Transcript #526

QAV #526

Cameron  0:01

Wel­come back to QAV, live and in per­son, in front of your naked, steam­ing eyes, as David Lee Roth would like to say. I’m still in the Unit­ed States, it’s the fourth of July here. And of course, to cel­e­brate, there was a mass shoot­ing at a fourth of July parade in a wealthy sub­urb of Chica­go, I think, today, because that’s what Amer­i­ca is all about. And where you are, it’s bib­li­cal floods, I believe, Tony.

Tony  0:32

Yeah, I’m clear­ing out, Cam. I’m leav­ing, I’m going down to Wag­ga for a cou­ple of days. I’ve been kept inside since Fri­day. It’s now Tues­day. So, yeah, I’ve had enough. This is like the fourth time in recent mem­o­ry that it hap­pened. It’s pret­ty bad. Look, I’m mak­ing light of it. It’s bad for all the peo­ple who have to leave their hous­es because of floods, so I feel for them. Yeah, it’s, it’s just nev­er-end­ing rain.

Cameron  0:56

Did you buy an ark, or do you just rent one in sit­u­a­tions like this? Or are you like Buf­fett? Do you go, “I don’t need to own my own Ark. I don’t need to buy my own. I got plen­ty of friends with arks, I’ll just bor­row one of their arks.” Isn’t that what Buf­fett said about pri­vate jets?

Tony  1:10

He’ll set up a frac­tion­al own­er­ship sit­u­a­tion. I call my ark “the inde­fen­si­ble.”

Cameron  1:21

That’s what he calls…

Tony  1:21

What Buf­fett calls his plane.

Cameron  1:22

Hi plane, yeah. Well, it’s the oppo­site of that here. It’s like they’re in the mid­dle of a three- or four-year drought, I think, in this part of the US.

Tony  1:30

Well, the water’s got to come from some­where.

Cameron  1:32

That’s right. It’s the Col­orado Riv­er, as I believe. Hap­py New Year to every­body. It’s the new finan­cial year this week and I guess it’s a good time as any to have a look at the per­for­mance of the dum­my port­fo­lio in the last finan­cial year, the 2022 finan­cial year. And it was­n’t that inspir­ing, I have to be hon­est. I looked at it this morn­ing, our return for the full finan­cial year was neg­a­tive 3.03%. Cap­i­tal Gain was neg­a­tive 8.49%, Income return though was 5.46% pos­i­tive, so it brings it to a neg­a­tive 3.03%. Now, com­pare that to our bench­mark, the ASX 200, it was down 6.84% for the finan­cial year. So, our goal is to do twice as well as the index, and we did. We did twice as well as the index, we fell by 50% of what the index fell over the course of the finan­cial year. So, it works. In all seri­ous­ness, the sys­tem, you know, pre­vents us from los­ing as much as we might oth­er­wise. It gets us out. But it’s been a dis­mal year for the stock mar­ket in Aus­tralia — and around the world, not just Aus­tralia. But, you know, the good news is the long-term, you look over since incep­tion — and for new lis­ten­ers, we start­ed the port­fo­lio when we were ful­ly invest­ed with our orig­i­nal imag­i­nary $20,000 cap­i­tal, first of Sep­tem­ber 2019. If we look at it from incep­tion, the dum­my port­fo­lio is up 15.75% per annum ver­sus the index, which is up 3.55% per annum over the same peri­od. So, we’re doing rough­ly five times bet­ter than the index since incep­tion. So, it’s, you know, we’re doing okay. It’s been a bad year for every­body, but in the big pic­ture, we’re doing okay. Best per­form­ing stocks in the last week in the dum­my port­fo­lio were LAU up 13% in the last week; ECX up 5; KOV up 2; FEX up 1.6; CGF up 0.29%. So, that’s my port­fo­lio report for this week, this year-finan­cial year. Tony, what are your thoughts on all that?

Tony  4:03

My over­rid­ing thought is that, dur­ing the finan­cial year any­way, the share mar­ket went up and came back again. And minus 3% for a year is actu­al­ly unfor­tu­nate, it’s down 3% and the mar­ket is down 6%, but that’s not a bad year. I mean, I’ve lived through years where it’s been down 30%, so, this is, what’s hap­pened that made peo­ple, I think, feel it more is that, you know, six months in I think we were up like 10 or 15% or some­thing even high­er than that maybe, and it’s come back in the last six months. So, it’s been a bad start to cal­en­dar year 2022, but the finan­cial year… Like, if you looked at a whole list of the last twen­ty or thir­ty years of gains and loss­es in the share mar­ket, minus 6% would be, you know, just a blip. It would­n’t be con­se­quen­tial. So, I think a lit­tle bit of per­spec­tives required even though peo­ple will be feel­ing like, a, they’re hurt, because their port­fo­lio has gone down in the last six months sig­nif­i­cant­ly, and, b, prob­a­bly tired because it’s been a chop­py mar­ket. So, we’ve been rur­al one­ing a lot and buy­ing things, and rule one­ing again and buy­ing things, then three-point sell­ing and buy­ing things. And now like me, I think a lot of peo­ple are sit­ting on cash wait­ing for the time to start re-buy­ing. So, that’s my over­rid­ing thoughts on the mar­ket in the last twelve months.

Cameron  5:20

Well, one of the things I’ve learned from being in the US for the last cou­ple of weeks, Tony, is the rea­son the mar­kets been down in the last six months, and the rea­son that fuel prices are up and all these sorts of dra­mat­ic eco­nom­ic things: it’s Joe Biden. I’ve had a num­ber of peo­ple tell me it’s Joe Biden, “it’s all Joe Biden. It’s his fault all of this is hap­pen­ing. Amer­i­c­as in the toi­let.” I said, “well, hold on. Aus­trali­a’s economy’s in the toi­let as well, is it Joe Biden’s fault that Aus­trali­a’s econ­o­my’s in the toi­let?” and they were going, “oh, I don’t know. Prob­a­bly, yeah.”

Tony  5:52

I think the answer is, “if only you had that much pow­er.”

Cameron  5:55

He wish­es he had that much pow­er.

Tony  5:57

Exact­ly. Yeah. If he’s got that much pow­er, take it off him. Rise up, arm up, take back the gov­ern­ment. Hap­py Sedi­tion Day to you over there as well.

Cameron  6:07

Yeah, thanks. I got­ta give a plug for my new favourite drink of choice. You can’t see it in my plas­tic cup, but it’s a Nico­la­da. I was intro­duced to this at a Mex­i­can restau­rant in Phoenix. You ever have a Nico­la­da in your time over here, TK?

Tony  6:22

Nico­la­da. No. Sounds like a Niki Lau­da. Was it a For­mu­la One rac­ing dri­ver who got bad­ly burnt?

Cameron  6:28

Bad­ly burnt, yeah. It tastes just like Niki Lau­da. That’s dark. Wow, you have been trapped inside for a long time, haven’t you? It’s half beer, this is half prick­ly pear beer, and half clam­a­to juice.

Tony  6:46

Wow. No.

Cameron  6:47

Which is my favourite go to drink when­ev­er I come over here. It’s clam­a­to juice, I crave clam­a­to juice when I’m back home. Any­way, so half clam­a­to, half beer.

Tony  6:56

I haven’t had that. We used to… well, I prob­a­bly have if you take the beer first and clam­a­to sec­ond, because we used to always have a cou­ple of bot­tles of clam­a­to juice in the fridge. It’s love­ly.

Cameron  7:06

Ah, so good.

Tony  7:07

We used to put vod­ka in ours, too, and have Bloody Mary’s. Or Cae­sars as they called in Cana­da.

Cameron  7:12

Yes, Cae­sars. Peo­ple kept say­ing, “you should have it as a Cae­sar.” I did­n’t know what they were talk­ing about. Well, I’ll tell you who’s had a good year, is one of our sub­scribers, Brent. He post­ed on Face­book yes­ter­day, “with the end of the finan­cial year, I’ve been tidy­ing up my paper­work and reflect­ing on the QAV, process, per­for­mance and trends over the year. What a tough year. My cen­tral theme for the year was the sys­tem got me out of retail­ers and banks and moved me into oil, coal and cash. Along the way, there were a lot of rule one sells, and I’ve become much more com­fort­able sell­ing com­pa­nies and mov­ing into com­pa­nies that are ris­ing. The QAV process pro­tect­ed my cap­i­tal to fight anoth­er day and I’m look­ing for­ward to the days ahead that will be full of bar­gains. I’m extreme­ly hap­py with my return for the year but slight­ly dis­ap­point­ed as the last three weeks halved my year­ly return and destroyed me. My returns were sole­ly the result of over­weight posi­tions in GRR, YAL and NHC and the div­i­dends they paid. This com­pound annu­al growth rate,” and I don’t know how long this is for… oh, I guess he’s got it down below, it’s a cou­ple of years. 28.37% is his CAGR since incep­tion, which is the 25th of Jan­u­ary 2021. He says his return is 64.79%. I guess there must be, like, total over the peri­od, and he said the All Ords, All Ordi­nar­ies returned over the same peri­od is 0.37%. Out­per­for­mance of 64.42%. For the finan­cial year just gone, he said his return was 35.87%. So, minus the All Ords — and he’s not just doing the 200 like we do, he’s doing the ASX JOA, actu­al­ly, so the total return index — down 7.44% over the peri­od. So, out­per­for­mance of 43.31%. I don’t know how Brent did this because we did­n’t, but that’s a great return so well done.

Tony  9:13

It’s a great return.

Cameron  9:14

Gary replied, “well done, Brent. I’m sit­ting at 15% total return over the same total peri­od as you. Was at 40% back in March but got ham­mered since then. Only 0.65% for the last finan­cial year. My fault, not QAV’s. Bet­ter than neg­a­tive though.” Well, hey, we are neg­a­tive for the last finan­cial year, Gary, so you’ve done bet­ter than us, too. But that’s a great per­for­mance for Brent. So, maybe Brent should come on the show and tell us how he did it.

Tony  9:42

Yeah. Well, espe­cial­ly if Brent did some­thing dif­fer­ent, if he fudged some­thing or if he mod­i­fied the rule some­how.

Cameron  9:48

Well, he said he was over­weight in Grange Resources, Yan­coal and New Hope Coal. So, I don’t know what he means by over­weight, why he was over­weight? With QAV with you should­n’t be over­weight in any­thing, you should be rel­a­tive­ly even­ly bal­anced across your fif­teen to twen­ty stocks, right?

Tony  10:08

Well, yeah, I mean, I have dou­ble bought things in times like this when I’ve got cash to deploy, so you can get slight­ly over­weight. But yeah, I won­der if he just means that he let those stocks grow and they became large in his port­fo­lio and over­weighed his port­fo­lio maybe.

Cameron  10:20

Yeah, it could be. But any­way, well done. Con­grat­u­la­tions, golf clap to Brent. That’s great.

Tony  10:24

Yeah, well done. And I think that’s the oth­er com­men­tary I’d make on the last finan­cial year, I was look­ing at some of the sec­tor returns as well, and the ASX, I think it was 20, was down some­thing like 12%, I think, for the year and that would be with­out div­i­dends. So, large-caps were down more than small-caps. But the big win­ner for last year was the ener­gy sec­tor, the ASX ener­gy index was up 25% for the year. And as Brent said, I mean, we start­ed the year — I think I start­ed the year in iron ore stocks, actu­al­ly, and banks and gold, and got out of those and into Beach Ener­gy, San­tos. I think I had San­tos all the way through, but Beach and then even­tu­al­ly Yan­coal and Newhope. So, it is get­ting us into the right sit­u­a­tions in the mar­ket with­out try­ing to be the­mat­ic, we tend to end up being the­mat­ic.

Cameron  11:13

Good stuff. So, what else have you got to talk about today before we get into Q&A, Tony?

Tony  11:19

Yeah, a cou­ple of things. So, I’ve got, I’d say about three weeks ago we had a ques­tion from a lis­ten­er about a com­pa­ny called Byron Ener­gy, BYE. And the ques­tion was, and I’ll para­phrase, was BYE had a qual­i­fied audit in its annu­al report and then noth­ing in its half-year­ly accounts. There was a mate­r­i­al uncer­tain­ty raised in the annu­al report, but it was­n’t raised in the half year­ly report, and the ques­tion was does that mean it’s no longer a qual­i­fied audit? And I did­n’t know the answer to that, so I went out and asked James Oliv­er, our mem­ber who is an audi­tor, and he came back with an answer and I’ll just I’ll read it out quick­ly. His answer is, “this was a good ques­tion, and unfor­tu­nate­ly the answer is not an intu­itive one to the aver­age investor. If you look at the his­to­ry of BYE’s audit and review reports, June 20th audit report ‘mate­r­i­al uncer­tain­ty ongo­ing con­cern’ para­graph added. Decem­ber ’20 inter­im review report, no such para­graph added. June ’21 Audit Report ‘mate­r­i­al uncer­tain­ty on going con­cern’ para­graph added. Decem­ber ’21 inter­im review report no such para­graph added, and June 2022 audit report we’ll see soon enough.” So, he goes on to say, “I think there’s a bit of a pat­tern here. I think this is because tech­ni­cal­ly there is no audit of going con­cern at the inter­im dates and the user is meant to read an inter­im report in con­junc­tion with the most recent annu­al finan­cial report, includ­ing any dis­clo­sures in rela­tion to going con­cern.” What he’s say­ing there basi­cal­ly is we may not see that that qual­i­fied audit state­ment in the half-year­ly report because it’s not a full audit. So, when I found out that and got that answer we took Byron Ener­gy off the buy list because it had reversed the qual­i­fied audit, and now I’ve reversed it back. And there’s been fol­low up ques­tions from that from lis­ten­ers say­ing that yeah, a direc­tor has been buy­ing shares recent­ly and the share price is going up, etc. And this reminds me of our old friend Apol­lo Tourism and Leisure, who did the same thing. They had a qual­i­fied audit in their annu­al report, noth­ing in their inter­ims, and, you know, I will repeat the same com­ment I made there that it’s entire­ly pos­si­ble that Byron Ener­gy and Apol­lo Tourism and Leisure have got­ten bet­ter over the course of the year, and we won’t know that for sure until we see the annu­al report when it comes out in a cou­ple of months. There are plen­ty of oth­er stocks to buy in the mar­ket — well, maybe not so much now because of where the mar­kets at — but there are always oth­er stocks to buy at some stage, and so I just would­n’t want to take the risk that we buy a stock that looks like it’s going up and then the annu­al report comes out and we find it’s a qual­i­fied audit still. So, it’s a risk mit­i­ga­tion strat­e­gy that I’ve tak­en Byron Ener­gy off the buy list.

Cameron  14:00

And if peo­ple hold Byron Ener­gy, as I think we did in one of our port­fo­lios, we sold it when you made that deci­sion. So, peo­ple who might want to con­sid­er, please seek pro­fes­sion­al finan­cial advice. Don’t lis­ten to any­thing I say, I’m a guy sit­ting in the desert wear­ing a ban­dana. But you might want to think about de-risk­ing by remov­ing it, because it is a risk.

Tony  14:25

It is a risk, yeah. And a com­pa­ny will turn around the most when it goes from being finan­cial­ly risky to back on its feet again, and we may miss out on that if we decide to adopt a risk mit­i­ga­tion strat­e­gy like this, but I’m hav­ing to do that because I’ve also been in the sit­u­a­tion where things can get mate­ri­al­ly worse quick­ly and the stocks can go broke. I’m think­ing of one called Col­lec­tion House which isn’t on the buy list at the moment and has­n’t been for a while, but it has been some­thing I’ve looked at years ago. It had a mate­r­i­al uncer­tain­ty raised in this annu­al report and it’s now broke. So, it can go both ways and I think we just have to be care­ful with these kinds of stocks. And if peo­ple want to read more, James did pro­vide a link which peo­ple can Google this, it’s on the CPA Aus­tralia web­site, which is cpaaustralia.com.au. And if they go there, or if they Google, “A Guide to Under­stand­ing Audit­ing and Assur­ance,” so “A Guide to Under­stand­ing Audit­ing and Assur­ance”, there’s a whole paper there on under­stand­ing audit reports which peo­ple might find use­ful if they want to inves­ti­gate this more.

Cameron  15:33

Big thanks to James for tak­ing the time to do that work and put it togeth­er for us and for the mem­bers. Very gen­er­ous with his time as always, and if peo­ple haven’t heard the episode when James was on a few months ago talk­ing about qual­i­fied audits, it’s worth hav­ing a lis­ten. It’s very insight­ful.

Tony  15:52

Yeah, thanks, James. Now mov­ing on, a cou­ple of oth­er things to talk about. One of the things that got picked up in my read­ings over the last week — and I’ve been able to do lots because I haven’t been able to get out much with all the rain. The ASX for­ward PE is around 12 times, which is very low. That’s what we’re trad­ing on at the moment.

Cameron  16:11

Can you explain ASX for­ward PE to me?

Tony  16:14

Yeah, so there’s two ways of look­ing at the PE, which is the price to earn­ings ratio. One is to look at what the actu­als have been report­ed at in the last report­ing sea­son, that’s called the trail­ing PE. And then the oth­er one is to use the con­sen­sus fore­cast for earn­ings per shares to cal­cu­late a new PE based on the cur­rent share price. So, it’s the expec­ta­tions for the mar­ket. It’s now down to 12 times. I think at the end, or the mid­dle of the GFC, it got down to about eight times, that’s prob­a­bly the record low I would think. So, we’re not quite at the bot­tom yet, but we’re cer­tain­ly in the cheap cat­e­go­ry or cheap ter­ri­to­ry. So, I’m not say­ing it’s gonna go up soon, but this kind of sit­u­a­tion is when the mar­ket may well ral­ly. But whether that’s next month, six months, next year, who knows, but it is get­ting cheap. So, what is next, we’re mov­ing into con­fes­sion sea­son now, so be alert peo­ple, espe­cial­ly in this kind of envi­ron­ment where we’ve real­ly only had one quar­ter in Aus­tralia of high fuel prices, gas prices, and ris­ing mort­gage rates. So, most com­pa­nies I would expect going into this earn­ings sea­son are still going to meet their con­sen­sus tar­gets, because they may be trail­ing off at the end of the year if peo­ple are tight­en­ing their belts, but they’ve prob­a­bly had three good quar­ters in there as well. So, I’m not expect­ing a whole heap to come out of con­fes­sion sea­son, but be alert, there could be some com­pa­nies who say look, you know, espe­cial­ly in the retail space as I spoke about last week, I’m see­ing a lot more emp­ty shop fronts as I get around Syd­ney. So, I think retails doing it tough, so we may see some of the retail­ers in par­tic­u­lar per­haps come out and say, “we’re not going to meet our earn­ings pro­jec­tions, so be aware.” So, keep aware of that. After con­fes­sion sea­son of course comes report­ing sea­son. Again, I don’t expect much car­nage dur­ing report­ing sea­son, but we’ll see. I know the US report­ing sea­son that’s just gone by, because they have quar­ter­ly report­ing sea­sons, has been meet­ing tar­gets. More com­pa­nies met tar­gets than did­n’t, so it has­n’t been a prob­lem over there. But the mar­ket, of course, looks nine months ahead, and it’s pre­dict­ing what’s going to hap­pen. So, that’s why the PE is now 12 times rather than, you know, his­tor­i­cal­ly it’s about 15–16 times for­ward esti­mate and last year was prob­a­bly up around 20 times for the esti­mate, so it’s been drop­ping rapid­ly. But typ­i­cal­ly, what we see, or what I’ve seen when things play out like this is that it’s the next half that we’ll start to see com­pa­nies come out and say our earn­ings are being impact­ed, or ana­lysts come out and say earn­ings are being impact­ed. I would think the thing to watch out for is com­pa­nies who won’t give guid­ance. They’ll use weasel words like the mar­kets or the envi­ron­ments too uncer­tain to pre­dict trad­ing. That’ll be a red flag to the ana­lysts, and they’ll start mark­ing down the PEs even fur­ther, the prices they are pre­pared to pay for these stocks even fur­ther. So, that’s some­thing else to watch out for dur­ing this time. So, all in all, it’s going to be a fair­ly chop­py year I would think. The mar­ket’s going to look nine months ahead, they’re gonna see infla­tion, they’re gonna see the war in Ukraine, etc., still going on. But as we know, pre­dic­tions are real­ly hard and it would­n’t sur­prise me at all if today’s con­cerns aren’t the con­cerns in the mar­ket in nine months’ time, there’ll be a new set of con­cerns, you know, anoth­er COVID out­break or what­ev­er that’s hap­pen­ing. So, pret­ty hard to pre­dict. Part of me thinks that the cen­tral banks who are hik­ing inter­est rates if things do turn south with­in the next cou­ple of months may well hold that, which may well spark a ral­ly in the mar­ket, but I just don’t know. So, I guess the point of all that is we’re head­ing into con­fes­sion sea­son and then report­ing sea­son, be alert dur­ing those times. And then after that, I think we should still be alert because I think per­haps three months after that, we may still see some com­pa­nies com­ing out with either guid­ance down­grades or inabil­i­ties to make guid­ance.

Cameron  20:05

Can I ask a ques­tion?

Tony  20:07

Yeah, sure.

Cameron  20:08

So, when you say be alert, what form does that take? I mean, aren’t I just run­ning the num­bers as I nor­mal­ly am?  What do I have to be alert about?

Tony  20:18

Yeah, so we are doing the process, the process does­n’t change. In this kind of time peri­od when I’m say­ing I’m being alert, I’m mak­ing sure I read the paper, the Finan­cial Review every day, and I’ve got all my alerts set in Stock Doc­tor, espe­cial­ly three-point trend line alerts and rule one alerts. Because, if a com­pa­ny does come out and say, “look, it’s tough going out there, I can’t con­firm guid­ance,” the share price could drop 20 or 30% in a day. So, that’s some­thing to watch out for.

Cameron  20:45

So, make sure you do what you should be doing all the time, right? Have your alerts set, keep your eye on the papers. But there’s noth­ing dif­fer­ent, real­ly, that we do in this peri­od, right? We just keep doing what we always do. We just have to… if I trans­late what you’re say­ing, it’s a par­tic­u­lar­ly pre­car­i­ous time right now so make sure you do the stuff you should be doing.

Tony  21:05

Yeah, and at that means if you’re going on hol­i­days, like you’re doing for four months…

Cameron  21:10

Yeah, it’s hard.

Tony  21:13

Sor­ry, for four weeks.

Cameron  21:14

It feels like four months, I tell ya.

Tony  21:17

You’ve just got to check in as much as pos­si­ble. You and I kind of back each oth­er up, so if we see some­thing which is a sell and I think you might not have got it I’ll send it to you, and vice ver­sa. But, you know, if I was in your shoes and I did­n’t have a net­work of peo­ple that we have in QAV, I’d prob­a­bly as soon as I got back into Wi Fi range catch up on all the AFRs I missed out on. So, I might binge read three or four or five in a row and just make sure that I’m up to date on finan­cial news. Make sure that if I was away for a cou­ple of weeks, I’d reset the alerts when I got back into range, that kind of thing.

Cameron  21:49

I got­ta tell you, so slight­ly off top­ic, but when we got here, we got Ver­i­zon SIM cards, 5G blardy blardy blar, this was in LA the first day. The Ver­i­zon net­work here is the worst piece of shit I’ve ever… like, even now, like right now I’m in Cedar City, Utah. It’s not a big town you know, there’s like 30–40,000 peo­ple, but the 5G has giv­en me two megabits a sec­ond. Like, back home in Aus­tralia on Tel­stra’s net­work that’d be more like 200–250 megabits per sec­ond on 5G. Get­ting two megabits per sec­ond here. For­tu­nate­ly, the Airbnb we’re in has got real­ly good broad­band, I’m get­ting 500 megabits a sec­ond on this. It’s from the ridicu­lous to the sub­lime. But when we were down at the Grand Canyon, you know, every­one had told me — when I say every­one, Chris­sy told me — there’d be Wi Fi at the lodge at the Grand Canyon, knew that the tele­phone sig­nal would prob­a­bly be bet­ter. She said there’ll be Wi Fi at the lodge. So, I got there, went straight to the lodge, said “you got Wi Fi?” They went, “no, we don’t have any Wi Fi in the lodge.” They said try the gen­er­al store which is a five-minute dri­ve up the road. So, I went to the gen­er­al store, logged on to their Wi Fi and I was get­ting 400 kbps speeds. I went inside and said to the staff, “look, I’m sit­ting out the front,” like on some chairs they had at the front, “and I’m get­ting this. Is there a place here where it’s bet­ter?” They were like, “nah, that’s it. That’s what you get.” Alex had sent me the spread­sheet; I could­n’t even down­load a spread­sheet or upload a spread­sheet. I spent an hour try­ing to answer emails from you and Alex and just, it was just the most frus­trat­ing thing. We were there for five days with no net when I thought I’d have net that entire week. And the oth­er thing that gets me over here is, you know back home you tap to pay every­thing, and you have done for years. Here, at some places you can tap to pay, oth­ers you can’t. Some places you can use a pin, oth­er places you can’t. You have to put a sig­na­ture on a thing.

Tony  23:53

Yeah.

Cameron  23:54

It’s all over the place. You know, some places accept this card, but the oth­er card isn’t accept­ed. Like, you have to have four or five cards as back­ups because you don’t know which one this place is going to take. It’s such a dog’s break­fast over here with stuff. I always think of the US as being five to ten years ahead of us on basic things like this, and they are in the cou­ple of areas…

Tony  24:22

Like what?

Cameron  24:23

Legal­i­sa­tion of mar­i­jua­na. We were in Ari­zona for the first cou­ple of weeks, man there’s like dis­pen­saries on every street cor­ner. You can just go in and buy gum­mies and weed to your heart’s con­tent. Can’t in Utah. And they were ahead of us in legal­i­sa­tion of gay mar­riage, although the Supreme Court looks like they’re gonna do their best to prob­a­bly over­turn both of those things in their next sit­ting. They’re rolling back the clock on as much as they can hear right now, it’s fas­ci­nat­ing. Any­way, I’ll leave this for after hours. But yeah, the telecom­mu­ni­ca­tions and the pay­ment net­works here are just so far behind it’s real­ly, real­ly fas­ci­nat­ing.

Tony  25:06

And it’s still paper mon­ey. Has any­one got­ten their black pen out and put a stripe through the paper mon­ey when you give it to them yet?

Cameron  25:12

I haven’t been giv­ing peo­ple paper mon­ey except for tips, real­ly.

Tony  25:15

Yeah, okay.

Cameron  25:16

Oh, that’s the oth­er thing that’s annoy­ing; when you pay for every­thing, they’re like, “now, two screens will appear. Please answer them as you see fit.” And the first screen is “what kind of tip would you like to give this per­son?” I’m like, noth­ing? I don’t know.

Tony  25:31

And you get hard­wired into 10,15 or 20%

Cameron  25:35

Yeah. Or there is a cus­tom Chris­sy showed me today. But yeah, the whole.… Any­way, that’s prob­a­bly why I haven’t slept for three days.

Tony  25:43

What’s the basic wage in the US at the moment? Sev­en bucks an hour or some­thing, isn’t it? So, they live on tips.

Cameron  25:48

I don’t know. Yeah, they do. It’s like, it’s 2022, it’s such a… Any­way, don’t get me start­ed. All right. What else you got?

Tony  25:56

Pulled pork. Oh sor­ry, one more thing before the pulled pork. We’re record­ing this on Tues­day morn­ing, July 5 Aus­tralian time, and the RBA meets today and I expect, well, every­one’s expect­ing the inter­est rates to rise. I’ll put out a new mes­sage about what to plug into the spread­sheet to test for inter­est rates, to put into the inter­est rate’s cell to test if the yield is high­er than the mort­gage rate. I noticed over the week­end the mort­gage rates had been put up by some of the major banks, but I haven’t both­ered to update the spread­sheet yet because I think they’re gonna go up again today.

Cameron  26:29

Wow.

Tony  26:30

Yeah. We’ll see. Okay, pulled pork. Pulled Pork today is one of the only stocks that we’re see­ing to buy at the moment, which is NZM, New Zealand Media and Enter­tain­ment — NZ ME for short. I think it went out in an email yes­ter­day. I also saw Sun­land, I was think­ing about doing Sun­land, but I think I’ve done Sun­land before last year. Cam, can you recall? If not, I’ll do it next week.

Cameron  26:54

No, I can’t recall, but I can have a look at my notes.

Tony  26:56

Okay. Any­way, this week is New Zealand ME. So, inter­est­ing com­pa­ny. When I was liv­ing in New Zealand many years ago there was a web­site set up called stuff.com by a young entre­pre­neur in New Zealand, and it even­tu­al­ly grew to be like the — I guess what the Yahoo por­tal should always have been, sort of that gate­way to the inter­net — and it sort of branched out into a com­bi­na­tion of eBay and a news site and all sorts of dif­fer­ent things. And it was even­tu­al­ly bought out, I think, or sold to one of the media com­pa­nies and mor­phed into NZ ME if I’m cor­rect, from mem­o­ry. But now any­way, it’s a very large media com­pa­ny in New Zealand. It has inter­est in radio, it owns the New Zealand Her­ald, which is a news­pa­per, and it has the dig­i­tal still with the stuff.com web­site. So, it’s quite large over there and it’s a clas­sic big fish in a small pond. So, this is the kind of com­pa­ny that I think a War­ren Buf­fett, or a young War­ren Buf­fett might have been inter­est­ed in because it’s got cer­tain monop­oly char­ac­ter­is­tics. It has a big toe­hold in the media sec­tor over there, it’s gonna be hard for some­one to come in and com­pete with it. The New Zealand Her­ald is a well-estab­lished news­pa­per over there. And news­pa­pers were some­thing which always inter­est­ed Buf­fett, he owned the Wash­ing­ton Post. You know, he liked their abil­i­ty to raise prices even dur­ing all kinds of eco­nom­ic cycles. And if you think about it, who ever heard of a news­pa­per putting its price down? They nev­er have, it’s always gone up over time. The Finan­cial Review’s now $4.50 a copy, so that’s an exam­ple of that. On the flip side of that sort of big fish in a small pond sit­u­a­tion for NZ ME is, how does it grow? The media reg­u­la­tors in New Zealand are prob­a­bly gonna look fair­ly poor­ly on any attempt to buy anoth­er media pres­ence in New Zealand from com­pe­ti­tion con­cern per­spec­tives. So, it could go over­seas into Aus­tralia; again, it will be hard to buy some­thing in Aus­tralia, the media com­pa­nies over here are quite big as well. So, it’s a com­pa­ny which throws off a lot of cash which is real­ly good, and they’ve been using that cash to buy back shares and to pay spe­cial div­i­dends, which is a sign to say they can’t find some­thing to buy. That’s, I guess, where it is. I would think it’s a poten­tial takeover tar­get for an Aus­tralian media con­glom­er­ate like Chan­nel Nine, but, you know, is New Zealand real­ly going to be a big enough inter­est for them? So, any­way, that’s all spec­u­la­tion. The good thing about this com­pa­ny is that it trades on a PE cur­rent­ly of 4.3 which fun­ni­ly enough isn’t the low­est PE in the last three years, it’s been down as low as 2- or 3‑times earn­ings, but it’s price to oper­at­ing cash flow is not much more than that. It’s price to oper­at­ing cash flow is 4.4. So, most of the cash it makes flows straight to the bot­tom line. I guess if you think about radio and print and all those kinds of things, and even the dot­com site, once you make the ini­tial cap­i­tal out­lays there there’re just staffing costs from then. So, that’s prob­a­bly why we’re get­ting lots of cash thrown off and then it flows straight through to the bot­tom line, pret­ty much. If this was in the dot­com boom, you know, it’s trad­ing on an ROE of 39%. It’s the clas­sic dot­com com­pa­ny: no cap­i­tal invest­ment required and throw­ing off lots of cash. The prob­lem is it does­n’t have growth. It’s hard for us to mea­sure growth because there’s no con­sen­sus earn­ings fore­cast, but look­ing his­tor­i­cal­ly, the growth has bounced around a lot in this com­pa­ny. So, you’d expect with­out any sort of acqui­si­tion it’s not going to grow much at all going for­ward. The num­bers for it are inter­est­ing. It’s $164,000 on aver­age per day, so it’s not a large com­pa­ny but it’s still a rea­son­able size for a lot of our lis­ten­ers to look at. It’s a New Zealand com­pa­ny but it’s list­ed here as well, so it would have a dual list­ing. There’s no issue there real­ly, except that some­times peo­ple on either side of the Tas­man can play arbi­trage if the share price for what­ev­er rea­son goes out of sync. But any­way, the finan­cial health of this com­pa­ny is steady and strong, so it scores well there. The yield is quite high in this com­pa­ny as well, so it’s cer­tain­ly above the mort­gage rate. This is one of the com­pa­nies we spoke about before where the PE is less than the yield, which is some­thing I’ve always looked for when I’m invest­ing. So, if you think about that, the price to earn­ings ratio is low, very low, and the yield is very high. So, again, it’s an indi­ca­tion of a high cash flow com­pa­ny, which is great. It’s a clas­sic cof­fee shop, it’s throw­ing off lots of cash but the only way it can grow is to buy anoth­er cof­fee shop, real­ly. It does­n’t have con­sis­tent­ly increas­ing equi­ty, so that’s no good, does­n’t score there. It’s less than TK IV 1, we don’t have IV 2 so I can’t mea­sure that on that basis. The yield is 6.78%, so very high, although there have been some spe­cial div­i­dends in there as well. There’re no earn­ings per share fore­cast, so I can’t give a score on that basis. Any­way, all up it’s got a qual­i­ty score of 75% and a QAV score of 0.17, and that’s using a share price of $1.12 which was the share price at the time of analy­sis.

Cameron  31:56

So, it’s down 5% today, I see. It’s cur­rent­ly trad­ing at $1.10 and it’s a Josephine accord­ing to the Bret­te­la­tor.

Tony  32:05

Okay. It was­n’t when I had a look at it.

Cameron  32:06

It closed last month with a $1.15, but I want­ed to ask you about the chart. And the rea­son I’m drilling down on this is because I’ve had a cou­ple of ques­tions on Face­book today from, I think, Ed and I think the oth­er one was from maybe Alice, or Car­olyn, I think it might have been actu­al­ly, ask­ing us to go over the sec­ond buy line again, or ask­ing for a ref­er­ence to an old episode of the sec­ond buy line. We’ve talked a bit about this in recent weeks, because every­thing is a Josephine and even things that are turn­ing around — like, there have been a few pos­i­tive days in the mar­ket in the last three or four days, or the last three or four mar­ket days. But you know, we keep say­ing “well, we can’t buy any­thing because they haven’t crossed that sec­ond buy line.” So, can you just review for us the think­ing behind the sec­ond buy line for peo­ple like Ed and Car­olyn?

Tony  33:01

Yeah. So, I mean, I think it’s safe to say that I still haven’t got­ten my rules togeth­er on sec­ond buy lines and on Josephine’s and all that, but there are two com­po­nents. One is, is the share price cur­rent­ly above the clos­ing price for the end of last month? So, if it’s not then the share price is in decline quite clear­ly. Although it’s July 5, we’re only a few days into the new month and so some­times the share price can bounce around before we find out what the clear trend is this month. So, it’s best to wait until week two of the month before mak­ing clear deci­sions on that basis. And that also brings into play the sec­ond buy line. The sec­ond buy line is there to say, okay, the share price is turn­ing up, but it could still be a falling knife, so it’s been going down for a num­ber of months and how can we guard against this being a dead cat bounce? So, it’s an upturn this month but it may not last. Well, the only real way is to look for it to cross anoth­er buy line. So, the shares we’re talk­ing about already are in buy ter­ri­to­ry, they’ve been buys pre­vi­ous­ly, they’ve gone up, and now like a lot of shares they’ve had a peak and they’re com­ing down. If we use that peak, which is usu­al­ly the high­est share price on the graph as H1, and then look for a sec­ondary peak and draw a sec­ond buy line, has the share price gone above that? Has it basi­cal­ly bro­ken out of its falling knife trend is what we’re try­ing to test for? I say that with­out hav­ing clear rules, Cam. They’re the rules that I’m using at the moment, but if I look at some com­pa­nies — like I’m think­ing of, say, an Ardent Leisure Group — they’re not past their sec­ond buy line but they’re above their pre­vi­ous clos­ing month price and they’ve just returned a lot of mon­ey in a spe­cial div­i­dend. So, if you wait for the sec­ond buy line to come across, you’ll miss out on that spe­cial div­i­dend and you think the share price will drop, so I guess you’ve got to apply a lit­tle bit of com­mon sense if you like Ardent Leisure in that sit­u­a­tion.

Cameron  35:03

So, I’m look­ing at the NZM five-year month­ly chart. Looks to me like the peak was the end of March ’22 at $1.61. So, I would start there, H1 for my sec­ond buy line, and then I don’t real­ly have anoth­er peak as such.

Tony  35:24

Yeah. So, using the three-point trend­line rules, if we did­n’t have a sec­ond peak we’d go back to the peak before that, which is Novem­ber 30th, 2021.

Cameron  35:35

Yeah.

Tony  35:35

And then there’s anoth­er point after that you can draw a line through.

Cameron  35:40

Decem­ber ’21 point?

Tony  35:42

Yeah.

Cameron  35:43

So, not a peak there obvi­ous­ly, just a thing. Okay. So, if I draw through those, I get a line that I think it’s prob­a­bly just above, but again, it’s still a Josephine because it’s $1.10 and it closed at $1.15 last month. But that is how you would draw the sec­ond buy line for NZM, and I’ll post this up on to Face­book and the dif­fer­ent comms chan­nels so peo­ple can see.

Tony  36:09

So, what I’m gonna do… so Brett Fish­er has kind­ly updat­ed the Bret­te­la­tor to draw the sec­ond buy line.

Cameron  36:15

Oh, nice.

Tony  36:16

So, I’ve been using that for the last week or so and test­ing it, and I think I can release it, so I can put it out there. And there will be sit­u­a­tions like this where you look at it and go, “oh, that’s a bit strange.” But if you work back through the rules, that’s what’s going on.

Cameron  36:28

Right. So, in the case of NZM it’s a Josephine, but if it turns around it will be already above that-it’s already above the sec­ond buy line. But it’s a Josephine.

Tony  36:40

Yeah, but it’s below the last month close. So, there’s these two rules at play here, and I haven’t writ­ten the code yet to be able to work out which one… Maybe it’s just either or if it’s above the buy line — or maybe it’s an “and not”, and the price is above the last month, it’s safe to buy.

Cameron  36:57

Yeah, no, I under­stand this is sort of a work­ing the­o­ry that you’ve been play­ing around with. It’s only six months or so, I think, you’ve been play­ing around with this.

Tony  37:07

Cor­rect. And it gets us into a whole oth­er sit­u­a­tion which Brett and I’ve been going back and forth at, and Bret­t’s kind­ly done some research into it, whether when we cod­ed the buy line fol­low­ing the sell line, which gives for NZM a nice buy line pur­chase way back in 31st of Octo­ber 2020. So, you can see how we caught all that upswing, and the price back then was 52 cents. Bret­t’s been test­ing whether we should go back to just hav­ing the most recent H1 and H2 as our buy lines. Again, we haven’t come to a con­clu­sion on that because it’s almost like the buy line fol­lows the sell line works at some stages in the cycle, and the sec­ond buy line, which is how we used to do it, which is H1 being the high­est point on the graph and H2 being the sec­ond high­est point on the graph, works at oth­er times in the cycle. So, it’s kind of again, we’re play­ing around with a com­bi­na­tion of both here try­ing to land on some rules that we can code.

Cameron  38:03

All right, well, thank you for the pulled pork on NZM, TK. We ready to get into the Q&A?

Tony  38:10

Yeah, sure.

Cameron  38:11

Before you have to go and jump on your ark.

Tony  38:16

I’ll show you what it’s like at the moment. Have a look at this. I don’t know if you can see any­thing.

Cameron  38:21

It’s Bib­li­cal.

Tony  38:22

It’s just com­plete­ly whit­ed out.

Cameron  38:24

You’ve got to go jump on your ark, and I got­ta get out of here before peo­ple start set­ting off fire­works out­side of my win­dow, which is gonna hap­pen any­way.

Tony  38:32

That’ll be fun. Fox will enjoy that.

Cameron  38:34

He will if he’s not still hav­ing a melt­down. He stayed with his cousins last night again, and I heard he went to bed at-they all went to bed at 12:30am. So…

Tony  38:47

Mid­night feast, always a high­light of the sleep­over. I used to get a phone call at about 12:30 in the morn­ing when Alex was a kid, “come and get her, she’s had her mid­night feast and she’s run­ning around.”

Cameron  38:59

She’s got her sec­ond wind.

Tony  39:01

“She’s high­ly anx­ious.” So, Fox is enjoy­ing his cousins, so has a thought crossed your mind that you’re prob­a­bly gonna be stay­ing over in Utah a lot longer than you think?

Cameron  39:11

These actu­al cousins live in Phoenix. We were with them in Phoenix. They’re up here for — there was a fam­i­ly reunion here a cou­ple of days ago when we got here. Yeah, he loves his cousins. There’s a bunch of kids, but the two of them are twins and they’re about a year old­er than Fox and they just get along like a house on fire. They’re like triplets run­ning around, they just bounce off each oth­er. But appar­ent­ly their father, Jeff, asked Fox today or yes­ter­day, “Fox what would you do if you were rich?” And he said, “I would move to Amer­i­ca and buy a gun.” So, he’s been here two weeks and that’s what he’s worked out is what to do. But as Chris­sy said, that’s Fox just being a clown. He thinks he’s crack­ing a joke, right?

Tony  39:52

Being fun­ny.

Cameron  39:53

He thinks that’s a fun­ny answer. Good. Okay, onto ques­tions, Glen. Glen’s done some real­ly inter­est­ing analy­sis here, which I’m gonna read out. I don’t expect to under­stand it and I don’t expect any­one else to under­stand it except maybe you, but any­way, I’m gonna do my best to read this out. Glen says, “hi Cameron. I’m by no means a com­mod­i­ty expert but like to research things of inter­est. I found that GRR, which I own, pro­duces almost 100% rev­enue from iron ore pel­lets, which is a pre­mi­um grade of iron ore com­pared to the one we usu­al­ly track in Stock Doc­tor, 62% Chi­na FE. I’ve been search­ing high and low to find a chart for iron ore pel­lets and found this one after a long peri­od of time,” and he has a link to a web­site called stealmint.com. “It’s a bit of a fid­dly chart but you can get the attached trend­line for a two-year peri­od. When I say two years with a fid­dly chart, I get the L1 line on the chart by man­u­al­ly count­ing back one month incre­ments on the live web page, select­ing one month or peri­od. It does have the ori­gin as Brazil, but it does trade in USD which GRR con­vert their sales, so would assume some cor­re­la­tion? May be want to run through TK, but thought on this being an ear­ly indi­ca­tion that iron ore pel­lets not iron ore 62% Fine as a com­mod­i­ty are a sell. Just one obser­va­tion relat­ing to iron ore.” And he gave me a link, he says 63.5% grade when he sent me this a cou­ple of days ago is trad­ing at a clos­ing price of $116.50 USD per ton. “From mem­o­ry Tony ref­er­ences TR# iron ore 62% FE CFR Chi­na in Stock Doc­tor, which has a clos­ing price of $129.71 per ton. In Trad­ing Eco­nom­ics, they have the same 62% grade fur­ther down the page under indus­tri­als, which has the same clos­ing price of $129.71 per ton. The 63.5% ver­sus the 62% charts are very sim­i­lar, how­ev­er the 63.5% is a big Josephine this month com­pared to the 62% charts so there are some dif­fer­ences. It’s hard to obtain for all min­ers, but Rio and FEX men­tioned 62% in their reports, so maybe check with Tony on which iron ore he ref­er­ences on Stock Doc­tor and pos­si­bly update the link in the buy list. Sor­ry for the long email, just bunker­ing down dur­ing this peri­od of mar­ket pain and get­ting ready to go when the oppor­tu­ni­ty presents. Real­ly appre­ci­ate your show each week. Keep up the hard work. Regards, Glen.” I think Glen needs to get on the ark with you, Tony.

Tony  42:32

With his iron ore pel­lets.

Cameron  42:35

He’s going stir crazy wher­ev­er he’s holed up.

Tony  42:38

I had to look at this and I don’t pro­fess to be an expert on it. Tough one. I’ve just been using the Stock Doc­tor iron ore price, whether it’s pel­lets or not, I haven’t tak­en into account. I defer to Glen’s research on this if it’s a bet­ter graph for GRR, then go for it, sell. I noticed that, when I did a lit­tle bit of research, that we’re look­ing at the iron ore 62% Fine it’s called, but it’s basi­cal­ly the grade of the iron ore in that the ore that’s being shipped, and Glen’s graph is 63.5%. So, it’s not going to be a huge dif­fer­ence I would­n’t have thought. I think both graphs are in US dol­lars, I don’t know if Aus­tralian dol­lars would make a dif­fer­ence when it comes to iron ore. So, there’s all sorts of things we could go down the rab­bit hole on with this. If Glen thinks that’s a good graph to use, then by all means go ahead and sell. My only com­men­tary is that I’ve had con­tact from a cou­ple of peo­ple who have point­ed to oth­er graphs which sug­gests the iron ore mar­ket has just become a sell, and I don’t dis­agree with those. There was the graph that we talked about a lit­tle while ago which I’m still look­ing into which is the brick, where it puts stacked bricks on a curve, and it’s avail­able in Stock Doc­tor as well. And then there are oth­er var­i­ous graphs around whether it’s iron ore in gen­er­al, iron ore into the Asian mar­ket, its dif­fer­ent grades, etc. I think all that’s telling me is that iron ore is get­ting pret­ty close to a sell if it has­n’t already become a sell. I think it’s only about $10 above the sell price that we’re using any­way in Stock Doc­tor. So, I’ll defer to Glen on this one. If he wants to sell for GRR, that’s fine. I’m going to stick with Stock Doc­tor in gen­er­al, and I hold Cham­pi­on Iron so I’m using Stock Doc­tor as my com­mod­i­ty for Cham­pi­on Iron if I need to sell it. My over­all com­ment is that I tend to be a lit­tle bit loose as I can with these things, because, you know, they can go both ways. The iron ore price is going down, does that mean it’s going to keep going down or could it go back up again? So, as we’ve spo­ken about before, com­mod­i­ty share prices, all these things move in oscil­la­tions, usu­al­ly with a gen­er­al upward trend. But they go from peaks to troughs, and we’ve seen Iron Ore go to a high peak and now it’s com­ing down. Are we near­ing the trough? Are we not near­ing the trough? Is it going to rebound again? All it would take would be for Chi­na to get on top of its COVID sit­u­a­tion, per­haps, and the iron ore price could rise again. Or a lim­it in sup­ply some­where because of rain or what­ev­er in iron ore mines, and the price would rise again. So, the worst thing to do is to sell at the bot­tom. So, I’m kind of, I’m gonna stick with the way I look at it which is the three-point trend line graph using the Stock Doc­tor 62% FE con­cen­trate, and it’s get­ting pret­ty close to a sell there. I’m just gonna see, it may turn around, it may not, and I could be out tomor­row, but I’m just gonna stick to what I’m using.

Cameron  45:26

Okay. I am in Iron Coun­ty here. I could just walk out and just ask some­one down the street.

Tony  45:32

What do they think of the iron ore price for Chal­lenger?

Cameron  45:34

The red rocks of Utah. Okay, thank you for that analy­sis, Glen, but you need to get out more, get some sun­shine. Mark asks, “could you go through a few sec­ond buy line stock exam­ples?” I think we’ve talked enough about that today. I got a late ques­tion from Dan that I haven’t sent you, but I think you can do this one on the fly. He said, “if over the last few weeks your port­fo­lio dropped from fif­teen down to sev­en com­pa­nies, would Tony advise to dol­lar cost aver­age back in the mar­ket by, let’s say, buy­ing one par­cel of shares a week or fort­night or month. Or in case you would find five com­pa­nies to buy this week, for exam­ple, would Tony advise to buy them all with­in that week, mind­ful of the fact that a few days in the mar­ket actu­al­ly can account for a big part of the gains? If you dol­lar cost aver­age slow­ly, would you poten­tial­ly miss out on the mar­ket turn­ing?”

Tony  46:29

So, I would advise buy­ing if you can see some­thing to buy at the moment, and all at once. Now, the only thing I’d say in addi­tion to that is that that’s hard for me to do giv­en the par­cel sizes I’m buy­ing, so I do take a num­ber of days to get into a posi­tion some­times. It’s as much because of the bank­ing restric­tions I have as it is fill­ing the orders with what’s avail­able. So, I’m kind of forced into dol­lar cost aver­ag­ing, but it’s not a long term one. I’ll be in as soon as I can.

Cameron  46:56

Yeah, that’s not delib­er­ate, it’s just you fac­ing lim­i­ta­tions to buy those sized parcels, yeah. As Dan says, because that’s true and I keep remind­ing peo­ple of this in my newslet­ters, that his­to­ry shows that when the mar­ket turns around, a lot of the growth does tend to come very quick­ly in a day here, a day there. If you look back over fifty years, that’s where the major­i­ty of the gains come. I think I read an arti­cle, we talked about it on the show at some stage, over the last fifty years if you missed out on the top twelve days, I think, of the mar­ket, your returns were reduced by 50% or some­thing. I’m mak­ing up the num­bers here, but it’s some­thing like that. It was like a mat­ter of twen­ty days that result­ed in 50% of the gains in the mar­ket, and if you weren’t invest­ed in those twen­ty days, you’re only half of where you could have been. So, that’s why you tell us to be ful­ly invest­ed at all times if we can find things to buy that pass the rules, right?

Tony  47:59

Yes, exact­ly. I think that’s a good sum­ma­ry. It kind of backs up the fact that if we find some­thing to buy, we should jump back in, because chances are it’s the begin­ning of the upturn that you were just talk­ing about and we want to be posi­tioned well for that.

Cameron  48:13

And as we’ve seen with all of our rule ones, there’s a lot of false starts there. We jump in and then we have to sell some­thing a week lat­er.

Tony  48:19

Yeah.

Cameron  48:20

But the prin­ci­ple is that we want to be there for the great turn­ing.

Tony  48:25

Yeah, and that’s a good point, too. So, the per­son who’s ask­ing the ques­tion, if they went out and bought five stocks tomor­row, I would­n’t be sur­prised if they were sell­ing one of those five stocks as it turned down again. I’m think­ing, like just that exam­ple we went through before with New Zealand ME. I did the analy­sis yes­ter­day and it was okay to buy and today it’s a Josephine, it’s down 5% or what­ev­er its down today. So, you know, it can turn either way quick­ly in this kind of mar­ket. But yeah, to your point, the fact it can turn quick­ly means you should get in as soon as you can. The oth­er point I’d make is that I’m also look­ing at what are called dou­ble posi­tions in this kind of mar­ket, as well. So, I’ve already bought a sec­ond tranche of West African Resources a week or two ago, and some­thing like Beach Ener­gy is on my radar to look at as well. I don’t want to sit on cash and I’d rather if some­thing that I already own is a buy and it’s not a Josephine, I’d rather take anoth­er posi­tion in that and kind of over­weigh the port­fo­lio a lit­tle bit towards those stocks than sit­ting in cash at the moment.

Cameron  49:23

I got your email about BPT, and I went to add it to the dum­my port­fo­lio but we sold it a week before the end of the finan­cial year. And I know it’s a dum­my port­fo­lio so the ATO’s not going to come after us for asset wash­ing, but I thought you did remind us all not to get caught out asset wash­ing so I did­n’t add it back.

Tony  55:38

Okay, good.

Cameron  55:38

We could do it and get away with it but every­one else can’t, well can’t if you’re doing it with real mon­ey, so I did­n’t. All right. Well, that’s all the ques­tions for this week, TK. After hours. What have you been up to?

Cameron  1:07:16

The QAV Pod­cast is a pro­duc­tion of Space­craft Pub­lish­ing Pro­pri­etary Lim­it­ed, autho­rised rep­re­sen­ta­tive of AFS sale 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.