pay­ment for them and when the CEO resigns, they gen­er­al­ly look around their indus­try and goes where’s the best place to prop myself up as chair­man because I know the indus­try so well that this is anoth­er com­pa­ny to para­chute into and I think this might be the case with real­ly and I haven’t spo­ken to Mick for a long time so I don’t know if that’s his think­ing.

I don’t want to cast any asper­sions his way but yes this is poten­tial­ly a book deal for some­body who knows the indus­try well but any­way, it’s on the QAV buy list. Last time I looked, it had a score of 0.11 so it may not last. A cou­ple of oth­er ones in the same boat. Not in terms of book deals but in terms of get­ting quick stocks. Kat­man­du had good results and PPG, pack­ag­ing com­pa­ny also had good results and entered our buy list and may not last because the share prices are going up quick­ly.

Cameron  38:40

Get in quick stocks. Start­ing to sound like who’s that guy on Amer­i­can TV? He’s always pump­ing gold and stuff. Crazy dude has the big red buzzer.

Tony  38:50

I know the guy name.

Cameron  38:51

The CEO of FMG is sold some of her stock. What’s her name again? Eliz­a­beth.

Tony  38:55

Gaines. Yes, I just found it inter­est­ing, again. I think I read it some­where, maybe in Livewire as well. She sold $9 mil­lion worth of stock and again, it just gave me the thought that Twig­gy forests, the chair­man ex CEO must know the iron ore mar­ket inside and out and for the last cou­ple of years Fortes­cue Met­als has been pay­ing an incred­i­bly high div­i­dend. I think the yield got up to at least 10%, maybe high­er and I sus­pect that’s his way of tak­ing mon­ey off the table and he’ll pock­et it and then buy back in and increase his stake in Fortes­cue Met­als when he thinks the price is going to rebound.

It’s pos­si­ble that Eliz­a­beth Gaines is also doing that. I’m not sure if there are rea­sons for sell­ing. Some­times they say they’re sell­ing for tax rea­sons or to buy a house or what­ev­er but it just did­n’t make me think that these insid­ers who know the iron ore mar­ket well are tak­ing mon­ey off the table. Poten­tial­ly to buy back in lat­er on and that might be a good indi­ca­tor of when it’s time to buy back into—

Cameron  39:48

How would you know?

Tony  39:49

And all stocks.

Well, they have to declare as we spoke about before inside here when they buy or sell.

Cameron  39:53

We’ll be look­ing at iron ore price though, right? The com­mod­i­ty price.

Tony  39:57

Yes, we’ll be look­ing at sen­ti­ment.

Cameron  39:59

That’ll prob­a­bly be an indi­ca­tor.

Tony  40:00

It will be com­fort­ing to know that Twiggy’s buy­ing back in when we do.

Cameron  40:03

All right. Win­ter is com­ing.

Tony  40:06

Yes. Anoth­er inter­est­ing arti­cle I read recent­ly. In the US, as you know that the Fed reserve or the their equiv­a­lent of the RBA, the Reserve Bank board is made up of dif­fer­ent state Fed chiefs and they will have– Each state has its own priv­i­lege to the Reserve Bank board and the Chiefs all get togeth­er and form the Fed­er­al Reserve but two of the mem­bers of the Fed, a guy called Kaplan and a guy called Rosen­gren, both sell out of all their shares in the recent month or so, espe­cial­ly for Kaplan that he was doing it because he’d been copy­ing some flack about own­ing shares when he was the Fed Reserve Board mem­ber, which was fair enough, right? You should know what the econ­o­my’s doing and you need to be impar­tial. You should­n’t be think­ing about what’s going to be best for your stock when you’re mak­ing deci­sions on inter­est rates. Arguably one of the rea­sons why they’ve been kept low for a long time now but any­way, he wore the crit­i­cism for a long time but now he sold it on the basis of it being an eth­i­cal deci­sion that he should have sold them a while ago.

On the pri­ma facie that sounds like it’s the right thing to do. How­ev­er, this was a guy who bought, I think it was $28 mil­lion worth of shares fol­low­ing the COVID cough so he knows exact­ly what he’s doing. Right now, I’m not going to– I don’t want to impugn any motives to him and good on him for sell­ing his shares if it’s seen as a con­flict of inter­est but to me, it’s–

Cameron  41:25

The oppo­site thing [Inaudi­ble 00:41:27]. I want these guys to have skin in the game like the CEO of a com­pa­ny. I want them to have lots of shares.

Tony  41:31

Well, no, because then they just hold inter­est rates down for­ev­er. The share mar­ket keeps going up until the PE is like 100 or two.

Cameron  41:37

They’re good?

Tony  41:38

For the mar­ket and even­tu­al­ly some­one takes the trash out.

Cameron  41:40

OK, just anoth­er indi­ca­tor that poten­tial­ly things are not look­ing good.

Tony  41:46

Yes.

Cameron  41:46

But again, I’ll just reit­er­ate for folks that are new. For us, there is no good times or bad times. In terms of investors, it’s all the same. We look for oppor­tu­ni­ties in the moment we get in and get out when the Bible tells us to. Well, the Bible [Crosstalk 00:42:00].

Tony  42:00

Yes, we’re talk­ing about my analy­sis and my pre­dic­tions and my gos­sip here but it’s real­ly some­thing.

Cameron  42:06

Just ignore every­thing Tony just said, does­n’t mat­ter.

Tony  42:09

Just ignore every­thing I said for the last half hour.

Cameron  42:11

Yes. Livewire said that 7% of the world’s com­pa­nies are founder-led which is sur­pris­ing­ly low, real­ly like the world’s com­pa­nies, the pub­licly list­ed com­pa­nies or just com­pa­nies com­pa­nies?

Tony  42:24

Could­n’t tell whether it just had the world’s com­pa­nies. Could­n’t tell whether they were list­ed or not. You would think unlist­ed would have a lot more infor­ma­tion?

Cameron  42:30

Small, medi­um sized busi­ness­es would all founder-led. You would imag­ine.

Tony  42:33

Yes, you think so? Yes.

The point I want­ed to raise was, I did a quick count of the check­list and I think the buy list has about 51% com­pa­nies on it with a founder-led. I think that was inter­est­ing. I know, that’s one met­ric. I might do some research and see how we com­pare to the index for a lot of those met­rics as well which is inter­est­ing I think.

Cameron  42:51

And this would be because if we find a com­pa­ny that’s where the founder has a large chunk of stock, it gets a good score and has got a bet­ter chance of end­ing in our buy list.

Tony  43:02

Yes. Buy list.

OK, my think­ing is that we can see that we’re over­weight on this met­ric. If I look at the index across all met­rics, there’s maybe anoth­er met­ric there that we’re over­weight, that we are over­weight on which I haven’t put into the check­list yet. If we find that, that might be a good addi­tion but bit of work to do today.

Cameron  43:20

Well, let’s talk about oil. It’s going up.

Tony  43:22

It’s going up. Yes, and peo­ple who have read arti­cles in the UK about long lines at petrol sta­tions and– Or the Com­mu­nist Par­ty in Chi­na telling ener­gy com­pa­nies to buy coal at any cost to keep the pow­er sta­tions run­ning dur­ing win­ter. Yes, that bodes well for com­pa­nies like New Hope Coal but the point I want­ed to make was, not just that gas and coal are ris­ing but I mean, the risk with it is that it’s just a north­ern hemi­sphere win­ter sit­u­a­tion because there’s still a large num­ber of pow­er sta­tions over there which are run by either coal or nat­ur­al gas and the oil price tends to form in lock­step with nat­ur­al gas prices and it’s nat­ur­al.

I actu­al­ly did some research on the week­end, it’s actu­al­ly the nat­ur­al gas price which is going up at an even stronger pace than the oil price but a lot of con­tracts for oil are actu­al­ly tied to the nat­ur­al gas price.

I also found out after doing a bit of research to which I should have known before­hand, that San­tos is pre­dom­i­nant­ly a nat­ur­al gas exporter rather than being just an oil com­pa­ny which his­tor­i­cal­ly it’s been an oil com­pa­ny but it’s obvi­ous­ly grow­ing more on nat­ur­al gas space as well. That’s why it’s tak­en off recent­ly as well.

Yes, the point to make I just want­ed to make is that this can just be a sea­son­al thing that the oil price is going up and coal prices going up but either way again, we’ll look at the com­mod­i­ty trend lines when it’s time to sell. The north­ern hemi­sphere, obvi­ous­ly the reverse of us but it’s also the reverse of the South­ern Hemi­sphere in anoth­er way.

Our pow­er sta­tions have increased usage in sum­mer for us because peo­ple turn on their air con­di­tion­ers like in win­ter, most of the coun­try out­side of Tas­ma­nia, maybe Mel­bourne could­n’t care less they just– They’re not stock­ing their fur­nace or putting on their heat­ing. There’s no draw on the pow­er sta­tions as much as there is in the North­ern Hemi­sphere when it’s– Was work­ing Toron­to was 20 below zero. If you weren’t run­ning burn­ers in a cou­ple of parts of your house, you froze so it’s a big draw on pow­er sta­tions in win­ter in the North­ern Hemi­sphere.

Cameron  45:16

Yes, I think that’s all the news items we had for this week, Tony. The chit chat.

Tony  45:22

On to the ques­tions.

Cameron  45:22

On to the ques­tions. This first one is from the oth­er TK. TK Wool­ley on Face­book asked a cou­ple of days ago, does any­one under­stand why BXB and ANN are drop­ping so far and quick­ly. You famil­iar with either of these stocks, Tony?

Tony  45:38

I am. Bram­bles and Ansell and I mean this might be some hang­over shares from the TK Wool­ley holds but the first ques­tion is, why you’re hold­ing them?

I think Bram­bles is on a QAV score of 0.05 and Ansell’s is on a QAV score of 0.01.

Cameron  45:54

Right.

Tony  45:54

To go back a long way, par­tic­u­lar­ly Bram­bles. Bram­bles was the CSL of 20 years ago, right? It could­n’t do a thing wrong. It trad­ed on a high PE. Had a rock star CEO, a guy called John Fletch­er who then went across to run Coles Myer. Peo­ple would buy Bram­bles as a cor­ner­stone of their port­fo­lio the way they buy CSL as a cor­ner­stone of a port­fo­lio now.

If you just want­ed to buy blue chips in the mar­ket and once some­thing with a good growth pro­file but I mean, Bram­bles came a Crop­per, I remem­ber it famous­ly going through a big down­turn and what hap­pens with high PE stocks is what always hap­pens with high PE stocks. When they have a hic­cup on growth, they revert back to a more nor­mal PE and if you’re trad­ing on a PE of 45, or some­thing, you’re 50, which I think Bram­bles was and it drops back to 20. It’s cyanide to the share price. It’s like Claudius at the Cae­sar par­ty. It just caus­es the share price to drop dra­mat­i­cal­ly. If I got the metaphors along with that.

Cameron  46:43

Claudius was an emper­or. No, Clo­dus.

Tony  46:47

Yes, Clo­dus.

Yes, it caus­es the share price to drop down dra­mat­i­cal­ly and Bram­bles, I think has strug­gled a bit since then but Ansell is a mak­er of–

Cameron  46:56

Con­doms, which I don’t need to wor­ry about any­more.

Tony  46:59

Rub­ber. Latex is the word I’m think­ing of. You’re sit­ting on peas today. Are you?

Cameron  47:02

Not today, but I was over the week­end. Yes.

Tony  47:04

Is that why you had all day to work on the Josephine yes­ter­day?

Cameron  47:07

Yes. Could not move off the lounge with my peas. Oh my God.

Tony  47:12

And that’s because?

Cameron  47:14

I had a vasec­to­my on Sat­ur­day morn­ing. Every­one want­ed to know that. Just to let every­one know, was­n’t as bad as I thought. It was 100 times worse. It was extreme­ly painful. They gave me a local. The sur­geon start­ed cut­ting and snip­ping. Apolo­gies if you’re eat­ing lunch. I went, Oh, that real­ly hurts and he said, I might have to give you anoth­er cou­ple of shots of the local there. Are you nor­mal­ly resis­tant to local anes­thet­ic? And I said, well, now that you come to men­tion and when­ev­er I see the den­tist, he has to give me two or three times the dose he nor­mal­ly gives peo­ple so he hit me anoth­er cou­ple of times and the pain reduced to a roar and then he start­ed on the oth­er side five min­utes lat­er.

He gave me anoth­er cou­ple of shots on that side too but it took every med­i­ta­tion trick in the book to lie there not and grab a scalpel and stab both of them to death man and hurt like hell. Has­n’t been so bad after the events. I got to say it has­n’t been too bad but dur­ing, Oh.

Tony  48:20

Well, your kids thank you because now you don’t have to spread the QAV inher­i­tance. [Inaudi­ble 00:48:27].

Cameron  48:29

Yes. Look, hon­est­ly, I just kept think­ing of the things all my wives have been through with con­tra­cep­tion and child­birth and I was think­ing, hey, be a man. Take it. Grit your teeth and Take it. How did we get on to that?

Tony  48:41

Yes.

Cameron  48:43

Latex. Ansell.

Tony  48:44

Latex. That’s right. They’re a latex mak­er. I could­n’t think of the word for latex. I was try­ing not to say con­dom but because they make more than con­doms, right? They make rub­ber gloves and which is just PPA and things like that. Yes, but again, QAV score points are 0.01, rea­son­ably high PE stock but any­way, look to give a gen­er­al answer to TK Wool­ley’s ques­tion. The way I would check this kind of thing hap­pen­ing is if you go into Stock Doc­tor and look at the ex-div­i­dends as we did before for Sun­land group, SDG and see if the div­i­dend was behind it. Often­times a big drop is when the share goes ex-div­i­dend.

That was part­ly the case here but then if you go into the announce­ments page of Stock Doc­tor, you can see there’s a col­umn in the mid­dle which gives you the price that after the announce­ment was made and it only gets record­ed for price sen­si­tive announce­ments, but for both Bram­bles and Ansell. Bram­bles went down 10% after they did the investor brief­ing day on their future plan, that went down like a lead bal­loon and Ansell dropped 10% on the day that they released their results on the 24th of August. I dare say that that’s prob­a­bly the rea­son for both of those two events plus a bit going ex-div­i­dend and then both of those two things would have been digest­ed by ana­lysts over the fol­low­ing weeks and would be will­ing that trend down prob­a­bly.

Cameron  50:01

Right. Div­i­dends and announce­ments, price sen­si­tive announce­ments.

Tony  50:06

Cor­rect. Yes.

Cameron  50:07

Pro tip.

Tony  50:09

But don’t hold those stocks there. Maybe look at these lega­cy stocks in TK Woolley’s port­fo­lio but they gen­er­al­ly have prob­lems.

Cameron  50:18

Well, Stew­art had asked a ques­tion about the chair­man of Rid­ley buy­ing 400,000 shares.

Tony  50:23

Yes, just to answer that ques­tion though from Stew­art, he asked whether that par­tic­u­lar buy would be a rea­son to pump up Rid­ley’s QAV score? And it’s not because I looked up the share­hold­ings of the board and man­age­ment and the less than I think they’re 1% so much less than 10%. There’s no founder hold­er which means we would­n’t increase our share. Not say­ing that see­ing the chair­man by that much in shares isn’t a good thing. Like I said before with tricky for us it’s a good sign, but it’s not part of our process.

Cameron  50:49

Thank you Stew­art for the ques­tion. OK.

Brett, inven­tor of the Bret­ta­la­tor. I’m won­der­ing if Tony can do an overview on how we use the com­modi­ties trends? I think I may have missed some points along the way because I was so busy build­ing the Bret­ta­la­tor. You’re wel­come every­one.

No, he did­n’t say that, I’m just putting words in the Brett’s mouth there.

Cou­ple of ques­tions. One, we say iron ore is a 3PTL sell but on a month­ly five-year chart, I have it still in a buy posi­tion despite the huge fall because the sell line is so low. Do we use a short­er term chart for com­modi­ties? I checked the Bible which says we use the five-year month­ly chart.

Tony  51:32

Yes, we did use a short­er term one for iron ore.  I think it was for mem­o­ry, the only com­mod­i­ty we did that for all of the oth­er ones had on like long enough trends to still make their five year month­ly charts rel­e­vant. I think we spoke about this quite a while ago but with iron ore, I did do a fair bit of research on whether it was bet­ter to use the five-year chart or whether to use a short­er time peri­od based on the com­mod­i­ty cycle and what I did with iron ore was I went back to the last time it was a buy for when it was a buy which is the start of this cycle and drew the line from there. It’s basi­cal­ly a fudge iron ore.

Cameron  52:11

You were start­ing like April 2020 for L1?

Tony  52:17

And by the way, I’m using TR#. When­ev­er that character’s called. Hash, I guess. Yes, I was using April 2020 as l1 and then it goes through Novem­ber 2020 and you can see from the chart in this par­tic­u­lar case, there’s anoth­er peak before that in 2019, July 2019, which I think was prob­a­bly the last time the com­mod­i­ty cycle peaked for iron ore and it fell back. Yes, I was using that as the buy line using that as h1 to give me the start of a new cycle.

Cameron  52:53

Right.

Tony  52:53

Yes.

Cameron  52:53

OK, next part of Bret­t’s ques­tion. In the most recent episode, Tony said he would buy back in if either the com­mod­i­ty or the com­pa­ny became the buy. Would he real­ly buy if the com­mod­i­ty was a buy but the com­pa­ny was a sell? This is what you were allud­ing to ear­li­er.

Tony  53:09

Yes, good ques­tion Brett. I would prob­a­bly wait for the com­pa­ny to turn back and that’s just because there might be some­thing else going on in the com­pa­ny that is affect­ing its share price besides the under­ly­ing com­mod­i­ty. My gut feels and I guess my expe­ri­ences though, that the com­pa­ny will turn before the com­mod­i­ty because just like it did with coal. If the stock mar­ket is for­ward look­ing indi­ca­tor so as soon as peo­ple start to get clear in their minds that they think the coal mar­ket might be improv­ing they start­ed to buy New Hope Coal and the oth­er coal com­pa­nies. We don’t buy them now and I don’t like buy­ing them until they become a three-point buy so like I said, we miss out on the first rise in the share price but when we buy them we know the sentiment’s pret­ty strong and I think it’s a con­firmed sen­ti­ment rather than one that might turn down again eas­i­ly.

Cameron  53:53

Just to be clear on that, you’re say­ing that even if the com­mod­i­ty became a buy, if the com­pa­ny was not a buy, you still would­n’t buy it?

Tony  54:02

I don’t think so. I mean, I think there’d be as a gen­er­al rule. No and it’s hors­es for cours­es. This reminds me a bit of the banks back in last year when their QAV scores became com­pelling but they still weren’t in a buy ter­ri­to­ry for us and we gave up fin­ished up giv­ing up quite a bit of their upturn wait­ing for them to get to the buy line and if Fortes­cue Met­als turned up 10–20% but had­n’t reached the buy line but iron ore had reached the buy line, I might still buy it.

Cameron  54:31

Right.

Tony  54:33

Yes.

Cameron  54:34

And then I bought into the banks and then had to sell them a cou­ple of weeks lat­er [Inaudi­ble 00:54:37].

Tony  54:40

[Crosstalk 00:54:40] I think it’s buy again.

Cameron  54:42

It’s hors­es for cours­es so you would look at both of those things and make a judg­ment call.

Tony  54:48

Yes, but I would think that as a gen­er­al rule, yes, I want the com­mod­i­ty price being a three-point buy sit­u­a­tion and I want the under­ly­ing com­pa­ny being in a three-point buy sit­u­a­tion.

Cameron  54:59

Right.

Tony  55:00

Yes.

Cameron  55:00

1. Third part of Brett’s ques­tion. What is the approach for the com­pa­nies that have been above the buy and sell lines right through? e.g. GRR, CIA, RIO, BHP all scor­ing well. Are we just wait­ing for the short term uptrend?

Tony  55:18

Wait­ing for the com­mod­i­ty price to turn around and become an uptrend. Whether that’s short term or long term? I have no idea.

Cameron  55:25

Right.

Tony  55:25

The iron ore price has risen a lit­tle bit. Makes up 10, 15% I think from its lows, but does that mean it’s going to con­tin­ue or not? I don’t know. Yes, but if you look at GRR, inter­est­ing ques­tion, we cer­tain­ly did the right thing in sell­ing out. It’s dropped back a lot that has Fortes­cue met­als by the way, which is 1450 last time I had a look at it and but GRR has­n’t turned around again. We might get a sit­u­a­tion when we get a sec­ond buy line. If you’re lik­ing GRR even though it’s in a buy state cur­rent­ly and a long way above its sell line but yes, I want to see iron ore firm up into a buy sit­u­a­tion before I bought into them.

Cameron  56:00

Any of those scor­ing well for you? I don’t remem­ber see­ing any of them on my score­card this morn­ing.

Tony  56:06

I think RIO and BHP are there but though they’ve been elim­i­nat­ed because they have an under­ly­ing sell sen­ti­ment for the com­mod­i­ty.

Cameron  56:12

OK, yes, that’d be why. Right.

Tony  56:15

Yes, that’s why you haven’t seen them prob­a­bly.

Cameron  56:17

Thanks, Brett.

Jeff, how are you, Cam? I’m good. Thanks, Jeff. A lit­tle bit sore when I walk around but just can’t do– I can’t do Kung Fu for a week but some oth­er things with Chris­sy but I’ll be good. Thanks very much for ask­ing. Thanks for your con­cern, Jeff. Still lov­ing QAV. I feel a life­time rela­tion­ship grow­ing nice­ly. That’s nice. We feel the same way about you, Jeff.

TK men­tioned recent­ly about post shed­ding the bleed­ing on all stocks. He men­tioned about div­i­dends and chang­ing up arrange­ments giv­en that he and Jen­ny are not work­ing. If not a per­son­al ques­tion, what does that change up look like a dif­fer­ent invest­ment struc­ture? I asked is my wife and I doing some stuff. I won’t go into his per­son­al details but a few lifestyle changes for him and he’s inter­est­ed in, you know what you did.

Tony  57:06

I did­n’t do any­thing dif­fer­ent­ly but the dif­fer­ence is that I do have to take mon­ey out of my port­fo­lio to live off either as div­i­dends or as if I sell some­thing, I might pock­et some of the sells pro­ceeds to live off for a while which is dif­fer­ent because in the past when with Jen­ny work­ing, her income was enough to live off and then we were able to rein­vest all our div­i­dends.

Cameron  57:27

That’s on top of the roy­al­ties you get from Mar­ket­ing The Mes­si­ah and The Psy­chopath Epi­dem­ic. On top of that, if you need any­thing from a QAV, any­thing extra then you tip, you have to take a div­i­dend.

Tony  57:41

Cor­rect. Yes, and the horse breed­ing busi­ness and the raf­fle busi­ness.

Cameron  57:46

Oh, God raf­fle busi­ness.

Tony  57:53

Absolute­ly [Inaudi­ble 00:57:42].

Cameron  57:53

Yes. Not that you put any work into any of those.

Tony  57:57

No time, right?

Cameron  57:59

Yes, I was being face­tious.

Tony  58:00

Yes. Right. Yes. No, I under­stand that where the ques­tion is com­ing from and I think a cou­ple of things that—He was a Jeff? Jeff might want to con­sid­er is, whether his stocks are held in a super fund. You may– Like I don’t do this but you may want to– If you have a deci­sion about where to buy a stock, you may want to put one that does­n’t pay a div­i­dend and Super­fund because if you need to live off the div­i­dends, you want that to be out­side of the Super­fund. You can do that but what I found is that div­i­dends are good to live off because you get the frank­ing cred­its. There’s some tax ben­e­fit to it but in the end, the square I land­ed in when I was try­ing to decide when to sell Fortes­cue met­als group was the iron ore price crossed its sell line like a week or two before the div­i­dend came out and I just had to make a call, I said, was it worth­while hang­ing on to the iron ore price as it drops? And then I’m going to sell Fortes­cue met­als group, is it worth­while hold­ing on until I can get that 10% div­i­dend which has the tax ben­e­fits? But I may be out 20% on the stock as it drops before I sell or is bet­ter off just fol­low­ing rules? And there­fore, I fol­lowed the rules and sold Fortes­cue.

Yes, I don’t face with that deci­sion, I try and make the one that fol­lows the rules and try and pro­tect my down­side rather than hold on to it and wait for the div­i­dend and get the frank­ing cred­it but yes, that’s about all the con­sid­er­a­tions I’ve made.

Cameron  59:19

There you go, Jeff. Last ques­tion. This is from Max.

He says, hi, Max. Hi, Tony. I’m fair­ly big into my tech­ni­cals and no mat­ter which way you look at it, the ASX and the DJI both looked to be set for a down­turn. Think there’s a lot of uncer­tain­ty in the mar­ket. Every­one is on edge and sell­ing down at the slight­est bit of news. This is shown by large fluc­tu­a­tions over one and a half per­cent both up and down in the last cou­ple of weeks. Cou­ple that with your analy­sis that you can’t find many large cap stocks to invest in at the moment, it’s telling me that fun­da­men­tal­ly the mar­ket is over­val­ued. The cape ratio of the DJI is 37. The ASX is 19 which is above aver­age but noth­ing like the DJI. We all know that when­ev­er the Dow coughs, the rest of the world catch­es a cold so every mea­sure in chart is sug­gest­ing we’re in for a pret­ty big down­turn. Espe­cial­ly as we’re in Octo­ber which is the month of many his­tor­i­cal crash­es. It’s only going to take a mere men­tion of the term rate rise and every­one will lose their shit. Would you ever con­sid­er some­thing like BBUS or BBOz as an invest­ment?

I think they’re beat­box­ing groups. That one Aus­trali­a’s got tal­ent. Yes, it’s an ETF and you don’t pre­dict the future and bub­bles of the past have gone 100% after they were called out as bub­bles but you could use a 3PTL on these ques­tion mark as in the 3PTL, sell of the XAO could mean a buy for BBUS, BBOZ. See the BBOZ chart below. It’s a one-year week­ly chart but used the short­er time frame to show the uptick, five-year month­ly shows a minor uptrend start­ing. Cheers, Max so BBUS and BBOZ, what are they for the unini­ti­at­ed, not beat box­ing groups.

Tony  1:01:04

Bear mar­ket ETF. They basi­cal­ly go up when the share mar­ket goes down. They have– I’m not quite sure how those par­tic­u­lar ETFs do it but they basi­cal­ly short the mar­ket. They wait for a down­turn in the mar­ket, then they’ll go up in an inverse way to what the mar­ket does.

BBUS is the US mar­ket. BBOz is the Aus­tralian mar­ket. They’re ETFs.

Cameron  1:01:27

Right.

Tony  1:01:27

Ben­e­fit from a crash in the mar­ket. Look, real­ly I think this is a real­ly great ques­tion. I mean, I think first of all three-point trend lines from my expe­ri­ence work on all things, not just QAV stocks. They work on com­modi­ties, they work on non-QAV stocks, all things. Yes, I think it does look bad if the ASX and the DJI have both crossed their three-point trends sell lines and I did have a look at the all ordi­nar­ies on the week­end and yes, I think it is a three-point sell but does that mean we– I sell my shares? No, for two rea­sons.

One, because the ASX isn’t like a com­mod­i­ty under­ly­ing all it shares. Unless you’re an index fund or an ETF where the ASX probably—Ordinaries prob­a­bly is like a feed­stock into your future trends. I won’t sell on that three-point trend line breach because we’ll find stocks like New Hope Cor­po­ra­tion which may run counter cycli­cal to the rest of the mar­ket and will increase or San­tos oil and gas or some­thing like that. Not all stocks march in lock­step to the all odds.

Index is the first thing.

And the sec­ond thing is, yes, I’d be wor­ried if I was hold­ing an index fund but was track­ing the index because the under­ly­ing index has become a three-point trend line sell and I would expect that means that the index fund will even­tu­al­ly if it has­n’t already become a three-point trend line sell as well but I don’t have any per­son­al expe­ri­ence at trad­ing the mar­ket as a mar­ket but real­ly inter­est­ing insights I think. In terms of the BEBOP, BBUS and BBOz, they’re not at the three-point buy lines yet. You’d be sell­ing the All Ords index in Syd­ney on cash for a while I think or invest­ing at some­where else in a dif­fer­ent coun­try maybe where the index is still going up wait­ing for BBUS and BBOZ to reach their buy sig­nals but yes, real­ly inter­est­ing.

Cameron  1:03:15

Fox has been doing beat­box­ing recent­ly. It’s– He’s got a cou­ple of friends at school, they’re all beat box­ing. He walks around the house like [Music].

Tony  1:03:27

Well, that must be fun.

Cameron  1:03:28

Nev­er ends. The fun nev­er ends here, Tony.

Tony  1:03:31

I can see why you had a vasec­to­my.

Cameron  1:03:35

Yes.

Tony  1:03:38

When you’re speak­ing to your doc­tor after­wards, they say, do you have any ques­tions? And like, they just say like, man, can I have sex with my wife again? And he said, well, week. Did you say when can I have sex with your wife?

Cameron  1:03:51

No, but the nurse did tell me that I have to. I’m not going to go there. There were some jokes to be had. Yes, she basi­cal­ly said, she’s going to hate to do it. No, I had to do it 20 or 30 times between now and when we can go with­out con­tra­cep­tion. In the next three months have to get it out 20 or 30 times and I said, can you give me that on let­ter­head to give to my wife to say look, doc­tor’s orders. We have to do it 20 to 30 time. [Inaudi­ble 01:04:23]. There’s noth­ing sex­i­er than telling you why she has to sleep with you because it’s doc­tor’s orders.

Tony  1:04:31

Right. Does she asked for a sec­ond opin­ion?

Cameron  1:04:37

Get­ting back to Max’s ques­tion and you’re con­trary in approach that’s again, Oh, I’m just going to talk about what works on Wall Street in our after­hours but that’s one of the points that Oh, Shaugh­nessy makes in this book is, the way to be an investor is to be a con­trar­i­an investor and it’s our job to find out what is doing well even if the rest of them– Even if 2380 stocks on the ASX are in freefall, we’re look­ing for the 20. That aren’t going to be. Right. That’s–

Tony  1:05:09

[Crosstalk 01:05:09] Get back to the COVID cough. We did­n’t sell 100% of our port­fo­lio. We did­n’t go to cash a lot but we still had at least 40%, I think maybe 50% of the stocks we held. Fortes­cue Met­als.

Cameron  1:05:20

50%. I think we sold about 50. Yes.

Tony  1:05:21

Yes. Schae­fer court come to mind. There are a few that we still thought were worth hold­ing dur­ing that. Yes.

Cameron  1:05:28

Yes, it’s our job to– And I was say­ing this to you this morn­ing. In our meet­ing, like doing the check­list yes­ter­day, I was real­ly enjoy­ing it and I said to my wife after­wards– Said to Chris­sy, it’s a game for me now. This– It’s a bit like a chess game, like my job is to look at two and a half 1000 stocks and try and find the win­ners out of those and fig­ure out, OK, can we get rid of all of those? Now, we’re left with sort of 100 and we’re going to get rid of 80 of the 100 to find the 20 and then, it’s a chal­lenge. It’s like, it’s a game. It’s this chal­lenge to see, can you find the dia­monds in the rough here? Can you find the nee­dle in the haystack? That’s the chal­lenge. Do you have patience?

Doing the spreadsheet’s, a lot of work. Can be if you’re try­ing to do the whole thing like we are every Mon­day now, which isn’t? I reit­er­ate for peo­ple, if they’re new. That’s not what you would nor­mal­ly do. You don’t have to do this for five hours, sev­en hours every week­end like we do at the moment because nor­mal­ly, we’re only going to do it when we sell a stock and then we’re only look­ing for a cou­ple at the top, right? But–

Tony  1:06:37

Cor­rect.

Cameron  1:06:37

It’s a much more sim­ple process if you’re using it for your own pur­pos­es but because we’re pub­lish­ing this each week, we’re going through the whole rig­ma­role.

Tony  1:06:45

And while going through it to cross ref­er­ence each oth­er so we can find it here as well.

Cameron  1:06:50

Yes, and then we do find lots of errors and then we have to fig­ure out why we dis­agreed on all of them and it’s usu­al­ly because of the Josephine sit­u­a­tion as we found this.

Tony  1:06:58

Cor­rect. Yes.

Cameron  1:06:59

But yes, it’s some. I’m enjoy­ing the thrill, the chal­lenge of–

Tony  1:07:05

Right.

Cameron  1:07:05

I can see how War­ren Buf­fett gets his jol­lies for 60 years sit­ting in his office, doing analy­sis and it’s kind of a hoot. It’s got noth­ing to do– As you said this morn­ing, it’s got noth­ing to do with the mon­ey. It’s just can I find the win­ner– Out of all the losers, can I find the win­ner?

Tony  1:07:22

Yes.

Cameron  1:07:23

Yes.

Tony  1:07:24

It’s a game and that’s great because it does take the emo­tion out of it. You’re not wor­ried about whether your port­fo­lio’s going up or down or whether you’re rich or poor. Today, the focus is on, can I find a win­ner? Can I get bet­ter from where I am? Which is great.

Cameron  1:07:35

Can I find the win­ner? Can I get in at the right time with the win­ner? And can I get out at the right time with the losers? And can I get the ticks and the talks?

All right, and yes, I mean at the end of the day, it’s about your port­fo­lio and if you do it well, it pays well but the oth­er thing I said to you this morn­ing and this is again worth men­tion­ing maybe for new folks is, I think for me after about six months of invest­ing my own mon­ey in QAV, the emo­tion­al fac­tor of invest­ing my own mon­ey, it’s prob­a­bly low­er. There was prob­a­bly like three months real­ly but the emo­tion­al aspect of invest­ing my own mon­ey went away because it was like OK, well, look it does­n’t mat­ter if this goes up or goes down because I know that over time it works. I just– It’s bak­ing the cake. I just keep fol­low­ing the recipe and I’m just bak­ing cakes and I’m not think­ing about the cake, this cake, that cake. It’s just going to be good. The cakes will be good. It just works out. It’s not a good anal­o­gy but you start–

Tony  1:08:35

Exact­ly right. I remem­ber back when you first start­ed buy­ing shares, you’d be tex­ting me every night going. [Inaudi­ble 01:08:42]. Calm down.

Once you gam­i­fy­ing it takes an emo­tion out of it.

Cameron  1:08:50

No, only text you once a night.

Tony  1:08:53

Yes, OK.

Cameron  1:08:55

No, yes, does it– Well, it’s the gam­i­fy­ing it but also just the con­fi­dence that it just works. I know that long term, we get more win­ners than we get losers so if there’s a cou­ple of losers along the way, that’s OK. We expect that. We expect 40% not to work out and does­n’t mat­ter because the 60% do. If I go through my port­fo­lio in Stock Doc­tor now. Not my super one but my indi­vid­ual one. OK, up five, this is indi­vid­ual stocks. OK, there’s one, two, three, four, five, six, sev­en, eight, nine, 10, 11, 12, 13 that I’ve bought and sold at var­i­ous times over the last 18 months.

Tony  1:09:36

Right.

Cameron  1:09:36

But up five, up 56%. This is up 1%, up 15%, up two and a half, down 3.8%, up 22%, up 85%, up one, up. 69% That was my error was up 90% until you made a stock of the week. Up 2%, down 2%, up 21% and what is it? 0% change. It’s WWG.

All in all, total return– Well, hold on what’s my TWRPA? 40% accord­ing to Stock Doc­tor so 39.03 times. It’s like after you’ve done it for a while you’re like well, it does­n’t mat­ter it just works so don’t even have to think about whether or not it’s going to work and I know it will.

Tony  1:10:23

And then if you like the next stage after from where you are now I sit down the week­ends and I go, what if I did this? What if I added this met­ric? What if I sharp­ened up the pro­ce­dure here or changed that? And yes, that’s when it becomes real­ly inter­est­ing as well.

All right, yes, like Max’s ques­tions. They’re real­ly good.

Cameron  1:10:41

Yes.

Tony  1:10:43

How do you improve it? Cor­rect. Yes.

Cameron  1:10:45

Well that’s the show for this week.

After hours, Tony. What have you been into this week when you’re not think­ing about invest­ing?

Tony  1:10:51

I’m just watch­ing invest­ing shows. I’ll be watch­ing bil­lions which is back on now which is great and I’m hooked on suc­ces­sion again, which is a–

Cameron  1:11:00

Great show. New season’s not out yet though. Right? Sea­son three I think comes out this week maybe?

Tony  1:11:05

Yes, I’m just halfway through sea­son two.

Cameron  1:11:08

Yes.

Tony  1:11:09

I watched the– Jen­ny and I watched the first episode or two when­ev­er it came out and we went, no, these peo­ple are pret­ty evil and venal and we don’t know.

Cameron  1:11:16

They’re hor­ri­ble.

Tony  1:11:16

Yes, but I got hooked into all the plot twists and twists and turns and who’s stab­bing who? It’s like Game of Thrones.

Cameron  1:11:24

Yes.

Tony  1:11:24

It’s very watch­able and if you like actu­al­ly if you watch– If you like that, you’d like Bil­lions, same sort of thing.

Cameron  1:11:28

Real­ly?

Tony  1:11:29

The peo­ple just venal and they’re stab­bing each oth­er all the time and they go to war all the time. Yes.

Cameron  1:11:32

And the per­for­mance is great in Suc­ces­sion like all of them. The Aus­tralian girl who plays the daugh­ter, she’s great.

Tony  1:11:40

Sarah Snook. Yes.

Cameron  1:11:41

Yes, the McCulken kid is great. They’re all just great. The dad what­ev­er is great.

Tony  1:11:47

Great Bri­an Cox.

Cameron  1:11:48

Bri­an Cox. Oh, he’s so good. Isn’t he just, oh great and he was in Dead­wood for a cou­ple of sea­sons too.

Tony  1:11:56

Cameron  1:11:56

He played one of Al Swearen­gen’s old mates and he’s a com­plete­ly dif­fer­ent char­ac­ter. He was like a trav­el­ing show­man who brought his the­ater per­for­mance to town and he was fab­u­lous is that he but he real­ly had like a bit of a dark under­bel­ly. He and Al went back but he had this whole the­ater per­sona that he put on when real­ly was an old throat slash­er from way back and then there was anoth­er show. Did you ever see the show where guy played Al Swearen­gen’s, Ian, what­ev­er his name?

Tony  1:12:30

Is it McGre­gor or some­thing?

Cameron  1:12:34

No. Any­way, he was the king of Amer­i­ca. Did you ever see that show?

Tony  1:12:39

No.

Cameron  1:12:40

It was real­ly great and he ran for one sea­son. I can’t remem­ber the name of it. I always for­get.

Tony  1:12:44

Think well. It’s not Gods and Mon­sters, is it?

Cameron  1:12:46

No.

Tony  1:12:48

He’s in there too.

Cameron  1:12:49

Yes, but it’s not called Gods and Mon­sters either. That’s the what­ev­er show. God My brain is dead for every­thing we’ve done today. Ian McShane is the name.

Tony  1:13:03

McShane. Thank you.

Cameron  1:13:05

He did this great show. It only ran for one sea­son sad­ly and just did­n’t– It’s one of these HBO shows that was fan­tas­tic but just did­n’t get a good run. Amer­i­can Gods is the cur­rent one you’re think­ing of? The one I’m think­ing of was called Kings. I should have remem­bered that.

Tony  1:13:25

Oh, OK.

Cameron  1:13:26

Yes, it’s based on the Old Tes­ta­ment. He’s– It’s like the bib­li­cal sto­ry of King David but set in mod­ern Amer­i­ca but he’s the king of Amer­i­ca and it’s a great show. Bri­an Cox was in that too as the king he deposed and he keeps– Every­one thinks he’s been dead for 20 years but he keeps him in a prison in like a base­ment prison and every now and again, if he’s hav­ing a real­ly tough time, he McShane is the king, you’ll just go and vis­it this guy bring­ing out a bot­tle of 25-year-old scotch and a chess­board and they’ll just go vis­it him and they’ll just shoot the shit for a while and drink scotch and talk about what’s going on here. Use him as his coun­sel as he’s like con­cil­iary but he’s keep­ing him in a prison.

Any­way, yes, they work well togeth­er. Yes, Bri­an Cox is good. Well, we’ve been watch­ing what we do in the shad­ows, the new sea­son of that, which if you haven’t seen that is real­ly fun­ny. It’s writ­ten by Jemaine Clement from Flight of the Con­chords and titling and Tyco YTT. It’s a bit– It’s basi­cal­ly a real­i­ty– Faux real­i­ty show but it’s about a house of vam­pires in New Jer­sey who are hun­dreds of years old and it’s over the top and ridicu­lous and Matt Berry’s in it and I’m Chris­sy and I are both mas­sive Matt Berry fans who can’t Matt berry can do no wrong in our book.

Tony  1:14:48

That sounds like– What was that vam­pire TV series that got res­ur­rect­ed into a movie with John­ny Depp?

Cameron  1:14:55

Oh yes.

Tony  1:14:55

That’s cool.

Cameron  1:14:56

I haven’t seen that. Yes, it was called some­thing like that. Yes. Nev­er saw that. This is a– This did the oth­er way around. It was a low bud­get film that type of a TD and Jemaine Clement did before they were famous and they turned it into a TV show a few years ago with a dif­fer­ent cast but yes, it’s very fun­ny and then I’ve been read­ing our Book of the Month Club book rec­om­mend­ed by Brent. I think what works on Wall Street by James P O’Shaugh­nessy that I think I men­tioned last week, but I lis­ten to more of the audio book of that on my way back from Bon­di. Real­ly good. It’s, as I said to you this morn­ing, it’s just QAV. It’s just total QAV and he wrote it in 1996.

Tony  1:15:42

Oh, real­ly? Wow.

Cameron  1:15:43

Yes. It’s well worth a read and or lis­ten, if no, if peo­ple are they haven’t got into it yet. It’s just, it’s all based on data and it just reaf­firms every­thing you’ve been teach­ing us on the show for the last cou­ple of years down to the let­ter, almost. It’s fan­tas­tic.

Tony  1:15:58

Wow. Well, there’s noth­ing new in the world is there? Just repeats?

Cameron  1:16:05

Well, yes, but again, like most of us don’t know this stuff and most of us haven’t worked it out. He’s basi­cal­ly going look based on my analy­sis of 52 years of the s&p data, here’s how to do it and its QAV. It’s fan­tas­tic. It’s real­ly good.

Tony  1:16:24

Oh, we should buy the copy out of print and change all the terms to QAV and put a cou­ple in it and resell it.

Cameron  1:16:32

I’ll just do a Ctrl F and change it. Yes. I’ve reached out to AI Shaugh­nessy to see if he’ll come on the show for a chat too. It’s real­ly nice. Don’t tell him that we’re going to just rip off his book when you do that.

Tony  1:16:42

Yes. OK. We’re– I’m read­ing a book called ‘The Jason’s’ at the moment which is quite good too. Have you heard of them?

Cameron  1:16:47

No, but I got ripped off by a cou­ple of Jason’s over the course of my his­to­ry.

Tony  1:16:52

Now, these are a group of sci­en­tists who were put togeth­er after the Man­hat­tan Project to advise the chiefs of staff in the US on var­i­ous mil­i­tary issues. It’s just amaz­ing. The stuff they get dragged into.

Cameron  1:17:04

Were their names actu­al­ly Jason?

Tony  1:17:07

No. There’s a bit of a cloud over why it’s called that. One the­o­ry which is prob­a­bly not the cor­rect one is that Jason stands for July, August, Sep­tem­ber, Octo­ber, and Novem­ber and the sci­en­tists used to meet in the North­ern Hemi­sphere sum­mer too because they’re all work­ing at uni­ver­si­ty cam­pus­es and teach­ing physics or doing exper­i­ments at the labs but the one which seems to have the most cre­dence is it was called alpha Jason and the Arg­onauts because they were going on a quest for the Gold­en Fleece all the time to find out these, solve these unsolv­able prob­lems for the US mil­i­tary.

Real­ly inter­est­ing stuff about you know how to stop the Viet­cong from get­ting from Chi­na down in the South Viet­nam, how to spot mis­sile launch­es?

Cameron  1:17:52

Well, that did­n’t work very well. Did it?

Tony  1:17:53

No, but then often­times, they did­n’t but it was just this is going through all these, the way they get togeth­er, get briefed intense­ly by four star gen­er­als and then have a cup of cof­fee around the table and say, what if we dropped all these release pen­cil size bombs that were basi­cal­ly fire­crack­ers and when a truck ran over them or some­one stepped on them, they’re mak­ing noise and then we drop the para­chute, these acoustic sen­sors like that were used by sub­ma­rine hunters into the trees in South Viet­nam or here the North Viet­namese com­ing through the jun­gle and will be able to drop bombs on them. Things like that. It’s real­ly inter­est­ing. left field sort of takes on var­i­ous prob­lems.

Cameron  1:18:36

I’ve nev­er heard of these guys before but I’ll have to make a note and talk about them on my cold war shall have to get this book.

Tony  1:18:41

Yes, and of course, there’s a polit­i­cal aspect to it because after the Man­hat­tan Project made the bomb, they all signed a let­ter say­ing they’re plead­ing with gov­ern­ments not to drop the bomb. It was that polit­i­cal dimen­sion to it too and they actu­al­ly had to take a lot of the work they did off cam­pus because of all the protests in the 60s and 70s about nuclear activ­i­ty and work­ing for the mil­i­tary and all that kind of stuff. Yes, inter­est­ing, right?

I came across them. I read a book that Mal­colm Glad­well his lat­est book, which came out about six months ago. I think it’s called some­thing like Bomber Com­mand, but it was about the inven­tion of the Nor­den bomb­sight dur­ing World War Two which was real­ly inter­est­ing when it was meant to be the thing that changed the war but it did­n’t real­ly because it nev­er worked prop­er­ly. It’s a great sto­ry about sci­en­tif­ic invest­ment and research and how again, it does­n’t always pay off but how it did in a con­vo­lut­ed way shape the war and how Oba­ma come out and change their tac­tics and change them back and all this kind of stuff. Yes.

Cameron  1:19:44

Oh, I haven’t heard of that either. You’ll have to send me some links. Good stuff.

Well, that’s the show. Thank you, TK. Have a good week­end. Enjoy your new pre­miere when he takes office tomor­row.

Tony  1:19:59

Yes, with his six kids and his love of Trump. That’ll be fun. Got this might not look so bad after this guy. We lose Baro­la and we get Trump light into the state pre­miers office. Yes.

Cameron  1:20:13

Oh, God. He’s Opus Dei too. At least he went to an open school I read. Yes.

Tony  1:20:17

1. The inter­est­ing thing that I’ve– I mean that just a cou­ple of things I’ve read about him, so I’ll give him the ben­e­fit of doubt and he might be very com­pe­tent and a good leader and all the rest.

Cameron  1:20:26

Yes, that’s what they said when Trump got elect­ed.

Tony  1:20:30

Two things I will say was, I think Gladys did a good job of bal­anc­ing his views against the sci­en­tists’ views. When the sci­en­tist was say­ing we need to lock down and he was say­ing bull­shit, this is just a lie, we need to open up and save the econ­o­my. He’s cer­tain­ly com­ing from that Trump point of view of what to do with COVID but giv­en that gratis has laid the way out now any­ways, just cut imple­ment the plan, I think now, so maybe you can’t do too much dam­age on that front but he famous­ly is alleged­ly to have said that chief health offi­cer should take a pay cut if she wants to shut down the econ­o­my because that’s what’s going to hap­pen to busi­ness­es.

They both denied that was ever said, but it’s been report­ed and the oth­er thing was he was called out by them if you read Christo­pher Joy’s columns in the FINRA view but they’re all still often­times very, long and arcane but they often­times also good read­ing so he came out and said that Para type has set up a bunch of ex bankers. One of them was an ex West­pac banker, I set up a kind of qua­si future fund for New South Wales to invest to for its future which is not a bad thing but then Christo­pher joy out­line how much they’re all being paid to run this fund­ing sort of thought. This is not good.

Cameron  1:21:39

He should have a quick look at papers that came out today to see if any of it is in the papers.

Tony  1:21:44

Yes. Any­way, like I said, I don’t know much about him so that I don’t want to impugn his motives or his points of view but we’ll see what hap­pens.

Cameron  1:21:50

All right. Good luck with that guy.

Tony  1:21:51

Have a good week. Enjoy the peas.

Cameron  1:21:55

OK.

QAV Pod­cast is a pro­duc­tion of space craft pub­lish­ing pro­pri­etary lim­it­ed autho­rized rep­re­sen­ta­tive of AFSL 520442 HFS rep­re­sen­ta­tive num­ber 001292718. Please don’t make any invest­ment deci­sions based sole­ly on lis­ten­ing to this pod­cast. This is pre­sent­ed as gen­er­al advice only not per­son­al finan­cial advice. We don’t know your per­son­al finan­cial cir­cum­stances. Please see a finan­cial plan­ner before mak­ing any invest­ing deci­sions.