Transcript #448

QAV # 448

Cameron  00:08

Wel­come to the GET BACK pod­cast, where Tony and I are just gonna gush about the new Bea­t­les doc­u­men­tary for four hours.

Tony  00:15

Let’s, let’s rush through this one and go back to watch it again.

Cameron  00:20

I though, this is QAV 448. I decid­ed the title’s Get Back Omi­cron. Hel­lo, Tony, how are you?

Tony  00:29

Good. Wet.

Cameron  00:33

“Hot ‘n wet last year… with a lady but not when you’re in the jun­gle.” It’s been a crazy week.

Tony  00:39

It has, has­n’t it? Lots of tur­moil in mar­kets.

Cameron  00:43

Depend­ing on who you believe Omi­cron’s either gonna put us back to square one or It’s noth­ing. Don’t wor­ry about it, it’s all fine. Yeah. It’s a mov­ing tar­get, I think.

Tony  00:54

Yeah, who do you believe? Exact­ly.

Cameron  00:56

Mar­kets have bounced around on the slight­est of infor­ma­tion. Like yes­ter­day, the mar­ket crashed because every­one was wor­ried and then today bounced back up again. Based on what? Noth­ing real­ly. Hunt came out and said, “oh, we don’t think it’s gonna be so bad based on some ear­ly, ear­ly indi­ca­tions.” And so the mar­kets bounced. Mean­while, Pow­ell and the US Fed is telling the US mar­kets that it’s going to have — could have sig­nif­i­cant con­se­quences on the US econ­o­my, Omi­cron, but here we don’t seem to be too wor­ried about it. Uh, it’s all over the place.

Tony  01:31

Well, the US mar­ket bounced as well. We’re just fol­low­ing them. So they must have ignored Pow­ell.

 

Cameron  01:37

Yeah well, yes prob­a­bly.

Tony  01:39

Would­n’t be the first time. Yeah. Well, you know, the share mar­ket is a Bayesian machine. Right? It takes new infor­ma­tion and tries to pre­dict the future with it, work out the prob­a­bil­i­ties.

Cameron  01:50

Yeah, I would just feel sor­ry for any­one who’s try­ing to fig­ure out what to do with their invest­ing by read­ing the news right now. It’s all over the place. I feel grate­ful that I can ignore it all and just fol­low the recipe.

Tony  02:05

Yeah, fol­low the rules. Exact­ly. And it’s, it’s been chop­py, and you know, I’ve lost mon­ey. I’m sure oth­er peo­ple have lost mon­ey over the last week or so. But it’ll come back.

Cameron  02:13

Yeah.

Tony  02:14

Mar­ket will set­tle down once it has full infor­ma­tion, and we’ll just move on. At least remind­ed me to pull out this book called The Obsta­cle is the Way by Ryan Hol­i­day, which I got, I think last year. It’s a retelling of the sto­ics, phi­los­o­phy. Mar­cus Aure­lius in par­tic­u­lar, which is one of your guys, I think, from your his­to­ry pod­casts. But just pulled it out, you opened it to almost any page and isn’t applic­a­ble quote. And, and The Obsta­cle is the Way is prob­a­bly the most impor­tant one. He’s basi­cal­ly say­ing, what Aure­lius’ quote is some­thing like, “when­ev­er you come across an obsta­cle, you can per­ceive it to be a bad omen or per­ceive it to the end of all your for­tunes, or you can just get on with it and move it. There’s no going around. There’s no going back. It’s just the obsta­cle is the way.” And that’s what we do with the mar­ket.

Cameron  03:08

Or, as Shake­speare said, “noth­ing is good or bad, but think­ing makes it so.”

Tony  03:12

Cor­rect. Exact­ly. That’s one of the quotes in here too. Oth­er good ones, “under-under the comb, the tan­gle and the straight path are the same.” Her­a­cli­tus said that. So we’re in a, we’re in a tan­gle at the moment, but we have a process to untan­gle it. Here’s the Aure­lius quote: “the imped­i­ment to action advances action, what stands in the way becomes the way” that’s Mar­cus Aure­lius.

Cameron  03:33

Mind you, Ryan Hol­i­day’s last book, which I read was called Don’t Trust Me, I’m Lying. So you know, I’m not sure if he might be tak­ing the piss with this book.

 

Tony  03:44

You’re say­ing, you’re say­ing trust Aure­lius and the ancient Greeks?

Cameron  03:48

Yeah. Well, you you can go back ear­li­er with the sto­ics. Yeah, yeah, we, Ray and I on our Alexan­der show talked a lot about the, where the sto­ics came from around about 300 and some­thing BCE, 313 BCE. Yes, inter­est­ing sto­ry. And I post­ed a thing up on our Face­book group the oth­er day, I just hap­pened to be look­ing at our Navexa chart since incep­tion. And you know, it was just a good reminder that in the two and a lit­tle bit years we’ve been doing QAV and the port­fo­lio, our port­fo­lio has gone down by between 10 and 30% on prob­a­bly half a dozen occa­sions over two years. It goes down, then it goes back up, then it goes down, then it goes up a bit more, then it goes down, then it goes up a bit high­er than it was last time, then it goes down. then it goes up. And when I look at that after two years I go, “okay, well that’s just how it works. Right? It goes down and it goes back up.” And I realised that you’ve been look­ing at charts like that for thir­ty years, and I’ve been doing it for two years.

Tony  04:52

Yeah.

Cameron  04:52

Yeah.

Tony  04:53

And you know, been through peri­ods where it goes down and stays down and keeps going down for eigh­teen months or two years and then comes back up again. So yeah, it’s sit­u­a­tion nor­mal. As I said on Phil Mus­catel­lo’s show a cou­ple years ago dur­ing the COVID cough. Its what mar­kets do.

Cameron  05:09

And after you’ve seen it hap­pen enough times, I would guess you just go “yeah, okay. That’s just no big deal.”

Tony  05:15

Yeah, well, I mean, it’s just you flick a switch, the mar­kets now tur­bu­lent, I have to be vig­i­lant on my alerts on my rule ones and sell when they hap­pen. If I have to buy them back the next day, so be it. That’s, that’s the process. Okay, I’ve burned a bit of com­mis­sion. That’s how it has to hap­pen. That’s all — the process is all designed to pro­tect us. If we have to spend a bit of insur­ance mon­ey then so be it.

Cameron  05:39

That’s your insur­ance mon­ey, the trans­ac­tion fee to get out of some­thing when it’s drop­ping?

Tony  05:44

Cor­rect. Yeah.

Cameron  05:46

Okay, well, that’s good. We’ll speak more on that I’m sure as we go through the show. Just an alert for peo­ple, QAV club mem­bers in par­tic­u­lar who haven’t checked Face­book or read their emails in the last week: there have been some changes to the AF ver­sion of the check­list, make sure you go to the club mem­ber resources page and down­load the lat­est ver­sion of that. Check your emails or Face­book for an expla­na­tion, I won’t both­er going through it. But thank you again to Andrew Flit­man for doing a lot of work in the last week to come up with a new ver­sion for us, and to Glen Con­roy for point­ing out one of the prob­lems. Basi­cal­ly it was­n’t — I did­n’t have a process in place for updat­ing the check­list with all of the new stocks that were hit­ting the ASX. I was just doing it man­u­al­ly, which Andrew says is fine, and you know if some­thing pops up and it’s not a new man­u­al data tab, you can just add it in down the bot­tom. But there’s also a process that he cre­at­ed, you know, you can run it once a month or what­ev­er and it’ll just add all of the new stocks in. I don’t think it’s been a prob­lem because I com­pare my buy­er list with your buy­er list every week and noth­ing’s turned up in yours. There was­n’t in mine. So I don’t think it’s a big issue.

Tony  06:53

No, it should­n’t be and I know this recent­ly as well, there has been a lot of new stocks on the ASX, but they haven’t been, you know, Prc/Op CFs less than sev­en. So, it’s, I can’t think of any that have impact­ed the buy list at all.

Cameron  07:06

The thing that woke us up to it, that Glen point­ed out, was KPT and KIL. For some rea­son it end­ed up twice on our man­u­al data tab, both as KPT and as KIL because I had­n’t delet­ed it as KPT when it turned up as KIL and that sort of threw every­thing out of the check­list because there was too many stocks in there, so we just delet­ed KPT and it was fine. Mate of mine, I was talk­ing to a mate of mine last week — old school friend actu­al­ly from pri­ma­ry school, he runs a build­ing com­pa­ny devel­op­ment busi­ness, prop­er­ty devel­op­ment, in the Gold Coast and has done for twen­ty-odd years. And he was say­ing, yeah, builders are start­ing to go broke. And he said word on the street is going to see lot more of them the next six months that are just being squeezed by sup­ply issues. They just, you know, they’ve-they’ve pre sold a whole bunch of stuff and they just can’t get steel, wood, what­ev­er it is they need to build. So he said you’ll see a lot of builders start to go broke in the next six months when they just get squeezed, unless some­thing hap­pens with the sup­ply side of things, I guess, which does­n’t look like it’s hap­pen­ing in a hur­ry. So yeah, just…

Tony  08:18

That’s always a bad sign, when that hap­pens.

Cameron  08:20

Yeah. Again, obvi­ous­ly does­n’t change any­thing for us. We just keep doing what we’re doing.

Tony  08:25

Cor­rect. Yeah.

Cameron  08:25

But just, that was an inter­est­ing piece of intel from the ground.

Tony  08:31

It is. And the sad part is that peo­ple will lose their deposits as well.

Cameron  08:35

Yeah, that’s — there’s no insur­ance when you buy some­thing like that off the plan?  Some sort of insur­ance?

Tony  08:44

Yeah, there might be these days. There’s always been peo­ple caught out in the past, because what tends to hap­pen is the builder goes broke and then pops up, you know, a month lat­er with a dif­fer­ent com­pa­ny and they, you can’t sue the old com­pa­ny, it’s been bank­rupt­ed. And then what­ev­er gov­ern­ment insur­ance is in place takes three or four years to wind its way through the courts to try and claim from the phoenix com­pa­ny and doesn’t. Yeah, what­ev­er. That process may have been improved since the last reces­sion but hope­ful­ly it has but yeah, I would­n’t be, if that’s the case I would­n’t be buy­ing any­thing off the plan at the moment. Or on spec.

Cameron  09:18

It might be too late if peo­ple have been doing it when they’ve been flushed with cash.

Tony  09:22

Yeah. Could be.

Cameron  09:22

Last year. Howard Marks came out with his quar­ter­ly memo the oth­er day. Did you ever read of that?

Tony  09:30

No. I only read Har­po Marx, myself. I haven’t seen Howard Marks.

Cameron  09:37

I don’t read — I lis­tened to the audio­book of Har­po Marx. Yeah.

Tony  09:42

One of the great­est auto­bi­ogra­phies ever. Har­po Speaks!

Cameron  09:45

You told me that, yeah. I still haven’t read that. It’s pret­ty good though, right? So no, you did­n’t read Howard Marks?

Tony  09:51

No, no I haven’t read Howard — or Zep­po or, or Grou­cho either.

Cameron  09:57

What about Karl? Read Karl?

Tony  10:01

“The share mar­ket is evil.” No, I haven’t read Karl.

Cameron  10:05

Well he does­n’t, does­n’t say that he says that the forces of cap­i­tal should be in the hands of the peo­ple. But okay. Well, Howard Marks talks a lot about that, actu­al­ly, in a way he was talk­ing about — among oth­er things — about all of the prob­lems he fore­sees for Amer­i­ca mov­ing for­wards.

Tony  10:22

Right.

Cameron  10:22

In terms of its polit­i­cal sys­tem, and its cap­i­tal­ist sys­tem, how it’s just bro­ken every­where. He does­n’t sound very opti­mistic at all about the future of the Unit­ed States, but does sound very opti­mistic about the future of Chi­na. And he said, He’s for 15 years or so he has sat on the Shang­hai Amer­i­can Invest­ment Com­mit­tee Board or some­thing. So he spent a lot of time in Chi­na, he’s got a very close view of what’s going. He said, for all the rhetoric that, you know, came out of the last admin­is­tra­tion and this admin­is­tra­tion about Chi­na being a threat, and Chi­na being that, the amount of Amer­i­can mon­ey that’s being sunk into Chi­na still by Amer­i­can busi­ness­es sug­gests that Amer­i­can busi­ness­es don’t think any­thing’s gonna hap­pen between the US and Chi­na and they’re going to be using all of their influ­ence to make sure noth­ing hap­pens to their invest­ments in Chi­na. So he’s very pos­i­tive. He said, like, any­thing could hap­pen, but he’s very, he’s very pos­i­tive about the role that Xi Jin­ping is play­ing, the job that they’re doing over there, and that it’s going to be — con­tin­ue to be suc­cess­ful. So, inter­est­ing.

Tony  11:33

Good, good to have a bal­anced opin­ion. Yeah, was­n’t that — was­n’t the Citibank opin­ion, when Jamie Dimon, the CEO of Citibank con­grat­u­lat­ed the Com­mu­nist Par­ty on 100 years of rule, and then bet them that Citibank would still be around in 100 years’ time but they would­n’t be.

Cameron  11:50

Right.

Tony  11:51

Yeah. Which did­n’t help their invest­ments in Chi­na after that.

Cameron  11:59

My old boss Trevor Kennedy died over the week­end, Tony.

Tony  12:02

Your old boss, real­ly? Wow.

Cameron  12:04

Well, he ran OzE­mail when I was at OzE­mail for a cou­ple of years, yeah. And I read there was an obit in the Fin that I was read­ing: “Trevor Kennedy’s tough­est deal cross­ing Ker­ry Pack­er”. You ever heard the sto­ry about when Turn­bull and Trevor, who went on to found OzE­mail togeth­er, but where Mal­colm Turn­bull and Trevor got kicked out of the Tourang Con­sor­tium? Appar­ent­ly — this is old news — appar­ent­ly, Mal­colm Turn­bull secret­ly met with some inves­ti­ga­tors and gave them copies of Trevor Kennedy’s diary that showed that whilst, for kids or for folks who are too young to remem­ber this, this is going back a ways, the 80s, I guess, late 80s, when Ker­ry Pack­er was try­ing to take over Fair­fax, and he was telling the Aus­tralian media tri­bunal or what­ev­er it was that he was going to be hands off and he was­n’t — because he already owns nine or what­ev­er he owned at the time back then wom­en’s week­ly and oth­er kinds of stuff — that he was going to be hands off and he was­n’t going to have any­thing to do with it, it was okay. Pri­vate­ly he was going to run it like you would imag­ine Ker­ry Pack­er was going to run it and this was all writ­ten down and Trevor Kennedy’s diary, which Mal­colm Turn­bull leaked to inves­ti­ga­tors after they got knifed. And, Mal­colm Turn­bull is on record as say­ing that Ker­ry Pack­er told him he was going to have him killed for releas­ing this because just after he leaked this infor­ma­tion, Ker­ry pulled out of the whole Fair­fax deal when this got out. And Turn­bull claims he said to him, “well, when you send your guy after me you bet­ter make sure he gets me with the first shot because if he does­n’t, you bet­ter bloody be sure my guy won’t miss.”

Tony  13:50

Ooh, wow.

Cameron  13:53

I was like, well, that’s like, you know, Ker­ry Pack­er then did die. It was you know, eigh­teen years lat­er but he did die so you nev­er know. And, aren’t you liv­ing in Ker­ry Pack­er’s old pent­house apart­ment that he did­n’t move into…

Tony  14:11

Cor­rect.

Cameron  14:12

Maybe because he found out it was boo­by trapped by Mal­colm Turn­bull. That’s all I’m say­ing. Just want to be care­ful. You see any loose wires in the walls, don’t, don’t pull on them or any­thing like that.

Tony  14:24

Right. So it’s Mal­colm who’s been steal­ing our stock tips, not the Chi­nese Com­mu­nist Par­ty.

Cameron  14:30

It could be, could have the place bugged. Yeah.

Tony  14:32

Yeah, right. Gee.

Cameron  14:35

Any­way, you want to talk about the week?

Tony  14:38

Yeah.

Cameron  14:40

We can talk about news items first.

Tony  14:42

And a few oth­er things. Yeah. Well, speak­ing of the Chi­nese Com­mu­nist Par­ty, did you see how the World Health Orga­ni­za­tion, the WHO, the doc­tor as, as I like to call it, they skipped two Greek let­ters to get to Omi­cron.

Cameron  14:56

Yes.

Tony  14:56

Nu and xi.

Cameron  14:57

Xi was one of them.

Tony  14:58

Yes, yeah.

Cameron  15:00

Yeah, but they said it’s because it’s a com­mon sur­name as it is with Xi Jin­ping, and they did­n’t want to offend peo­ple. Don­ald Trump’s say­ing it’s because they’re try­ing to paci­fy the Chi­nese or paci­fy the Pres­i­dent, but I don’t think that’s the case.

Tony  15:15

Who knows? Any­way, I thought it was inter­est­ing and worth a laugh.

Cameron  15:18

Gee, you real­ly, you real­ly have been spend­ing a lot of time with Des late­ly, haven’t you?

Tony  15:22

I unfriend­ed Des about two years ago or a year ago, or some­thing.

Cameron  15:26

I know, I know, you’re just going down the con­spir­a­cy rab­bit hole.

Tony  15:29

Nah. I’m hold­ing, I’m using my Bar­ba­dos tea mug today. So hats off to Bar­ba­dos, they’ve just elect­ed their own pres­i­dent.

Cameron  15:38

Oh, yes. They’ve become a repub­lic.

Tony  15:39

Repub­lic. Yes. And thrown off the British Roy­al Fam­i­ly. So we, we vis­it­ed a day when I was liv­ing in Toron­to, great place.

Cameron  15:47

And you’re wear­ing your Berk­shire Hath­away com­mem­o­ra­tive shirts.

Tony  15:51

That’s right. I haven’t worn it for a while. I’m going away on Fri­day, so I’m try­ing to wear all the things I don’t nor­mal­ly take away with me so I don’t have to wash before I leave. Yeah. Ah, what else? Oh, just get­ting back to the cur­rent mar­ket. A cou­ple of oth­er quotes that I want­ed to cov­er up before we go into stock on the week. One comes from the rac­ing fra­ter­ni­ty, and it says “los­ing mon­ey is one thing, los­ing your nerve is every­thing.” And I think that’s kind of, get a sense that some peo­ple are start­ing to get a bit tired of rule one or three point sell lines, but you got to keep, got­ta keep hold­ing your nerve. And I guess anoth­er quote came to mind; Rud­dy was talk­ing to me last week about it. So, we, we went away to the Hunter and played golf, and as part of our good­ie bags, they gave us a copy of a book by a golf pro, Nick O’H­ern, and in that Rud­dy pulled out a quote which was, which was good. It’s a three-let­ter acronym is DCA. And it stands for Decide, Com­mit and Accept. And it’s a good way to play golf, you decide on the shot, you com­mit to it, and then what­ev­er hap­pens, you accept it. And I think the same thing’s applic­a­ble to the stock mar­ket; you decide what you’re going to do, you com­mit and you accept. You don’t go in going “oh what the fuck do I do? Rule one’s been breached? Do I sell? Do I hold? You decide, you com­mit and then what­ev­er hap­pens you accept it. You don’t Mon­day morn­ing quar­ter­back it, you don’t say “oh gee, should have used a six iron, not a sev­en iron.” You accept it, you may have got it right, you may have got it wrong, you move on. I think that’s appro­pri­ate.

Cameron  17:30

Yeah, and I look I feel for peo­ple that are new into QAV and maybe they haven’t been lis­ten­ing very long, they haven’t been fol­low­ing along very long. And you know, they may not have the degree of con­fi­dence in it or in you that they will have over time that the sys­tem works. And so, it’s, it’s quite scary. And they think well if I just maybe tweak this bit or tweak that bit, which of course they’re, they’re free to do.

Tony  17:57

Absolute­ly.

Cameron  17:58

Until the cows come home if you want, but cer­tain­ly it’s you know, it where it cur­rent­ly is, is the result of your 30 years of tweak­ing.

 

Tony  18:09

Yeah.

Cameron  18:10

And test­ing and back test­ing. So, you know, I would rec­om­mend that they just, you know, don’t trust us, don’t trust you, jump on our Face­book group and ask. Ask the peo­ple that are fol­low­ing QAV for a cou­ple of years because there’s a bunch of them there on the Face­book group and say you know what, what do they think after a cou­ple of years. Don’t, you know, don’t trust us you know…

Tony  18:33

Yeah, God no.

Cameron  18:33

… Go ask the peo­ple that have been here for a while.

Tony  18:35

Don’t trust us, I mean trust the process. If you don’t like the process, you can fudge it. But you know, if you fudge it too much and get too far away from it, you’ll get into that loop of “did I do the right thing, did I do the wrong thing,” you got­ta decide to com­mit. Yeah, any­way. A cou­ple of oth­er things. There’s been a few sells last week which crossed our three point trend line, I just thought it might be worth­while talk­ing about, or not talk­ing about them but just nam­ing them now in case peo­ple haven’t seen them. Nation­al Bank did, and I sold it. Down­er EDI did and I sold it. Super Cheap Auto did last week, or Super Group — Super Retail Group. As did EVZ, ASG, DSK, EP1, PPG, SGA-SGR, sor­ry, and ADA. They’re all now sells that I picked up doing our buy list work on the week­end. And two new ones, CLT and SND. Saun­ders Inter­na­tion­al have entered the buy list. You spoke about our dum­my port­fo­lio, haven’t you I think? Any­way, we’ve got our three top stocks in Navexa this week are KSC up 5%, Kor­vest, KOV up 3%, and KIL which is just up 0.38 per­cent. But they were the only three ris­es. So, the dum­my port­fo­lios down just under 1% for the week, but the mar­ket was down 2.13% for that same sev­en day peri­od. As you said before, we’re up 30% CAGR over the two-and a‑bit years, ver­sus 11% of the mar­ket since incep­tion, and 5.25% for this finan­cial year ver­sus 2.57% for the mar­ket. So, not quite dou­ble but get­ting there. Yeah, so it’s a tur­bu­lent time, but these are the kinds of times we, I think the process comes to the fore. And if you — it’s good to have a process to rely upon, you don’t have to think about every­thing from first prin­ci­ples. So, yeah. Two more things I want to talk about quick­ly before stock of the week. The first one is last week I talked about aver­age dai­ly trades and what sort of per­cent­age peo­ple should pay up to of that and one of the lis­ten­ers had writ­ten in ask­ing a ques­tion, and in part of that ques­tion they men­tioned that 20% was in the Bible. And I said, “no, I think it’s 33 and a third.” It should be 20%, so I got that wrong, I’m sor­ry. I think what’s hap­pened is, in the cou­ple of years since I men­tioned that I’ve just been try­ing to find 15 to 20 stocks big enough on the buy list to get into my port­fo­lio. So, I think I’ve crept up to 33 and a third per­cent, to try and do that. But no, it should be 20%. I went back and looked at — so the idea for that came from a book called Skin in the Game by Nicholas Taleb. The clas­sic quote is about walk­ing into a movie cin­e­ma and look­ing at, look­ing not at how big the cin­e­ma is but how big the exits are in case you need to get out in a hur­ry. And, also checked with Stock Doc­tor, Stock Doc­tor rec­om­mend 20% as well. So, a cou­ple of sources there for that. So, I got it wrong, sor­ry. It’s, it should be 20% in the Bible, not the, not a third. I just think I’ve crept up to that.

Cameron  21:40

Yeah, the prob­lems you have Tony, like…

Tony  21:44

Like a faulty mem­o­ry.

Cameron  21:44

No, you’ve got a good mem­o­ry. But yeah, not being able to find stuff to buy, they’re all too small.

Tony  21:52

And then the oth­er thing I want to men­tion, too, when we talk about Omi­cron, I did make a note and we did­n’t cov­er it was that the dif­fer­ence this time around is anti-viral. So, I sus­pect not only will there be, if we need the new vac­cines, or if the cur­rent ones are fine, boost­er shots, but the dif­fer­ence this time around is that it’s, we’re not too far away from hav­ing an oral antivi­ral which will help peo­ple get through COVID. That may make a dif­fer­ence.

Cameron  22:17

Although the one they were tout­ing a cou­ple of weeks ago, they’ve end­ed up pulling. Said it did­n’t work.

Tony  22:22

Okay.

Cameron  22:23

Yeah, hope­ful­ly won’t be so long that we, won’t be too long before we have one.

Tony  22:27

Yeah. Okay, mov­ing on. I’ve got stock of the week to talk about.

Cameron  22:32

Mm-hmm.

Tony  22:32

So the small cap one and a large cap one. I did­n’t put it in my notes, sor­ry.

Cameron  22:37

Lind­say, LAU.

Tony  22:38

Lind­say. Thank you.

Cameron  22:39

Lind­say Trans­port.

Tony  22:39

Yep. It’s only a, it’s a very tiny com­pa­ny. Only has an ADT of around $3,000 so it’s not going to suit most peo­ple. But I’m not going to talk about that in detail. I’m going to talk about West African Resources, which is a much big­ger com­pa­ny, and declare that I own it. And last week, when I was sell­ing stocks and try­ing to find things to buy, I topped up my hold­ing in West African Resources. But that’s nei­ther here nor there. This is not a rec­om­men­da­tion to buy the stock, I’m just going to go through the process of how we analyse it. I learnt some­thing new when I was look­ing at the details on West African Resources. Do you know what the cap­i­tal of Burk­i­na Faso is? Where WAF has a mine?

Cameron  23:18

I used to, actu­al­ly, but no, I can­not recall.

Tony  23:21

Well hope­ful­ly I pro­nounce it prop­er­ly: Oua­gadougou.

Cameron  23:24

Ah, Oua­gadougou  Oua­gadougou do-do-do. I knew a fam­i­ly from Burk­i­na Faso that I met a few years ago, so I read up on it because I knew noth­ing about it and I felt like, I felt like a com­plete idiot. So, but yeah, that’s a good one.

Tony  23:26

Oua­gadougou.  Yeah. So West African coun­try, Burk­i­na Faso. Two projects over there for this com­pa­ny: San­bra­do Gold Project, which is actu­al­ly pro­duc­ing, and that’s near Oua­gadougou, the cap­i­tal of Burk­i­na Faso. And then a new one called Sar­tan­ga, which is a cop­per, gold and molyb­de­num project, which is under devel­op­ment also in Burk­i­na Faso and rea­son­ably close to the coast. So, it’s only forty k’s from a port, which is always impor­tant for min­ers, that’s a good thing. That’s under devel­op­ment, has­n’t actu­al­ly start­ed pro­duc­ing yet. Onto the num­bers. QAV score is 0.14 so it’s down towards the bot­tom of the list. And one of the things I strug­gled with in find­ing a stock to talk about this week, Cam, was that the small-cap stocks are fine, but find­ing a large-cap stock that we had­n’t already talked about and was on the buy list and was­n’t also a Josephine was dif­fi­cult.

Cameron  24:37

I had to run a buy list this morn­ing for my Super­fund just with the ASX 300, so large cap stocks. My, the list was pret­ty small. It was… I meant to ask you about that. I ran it and it was like less than twen­ty stocks.

Tony  24:49

Yeah.

Cameron  24:49

And I, we owned, like fif­teen of them, so I was get­ting right down to the bot­tom.

Tony  24:53

And some of them are prob­a­bly also Josephine’s too, like Beach Ener­gy, for exam­ple.

Cameron  24:58

End­ed up buy­ing Perseus which I tried to buy like a week or so ago, but it was a Josephine then, but it’s shot up since then. But yeah, it was very slim pick­ings for large cap stocks this morn­ing.

Tony  25:08

Yeah, so that’s an issue. So that’s why I’m talk­ing about a stock that’s close to the bot­tom of our list. And it’s scor­ing 0.14, and this is with a share price of $1.32. But if it does increase, and gold com­pa­nies will do well if there is anoth­er pull­back in the mar­ket, or if there is anoth­er prob­lem with Omi­cron, then this one, like could go off the bot­tom of the list. But, yeah QAV score 0.14, qual­i­ty score of 85%, which is quite good, aver­age dai­ly trade of $5.38 mil­lion. These fig­ures come from today, 30th of Novem­ber ’21, 2021. Price is $1.32, which is less than the con­sen­sus tar­get in Stock Doc­tor of the bro­ker­age of this, that cov­ers this com­pa­ny. No div­i­dend, so we can’t give it any points for that. But the finan­cial health is strong and steady, but it’s not a star stock. So, it’s strong and steady, but not a star stock. Inter­est­ing­ly enough, the return on equi­ty of this com­pa­ny’s near­ly 94%. So, I know some peo­ple like to focus on that, we don’t, but it’s a very high ROE for this com­pa­ny. But Prc/Op Cf is 6.46, so just under 7, and I think if the share price does increase, it won’t take long before this is above 7 and it will lose a cou­ple of points. So, if the share price keeps ris­ing, it may not be on the buy list for a long peri­od. PE is 8.43, which is quite low. And one of the rea­sons that com­pa­nies like this come on to a val­ue investor’s screen­ing page is because that all a lot of peo­ple don’t like buy­ing out­side of Aus­tralia, and they talk about sov­er­eign risk, which is some­thing we should address with com­pa­nies like this. It is always a risk, but risk and reward applies here and the com­pa­ny cer­tain­ly, for a com­pa­ny with a ROE of 94% and a ful­ly func­tion­al gold­mine plus anoth­er one in devel­op­ment, to pay this kind of price for it, you know, six or sev­en times cash flow is quite cheap. But there is the risk of it being in a for­eign juris­dic­tion, and they call that sov­er­eign risk. I did note in my research of the com­pa­ny that the Burk­i­na Faso gov­ern­ment gets a free 10% share­hold­ing or a stake in the prof­its, I think I don’t know if they’re actu­al­ly share­hold­ers, but cer­tain­ly a stake in the prof­it. So, who knows what will hap­pen. But that may well pla­cate any sort of neg­a­tive activ­i­ty from the local gov­ern­ment over there. But it’s always a risk. The price of this of this stock is above our IV 1, but it’s less than IV 2, and it’s less than half of IV 2, so we give it an extra point for that in the check­list. Net equi­ty per share is only 28 cents. So, the share price of $1.32 is way above that so it gets a 0 score for book val­ue, and a zero score for being less than 30% above book. EPS growth is fore­cast to be 32%, which is again quite high giv­en, espe­cial­ly giv­en the price we’re pay­ing for this stock, which means the growth over the PE is 3.8 times which scores well on our check­list, some­thing we look at. Fun­ni­ly enough, direc­tor’s only hold 3%. So, it does­n’t score on the founder-own­er side of things. It does have a record low PE for the last three years, so that gets a 2 in our check­list. Equi­ty is not going up con­sis­tent­ly so it does­n’t get a score for that. So, all in all, cheap, prob­a­bly because of sov­er­eign risk, and scor­ing 0.14 but with a Prc/Op Cf 6.46 might not be around for long.

Cameron  28:32

Hmm, I think I’ve got the low­er Prc/Op Cf on that when I was look­ing at it yes­ter­day, I think mine was 5.46.

28:39

Yeah, there’s a dif­fer­ence between Stock Doc­tor if you take their fig­ure and how we, when we cal­cu­late it using NEPS is about 10% dif­fer­ence. Yeah.

Cameron  28:47

I might have been look­ing at the Stock Doc­tor one, yeah. Good. Thank you for that, Tony. I hold WAF and LAU in my port­fo­lios just for full trans­paren­cy. Let’s move on to ques­tions.

Tony  29:00

Yeah.

Cameron  29:01

Gary: “got a quick ques­tion in regards to what you might be doing at the moment while the mar­ket seems to be going south?”

Tony  29:08

Play­ing Golf.

Cameron  29:08

My.… this weath­er? “I start­ed invest­ing in Octo­ber. I start­ed invest­ing in Octo­ber when I was try­ing to build up my port­fo­lio to twen­ty stocks. I start­ed to buy from the top of the list where I got to about six­teen. After a few weeks had a few stocks where they dropped more than 10% of their buy price so I had to use rule num­ber one, for exam­ple NHC,” yep, I had to sell that as well. “SFR, AIS,” yep, “GCY and SUN.” Yep.

Tony  29:36

I sold SUN.

Cameron  29:36

We’ve all been there, Gary. “I cur­rent­ly have eleven stocks in my port­fo­lio but three more have dropped below their 10% buy price. I.e. EHL…” Yep, I saw that yes­ter­day, “… Dow and SLX. My ques­tion is, would you con­tin­ue to keep buy­ing from the watch list or hold on to your cash, sit on your pos­i­tive per­form­ing stocks and wait until the mar­ket picks up again to buy. I’m inter­est­ed to know what you would do.” Well, yes, the clas­sic ques­tion…

Tony  30:06

Yeah.

Cameron  30:06

…Gary, to sit on cash or keep invest­ing. And Tony says…

Tony  30:12

Keep invest­ing. The answers in the ques­tion; do you sit on cash and your pos­i­tive per­form­ing stocks and wait until the mar­ket picks up again to buy? Or do you invest? Well, if Gary can tell me when the mar­kets going to pick up again, I’ll just go away or sleep when the mar­kets not going to and I’ll wait until he tells me when the mar­kets going to pick up again. I’ll just invest on the good days, that’ll be great, and we’ll be doing this from the Bahamas in the future if that can hap­pen. No one, no one knows when the mar­ket will pick up again. Peo­ple will tell you they do. But they don’t. And you only know when it hap­pens, so stick to the process. That’s, that’s my, I mean, it’s a kind of a trite answer to Gary’s ques­tion. So, I guess it’s unfor­tu­nate that Gary sort of start­ed to invest in Octo­ber when the mar­kets going through a tur­bu­lent time. But what else do you do? You could just wait until the mar­ket cor­rects, but you could be sit­ting and wait­ing for a cou­ple of years before that hap­pens, so who knows? If I had start­ed in the mar­ket in Octo­ber I’d be doing the same thing Gary’s doing. And I won’t read out the names of the stocks or because Gary’s also includ­ed some details of his port­fo­lio here, and I’m not going to give per­son­al advice. But just to run through the pro­file of the port­fo­lio, one stocks up 23%, anoth­er ones up, just under 10, ones up 7 or 8%, ones up four and a half, one’s up just under 2, ones down, just under 1, one’s down 5%, ones down near­ly 9%. And then he men­tioned in his email, he has three which are down more than 10% and I’m not sure where they are today, they may well have recov­ered a lit­tle bit. I know, I checked one of those stocks this morn­ing, and it has­n’t enough to buy again, but, but I would def­i­nite­ly just apply the process. So, I’d be sell­ing those bot­tom three, because they have dropped more than 10% from what you paid for them. And I’d be going on to the buy list and buy­ing the next one down the list you don’t own. And I guess the trick these, in this kind of mar­ket is, is to check for the big­ger Josephines. So, don’t buy a Josephine. That’s an impor­tant step of the process. And also, I pre­fer to buy on a pos­i­tive day for the stock. So, you know, if some­thing’s going down, even though val­ue investors will say “great, buy­ing it cheap­er”, that might be the start of a trend. So, I will wait until I see a pos­i­tive day for that stock. So that’s how I would apply the process, that’s how I am apply­ing the process even though I’ve been in the mar­ket for a long time. Under­stand, it’s dif­fi­cult for Gary who’s, who’s churn­ing stocks, he’s hav­ing lots of rule 1 sells, but stick with it bud­dy, it’s, you’ve been in the mar­ket for a month, maybe two months, you’ve got the rest of your life to sort this out and you’ll be fine.

Cameron  32:48

You know, I remem­ber when we start­ed the QAV port­fo­lio Sep­tem­ber 2019. And it was doing real­ly well…

Tony  32:56

And the months before that with Apol­lo.

Cameron  32:58

Yeah, well, let’s not talk about Apol­lo. But we, we were ful­ly invest­ed in Sep­tem­ber, and it did well for a cou­ple of months, and then COVID hit Chi­na. And our, our port­fo­lio start­ed to slip, and then it hit every­where and it tanked. And you were like, then you were like “eh, this is sit­u­a­tion nor­mal.” As you said before, this hap­pens, mar­ket cor­rec­tions come, don’t wor­ry about it. And with­in six months our port­fo­lio was, you know, way up and recov­ered. Went back up, then went down, went up, went up, as I said before.

Tony  33:34

And that’s an inter­est­ing case study, because I remem­ber dur­ing the COVID cough, we had no idea, like we were try­ing to pre­dict what was going to hap­pen, like whether it would be a mil­lion deaths in Aus­tralia or one death in Aus­tralia and we just did­n’t know. We were try­ing to do the sums, we could­n’t do the sums, or the sums were wild­ly inac­cu­rate that we did, so yeah, lis­ten­ing to the noise and try­ing to pre­dict things is impos­si­ble. Just fol­low the process. Just now­cast not fore­cast.

Cameron  33:59

Yeah, look, I’m sure all of us — Gary and myself includ­ed — would love for your port­fo­lio when you just start for it to go up for a long time before it goes back a lit­tle bit. But that’s just not how the world works.

Tony  34:12

No, cor­rect.

Cameron  34:12

Some­times you get start­ed in a chop­py peri­od. But I know you’ve always said always be invest­ed. That’s your pol­i­cy.

Tony  34:19

Yes.

Cameron  34:19

Always be ful­ly invest­ed. Nev­er sit on cash.

Tony  34:22

Well, if I can avoid it, I mean, I did sit on cash dur­ing COVID because there’s noth­ing to buy on the buy list. And,

Cameron  34:27

Yes.

Tony  34:28

I did sit on cash over the week­end. I sold stocks on Fri­day and I could­n’t find any­thing on the buy list to buy. I bought back into a cou­ple today. Noth­ing new, I just topped up some posi­tions. So, like I found in my port­fo­lio when I was going through it last week with all the chops and changes, some posi­tions — par­tic­u­lar­ly ones which I’ve held for a num­ber of years — are small­er than oth­er ones, than the new­er ones, because the port­fo­lio has gone up and I’ve been buy­ing more and high­er ADTs and big­ger posi­tions. So, I’ve just been top­ping up some of those small­er ones. Sand­fire and ASX today come to mind because I can’t find any­thing else to buy on the mar­ket. And I don’t want to be in cash. But it’s quite pos­si­ble if the mar­ket goes down again and lines get breached and we sell, that we, I can’t find things to buy so I may well sit on cash, but I try and avoid it.

Cameron  35:17

Yes, you if at all pos­si­ble, you want to be ful­ly invest­ed at all times.

Tony  35:22

Cor­rect.

Cameron  35:22

The oth­er thing that I’ve learned over the last cou­ple of years is even when the mar­ket’s tank­ing there are still stocks that are going up. There are still stocks that are doing well.

Tony  35:30

Yep.

Cameron  35:30

So we’re try­ing to uncov­er those, you know, there’s an old quote from one of those guys, Howard Marks or some­body about turn­ing over rocks, Peter Lynch, maybe: your job as an investor is to keep turn­ing over rocks and look­ing for the crab under­neath, i don’t know, the dia­monds maybe, I’m not sure. What’s under the rock at the top, and what was under the rock…

Tony  35:51

I don’t remem­ber that quote. Yeah.

Cameron  35:53

You’re turn­ing over rocks.

Tony  35:55

Kiss­ing Frogs? Yeah.

Cameron  35:57

Yeah, cuz we look we’ve seen — I’ve seen, you’ve seen a lot more, but I’ve seen just in the last cou­ple of years that even in times when every­thing’s going bad, some stocks are doing okay. And if you’re not invest­ed in those stocks at the time, you’re miss­ing out on that growth. I think this is some­thing that when we’re new to this, we don’t under­stand. Like, okay, when, so Gary says wait until the mar­ket picks up again. But how do you define picks up again? Is it 1% above where it was yes­ter­day? Is it 2%? Is it 3%? Is it con­sec­u­tive 3% days? Or is it 10%? Okay, once the mar­kets up 10%, then I know that it’s up, but then you’ve just missed out on that 10%, that gives you a,

Tony  36:39

Cor­rect.

Cameron  36:40

An invest­ment. But 10% is every­thing right? That’s where, you know, we…

Tony  36:45

Well, and the mar­ket might start going down once it’s gone up 10% too, so could be worse. You could, like its clas­sic investor behav­iour for some­one who’s new to the mar­ket or not expe­ri­enced in the mar­ket is to when things go bad to sell, and sit on cash, and then to come back in when things are good. So, you’re always buy­ing at the top and sell­ing at the bot­tom. And that’s not the way to invest.

Cameron  37:06

And the psy­chol­o­gy behind that, I think is real­ly hard to get out of. It took me a long time of doing this to realise, think­ing about when we talk about growth stocks or Bit­coin or stuff like that, too, like, how do you know when to get out? If you don’t have some­thing like a three point trend­line rule or a rule 1 rule, how do you know when to get out? How do you know when to cut your loss­es? But the flip­side is, how do you know when to get into these things if you don’t have rules telling you when to get in and when to get out because we’re not good judges of com­plex sys­tems, right? Oh, how do you know when the mar­kets going back up and isn’t going to turn around tomor­row? You just don’t know. You can’t know, it’s imposs- no one knows. You don’t know, Buf­fett does­n’t know. No one knows. So, you just need to be always fol­low­ing the rules day in, day out. So, on those — you remem­ber we talked about this sto­ry, I can’t remem­ber where we got it from, but we talked about the sto­ry some months ago. Some guy did some analy­sis, Howard Marks or maybe some­body like that and looked at the last fifty years of the S&P 500 or some­thing like that, and all of the growth in the last fifty years came in about six years. Maybe it was twelve years or some­thing like that, like the vast major­i­ty of the time, the mar­ket does not grow, it goes down. But if you’re not invest­ed in those years when it does grow, like the six years out of the fifty, or what­ev­er it is,

Tony  38:37

Yeah.

Cameron  38:39

Or if you get in halfway through that peri­od, you’ve lost 50% of your growth over fifty years. Like it’s it’s it’s real­ly weird. We, you know, for ama­teurs, we don’t think about the mar­ket like that but when you look at, you do the data analy­sis, and you go, “oh, shit, it’s real­ly much more flim­sy and spo­radic than we realise.”

Tony  39:00

Yeah, and look, I mean, it’s, I mean, that sort of is the long term stats, but it applies just as equal­ly for say the last twelve months, if you look at the last twelve months, you know, most of the gain in the mar­ket and the mar­ket was up, what, 25% or some­thing, most of that hap­pened in April or May of last year when com­ing out of COVID,  every­thing just took up. The share mar­ket just went up almost at a 45-degree angle. If you were, you know, sit­ting there try­ing to work out what was hap­pen­ing with COVID and what was hap­pen­ing with trav­el stocks and Bit­coin and all that and you missed that 25%, well, okay, you picked, maybe picked up some growth, but you missed out on the major part of the growth.

Cameron  39:39

It’s the Are We There Yet syn­drome? Are we there yet? Are we there yet?

Tony  39:43

Yeah, right. Yeah. Yeah.

Cameron  39:45

Is the mark up yet? Is the mar­ket up?

Tony  39:46

Yeah.

Cameron  39:48

You nev­er know.

Tony  39:49

And I remem­ber all the ques­tions around the COVID cough time was how long did the GFC take and how long are we going to be down and out for and sit­ting on cash and all that and I’m like, well, the GFC took eigh­teen months but this could be dif­fer­ent. And it was and no one, and I was com­plete­ly sur­prised at how quick­ly the mar­ket climbed out of the COVID cough in March. And if we had­n’t had the process to buy back in when the buy lines were hit, we’d still be scratch­ing our heads going shit what just hap­pened? You know?

Cameron  40:13

Yeah. Exact­ly, yeah. But, you know, we just fol­low the rules and the rules take care of it. The rules, Gary, tell us when to get in, when to get out. But so I think that’s the impor­tant thing, like, to stay ful­ly invest­ed if you can and just fol­low the rules. Fol­low the process, it’ll guide you through.

Tony  40:13

Yeah, I agree Gary. Good luck mate, I think you’ll be fine.

Cameron  40:13

Yeah, I know you will if you stick to it, I mean from my lim­it­ed expe­ri­ence any­way over the last few years. Luke: “a ques­tion from a friend, I’ve heard on the show,” by the way I want to give Luke’s YouTube show a plug. Luke’s got a Yeah, exact­ly. Yeah. But you know, we just fol­low the rules and the rules take care of it. Rules, Gary, tell us when to get in, when to get out. That’s, so I think that’s the impor­tant thing, like to stay ful­ly invest­ed if you can, and just fol­low the rules, fol­low the process. It’ll, it’ll guide you through.

Tony  40:32

Yeah, I agree, Gary, good luck mate you’ll, I think you’ll be fine.

Cameron  40:36

Yeah, I know you will if you stick to it. I mean,

Tony  40:38

Yeah.

Cameron  40:39

For my lim­it­ed expe­ri­ence any­way, over the last few years. Luke, a ques­tion from a friend “I’ve heard on the show…” — by the way, I want to give Luke’s YouTube show a plug. Luke’s got a great lit­tle pod­cast, a YouTube pod­cast, what­ev­er you call it, where he is, I think he’s about ten episodes in, he’s talk­ing about going from 50,000 to a mil­lion. Try­ing to start with 50,000 and build his port­fo­lio to a mil­lion. And he’s just guid­ing peo­ple through, telling them what he does using the QAV sys­tem each week … and just in a real­ly acces­si­ble “guy with a Ute” kind of fash­ion, and doing a great job. So check it out. I can’t remem­ber the name of the — sor­ry, Luke, but jump into the Face­book page and give it a plug and you should come on the show. Shoot me an email, you should come on the show and some­time in the next cou­ple of weeks and talk to peo­ple about what you’re doing, because I think you’re doing a great job. Any­way, Luke’s got a ques­tion from a friend: “I’ve heard on the show before, but what was the rea­son for not buy­ing into ETFs and LICs? Why won’t they show up on the check­list? Just a refresh­er, if any­thing. Thanks.”

Tony  41:54

Yeah, so they used to be on the check­list, Luke. ETFs in par­tic­u­lar were an easy one to drop because the oper­at­ing cash flow for an ETF rep­re­sents usu­al­ly peo­ple buy­ing and sell­ing the shares of the ETF rather than the per­for­mance of the under­ly­ing fund. And it could also rep­re­sent things like gear­ing and hedg­ing, cur­ren­cy move­ments, etc. So it was­n’t real­ly a true reflec­tion of oper­at­ing cash flow as we would like it to be in terms of income to a busi­ness and using the cof­fee shop anal­o­gy; the sales less the cost of col­lect­ing those sales, the cof­fee shop would have. So ETFs are out LICs are also part­ly in that camp. And I may put them back in, I still haven’t done enough research to work out whether they should come back in or not. LICs do have, their oper­at­ing cash flow has more of a flavour of the suc­cess or oth­er­wise of the under­ly­ing fund but it does rep­re­sent when they buy and sell shares which may not actu­al­ly rep­re­sent whether the fund is doing well or not, just might be that they sold lots of shares this half. And, but it also reflects exer­cis­ing options or rais­ing new funds etc. as well, flow­ing through ‑some­times they flow in through the oper­at­ing cash flow. So that’s why LICs and ETFs are out. Look I’m not averse to putting them back in, or you can look if you want to because we cer­tain­ly had some suc­cess with them in the past and when they meet our cri­te­ria, but I was just a lit­tle wary of of hav­ing oper­at­ing cash flows so crit­i­cal to our process and not nec­es­sar­i­ly rep­re­sent­ing what we nor­mal­ly think of oper­at­ing cash flow which is income from a busi­ness.

Cameron  43:34

Thanks for explain­ing that and I just looked it up, Luke’s YouTube chan­nel’s called The Gib­son Hus­tle. Look that up, check it out, he’s doing a great job. Lee, ques­tion re: sell­ing win­ners. “What/how does TK think about swap­ping win­ners for some­thing that is on the buy list; eg. com­pa­ny A is cur­rent­ly 51% up and nowhere near the sell line. Com­pa­ny A is no longer on the buy list, ie. it’s not com­ing up in my fil­ter any­more, would have to man­u­al­ly check QAV score but obvi­ous­ly it is now low after share price rise. Does TK think about sell­ing com­pa­ny A and buy­ing com­pa­ny B which IS on the buy list? High QAV score, sen­ti­ment checked, good to go, etc.?”

Tony  44:18

Yes, I’m actu­al­ly tri­al­ing that at the moment. We’ve talked about this before. The gen­er­al prin­ci­ple is I don’t do that. That’s a rebal­anc­ing sit­u­a­tion and Buf­fet­t’s famous quote comes to mind of if you got Michael Jor­dan on the team, why would you bench him? And that’s the case, if you’ve got some­thing which has gone up 50%: Hap­py Days. Like why would you sell it’s, it’s going to incur a cap­i­tal gains tax and it might be some­thing you hold for life so who knows. But I do take the points that Lee makes and have been run­ning a tri­al of rebal­anc­ing and like, my cri­te­ria for rebal­anc­ing is when a com­pa­ny hits 0.05 on the QAV score on the buy list. So it’s been on the buy list above 0.01 and has dropped down because the share price is ris­ing and it’s now 0.05 or worse, and I’ve been sell­ing that each month and buy­ing some­thing from the buy list each month. That’s been run­ning now as a tri­al for me for five months, I think. And it’s pret­ty much line ball. The rebal­anc­ing was work­ing about 1% less than the buy and hold. It’ll be inter­est­ing to see what hap­pens next month, which I’ll do next week, because it’s end of month at the moment or maybe lat­er on this week if I have time. Because, you know, it always hap­pens, I sold NIC Nick­el Mines the start of this month, which was some­thing I bought and hold for a long time. Sold it. It was QAV score of 0.5, I for­get what I bought, I think chal­lenger CGF some­thing like that. Any­way, Nick­el Mines is up 40% this month and Chal­lenger’s down five, so.

Cameron  45:48

So when you say it’s score was 0.5 you mean 0.05?

Tony  45:52

0.05, yes, 0.05. Yeah. And Nick­el Mines went through the roof, so that might be the end of the tri­al, but we’ll see. It’s always the way. His­tor­i­cal­ly, I don’t rebal­ance. I’m doing a tri­al because I did notice in the past that some­times when some­thing got below 0.05 It was reach­ing sort of the extrem­i­ties of its val­u­a­tion. But the tri­al isn’t look­ing good at the moment.

Cameron  46:19

There you go. How long do you think you’ll have to run it for before you make a call on it?

Tony  46:24

Prob­a­bly through anoth­er report­ing sea­son, I think.

Cameron  46:26

Right, anoth­er six months?

Tony  46:27

Yeah. Yep. Because, you know, like, the rea­son why I did this was because observ­ing it six months ago, it worked. Right? So now it’s, I’m tri­al­ing it. We’ll give it twelve months and see how it goes.

Cameron  46:41

Thanks, Lee. Last ques­tion, Stu­art: “I won­der if there is more analy­sis that needs to be done on when to sell? MYE was on the top of my per­for­mance list for a while, and now it’s a rule 1. I’m won­der­ing if we should sell any share that has a 10% drop at any time regard­less of buy price, eg. if the share drops 10% at any time, it’s a sell not just 10% below the buy price or below the sell line. For exam­ple, NYE got up to a high of $1.10 at the end of August, once it dropped down to 99 cents you’d sell even if it’s still above the buy line. That’s tak­ing sen­ti­ment to the next lev­el.” Do you mean, I think he means sell if it drops, if it’s above the sell line? Because we don’t wor­ry about what the buy line is when we sell, right, we use the sell line to deter­mine when to sell not the buy line.

 

 

Tony  47:29

Yeah, I think what Stu­ar­t’s say­ing is that he’s bought some­thing and it could be up a long, long way above the buy or the sell line. Yeah. And then if it drops back 10% should we sell it? I don’t think so, Stu­art, I don’t do that. I think if you sold stocks when they drop 10% you’d be churn­ing a lot, you’d have a very volatile port­fo­lio. And I mean, Cameron, you talked about it before, our port­fo­lio has dropped 10% at the port­fo­lio lev­el a lot in the two years that we’ve been run­ning it. So, at the stock lev­el, you can prob­a­bly mul­ti­ply that by 15. And if you look at the stocks that have gone up for us, like Fortes­cue Met­als Group, there’s plen­ty of times dur­ing it’s rise where it’s retreat­ed 10% or more, Mac­quar­ie Bank’s the same comes to mind. So no, it’s not some­thing I would rec­om­mend doing. You can always fudge it, if you want to Stu­art, and if it makes you hap­py, but I think you’ll find you’ll be churn­ing a lot in your port­fo­lio. And if you don’t pay close atten­tion when you have that kind of tight rule, you know, you’ll miss it and you’ll be sell­ing out when it drops 10%. You’ll take your eye off the ball and buy back in when it goes up 20%, and then it’ll drop 10% and sell it, and you know, if you miss the upturn, you just — yeah, I think it’s too volatile. I would­n’t do it. I don’t do it.

Cameron  48:42

You have been toss­ing around the idea, though, of com­ing up with a new rule for sell­ing. Remind me what that was, again?

Tony  48:51

You’re talk­ing about the com­mod­i­ty stocks? The min­ers?

Cameron  48:54

No, I think it’s just the stuff you were talk­ing about before about the QAV score, right? Just that the QAV score drop’s down. So, there’s no, there’s no oth­er exper­i­ment you’re run­ning?

Tony  49:04

No, no, so I did look at the com­modi­ties. And the min­ers. And I did look at QAV scores when they’ve dropped below 0.05. So those’re the things that I’m look­ing at. Yeah. And that tri­al is still going on with 0.015 and it’s not look­ing great, but we’ll see.

Cameron  49:21

Well, that’s it. That’s the ques­tions. That’s the show for today. Now we’re just going to talk about the Bea­t­les doc­u­men­tary for four hours so every­one kick your shoes off, put your feet up. Tony and I already talked about it for about an hour yes­ter­day already. Fan­tas­tic, yeah. I’ve only seen the first episode, the first cou­ple of hours but it just blew my mind. I can’t wait to watch the rest of it. So great.

Tony  49:43

Yeah. Yeah, I think this, I watched the sec­ond episode, or at least most of it, I don’t think we got through it because it’s two hours long and the third episode has­n’t dropped yet, which will be great because that’s when they go onto the roof and do their con­cert — which was going to be in Syr­ia, if Orson Welles’ ille­git­i­mate son had his way.

 

Cameron  50:00

I still haven’t looked that up yet, the con­nec­tion between Hog and Welles, I got to check that out.

Tony  50:05

Yeah.

Cameron  50:06

Yeah. So I mean, the high­lights for peo­ple that haven’t watched it like, if you’re a Bea­t­les fan at all, it’s a must watch. It’s one of the most mind-blow­ing things you’ll ever see. To see these guys going through the cre­ative process, just clown­ing around, and just jam­ming real­ly and slap­ping — throw­ing mud on the wall and see­ing what sticks and out of it comes an album and then and half of the next album, because I think it was like three days after they did the rooftop con­cert, they went back into the stu­dio to record Abbey Road,

Tony  50:41

Right.

Cameron  50:42

With, you know, and half of Abbey Road songs they were sort of work­ing on in the Let it Be ses­sion. So yeah, it’s, it’s just mind bog­gling to watch it all unfold, real­ly.

Tony  50:54

Yeah. And what great musi­cians they were, you know, like, we’ve both writ­ten songs with peo­ple, like, some­one would say, “hey, what about this” and you go, “okay”, and then “I’ll come back tomor­row with some, some riffs for that, to go with it.” Where­as George would sit there and go “okay”, and come up with a riff on the spot that fits in real­ly well. “What’s the key? Off we go.”

Cameron  51:17

And if McCart­ney is play­ing piano, John jumps on the bass. If John’s play­ing piano McCart­ney jumps on the bass and pow­er drums, they just all do it and its just, yeah. It’s astound­ing to watch them just sort of be a fly on the wall dur­ing the… and, you know, they did break up not long after that but…

Tony  51:38

Or dur­ing, yeah.

Cameron  51:40

Well briefly reformed and broke up again. You know, there’s obvi­ous­ly ten­sions there as there is with any rela­tion­ship or mar­riage or band and as I heard Rick Beato say, bands should break up, you know, that’s, bands should break up and some bands don’t break up soon enough. They keep going and,

Tony  52:00

Right.

 

Cameron  52:00

You know, they get tired, lone­ly. Bands, you know, there’s a life cycle to all rela­tion­ships, and some are short and some are long. And, but it is like there’s, there’s so much clown­ing around and cama­raderie and friend­ship there. You can tell that they all loved each oth­er, real­ly. It was, it was *inaudi­ble*.

Tony  52:20

And it’s I think they’re at their best when they’re loos­est and clown­ing around like that’s when some of the music was made. When, you know, writ­ing Get Back and Paul’s just strum­ming on the bass, do-do-do-do-do-do-do “Get back” do-do-do-do-do-do-do. And then John starts clown­ing around with that, and George comes in and it’s just, and Ringo straight away gets the beat. And yeah, the sto­ry behind that was amaz­ing with the, the race riots and the race protests and the immi­gra­tion and it was — what were the orig­i­nal words? Some­thing like get back to Pak­istan? Where you belong?

Cameron  52:53

Yeah. “Hey, hey Mr. Pak­istani, what do you think you’re doing? Back to where you once came from.”

Tony  53:01

Yeah.

Cameron  53:01

Yeah, it was an anti, well, anti, anti-racist, anti-racist song orig­i­nal­ly. Ringo’s real­ly inter­est­ing. He’s very qui­et and just sits there like he just seems to watch and lis­ten when the guys are writ­ing songs. And when they need him he starts bang­ing the skins. And when he does­n’t he just sits and he’s smok­ing, smokes a cig­a­rette and just pays atten­tion. He’s very, I was sort of shocked by how qui­et­ly stu­dious he was of what the guys were doing. Not try­ing to insert his two cents or inter­fere with any­thing, just in awe, I think he was in awe, like he says at one stage, “I could sit and watch Paul play piano for hours.” You know?

Tony  53:46

Oh, who could­n’t? When he comes in in the morn­ing and goes “I’ve just got this one down last night, guys. Moth­er Mary comes to me…” It’s like, just…

Cameron  53:55

Starts just bang­ing out Let it Be and then Long and Wind­ing Road. He’s just like, “oh yeah”.

Tony  54:00

Yeah.

Cameron  54:01

Yeah.

Tony  54:01

Well, I think Ringo may have had copi­ous amounts of mar­i­jua­na inside him, which is prob­a­bly why he was relaxed. But, but then they were also, they were in the Shep­per­ton Stu­dios because Ringo was film­ing The Mag­ic Chris­t­ian with Peter Sell­ers.

Cameron  54:15

Twick­en­ham Stu­dios.

Tony  54:16

Sor­ry, Twick­en­ham Stu­dios, yeah. Which was a great a great movie, too. If you haven’t seen that. That’s hilar­i­ous.

Cameron  54:21

I have. It’s weird. It’s a real­ly weird film.

Tony  54:24

Yeah. John Cleese cameo.

Cameron  54:26

John Cleese, yeah.

Tony  54:27

Yeah.

Cameron  54:28

I saw a bit of it. I don’t think I’ve seen the whole thing. I tried to track it down some years ago and saw some of it, any­way.

Tony  54:33

Real­ly good.

Cameron  54:34

What else? You were telling me about this book Caste by Isabel Wilk­er­son.

Tony  54:37

Caste? Yes, a rec­om­men­da­tion from Johannes Ris­seeuw who we had on the show last year or the year before. Yes, c‑a-s-t‑e, Caste. Isabel Wilk­er­son. Great book. I’ve only read the first hun­dred pages, but it’s about Amer­i­can pol­i­tics, Amer­i­can race his­to­ry. And her the­sis is that it’s not a racial prob­lem in the US it’s a caste prob­lem that, and we’re all part of it, that we all let peo­ple who are our over­lords, you know, con­trol things and peo­ple who are our under­lings get by with­out help­ing them etc., etc. And she draws lots of par­al­lels with the Indi­an caste sys­tem. But just some amaz­ing facts in the first 100 pages, like there’s one chap­ter on, on Nazi Ger­many and how one of the peo­ple who were, who was asked by Hitler to write the laws around racial puri­ty in about 1934 had stud­ied at the Uni­ver­si­ty of North Car­oli­na, and when he came back and said, “yeah, yeah, I can draft the laws based on the Amer­i­can laws” the Nazis are going “no, you can’t do, you can’t pos­si­bly be telling the truth. They can’t pos­si­bly get away with that law in the US.”

Cameron  55:47

“Look, we may be Nazis, but we draw a line some­where. We’re not going to be Amer­i­ca, come on.”

Tony  55:53

Yeah, so that was inter­est­ing. And then she tells a sto­ry too about, you know, she paints a pic­ture of how some­one was sweep­ing their, their front stoop in Ger­many, and it was cov­ered in grey ash, and how that was the, the task they did every day was get out and sweep the ash off the stoop and then get back to their lives. And, of course, the ash was the human burnt remains from the con­cen­tra­tion camps. Very pow­er­ful book.

Cameron  56:21

And it’s shock­ing. Chris­sy and I were just talk­ing about this the oth­er day, it’s shock­ing to see how far to the right Ger­many’s going again as well. I nev­er thought they would get back there, but the right near the sort of extreme right real­ly seems to be on the rise in Ger­many again at the moment, which is shock­ing and sur­pris­ing and a lit­tle bit sad.

Tony  56:42

Yeah, I think there’s a bit of reac­tion there from when Angela Merkel opened up the bor­ders to immi­grants, and a mil­lion immi­grants flood­ed Ger­many, and then they had some prob­lems. So bit of the pen­du­lum swing­ing back I think on that one.

Cameron  56:53

Yeah.

Tony  56:55

And watch­ing Total Con­trol too on the ABC. I’ll give a plug for that. It’s on iView. It’s great, real­ly good Aus­tralian series.

Cameron  57:02

You plugged that last week, I’ve been mean­ing to check it out.

Tony  57:04

Yeah, real­ly good cou­ple of episodes recent­ly.

Cameron  57:06

We did­n’t even get through this week’s episode of Suc­ces­sion last night because Chris­sy was falling asleep halfway through it, but it was crazy.

Tony  57:14

It was great.

Cameron  57:15

We saw, Kendel­l’s left the par­ty

Tony  57:16

Kendal­l’s for­ti­eth birth­day. And how he was going to fly above the crowd, strapped to a cross, singing Hon­esty by Bil­ly Joel.

Cameron  57:31

I love his man­ic peri­ods. He’s just so crazy. Good stuff. Alright. Well, that’s the episode for this week, thank you, Tony. Now you’re leav­ing this week. You’re going down south?

Tony  57:46

Yeah. Going, head­ing down to Cape Schanck. But I’ve got a golf char­i­ty tour­na­ment on Mon­day, Tues­day, Wednes­day, next week, so we can either record on Thurs­day, or we can do some­thing this week and put it out next week, or what­ev­er you want to do?

Cameron  57:59

Yeah, well, we did talk about doing sort of a lesson’s of 2021 sum­ma­ry show, which maybe we’ll do that next week, see­ing as you’re going to be out of action for a lot of the week and saves us scram­bling at the end of the week. So, save your ques­tions this week, folks, we’ll prob­a­bly do just a more of a philo­soph­i­cal show next week.

Tony  58:23

Yeah, or we can we can cer­tain­ly answer ques­tions if peo­ple want to pose them. I don’t have a prob­lem with answer­ing ques­tions. We’ll just do it on Thurs­day rather than Tues­day.

Cameron  58:30

Right.

Tony  58:31

I’m sure there will be lots of ques­tions. The mar­ket will still be… who knows? The mar­ket may be going up in a straight line, or it might be crash­ing or it might be ter­moil­ing around Omi­cron. We don’t know.

Cameron  58:42

Right. Well, the only prob­lem is if we record Thurs­day, we won’t get it out until Fri­day. And then we nor­mal­ly do anoth­er one on Mon­day or Tues­day. So yeah, it might be might be sort of start­ing to com­press the shows a lit­tle bit too much.

Tony  58:57

Oh, well, let’s see. We’ll focus on Thurs­day next week of doing a mar­ket recap for the year. But if any­one wants to send through ques­tions, that’s fine. If we get too many, we can spill them over on the Tues­day show.

Cameron  59:10

Yeah, if you have urgent ques­tions, send them. If not, save them up or send them to me any­way and I’ll work out where we put them. Let’s just do that. Okay. Have a good, have a good trip. Safe dri­ving.

Tony  59:19

Yeah, thank you. Yeah, hope­ful­ly the weath­er turns. Alex was say­ing it was 30 degrees and sun­ny in Mel­bourne today, which she hates. I’m like, I’m com­ing down. I said it’s rain­ing in Syd­ney. It’s been rain­ing for two or three weeks.

Cameron  59:19

It’s one of the three days of 30 degrees and sun­ny they get in Mel­bourne all year round. So tell her to enjoy it while it lasts.

Tony  59:38

Yeah, exact­ly.

Cameron  59:40

Cheers mate.  The QAV Pod­cast is a pro­duc­tion of Space­craft Pub­lish­ing Pro­pri­etary Lim­it­ed, autho­rised rep­re­sen­ta­tive of AFSL 520442. AFS 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 invest­ment deci­sions.