Transcript #512

QAV 512 Club

Cameron  00:00

Hey folks, Cameron here. Before we get into Episode 512, we have an update from Denis, our edi­tor based in Ukraine. I’m sure you all heard his update a cou­ple of weeks ago, we asked him to give us anoth­er one and let us know how he’s track­ing, and so he did. Here’s Denis.

Den­nis  00:20

Hel­lo, every­one. Hi, Cam. Hi, TK. This is Denis, record­ing from Khmel­nit­sky, Ukraine. I just thought I’d record a small update on how we’re doing and about the sit­u­a­tion here. Things have slowed down for us here. I don’t think I can tell you any­thing that you haven’t heard about already in your news, but I’m not real­ly sure what’s been high­light­ed in your media. So, about the sit­u­a­tion on the front line, the Mar­i­upol is still the worst one, the city is being com­plete­ly destroyed. There’s heavy fight­ing there. In Kiev and Kharkiv things have been stalled and our army is push­ing Rus­sians back to the bor­der, they’re lib­er­at­ing lots of small towns and vil­lages. Rus­sians are not even try­ing to face our army, they’re still strik­ing from afar. They’re try­ing to ter­rorise the civil­ians. So yeah, they’re avoid­ing any close fights. Near Kher­son, there is a small town called Chornobaiv­ka. This is prob­a­bly some­thing that you did­n’t hear in your media. This is a place that became basi­cal­ly a meme right now for Ukraini­ans because the Rus­sians have tried to posi­tion their troops there for, I don’t know, more than twelve times now, and every time they’re being com­plete­ly destroyed by Ukrain­ian army there. And we’re all just laugh­ing at them at this point. What about us? Here in Khmel­nit­sky its pret­ty qui­et. This is one of the cities that has not expe­ri­enced any heavy shelling so far. But even here, right now it’s 11pm, and the sirens are going on out­side. So yeah, it’s dan­ger­ous even here. And I evac­u­at­ed my cat from Kharkiv, so he’s here with us. He was in Kharkiv close to my house under heavy shelling for a month. So yeah, I’m very hap­py I man­aged to get him out of there. So, the war has been going on for over a month right now, and even we over here are get­ting used to it. But it is still impor­tant, still very impor­tant to talk about it, to tell peo­ple that this is not a con­flict; this is not a spe­cial mil­i­tary oper­a­tion, this is war. This is an inva­sion, and Ukraini­ans are dying, still dying every day here because Rus­sians are shoot­ing at res­i­den­tial areas. So, your sup­port is cru­cial right now. We need each and every one of you to stand with Ukraine. Thank you. Just as I was record­ing this mes­sage to you talk­ing about how we are get­ting used to war and how Khmel­nit­sky is a safe and qui­et town there was two or three loud explo­sions over here. I think this is the first time. This is the loud­est ones here. So, you might prob­a­bly hear about this in the news today. So, once again, Ukraine still needs sup­port. The Ukraine is a huge coun­try and as you can see, there is no safe place right now here. 

Cameron  04:21

Wel­come back to QAV. This is episode 512 being record­ed Tues­day 29th of March 2022. How are you TK?

Tony  04:37

Very well, thank you Cam. How are you?

Cameron  04:39

Good. How’s the back?

Tony  04:41

Yeah, not so great, but it’s get­ting bet­ter.

Cameron  04:44

You been play­ing golf since last week?

Tony  04:47

In flip­pers. It’s been rain­ing cats and dogs.

Tony  04:50

I had the impres­sion that noth­ing stops you. “Nei­ther rail…” you’re like the Amer­i­can postal work­er, “nei­ther rail nor sleet nor rain will stop you from hit­ting a lit­tle white ball.”

Tony  05:04

Yeah, except for a bad back. So yeah, it’s been hurt­ing, drag­ging on a bit longer than nor­mal but I think I was­n’t doing it any help. I kept doing my nor­mal exer­cis­es last week, so I stopped them this week and it’s improv­ing. I do all these things to, like, strength­en the core and the glutes and all those kinds of areas which are meant to take pres­sure off the back, but this time I think they’re the areas that are hurt­ing. So, I’m just going to give it some rest.

Tony  05:31

Get up and show me your exer­cis­es, your core exer­cis­es. Show me how you strength­en your glutes, Tony. No? Okay.

Tony  05:39

After the record­ing.

Cameron  05:41

Okay. After hours.

Tony  05:43

Yeah. QAV after dark. 

Cameron  05:47

Well, where are we?

Tony  05:50

Where are we? It’s the usu­al shit­storm going on in the world. That’s where we were. Well, it’s bud­get night tonight, so we’ll get to see the cash flash before the elec­tion com­ing up. Joe Biden says that Putin should be removed.

Tony  06:07

That was when he’s, he’s inside voice came out in a long time, was­n’t it? I was like, “did I? Did I say that out loud? I’m only sup­posed to say that in cer­tain rooms to cer­tain peo­ple. Not sup­posed to say those things in pub­lic.”

Tony  06:22

Yeah.

Cameron  06:22

I was just wait­ing for, with the bud­get tonight, I’m wait­ing to see Albanese stand up and give an ol’ Will Smith to… 

Tony  06:32

Chris Rock?

Cameron  06:32

Yeah, like treat Fry­den­berg like he’s Chris Rock.

Tony  06:35

Also, I think the Oscar rat­ings were up 53% or some­thing last night, so be pre­pared for the rematch next year. The cage fight.

Cameron  06:44

Exact­ly. I’d pay to see that. 

Tony  06:46

Now they know how they get the rat­ings up. Might be-2024 might be a cat­fight.

Tony  06:52

They’ll have to hire Roy and HG to com­men­tate the whole thing. A lit­tle bit of bif­fo. 

Tony  06:58

The caul­dron, “live from the caul­dron.”

Cameron  07:01

“Where too much bif­fo is nev­er enough. Want to see some blood. Wan­na see some blood on the stage, Roy.”

Tony  07:08

“Well yes Roy, that’s right. I think Chris Rock is now offi­cial­ly Will’s bitch.”

Cameron  07:16

Any­way, back to invest­ing. AMI, Tony, Aure­lia Met­als. They had an announce­ment last week, some­thing about a low­er grade of min­er­al­i­sa­tion than pre­vi­ous­ly fore­cast at the Dar­gues mine. Peo­ple on Face­book want­ed to know is that a bad news sell? Mar­ket did­n’t react very pos­i­tive­ly to it, that’s for sure.

Tony  07:39

Yeah, so I own AMI, so I’ll just declare that up front. And I haven’t sold it. I want to just clar­i­fy the bad news sell; I mean, the mar­kets always our guide whether we think it’s bad news or good news or what­ev­er, it’s what the mar­ket thinks that’s the impor­tant thing. So, all of our nor­mal rule 1 rules, three-point trend­line sell rules are all still in place and that’s why I still hold AMI. The bad news sell is what I’ve seen over the years for things that are a red flag but haven’t been picked up by the mar­ket yet, and that’s typ­i­cal­ly things like an inde­pen­dent direc­tor resigns, or the CFO resigns, or the CEO resigns unex­pect­ed­ly. They’re prob­a­bly the most com­mon type 1s. Like, the CEO resign­ing can trig­ger mar­ket sen­ti­ment but often­times the CFO resign­ing unex­pect­ed­ly does­n’t, or, in par­tic­u­lar, an inde­pen­dent direc­tor resign­ing. And that gen­er­al­ly is code for the inde­pen­dent direc­tor just can’t stand the board any­more. They can’t get their way, they can’t per­suade them, they can’t see sense and so they’re out. They’re not going to have their name tar­nished by the rest of the board and what they’re doing. So, that’s what I treat is bad new sells, the rest I real­ly just get guid­ed by the mar­ket. I mean, AMI in par­tic­u­lar, so what’s hap­pened there is that they’ve announced a down­grade in min­er­al­i­sa­tion, which means that there’ll be a non-cash pro­vi­sion tak­en in the next prof­it report, and so the prof­it will be less than what it is this year. But it’s a non-cash item, and the mar­ket did­n’t like it, the shares are down 10–12%, some­thing like that. So, it’s not the end of the world and they’re still up for the year. So, it’s not enough for me to sell, Cam. 

Cameron  09:19

Okay, so let’s just recap. Bad news is some­thing that the mar­ket has­n’t react­ed to yet, but we see as poten­tial­ly dam­ag­ing. 

Tony  09:29

Cor­rect, a red flag, yeah. Oth­er­wise, I let the mar­ket guide. 

Cameron  09:33

So, some­thing like this, the share price drops, but if it’s still above — assum­ing you’ve owned it for a while so it did­n’t become a rule 1 — it’s still above the three-point trend­line sell line. It’s just busi­ness as usu­al.

Tony  09:47

Yeah, I mean, it is a lit­tle bit of that. And we’ve seen this before with oth­er com­pa­nies; I remem­ber Beach Petro­le­um, or Beach Ener­gies it’s now called, did a sim­i­lar thing last year or the year before. They said we don’t have the same lev­el of oil reserves we thought we had, so we’re tak­ing a write down. Because, all these things, whether it’s the min­er­al­iza­tion that AMI is talk­ing about is, I guess, an assess­ment of assets in the ground. And that sits on their bal­ance sheet as an asset, and hav­ing to write it down because — take a non-cash impair­ment — because they’ve done fur­ther work, or some some new thrilling results have come to light, and it’s not worth what they said it was worth on their books. Same thing hap­pened with Beach Ener­gy a year or two ago, they thought they had more oil reserves then they did, they con­fessed up and then they coughed up a write down and their shares went down. But they, they’ve come back in the last oil surge. So, I’m hes­i­tat­ing to say it’s busi­ness as usu­al, but it is a recog­ni­tion of the fact that explo­ration com­pa­nies do have assets which can be writ­ten up or can be writ­ten down depend­ing on more recent drilling and explo­ration results. So, it is busi­ness as usu­al, but not nec­es­sar­i­ly some­thing that hap­pens every day.

Tony  10:59

So, I also own AMI, and you know, it looked like from a mar­ket reac­tion per­spec­tive, it looked like bad news. Share price dropped by 10% imme­di­ate­ly. But because this is mar­ket as usu­al activ­i­ty, report­ing on results or find­ings or the oper­a­tions, nor­mal oper­a­tions of their busi­ness, not bad news, just busi­ness as usu­al, nor­mal rules apply.

Tony  11:26

It is bad news. Unques­tion­ably, it’s bad news. They have less assets today than they thought they had yes­ter­day. But it’s not a bad news sell from my point of view. So, I just want to I want to clar­i­fy that. 

Tony  11:37

Okay. Maybe we should have “bad news” and “calami­ty” or some­thing like that.

Tony  11:41

Well, I think we have our main ways of sell­ing, the three-point trend line and rule 1, and that’s it except for if we see one of these red flags like an unex­pect­ed res­ig­na­tion, and we go “hang on what’s going on there.” So, it’s often­times some­thing that I’ve seen as a red flag that the mar­ket does­n’t pick up that I would sell for. But things like if a prof­it down­grade comes out, if a bad result hap­pens for a com­pa­ny, the shares may well drop but I’d still hold them if I was still above rule 1 or three-point sell. 

Tony  12:09

It does invoke a lit­tle bit of fore­cast­ing, does­n’t it, your red flag thing. You’re like, “ooh, inde­pen­dent direc­tors quit, CFOs quit, that’s por­tend­ing bad news to come down the track, I’m get­ting out now.” But we don’t usu­al­ly approve of fore­cast­ing. That’s a lit­tle bit of fore­cast.

Tony  12:27

Yeah, it is a lit­tle bit of fore­cast­ing, but it’s real­ly based on expe­ri­ence. I’ve seen it hap­pen before. I think prob­a­bly the best exam­ple I can think of goes back a long way. There was an inde­pen­dent direc­tor, I think her name was Cather­ine Grein­er from mem­o­ry, and she sat on the AMP board, and she left. It was just report­ed by the press, you know, “Cather­ine Grein­er moves on,” noth­ing to see here, and then AMP went through one of the calami­tous down­grades it’s been going through since it list­ed. So, that was a red flag for me, and I’ve seen that a cou­ple of oth­er times. It does­n’t always por­tend bad news. I mean, if a CFO resigns it might just be part of nor­mal career man­age­ment on their part, but there have been oth­er cas­es where CFOs get replaced because they won’t sign off on the results or what­ev­er, and you nev­er hear that. You just hear that the CFO’s gone, and then a few months lat­er you get a big down­grade. So, yes, it’s pre­dic­tion but it’s based heav­i­ly on expe­ri­ence.

Cameron  13:21

Okay, thank you for clar­i­fy­ing that. Let’s talk about Navexa and CAGR. Navexa have final­ly imple­ment­ed CAGR, but I don’t know if it’s work­ing.

Tony  13:32

No, I agree. 

Tony  13:34

Our QAV port­fo­lio when I report­ed in last week’s newslet­ter and I looked at Navexa — this is pre CAGR — from mem­o­ry we were up about 15% for the finan­cial year and the ASX 200 was up about 6% for the finan­cial year. Moved over to CAGR, I looked at the report today, it says the ASX 200 is up 7% for the finan­cial year and we’re up 5%. We dropped 10% in the last week, and we’ve had noth­ing go down sig­nif­i­cant­ly in the last week. So, I don’t know what’s going on.

Tony  14:09

I have to unpick it and look at it. That sounds like it’s that cash com­po­nent again, maybe the cash account isn’t being tak­en into account prop­er­ly. When I had a look at the change over to CAGR, I think our per­for­mance since incep­tion, which is about two and a half years, went down. Well, we were doing 29% on the old cal­cu­la­tion method­ol­o­gy, and then we dropped to 25% on the new cal­cu­la­tion, on the new CAGR cal­cu­la­tion method­ol­o­gy. But none of those make sense because the port­fo­lio has gone from around $20,000 in change up to around $30,000 in change over two and a half years. If you just plug it into Excel, it’s about 20% CAGR. So, I don’t know what’s going on there.

Cameron  14:50

They must hate us, the Navexa guys. 

Tony  14:53

We might just have to drop it out and do it in Excel again on our own.

Tony  14:56

That’s why we invoke the dark pow­ers of Steven Mabb and say, “Mr Pres­i­dent of the Aus­tralian Share­hold­ers Asso­ci­a­tion, could you have a look at their CAGR report­ing and get back to them?” Because, you know, I think his emails car­ry a lot more weight than ours do, even though I had to get them to pay atten­tion to his emails orig­i­nal­ly. He was email­ing them and I don’t think they were reply­ing, and I had to go ” hey Diego, hey guys, this guy is the pres­i­dent of the ASA, you should…” And they were like, “oh! Okay.” Gave him a lot of love. Mov­ing right along, new groups and Slack chan­nels. So, this is for QAV club mem­bers. As you may or may not have seen in the Face­book group, I’ve been try­ing to move away from Face­book and on to our own social media plat­form on our own site because I don’t trust Face­book, and don’t like Face­book, don’t like to have to have it open dur­ing the day to see all your com­ments because it’s noisy and peo­ple are always try­ing to get into fights with me over pol­i­tics. And I don’t have time. So, I’m try­ing to inter­nalise it. And also, we’ve set up a Slack chan­nel because I know some of you are already big into using Slack. So, check those out. If you haven’t already, go to qavpodcast.com.au/groups and get out your slack chan­nel off of some­where. I don’t know how you find us on Slack, I’m not sure how it works real­ly. But, ask me and I’ll show you how to get onto our Slack chan­nel if you… I did link to it in Face­book, I’ll keep link­ing to it. I’ll put it up on the Club Resources page so you can fig­ure out how to get on to Slack. And just the good thing about that is if peo­ple have ques­tions, par­tic­u­lar­ly new peo­ple dur­ing the day, they can ping me and I’ll get an alert on Slack and I can give you my atten­tion. Bet­ter than email prob­a­bly, bet­ter than Face­book if you need to get in touch with me because I try and avoid look­ing at my emails and look­ing at Face­book as much as pos­si­ble. What else. Oh, Andy Cody sug­gest­ed I remind peo­ple to leave us an iTunes review or a Spo­ti­fy review, some­thing that I don’t say every show and I should. So, if you have a minute and you haven’t, please leave us a review on one of those places. You can find a link on our home­page to those I think or you can just go to the Apple pod­cast app, go search for QAV, click on the show not the episode, scroll down to rat­ings and reviews and write a review. It’s a lit­tle bit hard to fig­ure out and I’m not sure how it works on Spo­ti­fy, but you’re all smart peo­ple, you can work it out. But yeah, reviews are good. That’s, you know, when oth­er peo­ple stum­ble across the show on one of those plat­forms the first thing I’m sure every­body does to see whether or not they should both­er lis­ten­ing is they look at the reviews and the more reviews, the bet­ter etc. Only good reviews, though, if you don’t like the show, don’t both­er. And, also while I’m think­ing of new peo­ple, we had a real­ly good suc­cess as I men­tioned last time with the first sort of Q&A Zoom call, just with me and a bunch of new peo­ple. The “help­ing you get up and start­ed” Zoom calls. So, I’m gonna start doing them on a Wednes­day night, sev­en o’clock Bris­bane time Wednes­day night start­ing this week. Adver­tise it so new peo­ple can just jump on and you know, get straight into ask­ing ques­tions in their first week if they’re com­fort­able. Or, just sit­ting and watch­ing and lis­ten­ing to oth­er peo­ple ask ques­tions and get a sense for how it goes. So, if you want to jump on one of those, it’s gonna be fair­ly freeform for now, just Q&A. You ask ques­tions and I’ll answer them, and any­thing I can’t answer I’ll ask Tony and we can talk about it on the show. Stocks of the week this week: not even the small-cap, our micro-cap stock of the week — could­n’t find any small cap stocks of the week this week — micro was TBR, Tri­bune Resources, and the large-cap was Bendi­go and Ade­laide Bank, BEN. So, if you’re look­ing for stocks this week to give some atten­tion to if you’ve been too busy to do your own check­list this week and you’re look­ing for a micro-cap, I think its aver­age dai­ly trade for TBR is about 15 or 16,000. So, it’s small, but big enough that, you know, if you’re putting 1000 in or a cou­ple of 1000 you can prob­a­bly get in there. And Ben’s aver­age dai­ly trade’s like, I don’t know, 21 mil­lion or some­thing, so it’s huge.

Tony  19:13

But do your own research, peo­ple, they’re not rec­om­men­da­tions.

Tony  19:17

A good place to start doing your own research. Okay, Tony, San­tos. Talk to me about San­tos. 

Tony  19:24

Yeah, San­tos I’m find­ing more and more inter­est­ing. So, the news item I just want­ed to high­light was they had a big dis­cov­ery of a new oil field off the coast of WA, and it’s appar­ent­ly the sec­ond largest in the last five years so it’s a sig­nif­i­cant one. Their share price has been going well because of the oil price ris­ing, but I think it’s also a longer-term good invest­ment from the point of view of it is still invest­ing in devel­op­ing its oil reserves. It’s merged with Oil Search, that’s gone through. So, it’s much big­ger than what it was in the recent past. And, because of ESG con­cerns, San­tos and a lot of the oth­er big oil majors are not real­ly devel­op­ing or expand­ing their oil reserves because they’re not get­ting access to cap­i­tal. So, San­tos is get­ting some access to cap­i­tal, is still expand­ing, and I think that bodes well because I can’t see the oil price drop­ping dra­mat­i­cal­ly even when the Ukraine con­flict is over. It’ll def­i­nite­ly drop, but by how much, who knows? But, there is this, sort of, gen­er­al the­mat­ic going on about the lack of invest­ment in oil reserves will keep the oil price high. I did read today in the Fin Review that there’s anoth­er, I guess, the­mat­ic start­ing with San­tos which is that it’s being seen by some ana­lysts as being a tran­si­tion­al stock. So, even though it’s an oil and gas explor­er, it is seen as as help­ing the decar­bon­i­sa­tion, I guess, future of the plan­et because it is invest­ing in oth­er fuel type. So, you know, that may or may not play out, I don’t like invest­ing in the­mat­ics. I just, I real­ly raised the sto­ry about the large dis­cov­ery in WA which will bode well for San­tos going for­ward.

Cameron  21:05

Very good. Good luck to San­tos. I own San­tos for the record. Max Walsh passed along. 

Tony  21:12

Yeah. I don’t know if it’s just us get­ting old­er, but I seem to be notic­ing more peo­ple pass on. Max Walsh, for peo­ple who don’t know, was a past AFR edi­tor back in prob­a­bly the 80s or 90s and famous for that, and also a show called the Car­wash report with Richard Carl­ton which was on the ABC and was pret­ty ground­break­ing. At least as my young self could see, in that it real­ly did do deep dives into pol­i­tics and the econ­o­my and busi­ness which was usu­al­ly on the back or mid­dle pages of news­pa­pers and hard­ly ever spo­ken about on TV. So, he was a pio­neer, and valet to Max Walsh.

Tony  21:54

And he was also the Edi­tor in Chief at the Bul­letin Mag­a­zine when I was on their front cov­er in 2006, so thank you for that. And then they prompt­ly went out of busi­ness. So my apolo­gies, Max, for that. Ah, yes, he was around a long time. He was sort of a main­stay of finan­cial polit­i­cal jour­nal­ism in this coun­try, was­n’t. 

Tony  22:19

Yeah, he was. Yeah. 

Cameron  22:21

What’s going on with Twig­gy For­rest, Tony?

Tony  22:23

Yeah, just an inter­est­ing arti­cle I read recent­ly about his idea for a per­pet­u­al train. So, the idea is that they have these long trains of some three hun­dred car­riages car­ry­ing iron ore from their mines down to the coast so it can be loaded onto ships. And Twig­gy’s hired an engi­neer­ing firm in the UK to build him a net-zero self-pow­er­ing train, net-zero in terms of using ener­gy. And the idea is that because it’s down­hill from the mind to the coast, and the train is full of iron ore, they can hook up some bat­ter­ies on car­riages behind it. As the train slows down the brakes charge the bat­ter­ies, they unload the iron or, the trains a lot lighter than it was on the way down and the bat­ter­ies pow­er it back up the hill to the mind. And appar­ent­ly this has got some kind of in prin­ci­ple sup­port from the engi­neer­ing com­pa­ny, and they’re going to devel­op a con­cept for it. I thought it was intrigu­ing. Very clever.

Tony  23:19

Yeah. Good for Twig­gy. BNPL blood­bath.

Tony  23:25

Yeah, I mean, we’ve spo­ken about the buy now, pay lat­er stocks over the last cou­ple of years we’ve been doing this pod­cast, and some­thing caught my eye dur­ing the week which said that if you take into account After­pay and the way it was con­vert­ed into block, even though block is now up around the high­est price After­pay ever got to — the con­ver­sion was­n’t one to one — After­pay is down 50% for peo­ple who held on to it after it con­vert­ed to block. But the eye catch­ing one was Zip, one of After­pays Aus­tralian com­peti­tors. Hit a high price of $12.40 a year or so ago and is now $1.47 today. So, some heavy loss­es being sus­tained in the buy now, pay lat­er space. Well, I don’t hate to say I told you so. I did tell peo­ple that, I think we were say­ing all the way along these things are being held up by hot air and they were. 

Cameron  24:14

Wow. So, gee. Where are all the peo­ple that were talk­ing about the huge futures for these and they’re great, you know, this time it’s dif­fer­ent. 

Tony  24:29

This time it’s dif­fer­ent, yeah. 

Cameron  24:30

Where are their sto­ries? What are they say­ing now? Where are they all? 

Tony  24:35

They’re qui­et, they’re lick­ing their wounds. Well, they’re prob­a­bly mov­ing on to green hydro­gen or some­thing. The next play, the next pump and dump that does­n’t have a prof­it and nev­er makes any mon­ey.

Tony  24:45

But like, this is, like, with­out any sense of Schaden­freude, but you were telling us this sto­ry for the last few years. You kept say­ing, “yeah, I’ve seen it all before. These things rise up and then inter­est rates start to rise or some­thing else hap­pens or big com­pe­ti­tion moves in…”  

Tony  25:04

More reg­u­la­tion, 

Cameron  25:05

More reg­u­la­tion, and they just evap­o­rate overnight. Not go down by 10% or go down by 20% and then come back up, but evap­o­rate, and some­body is left hold­ing the cup. Some­body bought in when After­pay was at $200. Some­body bought in when Zip was at $12. Some­body who was told by some­body else, “oh, man, this thing’s going all the way to the moon.” You know, “it’s a brave new world, rules don’t mat­ter any­more. It’s all about mar­ket share and eye­balls and ear lobes.” 

Tony  25:39

Yeah, as Ben Gra­ham said a hun­dred years ago: “the mar­ket in the short term is a vot­ing machine, and in the long term it’s a weigh­ing machine.” And these com­pa­nies have been put on the scales and there’s noth­ing there. They’re pret­ty light when it comes to finan­cials, so they’ve been vot­ed off the island.

Tony  25:54

But there were ana­lysts after ana­lysts, after jour­nal­ists after jour­nal­ists say­ing these things are going to be the future, and is writ­ten in stone.

Tony  26:06

And “its a great new busi­ness mod­el,” and “it’s going to take over the world,” and “we did it first,” “first mover advan­tage,” all those kinds of sto­ries which we’ve all heard before.

Cameron  26:18

And the peo­ple, like, the ana­lysts, I’m talk­ing about the pro­fes­sion­als, not the pun­ters, but the pro­fes­sion­als who no doubt when After­pay was at $7 were say­ing it was under­val­ued at $7. And we’re say­ing it was under­val­ued at $10, and $11. Why aren’t they buy­ing it and keep­ing the price up at $7 or $8 or $10 if it was under­val­ued.

Tony  26:41

That’s the FOMO. There were plen­ty of sto­ries around, par­tic­u­lar­ly after the COVID cough when After­pay went down to I think it was like less than $20, and peo­ple piled in and they made a lot of mon­ey out of it. So, hope­ful­ly they sold out and kept the mon­ey. But that’s what gets report­ed. What does­n’t get report­ed is the fact that, lucky for After­pay, block took it over. But on the con­ver­sion, it’s still worth half of what it was when block took it over and let alone what’s to hap­pen to the oth­er play­ers in the space. No one’s report­ing on that, but that’s the flip side to all these booms, they always go bust.

Cameron  27:13

But, to play dev­il’s advo­cate, let’s say you had bought Zip in Jan­u­ary 21 at $5 and it went up to $12 in a month because it dou­bles in a month, because that’s real­is­tic. And then you three-point sold it on its way down — I won­der what the three-point trend­line would have looked like, you know, what kind of stop loss would you have in place for these things? 

Tony  27:41

We can have a look. I imag­ine with that kind of steep rise the sell point would be very low. So, you prob­a­bly would have giv­en up most of the upside com­ing back.

Tony  27:49

If you’re going to play that game you would need a dif­fer­ent kind of sell trig­ger, stop loss sell trig­ger.

Tony  27:54

Yeah, I mean, I looked at Bit­coin and tried to apply a three-point trend­line to that, but you can’t do it either because over five years it’s gone from noth­ing to, well, it’s gone from thou­sands to tens of thou­sands and so the sell line’s real­ly low. And Bit­coin might con­tin­ue to hold up and then the five year graph rolls around and you get a sell out of it, so it might still work. But, that’s all you can do with these stocks, Cam, is trade them. Trade them based on, you know, some kind of tech­ni­cal analy­sis not fun­da­men­tal, it’s got to be on the graph. And that’s a valid strat­e­gy. So, you know, my point is if you do have a sys­tem which says “if I bought Zip at 5 and its gone up by more than dou­ble, so I’m sell­ing it,” great. And then what do you do? Move into Bit­coin and do the same there, etc., etc. Even­tu­al­ly you’ll get caught out because some­thing will drop dra­mat­i­cal­ly and quick­ly, and you’ll get caught. But it’s a strat­e­gy. It’s a momen­tum strat­e­gy, and there are plen­ty of momen­tum traders out there.

Tony  28:44

Yeah. If I go back, say, a year and I was draw­ing a three-point trend­line for it then, it looks like the low point would have been around ear­ly 2016. Any­way, there would have been a very low sell line. Yeah, I think your sell line would have come in around about $1.60 which is kind of where the share price is now. So, you could be get­ting out now. But yeah.

Tony  29:08

Yeah. Any­way, my point was that I pre­fer to be a fun­da­men­tal investor and let the num­bers stack up, and you avoid all this kind of hav­ing to watch the share price every day and decide in a bina­ry sense do I stay or do I go? Do I buy more or do I sell? If you can rely on the num­bers.

Cameron  29:26

Yeah. Some­body go back and find all of the hype arti­cles around Zip for us from eigh­teen months ago. We can have a read, have a laugh. What do you want to talk about? The new mas­ter spread­sheet?

Tony  29:40

Yeah, so I’ve final­ly caught up to the AF mod­el. The new spread­sheet which I sent through now cal­cu­lates the num­ber of days since the con­sen­sus tar­get was last updat­ed, and peo­ple can put in their own date range. I’ve been using182.5 days, which is six months, to test to see if the con­sen­sus tar­get is still up to date. So, in oth­er words has it been updat­ed since the last results were released? So, that’s now live. I had some prob­lems with it, I could­n’t work out why that date cal­cu­la­tion was­n’t work­ing and then I jumped on a call with Brett from Bret­te­la­tor fame last week and we sort­ed it out. Well, he sort­ed it out. The sys­tem clock on my com­put­er was still work­ing on a North Amer­i­can date for­mat, so month — what is it over there? It’s month, day, year, and it was mess­ing up with the cal­cu­la­tion. So, that’s an issue. If any­one has prob­lems with that date cal­cu­la­tion in our spread­sheets, just check your sys­tem date for­mat and make sure it’s set to Aus­tralian.

Tony  30:42

You have a ver­sion num­ber or some­thing for this, the right one? Is this the one you sent me late last week?

Tony  30:49

It is, yeah, I sent it to you on Thurs­day, I think. 

Cameron  30:52

Okay. 

Tony  30:53

And that’s the one, too, if peo­ple are using my spread­sheet then you’ll need to add the extra field onto the Stock Doc­tor fil­ter at the end, which is the con­sen­sus tar­get date.

Tony  31:04

Yes. Same if you’re using the AF one.

Tony  31:06

Yeah. But I think we told peo­ple a cou­ple of weeks ago not to do that until we released this new ver­sion of mine. 

Tony  31:12

Yep. Okay. BHP and RIO have just become bor­der­line star growth stocks.

Tony  31:20

Yeah. So, once again, fol­low­ing the results they’ve been pro­mot­ed up the star stock chain, but they’ve been on our buy list now for a while. So, it’s, as I said I think last week, it’s always good that we find some­thing and then they get a lit­tle bump in the star stock uni­verse as well.

Tony  31:37

Yeah. Navex­a’s top movers, or our port­fo­lio top movers accord­ing to Navexa last week, Tony?

Tony  31:44

Yeah, so Capral Alu­mini­um up near­ly 14%, and Eclipse Group up near­ly 14% as well. Two big moves.

Tony  31:52

And yet our port­fo­lio went down by 10% per­for­mance per annum accord­ing to Navexa.

Tony  31:58

On the week­ly basis it was good. We were get­ting close to dou­ble mar­ket, I think, on the week­ly.

Cameron  32:03

Very good. Okay, you want to do your pulled pork for today?

Tony  32:07

I do, yes. And so, get­ting back to a ques­tion that was asked a cou­ple of weeks ago, can I do a pulled pork on Kingrose Min­ing, KRM? And the answer is no, I can’t. So, the new fig­ures were released by Stock Doc­tor last week and there was appar­ent­ly some delay in Kingrose’s fig­ures being released by the com­pa­ny. So, they should have been out by the end of Feb­ru­ary but they were delayed until mid-March. They’ve now hit Stock Doc­tor, but the prob­lem is the new fig­ures have a neg­a­tive oper­at­ing cash flow and so they’re not part of our down­load so I can’t do a pulled pork on them. It’s hap­pened before to me, where a com­pa­ny goes neg­a­tive on its cash flow, and that does­n’t nec­es­sar­i­ly mean I’ll sell it but it is some­thing I’ll watch and use the three-point trend lines and rule 1s to trade out of even­tu­al­ly. So, if it’s going up, fine, if it comes back down again, we’ll sell it. But yeah, I can’t do a pulled pork on it. I did want to just, maybe, do a quick deep dive into oper­at­ing cash flow as it appears in Stock Doc­tor, so I’m going to call it up. So, the thing to note, I just want to high­light this: in both our fil­ters and in Stock Doc­tor when you have a look at it, the finan­cial state­ments screen, if you go to the state­ment of cash flows you can see that the oper­at­ing cash flow for the June peri­od, June 21, was pos­i­tive 9.9 mil­lion but for the Decem­ber 21st inter­im results is ‑429. So, it’s gone neg­a­tive which means we can’t score it because it’s not mak­ing any, not hav­ing any cash come in. Just above those num­bers though, on that screen in Stock Doc­tor, there’s a lit­tle box which is cur­rent­ly set to annu­als and inter­ims. If you click it you can select either annu­als by itself and annu­als and inter­ims. We always leave it set to annu­als and inter­ims, but if we set it to annu­als the inter­ims go away and we can see that June 21, as I said, had a pos­i­tive cash flow. If we go back to annu­als and inter­ims it adds the inter­ims back, and what it does is it gives us a rolling twelve months. So, it adds the six months from the sec­ond part of that June 21 annu­al state­ment to the six months between June and Decem­ber, and that gives us a neg­a­tive num­ber. And that’s the pre­ferred way of doing it, because that gives us a rolling twelve months which is the more recent of the results. So, we can either wait until we get anoth­er annu­al result or we can do rolling twelve months. So, that must mean that there was prob­a­bly a… there could have been in June, sor­ry, the sec­ond half, so Jan­u­ary-June neg­a­tive and then June-Decem­ber neg­a­tive, or it could just have been neg­a­tive in June-Decem­ber. Either way, it’s cur­rent­ly neg­a­tive on a rolling twelve-month basis so we can’t score it. So, let me do a pulled pork for this week. I’m going to do it on ABA, and the rea­son for that is it’s hit our buy list this week and it’s pret­ty high up. This is a com­pa­ny called Auswide Bank. Peo­ple may know it under its old name of Wide Bay. So, Wide Bay Build­ing Soci­ety orig­i­nal­ly, and it did, I think, merge with some of the oth­er build­ing soci­eties in Queens­land. So, it’s a region­al bank now, it was a region­al build­ing soci­ety in Queens­land.

Cameron  35:13

Bund­aberg, head­quar­tered in Bund­aberg. 

Tony  35:16

Is it? Okay. Bund­aberg.

Cameron  35:17

Yeah, Bund­aberg. 

Tony  35:18

It’s new to our buy list. It has an ADT of 108,000, so it’s a rea­son­able size for peo­ple. I don’t own this one, by the way. It’s a small bank and I think that there are both some pos­i­tives and neg­a­tives to the small bank space. On the neg­a­tive side, they have been asked to hold more cap­i­tal ratio, as it’s called, by APRA to pro­vide liq­uid­i­ty in case there’s a run on the funds and they hold more than the big banks do, which they’ve always cried foul on. So, that’s a neg­a­tive because it does tie up more of their cap­i­tal. But, on the pos­i­tive side of things, if they exe­cute prop­er­ly, these banks have an advan­tage. And this was pio­neered way back in the 80s and 90s by some of the first of these small build­ing soci­eties to list, and what they would do is they would con­tin­ue to oper­ate their build­ing soci­eties or bank ser­vices in their local areas but then they would go down into Bris­bane, Syd­ney, Mel­bourne, and open an office and use a bro­ker net­work to sell mort­gages. And the advan­tage they had in doing that was they did­n’t have to have a branch net­work to ser­vice their cus­tomers, and so their costs were kept down because of that. It seems like that’s the strat­e­gy which ABA is using, and it seems to be using it effec­tive­ly. So, ABA has some sev­en­teen branch­es, main­ly in its Queens­land area, but they do have offices in Syd­ney and Mel­bourne. And some­thing like, I think, two thirds of their lend­ing, their mort­gages, come through the bro­ker net­work. So, that’s going to be a low cost way of ser­vic­ing their cus­tomers. So, it’s a good strat­e­gy, and it seems to be work­ing for them. To go through the num­bers, I’m using a price of 696 from the week­end, and that’s 95% of the con­sen­sus tar­get. How­ev­er, the con­sen­sus tar­get is now more than six months old so I’m not going to score it for that. The mar­ket cap is 300 mil­lion, so it’s small com­pared to the big play­ers which are way up in the near­ly 100 bil­lion space of Comm­Bank, so it’s a min­now com­pared to the big ones. How­ev­er, it does score well. It’s pro­vid­ing a yield of 6%, which goes to show that the old adage holds for a lot of banks where you put your mon­ey in the bank’s shares, not deposits. If you did that, you’d have an inter­est, a div­i­dend pay­ment of 6% ver­sus less than 1% for a bank deposit. The finan­cial health in Stock Doc­tor is strong and steady for this one. The Pr/OpCaf is very low, it’s 1.84 and a PE of 11.3 which is rea­son­able as well, below the aver­age in the mar­ket, but prob­a­bly in the ball­park a lot of the bank shares which are around that sort of PE of 10 to 14. The price is greater than IV 1 which is $3.16 and we don’t have any con­sen­sus fore­casts for this com­pa­ny to use, so no IV 2 or earn­ings per share fore­cast. Net equi­ty per share is 623, so the share price of 696 is above that but less than book plus 30%, which is $8.10. So, it gets a point for that. Direc­tors are only hold­ing 1%, so there’s no score there. It does have a record low PE for the last six halves, so it scores a 2 there. And the equi­ty is con­sis­tent­ly increas­ing so it scores a 1 — we don’t see that too often these days, but that’s been hap­pen­ing with this bank so good on them. All those things add up to give a qual­i­ty score of 92% which is quite high, and a QAV have a score of 0.5. I just thought I’d run through a quick com­par­i­son to some of the oth­er banks on our list. So, ANZ, which is get­ting close to being a buy again but isn’t at the moment, ANZ has a qual­i­ty score of 50% and a QAV score of 0.28. CBA as well is down our list with a QAV score of 0.06 but it’s often the most expen­sive bank, and West­pac is again almost a buy on our buy list for using the three-point trend­line sen­ti­ment check­er. Its qual­i­ty score is only 41% and QAV score of 0.24. So, this ABA is a lit­tle bank that could, and it’s come on to the buy list this week and worth a look for peo­ple. 

Tony  39:13

And you get a free bot­tle of Bundy rum with every share of ABA.

Tony  39:19

Do your own research on that one.

Cameron  39:21

And if you are going to go to Bund­aberg, don’t go to the Bundy rum dis­tillery. Go to Kal­ki Moon, get some gins and vod­ka from the Kal­ki Moon dis­tillery. Much bet­ter. All righty TK, thank you for that. Q&A time?

Tony  39:34

I had a cou­ple of oth­er ones to go through quick­ly, sor­ry. Few more news items that came in today as I was prep­ping. Peo­ple may be read­ing about the yield curve inver­sion again. So, we last heard about this a cou­ple of years ago, which is hap­pen­ing again in the US. This is where short-term bonds have a high­er yield to long term bonds, which is usu­al­ly the reverse, and it often is a pre-stage for a down­turn in the econ­o­my and down­turn in the mar­ket. Hap­pened before COVID, although I think that was prob­a­bly a coin­ci­dence, no one could have pre­dict­ed COVID. But it is hap­pen­ing again in the US and prob­a­bly being dri­ven by infla­tion and the Fed start­ing to raise inter­est rates over there, but has­n’t hap­pened here yet. Our yield curves haven’t invert­ed, and it has­n’t hap­pened across the board. So, it’s only hap­pen­ing for five-year bonds and ten-year bonds, and five years and thir­ties. So, the last time the US five year and thir­ty year invert­ed, though, was in 2006. So, it can be an indi­ca­tor of things to come.  You know, I’d watch the space, I’d be care­ful about tak­ing out any fur­ther debt in this kind of time. And because I think inter­est rates are going up any­way. So, if you do, fac­tor into account the cost that’s not going to be much high­er than what it is now for repay­ments. And just be a lit­tle care­ful with debt at the moment, because yield curve inver­sion may come to noth­ing, but it may also lead to or be an ear­ly warn­ing sig­nal for things that we’ve been talk­ing about; infla­tion in par­tic­u­lar.

Cameron  40:59

Before you go on, I want­ed to ask you to explain that to me again, because I know we talked about this a few years ago but I for­got. So, you said yield curve inver­sion is when short term bond rates are high­er than long term bond rates. 

Tony  41:15

Yes, the yields. 

Cameron  41:16

The yields, yeah. What they’re will­ing to pay to keep your mon­ey for the short term, rather than keep your mon­ey for ten years.

Tony  41:23

Yeah, they’ve got­ta buy, have got to pay you more in the short term than they pay you in the long term. So, that sug­gests that the peo­ple who are bor­row­ing, who are buy­ing those bonds, think the short term is going to be eco­nom­i­cal­ly worse off than the long term. So, it’s less risky to take out a ten-year bond rate than a five-year bond at the moment.

Tony  41:42

It’s less risky to take out a ten-year bond than a five-year bond.

Tony  41:48

So, that could also be that they think that short term bonds might get sold off more, which would make sense if inter­est rates are ris­ing in the short term because new bonds will come onto the mar­ket with a high yield. And then the exist­ing bonds have to get sold down to match that until their yield match­es the new bond yield. So, that’s usu­al­ly a sign that infla­tion is going up, which has neg­a­tive con­se­quences on the econ­o­my.

Cameron  42:11

I’m still not fol­low­ing why the yields on the short-term bonds sud­den­ly become high­er. So, peo­ple say, “okay,” if some­body is issu­ing a bond, com­pa­ny’s issu­ing a bond, com­pa­ny X is issu­ing a bond, and the mar­ket is say­ing, “well, you only want my mon­ey…” So, you say five years is short term.

Tony  42:28

In this case, it is. I mean, there’s all sorts of ratios that get used, six months ver­sus five years, but in this par­tic­u­lar case, it’s the five year ver­sus ten year and five year ver­sus thir­ty year which have invert­ed.

Cameron  42:40

So, peo­ple are say­ing, “I will give you my mon­ey for five years, but I want a high­er return on that per annum than I would if I gave you my mon­ey for ten years.”

Tony  42:55

Cor­rect. Because they see the short term as being a rock­i­er invest­ment than the longer term. So, in oth­er words, they’re pre­dict­ing that the short term is going to have eco­nom­ic prob­lems, but they’ll right them­selves in the long term.

Cameron  43:07

So, how does that rock­i­ness impact on my deci­sion to want high­er rates? I’m like, “okay, well, because I might need that mon­ey in this five years. So, to give it to you, I want to get paid back a high­er return or… I’m wor­ried that if I give it to you, you might go out of busi­ness,” no, you would­n’t do that.

Tony  43:29

In sim­ple mechan­i­cal terms, the inter­est rates are ris­ing. So, if I buy a five-year bond yield now that’s pay­ing 2.5% I expect if I wait a peri­od of time, say six months, I can bor­row five year mon­ey at 3% and get a bet­ter deal. So, I’m hang­ing off and I’m expect­ing that the next round of bonds that get issued will be more attrac­tive to me because inter­est rates are ris­ing. That’s the mechan­ics of it.

Cameron  43:55

Right. So, then the bond issuer needs to increase the inter­est rates just to attract the mon­ey. So, it’s real­ly just men­tal­i­ty on behalf of the investors, the bond buy­ers, to say, “I think I can squeeze as much mon­ey out of the mar­ket as pos­si­ble, because infla­tion is going up, there­fore, inter­est rates will rise. And yeah, I should, I can use that to just squeeze high­er rates out of the mar­ket today.”

Tony  44:24

Yeah, and it’s prob­a­bly even more. That’s part of it, def­i­nite­ly. It’s also mechan­i­cal in that as the Fed puts up inter­est rates, then the com­pa­nies that are issu­ing bonds have to put up their short-term inter­est rates as well to attract peo­ple away from gov­ern­ment bonds. And so, the peo­ple who are buy­ing those bonds are say­ing “do I keep my hands in my pock­et now, because if I buy a bond now at 2.5%…” So, say I spent a mil­lion dol­lars buy­ing a bond at 2.5% and in six months’ time the next round of issuances are at 3%. My bond gets sold down until the yield match­es the cur­rent mar­ket, so my mil­lion dol­lars is now worth less. If I sold that bond on the mar­ket in six months’ time, I might get $900,000 for it, because that’s the only way the yield can go up on that bond, is if some­one who buys it off you pays less, because the com­pa­ny that issued the bond is always pay­ing 2.5%. But if I buy the bond off you at a cheap­er rate than face val­ue, then I’m going to get my 3% which is the cur­rent mar­ket rate. So, its that sec­ondary trad­ing the cur­rent buy­ers of bonds are say­ing, “I think it’s risky to my cap­i­tal to buy a short-term bond at the moment because inter­est rates are going up. I’m bet­ter off wait­ing, pre­serv­ing my cap­i­tal and buy­ing them in the future and get­ting a high­er inter­est rate.”

Tony  45:37

And in order to attract those investors, the bond issuer needs to increase the inter­est rates to make it worth their while. 

Tony  45:43

Cor­rect. 

Cameron  45:44

Okay. I think I under­stand that. I’ll for­get it in five min­utes, but right now… And the gov­ern­ment is putting up the inter­est rate on the gov­ern­ment bonds because they’re try­ing to slow down the amount of cap­i­tal going into the mar­kets, because banks will buy those bonds and then they bor­row mon­ey at those rates, and then they need to put a mar­gin on it. So, what­ev­er per­cent they’re going to tack on puts the mar­ket rates up for busi­ness­es and the gen­er­al pub­lic and that’s designed to make-it’s a dis­in­cen­tive to bor­row­ing mon­ey.

Tony  46:20

Yes, it slows the econ­o­my, which is, you know, the Fed in the States are try­ing to put a lid on infla­tion at the moment. And so, that’s why the ten-year bond rates aren’t going through that kind of ratch­et­ing up as well, because their infla­tion is seen as being a short-term thing at the moment in the US. But, this kind of short-term inver­sion, so the short-term bonds are going up, long term bonds are rel­a­tive­ly sta­ble, is often a sign of, you know, some kind of prob­lem in the econ­o­my around the cor­ner. We all know it’s prob­a­bly com­ing because of infla­tion, but this is just one indi­ca­tor of it. And I think the oth­er thing to point out too, which is inter­est­ing giv­en that we’ve just done a pulled pork on a bank, is that banks are the clas­sic “bor­row long and sell short.” So, the banks are in the mar­ket-as, for the last forty years, as inter­est rates on bonds have been com­ing down, they can go and get a ten-year bond that’s pay­ing a low yield, sor­ry, a high­er yield than the short term bond. So, they can bor­row at, say, 3% and then put it in the mar­ket as a mort­gage at 2.5, then they’re mak­ing half a per­cent. Because of a yield curve inver­sion, they can’t do that. They can’t bor­row any­more. They’re going to bor­row a thir­ty-year US bond, for exam­ple, at two point what­ev­er it is, 2.5%, but in the short term mon­ey mar­ket the short term bond rate is 2.6%. So, they’re going to lose on issu­ing mort­gages if they bor­row to do that, so they become more reliant on deposits, which will prob­a­bly mean that we’ll start to see inter­est rates on deposits go up because they need to attract that mon­ey back into their cof­fers.

Cameron  47:52

What was the thing you said before when you were doing the ABA pulled pork? You said the old adage, “bet­ter to put your mon­ey in bank shares than in a bank deposit?”

Tony  48:02

Yeah, cor­rect. That’s always been the case.

Tony  48:05

No one’s ever told me that, I’m fifty-one years old, Tony. No one’s ever told me that before. When when did that become an old adage?

Tony  48:12

It was old when I start­ed invest­ing, and it’s been good. I mean, you know, prob­a­bly over the last five years the Aus­tralian banks have gone down, so it does­n’t always work. But, over the long term bank stocks have always done rea­son­ably well and paid a high div­i­dend yield — much high­er than the bank deposit rate. 

Tony  48:29

All right. Good stuff. You got any more news items?

Tony  48:33

I do. I was read­ing about Lar­ry Fink and Howard Marks, two pun­dits that peo­ple have talked about in the past. But, what caught my eye was an arti­cle recent­ly say­ing that they are call­ing an end to glob­al­i­sa­tion, large­ly because of the Ukrain­ian inva­sion, and, you know, sanc­tions being imposed on Rus­sia. They’re call­ing that as being the begin­ning of the end for the US Dol­lar as being a glob­al cur­ren­cy, and when the world starts to split up, which its kind of doing now with Chi­na set­ting up more con­tracts in their cur­ren­cy rather than US dol­lars, the world starts to splin­ter back to being region­als rather than a glob­alised econ­o­my. And so, both Fink and Marks are say­ing that we’re mov­ing from glob­al­i­sa­tion to near-local sourc­ing, they’re call­ing it. So, in order for sup­ply chains to work going for­ward, when we can’t trust deal­ing with oth­er glob­al part­ners, we’ve got to do more man­u­fac­tur­ing either local­ly or in coun­tries that we can trust near­by. And that’s anoth­er source of infla­tion, is what that means. Prices go up.

Tony  49:34

Because wages are going to be high­er, infra­struc­ture costs are going to be high­er, run­ning costs…

Tony  49:40

Exact­ly. And then last­ly, my last lit­tle bit of news was that if any­one fol­lowed our dis­cus­sion last week on the oil price going up and that to me it was like the 1970s when we moved from V8s to four cylin­ders, if I had of bought Tes­la stocks last week, they’re up 17% this week. Large­ly because they’re talk­ing about doing a share split, but it was, it was a coin­ci­dence. So, hope­ful­ly some­one ben­e­fit­ted. I did­n’t, was hop­ing some­one did out there.

Tony  50:08

If peo­ple are lis­ten­ing to you and then going and buy­ing Tes­la they’re not real­ly lis­ten­ing to any­thing that you’ve said.

Tony  50:16

True. Oh, that reminds me too speak­ing of finan­cials, I should declare that, I think for the first-time last month and maybe the month before, I did pull a dol­lar out of QAV. Which is a first for me. I know I’ve been talk­ing for years about doing it for free, but I just want­ed to declare that I made a lit­tle bit of mon­ey.

Tony  50:36

Well, tech­ni­cal­ly, you did­n’t though, right? It just cov­ers your costs. 

Tony  50:40

It’s not even cov­er­ing my costs. 

Cameron  50:41

Okay. You’re not get­ting any prof­it out of it, I just cov­ered some of your costs for the month.

Tony  50:49

Yeah. For peo­ple who don’t know the arrange­ment Cameron and I have is that he’s been tak­ing the $100 a month that you pay, and using that to run the ship, pay for the IT and the mar­ket­ing, edit­ing and emails and all the rest of it, and tak­ing a lit­tle bit of a wage for him­self. And, we had a deal where once it reached a cer­tain lev­el that we’d start to prof­it share. But as you say, I’ve got some mon­ey which is cov­er­ing my costs. Because I’ve out­sourced some of the stuff that we do as well, to my daugh­ter and to Dylan and all the oth­er things. So, any­way, it’s nice, it’s nice to see us grow­ing. Well done, Cam. I just want to call out the fact that you do work hard on this and you deserve the income.

Cameron  51:29

All I heard was you com­plain­ing that it’s not cov­er­ing your costs. That’s all I heard. 

Tony  51:33

I did not com­plain. It was a good news sto­ry, I got some income.

Cameron  51:39

Alrighty, let’s move on. Any­more before we get into Q&A? 

Tony  51:43

No, That’s all. Thank you.

Cameron  51:45

Petra. She says, “my port­fo­lio is slip­ping. I for­got to sell out and also decid­ed to hang on to a few when I should­n’t have. They’re trav­el­ling up again, slow­ly. I’ve been strug­gling with the blunt rule 1 and a breach of the sell line when the stock is volatile, or the mar­ket is gen­er­al­ly volatile. Ear­li­er in Face­book, some­one post­ed ‘to sell or not to sell?’ This is what I’ve been strug­gling with too. I feel that some­times we sell out of posi­tions and buy into anoth­er to make up a loss, lots of work to main­tain the sta­tus quo, when per­haps we could have writ­ten out the down­ward sen­ti­ment and stayed in the same stock and got the same results. Maybe you could do an episode with a deep­er dive on the psy­chol­o­gy of invest­ing.”

Tony  52:26

Psy­chol­o­gy of invest­ing, sure. And also, the three-point trend­line rules and the rule 1 rules. I can start there. I mean, first of all, sor­ry, Petra, that you haven’t been doing as well as per­haps some of our oth­er lis­ten­ers are. And I should com­ment that we’ve had this ques­tion before about what hap­pens if a stock blasts through its sell line or its rule 1 line and we haven’t sold yet. I think you should sell and move on for the same rea­sons I think you should have sold when it hit those trend line alerts. And the rea­son for that is three-point trend line rules and rule 1 rules are insur­ance, and that’s all they are. So, you’re right, maybe some of those stocks that you’re hold­ing will even­tu­al­ly come back, espe­cial­ly when the mar­kets in a volatile sit­u­a­tion. But maybe they’ll go the oth­er way and keep going down. So, I’m per­fect­ly hap­py to apply the rules, sell out of some­thing and find out that it’s turned around and come back, because I would have bought some­thing else which should go up based on buy­ing some­thing high­er on the buy list.  And the con­cept of insur­ance is always a hard one. So, you know, I buy insur­ance on my house and my car etc., nev­er expect­ing to claim, nev­er hop­ing to claim, but I still take out the insur­ance because if I do have to claim it’s going to be some kind of Lol­la­palooza event which are, you know, I need finan­cial help to weath­er. And it’s the same way with these rules. And Petra, you prob­a­bly weren’t around when we went through the COVID cough in 2019, but for those lis­ten­ers who were, they learnt real­ly quick­ly how these rules work. And, com­ing into March 2019 as the virus was start­ing to hit the news head­lines and the mar­kets were tank­ing, we got out of a lot, if not most of our stocks. And for the only time in a long while I went to 50 or 60% cash in our dum­my port­fo­lio — I did, too — and then a month or so lat­er, we start­ed buy­ing again because they were the rules. And no one could have pre­dict­ed that in either event and it was that kind of insur­ance which got us out of the mar­ket safe­ly and got us back into the mar­ket safe­ly. And now, I admit the price, the pre­mi­um we pay is that some­times there’s not the calami­tous event going on like a COVID cough, and we sell out of some­thing and it rebounds. But that’s the price of insur­ance. And I would have bought some­thing else and with the expec­ta­tion that that would go up, so I’m not wor­ried about the fact that the stock I sold may rebound. And if I remem­ber at that COVID cough time, Cam, like in March of 2019 every­one was ask­ing “what’s hap­pen­ing? Tell us about the GFC. How long was the share mar­ket in the dol­drums in 2007 and 2008? What kinds of signs can we look for?” And, you know, we start­ed to talk about those and then about three weeks lat­er the mar­ket was tak­ing off again and we used our three-point trend­lines to buy in with­out real­ly know­ing why. There was heaps of bad news in the mar­ket, I could­n’t real­ly tell why the mar­ket was tak­ing off. But it did, and again, it was that the prin­ci­ples of those rules got us back into the mar­ket at the right time and we did well. So, I mean, Petra, you might want to go back and lis­ten to the sort of shows around March 2019. That might help. But that’s real­ly the rea­sons for those par­tic­u­lar rules. The sec­ond point I want­ed to make was on the psy­chol­o­gy of invest­ing again, we did do a show with, I’ve for­got­ten the lady’s name, Cam, I’m sor­ry. But any­way, a cou­ple of things she spoke about, and you can read about, is one con­cept is called anchor­ing and the oth­er one’s called the sunk-cost fal­la­cy. And this is behav­iour­al psy­chol­o­gy, if you want to read more about it go and look at things that Daniel Kah­ne­man has writ­ten. Think­ing Fast and Slow is a real­ly good book. And Michael Lewis wrote about Kah­ne­man in a book called The Undo­ing Project, anoth­er real­ly good book. But basi­cal­ly, it’s an inves­ti­ga­tion into the mind­set of what hap­pens when we hold on to a los­ing invest­ment. And the anchor­ing prin­ci­ple says, “well, I bought into this stock,” or I bought into any­thing, a house, a car, or what­ev­er, “and it must have been a good deci­sion, because I did my due dili­gence on it. So what’s changed? Well, I can’t see what’s changed, but it’s going down, I bet­ter hold on.” And you can trade that suck­er all the way, you can hold onto that suck­er all the way down to zero, as peo­ple with Zip can tell you about, right? And I’m sure that peo­ple with Zip, who bought Zip at $12 haven’t had any change to their the­o­ry as to why they were buy­ing it, it’s just that the mar­kets tanked. So, our three-point trend lines are there to pro­tect us against that kind of thing. It’s called anchor­ing, or the sunk-cost fal­la­cy which is a sim­i­lar sort of thing; “I put mon­ey into this, I should be dou­bling down now that the price has dropped.” And again, that can be a real­ly bad thing to do as well. If it’s in sell ter­ri­to­ry as far as our trend lines, I would­n’t be doing that. And it’s real­ly, there’s no log­ic to it. How do you know whether you should be dou­bling down if the thing goes down 10%, 20%, or 50%, or more? That’s just basi­cal­ly guess­ing. So, the rules are the rules and they’re there for insur­ance rea­sons. And they’re there to pro­tect us from the sort of wiring that our brains have, that if we don’t have a sys­tem can take over and dom­i­nate our think­ing. And so, that’s the rea­son why we have the rules, Petra.

Cameron  57:20

That was Louise Bed­ford who came on to talk about the psy­chol­o­gy of invest­ing. Episode 443 if peo­ple haven’t heard that, it was a good show. The Can­dle­stick Queen is the name of the episode. I just opened a cou­ple of Zip arti­cles from 2020, just for fun, when you men­tioned… Finan­cial Review: “Zip shares jump 25% to a record after announc­ing a move into busi­ness lend­ing on the back of a part­ner­ship with eBay Aus­tralia,” August 26, 2020. “A day before announc­ing its full year results, Zip on Wednes­day launched the Zip busi­ness, dis­tin­guish­ing itself from main rival After­pay and rival buy now, pay lat­er providers whose sole focus is con­sumer lend­ing. This part­ner­ship with eBay will allow Zip to offer work­ing cap­i­tal to forty thou­sand small busi­ness­es using eBay plat­form,” blardy blardy blar. “Zip shares have climbed 50% in August.” In one month, they went up 50%.

Tony  58:19

So, yeah, it’s worth the AFR cov­er­ing a share that’s gone up 50%. But there’s two things there, which I think are wor­thy of note. One is they made an announce­ment about a new deal the day before the results came out. So, you know, in oth­er words, “look at this shiny object. We’re going to release some bad num­bers tomor­row.” And of course, and I’m not pick­ing on Zip, but with these kinds of com­pa­nies are always bad num­bers, right? Because there’s no prof­it. And the sec­ond thing is, I can bet that the AFR nev­er went back in the inter­ven­ing two years since then and said to Zip, “hey, how’s your part­ner­ship with eBay going and your busi­ness lend­ing pro­gramme going?” So, there’s no fol­low up.

Cameron  58:58

Hope that helps, Petra. Yeah, I know the whole sell­ing thing and hang­ing on thing. It is hard at the begin­ning. But you know, I was out to din­ner with the boys the oth­er night and Chris­sy and Fox, and Tay­lor said “I saw some­body on the Face­book page,” the QAV Face­book page, “they said some­thing about this and that, ‘what should I do?’ And they’re get­ting down in the weeds, and I thought to myself, ‘why are you both­er­ing with the weeds, just fol­low the rules.’ ” And I was like, “ah, you’ve lev­elled up, cock­roach-grasshop­per, you’ve lev­elled up.” He’s hit the point where he’s like “yeah, I don’t even think about what to do with all that kind of stuff now, I’m just like, do the bare min­i­mum, fol­low the rules. Ignore every­thing else.”

Tony  59:49

Play golf. 

Cameron  59:50

Well, not sure he’s doing that so much. I haven’t spo­ken to him, haven’t asked you about it — he came and had a game with you, did­n’t he, a few weeks ago. How’d he go? 

Tony  59:59

He was good as a begin­ner, good begin­ner. But he should go, though, he’s a young and fit guy, so, he should go and take some lessons for sure.

Tony  1:00:06

There you go, Tay. Go take some lessons. I’ll come, we’ll do it togeth­er, it’ll be fun. Next ques­tion, this one comes from Neil: ” I held ECX for a few months after buy­ing it at about $2.50 and not sell­ing despite breach­ing rule 1. Even­tu­al­ly I quit and took a greater than 10% loss. Appar­ent­ly, a car leas­ing com­pa­ny with good fun­da­men­tals and a share buy­back instead of a div­i­dend. Con­nect­ing the dots, I was won­der­ing why it took off this week. Then I recalled two things; Tony talk­ing about petrol prices and the impact on elec­tric vehi­cle out­look. ECX had a strong ESG phi­los­o­phy and ben­e­fit­ed from the move to fleet sales of elec­tric vehi­cles. I wish I’d con­nect­ed the dots before the shares took off. Appar­ent­ly, it was obvi­ous to those who were buy­ing. I guess it speaks to under­stand­ing busi­ness dri­vers of our invest­ments. I won­der if Tony con­nect­ed the dots or any of the lis­ten­ers after last week’s pod­cast? I won­der if there is more upside?”

Tony  1:00:59

Well, Neil, I don’t think the dots were con­nect­ed by the peo­ple who were buy­ing ECX. I doubt if the con­nec­tion between the oil price and elec­tric vehi­cles was dri­ving up the ECX share price. It could be, it’s unusu­al that would hap­pen in the space of a week. I mean, who knows, because ECX is noto­ri­ous­ly bad at com­mu­ni­ca­tions. They hard­ly ever make announce­ments out­side of the ones that they’re required to make, like, you know, some­one buy­ing and sell­ing that has a large stake. So, I don’t know why it’s up. I did do a bit of some analy­sis on why it might be up. So, could be pos­si­bly on Neil’s the­o­ry, could also be pos­si­bly on the fact that with COVID shut­ting down sup­ply chains and peo­ple hav­ing to wait longer for new cars that they’re extend­ing their leas­es on cur­rent cars. So, that might help Eclipse. Cer­tain­ly the used car mar­ket, the prices there have been going up, and part of Eclipse’s rev­enue comes from when a car comes to the end of its lease, the own­er has the right to buy it at a fair mar­ket rate. So, that could help them as well. But again, there’s no infor­ma­tion com­ing out of Eclipse on that. Could be inter­est rates, I mean, Eclipse is a car leas­ing busi­ness, so they’re going to be bor­row­ing mon­ey and then buy­ing vehi­cles and then leas­ing them to cus­tomers. So, poten­tial­ly if inter­est rates rise they can charge more for the leas­es, maybe that expands their mar­gin. Not sure. I did have a look in Stock Doc­tor, there’s been no direc­tor buy­ing since July 21. How­ev­er, what I did notice in look­ing at Stock Doc­tor is Eclipse is one of those com­pa­nies that have an end of March report­ing date. So, they are days away — or weeks away, per­haps — from report­ing their finan­cial results, and their share price is going up. So, I per­son­al­ly think the ASX should issue a speed­ing tick­et and ask them why the share price is going up, and are there any mate­r­i­al rea­sons for that? And should they be mak­ing a con­fes­sion dur­ing con­fes­sion sea­son for them? Because they haven’t, but I sus­pect that the results have leaked, or the ana­lysts who know a lot about Eclipse have put two and two togeth­er and have come up with a good result in advance of the announce­ment.

Tony  1:03:04

Isn’t that insid­er trad­ing. Do peo­ple get nods and winks, and you know, that kind of stuff in your expe­ri­ence?

Tony  1:03:13

Well, I think yes. I think that in some ways the share mar­ket is rigged, and all I’ve ever said is that if it is I want to get in. I don’t think there’s any par­tic­u­lar insid­er trad­ing going on here, if some­one’s been assid­u­ous­ly fol­low­ing this com­pa­ny and has num­bers at their fin­ger­tips to do the analy­sis on what the increase in used car prices mean, and what inter­est rates mean to this com­pa­ny and all that kind of stuff, they may well have put two and two togeth­er. But there’s not much in the way of mar­ket release on data for this com­pa­ny. So, if some­one does have a deep­er analy­sis of the com­pa­ny, they’re prob­a­bly talk­ing to man­age­ment. So, that could be skat­ing on the edges of insid­er trad­ing. Cam, but maybe the MD just booked an over­seas trip to Aspen ski­ing and the Sec­re­tary thought “hang on, things are look­ing up.” Who knows. Who knows what the rea­son is.

Cameron  1:04:05

Not talk­ing about ECX, Eclipse Group Lim­it­ed at all. No, no, no insin­u­a­tion of any­thing here. But gen­er­al­ly speak­ing, as some­body who’s been around, you’ve held exec­u­tive posi­tions, your wife holds exec­u­tive posi­tions, you know lots of exec­u­tives. Like peo­ple, peo­ple go out to lunch, right? And they’re like, “don’t tell me if the results are good, but if they’re good, just eat that crack­er with your left hand,” or some­thing like that.

Tony  1:04:41

As long as that’s worked out well in advance then yeah, that’s a poten­tial code. Well, I mean, there used to be a guy when I worked at Shell, right? I’m not talk­ing over school here, this is going back twen­ty years. The petrol indus­try was heav­i­ly reg­u­lat­ed to pro­tect the deal­ers. They were always seen as being the small guy. Oil com­pa­nies where the big nasty oil com­pa­nies. And the gov­ern­ment used to hold inquiries from time to time and come out with rules say­ing, as a rep, which I was, an area man­ag­er, I could­n’t go to a ser­vice sta­tion oper­a­tor — now a fran­chisee — and say, “hey, put your price up.” I could­n’t have a con­ver­sa­tion with them about mov­ing their price, right? The fran­chisee had to come to that con­clu­sion all on their own. What evolved over time was a sys­tem where­by the oil com­pa­nies would offer rebates to deal­ers if the price got too low to prop their busi­ness­es up. So, that became a codes way of telling a deal­er what they could make if the price was a cer­tain amount, because I could say, “I’m offer­ing a rebate of 2 cents a litre this week, or 1 cent a litre this week.” And so, that would be like a hid­den sig­nal of where I thought the mar­ket was going and what they could expect. And that was legit­i­mate. But there was this one guy, an area man­ag­er, who used to have an answer­ing machine back in the day. And he used to reg­u­lar­ly just change his mes­sage to say things like, “I’m going fish­ing, who’s with me?” And the deal­ers would ring up and they’d hear that mes­sage and they’d go, “oh, that’s the code to move the price up or down or what­ev­er.” So, there were all sorts of codes like that. Addi­tion­al­ly, I would say that least two, no three cas­es in my invest­ing career where I have been offered insid­er infor­ma­tion and I’ve delib­er­ate­ly cho­sen not to take it up because it’s ille­gal. But, in all three cas­es I could have made a lot of mon­ey. And in all three cas­es, I went back to the per­son and I said “look, you can’t. Don’t tell me this in the future, because if I’m going in, I’m putting mil­lions of dol­lars on it, right? And it’s going to hit some kind of ASX report and you’re going to get found out and I’m going to get found out, so just, I don’t know who else you’ve told about this, but please don’t tell me any­more.”

Tony  1:06:41

You know that snitch­es get stitch­es, Tony. If you get called in, you’ve got to take your years like a gang­ster.

Tony  1:06:49

I nev­er did any­thing wrong. In fact, I help ASIC reg­u­late the mar­ket. I told the peo­ple not to tell me.

Tony  1:06:55

No, that’s now what I’m say­ing. If you put in the mil­lions and you got caught, you just have to go down. Qui­et­ly do your time, they’d look after you when you came out, I’m quite sure.

Tony  1:07:04

Cor­rect. And in fact, I know some­one who went to jail for insid­er trad­ing.

Cameron  1:07:07

Real­ly? 

Tony  1:07:08

And they were looked after. 

Cameron  1:07:09

Wow. Because they did­n’t snitch?

Tony  1:07:11

Because they did­n’t snitch, they did their time. Any­way, this is for the after-hours Pod­cast. I’m not say­ing any­thing more.

Cameron  1:07:19

Like, I just assume that there are cod­ed sig­nals between old friends in the mar­ket. 

Tony  1:07:27

If you’re out play­ing golf, there’s not many micro­phones around, is there? 

Cameron  1:07:30

Well yeah. Not unless you’re being tracked by ASIC. Do they have drones? ASIC drones fly­ing over golf cours­es? Thank you, Neil. Alice: “could you please check in the check­lists, is share price less than con­sen­sus IV, is it sim­ply ask­ing is the share price less than the con­sen­sus price?” The exam­ple that she gave is URW, share price is $4.66, con­sen­sus price is $5.15. “Would it be eas­i­er to replace price to con­sen­sus tar­get per­cent­age with con­sen­sus price tar­get dol­lar in the fil­ter and then it would make the for­mu­la eas­i­er to under­stand?” And I went back and said I don’t under­stand. What’s the point of this, Alice? I think she said it just makes it eas­i­er for the for­mu­la.

Tony  1:08:17

Right? Okay, so it’s an alter­nate and I think Alice is right, you can either take the share price from the con­sen­sus price tar­get and work out one side on the oth­er, or you can just take the one field from Stock Doc­tor which is the per­cent­age of the con­sen­sus price tar­get and use that. So, it’s six of one, half a dozen of the oth­er. The fact that Alice thinks that one’s bet­ter than the oth­er, some peo­ple don’t work well with per­cent­ages. So, per­haps that’s the case with Alice, I won’t…

Cameron  1:08:40

I’m one of those peo­ple, I con­fess right now.

Tony  1:08:43

Yeah. And you know what’s inter­est­ing, and I don’t want to high­light the point with Alice. Back when I was work­ing at Cole’s Myer and we did some research into — I was in the research depart­ment — and we did some research into, you know, whether telling peo­ple a 10% dis­count was bet­ter than, you know, a cer­tain dol­lar off the price. So, what was going to go on the signs in Coles that week. And I was shocked that there is a sig­nif­i­cant amount of the pop­u­la­tion who don’t know what a per­cent­age is, who can’t cal­cu­late the math for a per­cent­age. So, that’s why you often see Coles bananas are 99 cents a kilo cheap­er this week and not 20% cheap­er, or what­ev­er the num­bers are. 

Cameron  1:09:20

Wow. 

Tony  1:09:20

Yeah, I was shocked. It was some­thing like 15% of peo­ple in the pop­u­la­tion can­not cal­cu­late per­cent­ages. So, I’m sym­pa­thet­ic to you, Alice, but I think it’s not gonna make much dif­fer­ence real­ly.

Cameron  1:09:29

It’s inter­est­ing. I was watch­ing a Wing Chun doc­u­men­tary over the week­end out of Hong Kong, and the guy, one of the guys on video start­ed train­ing in the 40s or the 50s with Yip man, sort of the most famous Wing Chun Teacher — Teacher of Bruce Lee and William Chung, and those guys. And this guy was say­ing, you know, you go into a Wing Chun school today and they say you got to have your arm at a 135 degree angle for max­i­mum ten­sion, and you got to turn your body you know, 33 degrees to the oppo­nent for their cen­tre line, and blah blah. He said “we nev­er learned it that way,” like, no one knew what a per­cent­age was. Like, in most of its his­to­ry, Wing Chun was being taught to illit­er­ate, une­d­u­cat­ed Chi­nese men and women. 

Tony  1:10:11

And it’s not now?

Cameron  1:10:14

They’re all bet­ter edu­cat­ed than us now. They’ve got great edu­ca­tions.

Tony  1:10:17

Okay.

Cameron  1:10:18

No, just une­d­u­cat­ed Aus­tralians who don’t know what a per­cent­age is. But you know, he was say­ing it gets taught dif­fer­ent­ly in West­ern coun­tries to how it was taught tra­di­tion­al­ly, because all these things no one under­stood. He said, “our teacher would just go, ‘you look like this’ ” and that was it, you know, and talked a lot about yin yang and all that kind of stuff. I don’t know where I’m going with that… But I agree with, well, you that I’m not good at per­cent­ages. But what I did­n’t under­stand about Alice’s thing is like, why it mat­ters? Like, it just pumps out a num­ber. But I think she’s try­ing to under­stand the for­mu­la, take it apart, which is fine.

Tony  1:10:52

Yeah, she’s say­ing is it bet­ter off to know that the con­sen­sus price is, in the case of her exam­ple, was it 49 cents-59 cents cheap­er? Or is it bet­ter off to know that it’s a cer­tain per­cent­age cheap­er?

Cameron  1:11:05

She’s prob­a­bly an engi­neer, or a math­e­mati­cian.

Tony  1:11:08

She’s prob­a­bly way smarter than I am, but I don’t think it mat­ters whether we’re look­ing at the per­cent­age dis­count or the dol­lar dis­count to the con­sen­sus price tar­get.

Cameron  1:11:16

Thank you, Alice. Glen asks, “how does Tony man­age the QA…” Oh, this is the big ques­tion for the week: “How does Tony man­age the QAV process when he’s on hol­i­days? The back­ground behind this ques­tion is that when going on hol­i­days, it’s not as easy to be able to jump on to place, buy or sell orders or run a new QAV spread­sheet. Com­put­er access at times is lim­it­ed. I would just like to find out some details of how Tony enjoys a hol­i­day but still ensures the port­fo­lio is man­aged suc­cess­ful­ly?” My ques­tion is, how do you tell when Tony’s on hol­i­day? What’s the dif­fer­ence between Tony being on hol­i­day and Tony not being on hol­i­day?

Cameron  1:11:17

Because all I care about is does it spit out a result? Does it spit out a num­ber, a score? Any­way. So, basi­cal­ly, you’re say­ing to Alice “Yeah. Well, if that works for you do it that way.” 

Tony  1:11:23

Cor­rect. 

Tony  1:11:23

You haven’t real­ly seen the sec­ond one, have you?

Cameron  1:12:15

Well, no. I mean, when you say “I’m going on hol­i­days,” I’m like, “and how’s that dif­fer­ent from your nor­mal life?”

Tony  1:12:25

Yeah, just the WiFi gets worse at Cape Schanck, that’s about it.

Tony  1:12:28

That’s about it, yeah. Your life does­n’t seem to change a great deal. When you stay home, its play golf and eat out at restau­rants. At Cape Schanck its play golf — or, you have to cook for your­self, that’s what hol­i­days mean to you, you have to cook for your­self. 

Tony  1:12:41

Maybe Cape Schanck is work and up here is hol­i­days? Yeah, look, I’ve been doing this for a long time and been on lots of hol­i­days around the world. And, I guess I don’t go on hol­i­days to the Serengeti or the Andean moun­tains or what­ev­er. So, I’m always going to some­where that has WIFI or at least tele­phone recep­tion. That’s all I need. I do what I do now. So, I set my alerts. If I need to trade, I send an email to Baillieu’s to trade for me. I’ll keep a copy of the con­tract note in my email fold­er and then print it off when I get home. I’ve got my spread­sheets with me, I’ve got my lap­top with me. So, yeah, I’d say its busi­ness as usu­al. I do min­i­mal work, which I do now. Half an hour, an hour a day. I still read the AFR online when I want to. A cou­ple of things, I do a back­up of my spread­sheets and spread­sheet his­to­ry to a thumb dri­ve before I go any­where. I do back­up to iCloud all the time too, but it’s like belts and braces; I’ve got a back­up on a back­up that way. And yeah, that’s it. Busi­ness as usu­al, does­n’t change at all. 

Cameron  1:13:45

When we were trav­el­ling around Europe for a few weeks a few years ago I don’t remem­ber you going, “I have to go back to the hotel room to do a check­list.”

Tony  1:13:55

I was doing it. 

Cameron  1:13:56

Yeah, but just in between the muse­um tours and the drink­ing.

Tony  1:14:00

Yeah, exact­ly. After the muse­um, before the hap­py hour.

Cameron  1:14:04

Yeah, those hap­py hours were hap­py. Bot­tom line is, I mean, if you were going to go to the Serengeti, if you were going to be offline for a cou­ple of weeks, what would hap­pen? 

Tony  1:14:15

I don’t know, I’d prob­a­bly have to park all the mon­ey some­where. Sell out and park it, maybe. 

Cameron  1:14:19

Real­ly?

Tony  1:14:20

Put it in an ETF. I don’t know, I mean, it’s nev­er been an issue for me so I haven’t thought it through. I mean, it could be an issue if I ever got, you know, bad COVID and put on a res­pi­ra­tor or some­thing. But Jen knows she rings up Alex Hay and puts every­thing into an index fund — a LIC, the largest LIC. 

Cameron  1:14:35

That’s the emer­gency pro­to­col? 

Tony  1:14:37

It is, yeah. 

Cameron  1:16:31

Just put it into a LIC.

Tony  1:16:34

Yeah, so Aus­tralian Foun­da­tion Invest­ment, or what­ev­er the largest LIC is at the time. 

Cameron  1:18:33

Do you have a code­name for that oper­a­tion?

Tony  1:18:39

Jen­ny prob­a­bly calls it Code­name Break­out or Code­name Escape or Code­name Yippee!

Cameron  1:23:08

Does she have a, I don’t know if has like a secret wall pan­el that she acti­vates and it torch­es your build­ing, destroys all the paper­work. You know, deletes all the hard dri­ves.

Tony  1:24:06

No, it’s pret­ty loose.

Cameron  1:24:35

I’ve been read­ing too much of The Ipcress File, as I segue into after-hours…

Cameron  1:26:32

The QAV pod­cast is a pro­duc­tion of Space­craft Pub­lish­ing Pro­pri­ety Lim­it­ed, autho­rised rep­re­sen­ta­tive of AFSL 520442 , AFS rep­re­sen­ta­tive num­ber 001292718. Please don’t make any invest­ment deci­sions based sole­ly on lis­ten­ing to this pod­cast 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