Transcript QAV 411

Episode name: QAV 411

Audio Length: 1:03:23


[Intro] Cameron Reilly [00:05]: Welcome back to QAV, Kyno!

Tony Kynaston [0:12]: Hi Cam, how are you?

Cameron Reilly [00:15]: I’m good. This is episode 411 recorded on Wednesday, the 17th of March, 2021. How was your golf tournament?

Tony Kynaston [00:28]: Good. We had three days of golf actually. We played on Friday and a charity golf tournament and had a lot of fun and came 6 out at about 40 groups and that was good, not enough to win a prize, but still have lots of fun and then we had a couple of rounds, one round, on Monday, and one round on Tuesday; one at Liverpool and one Riverside Oaks, so had lots of really good rounds. We were lucky we dodged the rain; it’s been raining down here for a long time. Golf was good.

Cameron Reilly [01:00]: Oh, you avoided the rain, that’s good. It’s been raining here nonstop for the last few days, which is good for podcasting because the temperatures down at 25 in my office, not the 32 it was I think last week when we recorded. So that’s nice.

Tony Kynaston [01:12]: Good. Yes.

Cameron Reilly [01:14]: I don’t have to sneakily turn the fan on every time you start talking. Mute my microphone and turn the fan on.

Tony Kynaston [01:26]: To avoid [cross-talking 01:26]

Cameron Reilly [01:27]: So Golf went okay. You got some horses running this week?

Tony Kynaston [01:32]: Yes. Well, people won’t get to see Ring of Honor, but she’s racing at six o’clock tonight, Wednesday night, but Darnie Patina races in Sydney on Saturday race one on golden slipper day, big race day at Rose Hill.

Cameron Reilly [01:47]: I’ve put five bucks on it to place. So, I think I win 1378 if it places, so that’ll recoup something. Good, Yes.

Tony Kynaston [01:57]: Well, I hope it does place.

Cameron Reilly [02:00]: Good.

Tony Kynaston [02:00]: It’s got a very good place record so she should do okay.

Cameron Reilly [02:04]: Right. And Damien Oliver [cross-talking 02:06].

Tony Kynaston [02:06]: And she was riding. Yes, he’s an amazing jockey, he’s getting pretty old now, too.


Cameron Reilly [02:10]: Yes. He’s been around for a long time. Yes. I was going to say, Yes.

Tony Kynaston [02:14]: Yes. Melbourne Cup-winning jockey. He’s very good. And Darnie Patina loves the wet, which is why she’s coming to Sydney because it’s so fricking wet here.

Cameron Reilly [02:24]: And I’m coming to Sydney on the weekend.

Tony Kynaston [02:26]: You are? Bring your umbrella.

Cameron Reilly [02:31]: I will

Tony Kynaston [02:31]: Yes, good. We’re going to the Whiskey Awards.

Cameron Reilly [02:35]: Whiskey Awards on Sunday, QAV dinner on Monday night, hard to get Sydney people to come to a dinner. We do a dinner in Brisbane ton of people turn up, we do a dinner in Melbourne ton of people turn up, we do a dinner in your hometown everyone’s like, ah really? We have to go out? No don’t think so. Very hard to sell tickets dinners with you in Sydney for some reason, I think word must have gotten around or something in Sydney.

Tony Kynaston [03:05]: Yes. Well, I mean come on people in Sydney come along, it’s good fun. We’ve got the restaurant to ourselves; you can ask questions; you can take photos with cam.

Cameron Reilly [03:20]: I’ve got a photographer coming in to take some photos of you and I on Monday, you’re going to have a haircut before then? Or you’re just going to, ugh which doesn’t matter.

Tony Kynaston [03:29]: Yes, I’ll try and have one of mine.

Cameron Reilly [03:32]: I can do it for you if you’d like. I’ll bring my scissors, my razor, give you a buzz cut.

Tony Kynaston [03:39]: Number three, bald. It’s okay, I’ll try that one.

Cameron Reilly [03:46]: It’s okay. I’ll put some gel or something in it’ll fudge, slick it back, put you in a good suit and tie. That’s what all the other Investment gurus do on the internet man they’re all like.

Tony Kynaston [03:58]: Yes man, okay.

Cameron Reilly [03:58]: Slicked back, get the suit, posing in front of the rented Lambo.

Tony Kynaston [04:03]: Yes, and I got the side part with an earring     kind of over the one side,

Cameron Reilly [04:08]:  The French cuffs?

Tony Kynaston [04:11]: [cross-talking 04:12] Yes, French cuffs, yep. oh my God!

Cameron Reilly [04:14]: Turn up hazeled, tussled, wrinkled, bloody shirt, you’re like, eh,

Tony Kynaston [04:21]: What’s happening? What are these?

Cameron Reilly [04:29]: That’s the new coffee mug of getting made up QAV, what’s up wannabes? I’m looking forward to coming down and hanging out. It’s going to be good fun.

Tony Kynaston [04:40]: Yes.

Cameron Reilly [04:40]:  All right. let’s get into show stuff. We’ve got a million questions again this week, probably not going to get to all of them I apologize to everybody, but we’ll work our way through them. Obviously the bigger the audience gets, the more the questions are, the tougher it is to get through all of your questions, but keep them coming because it’s great.

Tony Kynaston [04:59]: Please do. Yes, they’re really good questions.

Cameron Reilly [05:02]: Now one of our new subscribers Jeff, suggested that we do some workshops. He said, Yes, what about one day workshops? And I said, Oh, I’ll run it past Tony, but I’m pretty sure he’ll say it sounds like too much hard work, and that’s in fact exactly what you said oh the whole day, oh God.

Tony Kynaston [05:26]: Well, I can probably train the intern maybe in for half a day and then he can go on the one-day workshops.

Cameron Reilly [05:32]: I’m going to have to get like a body double for you like custodian.

Tony Kynaston [05:36]: Yes. Phillip Seymour Hoffman is the decease though, so I can’t get him. Well, I mean, people won’t come along to a Sydney dinner, who’s going to come along to a Sydney workshop.

Cameron Reilly [05:47]: Yes. Good point, well.

Tony Kynaston [05:47]: We can figure something online, but zoom calls are pretty much workshops, aren’t they? Or zoom videos are pretty much workshops.

Cameron Reilly [05:56]: They are, or I was thinking I could do it by myself, like I answer some of the emails by myself, you just play golf and I’ll just FaceTime you if there’s one, I’m not confident in answering. Just everyone take a break, eat one of those little mints on the table, I’m going to FaceTime Tony. Sorry Jeff, it’s a no for the workshops. I want to talk about a couple of things that hit my radar this week, Tony, I was watching a video by a guy called Aswath Damodaran, you ever come across him as Aswath Damodaran?

Tony Kynaston [06:36]: No, I haven’t. No.

Cameron Reilly [06:37]: It’s also a Harry Potter magic spell if I say as Aswath Damodaran, can make all your money disappear and go to my bank account.

Tony Kynaston [06:48]: You’re bigger than me, I was trying to rip off his name but I couldn’t make it happen.


Cameron Reilly [06:52]: Well, I was actually thinking about saying that over Bella Nipotina on Saturday, just before the race as with Damodaran. Now Damodaran is a professor of finance at the Stern School of Business at New York University and.

Tony Kynaston [07:06]: I never smile there.

Cameron Reilly [07:08]: No, you don’t want an easy-going school of business or school of finance, you want them to be stern where they take it very seriously. He is a value guy and been around a long time apparently, very popular I gather. But I watched some videos that he did and he starts off one of them by using a lemming’s analogy. He said, all investors are lemmings, trying to remember the rest of it but he said, you look at lemmings and you go, okay well the first one that goes over the edge of the cliff you go okay, well you can understand that maybe the first one didn’t see the edge of the cliff and was just excited and was running and fell over and then the next couple that go over well, maybe they were just too close to the first one and it was too late by the time the first one went over and they couldn’t put the brakes on fast enough, so momentum carries them over. Yes, but what do you do about the last one? It’s like 50 lemmings how do you explain the last one? He’s seen 50 of his friends go over Yes and he’s obviously thinking wow, it must be something good at the bottom of this cliff, I’m not going to miss out I’m going over as well.

Tony Kynaston [08:19]: Exactly. Yes, he goes “Yolo!” on the way over. You Only Live Once.

Cameron Reilly [08:24]: Yes, that’s right. So, he said, they’re all investors are lemmings the ones at the front are the momentum investors, like they’re just excited, they can’t believe how great this is, they’re going along with it they go over the cliff. Then he said, you got the people in the middle of the bunch that are sort of a little bit more skeptical, but then they look at what the momentum investors are doing and they’re like, well they must know something I don’t and so they go over the edge. Then he at the bottom, you’ve got the value investors right at the back, they’re like, oh no I’m going to at least try and apply some logic and reasoning to why I’m running up this cliff and whether or not I should jump off the end. He said, it doesn’t mean that they won’t jump off cliffs from time to time, but he was basically talking about having some rules, having some attempts not to be a momentum lemming not to be one of the worst lemmings, he was talking about the hardest thing, and we’ve talked about this a lot before  but the hardest thing in investing is discipline and not getting carried away and not getting involved in FOMO and all those sorts of things and so he said look, for me I just try and I understand that I’m probably going to make mistakes and I’m probably going to fall into traps and I’m probably going to do things that I make decisions that I regret later, but I’m trying to use as much data and logic and reasoning as I can to avoid those things, to avoid those aspects of human nature, which we all have. It’s natural, apart from you ice man, but for the rest of us, it’s hard not to get swept up in the.

Tony Kynaston [10:15]: Yes [cross-talking10:16]

Cameron Reilly [10:15]: The big excitement. Yes, exactly. [cross-talking 10:20] Well you and Taylor are going to have some good conversations about Bitcoin when we’re in Sydney,

Tony Kynaston [10:26]: What’s worse than that that Cam, it’s like there are people who are paid to usher the lemmings up the cliff, and then they pay the road runner to go out in front and then just stop just short of the cliff and watch everyone go over and there are people who sell tickets to the cliff, it’s like Yes.

Cameron Reilly [10:45]: Yes!

Tony Kynaston [10:45]: You don’t want to go on there and nah you’re not good enough for the cliff mate, no. Okay, I’ll give you a ticket, sure.

Cameron Reilly [10:53]: Shh, don’t tell anyone.

Tony Kynaston [10:58]: The magic ticket. Yes great. [cross-talking 10:58] He’s right. We’re probably all, some type of lemming, but you can just spot where the lemmings are going at the moment can’t you? Into the SAS stocks, the after-pay stocks, all those kinds of things.

Cameron Reilly [11:16]: Yes. But of course, they don’t think they’re lemmings, they think they’re the smart ones and we’re the dumb ones, value investors are the dumb ones. Well, anyway, this is all a lead up to story that somebody posted on, I think on a Facebook group today, CBA launching BNPL service. Well, we always knew it was a matter of time, I guess this is from their financial review Commonwealth Bank unveiled its after pay pincer movement, announcing a new product; CommBank BNPL, not exactly the catchiest name, somebody in Commonwealth Bank’s marketing department is probably putting a rope around their neck this morning, they probably had a bunch of really cool names and then the senior execs went nah, let’s call it CommBank BNPL and the marketing person is like no.

Tony Kynaston [12:12]: No, they would have gone. Listen, what do you know about, what’s wrong with the CommBank brand? Come on.

Cameron Reilly [12:18]:  It’s one of the most beloved brands in the country. It’s your money, Ralph, no was that CommBank?

Tony Kynaston [12:27]: [cross-talking 12:27] Victoria.

Cameron Reilly [12:27]: Who was CommBank? It was Jan not happy Jan? [cross-talking 12:3I] I’m sure they had a catchy marketing slogan at some point.

Tony Kynaston [12:41]: Or probably not.

Cameron Reilly [12:41]: We’ll allow up to 4 million of its retail customers to pay in four installments and the biggest competitive response by a major bank to the buy now pay later phenomenon. Now Tony, I asked you this being an investing guru, when an announcement like that comes out what would have happened today to the Commonwealth Bank shares and what happened to the After-pay shares?

Tony Kynaston [13:09]: I don’t think it would have affected the CommBank shares much at all and after pay, I think I know the answer, they went down a little bit, but then they came back up to about where they were beforehand. So, investors have pretty much brushed off the news.

Cameron Reilly [13:23]: Last time I checked after pay was up. I think after the market goes, well this is validation of after pay, that they’re on a good thing.

Tony Kynaston [13:32]: Copycats, Yes.

Cameron Reilly [13:33]: Copycats, Yes. And Commonwealth Bank nah, what do they know about the kids of today? And they’re probably right.

Tony Kynaston [13:40]: I read in the article that CommBank weren’t going to charge their merchants, anything for the sales. So, if you’re a retailer and you’re paying 6%, at least to after pay to book their sales, you’re going to put the After pay promotional gear at the back of the counter or under the counter and put lots of CBA stuff on the counter or [inaudible 14:03].

Cameron Reilly [14:05]: Is that a cause for any competitive lawsuit at some point?

Tony Kynaston [14:15]: No, I don’t think so. possibly, who knows?

Cameron Reilly [14:19]:  Yes. Do we have any competition laws in this country like they do in the US? I don’t even know how it stands here.

Tony Kynaston [14:27]: Yes, we do have anti-competitive laws, I don’t think they apply in that case. We have third line forcing, so it would be illegal if the merchant said you can only buy these goods with a combat card, but.

Cameron Reilly [14:38]: Right.

Tony Kynaston [14:40]: Yes. And that wouldn’t apply in this case either.

Cameron Reilly [14:42]: We are going to treat it like it is credit CBA group executive for retail banking services Angus Sullivan said CBA would monitor customers exposure to other buy now pay later services and would not allow the new product to be used when customers are late repaying other providers, this goes beyond the commitments made by the buy now pay later fintech in the new BNPL code of conduct which has been attacked by consumer groups as lacking the protections of the Credit Act.

Tony Kynaston [15:10]: Yes, I heard that today, they made a powerful case. I forget the lady’s name, but she was the chair of one of the financial counseling charities and she was saying, we get heaps and heaps of people in who are in financial problems because it’d be BNPL.

Cameron Reilly [15:24]: Really? Wow!

Tony Kynaston [15:29]:  Because there’s no credit check done before you buy something and you can spend quite a bit of money on it, so you can get into lots of trouble.

Cameron Reilly [15:35]: Right.

Tony Kynaston [15:36]: Because it’s credit! As we’ve said before, it walks like a duck, it quacks like a duck, its credit and there’s no credit check before you use the product and sign up.

Cameron Reilly [15:46]: Anyway, there you go. CBA shares are down, afterpay shares are up.

Tony Kynaston [15:54]: Yep

Cameron Reilly [15:54]: Oh, completely rational in the markets today.

Tony Kynaston [15:57]: We’re through the looking glass. But there’s a few other developments, you see what happened with after pay, they issued 10-year bonds, zero coupon so no interest payments. So, if you give your money to after pay for 10 years, I think from memory the deal was something like the bond is basically [inaudible 16:16] after pay share price of it around a hundred bucks, but in 10 years’ time, they’ll give you I think $130 a share or something like that. So, you’re basically gambling with after pay. A] it’s still going to be around in 10 years’ time and B] It’s going to be worth somewhere way north of $130 a share and people are just lining up like lemmings to take out the zero-coupon bowl.

Cameron Reilly [16:39]: Well, there you go. Good luck to them all. I hope they do well.

Tony Kynaston [16:42]: Yes.

Cameron Reilly [16:42]: Moving right along.

Tony Kynaston [16:46]: [cross-talking 16:46] with Bitcoin.

Cameron Reilly [16:49]: Moving right along. CVL that we recently added to our portfolio is currently slightly under the price we paid for it. What do we do?

Tony Kynaston [17:00]: Oh, let me have a look. I haven’t looked at it for a while.

Cameron Reilly [17:02]: Civmec, we bought it for 60 cents on the 1st of March, it’s currently trading at 59 cents.

Tony Kynaston [17:09] Let’s have a look at this graph. So, 1.7% today, by the way.

Cameron Reilly [17:21]: Yes, it was down lower than this yesterday. Yes.

Tony Kynaston [17:25]: I think [cross-talking 17:26] looking at that share graph, it’s well above its sell line.

Cameron Reilly [17:32]: Right. But recently we sold something because it dropped below the share price.

Tony Kynaston [17:38]: I think that was Ramelius, wasn’t it? And if you look at the Ramelius graph, I think generally it was trending down which is why we sold it and it was, but I didn’t sell it because its graph was trending down in the short term because it’s still above its sell price, but I was selling it because its graph was trending down in the short term and it was below its sell price. I’m just calling up Ramelius now and Yes, well it’s actually kicked up since we sold it so that was a dumb mistake, wasn’t it? Okay, capitulation.

Cameron Reilly [18:15]: Yes.

Tony Kynaston [18:17]: [cross-talking 18:18] disciplined?


Cameron Reilly [18:22]: Yes, well sometimes.

Tony Kynaston [18:23]: When I write my annual letter to shareholders, I have to do what Buffett does and say I made a foolish mistake.

Cameron Reilly [18:31]: Yes. Well, it’s not the first one you’ve made. I can just rattle off all of the things that you’ve got involved with me on over the years. You need to getting involved in with Cam Projects. Checklist. First thing is, is cam involved? Yes, [inaudible 18:51] no I’m not getting involved in it, it’s a big mistake. All right, so just because it’s.

Tony Kynaston [19:00]: You sound like my wife.

Cameron Reilly [19:03]: Oh right, Yes. Okay. Well, I’ll remember to bring that up at dinner on Monday night. Let’s say Taylor explain to all of us, why you think investing in Bitcoin is a good idea. Now Jenny explains to all of us why Tony shouldn’t get involved with me in any more projects.

Tony Kynaston [19:22]: She wouldn’t say that, she just says, how much have you spent?

Cameron Reilly [19:27]: Fair enough. Well, one of these days.

Tony Kynaston [19:31]: Exactly.

Cameron Reilly [19:31]:  It’ll all come good.

Tony Kynaston [19:33]: Yes. I say just treat it like another race horse, Jen.

Cameron Reilly [19:38]: Oh, I’m a racehorse, I like that, Yes.

Tony Kynaston [19:40]: Yes. A thoroughbred., eventually something will come good.

Cameron Reilly [19:45]: A Fox is going to be where it all comes good.

Tony Kynaston: [19:48]: Right. Okay.

Cameron Reilly [19:49]: Yes. Okay, well that was uncomfortable, but let’s move on. Okay, so CBL is down a bit, but because the chart looks like a Halloween pumpkin it’s good.

Tony Kynaston [20:01]: It looks better than that. Yes. It’s climbing overall.

Cameron Reilly [20:06]: Yes, but you got Five-year child and It looks like a Halloween pumpkin, but it’s up on the right-hand side. Okay, good to know. Stock of the week Tony, you’ve been a little bit quiet on the whole journal [cross-talking 20:21] this week.

Tony Kynaston [20:21]: [cross-talking 20:21] and golf.

Cameron Reilly [20:22]: I know, Yes. So, I actually did the download today and it’s taking me all day to try and get something out to you, but I haven’t finished yet, but because there’s lots of stuff coming to Stock Doctor in the last week.

Cameron Reilly [20:36]: So, reporting season is not over?

Tony Kynaston [20:39]: Reporting season is over but two things happen most companies by number report in the last week. So, lots of lots of late reporters and it can take a week to get, or maybe even a little bit longer to get the numbers in the Stock Doctor from their data providers.

Cameron Reilly [20:59]: Right

Tony Kynaston [20:59]: Yes. So, I’m still going through it. I’ve got a couple of stocks of the week, actually got, two or three to talk about. I was going to make GCY stock of the week and that’s


Cameron Reilly [21:12]: GCY?

Tony Kynaston [21:12]: The reason is because they had a qualified audit six months ago and that’s been removed now. So, I guess going resources and the share prices with the rocket. So, they actually, I think were suspended for a while, they did a capital raising to keep the company alive, which went off successfully and now that they’ve come back into trading, they’re on the up so.

Cameron Reilly [21:40]: Oh my God.

Tony Kynaston [21:41]:  We might want to have a look at guests going resources.

Cameron Reilly [21:44]: Shut up, from 2.89 cents to 56 cents?

Tony Kynaston [21:49]: Yes. So, it was like I said, it was dropped right down to that to that 3 cents a share and then it was suspended and then they do the capital raising of some, 150 odd million dollars, which was supported and now they’re back and listed again and the shares are on the up from 3 cents to 56 cents.

Cameron Reilly [22:09]: Okay. So that’s the stock of the week. What’s their QAV score?

Tony Kynaston [22:14]: Hang on, GCY has a 0.53 QAV score.

Cameron Reilly [22:19]: Wow! What?!

Tony Kynaston [22:23]: Yes.

Cameron Reilly [22:23]: This must be a new thing right? Because they’re not in the most recent buy list that you sent through.

Tony Kynaston [22:30]: Correct. Because they had a qualified audit up until recently and I’ve just put their latest numbers into my spreadsheet.

Cameron Reilly [22:38]: Right, okay. Well, that GCY it’s a good one. What do they do? Gas going resources? What do they dig up?

Tony Kynaston [22:46]: Gold miner.

Cameron Reilly [22:48]: Gold.

Tony Kynaston [22:48]: Gold, Yes.

Cameron Reilly [22:49]: Okay. And I noticed in your journal last week, you mentioned that the qualified audit for Zimplats has gone away.

Tony Kynaston [22:59]: Yes. That’s right. Yep. So, I think from memory, just reading through their annual report last week, the qualified audit is gone away, but they still actually are, I think even in the courts with the South African government about, or whichever government, there was Zimbabwe I suppose I’m not sure, with an African government about the tax issue so that the tax issue that was highlighted in the qualified audit hasn’t gone away, but the audit is happy enough to sign off on the accounts. So that’s improved for them.

Cameron Reilly [23:34]: Okay. Zim has [cross-talking 23:39]

Tony Kynaston [23:40]: If you’re call the qualified audit for Zimplats was about there’s, I think it’s a Zimbabwe company rather than, sorry South African and I think from memory, the problem was they weren’t accounting for their purchases of equipment in Zimbabwean dollars, they were sometimes putting them into us dollars, which apparently was illegal, so they would try to unpick that and it was causing them headaches.

Cameron Reilly [24:05]: Right. Okay, so it can go back on the.

Tony Kynaston [24:12]: Yep.

Cameron Reilly [24:12]: Is it on the list? So back on the buyer list?

Tony Kynaston [24:14]: Yes.

Cameron Reilly [24:15]: Like you said, it is right? Yup.

Tony Kynaston [24:17]: Yup.

Cameron Reilly [24:19]: What did you say in your journal just pulling up, added to the buyer list with the QAV score of 0.19.

Tony Kynaston [24:25]: Yes. So not very high.

Cameron Reilly [24:27]: Yes. Okay, not a guess going there.


Tony Kynaston [24:30]: Yes. Correct.

Cameron Reilly [24:32]: Okay, all right. Well, that’s it for my news of the week. Do you want to get into Q&A?

Tony Kynaston [24:38]: Yes, sure. Just a couple of other points about the buyer list. I’ll put one out in a day or so probably tomorrow. There’s a fair bit of work to be done and secondly, there’s lots of our current buyers’ companies have new figures and I think most of them are remaining on the buyer list, even though.

Cameron Reilly [24:56]: Okay

Tony Kynaston [24:56]: These have come in. So, I think just to point out a couple of highlights CAA Capral Aluminum has got a QAV score of 0.46 still. Myer’s new figures came out recently and they’ve got a QAV score of 0.68. So, MML Medusa Mining have a QAV score of 0.54.  So, there’s a couple of people might want to have a look at, but they remain on the buy list, which is good.


Cameron Reilly [25:20]: Good and while I think of it one more news item, FMG it’s taken a huge hit in its price in the last few weeks; Iron-ore prices are down, et cetera, et cetera. You want to just talk through your thoughts on something like this? I’d say we’ve obviously done very well out of FMG in the portfolio. It was trading at 2423 since the 26th of February, it’s down to 2028 so that’s a big drop, what are your thoughts?

Tony Kynaston [25:59]: I’ll Sit and watch. We’ve also paid a big dividend in that time period of at least 10% I think from memory so that’s another reason why the share price has gone down, but Yes, certainly in all prices had gotten to record highs of around $170 a ton and they’re back into, I think about the 150’s now so that would also be weighing on the share price. Again, I’m guided by the sentiment if it keeps dropping from here, I might look at selling it, and look at the more recent trend lines, our pay [inaudible 26:34] talks about because I don’t want it to go all the way back to say $60 a ton of iron ore and we’ve given up all our upside, but I don’t think it will do that. It’s likely, I think to still stay behind our price market little bit from here but there’s still lots of when the world comes out of, COVID lots of demand for infrastructure spending, which is largely driven by Iron-ore so I think most people are saying the iron ore prices are going stay up for longer, but it’s hard. I don’t want to predict what the iron ore price will do because I’m driven by some of the vagaries about which companies mining well, which one isn’t whether what’s China doing all those kinds of things. And there’s also talk about China trying to buy up Iron-ore mines in Africa and develop them there to try and offset dependence on Australia. So Yes, I’m not an Iron-ore expert I’m going to sit and watch and make a call when I need to. Well, the summary is I’m going to have to wait and watch for the [inaudible 27:38].

Cameron Reilly [27:39]: Okay. Do you think the world’s ever going to come out of COVID the way it goes?

Tony Kynaston [27:43]: [cross-talking 27:43].

Cameron Reilly [27:46]: I can’t believe it’s been a year and the US had 47,000 new cases yesterday, like a year. I’m in shock really that it’s still going on like this it’s really kind of crazy.


Tony Kynaston [28:02]: 47,000 new cases, well. One of the guys I played golf with he is an American and he was saying that some of the states are doing well with the vaccinations, some of the states are doing poorly with the vaccination and it really comes down to the weakest link in this stuff that he doesn’t think that the US will get complete coverage from vaccination anytime soon, so there’ll be outbreaks.

Cameron Reilly [28:25]: Yes. And it’s not going well in Europe, but I saw the other day too. I think Italy’s got its third wave going on. They’re all stopping the AstraZeneca Vaccine because of this blood clotting issue, it’s kind of crazy. Sorry. I was wrong on that US number; they didn’t have 47,000 new cases yesterday That was the day before they had 53,231 new cases yesterday. Brazil at 84,124 new cases, India,28,000, France 29,000, Italy 20,000, Germany 9,000.

Tony Kynaston [29:06]: A day.

Cameron Reilly [29:07]:  Poland 14,000, a day!

Tony Kynaston [29:10]: So clearly all of these countries just aren’t locking down, are they? just going about business as usual.

Cameron Reilly [29:16]: Yes. Something like that. Anywho! Let’s get into Q&A.

Tony Kynaston [29:23]: Yes. Good for gold stocks app.

Cameron Reilly [29:25]: Hi Cam. This is from Brett, “Hi Cam”. Hi, Brett, “Can you please ask TK how he decided to sell a stock before he discovered the three-point trendline? ”

Tony Kynaston [29:34]: Yes. Good question. I think I’d probably classify myself as a buy and hold investor largely before that so, as I’ve said before on the show, held most of my stocks through the GFC and that was painful and that’s when I started to investigate ways of trying to improve that process, which is when I came across the simple idea of the three-point trend line. Although there were plenty of people out there talking about other kinds of momentum investing about short-term, three-month trend lines going below 12-month trend lines are above that kind of thing so it’s not a new concept. I think I would probably say that I would have sold things in the past based on some of the ways we’re talking about now. If you ignore the sentiment, so if there was a resignation of a director or a CEO or a CFO, if there were red flags like that, if they were qualified audits, if they were a bad result announcement, that kind of thing. I guess in my early days, I probably put a lot of stock in what people like Roger Montgomery would say, there was another guy who I used to subscribe to called Ian Huntley who’s not around anymore, he sold his newsletter to Morningstar, which I think is still going, but I didn’t find their analysis to be as good as the Ian Huntley’s and Yes, people like that, so no real science behind or methodology behind it.

Cameron Reilly [31:08]: And after the GFC, you implemented the three PTL to try and.

Tony Kynaston [31:15]: Correct.

Cameron Reilly [31:15]: Limit the losses because, buy and hold is sort of a classic value investor strategy, right? That’s what a lot of value investors do.

Tony Kynaston [31:22]: Yes, correct. So, I was trying to find good companies and look to hold them for the rest of my life if I could. So, lots of emphasis on the quality side of the checklist and the value side I suppose lots of analysis, which eventually distilled itself into the checklist but Yes on the sell side, event-driven is probably how I describe it.

Cameron Reilly [31:45]: Okay, there you go Brett, I hope that helps. Matt, “Hi Cameron, really enjoying the QAV podcast, I never thought I’d be eagerly awaiting a show about investing each week so thanks very much to you and Tony for all your work.” I never thought I’d be making a podcast about investing each week, Matt and so welcome to the club. “. Got a question for TK about fudging a sell price in situations where we have fudged the buyer price take ECX as an example. That’s the second well, we’ve got another question about ECX I think in the show.

Tony Kynaston [32:15]: Yes, we do [inaudible 32:15]

Cameron Reilly [32:17]: “If we strictly follow the rules, the sell price is currently about 72 cents, but TK fudge the sentiment for ECX on the way in and ended up with a buy price of around a $1.22 rather than waiting until somewhere around $4.00” Do you remember this? I don’t remember this.

Tony Kynaston [32:34]: Yes. ECX was definitely a fudge.

Cameron Reilly [32:36]: Right?

Tony Kynaston [32:38]: It had two peaks from memory or three peaks around the same price or in that $4.00 Mark.

Cameron Reilly [32:42]: You took the last one, Yes, I remember now.

Tony Kynaston [32:43]: Correct, yep.

Cameron Reilly [32:45]: “In this situation, should we similarly fudge the sell price and the way out to more accurately reflect the more recent sentiment? For example, use the low points in February and March, 2020 to get a sell price around a $1.20 or to aligned to the scale of fudging on the buy side, use March, 2020 in December, 2020 to get a sell price around a $1.90. My thinking is that by doing so, we’d be basing any sell decision on changes to sentiment that are more closely aligned to the events that caused us to, by interested in your thoughts on balancing our fudge”. Well, that’s the title of the episode, Matt, well done.

Tony Kynaston [33:22]: Balancing the fudge.

Cameron Reilly [33:22]: Balancing the fudge.

Tony Kynaston [33:24]: I don’t think you have to balance the fudge, that’s the first point to make really. Yes, it was a fudge buy, all jokes aside I knew the business quite well and the reason why it went down was because they had some problems, they made lots of acquisitions to try and grow the company. One was a driving instructor company and one was I think a Grey’s Online; an auction company and the sort of diversification had distracted management. And so, the share price started to drop then there was a takeover offer initiated and that was withdrawn and that caused a share price to collapse and new management came in and eventually sold off Grey’s Online and the driving instructor business and that’s why I was happy to fudge it because I could see some fundamental shifts happening in the company which allowed me to think it would recover, which it has. In terms of fudging things, I’m happy to fudge on the sell-side as well. I tend to take the first line that Matt spoke about there, which was the sell price of around $1.20 so he’s ignoring the low point, but using March, 2020 is the low point and that’s fine. I think if I drew the line for my own use, I’d be drawing it with a sell price in the seventies, around 70 cents, something like that using the two low points. I’ll just call up the share so I can talk about what those low points are, ECX.

Cameron Reilly [35:07]: Yes. So, you’d be using the first one back in March 2019, 64 cents and the second one, March, 2020 at, 68 cents.

Tony Kynaston [35:19]: Yes. Which gives us a sell price around 70 cents. I think what Matt was saying was to use March and then April, which would give him a sell price of North of a dollar; $1.20 he’s saying, and that’s fine. I don’t have a problem with that either. So, it’s all these questions about three trend lines in selling, et cetera I think we’ve still got to use common sense. At the moment, the share price is going up probably the slightly slower rate than it has in the past. If people want to lock in profits and fine, but I won’t be selling until it gets down into the 70-cent range. Do you own ECX? [Cross-talking 35:58].


Tony Kynaston [35:58]: Yes, I do own ECX


Cameron Reilly [35:58]: [Cross-talking 35:58] QAV portfolio? You held it for a long time or is it a more recent thing?

Tony Kynaston [36:05]: When did I buy it? I think I bought it, that’s a good question Cam, I bought it when it turned up around, the time we added that, so probably July last year?

Cameron Reilly [36:20]: September last year we added it at $1.50. We bought it before it was in our portfolio going back to June 19, but then we got out, we bought it again at $1.50. And it’s now what? 1.90? Yes. So, 26, 27% up since we bought it in September so it’s a good one for us, but we’re going to keep holding it. You’re not worried about fudging a sell line for this one?

Tony Kynaston [36:52]: No, I’m not.

Cameron Reilly [36:54]: Okay.

Tony Kynaston [36:54]: But look I can see the sense in doing that first one that you spoke about, that Matt spoke about a $1.20 in terms of ignoring the first sell line and just using the two more recent ones I don’t have a problem with that in terms of a fudge, but I don’t think we need to balance the fudge, there’s no sort of science now.

Cameron Reilly [37:15]: It sounds good though. So, I’m just looking at the last buy list you sent me, which is on the 4th of March. It’s in the buy list with a QAV score of 0.48. This is with the buy sentiment fudge though but well the share price was $1.93 then, so it’s come down a little bit, but it’s got a good QAV score, stocks good, it’s a good buy, it’d be in our top 10 buys if we didn’t already own it so it’s not like the business is tanking.

Tony Kynaston [37:53]: No, correct. No, I agree. I think it’s still quite cheap.

Cameron Reilly [37:57]: Right and just to explain for us again, Tony, your thoughts on sticking to the sell line, even when it looks pretty drastic like that, as I understand it, it’s because you believe that a business that’s performing well and is undervalued according to our calculations, the market will eventually wake up to that and it’ll revert to the main.

Tony Kynaston [38:26]: Yes, or we’ll see some reason for it dropping off and we’ll make a decision based on that, you know like if the MD resigns unexpectedly or something like that, the share price will drop and we have to decide whether we want to buy or sell, even though it’s above the sell line. But Yes, that’s the whole point with the sell lines, the steeper you draw the sell line, the closer you draw it to the current uptrend, the more volatile you’re going to be. So, you can see with the uptrend with ECX, it doesn’t just go off in a straight line, it goes up, it comes back, it goes up, it comes back. So, it’s generally falling in uptrend, but if you sort of draw a line along the bottoms of all that sort of retreats on the way up, eventually it might drop below that and your sell, but then it might revert quite quickly and go above the buy line again. So, I prefer to have quite a bit of room on the way up so that I can hold, sometimes you might want to hold for six months to see what the new figures come out as that might vindicate your idea of it being a quality stock, that’s still cheaply priced. So, I think there are exceptions to that, like we said, last week, I’m thinking very hard about gold stocks, and potentially then by the same sort of idea on all stocks or any sort of commodity stock where the volatility of the underlying commodity might cause us some concern, but I haven’t really come to a conclusion with that at the moment yet and, I think if it might be worthwhile just going through a chart, there’s a company called Northern Star which was one of my bigger holdings not if you want to call that one out, we can talk about it. I bought it three or four years ago when the gold price first started trending up it says.

Cameron Reilly [40:12]: NST?

Tony Kynaston [40:15]: NST that’s, right. People might want to have a look at NST. And I still scratch my head with some of these gold mining companies. So NST was a very good buy for me four or five years ago and it’s gone up four or five times for me over that period but recently it dropped off and you can see from the graph it’s dropped off from something like 15, $16 back to $9, but if you drew a three-point trend line on the graph, as it currently stands, the sell line’s going to be around sort of $7 or even maybe even lower than that, maybe sort of 4.50.

Cameron Reilly [40:56]: Yes. So that’s where I think.

Tony Kynaston [40:59]: Yes, we wouldn’t be selling it. So, I was in two minds, but the reason why I did sell Northern star recently, and I didn’t declare it because it’s not on our buy list or anywhere near it because its prices weren’t so much. The reason I sold it is because of the clients started to happen with the retreat in the gold price the CEO who really was instrument, Oh, sorry, I think he’s now chairman really instrumental in driving this company through acquisition has just recently left the company and that sort of split the market a bit so I decided to sell. So, you can see that it’s above its sell line by this pretty clear using common sense so that’s gone below the trend for the last four years and you have the additional complication of the Bill Beaumont the guy who drove the company has left the company.

So, I made a decision to sell, I’m sort of betwixt in between with gold because it’s only the gold price has only dropped, sort of 15, 20% tops from $2,000 US and the answer back to you, something in the seventeen hundred. So that still means these companies are making lots of money so I just can’t really understand why they’ve pulled back so dramatically. I think the bond sell off has had a bit to do with it, people are sort of expecting that the world’s going to come out of COVID recession quickly and therefore gold won’t be as valuable as if the world was in turmoil and we’re heading into recession as you said before, cam, I don’t know if we’re that clearly out of the woods yet that gold won’t revisit some of its highs but I just don’t know. So, you know, I think it’s worthwhile using a bit of common sense in these cases. And so

Cameron Reilly [42:50]: People are buying Bitcoin instead of gold it’s the view, it’s the new digital gold Tony.

Tony Kynaston [42:55]: That’s what I find strange is that people are saying Bitcoin’s a new digital gold, but gold is being sold off, but Bitcoin isn’t, so there’s a lot of other sort of contrary positions or contra logic going on at the moment. I can’t make heads or tails of it. So, yes when I see a retreat, I got the other Northern star around 10 bucks, it’s now nine but this may be how something like Fortescue Metals plays out for us or any of the other commodity stocks that we have. We might make a common-sense decision rather than apply a hard sell line to it.

Cameron Reilly [43:28]:  So just [cross-talking 43:30] of people, Yes. So, the three-point trend line is a guide, not a rule.

Tony Kynaston [43:35]: Correct, Yes.

Cameron Reilly [43:36]: What would Bill Murray say? It’s more of a guideline than a rule or something like that, can’t remember what film that was from, but I’m not a God, I’m not the God, I’m just a God. Yes, so you can make some common-sense decisions looking at the three-point trend line. Not a hard and fast rule.

Tony Kynaston [44:00]: We’re getting back to ECX. I think that ECX is well above its sell price, but things might change that causes me to sell it before it gets to its sell price but at the moment it’s looking good.

Cameron Reilly [44:13]: Can you smell that?

Tony Kynaston [44:14]: No, I’m going to Sydney.

Cameron Reilly [44:17]: Well, I’m pretty sure Chrissy just opened the door and opened the jar of kimchi and I was wondering if it came through the microphone because it’s pretty stinky here. Where’s the kimchi, take the kimchi outside. Yes, stop listening to me. Okay. Thanks Matt, good and thanks for giving us the title of the episode.  Eric is next. “Hi Cameron. I’ve just been reading TK’s latest journal entry. I raise a question on EVZ, this is probably a week or so old EVZ removed for a qualified audit, where is this qualified audit? There is the audit entry, this is the audit entry from the latest half year results. It says that they have not become aware of any matter, blah, blah. I thought this was what we were looking for to see if there were any issues. If there was an issue, they wouldn’t be saying this right? Cheers, Eric.” Thanks Eric.

Tony Kynaston [45:13]: You know, I think Eric had to just drop down a little bit further in the audit report, I’ll just call it up, EVZ going to their annual report. Yes, so Eric sent us the basis for other conclusion and if he scrolls down the next paragraph has headed basis for conclusion and then the paragraph under that says “Material Uncertainty Related to Going Concern” and that’s the qualified audit I’m talking about.

Cameron Reilly [45:47]: So, this is in which report? The half-year report from the 18th of February or is it the earlier one from November?

Tony Kynaston [45:57]: 18th of February.

Cameron Reilly [45:58]: Okay. I’m just downloading it. So, it’s right down the bottom?

Tony Kynaston [46:04]: Yep, right down the bottom of the report.

Cameron Reilly [46:07]: Grant Thornton auditor’s responsibility?

Tony Kynaston [46:11]: I’ve got to say normally in this sort of situation, they would have said something. I’m surprised they didn’t say in the conclusion section there based on our review; we have not become aware of any matter that makes us believe that the accompany half year results does not comply. They usually put in their qualification something like except for our note below, but if you do scroll down another half a page, it says “Material Uncertainty Related to Going Concern. We draw attention to note 1D in the financial report, which notes that the groups bank funding matures on the 31st of October, 2021, the group’s ability to continue as a going concern is dependent on their bank facilities being extended.

These conditions are set out, set forth in note 1D indicate the existence of a material uncertainty which may make us doubt significant doubt about the group’s ability to continue as a going concern.

Cameron Reilly [47:09]: They say our report has not been modified in relation to this matter and then below, right at the end, they say a court accordingly, we do not express an audit opinion, but your classifying, this is a qualified audit.

Tony Kynaston [47:27]: Well, Yes, if there’s material uncertainty that the company is not going to be continued past 31st of October, I don’t want to buy it.

Cameron Reilly [47:33]: Right.

Tony Kynaston [47:35]: [cross-talking 47:35]

Cameron Reilly [47:38]: So even though they don’t specifically say there’s a qualified audit, but reading between the lines, well, it says material uncertainty so that’s your red flag, right?

Tony Kynaston [47:49]: Right. exactly. Yes, okay. So, I am surprised that they concluded the way they did because there are other examples where they say the same verbiage, but they have a quote qualification, then they’re saying see below and below is material uncertainty or the going concern.

Cameron Reilly [48:06]: Okay, good. Thanks for clarifying.

Tony Kynaston [48:11]:  Was it James from Melbourne who is the auditor with Deloitte? We should still get him on the show to go through all this stuff with us and just tell us, are there grades of uncertainty, or what do all these different wordings mean?

Cameron Reilly [48:24]: I think from memory he was asking for permission.

Tony Kynaston [48:27]: Oh, okay. All right, Yes.

Cameron Reilly [48:29]: Yes. Thank you, Eric hope that helps. Daniel. “Hey mate question for TK or yourself, if you could answer it off the cuff, if not, I’ll wait, not sure if I’ve used all my questions, I’m interested in what metrics make up for SD IV; Stock Doctor Intrinsic Value for new listeners. For example, is it a DCF model don’t come Friday and FCF model?

Tony Kynaston [48:51]: Free close Friday.

Cameron Reilly [48:53]:  No, that’s fine. Well, there’s something else, I just want to replicate the checklist the best I can with my guru focus checklist. Cheers” I use one called Guru Focus Value. This is how it’s described on the website both forward and backward-looking guru focus adjustment factor based on the company’s past returns and growth future estimates of the business performance. Now calculating the SDIV, I know that we’ve talked before about how to sort of fudge the SD star stock rating.

Tony Kynaston [49:30]: Yes.

Cameron Reilly [49:31]: But if we have a broken down the SD IV do you know how they calculate that?

Tony Kynaston [49:37]: They won’t tell.

Cameron Reilly [49:38]: Right.

Tony Kynaston [49:40]: I haven’t asked them recently, but in the past when I’ve asked them, they won’t say, they say its proprietary to them.

Cameron Reilly [49:47]: They don’t tell they don’t smell and they’re as grateful as hell.

Tony Kynaston [49:52]: Don’t ask, don’t tell, they won’t say. So, I guess my recommendation to Daniel is use the consensus forecast which is available in Yahoo finance and I think probably Google finance as well, which we use and if he wants to, I’d suspect that Stock Doctor use some kind of discounted cashflow, but they won’t confirm that or not and I don’t know the details, I don’t know what their DCF rate is, for example. So, it’s not the end of the world if you don’t have it. I just use a consensus forecast instead. And if Guru Focus has one and he thinks it looks realistic, use theirs.

Cameron Reilly [50:31]: Unlike us, where we teach people how to calculate it, keeping it close to their vest.

Tony Kynaston [50:38]: Yes.

Cameron Reilly [50:39]: Fair enough. Thank you, Daniel, hope that helps. How are we going for time? One more, couple more 52 minutes. Okay. Jamie, hi, Jamie, when are you coming on the show, Jamie? “Hi Cam. I seem to recall TK mentioning a book he once read where he learned how to draw three PTL., perhaps you could ask him the name of the book I’d like to read it. Jamie.” Can you remember?

Tony Kynaston [51:04]: Well, it wasn’t a book, it was like an eBook and I’ll be honest to say it was some kind of financial Click Bank that I clicked on 20 years ago or I’ll listen to, I suppose it was 13, 14 years ago after the GFC.

Cameron Reilly [51:21]: You still got those porn popups on your Mac at the time?

Tony Kynaston [51:25]: Well, it was on my old, XT computer or something so it’s probably on a hard drive somewhere there, but I haven’t been able to find it. I’m sorry and I’ve searched the internet can’t even find the company that sold it to me, I can’t remember the company’s name. So, the guy just took my twenty-five bucks and probably shut up shop, and now he’s selling the porn.

Cameron Reilly [51:45]: Sorry. I was just thinking the other title for this episode is just what’s up wannabes, decide which one to go. Sorry about there, Jamie, but if we ever remember, we’ll let you know I would offer when I’m down in Sydney to go through all of Tony’s old hard drives, but that could be a scary prospect, god knows what I’d find. John, “Hi Cam, how are you?” I’m good. Thanks, John. “Could you ask Tony if the gold price chart on index mundi signals a buy yet?

Tony Kynaston [52:16]: It’s been a buy for years, it’s been a buy since well, last four or five years. Let me just call it up.

Cameron Reilly [52:22]: Monthly gold price Yes, look at so we do a five year. Yes. It’s been just on a tear for the last couple of years?

Tony Kynaston [52:36]: Yes. So, I don’t know if he’s sort of, I’m suggesting because of the pullback, is it time to buy gold or not? But it’s certainly meaning a five-year uptrend.


Cameron Reilly [52:47]: Yes.


Tony Kynaston [52:48]: And in fact, if you look at the gold price, what month is that reading up until the end of February it’s pulled back? So that’s the question I’m having about gold. Do we take the three-point trend line back from November 16 and August 18, which gives a sell price of around $1,200, U S announce maybe $1,300? Or do we say some people have suggested take a more recent trend line approach in which case it’s probably breached now and I’m still thinking about that because if you click on the longer time period, say 10 years on the gold price chart, you can see how it does go through cycles. It goes up and down but if you look back into 2011, there was a peak 2012, there was a peak almost into 2013 is kind of like a number of different peaks so are we going to see it turn up again and give us multiple peaks or are we going to see it revert back to that sort of trough around $1,200? Like it did in 2016? And the short answer is, I don’t know.

Cameron Reilly [53:58]: What was going on in 2011 and 2012 was that Obama’s going to take away all of our guns. So, buy gold Fox news, Bill O’Reilly spruking it, or Alex Jones or someone.


Tony Kynaston [54:11]: I would say in broad terms, that was the end of the getting out of the GFC so there were lots of fits and starts up until about 2012 when people finally said, okay we’re over it and then the gold price dropped right back down again, and got going again in about 2017-2018. About 2018 I think it was when I started buying gold miner shares Yes. I’m looking at the trend I think If it does slide back a bit more from here, I probably would be a seller. but as I said before, I think we’ll probably see that reflected in the gold miner shares first of all. Well, I think that’s, what’s probably going on now with companies like RMS is that, people are predicting the gold price to be past its peak but again that’s a prediction we’ll never know.

Cameron Reilly [55:06]: Yes. So, the gold price and index mundi only really affect us as much as it affects the gold stocks in our portfolio. You’ll be looking at their charts individually, but then factoring in the index mundi price as sort of an overarching issue about whether or not we should continue to hold or we should bail.

Tony Kynaston [55:28]: Well, Yes, I think it’s a good point. You could almost ignore the commodity price except that I think people who are buying and selling commodities stocks, mining stocks, trying to predict what’s going to happen with the commodity-based on the index mundi type chart, which I think is what’s happening now with the gold price, people are saying well there was coming out of COVID, there was no big depression or the depression was short-lived and everything’s going to be rosy so sell gold but there’s a lot of ifs and buts in that kind of prediction game.

Cameron Reilly [56:02]: Biden got a $1.9 trillion relief bill passed it’s getting it up to one 5 trillion now I think they’ve passed.

Tony Kynaston [56:11]: Yes, but look the thing that does that I am mindful of is that we don’t want to wait for the gold price to go all the way back to $1,200 before we sell because then we’ve lost all the upside that we had over the last four years. I don’t think that will happen because as we’re seeing now with, we just went through Northern star even though it’s not below its five-year sell lines below it’s sort of four years so it’s not a bad time to sell.

Cameron Reilly [56:36]: Okay, good thanks. Good time for one more?

Tony Kynaston [56:41]: Yes, sure.

Cameron Reilly [56:42]: This is Gary. Hi Gary, ” I was wondering how Chi-X works with or alongside the ASX ” Chi-X, remind me what Chi-X is Tony.

Tony Kynaston [56:58]: It’s another stock exchange a competitor to the ASX. So, there’s the Australian stock exchange and then there’s the Chi-X. Not sure what chi stands for you think Chinese, but I think it is.

Cameron Reilly [57:09]: Chicago I would have guessed.

Tony Kynaston [57:11]: Yes, it could be. So Yes, it’s a competitor to the ASX, it’s another stock exchange that exists in Australia and a lot of big institutional traders will use it and they will, although I will arbitrage between one and the other or they’ll try and get the best price, but on both exchanges, there’s a bit of work going on at the moment I think driven by the government departments either APRO or ASIC probably ASIC, I’m not sure which one who regulate the stock exchange, so it’ll be ASIC be a sick Yes. And they were upset when the ASX had an outage a month or two ago, and people couldn’t trade for half a day. And so they’re thinking about making some kind of platform that straddles both Chi-X and the ASX so one can back up the other and I think there’ll be some benefit if ASIC came out and said to a stockbroker that if you’re using a broker, that you have to get the best price across either of the exchanges so it becomes more agnostic and we’re not talking about big differences, obviously BHP is probably on both and probably there’s only a few cents difference in the price across both from time to time, depending on the trades going through. So, it probably for us sort of retail investors will have no difference, but if it does back up the ASX, if there’s an outage, that’s good for all investors. I don’t know if there are any retail brokers who use Chi-X exclusively or if there are any retail brokers, I’ll give you the option of buying on one or the other, most of them are focused on the ASX which is the much bigger, the Chi-X is small compared to the ASX. That’s about all I know about it.

Cameron Reilly [59:01]: So, I was going to say, BHP is trading at 46.07 On the ASX at the moment and on Chi-X it’s 46.16. So, as you say few sentences in between them Chi-X by the way the “Chi” is derived from the Greek letter chi written as X symbolizing the crossing of the two sides of a trade along with the X, from the English alphabet names signifies a combination of the old world and the modern world or traditional securities trading techniques married with cutting edge technology. See the people who came up with this should have been hired by comeback, they would have come up with something a lot sexier than CommBank BNPL, Chi-X, there you go.

Tony Kynaston [59:46]: Yes, and there’s also the Newcastle Stock Exchange, which has been around for a while and that tends to just deal with small companies and lots of them run listed on the ASX so they go to a secondary exchange like Newcastle and get listed there so there are other platforms out there for people to trade on if they’re interested. I’ve never tried it on Chi-X, or Newcastle and it’s never impacted me but I think it would be good if we have a bit more competition and a backup to the ASX. The other interesting point is the company ISX, so ISX.AX Is also the operator of the ASX so someone’s like a regular, it’s going to have to stand above the ISX if it ever wants to give prominence to Chi-X in terms of having another platform as a competitor or as a backup to the ASX because the ISX.AX won’t ever do it.


Cameron Reilly [1:00:41]: No, it’s not in their best interest to do it right?

Tony Kynaston [1:00:44]: No.

Cameron Reilly [1:00:45]: It’s like trying to get Telstra to give us broadband back in the 2000s. Why would we do that?

Tony Kynaston [1:00:51]: Yes, exactly.

Cameron Reilly [1:00:53]: All right. Well, I think that’s probably it for today. Tony. Let’s we’re a little over an hour. Thank you to everybody who submitted questions, apologies to those we didn’t get to we’ll have to do those next week when I’m in Sydney.

Tony Kynaston [1:01:10]: Yes, that’s right.

Cameron Reilly [1:01:12]: Straight after the whiskey event, we will sit down and do a show when we’re tanked.

Tony Kynaston [1:01:18]: On Sunday night.

Cameron Reilly [1:01:19]: From whiskey.

Tony Kynaston [1:01:20]: Really?

Cameron Reilly [1:01:20]: Hell Yes! Let’s get hammered and do a show, see what that’s like, I can’t even talk now what that’s like.

Tony Kynaston [1:01:27]: You’re salivating, have you spoken to Nico? Is he going to bribe us and tell us who to vote for?

Cameron Reilly [1:01:33]: No.

Tony Kynaston [1:01:36]: These are the whiskey awards, aren’t they?

Cameron Reilly [1:01:38]: I think the voting’s already like done.

Tony Kynaston [1:01:40]: Okay.

Cameron Reilly [1:01:41]: You had to go online and do the voting. He said, you go and vote and I was like, I don’t know what any of these whiskeys are, I wouldn’t know what to vote for. I drink like once a year this is my one night of drinking a year that I’m going to do so I don’t know. But Yes, I’m looking forward to, it should be fun, it should be an interesting group of people there.

Tony Kynaston [1:02:02]: Yes, it should be good. I’m looking forward to having you down.

Cameron Reilly [1:02:08]:  All right, well I’ll see you on Sunday.

Tony Kynaston [1:02:08]: Yes!

Cameron Reilly [1:02:09]: Thanks mate!

Tony Kynaston [1:02:10]: Yes.

Cameron Reilly [1:02:11]: Okay. Well see you then. Thanks mate, bye everyone!

Tony Kynaston [1:02:14]: All right, bye. Thanks Cam.