Name of Audio: QAV #362 — Don’t Judge The Fudge
Length of Audio: 01:07:48
Cameron Reilly [00:04]: Welcome back to QAV episode 362, the last episode for 2020. How are you, TK? How’s it going down there on the country estate?
Tony Kynaston [00:16]: Yeah, it’s really good. Really, really good. No, it’s cool. It’s like getting up sort of might reach 20 today, but some days it’s been 14, 15 degrees.
Cameron Reilly [00:29]: Stop it. You’re making me jealous. 31 in Brisbane today It’s killer. Anyway, get to use my pool, which is nice.
Tony Kynaston [00:40]: Do you have like QAVs written into the cement somewhere on the pool?
Cameron Reilly [00:47]: Cement? No, I’m talking the $60 blow-up pool for big W, TK what’s this cement business? What do you think? Cement? No, it’s a little wading pool, that’s all we can afford. We just sit out in it, splash each other, nothing too fancy. Yeah, it is.
Tony Kynaston [01:10]: No that’s good. Is it free blow-up rings or the canvas type?
Cameron Reilly [01:13]: One blow-up ring, yeah. Fancy technology these days you only need the one blow up.
Tony Kynaston [01:22]: And when you tip it up to empty it, does it create a water slide as well?
Cameron Reilly [01:25]: Yeah we do.
Tony Kynaston [01:26]: Yeah, good.
Cameron Reilly [01:28]: Oh, that’s nice. You’ve been getting some golfing?
Tony Kynaston [01:31]: Yeah. I played a couple of times last week it’s been pretty busy. We’ve had people staying with us and parties and Christmas functions and things. So, it wasn’t really until about yesterday that I could put my feet up for a while.
Cameron Reilly [01:42]: All right.
Tony Kynaston [01:44]: That’s anyway, that’s my song. I’m sorry.
Cameron Reilly [01:46]: Yeah, that’s so hard. Good thing you got down there when you did, if you’d left it to now, you would have been stuffed they’ve shut the border today, haven’t they?
Tony Kynaston [01:59]: They have, yeah, to Sydney at least. I left Sydney Thursday a week ago, which was the day before they started getting people to quarantine if they came from Sydney.
Cameron Reilly [02:11]: Oh, from the Northern beaches, I think officially and initially, and then Greater Sydney today, I think.
Tony Kynaston [02:17]: Yeah. Well, I think the border is shutting out Greater Sydney.
Cameron Reilly [02:21]: Yeah. So, we’ll have to talk about what this means for us doing an event in Melbourne in a couple of weeks, we’ll talk about that offline, I guess.
Tony Kynaston [02:29]: Yeah. Well, it shouldn’t matter, should it?
Tony Kynaston [02:31]: Well, depends on what happens between now and then, but you’re already down there, so you can do something whether or not I’ll be able to get down there in a couple of weeks who knows what’s going to happen? These things change quickly when these things break out.
Tony Kynaston [02:44]: They do, but with Queensland’s. Queensland’s is above the iron curtain, isn’t it? the banana curtain, you’ll be fine.
Cameron Reilly [02:55]: Well, before we get into questions, I want to cover off on things. I want to thank Eddie Donato for the Vino, he sent both of us a nice bottle of wine. Yours is probably still back home in Greater Sydney, but mine turned up and I’ve nearly finished it. Eddie said “Hey, enjoy your Christmas day” But it didn’t last that long. Eddie, thank you. that was thoughtful.
Tony Kynaston [03:18]: Thanks, Eddie. I look forward to going back and getting it maybe in six months’ time when COVID is under control.
Cameron Reilly[03:23]: When you’re allowed to go back, you were there quarantined yeah. thank you, Eddie! That was very generous. Ray Dalio had some tragic news; I don’t know if you’ve seen that. His 42-year-old son died in a car crash on the weekend.
Tony Kynaston [03:37]: Yeah. I just scan the headlines of it. Yeah, it sounds terrible.
Cameron Reilly [03:41]: Yeah, so.
Tony Kynaston [03:44]: I mean like I know people talk about 2020 and we haven’t got flying cars yet and things like that, but I’m still amazed that we have car crashes. Really.
Cameron Reilly [03:53]: Yeah!
Tony Kynaston [03:54]: Yeah. I mean, if people can walk away from formula one cars that burst into balls of flame, you think we’d do better with our own passenger cars.
Cameron Reilly [04:05]: Yeah.
Tony Kynaston [04:06]: Yeah. I mean, I actually saw an ad for a Volvo in the magazine on the weekend, and they’re now putting speed limiters on their cars, which I think is a great move. I’ve been calling for that for decades.
Cameron Reilly [04:17]: Yeah. Well, I wonder if the fully automatic self-driving cars will cut down on car crashes?
Tony Kynaston [04:28]: Yeah and if they don’t, the software could easily go into a driver, like a driver when you call it, a car with a driver, and improve the safety of it too.
Cameron Reilly [04:37]: Yeah. Anyway, tragic for Ray. For people who don’t know who Ray Dalio is, we talk about him from time to time on the show, American Billionaire Hedge Fund Investor, pretty much a value investor, I think. Yeah?
Tony Kynaston [04:55]: Yeah, from time to time or maybe in his past, he operated Vulture Funds, so it’s like a really big value investing.
Cameron Reilly [05:02]: Right.
Tony Kynaston [05:03]: [ inaudible 05:03] the Carcass of companies that are on their last legs.
Cameron Reilly [05:07] :Yeah.
Tony Kynaston [05:07]: Yeah.
Cameron Reilly [05:09]: It doesn’t matter how much money you’ve got when things like this happen. I’m sure it’s the same, the same sort of tragedy.
Tony Kynaston [05:17]: Yeah, it is. And I think Cam Williams said it best on Facebook when he said “no parent should outlive their kid”, which I hardly agree.
Cameron Reilly [05:25]: Yeah, so tragic there. On the opposite side of tragedy, Hawthorne, Haw had an exciting week. The hit, it has been like down 30% in our portfolio for quite some time and I kept saying to you, should we sell it? And you were like, no, it doesn’t breach the cell line. And also, as you pointed out with the dividend and capital reimbursement that they did a little while back, it really wasn’t a dip, they had sort of neutralized the drop in the share price. So it was, we’d made enough money from it and neutralized it. But then one-day last week it went from minus 30% to plus 11% in a single day, and they pause trading and the ASX asked them “WTF” and they came back and said, Hey, we don’t know. Yeah, that was it, just “WTF”.
Cameron Reilly [06:34]: They came back and said, we don’t know, but LCY’s share prices done something very similar. LCY is a legacy and apparently, the two of them have a joint venture in an iron-ore mine and, I think that apparently with the Iron-ore price going gangbusters, somebody thought, Oh, these guys are going cheap. So, the ASX took off the halt on their trading and then the share price came back down all over again, but it stopped. last I looked at stopped at minus 11%, which is still a long way up from where it started. So that’s good!
Tony Kynaston [07:22]: It is, yeah. Well, welcome to the world of small miners though really. That’s what they do.
Cameron Reilly [07:28]: Right. It’s currently trading at 11 and a half cents. So that means we’re really and truly in the black on that, even though it shows as negative on our spreadsheet, we’re in the black.
Tony Kynaston [07:42]: Right. Good. Our portfolio has been doing well. Like you too, I had a look today as I was preparing,
Cameron Reilly [07:49]: It has been doing well, according to Sharesite. For the financial year, our portfolio is currently up 28.03% versus, I’m tracking it in Sharesite against the S.P.D.R 200 fund which I had a look at that versus all odds and its tracts it pretty closely I think, the all odds is up, well the S.P.D.R 200 is up 14.59%. So, we’re almost exactly double the all odds.
Tony Kynaston [08:30]: That’s a great return isn’t it? 28%
Cameron Reilly [08:33]: The all ords is a little bit low. When I looked this morning, the ords were about 13.5%. So, we’re double, double the all odds for the financial year to date. So, it works! It’s where we should be. How about that?
Tony Kynaston [08:47]: Yeah, it’s good. I just came back to Hawthorn, I just up on Stock Doctor its average daily trade in and out is 25,000 bucks. So, it’s going to be susceptible to moves on rumors. All it takes is for a couple of people in the market to get excited about it and spend a hundred grand on the share price, it’s going to bounce.
Cameron Reilly [09:07]: Yeah
Tony Kynaston [09:07]: yeah.
Cameron Reilly [09:08]: So that was a bit exciting, a bit of fun and I saw it as Testament to your advice, that we don’t sell until it breaches because we held onto this and it came good.
Tony Kynaston [09:22]: Yeah and that’s the case with a lot of different things too, isn’t it? Not just this one. Beach Petroleum, I think, was getting pretty close to a 3‑point sale, but it didn’t reach it, and we went up like 60% a couple of weeks ago. So, these trend lines, I know that they are not exact and they’re not scientific to a point, but they do often represent resistance and it goes down to the resistance line and then people piling cause it’s cheap enough and there are flip sides to trade too. If it breaks through the resistance line, it will probably keep going up. That’s generally what happens.
Cameron Reilly [10:01]: The resistance is useless.
Tony Kynaston [10:02]: But unless [cross-talking 10:03] the five-year monthly chart for Hawthorne and you can’t see that it went down and went up again last week in that five-year monthly chart, you can see that it’s risen a bit this month, but that’s about it. And that’s one of the reasons for using the monthly chart just takes all that sort of volatility out of a stock price.
Cameron Reilly [10:25] :Yeah. Well, yeah because it came mid-month, right? So, we wouldn’t be able to see it.
Tony Kynaston [10:32]: Yeah, exactly.
Cameron Reilly [10:33]: I think another one that was down for a long time was Schaffer SFC We bought that at $14.50 back in August last year and it had a bit of a rough trot for a while. I think it got down as low as $10.33, but we held and it’s back up to $18 60 today. So yeah, a couple of times to be fair, there’s been plenty of times where they’ve kept going down and we’ve sold them, but a few times they haven’t hopefully in the balance of things, more of them recover them we have to get rid of.
Tony Kynaston [11:22]: Yeah, exactly.
Cameron Reilly [11:24]: All right, what’s next? Stock of the week, Tony, I’m guessing you probably don’t have one?
Tony Kynaston [11:32]: I do
Cameron Reilly [11:33: What?!
Tony Kynaston [11:34]: Wrong! Now I do.
Cameron Reilly [11:36]: Yeah. What have you got?
Tony Kynaston [11:37]: I’ve got Ricegrowers Association SGLLV. For some reason, I don’t know why it has a five-digit code.
Cameron Reilly [11:45]: Oh, and nothing, this is Rice Growers. Tell me about SGLL, what’s got you hot and bothered over that one?
Tony Kynaston [11:58]: Well, I did a download today just to prepare for this because I hadn’t done one in two or three weeks, and discovered that Ricegrowers was limited, had a reporting date of October 20. So, their numbers have just hit Stock Doctor. So that’s why I wanted to call it out. And its share price is doing quite well since it reported, but doing quite well for a while now. And it still has a QAV score of 0.11 so it’s still on our list, even though the share price is going up and it may not last on our list for much longer if the share price keeps going up. But yeah, I went through today and updated the manually entered data that goes with the stock because if we’ve got new figures and it’s still remained on the buyer list. The company itself, probably was an old co-op I guess, but as I said, it’s, as the name says it basically grows rice all types of rice. And I would think it would be based down in the Murray somewhere. And it has brands like SunRice, which would be fairly well known to Australian shoppers at least.
Cameron Reilly [13:18]: I think that’s where the SGL comes from, SunRice group. I think it was called at some point.
Tony Kynaston [13:22]: Okay, yes quite possible, yeah.
Cameron Reilly [13:24]: It looks like they’re on a bit of an acquisition spree; they’ve just picked up a New Zealand business. They’ve got Ingham’s Feed Mill at Hamilton and Top Cow and Top Calf Brands, and they just recently also acquired KJ &CO’s Brands. Not sure what that is, but they got the acquisition bug apparently.
Tony Kynaston [13:53]: Yeah. Not the biggest stock in the buy list, but the average daily traded of $37,000 so that will allow a few of our listeners to get set with it anyway.
Cameron Reilly [14:02]: what was their QAV score?
Tony Kynaston [14:04]: 0.11.
Cameron Reilly [14:06]: Oh, it’s low then it’s not high on the list.
Tony Kynaston [14:09]: Not high on the list now and like I said, the way the share price is going, it may slip off the buyer list if the share price keeps going up.
Cameron Reilly [14:16]: If it gets too high, yeah right?
Tony Kynaston [14:18]: Yeah.
Cameron Reilly [14:20]: Okay. Well, everyone can have a look at that; SGLLV. Apart from better be quiet on the old stock journal last week, you were in holiday mode, that’s fine, that’s good. I’m glad, I know, as I’ve said in the newsletter today, I’ve worked you harder this year than I think you’ve worked in 25 years.
Tony Kynaston [14:40]: 14 at least.
Cameron Reilly [14:42]: You need a holiday.
Tony Kynaston [14:44]: I do, actually. I do. I think you’re right. I do I feel a bit like it’s been, particularly in the last month or so, it’s been a long period of time. As you know, we were setting up a new company with your son who is involved with our charity exchange and our raffles, to raise money for charity. So that’s going live at the moment and has a few speed bumps we need to work through. That’s taken up a bit of time; my own investing takes up time, QAV takes up time, horse races, conquered by none, my horse race and horse breeding business takes up time. So yeah, it’s getting to be a bit of a half workload at the moment when you’re throwing traveling and managing for households and stuff. There’s enough at the moment. So, it’d be good to have a break. I’m looking forward to it.
Cameron Reilly [15:38]: On behalf of the Reilly family, we happily grant you this momentary respire before you get back into it.
Tony Kynaston [15:49]: Thank you. It’ll be a, respired only from recording shows. I’m still very much interested in what the market does, even though I’ll be quiet for the next couple of weeks. Fin review, we’ll go on hiatus and probably only put out one or two use papers over the next two weeks. I put out usually a Christmas one and then the new year’s one, and most people will be on holidays, but, yeah, we have worked hard this year, but I enjoy it. I’m 24/7, you’re not pedal to the metal involved in the markets. It’s my passion. So yeah, it’s hardly working, isn’t it?
Cameron Reilly [16:27]: Well, and on behalf of all of the listeners, I’m sure we appreciate everything you’ve done to teach us this year. It’s been a great year, been a challenging year, but also a terrific learning opportunity. I think we said that last week.
Tony Kynaston [16:41]: Yeah. I agree. Yeah. Thank you for that. I find it very rewarding to be making a difference to people’s lives and thanks everyone for the brilliant feedback. It’s never gone astray when we get an email from someone saying, you know, you made a difference to my investing. It’s very rewarding to the person involved financially. But also, to me, to know that this little podcast has made a difference to someone’s life.
Cameron Reilly [17:07]: Yeah. It’s nice.
Tony Kynaston [17:09]: Yeah.
Cameron Reilly [17:10]: Okay. So, I was going to just pull up the journal for the week and just run off a couple of items there. Bear with me a second.
Tony Kynaston [17:24]: And what are you doing now? I just wanted to say something about, Wilson Asset Management and Mason that we spoke about last week.
Cameron Reilly [17:31]: Yeah.
Tony Kynaston [17:32]: About permanent capital and I hadn’t had a good chance to read the articles about that acquisition and I have now I just wanted to clarify something. So, I think the way the acquisition’s working is that by the time the assets hit Wilson Asset Management, the company will have liquidated. So, it’s basically a, obviously a mobile phone company selling SIM cards. And that’s been that business has been taken over by Optus and the company will be de-listed, but along the way, in between that happening, Wilson Asset Management will basically take it over and get its franking credits and get the income from the sale of the business to Optus and bank the cash into the WAM Listed Investment Company. So, I spoke last week about unlisted investments in listed investment companies and how that can be problematic sometimes because you can’t Mark the unlisted company to market the same way every month You can a listed company. But that won’t be the case for this one because basically, it’s cash going into the Wilson Asset Management lick. So, I just wanted to clear that up for people.
Cameron Reilly [18:41]: Wow. So, I wonder what that means for my mobile phone account, I guess is just taking it over. I mean, it was always running off the Optus network, so I guess they just are absorbing it all.
Tony Kynaston [18:53]: Yeah, I guess so.
Cameron Reilly [18:56]: It’s been funny like, I don’t know about everyone else’s mobile phones, planes, but it may seem there isn’t a reasonably up with Amaysim in the first place years ago is they were providing a lot of data, like pretty cheap, 40 Gig a month, and it keeps going up 50 Gig a month, 60 Gig a month for the same price. And I was like, wow, this is great. And obviously, they were trying to fatten up the calf by the sounds of it.
Tony Kynaston [19:21]: Yeah. Quite possibly. Yeah. And then when you’re with Optus, it might be 10 Gig 19:25.
Cameron Reilly [19:27]: Yeah. Well, it’s funny. Cause I barely leave the house these days. I’ve hardly used any data this year as it is, except when I traveled down to see you, which is, been fairly rare unfortunately.
Tony Kynaston [19:40]: Well, hopefully, you’ll get down for a QAV dinner. I can come and stay at the Cape for a while.
Cameron Reilly [19:45]: Oh, that would be nice. Yeah. You got room?
Tony Kynaston [19:49]: Yeah, got plenty room.
Cameron Reilly [19:51]: Oh, nice.
Cameron Reilly [19:52]: Yeah. I did send you a stock journal today during the call-up.
Cameron Reilly [19:56]: Oh, well, yeah. Okay. So, you did.
Tony Kynaston [19:59]: So one was what was like 149. So just, to run through it quickly, there was a company called Gas Coin Resources, which was added to the download spreadsheet. It had been delisted for a while because it was going through a credit event and had to get refinancing for outstanding loans and it hit the boards again and bounced up. So, it had a good uptrend and the numbers were good so It had a good QAV score. But unfortunately, when I went into its annual report, I had a qualified audit and there was a material concern about its ongoing viability due to the debt it was carrying. So that got entered into the manually entered data tab, but not onto the buyer list. Another challenge this week is a company called VBC Verbrec Limited and for some reason, this is the old LogiCamms company, which people might recognize as a logistics company.
And they might see Logicamms stenciled on the side of pallets and on the side of trucks, maybe, certainly, it’s in that kind of industry, but they’ve rebranded. I think there was some kind of takeover recently and they’ve changed their name to VBC. That meant we had to either go in and enter VBC into the manually enter data tab and also maybe the rebranding worked or the acquisition work because the three-point trend line was crossed, the stock is going to trend upwards on its graph and it has a QAV score of 0.16. So, it’s also added to the buy list. Master Mine has come off the buy list because it’s breached it’s sell on and I think one of our listeners pointed that out during the week on the Facebook group. Actually, you’re right. I do say all those sports group was removed from the buy list, so quite possibly was what’s spoken about last week but taken off this week. ICS global, ICS is the code was removed from the buy list due to a rising share price as was JB Hi-Fi so, good luck to any of our listeners who bought either of those shares. They’ve improved since we had them on the buy list recently. We have spoken about Ricegrowers limited, and the last one is West Gold, which has slipped off the buy list, also due to a rising share price, obviously a gold miner. And the latest buy list I sent you came and the watch list has the percentage of directors’ holding. So how much of the market cap is held by directors, which was due to John Macon’s research last week. So, we’ll track that and see if it can help us find I guess, a new way to water the buyer list that might add some value to us.
But I have found it was a bit of a glitch in the calculations because some of the shares now that I’ve laid them out that way, I can see some of the shares are saying that the directors hold more than is available, well more than is registered as the market cap, which doesn’t make much sense to me. So, I’ve emailed Stock Doctors today, and to see if they can clarify. I expect the answer will be something like they’re counting options that are, have yet to vest as part of the directors’ holdings but I don’t have clarity on what that reason is. So, we’ll follow that one through in the upcoming weeks.
Cameron Reilly [23:22]: Oh, thanks, Tony. Very good. Well, let’s get into questions. Here’s one from Mark: “Hi Cam, hi Mark. Would Tony buy FMG tomorrow if he had some spare cash and if not, why not yield is triffic?”. Might be a typo or maybe it’s a new word. Triffic, reminds me of “Day of the Triffics”. Did you ever read that?
Tony Kynaston [23:47]: Yes, I love it when I was a kid. I love the old John Wyndhams.
Cameron Reilly [23:50]: Me too, they were terrifying. I remember there was a TV series in the seventies or early eighties too, you remember that? Was kind of scary.
Tony Kynaston [23:56]: I do yeah, or at least the movie, I think it was a black and white movie when I was. I’m not sure.
Cameron Reilly [24:01]: I just remember they were like really big walking sort of lilies and they had a tongue that would come out and hit you across the eyes and make you blind,
Tony Kynaston [24:08]: And blind you, that’s right. Yeah.
Cameron Reilly [24:10] : Scary stuff. That’s something that Hollywood should, do a remake of, that was good. Speaking of, I watched two of the best films I’ve seen in ages on the weekend, WolfCop and its sequel another WolfCop. A WolfCop 2014, low budget Canadian production but surprisingly, good script and acting but they’re made to look like 80 horror coms, same sort of style. If you like a good eighties’ horror com, this is just, yeah, really! I enjoy them funny, violent, stupid, yeah. Anyway, can’t talk enough about WolfCop and another WolfCop, good films. Anyway, back to “yield is triffic, Iron-ore price is nuts. FMG has to be the most efficient Iron-ore Miner and Huntery in history” Well, I don’t know, we’ll get into whether or not you would buy it now, but I know it’s currently up 218% from when we bought it in August last year, so it’s certainly been good for us. We talk about it every week, but if you were looking at it today, how would it go? Is it in the buy list?
Tony Kynaston [25:24]: It’s at the very bottom of the barrel. So, I did the update today and it’s currently at 0.1. So, I think if the share price keeps going up, it will slip off the buy list. So, if I had spare cash, I probably wouldn’t buy it, but only because there’ll be things higher up on the list, which I haven’t bought yet, which I’d buy instead. But look, it’s an interesting point, isn’t it? I mean, basically what Mark is asking is, if something’s gone on a run, do your buy, or do your wait for it to maybe pull back and we now have to make that call because like I said, the buy list will tell us it’s price increases, making it less and less desirable to buy, which is pushing it lower and lower on all the other buy-list.
Tony Kynaston [26:07]: So yeah, my answer is that I probably wouldn’t buy Fortescue Metals Group. I’m certainly not going to sell my holdings. I have a, it’s probably the biggest holding in my portfolio now because of the fact that it’s grown so incredibly quickly. And who knows what will happen? Obviously, Iron-ore, as Mark has mentioned is, is gone on a tier, but that doesn’t mean that we’ll continue to go on a tier. So, I don’t want to predict things, I couldn’t predict things, but I’ll just let the system drive me with that purchase, and right now I would say that I’d be buying something higher on the buy list and [inaudible 26:42].
Cameron Reilly [26:43]: Well, I’m surprised that it’s still on the buy-list after the tier that it’s been on. That’s impressive.
Tony Kynaston [26:49]: Yeah.
Cameron Reilly [26:51]: How loud are those birds outside your window, by the way?
Tony Kynaston [26:54]: Oh, sorry. You want me to close the window?
Cameron Reilly [26:56]: No, it’s nice. It makes me feel like I’m in the country. It’s just, they’re just loud, happy birds.
Tony Kynaston [27:04]: We’re surrounded by trees and probably for the first time ever when I got down here this time, I said, you know, we’re actually, it’s a good place. We’ve got lots and lots of trees on our acre of land down here so it’s a good thing. And the bird noise just reinforces that.
Cameron Reilly [27:20]: Sounds lovely. All right, thanks, Mark. Rowan: “Hey Cam, I want to say separately to the question that the podcast has made a huge difference to my life and I want to thank you and Tony for that. I think Cameron Williams said it well in that, there’s a certain amount of pessimism when you hear of someone teaching about investing. In that, I always think what’s the catch? What do they want from me? Pretty quickly I realized that’s not what TK was about, which was refreshing. I’m 29 now and I’ve wanted to invest since I was 16, even started a finance degree at one point, but was never able to see a method in anyone’s madness till now. I don’t have a mortgage and have good free cash flow each week and would like to leverage my portfolio. So, my question is regarding margin loans. I think Tony has mentioned before they need to be approached with caution but didn’t completely dismiss them. So, without giving financial advice, what are the pitfalls to look out for with margin loans? ”
Tony Kynaston [28:16]: Yeah, so I’ve only ever had one margin loan in my life and that was basically because, when I left Coles Myer when I was employed by them, I had some options and I had to finance them as I was leaving to take them and hold them while the share price was going up. So, I took out a margin loan to do that, but I didn’t hold it for very long. There’s a whole lot of issues I have with margin loans, the first one is the interest rate. I don’t know what the interest rate on the margin loan is now, but it’s often multiples higher than what the interest rate is on say a home mortgage. So, I wouldn’t be surprised if margin loans were at least 6%, maybe even higher. At the time when I had mine, it was 9% and the home mortgages were about six. So, you know, they’re usually a little higher than the mortgages. So, I’m not scared of leverage, but I would rather leverage my house to buy shares and then control the exposure and the interest rates and all that using that facility. But whatever leverage you employ, I still come back to when we invest in the business, I look for debt to equity of, of 33%. So, what I mean by that is that if I have a house worth a million dollars and a share portfolio worth a million dollars, then I wouldn’t borrow more than about $700,000.00. So, the debt is about a third of what the combined asset value is, the equity will be the difference between the debt and the asset value.
So that’s the kind of gearing I would go to. And if you are borrowing against your house, that’s probably going to be about the limit anyway, you probably couldn’t borrow more than about 70% against the value of your house. So that kind of puts things into the right sort of framework for doing it as a housing loan rather than a margin loan. So that’s the first thing. I have no problems at all borrowing against my house to invest. The other benefits of doing that. is that I can fund that mortgage usually by the dividends that the shares I invest in pay dividends, usually only about 4% which will, now the market is yielding three or 4% at the moment, which will easily pay for a current house mortgage, which is going to be around 2%, two to 3% and plus you get franking credits, which means you get a rebate on your tax return, which will also help you fund it.
But when I did this aggressively, I used a type of which called a revolving line of credit. So basically, it was an interest-only mortgage. So, the bank never charged me a capital amount each month so all I had to do was to service the interest, which the dividends did quite handsomely. So that’s the kind of mortgage I’d recommend. Currently, I have a mortgage, which is not quite like that, but I do have what’s called a redraw facility. So even though I have to make payments each month on capital and interest, I can redraw part of that capital which again helps cash flow if I need it. So that’s a couple of, I guess, tips and hints if you think about leveraging into the market.
The other side of margin loans, which I don’t like, which is different to a mortgage, is that once the shares you have leveraged go down below their LVR; their Loan to Valuation Ratio, the bank can force you to sell them, to repay your loan. And that’s something I don’t like because as we’ve seen during COVID, for example, the market can fall 30 odd percent quite quickly and stocks can be more volatile even than that, and so you might think you’re holding a blue-chip stock and suddenly it’s worth,70- 60% of what it was worth last month. And the bank is running up and saying, Mike, we’re selling your stock and you have to repay the loan. So, you can basically lose or get back to zero fairly quickly in that circumstance.
But if you have the loan against your house and you control when you buy and sell the stock, you can decide if the stock drops 20%, 30% that you’ll sell it, and okay, you’ve taken a hit, but you still have the mortgage intact, you still have other shares which you can rely on and you’ll still have your mortgage which you can redraw and invest again so you get to live for another day. And the great quote from Warren buffet about margin lines was, if he had a margin loan against Berkshire Hathaway, he would have been bankrupted twice during his life.
So that’s quite telling as well. Yeah, basically you saying even when a company is sold as Berkshire Hathaway will have enough volatility in the share price, that you would have been called out twice a margin loan doubt.
So, I’m not a fan of margin loans. I am a fan of using a mortgage. I understand that in Mark’s case though, it looks like he hasn’t bought a property. So, he might want to consider that as a way of doing it if he doesn’t want, to the other thing I’d draw people’s attention to, and perhaps Mark’s too was a thing called an Installment Warrant I don’t know if we’ve spoken about that before on the show, but installment warrants work almost like a margin line, or what they do is they provide leverage to a share purchase. So not every share on the market will have an installment warrant and you might have to go and speak to your bank about it because oftentimes these are issued by banks. But what that basically means is that you can buy, let’s, take CBA as an example, you can buy an installment warrant on CBA. So, it’s in the share price on
Commonwealth bank might be, say $80.What you’re buying is the share component of it, but also a leverage component of it.
So, if you could afford to buy a hundred dollars’ worth of CBA shares, the installment warrant might actually allow you to buy $150 worth of CBA shares because you’re actually borrowing as part of the package. So, it’s almost like a product that is part share and part loan. And then what the installment warrant does is, it takes the CBA dividends and pays the interest on your loan. So, you never have to make a payment on the line and then use kind of set and forget. And in whatever your investment horizon is, 5 years, 10 years’ time, you get the leveraged result of having started with a bigger pool of CBA shares than what you could have bought yourself.
Tony Kynaston [34:55]: So I think if you’re starting out and it sounds like Mark, you might be but you do want leverage to the market. I’d have a look at installment warrants and talk to your bank about how to get them or Google them. I know what sort of banks issue them because they are a part loan, part shares. People like Macquarie Group do as well so you might have a look at their website as well. But certainly, that’s a way to get more exposure to the shares that you like rather than getting a margin line.
Cameron Reilly [35:24]: Okay, very interesting. Rowan says: “about 30% of my portfolio stocks meet the improved investment lists and of the approved stocks, most of the diversified LVR margin limit is 40% of which I think personally I’d to stay below 30%. What’s a diversified LVR margin limit for English Speakers?”
Tony Kynaston [35:46]: Don’t know what the diversified part is, LVR is Loan to Value Ratio. So, he’s signed with, yeah. once the stocks fall 30 or 40%, then you’re forced to sell them, right? Yeah. to look at it the reverse way, you can borrow 60% of what, the loan is or what the share is valued at. So, you put in 40%, you borrow 60% buy the shares, but if they fall by more than 40%, you’ve lost your money and the bank sells the shares and gets their money back. So, you’re back to square.
Cameron Reilly [36:19]: All right. Well, it sounds a little bit risky.
Tony Kynaston [36:25]: Yeah. And also, too, like I said, I haven’t done it for a long time, but there’s a big contract that goes with this and from memory and it could be different now, but you’ve got to be careful that if the shares drop 50%, you don’t owe the bank 10%. So, you’ve lost your money, plus you owe the bank to make up their loan difference.
Cameron Reilly [36:43]: Yeah
Tony Kynaston [36:44]: So, you don’t want to be working for the bank. You want to be working for yourself.
Cameron Reilly [36:47]: Yeah. All right. Well, hope that helps Rowan. Here’s one from James, from Brisbane: “Hi Cameron and Tony. I’m two to three months into the QAV process and I’m hooked! I’m relatively new to share investing over the last few years and the learning curve has been astronomical and thoroughly enjoyable. It also finally forced me to do the unthinkable and actually learn how to use an Excel spreadsheet, bonus! The podcasts are great. I know what Tony’s answer will be, but I’ll ask it anyway. With the COVID cough firmly in place and looking ahead over the next few years, do you see yourself fudging or ignoring the COVID trough as the second-lowest point on the right? I can see that it could lead to cell lines being set pretty low in some cases and may lead to holding onto shares that are tanking longer than perhaps you’d like to. I know in the scheme of things, it probably won’t make much difference, but interested in your thoughts, keep up the great work and the laughs guys, James from Brisbane.”
Now I did say to James, yeah. We talked about this two weeks ago. I don’t think he’d caught up with that episode. So, I did point him at it, but I said, I’d throw it in any way, because I’m sure he’s not the only person still wondering about that ignoring and then somebody called me this afternoon and asked me the same question. So, there you go. I know that James isn’t the only one. So, for the people that are still wondering about whether or not you can fudge the cough, would you fudge the cough, Tony?
Tony Kynaston [38:12]: No, you can’t fudge the cough.
Cameron Reilly [38:14]: Don’t fudge the cough.
Tony Kynaston [38:15]: Don’t fudge the cough yeah. And my reasoning for that is, if it’s not going to be the COVID cough, it’s going to be the G.F.C, it’s going to be the Asian Financial crisis, the Tech Wreck, once in every cycle there’s a low point and that’s the low point. So, things are growing up from here and hopefully, we will never touch that low point, which might mean that we’ll hold onto stocks for the rest of our lives and that’s not a bad thing either. So that’s my general observation. I also want to say, I think last time we talked about this, if it makes people sleep better at night, then go ahead and fudge, if you think that it’s, I mean it sincerely, if it doesn’t make common sense to use the low point because you can see there’s a different trend happening, and you’re worried that, the shares will drop and they have to drop a long way back to get to the COVID cough line, by all means, sell.
Cameron Reilly [39:12]: You don’t judge the fudge!
Tony Kynaston [39:15]: I’m not going to be a, sorry?
Cameron Reilly [39:17]: You don’t judge the fudge!
Tony Kynaston [39:18]: Don’t judge the fudge, that’s right. I’m not a trendline Nasser here, but I think as a general rule, the COVID cough stays in because like I said, if it’s not the COVID cough, this is something else is going to be in the market, which will be a low point every time in the cycle. So, it will be there for at least the next five years.
Cameron Reilly [39:38]: It’s in every cycle, comes a low point like this. I need you; you need me. Oh, my darling, can’t you see, the something.
Tony Kynaston [39:53]: But what was that? that was from what?
Cameron Reilly [39:58]: “The young ones” man! Cliff Richard and the Shadows!
Tony Kynaston [40:02]: Yeah, that’s good and thanks, James for the question and the nice feedback, I appreciate it. And I’m really interested in the wording of some of these questions they start off me with. “I know what Tony Kynaston would do but I’m going to ask it anyway”. So, I kind of think that means we’ve done our job for the last 18 months because it’s starting to sink in. This is what Tony would do. I know they still feel the need to ask it anyway and that’s fine, but I’m hoping in 12 months’ time it’ll be, the questions will go something along the lines of ” why’d you do that for? Kind of. That was a fudge. What are you fudging for? Come on!” So, I think it’s starting to sink in.
Cameron Reilly [40:41]: Yeah. Good stuff James. Brett, I think this was on the Facebook page. He said: “M.L. D high on the QAV buyer list at least it was at the time was put on trade hold for Monday and Tuesday, I think there was last week. It resumed after a successful issue of about 58 million shares at $1.02 below the current $1.16. At the time they want to issue another $16 million of shares over the next few weeks at $1.02. This is all they were caught. Our choir mining West, I calculate this as an increase of about 27% of the total number of shares. It’ll be interesting what impact it will have on the
Q.A. V score. When the new numbers settle. I haven’t seen your buyer list today. Do you have it handy? Do you know how M.L.D fed today?”
Tony Kynaston [41:30]: Oh, let me have a look. Sorry, I don’t have it. I’ll just have to call it up.
Cameron Reilly [41:34]: it was at number five. This is Maca Limited. Had a score of 0.36l last time you did it.
Tony Kynaston [41:42]: Yeah, it was about number 15. Now it’s still 0.28, but it won’t have that new acquisition in it yet. I think that’s the point that who was making?
Cameron Reilly [41:53]: Brett
Tony Kynaston [41:54]: Brett is making. So, just a couple of observations here. If Brett really wants to work out a new QAV score, there should be some pro forma documents available issued by either company about what the business will look like once the merger has taken place. So, if he wants to go and crunch out the numbers, he can. I tend not to and I think one of the reasons I don’t do those, if you have a look at the share price for MLD, it’s raising money at $1.02, it’s currently $1.24. So, the markets, past verdicts on this one, and they lock it.
Cameron Reilly [01:53]: So if you get the chance to buy, edit at $1.02, jump in because you want to make 20% overnight. So, Brett that’s my approach to these kinds of situations. And then as you say, it’ll probably settle with the new numbers in March of next year. Once we get a look at the December numbers, I’m not sure when this merger goes through, if it doesn’t go through until January or February, now we might not see them until August of next year. But that’s when you’ll see the merge numbers if you want to crunch them using the proformas, otherwise, just use the current QAV score and market sentiment to give you a good guide on what’s happening here.
Cameron Reilly [43:11]: Yeah. I noticed the Stock Doctor consensus valuation is $1.29. It’s currently at $1.24. So apparently the analysts think it still has some room to grow?
Tony Kynaston [43:25]: And like I said, if there were raising money a $1.02, it’s a no brainer to have to take up any entitlements that you might get.
Cameron Reilly [43:33]: Thank you, Brett. Phil Muscatello Shares for Beginners says: “just did my final interview for the year of doom Lord from platinum Julian McCormack, who believes we’re on the verge of a massive correction. Last week I saw a presentation from Roger Montgomery who believes markets will keep surging. Well, here’s one for the books. Roger is normally the doom Lord.”
Tony Kynaston [43:56]: Yeah, He’s been sitting on casseroles and maybe he’s deployed.
Cameron Reilly [44:00]: And he’s like, no! push the market’s higher. “Is this further evidence that we shouldn’t try and pick the future? I know Tony would say situation normal”
Tony Kynaston [44:11]: Here we go. How do I feel? Yes. See another one, I know what Tony would say, situation normal. It’s true. It is. And look, before I go on, thanks to Phil. Phil is one of our good friends of QAV and he gave us a shout out on his most recent episode when he was on the Rask report, which was really nice of him. So, thanks for that, Phil indeed. And I recommend “Shares for Beginners”, for people who are particularly are starting out, but it for anyone really to go back and listen to some really good interviews about the share market. So that’s great. It was funny like Phil and I had had, I think I’d been on Phil’s show maybe three times now, and then we, he records at home and I head over to buil‑9 and then we go for a cup of coffee afterward. And at some stage, Phil said “you know, I’m really surprised that people are coming on the show and being collegial and being so nice”. And I said, “Yeah, well, we’re all helping each other which I think is the idea of what we’re doing is educating people”. I think that’s really important to Phil. I think Phil may have thought that we all be competitors, but we’re not, it’s been great to be on Phil’s show and he’s welcome on our show at any time and at our events. And it’s great to have friends like this, of what we’re trying to do.
Cameron Reilly [45:24]: Yeah
Tony Kynaston [45:24]: So, thanks, Phil.
Cameron Reilly [45:25]: Back to Phil’s question back.
Tony Kynaston [45:26]: Sorry. Thank you, slave master. I think your last slave, dialed
Cameron Reilly [45:33]: Being whipped for getting off track, getting off-topic
Tony Kynaston [45:37]: That chat
Cameron Reilly [45:38]: For asking that question. Yeah.
Tony Kynaston [45:44]: Okay. So, to answer Phil’s question. Who knows? I mean, people often ask me, where’s the market can I be in next year? And my answer is always 10% higher because that’s what it’s done on average over the last hundred years and I’m rarely right because it won’t be exactly 10%, but on average it’s always 10%. So, who knows what will happen next year? I don’t know, Julian McCormack and I’m sure he makes a good case and because the market is at elevated levels, and then people will say, yeah, but that’s because interest rates are low and COVID has depressed things and now we’re coming out of it, and there’s a whole host of reasons why that might turn down. If the vaccines don’t work in America or in Europe, and if there’s an unforeseen side effect, for example, and they get to set a couple of months and the market will crash. If China decides to rattle some savers with the new US president, then the market will crash. There are all sorts of things that can happen. Being able to predict them is one thing I’m entirely sure cannot be done unless there’s someone in Silicon Valley sitting there with a fancy piece of software, no one’s ever heard of then no one can predict the future. And that’s the interesting thing about the share market. You need to have someone on one side of the market saying it’s going to crash and someone on the other side saying, it’s going to surge otherwise, why would anyone sell their stocks? If everyone believed Roger, it’s going to surge next year, then who’s going to sell the stocks to allow us to buy into the market. So, it’s really interesting psychology.
We need to have people out there like Julian saying, it’s going to crash otherwise we’re all going to halt all their current stocks and never sell them. In which case we don’t have a market. So, this is another interesting dimension of human psychology. I think when one of the things that the stock market does versus is to hold up a mirror to us and point out all the foibles in human psychology and this is just one of them that we both can’t be right and neither of us can predict so we stick to our system.
Cameron Reilly [47:49]: Interesting thing is, the all odds is currently at 6,920, back in February, it was 7,230 so it hasn’t quite got back to where it was pre-COVID. I remember pre-COVID, Roger Montgomery was saying it was overvalued, it was due for two, for a correction, it’s not quite back there and he’s saying that it’s due for a surge, so I don’t know.
Tony Kynaston [48:20]: I always knew I could change his mind.
Cameron Reilly [48:22]: I don’t know what’s changed in Roger’s view, maybe it’s time to get Roger back and he can explain it to us.
Tony Kynaston [48:29]: Yeah, sure. Or both of them, Julian and Roger.
Cameron Reilly [48:33]: Yes!
Tony Kynaston [48:33]: For sure.
Cameron Reilly [48:34]: Yeah. Maybe when we come back in the new year and you’ve had a break.
Tony Kynaston [48:37]: Thank you. Yes.
Cameron Reilly [48:40]: let’s see, here we go. Calve! Calve says “Hi Cam, Merry Christmas to you, Tony, and all QAV members? My question is the Stock Doctor filter search that Tony performs. Will this search capture all ASX companies that fit the QAV criteria with a good QAV score, or is there a possibility that it will miss some? Cheers! Calve” Well, I can’t see how it would miss any, can it miss any Tony?
Tony Kynaston [49:10]: No, I don’t think so, no. I think it’s missed from my knowledge, it’s missed two over the time we’ve been running it and both times there was an area with the data that Stock Doctor was being provided. When I went back to them and said hey, I think this one isn’t being reported properly, they fixed it quite quickly. So, to my knowledge, it picks up all of this; Well, the filter picks up all the stocks in a kind of a semi filtered way, we then have to go through and sort them to find out and add some manually entered data to find out which ones make it through to the QAV score. But there shouldn’t be anything that’s missing from the filter, which doesn’t then get filtered through to the buy list. If it should be there.
Cameron Reilly [49:53]: Speaking of filters, a couple of weeks ago Ashish asked a question about GuruFocus and whether or not it was an alternative to Stock Doctor because he said it was about half the price, I did get to spend some time with GuruFocus this morning and I think it has pretty much all the data points that we use might be a little bit of fudging around some of them, but I think it’s mostly all there. So, I think it’s something that people might want to check out. GuruFocus might be an alternative or a secondary data source, like Share Analysis used to be. I couldn’t see any analysts’ consensus for future E.P.S or things like that, but in terms of the core data, it seems to have nearly everything.
Tony Kynaston [50:46]: Okay. Well, I’ve played with it very quickly and haven’t had a chance to go into it in detail yet.
Cameron Reilly [50:53]: Well, when you get.
Tony Kynaston [50:54]: As I’ll be taking a break, I won’t get to it for a couple of weeks.
Cameron Reilly [50:58]: When you get bored with playing golf, spent some time having a look at that, GuruFocus with me.
Tony Kynaston [51:04]: When I get bored with playing golf, I’ll go for a walk or having Negroni. So, no.
Cameron Reilly [51:08]: Isn’t playing golf, basically having a walk while you’re having a Negroni Isn’t that? Isn’t it just walking around having a drink over that’s why people played golf?
Tony Kynaston [51:18]: Yeah, it can be, yeah absolutely.
Cameron Reilly [51:22]: There you go. Multitask Tony, you can get all three down at the same time finally. Oh, by the way, that book you recommended, I started reading a couple of days ago. What was that? something, of the stars?
Tony Kynaston [51:35]: “To sleep in a sea of stars”?
Cameron Reilly [51:37]: Yeah! I’m a couple of chapters hours into it, it’s a great read, I’m enjoying it. Thank you for the recommend.
Tony Kynaston [51:43]: Yeah, it’s Good. Yeah, I’ve just finished it. It’s like science fiction, but I really enjoyed it. So, it’s a great page-turner.
Cameron Reilly [51:49]: I like a bit of Sci-fi and I just finished Stanislaw Lems Solaris, you ever read that?
Tony Kynaston [51:58]: Yeah. Great book and great original movie and I think the remake was very good, but great original movie.
Cameron Reilly [52:04]: I’ve never seen the original, but I liked the Soderbergh Clooney one, but I hadn’t read the book until just recently, but a really interesting book. very interesting, very challenging. Yeah.
Tony Kynaston [52:16]: Yeah. Great science fiction writer. I remember one of my favorite science fiction stories, I’m pretty sure he wrote it and I’m careful now about who I attribute things to after that discussion before about the Batman thing, but, um, I’m pretty sure he wrote a short story called “Pirx the pilot” and it’s in a nutshell, the story is about all these space cadets who are doing their final tests, they get put into space, fighter planes, and the canopies are closed and they put through all kinds of simulations and Pirx the pilot who’s at the center of the story always doubts himself, and he’s always feeling like he’s underprepared and he’s always trying to match himself up against all these here, men who are in the other spaceships and always finds himself wanting. And the whole way through the trial, the ordeal, they have to go through to qualify from Flight-Cadet School.
If everything goes wrong for him, he’s like, he’s simulator It looks like it’s broken, the controls aren’t working as a fly in his space helmet. And the whole the way through he’s going “shit this always happens to me”, “Fuck, I got to do this. I’ve got to do that”, ” how long I’ll get this to work first”. And at the end of the story, he’s the guy who passes because that kind of self-doubt gets him through, whereas all the other pilots who are super confident, just crumble when they have to actually do something. So that’s sort of at what’s the word I’m looking for, that kind of story that kind of a fable was always stuck with me and I consider it a good one.
Cameron Reilly [53:53]: Well, thanks for ruining the ending of it for me, but I’ll read it anyway. You’re bad as Tyler he likes.
Tony Kynaston [54:0]1: No one is going to go and look up Stanislaw Lem and
Cameron Reilly [54:03]: I just downloaded it while you were talking, I just bought it on Amazon I’m going to go read it and then you ruin the ending for me. It’s a good thing I have no memory I’ll have forgotten about what you said in five minutes and I’ll be fresh.
Tony Kynaston [54:17]: Merry Christmas
Cameron Reilly [54:18]: Yeah. No, really. I mean, but getting back to Solaris, it’s like for people that haven’t seen the movies or read about if you’re interested in sci-fi, check it out basically about discovering, as is this new one that you recommended to me, a form of intelligence that’s very different from human intelligence, what we think of as intelligence and how humans respond when they go up against something that’s just vastly different and incomprehensible almost as a form of intelligence. Yeah. It’s a good mind-bender.
Tony Kynaston [54:50]: Did you ever read the Cixin Liu Trilogy? The Three-body problem was the first book in the series
Cameron Reilly [54:55]: I read the Three-body problem; I don’t think I got any further than that.
Tony Kynaston [54:59]: Ok. Yeah, I thought they were great. Amazing in the same sort of vein about alien contact, but it can be completely befuddling for humans but, the physics and in particular in the light of books, it’s just amazing and dimensional physics and how our humanity actually finishes up is just incredible.
Cameron Reilly [55:21]: I’ll have to dig that up and reread it because I can’t remember anything about it. It was a few years ago, you probably recommended it to me back then too.
Tony Kynaston [55:29]: I did yeah. So, the way that the aliens make contact is to issue a computer game on and let the players try and solve a problem which they’re having, which is a three-body problem. The aliens come from a planet that revolves around a couple of suns and they have lots of gravitational issues with the part that takes over history and they couldn’t solve it. So, they put it out there in the ethos in the way of a computer game and eventually someone on earth solves it for them.
Cameron Reilly [56:03]: I often wonder?
Tony Kynaston [56:05]: They own it, this is the starting point, that’s a jumping-off point for humans into the universe and one thing that stuck with me is what they call a dark forest problem, which is if you’re a Hunter in a dark forest and you know, there are other hunters out there, do you make yourself known or do you keep quiet? And of course, if you make yourself known, you might get shot at, if you keep quiet you’ve got more chance of surviving. That’s the basic problem that is going to face us and the universe at some stage.
If I could go and pick up that Voyager pride and bring it back, I would, because we’ve just told early civilizations that we’re dinkie toys in terms of our evolution, we put up an LP, a gold-plated LP record on a spacecraft, and send it out into space. Like we don’t even use those anymore, let alone the irony refines it.
Cameron Reilly [56:56]: Yeah
Tony Kynaston [56:56]: They’re going to go great these guys are going to be easy to invite,
Cameron Reilly [57:01]: Yeah. Well or maybe they’ll come and help. What are the odds that they’re coming up? Because we could use the help quite frankly,
Tony Kynaston [57:08]: We could. Yeah.
Cameron Reilly [57:10]: I saw Neil deGrasse Tyson on TikTok this week said, “you know what? This pandemic it’s a shot across the bow. It’s seeing how well as a species we can band together to face an existential threat and I give us a C- for how we’ve handled it so far”. He actually said, “if aliens arrive tomorrow and wanted to invite us if this is a test for how we get our shit together quickly to face an existential threat, I don’t like our chances”.
Tony Kynaston [57:40]: Yeah, we run around on Facebook and Twitter, big Karens telling people that you’re violating my rights by making me take the jab or putting a mask on, yeah
Cameron Reilly [57:55]: The aliens are fake news, is what we’d be saying. Okay. Last question, Chris Heath, “Any idea what happened with M.S.V? Breached its three points sell line late last week went to sell it this morning and it was up 7%”. This would be Mitchell services. I did go and have a look on Hot Copper and on Stock Doctor, we see that they sold a ton of shares at the end of November, but outside of that, I can’t see any news for them that would be cause for massive change in their share price. You got any idea, Tony?
Tony Kynaston [58:35]: I don’t know, but looking at the share prices, at least on a monthly graph, it’s kind of going sideways, it’s range trading so I don’t think there’s much news there at all. But looking at it now, it’s one of these kinds of tradings isn’t that? it’s above buy price, but it’s also below sell price. If you use the code or no, sorry. No, I’m wrong. It’s well, above sell price if you use the COVID cough. So it’s kind of going sideways.
Tony Kynaston [58:35]: I don’t know, but looking at the share prices, at least on a monthly graph, it’s kind of going sideways, it’s range trading, so I don’t think there’s much news there at all. But looking at it now, it’s one of these kinds of tradings isn’t that? It’s above its buy price, but it’s also below its sell price If you use the COVID or no, sorry. No, I’m wrong. It’s well, above sell price if you use the COVID cuff… So, it’s kind of going sideways.
Cameron Reilly [59:06]: Hold on. I’m drawing some lines now, well above the sell price, and yeah, I’d say barely above the buy price.
Tony Kynaston [59:17]: Oh no, I think it’s well above the buy price. Oh, okay. Yeah. No, hang on high prices going back to July 2019 it’s 68 cents.
Cameron Reilly [59:29]: Yep!
Tony Kynaston [59:29]: And then I’m guessing, I’m going to use, well, let’s have a look at this, this is an interesting one you’re using the rightmost point, are you?
Cameron Reilly [59:37]: November 2020, yeah
Tony Kynaston [59:39]: No, I’m using an earlier one. So what we should do is work out the last time it was a sell, which would have been in just before the COVID cough or maybe at the COVID cough. Right. So it’s the next buy after that cell, which would put it through, yeah around about the time you’re saying it would’ve been a buy-in November 2020.
Cameron Reilly [1:00:01]: Right.
Tony Kynaston [1:00:02]: So, it’s just, you’re right. You are correct. So it’s hugging that line just slightly above that line.
Cameron Reilly [1:00:08]: Just above it.
Tony Kynaston [1:00:08]: Yeah
Cameron Reilly [1:00:09]: But now I’m confused because Chris said it breached its three-point cell line late last week. No way in hell it breached the three-point cell line unless it’s daily numbers are massively different to its monthlies.
Tony Kynaston [1:00:22]: Yeah. I’m just looking at the front page of Stock Doctor for the grap. So 18th of December, the close was just over 50 cents, 50.5 and it’s back up to 54 now. So I’m guessing that as you said, it’s just above its buy-line which must be around about that sort of late 50s number
Cameron Reilly [1:00:41]: Yeah, but the cell line is 33 cents.
Tony Kynaston [1:00:44]: Oh, sorry. Yeah. Why the breach itself? I know it hasn’t no, he’s right. You’re right. The cell lines going to be very low. Isn’t it?
Cameron Reilly [1:00:50]: Yeah. I don’t know what you’re looking at Chris, but that’s not where I draw it. Let us know, send me a chart, Tell me how you drew it.
Tony Kynaston [1:01:00]: Yeah. So the first point would be May 2016, 15.7?
Cameron Reilly [1:01:06]: Yeah.
Tony Kynaston [1:01:06]: And the COVID cough is the second point?
Cameron Reilly [1:01:08]: Yeah.
Tony Kynaston [1:01:08]: which makes as you say sort of maybe 33, 35 cents?
Cameron Reilly [1:01:12]: Yeah. I don’t know where it is on your current buy lists, but looking at the buyer list from last week, it’s not on it.
Tony Kynaston [1:01:27]: No, it’s not on this one either.
Cameron Reilly [1:01:29]: Oh, hold on. It’s a way down the bottom of the watch list on the old one, well not quite at the bottom, halfway down had a score of 0.13, but you gave it a no for sentiment.
Tony Kynaston 1:01:47]: And that’s wrong, I think, isn’t it?
Cameron Reilly [1:01:49]: Well, yeah.
Tony Kynaston [1:01:5]: I would say it’s a buy.
Cameron Reilly [1:01:53]: I’d say the sentiments are pretty good.
Tony Kynaston [1:01:54]: Yeah. No, I would say I’ve got that wrong. I think it’s a buy.
Cameron Reilly [1:01:59]: Barely though.
Tony Kynaston [1:02:00]: Sorry about that. I’ll put it back on. I’ll send you a new stock channel, put it back on the buyer list.
Cameron Reilly [1:02:05]: Okay. But I mean, yeah, it’s looking a little bit shaky there on the buy-line, who knows where it’ll be this time next week the way it’s going?
Tony Kynaston [1:02:17]: Yeah. Unless we took it off, maybe I took it off because it fell below the buy-line I’m not sure. Yeah, possibly, but as of this week, I think it should go back on the buyer list.
Cameron Reilly [1:02:27]: Well, the buy price would be roughly where it is now, 53–54 cents and as you say, like it was down at 52, a few days ago or a week ago, it was down at 50, so it would have been below the buy-line then.
Tony Kynaston [1:02:44]: Yeah, I think that’s probably why we took it off, but I’m just looking at it today, it’s up 7% today, so maybe it’s time to put it back on.
Cameron Reilly [1:02:52]: Okay. Good
Tony Kynaston [1:02:54]: Well, thanks for that.
Cameron Reilly [1:02:55]: Well, thanks for alerting us to that Chris, but I’m not sure why you think it breached its sell line.
Tony Kynaston [1:03:03]: Yeah and as I say, this is a point for other people too is, I don’t go through and check every buy line when I’m putting together a new stock journal on the buy list. So that’s why I put the watch list out there and people can do that if they want to investigate something in more detail.
Cameron Reilly [1:03:20]: Yeah, hopefully.
Tony Kynaston [1:03:22]: Yeah.
Cameron Reilly [1:03:22]: One day soon, we’ll have an automated system that will do this for us.
Tony Kynaston [1:03:26]: Yeah.
Cameron Reilly [1:03:29]: Yeah, that would be nice.
Tony Kynaston [1:03:29]: Yep. When dealing with binders, some data that we can test with and get through some of the other questions. That’s a project I’m sure he can help us with.
Cameron Reilly [1:03:36]: All right. Well, that is a full lid for 2020. Next week, we won’t do a Q&A show. I will put out an interview that we recorded a while back with our friend Damian, but we won’t do another Q&A show until January, I guess.
Tony Kynaston [1:03:58]: Yeah, to the end, no, no.
Cameron Reilly [1:04:05]: Well, maybe we’ll do it in person If I’m down in Melbourne for an event the same.
Tony Kynaston [1:04:10]: Yeah! That’d be great. We can do it on the deck with the birds singing and Negroni in hand.
Cameron Reilly [1:04:16]: That’d be lovely. Well to everyone and to you Tony, Happy Christmas, Happy New Year, hope everyone stays safe, particularly those of you in Sydney, stay safe. And thanks to everybody who’s subscribed to the show this year, supported the show, listened, sending questions, come to our events, come on zoom calls, it’s been terrific to get to know everybody and to be part of their investing education journey. And thank you most of all, to you, Tony for giving us your time and intelligence and skills and experience this year. On behalf of everybody, I want to say thank you again.
Tony Kynaston [1:05:00]: Oh, thank you. You’re welcome and thanks, in particular, thanks for the feedback from people. That really is heartwarming to see the stories that we get feedback about how listeners are going. It really just emphasizes how important a show like this is, and I appreciate it a lot, so that’s great.
Cameron Reilly [1:05:20]: All right.
Tony Kynaston [1:05:21]: And can I just give a plug for our charity exchange raffle?
Cameron Reilly [1:05:25]: That’s a great idea!
Tony Kynaston [1:05:26]: Yeah. So, if people want to go to ahfraffles.org.au, that’s Australian Horizon Foundation Raffles, we have a raffle we’re going to win a $20,000 shopping spree with high-end brands like Louis Vuitton, et cetera and once we netted their costs out, the proceeds go to charity, which is a mental health charity. So, this is a new business we’ve started up with your son. another friend that we’ve spoken about; Mark Rudd and another guy Ben Mainor who was opening our eyes to the whole world of Instagram influences we were trying to use the push the raffle. So, if anyone’s interested yep. Please go to ahfraffles.org and do yourself a favor, buy a ticket. That’ll help us a lot.
Cameron Reilly [1:06:17]: Am I allowed to buy a ticket or am I disqualified, because I’m related to one of the…?
Tony Kynaston [1:06:23]:Yeah, I don’t think you can. I think the owners and the families can’t do it, so probably not.
Cameron Reilly [1:06:28]: All right.
Tony Kynaston [1:06:29]: Yeah.
Cameron Reilly 1:06:30:All right. Well, yes, very good. All right, mate. Well, take care. I’ll talk to you soon.
Tony Kynaston 1:06:36:Okay. Thanks, Cam. Bye
Cameron Reilly [1:06:38]: Bye.
[Outro].