Transcript QAV 113

Episode name: QAV 113

Dura­tion: 48:50

Cameron Reil­ly [00:04]: Wel­come back to the QAV pod­cast. My name is Cameron Reil­ly. If this is your first time, wel­come. This is a pod­cast where I talk with my friend, self-made mil­lion­aire investor, Tony Kynas­ton about his invest­ment strat­e­gy that has allowed him to achieve an aver­age of 19 and a half per­cent return on his port­fo­lio over the last 20 — 25 years. Nor­mal­ly we’ll take a stock and break it down. Look at its finan­cials. Apply Tony’s check­list to it. But today we have a very spe­cial episode. We have a guest on to chat with us. One of Aus­trali­a’s most respect­ed finan­cial jour­nal­ists. Cer­tain­ly, a very engag­ing man to talk to. Mr. Alan Kohler.

Now if you don’t know who Alan is. And I’m sure a lot of you do. He’s been around for­ev­er. I think he start­ed his jour­nal­ism career as a cadet at the Aus­tralian in the late 60s. He was the edi­tor of Finan­cial Review from 1985–1998. He was the edi­tor of the Age in Mel­bourne from 92–95. In the late 2000’s he set up his own com­pa­ny. Where he pub­lished the Eure­ka Report and the Busi­ness Spec­ta­tor before sell­ing out to News Corp 5 or 6 years lat­er. He was the chair­man of Mel­bourne Uni­ver­si­ty Press for a few years. Today he’s run­ning his own invest­ment newslet­ter again, The Con­stant Investor, as well as still appear­ing in print and on TV, and the radio.

And he was kind enough to come on and chat with us about his view of the econ­o­my, his view of equi­ties, even his view on things like whether or not CEOs are psy­chopaths and habit­u­al liars. So it’s a fas­ci­nat­ing chat and before we get into it, I just want to point out a cou­ple of things. One — Tony was sit­ting in his din­ing room in his Cape Schanck golf­ing palace. So there’s a lit­tle bit of echo on his chan­nel. As there has been over the last cou­ple of weeks. But he’s back in Syd­ney now. So that will go away next time. And as always remem­ber noth­ing you hear on this show  should be tak­en as finan­cial advice. We’re not finan­cial advi­sors. We’re just talk­ing about ideas and con­cepts that Tony, and in this case Alan, have used in their own invest­ing. Take some ideas from it if you like. But before you do any invest­ing go see a prop­er finan­cial advi­sor. With that, I’ll throw to Tony. And we’ll get on with the inter­view.

Tony Kynas­ton [02:45]: Alan thank you very much for com­ing on to our lit­tle inter­view here. It’s a  great hon­or to have you here. I’ve been a fan for decades now. Lis­ten­ing to you on the ABC and read­ing the Eure­ka Report. From pret­ty much its incep­tion, I think. So it’s just fan­tas­tic to actu­al­ly be talk­ing to you.

Alan Kohler [03:04]: Well it’s good to be talk­ing to you, Tony. And thanks for your sup­port over the years.

Tony Kynas­ton [03:09]: You’re wel­come. I’m quite keen to get your thoughts on how things are going both on the econ­o­my and the mar­ket. And I guess we can’t do that with­out talk­ing about the elec­tion. So I might just throw it to you. And it would be great to get an update on where we are in the mar­ket cycle. What you’re thoughts are on the mar­ket and the econ­o­my. And what you think might hap­pen from here now that the elec­tion is over.

Alan Kohler [03:31]: Well I sup­pose if we go back a bit. We had in the final quar­ter of 2018 we had a very big cor­rec­tion. All mar­kets around the world, sort of came down quite a lot. About 20% bot­tomed on Christ­mas Eve. And then real­ly, almost back to where they were in Octo­ber. And so there was a kind of a cor­rec­tion and recov­ery. And the recov­ery was basi­cal­ly tak­ing it back to where things were. And where things were, was the mar­ket was a bit expen­sive. So I think that on the whole. If you look at the Aus­tralian mar­ket as a whole, it’s cur­rent­ly, this is minus the banks. So we’ll talk about the banks in a moment.

But the Aus­tralian share mar­ket minus the banks is trad­ing at a price-earn­ings ratio about 20 times. And that is above aver­age. And you would­n’t say that it’s entire­ly stretched. You would­n’t say that it’s a bub­ble of some sort. But it’s cer­tain­ly above aver­age, the val­u­a­tion, and its price for every­thing to go pret­ty much right. What was inter­est­ing after the elec­tion was that the banks had a big strong rise. About 6 or 7% each on the day after the elec­tion. And then kept going after that. Now it’s main­ly because the elec­tion result­ed in no change to neg­a­tive gear­ing. Obvi­ous­ly, there is also no change to the div­i­dend frank­ing rules. But the main rea­son that the banks rose was because they’ve been no change in neg­a­tive gear­ing. Which meant that the prop­er­ty mar­ket would­n’t come falling. More of a hit that it has already. S there was a bit of opti­mism about the banks.

But the banks are still rel­a­tive­ly cheap. And that is to say, the bank’s shares which rep­re­sent around about 25% of the mar­ket. Are still priced for things to go wrong. That is to say, there’s rel­a­tive pes­simism around the banks. In a way what we have are two sep­a­rate sorts of mar­kets. The min­ing and resources sec­tor and the indus­tri­als going real­ly well. They are pret­ty well high­ly val­ued 20 times PE. The banks, on the oth­er hand, have done well after the elec­tion but real­ly, they’ve had a ter­ri­ble start to this year. And they look below aver­age in terms of their val­u­a­tion. And they are cur­rent­ly priced for things to not go that well. That is to say, the prop­er­ty mar­ket con­tin­ues to fall. And cred­it growth con­tin­ues to decline. And also for unpaid loans to rise. And also the oth­er prob­lem they’ve got, of course, is that they hav­ing to pay lots of reme­di­a­tion costs. Which most ana­lysts reck­on haven’t stopped yet. So that’s where I think things are in the mar­ket. That real­ly is kind of two sets. Two dif­fer­ent mar­kets real­ly in a way.

Tony Kynas­ton [06:08]: A cou­ple of ques­tions on what you said, Alan. The first one is. Giv­en the sort of stretch nature of val­u­a­tions in the non-bank sec­tor. My feel­ing is that the mar­ket has basi­cal­ly tak­en an option on the future [inaudible06:21]. Not only in Aus­tralia but also in the US. What are your thoughts on that?

Alan Kohler [06:25]: Well that’s cor­rect Tony. The thing is the rea­son inter­est rate cuts are com­ing. The mar­ket is now 100% con­vinced that there will be a rate cut next month in June. And the fore­cast amount from econ­o­mists just to be clear about it. The fore­cast on inter­est rates is that they’ll be at least two, pos­si­bly three rate cuts. And that’s from a cash rate of 1.5%. The rea­son that’s hap­pen­ing is because the econ­o­my is get­ting worse and dete­ri­o­rat­ing. Now it is the case that mar­kets tend to focus on what the Reserve Bank or the cen­tral bank is doing. Rather than the rea­son they’re doing it, which is the econ­o­my. And I think that that’s not appro­pri­ate and I think it’s a bit mis­guid­ed, real­ly. Because the rea­son that the reserve banks hit­ting the red cap but­ton is because the econ­o­my’s not doing too well. So that would sug­gest that the domes­tic econ­o­my is the basis on which the Aus­tralian com­pa­nies are oper­at­ing. [inaudible07:29] it does­n’t look that great. But it is true that the mar­ket is kind of focus to some extent on the rate cuts.

Tony Kynas­ton [07:33]: We do seem to have gone down in the rab­bit hole a bit on. A [inaudible07:45] cham­ber of the mar­ket wait­ing for one of the rea­sons to cut rates and react­ing to that. Rather than to the basic p&l and earn­ings poten­tial for stocks. It does seem like a strange time to be an investor. What are your thoughts on the whole point out of eas­ing dri­ving the mar­ket sort of sce­nario?

Alan Kohler [07:58]: Well the prob­lem is the cash rate. The aver­age cash rate is 1.5%. So, there­fore, you don’t get too many rate cuts from that point before you hit zero. And that’s what hap­pened in the US. They cut inter­est rates to zero in the US. Did­n’t want to go any fur­ther than zero. So, there­fore, they start­ed print­ing mon­ey and buy­ing bonds, and that was quan­ti­ta­tive eas­ing. So the Fed­er­al Reverse expand­ed its bal­ance sheet by tril­lions of dol­lars buy­ing bonds with print­ed mon­ey. Fresh­ly cre­at­ed mon­ey and that sort of has been increas­ing inter­est rates now for a cou­ple of years. The prob­lem we have here in Aus­tralia. Is that the new inert rate eas­ing cycle? It is start­ing with rates at 1.5%. So there is a bit of talk that they will have to do some quan­ti­ta­tive eas­ing here because they’ll get to what they call the zero bound.

That is to say, the zero inter­est rates they’ll get to that before they start need­ing to stim­u­late the econ­o­my. It is the case in some Euro­pean coun­tries, rates have been cut. And, in fact, the Euro­pean Cen­tral Bank cash rate is below zero. So it isn’t nec­es­sar­i­ly the case that you have a zero bound. You can actu­al­ly cut inter­est rates to below zero. Although it’s not very nice. And I don’t think cen­tral banks like doing that. So I sus­pect that this will prob­a­bly engage in quan­ti­ta­tive eas­ing before it goes below zero. But I think you need to bear in mind Tony. That the Aus­tralian mar­ket does­n’t real­ly respond much to Aus­tralian inter­est rates. It isn’t real­ly about what the cen­tral bank here does, that turns the Aus­tralian mar­ket.

We’re more influ­ence by the Fed­er­al Reserve, and what hap­pens to glob­al inter­est rates and glob­al mar­kets because the share mar­ket is pret­ty much a glob­al enti­ty these days. To be hon­est, I don’t think that quan­ti­ta­tive eas­ing here or rate cuts here are going to make that much dif­fer­ence. It real­ly has to do with what’s going on in the US and the rea­son the mar­ket has recov­ered. Both in Aus­tralia and the US in the first quar­ter of this year. It’s because the Fed­er­al Reserve changed its tune. It is not talk­ing about rate cuts yet in the way that the RBA is. But it stopped talk­ing rate increas­es and that’s real­ly what sup­port­ed the mar­ket here and in the US.

Tony Kynas­ton [10:08]: Yeah, I think they are both very good points. Leaves me to reflect on whether the RBA and the US FED is a man with a ham­mer. Where every prob­lem is a nail. At some stage, some­one got to have a look at their man­date and say there is more to life than just infla­tion. And there are more tools in your tool­box than just chang­ing inter­est rates. And we’ve been through a peri­od of low­er inter­est rates which dri­ve prop­er­ty prices up very high. Reduced income for peo­ple who are try­ing to live off inter­est and retire­ment. Just because the econ­o­my was per­haps going through a bit of a slum. And it always seems to me like. The RBA need­ed more lead­ers or the RBA in con­junc­tion with the gov­ern­ment need more lead­ers. And I notice I think on the week­end that the RBA chief here actu­al­ly asks the gov­ern­ment to work in con­cept with them to try and put some infra­struc­ture projects into the econ­o­my. To give it a boost. That will I guess at least help the econ­o­my along with inter­est rates? Rather than being this sort of one-trick [inaudible11:09]. What are your thoughts on that Alan?

Alan Kohler [11:12]: Well, that’s cor­rect. That’s reserve bank real­ly has only one tool and that is inter­est rates. Mon­e­tary pol­i­cy. And that’s what it does. And you’re right because it’s z car­pen­ter with a ham­mer. Every­thing looks like a nail. But the reserve bank gov­er­nor did start talk­ing the oth­er day about the need for more fis­cal pol­i­cy stim­u­lus. I inter­viewed the trea­sures Josh Fry­den­berg this morn­ing and put that to him. He said, there’s plen­ty of stim­u­lus com­ing, they’ve got rate cuts, sor­ry tax cuts, pro­posed for the com­ing finan­cial year. That will be the equiv­a­lent of two inter­est rates he says. And he’s got more tax cuts com­ing down the road.

So as a favor of infra­struc­ture spend­ing going on. I think it is the case that there is some fis­cal stim­u­lus com­ing. Both in the form of tax cuts and infra­struc­ture spend­ing. But the prob­lem is that up until this point, most of the fis­cal pol­i­cy has been quite the oppo­site of stim­u­lus if I can put it that way. I mean, the coali­tion gov­ern­ment has been intent on get­ting rid of the deficit and going into sur­plus as fast as pos­si­ble. And that, by def­i­n­i­tion, involves fis­cal con­sol­i­da­tion and tight­en­ing of fis­cal pol­i­cy. And, in fact, in the speech that the RBA gov­er­nor made, recent­ly, he talked about the fact that last year, house­hold tax­es increased at three times the rate of house­hold incomes. That is to say10%, ver­sus 3 and a quar­ter per­cent. And he said that that was unusu­al. And was a bit of a prob­lem.

Fry­den­berg’s response to that was, it’s part­ly due to increas­ing employ­ment. So a reduc­tion in unem­ploy­ment leads to more tax­es paid by house­holds. That is true. But I think it’s main­ly due to brack­et cred­it. And so what we’ve seen is although the coali­tion gov­ern­ment did not increase tax­es over the last few years. Brack­et cred­it has done it for them. And so what they are doing now over the next cou­ple of years, actu­al­ly, three or four years. The pro­pos­al is to hand back the brack­et cred­it that had been pre­vi­ous­ly tak­en in the form of tax cuts and gov­ern­ments always do that. So I think we’ve seen tight­en­ing fis­cal pol­i­cy as the coali­tion has attempt­ed to move the bud­get back into sur­plus. And actu­al­ly, I saw some­thing the oth­er day. Just on Fri­day. That showed that the gov­ern­ment that the bud­get is now in sur­plus. On a 12-month rolling basis. The bud­get is actu­al­ly in sur­plus. And so when they account for the cur­rent finan­cial year. 2018, 2019 finan­cial year comes out. Which is in Sep­tem­ber. It will show that the bud­get for that 12 months has been in sur­plus. That’s the thing by def­i­n­i­tion, that is fis­cal tight­en­ing, not stim­u­lus. And it kind of has been going against oper­at­ing against the mul­ti-pol­i­cy eas­ing. That the reserve bank has been try­ing to achieve.

Tony Kynas­ton [14:00]: Yeah, that’s a good point. So where would you say the econ­o­my is Alan? Would you say it’s rea­son­ably healthy? Or in a prob­lem ter­ri­to­ry? Is it some­thing that needs resus­ci­tat­ing? Or you think apart from a few speed bumps it’s going down the road nice­ly?

Alan Kohler [14:15]: Oh no it’s def­i­nite­ly not going down the road nice­ly. It def­i­nite­ly is weak­en­ing. I’m not say­ing we’re going to be in a reces­sion, how­ev­er, the econ­o­my is not going well at all. And that’s why we’re talk­ing about rate cuts from 1.5%, pos­si­bly to two or three inter­est rate cuts. Crikey, we would­n’t be talk­ing about that. If the econ­o­my was going well. It’s not going well. I think the main thing, the main indi­ca­tor of it. Well, there is a cou­ple real­ly. One is wages growth is real­ly low. Infla­tion is like one and a half per­cent. Well below the reserve bank band. But the most impor­tant indi­ca­tor, in my view, is under­em­ploy­ment. Now unem­ploy­ment is 5.2%. Most recent­ly, and so it’s been hov­er­ing around 5% for a while. So unem­ploy­ment is not that much of a prob­lem. Obvi­ous­ly, you would want it to be four rather than five.

But under­em­ploy­ment is the prob­lem and it’s stuck above 8%. and has been for a cou­ple of years, at the same time as unem­ploy­ment has fall­en from 6 and a half% to 5%. Under­em­ploy­ment has stayed at above 8%. And so what’s hap­pen­ing is that the econ­o­my is chang­ing char­ac­ter, to some extent, in par­tic­u­lar, the nature work is chang­ing. I mean every­one refers to as the gig econ­o­my in a way. But I think we’re in a sit­u­a­tion now where employ­ment is not bina­ry. It used to be the case that you either had a job or you did­n’t, you’re unem­ployed. But nowa­days employ­ment is not quite bina­ry. Because every­one can get a few hours doing Uber dri­ving or deliv­er­ing piz­zas.

Cameron Reil­ly [15:44]: Or mak­ing pod­casts

Alan Kohler [15:47]: Or mak­ing cof­fee or some­thing like that. There’s all sort of part-time work going. And peo­ple are doing that instead of just going on the dole. But the thing is they’re all under­em­ployed. And that is press­ing down on wages growth, it’s press­ing down on incomes, peo­ple haven’t got enough income because of that. If you add togeth­er unem­ploy­ment and under­em­ploy­ment, which I think is what, one should do. The fig­ure is 13.5%. And that is a large num­ber. I mean, it’s I would­n’t equate that to unem­ploy­ment. You would­n’t say that the addi­tion of those two num­bers being 13.5%  is what we used to regard as unem­ploy­ment. I would say that. But it’s some­thing like that. And cer­tain­ly, I reck­on the equiv­a­lent num­ber that we used to look at just unem­ploy­ment is cer­tain­ly more than 5%. Take half of the under­em­ploy­ment at 4%. Then I reck­on unem­ploy­ment is prob­a­bly more like 9% than 5%. And that’s reces­sion ter­ri­to­ry. So that’s the prob­lem. I think we have in Aus­tralia. And I don’t think that the author­i­ties and the reserve bank or the trea­sury or any­where are pay­ing suf­fi­cient atten­tion to this.

Tony Kynas­ton [17:01]: Alan thanks that’s a great sum­ma­ry on that whole issue. I can’t help but think that even­tu­al­ly, some­one’s going to look at immi­gra­tion as being part of that whole dis­cus­sion about under­em­ploy­ment. I also think if I look back 10 years ago when there was a min­ing boom going on. There were lots of peo­ple trav­el­ing north and west to work on the mines and the econ­o­my was check­ing along very nice­ly. And employ­ment was very high. There’s some of that now, but it’s gone away. And the econ­o­my has­n’t real­ly tak­en up the slack with jobs usu­al­ly with­in the infra­struc­ture. So I’m hop­ing as well, at some stage in the future the gov­ern­ment ceas­es the need for some stim­u­lus in that area. Do you have any thoughts on that?

Alan Kohler [17:44]: Well, mines are robot­ic these days. Robots run mines. The mines are not a source of employ­ment. The Adani mine that’s prob­a­bly going to go ahead in Queens­land. Will have no more than 100 jobs. It’s the biggest coal mine in Aus­tralia. It’s all going to be robots. So a min­ing boom will no longer lead to employ­ment, it will lead to mon­ey. Being made by min­ing caps who are there­fore pay­ing tax­es. So the gov­ern­ment will be rolling in mon­ey that’s fine. But in order to get the employ­ment going, there needs to be infra­struc­ture, more impor­tant­ly, there need to be small busi­ness­es. Retail sell­ing and health care. Health is where all the jobs are. And that’s fine. But that needs to come from gov­ern­ment spend­ing. And all that stuff. So I do think that there is sort of a shift in the nature of Aus­tralia. In the way the econ­o­my is struc­tured, that means that things are dif­fer­ent now.

Tony Kynas­ton [18:36]: And what about your thoughts on immi­gra­tion as well Alan? I saw in one of your emails that there was a case to say that most of the growth in the econ­o­my was com­ing from immi­gra­tion. I won­der if those peo­ple com­ing in are also adding to the pres­sure on peo­ple. To par­tic­i­pate in the gig econ­o­my.

Alan Kohler [18:52]: Well yeah of course.  But just before the elec­tion, some data came out that showed.  I think the last, I’m pret­ty sure the last quar­ter­ly GDP num­bers showed that we had what every­one was call­ing a per cap­i­tal reces­sion, which is to say, on a per capi­ta basis, GDP was shrink­ing and had shrunk, for two quar­ters in a row. And what that tells you, and GDP itself, the over­all num­ber was pos­i­tive, that tells you that the growth in the econ­o­my was entire­ly due to pop­u­la­tion growth. Which is to say immi­gra­tion. And that’s been the case for quite a while now. I mean per capi­ta eco­nom­ic growth has been hov­er­ing around zero a bit pos­i­tive some­times neg­a­tive. For almost 10 years. And so I mean, it’s not going too far to say that most of the eco­nom­ic growth that we’ve record­ed. Over the past decade has result­ed from immi­gra­tion, which is expand­ing demand, expand­ing pro­duc­tion, and so on, except on a per capi­ta basis. It has not been grown at all. And if you take away that, plus you take away in recent times, in par­tic­u­lar, the growth in LNG exports. Because of the big burn­ing in LNG coals and gas export from Queens­land. Plus more recent­ly the states spend­ing mon­ey to catch up on the infra­struc­ture need­ed because of immi­gra­tion. There would­n’t be any growth in the econ­o­my at all.

Tony Kynas­ton [20:11]: I can’t help but smile, it’s a bit of a sor­ry state of affairs isn’t it? When we’re rely­ing on peo­ple tip­ping in at the top of the buck­et to keep every­one afloat. It’s food for thought. Giv­en your com­ments about the econ­o­my, and where it is. What are your com­ments and feel­ings about peo­ple pay­ing what looks like very high prices for growth stocks at the moment? Stocks like after­pay and the var­i­ous oth­er ones in the WAAAX sta­ble of shares?

Alan Kohler [20:37]: Well I think you need to think about what the com­pa­nies are doing. So most of the tech­nol­o­gy stocks are high­ly val­ued and have high PEs glob­al. So if you’re just look­ing at the Aus­tralian mar­ket these com­pa­nies are too expen­sive. But if you look at them as glob­al busi­ness­es. Where they’re going after glob­al posi­tions, glob­al rev­enues, then maybe they are not over­priced. Cer­tain­ly, After­pay is, for exam­ple, After­pay is on a high PE because of its US busi­ness, which is just tak­ing off. And so the investors are bet­ting that they are going to suc­ceed in the US. I mean they may or may not. The point being that there’s real­ly no good look­ing at sort of tra­di­tion­al PE val­ues. If you’re look­ing at some­thing that’s launch­ing a prod­uct glob­al­ly. You know the mar­ket is much big­ger. All these com­pa­nies are glob­al now. A sort of a tra­di­tion­al PE of, say, 15 times or what­ev­er it is. Is use­ful for the Aus­tralian mar­ket. But it’s not par­tic­u­lar­ly use­ful look­ing at a busi­ness that’s going for some­thing that’s glob­al, I think.

Tony Kynas­ton under­stands what you are say­ing. I think for me the key­word you use was a bet. It does seem to resem­ble more of a casi­no than a sort of invest­ment. If I was to buy a share like half to pay the only way, I could val­ue it. Is to start work­ing out the prob­a­bil­i­ties or the var­i­ous stages of growth actu­al­ly hap­pen­ing. Growth in the Us, growth in the UK. What are the prob­a­bil­i­ties of the com­peti­tor com­ing in etc.? You sort of devel­oped a big spread­sheet of all these things hap­pen­ing and then dis­count them back. But that feels like going to Randi­w­ck on a Sat­ur­day and bet­ting on a short price horse. Any­way.

Alan Kohler [22:17]: But Tony anoth­er one that’s like that is Xero, the account­ing soft­ware com­pa­ny that start­ed in New Zealand. Came to Aus­tralia and now it’s glob­al. It cap­i­tal­ized at 8 bil­lion dol­lars. But it still does­n’t make any mon­ey. Is that a high-risk spec­tac­u­lar­ly gam­ble? I don’t think it is. I mean it’s got so many sub­scribers. It’s def­i­nite­ly win­ning.

Tony Kynas­ton [22:38]: I don’t dis­agree with you, Alan. I think the hard thing for me is worth and how much to pay for that. And how much to pay for it going for­ward.

Alan Kohler [22:45]: Its extreme­ly dif­fi­cult, very dif­fi­cult, very dif­fi­cult. But the trou­ble is you have to shift your think­ing to some extent you can’t just use old met­rics that apply to a mature Aus­tralian-based busi­ness.

Tony Kynas­ton [23:01]: I appre­ci­ate that. And I’m hap­py to put my hand up and say I’m an old thinker. The first thing I always look out for in this kind of mar­ket. Is peo­ple who say this time it’s dif­fer­ent. I heard that in 1999. So it was­n’t dif­fer­ent then and I fear it’s not dif­fer­ent now. And this mar­ket to me does smell a bit of 1999. Do you have a take on that? Are you fair­ly square in the camp of this time it’s dif­fer­ent?

Alan Kohler [23:27]: I don’t think it’s just one extreme or the oth­er extreme. I mean, I think it’s a ques­tion of the indi­vid­ual busi­ness. And how it looks. I think there is a lot of inter­est­ing com­pa­nies around at the moment. And I think the inter­net is dif­fer­ent. It has devel­oped quite a lot of how can I put it. There are tremen­dous oppor­tu­ni­ties in the mar­ket these days. Obvi­ous­ly, there are a lot of shafters out there too. I would say I don’t think it’s like 1999 real­ly. I think it’s dif­fer­ent, every time, it’s always dif­fer­ent Tony. It’s nev­er the same. Things are nev­er the same. It’s always dif­fer­ent.

Tony Kynas­ton [24:11]: Thanks for the com­ments. I do see that the mar­ket tends to rhyme even if it does­n’t repeat. But rather than belabour the point, I asked you. Giv­en those com­ments does that sort of think­ing dri­ve your per­son­al style of invest­ment? What is your per­son­al invest­ment style?

Alan Kohler [24:28]: I pos­si­bly do take more risks than you do Tony. I try to find com­pa­nies that I think are going to suc­ceed in the future. I don’t always get it right. That’s for sure. So, I cer­tain­ly don’t, I don’t real­ly like invest­ing in staid blue chips too much, you know, I’m inter­est­ed in hav­ing a bit of fun with my invest­ing. I try to have a bit of both. I try to have sol­id good com­pa­nies like Transur­ban things like that. As well as try to invest in the future to some extent as well. For exam­ple, I’ve invest­ed in a busi­ness that’s called Push­pay which is a young busi­ness where the CEO has moved to Seat­tle. And they have launched an app to help church­es col­lect dona­tions online instead of send­ing the plate around. And they’ve gone real­ly well in sign­ing up church­es.  The only rea­son they are in the US is because they are more and larg­er church­es there. And they seem to be going very well. I think that took kind of a busi­ness for the future, I think. So I’m try­ing to do a lot of that. Some of my picks have been vast flops. That’s for sure.

Cameron Reil­ly [25:34]: Does Push­pay have an option for five-year-old buskers, Alan? My young fel­low went busk­ing for the week­end and peo­ple walk­ing are walk­ing past going ‘we don’t car­ry cash any­more’. I was think­ing some­body needs a solu­tion for young buskers.

Alan Kohler [25:50]: Well, that’s the prob­lem with church­es. Nobody’s got any cash to put on the plate. And what the church­es are find­ing is that their dona­tions are increas­ing by 10–15%. Because peo­ple are donat­ing using their phone app before they go. And they are giv­ing more than they used to. Church­es love it.

Cameron Reil­ly [26:08]: And the Lord said pul­leth out thy iPhone and open up thy app. Sor­ry.

Tony Kynas­ton [26:16]: Just want­ed to draw down a bit fur­ther in what you’re say­ing, Alan. If we can take Push­pay. It sounds like you’re I guess look­ing at the poten­tial upside, you’re look­ing at the sto­ry, the cod­ing, the man­age­ment, etc. Is there any sci­ence around your deci­sion to invest or not? Do you have met­rics, or do you have par­tic­u­lar things you look for? Or is it just that you think on a case-by-case basis, ‘That’s a good sto­ry’?

Alan Kohler [26:44]: That’s about it. I real­ly focus on cash, how much they’ve got in the bank. How much cash they are earn­ing. If they are earn­ing cash. These com­pa­nies par­tic­u­lar­ly ear­ly-stage com­pa­nies. It’s very much a cash sto­ry. I’ve got to get there. I’ve got to not run out of mon­ey. And then it comes down to the qual­i­ty of the man­age­ment. Do I like them? I don’t invest in a busi­ness I try not to invest in a busi­ness. Unless I’ve spo­ken to the man­age­ment, and I’ve got a sense of what they’re like. And then it’s the ques­tion of the idea real­ly. Is the idea good? is it like­ly to suc­ceed? I mean, I don’t as I say, I don’t always get it right. I invest in a busi­ness called Der­ma­com. Which I thought, kind of still think the idea is good. I like the man­age­ment. But it’s nev­er gone any­where real­ly. Unfor­tu­nate­ly. I’ve got over a dozen stocks in my port­fo­lio. I’m more a com­men­ta­tor on invest­ing than a big investor myself, I should add, Tony. I’m a stu­dent of it, as opposed to a rich per­son.

Tony Kynas­ton [27:39]: Thanks for shar­ing that any­way Alan. It’s always been a ques­tion in the back of my mind. Because I hear you inter­view lots of com­pa­nies. Dur­ing the week on your invest smart web­site. And I often won­der if that influ­enc­ing your invest­ment style? And these peo­ple that you are pick­ing on to inter­view. Are they the ones that you have already tak­en an inter­est in? And want to speak to their man­age­ment? Or is that just some­thing that crossed your path some oth­er way? I guess the inter­view that we hear, are the peo­ple that you have tak­en an inter­est in? Or they are peo­ple that have con­tact­ed you?

Alan Kohler [28:15]: Well it’s a bit of both. But I try not to inter­view CEOs of com­pa­nies that are absolute dogs. Because I don’t think that will be help­ful to any­one. So I do try to keep it to com­pa­nies that I think are inter­est­ing. And worth look­ing at. Just bear­ing in mind that I’m not an ana­lyst. I haven’t ana­lyzed these busi­ness­es so there­fore, the fact that I’ve inter­viewed them is not itself a buy rec­om­men­da­tion. It’s sim­ply an inter­view. And you know, at the end of the inter­view, I’ll often come to a view that sounds inter­est­ing and worth more of a look. On that basis too. I’m hop­ing that you would get to the end of the inter­view and think well that’s worth more of a look.  I would­n’t expect any­one to into invest­ment in a com­pa­ny just on the basis of the inter­view. But I’d hoped that it would intro­duce that com­pa­ny to you as an investor. And you might be per­suad­ed to do a bit more work on it. On the basis of that inter­view.

Tony Kynas­ton [29:08]: Thanks for that. Cer­tain­ly have done that in the past with some of the peo­ple you’ve inter­viewed. So it is a good source of ideas. Cameron and I have spent the last 5 or 6 years writ­ing a book on heads of insti­tu­tions and the preva­lence of psy­chopaths, psy­chopaths in those jobs. Called the psy­cho­path­ic econ­o­my. What are your thoughts on rely­ing on what CEOs have to say ver­sus fun­da­men­tal analy­sis of the com­pa­nies? Have you ever felt like you’ve been lied to by a CEO dur­ing one of these inter­views?

Alan Kohler [29:39]: Well all the time? I would­n’t say lied to straight out lie.

Cameron Reil­ly [29:47]: Don’t for­get Alan

Alan Kohler [29:48]: What?

Cameron Reil­ly [29:48]: What’s the George Costan­za line that you quot­ed today?

Alan Kohler [29:53]: It’s not a lie if you believe it.

Cameron Reil­ly [29:53]: That’s right

Alan Kohler [29:57]: But the thing to under­stand. Remem­ber CEOs are spruik­ers. They are there to sell their com­pa­ny. And when­ev­er I speak to them, it’s always fun and amaz­ing. When­ev­er I talk to CEOs, every­thing’s always fan­tas­tic. Every­thing’s great. The fea­ture is great. We got the right strat­e­gy. And quite often, I’ve inter­viewed a CEO who says every­thing’s great, we’ve got the right strat­e­gy at the right time, next week, he said. And the new guy comes in and has to change every­thing and says that it’s ter­ri­ble, the place is in a mess, we have to fix it up. And that’s hap­pened more than once. I can assure you.

Cameron Reil­ly [30:38]: We were laugh­ing about that on your show a cou­ple of weeks ago. I’ve been laugh­ing at it. You are prob­a­bly very close to this, but CEOs of news­pa­per com­pa­nies over the last 15, 20 years say now we’ve got a strat­e­gy, now we’ve got a great strat­e­gy for get­ting our news­pa­per back on top and prof­itable. And then they end up sack­ing a lot of peo­ple. Which seems to be the strat­e­gy.

Alan Kohler [30:57]: Well the thing to bear in mind about all CEOs, includ­ing news­pa­per ones, is that they are in the job for 2 or 3 years. 5 years the most. Their task is to get through that peri­od. With­out los­ing too much of their salary. Their job is to keep get­ting paid that salary. For the next few years. And then get­ting out with their skin on. That’s all they want to do. I mean, that’s fair enough.

Cameron Reil­ly [31:21]: Well is that a good thing for share­hold­ers though? Is that what the CEO’s objec­tive is?

Alan Kohler [31:26]: Of course not, there’s a push on and sup­port to make the CEOs get paid, most­ly at least half in shares. Then divest for sev­en years. And that’s what I think all these short-term incen­tives and all that stuff is, STI & LTI’s at the moment. Rub­bish. Real­ly, I mean, I think they should just get paid a salary, plus some shares that will vest in 7 years. And that prob­a­bly will focus their minds.

Cameron Reil­ly [32:00]: I agree

Tony Kynas­ton [32:00]: Thanks for com­ing on Alan I real­ly appre­ci­ate it. I guess I just want­ed to give you a [inaudible32:04]. You spoke about some of your issues there. That you sup­port change for. What about some of the oth­er things I’ve seen and heard you talk about like a con­flict of inter­est in finan­cial plan­ning, and high fund fees that are get­ting charged. Do you have some­thing to say about those?

Alan Kohler [32:16]: I think it is true that the fees that some man­agers charge, are most­ly too high and it is the case that on aver­age, most fund man­agers do not out­per­form their bench­marks or the mar­ket. And they tend to under­per­form by the amount of their fees. So I think, and I’ve come to see that fees are the main prob­lem in wealth man­age­ment, apart from con­flict of inter­est, and I was very dis­ap­point­ed that the Hain Roy­al Com­mis­sion did not rec­om­mend. The sep­a­ra­tion of advice and prod­uct. In that, he specif­i­cal­ly decid­ed not to do that. I think the key prob­lem with finan­cial ser­vices in this coun­try is that banks and wealth man­agers such as IMP are allowed to employ advi­sors, or finan­cial advi­sors or to hold their licens­es to be affil­i­at­ed with them. And so the result of that is. That there is a dis­con­nect.

They will think they are get­ting finan­cial advice. Through its inde­pen­dence when in fact most of the time they’re not, it’s con­flict­ed. Now it is the case that the fea­ture finan­cial advice leg­is­la­tion, banned com­mis­sions. But that’s not the only way that there’s a con­flict of inter­est. Some­one who’s employed by a bank to pro­vide finan­cial advice is nat­u­ral­ly going to try to push prod­ucts, even if the prod­uct is not the banks. I mean, they are involved in sell­ing. I think finan­cial advice needs to be entire­ly sep­a­rate. What I think is a prop­er anal­o­gy with the health sys­tem. Where the idea of a doc­tor giv­ing you pre­scrip­tions for drug com­pa­nies that they are employed by. Would be com­plete­ly unac­cept­able. I mean, if a doc­tor that gets kick­backs, or salary from a drug com­pa­ny would be rubbed out, and right­ly so. But in wealth man­age­ment as opposed to health man­age­ment, it’s okay appar­ent­ly. It’s not okay.

Cameron Reil­ly [34:09]: Fan­tas­tic

Tony Kynas­ton  [34:10]: Agree. Well, one last ques­tion Alan. I do this because I read on your Wikipedia page that you are an ambas­sador of the Aus­tralian Indige­nous Edu­ca­tion Foun­da­tion. Would you like to tell us what that is? And how we can get involved.

Alan Kohler [34:27]: So the AIEF is found­ed by Andrew Pen­fold and what they do is. They sup­port indige­nous peo­ple, kids main­ly, obvi­ous­ly, chil­dren too, to go to good schools. In cap­i­tal cities main­ly. And those kids end up with good edu­ca­tion and quite often go back to their com­mu­ni­ties. And I think it’s real­ly not only helps those kids, but it real­ly has a pos­i­tive impact on the whole indige­nous com­mu­ni­ty. Because they kind of, they go back, and they sort of, the val­ue of edu­ca­tion is rec­og­nized and spread through the whole com­mu­ni­ty. So I just think that that’s a real­ly ter­rif­ic char­i­ty, and they’re doing great work.

Cameron Reil­ly [35:09]: Won­der­ful

Tony Kynas­ton [35:09]: Well, thank you, Alan. That’s my last ques­tion, I real­ly appre­ci­ate you com­ing on. I’ve been a big fan for a long time. And I’m always hap­py to hear your voice cry­ing out against con­flicts of inter­est in the finan­cial ser­vices indus­try in par­tic­u­lar. So well done and again thanks.

Alan Kohler [35:28]: No wor­ries, thank you.

Cameron Reil­ly [35:30]: Well there you go. You got your fan­boy inter­view there done. Are you feel­ing good?

Tony Kynas­ton [35:36]: Yeah. I’ve been excit­ed about it all week. I real­ly do appre­ci­ate Alan’s help. He plugged us into his email, and he came on board for an inter­view. It was a high­light for me. Some­one very spe­cial.

Cameron Reil­ly [35:48]: That’s great. I thought it was inter­est­ing that he said he’s more of an invest­ment com­men­ta­tor. An invest­ing com­men­ta­tor than an investor. You seemed a lit­tle bit sur­prised by that?

Tony Kynas­ton [35:59]: I was yeah. Cause he has spo­ken before about com­pa­nies he has invest­ed in. And some­times it works out and some­times it does­n’t. But I do have the impres­sion, that’s only my impres­sion that he was a fair­ly large investor, espe­cial­ly after sell­ing some of these com­pa­nies back to news corp. So I was a bit sur­prised yeah. And I think also too, inter­est­ing to inter­view some­one like that. I felt the inter­view was get­ting into a bit of a debate between him and me, on var­i­ous invest­ment styles. So I tried to side­step that a bit. But it was a very dif­fer­ent view­point from the one that I am employ­ing. And I’m used to. So I think it was good to have that on the show as well to give peo­ple a wider, wider insight into invest­ment styles.

Cameron Reil­ly [36:45]: Basi­cal­ly he said you’re an old fud­dy-dud­dy when it comes to inter­net stocks.

Tony Kynas­ton [36:53]: Yes. Well, I mean, look at it. Name suc­cess­ful stocks are still around since the dot-com boom. There is Google, Face­book,

Cameron Reil­ly [37:05]: Ama­zon, eBay.

Tony Kynas­ton [37:12]: Ama­zon, I’m real­ly strug­gling after that. And yet in 1999 there were 100s, if not 1000s of them around.

Cameron Reil­ly [37:18]: I was explain­ing this to I think, one of my kids on the week­end. You know, I was work­ing in an ISP in 96. I think I worked for Oze­mail, and I went from that to Microsoft, where I worked at our inter­net ser­vice divi­sion. So I was the account man­ag­er for Wish­list and dStore and Scape, the big online ven­ture of Vil­lage Road­show, who threw hun­dreds of mil­lions of dol­lars into it, it last­ed about 6 months. Just fact-check­ing myself there. Accord­ing to a com­put­er world arti­cle from the 21st of March 2001, Scape hits the dust bin, the Ten Net­work and Vil­lage Road­show spent a report­ed $44 mil­lion to build the web­site. And I was explain­ing to my kids, you know, the per­cent­age of these busi­ness­es that sur­vive are minus­cule, absolute­ly minus­cule, and some of them go on and do huge things, but most of them don’t last. Most of them don’t make it even though they make huge claims and hired by ven­ture cap­i­tal­ists and the tech media at the time as being huge vision­ar­ies that it is going to take over the world. I’m not just talk­ing about Aus­tralian busi­ness­es. I’m talk­ing about US busi­ness­es as well. Very few of them sur­vive to become a prof­itable, sta­ble, sus­tain­able busi­ness.

Tony Kynas­ton [38:51]: Well, that’s right. I mean, even if you look at Ama­zon now. I think it’s bare­ly prof­itable, and it cer­tain­ly is in their busi­ness mod­el to pump all their prof­its back into expand­ing sales, so I don’t begrudge that. But it makes it hard to val­ue them.

Cameron Reil­ly [39:04]: Ama­zon made 11.2 bil­lion in prof­it last year, so I don’t know what you clas­si­fy as bare­ly, but

Tony Kynas­ton [39:11]: Thanks Mr. fact-check­er. Have a look at what their return is though.

Cameron Reil­ly [39:14]: Maybe, by your stan­dards, that’s bare­ly.

Tony Kynas­ton [39:23]; Yeah, I’m hap­py to be inter­net fud­dy-dud­dy.

Cameron Reil­ly [39:24]: Well, let’s talk about, what you talked about a lit­tle bit off the air ear­li­er today. And we were talk­ing about val­ue invest­ing. One of the ques­tions I want­ed to ask Alan, but did­n’t get a chance, was why, in his expe­ri­ence, after writ­ing about mar­kets for decades, more peo­ple, more investors, and fund man­agers don’t fol­low in val­ue invest­ing method­ol­o­gy as you do. And get the sort of returns that you do. And you were say­ing some­thing about it sort of comes and goes in terms of pop­u­lar­i­ty.

Tony Kynas­ton [39:57]: Yeah, it very much does. It comes and goes in terms of the cycle. So I remem­ber lead­ing up to the dot come boom and bash in sort of 97, 98, 99. Peo­ple like War­ren Buf­fet were com­ing out say­ing I can’t find any­thing to buy in this mar­ket. Every­thing is over­val­ued. So I’m going to go to cash. And it turned out to be a very good idea because in 2001 he was able to buy a lot of things cheap­ly. But it can be a peri­od of four or five years where val­ue invest­ing goes out of style. And I think we’re in a time like that now. If all the fund man­agers who post a good per­for­mance in the last 12 months. Have all had shares like half to pay in their port­fo­lio? And I can’t help think­ing that’s going to come a cor­po­rate some stage. It’s just so volatile. And if they can buy at the bot­tom and sell at the top, good luck to them. But I think that’s very hard to do as well. Because what’s the top for a stock like that? If you can’t val­ue it, how do you know when it’s over­val­ued? The oth­er thought that is also at the back of my mind is that for decades.

The busi­ness press here is always being lit­tered with sto­ries about com­pa­nies who tried to expand over­seas. Par­tic­u­lar­ly to the US and did­n’t do so well. I mean the US is a big mar­ket, but it’s a dif­fi­cult mar­ket. It’s over 50 states with dif­fer­ent leg­is­la­tion in each state. And the dif­fer­ent mar­kets in each state. And lots of entre­pre­neurs who are ready to copy and imple­ment some­thing. On a wider scale than the Aus­tralian com­pa­ny. Enter­ing the mar­ket can. Now some have done it and hats off to them. But I can’t help think­ing as if I was writ­ing an app. To make dona­tions from US church­es. It would­n’t take long for some­one involved in those US church­es even to have anoth­er app in their mind. With a big­ger net­work than what I could do from New Zealand. I could be wrong. And I am an inter­net fud­dy-dud­dy but. It seems to me that, the peo­ple are over­rat­ing the chance of suc­cess in the US for these stocks.

Cameron Reil­ly [41:58]: How did you go from run­ning one of  Aus­trali­a’s first.com retail­ers? To be an inter­net fud­dy-dud­dy, Tony?

Tony Kynas­ton [42:08]: I was always an inter­net fud­dy-dud­dy. I remem­ber work­ing at Col­mar at the time. We had peo­ple com­ing in, includ­ing Vil­lage Road­show. And pitch­ing their sto­ries to us. And I kept scratch­ing my head, going. Let’s lift the skirts here, where is the mon­ey? Where is the prof­it? And there was­n’t any. It was all about, not sin­gling out Vil­lage Road­show here. It was all about so let’s start an inter­net com­pa­ny. Let’s list it and let’s cash in. And get out. That was nev­er a long-term busi­ness mod­ule. And I think maybe, I prob­a­bly should have asked Alan, but I did­n’t. I won­der whether his career in news­pa­pers. And even in TV is any dis­rup­tion that would have gone through. Is now col­or­ing his taste for the dis­rup­tive.

Cameron Reil­ly [42:51]: I don’t think that there is no doubt that there is a huge amount of oppor­tu­ni­ty in dis­rupt­ing busi­ness mod­els. But as I said before, the num­ber of star­tups that get it right and sur­vive is minus­cule. It real­ly is like you said going to Flem­ing­ton on the week­end. Which is some­thing that you are not very good at based on the results of your hors­es in the last cou­ple of years.

Tony Kynas­ton [43:20]: That’s right. I enjoy it and it keeps me men­tal­ly sharp. But it doesn’t pay the bills. And I think one thing I want to add to that Cam. Is that val­ue invest­ing? Is almost called a sci­ence, there are met­rics, there’s the abil­i­ty to look for things above or below hur­dle rates. You can cre­ate a check­list. You can test against some­thing that’s real. I haven’t yet come across an investor in the.com space that has a check­list like that. Oth­er than sort of soft ones like how do you like the man­age­ment? Or there’s a huge address­able mar­ket. It just does­n’t seem all that sci­en­tif­ic to me. And I like the sci­ence of invest­ing. Not the sto­ry­telling side of things.

Cameron Reil­ly [43:58]: Yeah. Look, I think that’s one of the things that I find fas­ci­nat­ing about your approach is it is very math’s‑based and ratio­nal. You almost, it’s almost like a sci­en­tif­ic method. It’s like you’ve built-in ways of try­ing to nav­i­gate around the sub­ject of cog­ni­tive bias and emo­tion. That every­one gets caught up in when we hear a good sto­ry. Humans are sto­ry­tellers. We are dri­ven by sto­ries, and we’re sus­cep­ti­ble to a good sto­ry. You kind of get beyond that and just look at the hard met­rics.

Tony Kynas­ton [44:39]: Yeah thanks. That’s what I try to achieve. From expe­ri­ence, I mean, as I said, we start­ed off lis­ten­ing to every­body tell a sto­ry. To us and take tips and that kind of thing. And it just ends in dis­as­ter.

Cameron Reil­ly [44:53]: It’s bor­ing. It’s bor­ing, but. And lis­ten that’s not to say. I’m sure like I heard Buf­fet say he missed Face­book, he missed Ama­zon. They were giv­en oppor­tu­ni­ties to buy them. And Apple. Giv­en oppor­tu­ni­ties to buy into those com­pa­nies a long time ago and said no, because they did­n’t under­stand how to val­ue it and they missed out. But you miss some, but long term he’s done okay with doing what he does.

Tony Kynas­ton [45:21]: Yeah. That’s exact­ly right. He’s doing this to win it. And I guess I bet­ter learn not to have regret about that. I mean, I mean I could have bought Ama­zon at 14 bucks in 2001. But I did­n’t because I could­n’t see it mak­ing any mon­ey. If I had, we’d be hav­ing this con­ver­sion in the Bahamas. On a G7 golf stream. But we’re not. You can’t have regrets about that, you’ve got to stick to what you know. Your cir­cle of com­pe­tence as War­ren Buf­fett says, and just keep plot­ting along with it, it’s bor­ing. I find it fun. But most peo­ple will find it bor­ing. It’s far more inter­est­ing to pick up the phone and talk to CEOs. Who are always giv­ing you pos­i­tive news and view about how good their com­pa­nies are going to be. And how it’s going to be the next Ama­zon. Far more fun to do that than to sit down and go through p&ls, bal­ance sheets, look­ing for good cash flow and low debt.

Cameron Reil­ly [46:11]: To me, that was one of the most fas­ci­nat­ing things about chat­ting with Alan. Was just his views on CEOs.  Like that sound­ed some­thing as cyn­i­cal as some­thing that would come out of my mouth. In the book of psy­chopaths. To come out of his mouth, I find fas­ci­nat­ing.

Tony Kynas­ton [46:27]: Yeah, yeah. I did too. Well, I guess you know, he’s done enough inter­views. And he’s been around long enough to be cyn­i­cal. Isn’t that the old [inaudible46:35] of the hard-bit­ten news­pa­per? I’ve seen them all done that.

Cameron Reil­ly [46:38]: So what you’re say­ing is if you had bought Ama­zon back in 2001, you would be fly­ing me. With you to St. Andrews in July. When you’re going on your dis­tillery and Golf­ing tour for a month. Unfor­tu­nate­ly, I have to stay here and keep the fires burn­ing.

Tony Kynas­ton [47:00]: Next time.

Cameron Reil­ly [47:02]: But I will be in Syd­ney with you next week. We’re going to hang out, do some video, do some pod­casts togeth­er. In a room less echoey hope­ful­ly than the one you’re in now. I’m look­ing for­ward to hang­ing out.

Tony Kynas­ton [47:12]: Yeah, it will be great.

Cameron Reil­ly [47:22]: We’ll do some more stuff analy­sis shows next week, and hope you enjoyed our chat with Alan Kohler. Thanks to all our new sub­scribers as well. We appre­ci­ate that a lot of you have come over from Alan Kohler’s newslet­ter. So I hope in par­tic­u­lar that you guys enjoy it. And we’ll be back soon. Thanks, Tony.

Tony Kynas­ton [47:34]: Thanks Cam, I’m out. See you.

Cameron Reil­ly [47:39]: And one last note from me. If you want to sign up to become a mem­ber of the QAV club where you can hear our pre­mi­um episodes or you want to check in our archives. If this is the first episode you’ve lis­tened to, you should prob­a­bly go back to lis­ten to episodes 1,2,3,4 where we talked a bit about Tony’s back­ground, how he devel­oped his method­ol­o­gy, and his check­lists. How it works, etc. We ana­lyzed Tel­sa [inaudible48:00] so you get a sense of how the check­list works. Go to QAV podcast.com.ou. And I also pro­duce a whole bunch of his­to­ry and pol­i­tics-relat­ed pod­casts. If you’re inter­est­ed in that kind of stuff. Go to the podcastnetwork.com, check those out. We’re not finan­cial advi­sors, make sure you get finan­cial advice before you do any invest­ing. And that’s us for this week. We’ll be back next week with more stock analy­sis. Thanks for lis­ten­ing.