| Cameron 0:00:04 — 0:00:17 | Welcome back to the QAV podcast, Tony Kynaston, you’re at your country estate this week. While by the way, this is Tuesday, the 15th of December 2020. Episode 361, Season 3, Episode 61. Hi. |
| Tony 0:00:17 — 0:00:18 | Hi Cam, how are you? |
| Cameron 0:00:18 ‑0:00:44 | Well, I woke up this morning and my NBN wasn’t working, and finally, they fixed that a few hours later, then I got banned from Facebook, immediately afterwards, I jumped on Facebook and they said you’ve been banned, disabled, from Facebook. Why? We don’t know. Can you get them to review it? We don’t know. They were like, we don’t know what’s going on, we’re just Facebook. No one tried to contact me on Facebook for a while. |
| Tony 0:00:44 — 0:00:52 | We’ll have to devise some kind of workaround for the QAV club and everything too so we can still promote things, either through me or through Taylor or someone anyway. |
| Cameron 0:00:52 — 0:01:10 | Well, yes, and I can send people mails via Mailchimp. I’ll be communicating with everyone via emails for the foreseeable future, don’t look for updates on Facebook, I’m sorry. You are on the country estate, Tony. |
| Tony 0:01:11 — 0:01:14 | Oh yeah, the country acre. Yep. I’m amongst the birds and the trees. |
| Cameron 0:01:14 — 0:01:16 | How does it feel to be back in Victoria? |
| Tony 0:01:16 — 0:01:27 | Feels good, I’ve missed it all year. It’s strange though, we spent the weekend in Melbourne, and you’ve got to wear masks to go inside stores and things and that’s uncomfortable and unusual. |
| Cameron 0:01:27 ‑0:01:27 | Yeah. |
| Tony 0:01:27 — 0:01:32 | Haven’t had to do that for quite a while in Sydney, Sydney is pretty much back to normal, I guess Queensland is too. |
| Cameron 0:01:33 — 0:01:39 | Queensland’s has been back to normal for, well, forever, really a long time now., |
| Tony 0:01:39 — 0:02:11 | That was quite confronting but it’s good to be back here, it’s hot. |
| Cameron 0:02:11 — 0:02:11 | Confronting. |
| Tony 0:02:11 - | Putting mask on and seeing people walking around in mask just brings COVID back to the front of your thinking again. Pretty much, you’re worrying about it when you shouldn’t. We stayed in the hotel rooms, and everything is covered in cling wrap, the tv remotes were in plastic, the cutlery is all wrapped up in cling wrap, the cups and saucers were covered in cling wrap. We had to go through a fair bit of effort to keep it COVID safe. |
| Cameron 0:02:12 — 0:02:18 | It’s like Christmas, you have to unwrap all your presents when you check into the hotel, it’s nice |
| Tony 0:02:18 — 0:02:19 | Even the condoms had condoms. |
| Cameron 0:02:20 — 0:02:39 | That’s a little bit more information than I really needed, Tony. The Financial Review, Chanticleer had an article the other day, why value investing is back in Vogue, I was so confused because I’m pretty sure that it was only like six months ago that they said it was dead. |
| Tony 0:02:39 — 0:02:39 | Exactly. |
| Cameron 0:02:39 — 0:02:58 | It’s zombie value investing, its back , baby. I reckon in the nearly two years we’ve been doing this podcast this is the second time I’ve seen the whole value investing is dead / value investing his back cycle happen. It happens every six months. |
| Tony 0:02:58 — 0:03:26 | And is completely meaningless of course, it never went away. Yeah, I don’t get it, I think it’s just that the IT stocks have their day of the aftertaste have their day and now the economy is coming out of COVID and the banks are up 20 or 30% and stocks like them, and travel stocks and Qantas and all that, they’re saying that their value stocks in their back in Vogue. I guess so. But they never really went out of Vogue. |
| Cameron 0:03:27 — 0:03:42 | Yeah. One of the guys he’s quoting in this article is Paul Skamvougeras, head of Equity Perpetual Investments. I think they’re the guys we’ve been trying to get on the show for a while or they’ve been trying to get on the show. But we haven’t been able to… |
| Tony 0:03:42 — 0:03:44 | That was, Perennial, a different company. |
| Cameron 0:03:45 — 0:03:57 | Perennial and Perpetual, a different thing. These guys are a value fund as well. Perpetual, pure value share fund. |
| Tony 0:03:59 — 0:04:05 | Yeah, one of the most famous value funds in Australia. They’ve been going for a long time. |
| Cameron 0:04:05 — 0:04:09 | Oh. Okay. Why haven’t we had them on the show? |
| Tony 0:04:09 ‑0:04:10 | Don’t know. We should. |
| Cameron 0:04:10 — 0:04:30 | We should. We’ll reach out to them and get them on the show, I’ll make a note. That’s good to see anyway, that the FIN is saying value investing his back and might drive a few new people to, listen to us. Welcome, welcome anybody who’s listening to us because you read that value investing back in Vogue, |
| Tony 0:04:31 — 0:04:36 | it’s just content to sell newspapers. Really? |
| Cameron 0:04:38 — 0:04:48 | Yes. Obviously, they need readers, they need something to talk about. It’s in, it’s out, this is hot, that’s hot, what’s hot, what’s not. |
| Tony 0:04:48 — 0:05:05 | And of course, I think it was Steve Maab who pointed out that there’s an index of value stocks and the stocks in the index don’t really bear any relation to the stocks that we called value stock, so someone’s arbitrarily assigning them to the index for value stocks and it doesn’t make much sense. |
| Cameron 0:05:07 — 0:06:12 | Well, portfolio updates, while I think of it, by the way, Doug Morris from ShareSight, when he was on the show, said if we uploaded our portfolio into ShareSight he’d be able to give us a secret link that we could share with everyone. I’ve been talking to their marketing manager, Angela, and she doesn’t seem to know of any secret link so that’s not really working out. But, according to ShareSight, our total return for this financial year is currently sitting at 20.27%. According to the Google sheet, our non- total return just our normal capital gain without dividends factored in as 18.6% for the financial year, versus the All Ord’s, 11.68%, we were a bit higher than that when I checked yesterday, but we’ve dropped a point and a half or something today. |
| Tony 0:06:13 — 0:06:19 | Okay. You’ve tracked the portfolio since inception, don’t you? What are those figures? |
| Cameron 0:06:19 — 0:06:40 | Yes. Since inception, where 11.71%, that was as the end of last month. I do it at the end of every month, so this doesn’t count anything that’s happened in the first two weeks of December. We were up 11.71 and the All Ord’s was up 5.04. |
| Tony 0:06:41 — 0:06:42 | Okay, so we’ve got our Twice Market. |
| Cameron 0:06:44 — 0:06:57 | Yes, Twice Market on that, we’re running on average of Twice Market since inception. This financial year we’re almost twice, probably 70% or something, up. |
| Tony 0:06:57 — 0:06:57 | Good. |
| Cameron 0:06:57 — 0:07:00 | Holy shit, this works Tony. |
| Tony 0:07:00 — 0:07:05 | Let’s go ahead and [inaudible 0:07:03] it’s always nice when a plan comes together, isn’t it? |
| Cameron 0:07:08 | That makes me want to throw a cigar in my mouth like George Peppard. I love it when a plan comes together. 80s A- Team reference there for people who are too young to remember or the two thousand’s movie Reboot with Liam Neeson playing the role of, shit, was his name? What was George Peppard’s name in the A- Team? |
| Tony 0:07:30 — 0:07:33 | Hang on, there was Hannibal. There was … |
| Cameron 0:07:33 — 0:07:48 | Yeah. He’s Hannibal, not Hannibal Lecter, Hannibal something. Okay, so, stock of the week, Tony, do you have anything in mind? |
| Tony 0:07:48 — 0:08:08 | I haven’t got the stock of the week, I haven’t done a download for a while, I’ve been travelling, but we’re talking about a stock of the year. It’s the end of the calendar year, just about, and financial review, and other people are doing their year in review. I’m going to nominate Fortescue as our stock of the year. |
| Cameron 0:08:08 — 0:08:08 | Hells yeah. |
| Tony 0:08:08 — 0:09:46 | Let’s talk about it a bit, because it’s not only stock of the year and probably our best investment for circling the portfolio since we started, but it highlights a couple of things that we’ve spoken about and brings home a few points. The first one is about concentration versus diversification, there are three big iron miners on the ASX going or miners on the on the BHP Billiton, Rio Tinto, and Fortescue Metals Group. Fortescue Metals, though is a 100% and iron ore miner and they’ve dated, skyrocketed up over the last couple of years. In fact, I bought some of them at $3 a share, and they’re now in the 20s so it’s been really good, seven times return and they’re forecasting that they’re going to pay a dividend of over $2 next year. They’re a great yield stock as well, compare those to BHP or Rio Tinto, which they both are about 30%-ish, or maybe 50%. That’s because over the years they’ve diversified away from just being iron or clothes. They get into other mines and other commodities as well, oil and gas and things all over the world. I’m not criticising them that makes them much more stable because when the iron ore price will eventually come off, and it will. This example is a bit like a portfolio, if you concentrate on the one thing on your best returns and don’t pay much attention to the diversification, I think you’d do better. I’m sure you do better over time, then trying to diversify. |
| Tony 0:09:46 — 0:11:33 | We spoke about that last week as well, that was the first thing I would expect on about Fortescue Metals. On the second thing is, the whole fallacy of predictions. A year ago, just after we Fortescue Metals, maybe even 18 months ago, people were forecasting that the iron ore price was going to collapse, and that we shouldn’t be investing in iron ore. I just took a very agnostic approach to the iron ore price and for every argument that someone gave as to why it was going to collapse, there was an equal argument for why it was going to do well. On the weekend iron ore hit $160 a ton and I think back we bought it may have been about $60 a ton. It’s very hard to predict these things, who knows where we’ll go from here? Clearly, it’s being bolstered by the problems in South America for valet, the other big iron ore producer in the world and so China’s having to buy all its iron ore from Australia and who knows what China will do? One-day Xi Jinping might get up tomorrow and say, I hate Australia so much that bloody Scott Morrison, I’m not going to buy oil from anyone. I’ll just shut down this thing, just out of spite. So, again, you can’t predict what’s going to happen with this better mind than us, like Andrew Forrest and Elizabeth Gaines who run Fortescue Metals are factoring in all this game, playing about where the iron ore price is going to go into their business plans, and so, they’re opening up new mines. I think as we speak, they’re just commissioning a new mine somewhere in Australia, in the Northern Territory, I think, which will bolster their output. We know, more iron ore output going into the market will depress the price, for sure, but that may not depress the share price of Fortescue Metals Group. |
| Tony 0:11:33 — 0:12:01 | If they’ve got a bigger share of the market going forward. I think they’re also trying to branch out into Africa, so that might come to fruition. But yes, there’s just so many moving parts and these things, they’re hard to predict, and I think this was a great example of that coal fallacy of prediction model and not trying to predict the future, but just trying to invest in quality companies that you can invest in cheaply and let management take them where they go. |
| Cameron 0:12:03 — 0:12:39 | For the QAV people to follow, we bought Fortescue back in August of 2019 at $7. 55 it’s up 182% as of the time of recording. Since then, we bought our second lot in much early March this year, the beginning of COVID at $9. 63, it’s up 121% since March. Definitely it’s been a real winner for us in the QAV portfolio. If I had known it was going to be that way, we could be put all of our money into Fortescue, but. |
| Tony 0:12:39 — 0:12:40 | We don’t know that, again that’s part of the fallacy of predictions. |
| Cameron 0:12:43 — 0:12:51 | Yes. So, we do diversify a little bit, but it’s limited diversification. |
| Tony 0:12:51 — 0:13:08 | We diversify in case we make a mistake with what we buy, we diversify because we don’t know which shares on the buyer list are going to outperform others, we don’t way over diversify, and we don’t try to decor relate. We stick to the process, which is, trying to get the best return. |
| Cameron 0:13:09 — 0:13:15 | We’ve currently got 15 stocks in the QAV portfolio. |
| Tony 0:13:15 — 0:13:23 | That’s a nice number, 15 to 20 is about the number I was trying to hold as well. |
| Cameron 0:13:23 — 0:13:23 | Speaking of… |
| Tony 0:13:23 - | Sorry Cam to interrupt, every year looking back with hindsight, you could say I wish we had more Fortescue metals or this or that. But every year looking back, I never would have been able to predict with confidence, which was going to be the best performing share. |
| Cameron 0:13:37 — 0:13:41 | Wish we had never bought Apollo tourism, that’s what I’d say when I look back. |
| Tony 0:13:41 — 0:13:47 | Luckily, we do have a portfolio that that only hurts 2 or 3% instead of a whole heap. |
| Cameron 0:13:49 — 0:14:20 | If I look back at the stocks that we’ve sold, over the duration of the portfolio, we’ve sold a lot of stocks. We’ve sold about 35 stocks some of them we bought and sold repeatedly, versus the 15 that we’ve hold. When we talk about getting 60% of our buys right, does that work out? If we’ve hold 15 and we’ve sold 35? |
| Tony 0:14:20 — 0:15:02 | No, I don’t think it does, but I think this year has been unusual for two things, COVID of course, we sold at least half the portfolio during COVID. That’s not going to happen every year, and the other thing is, I guess this is something I haven’t done for a long time, but it was useful doing it with a dummy portfolio. I think getting started from scratch can lead to lots of trading until you settle into the portfolio with the stocks to go forward. It’s almost a bit of an evolutionary process, you try a few things, they drop back, you sell them and then you settle into, here are the 15 stocks I’m going to go forward with. We haven’t made many changes to those since we’ve settled into that portfolio. |
| Cameron 0:15:03 — 0:15:16 | But even all that taken into account, as I said before, since inception we’re up 12% versus the All Ord’s, up 5%. so, it’s done what it’s supposed to do. |
| Tony 0:15:17 — 0:16:24 | Correct, and it survived the COVID lock down. If we talk to our friends, how many people sold out during COVID dip and never came back in or made all kinds of trading mistakes because of that. Our system got us through it, which, I’m particularly proud of that probably I’m proud that we’ve done Twice Market, that’s what I thought we should do, that’s what I do and I’m glad it worked out that way for our listeners, and we could prove it demonstrably. I’m proud of the way we came through COVID because we didn’t know what was going to happen in March. There was all kinds of doom and gloom prophecies of the underworld, but before the system, we thought we sold lots of our shares and I remember, within a month of that we started to buy again, maybe even weeks. I went, well, this is really different for GFC because the GFC kind of kept going down for 18 months. I was trying to use that as the paradigm to base decisions on, or base things upon. We just followed the system and we’re back in, the next month, we rode those stocks back up again and some of those folks are up 30 or 40% since then. |
| Cameron 0:16:25 — 0:16:37 | We actually started selling off in February en masse, 10th of February 17th of February 20th, 24th we were selling stuff. February March, we sold off a ton of stuff. |
| Tony 0:16:37 — 0:16:38 | Looking at it here, you’re right. |
| Cameron 0:16:38 - | We did by AQG on the 17th of February, then we didn’t buy and again until we bought Santos on the 3rd of April. We sat out for a month or a bit, a month, or six weeks. |
| Tony 0:16:56 — 0:17:14 | Yeah, we sat cash for a while. Anyway, the year in review I think it was a great learning experience and I hope people have started to build some trust in the model in the system, I think it works. |
| Cameron 0:17:14 — 0:17:24 | Speaking of coal, China announced yesterday that they’re banning all Australian coal. |
| Tony 0:17:29 — 0:17:39 | Oh dear. Our politicians aren’t doing the business world any service at the moment, are they? You know you don’t piss your best customer off. |
| Cameron 0:17:40 — 0:17:45 | Hold on, but there are a pro-business government Tony, it’s a liberal party, they’re good for business. |
| Tony 0:17:46 — 0:17:55 | You go to imagine there’s a few things going on behind the scenes like you’re never going to donate to the liberal party again unless you fix this mess. |
| Cameron 0:17:55 — 0:18:27 | Funnily enough, I don’t see the Murdoch press coming out and lambasting the government for destroying the economy. Can you imagine if it was a labour government that ended up with China banning coal, what the headline of The Herald Sun and the Australian would be? Sky News? They’d be being tearing their clothes off and running around and chopping heads off, lighting torches and stuff. It would be crazy. |
| Tony 0:18:27 — 0:18:30 | I think most of the editorials are Scott Morrison stands firm. |
| Cameron 0:18:34 — 0:19:05 | Here’s another thing Chanticleer posted today. Geoff Wilson’s Amaysim bid channels Warren Buffett. Geoff Wilson’s opportunistic bid for mobile business Amaysim, sets a higher bar for any counter offers, it also marks a new phase in his management of permanent shareholder capital. He’s doubled down on his commitment to Warren Buffett’s idea of using permanent capital to build wealth with a takeover bid for mobile virtual network operator Amaysim. I use Amaysim, they’re my mobile providers. |
| Tony 0:19:05 — 0:19:30 | Okay You’ll have a new owner. I’m not sure, I sort of briefly read that article this morning, I’m not quite sure what permanent capital means they’re. Geoff Wilson runs lots of investment bonds, lots of investment companies so that he’s got permanent capital, I guess, and his job is to invest it. I guess maybe the difference here is that he’ll take over this company and it’ll be a privately owned investment for that fund, is at the difference? |
| Cameron 0:19:30 — 0:19:35 | I don’t know, man. You’re the expert. I’m just reading what it says in the FIN. |
| Tony 0:19:35 — 0:19:39 | I think it is, I just read it briefly myself this morning. |
| Cameron 0:19:39 — 0:19:43 | Has he done any other complete acquisitions? [inaudible 0:19:43] |
| Tony 0:19:43 — 0:20:05 | No, I don’t think he has, he tends to just take big, big positioning companies like Myer, for example, I think he owns 10 15% of Myer and that’s big for him, so this might be the first time he takes something private. That’s probably what they’re talking about but I’m not sure if that’s channelling Warren Buffett, necessarily. |
| Cameron 0:20:07 — 0:21:08 | There’s a great anecdote in this article, Jeff Wilson tells Chanticleer that the concept of permanent capital was well explained by hedge fund manager Bill Ackman at this year’s Sohn Hearts & Minds Investment Conference last month. During an interview, Ackman retold the story of how Buffett created Berkshire Hathaway more than 50 years ago. If you followed Berkshire from 1956 to 1969, he was an activist, hedge fund manager, Ackman said. Then a 1969 he wrote a letter to his investors, saying, I made a whole bunch of money, I’m a little less motivated, I’m not going to work is hard going forward and I’m going to go run this crappy textile company. Ackman said his investors good choice of Cash or stock in Berkshire. Many took cash, some famous names took cash, Buffet took stock, and that gave him control of his own vehicle and what’s interesting is he walked away from managing a one hundred billion dollars hedge fund, which in 1969 was a very large hedge fund, sounds like a very large hedge fund to me today. |
| Tony 0:21:09 — 0:21:13 | [crosstalk 00:21:08] in 69, hundred billion dollars? |
| Cameron 0:21:13 — 0:21:35 | Yeah, I just thought so too, twenty-five million of it was his and he got 25% of the profit, there you go, that puts paid to the numbers there. He’d exchanged that, if you will, for what amounted to a company in textile’s and dying business, and of course, we know that he then used Berkshire to go and buy other companies, he can run them from that so, that’s what Wilson’s doing. |
| Tony 0:21:35 — 0:23:26 | He’s a complete company, and they’re going to use it to fund other things from the profits. That’s interesting for him to do that. I’m not sure what vehicle he’s using to do it, whether it’s where capital or one of the other funds. There’s pros and cons of that, the pros are, he is probably getting so big he has to do that for these investments, taking a percentage share in them doesn’t make much sense. But, when you d‑list a company or when you take it private like that, then it gets a different accounting treatment, I’ll call it that. It probably won’t be a problem but if you have a list of investment companies like he does every month, he marks them to market because he can tell his investors what the closing share prices were for the shares in his portfolio, then straight away, you can see whether the list of investment companies is trading above or below net tangible assets because you know the sum of all the share prices for the stocks and how much he owns in those stocks You can compare that to what one share of that list of investment companies is at the moment. You could decide to buy or sell based on a discount or premium, but have privately owned companies in there, you can’t market to market every month. He has to put some kind of value on that company and that that can become tricky. I’ll say that there are listed investment companies out there, which I won’t touch, let me say that because they don’t have listed investments in them and working out what their net tangible assets are becomes more akin to an ivy calculation for business. And there’s a lot of as we know from our own by the checklist as well as lot of opinions in the evaluation process. |
| Tony 0:23:27 — 0:24:28 | If you run that list investment company and you value the underlying companies, they’re in that list of investment company, your kind of mark in your own scorecard and I think that leads to issues. We saw, particularly in the GFC, where conglomerates and a list of investment companies that did that had to suddenly write down their assets dramatically because they had bean perhaps overstating the values in the past. Then when the rubber hit the road in a depression, it became quite obvious that those listen this investment companies had been overvaluing their assets to get their net tangible asset value up and therefore this share price. I’m not saying that Jeff Wilson will do that or have problems with that, but it’s something to watch out for it if he’s going down that route, it doesn’t become as straightforward as looking at the NPA for the list of investment company every month and comparing it to the market-to-market share prices. |
| Cameron 0:24:29 — 0:24:51 | Yeah, it is. Ah, I am WAM capital that he’s using, apparently, Wilson’s WAM Capital is offering 69.5 cents in cash for each Amaysim share. The big prize for Wilson is 80 million in franking credits sitting on Amaysim sheet. |
| Tony 0:24:53 — 0:25:19 | That’s because WAM Capital has built its followers on the basis of paying added with dividend frank dividend yield. These days they have lots retirees investing and WAM capital in particular and getting a sort of 6 or7% yield plus franking credits that’s very attractive to people compared to what they could get in the market in a bank account or a bond-like investment. |
| Cameron 0:25:20 — 0:25:47 | Okay, well, let’s quickly run through some Journal entries and get into their questions. We’ve got a ton of them today. to finish up the year with well, so I think we’ll do one next week, but nearly finishing up the year. Autosport’s Group you removed from the buy and sell because its prices dropped below the sell line and you said it now looks like a falling knife. |
| Tony 0:25:47 — 0:25:59 | That one came into the buyer I list a couple of months ago, I think it had tipped up there for a bit but it’s tipping down again now, and I think it probably is a falling knife. |
| Cameron 0:26:00 — 0:26:42 | For new listeners, a falling knife is a fairly common term in investing, it’s for stock that’s continuing to go lower. It may spike up a little bit from time to time, but then it keeps dropping, and it’s trying to catch that stop, trying to buy it when it bottoms out, it’s a bit like trying to catch a falling knife. Tony often says You got to wait for the knife to hit the floor before you pick it up or you’ll cut yourself. when you see a stuff like that that’s continually sliding backwards over a long period of time despite attempts for it to poke its head up, we call that a falling knife and we tend to avoid them. |
| Tony 0:26:42 — 0:26:58 | Always difficult with those kinds of share grass where they sort of start to do the Nikeish swoosh the hockey stick going up there after going down for a long time. But it has printed down again. And gone below its sell price. |
| Cameron 0:27:01 — 0:27:09 | Really? I’m pulling it up, just having a bit of problems with stock doctor doing what it’s told. |
| Tony 0:27:09 — 0:27:10 | You’ve be banned from them too, have you? |
| Cameron 0:27:11 — 0:27:31 | God. Oh. They were nice to us, they sent me a nice e mail last week saying, everything’s fine, keep doing what you’re doing. A couple of people have asked me if we’ve got an update on the Stock Doctor Situation there. They’ve got no problem with us sharing a little bit of their data with you as we teach and train apparently, so that’s nice. This graph that I’ve got only goes back to late 2016. Is that when auto sports listed |
| Tony 0:27:31 — 0:27:31 | Yeah, that’s good on them. |
| Cameron 0:27:31 | This graph that I’ve got only goes back to late 2016. Is that when auto sports listed |
| Tony 0:27:43 — 0:27:46 | Yes, November 2016. Correct. |
| Cameron 0:27:46 — 0:28:03 | Okay. I’m just looking at the sell line here, I’m starting at what looks like a no April 2020 COVID cough and what are you drawing is a second line, like the next lowest point the month after. |
| Tony 0:28:04 — 0:28:38 | I did originally draw at that point, and that’s why I became a buy, if you sort of fall the peaks down, then became a buy around October 2020 but now I’m drawing the sell line using April 2020 and September 2020. There’s been a couple of buy and sell alterations in the last few months with this one and use those two points it’s just dropped below that sell line. It’s kind of hugging the buy line, it hasn’t gone above it again yet. |
| Cameron 0:28:39 — 0:29:01 | Yeah. So, the buy line. Sitting on the buy line, it’s below the cell line. Not good for SG Autosports, let’s see, what else did you talk about? Yancoal. You said it got a QAV score of .31. |
| Tony 0:29:01 — 0:29:02 | Did we mention this one last week? |
| Cameron 0:29:03 — 0:29:04 | I don’t know, maybe we did. |
| Tony 0:29:04 — 0:29:31 | I was going through the notes this morning trying to look if we did, I’m not sure if we did. We’ll just touch it quickly anyway. I think I spoke about it last week because there’s only average value traded amount of 57,000 but the market cap is nearly three billion. That’s because a large shareholder in there is the Chinese coal company. That will be interesting now that China’s ban the Australian Coal Companies, this one’s majority owned by a Chinese company I don’t know what that means for them. |
| Cameron 0:29:34 — 0:29:59 | I think we did, because we recorded late in the week last week that’s how we managed to squeeze that one in, I normally go back seven days, but it was before that. Getting back to the China coal thing, I’m guessing a lot of investors are panicking over that, but from s QAV perspective, nothing changes? We just read the numbers? |
| Tony 0:29:59 — 0:30:28 | Correct. Just looking at Yancoal is down 10.4% today. That market hasn’t received that news well, if I look at some of the other ones like Whitehaven Coal, how’s that going? That’s down 7.4% and then New Hope could be another one that sometimes comes onto the buyer list. New Hope is down 11% today as well and the markets haven’t been open two hours today. |
| Cameron 0:30:29 — 0:30:44 | Any coal miners in our portfolio? Ramelius Resources, Perseus, SSR, there we go Grange caught on commodities |
| Tony 0:30:44 — 0:31:03 | Hawthorne’s Coal, Mineral commodities, Mineral Sands. No, we don’t have any there. I’m just trying to think what the buy list has, if the buy list has, let me look up the latest buy list. The buy list may have New Hope on it, I’m just going from memory here, let me just have a quick look. |
| Cameron 0:31:04 — 0:31:16 | Yeah, row 68, it’s fairly low. QAV score of 0.11. |
| Tony 0:31:17 — 0:31:43 | Let’s just have a look at the New Hope stock journal on the run here, let’s have a look at the New Hope graph, so their share price is now $1.30.7 it’s down nearly 11% as we speak, going to the chart on Stock Doctor. It’s a tricky one, isn’t it? Sze? Actually, it’s actually probably above wouldn’t be a Schrödinger. It’s actually above the buyer price and below the sale price. |
| Cameron 0:31:43 — 0:32:20 | Another a bit of a terminology alert there, I thought I should jump in from time to time when we do this on the show Schrödinger there, is one of our terms. That’s for, stock that is simultaneously a buy and a cell. It’s above the buy line, and it’s below the sell line. We don’t really want to get involved with a stock like that either, because way probably have better options that have a cleaner graph, more obvious which direction they’re going in. We tend to avoid the Schrodinger’s. |
| Tony 0:32:20 — 0:33:10 | We only have the price on you has two points in the line, so I’ve got the low point is October 2020 and then the next lowest point to the right is November 2020 units it’s above that point. Where are we? go to? 31 5 the next lowest points just below a dollar 30.7. technically it’s below the sell but we only have two points in that sell line. Ideally, unless it turns down dramatically, I’d be waiting to see what that trend does, it is above the buy line if you take the high point. February 2019 and I think this is probably a case where you have the right-most peak |
| Cameron 0:33:10 — 0:33:13 | Which is the second low point, is also the second-high point? |
| Tony 0:33:13 — 0:33:15 | Yeah, that’s right. |
| Cameron 0:33:16 — 0:33:16 | So, it’s Schrödinger. |
| Tony 0:33:16 — 0:33:16 | Yeah, it’s Schrödinger. |
| Tony 0:33:16 - | And a falling knife too, it been falling since February 2019. |
| Tony 0:33:29 — 0:33:42 | All things being equal, I wouldn’t dump this from the buy list yet, but you’d expect things to get worse for these companies because of what happened in China yesterday. I would expect that that share price will keep declining, and we’ll take it out very soon. |
| Cameron 0:33:43 — 0:33:50 | All right, but it’s business as usual for us from QAV perspective. We just keep watching the charts and listening to the numbers. Right? Good. |
| Tony 0:33:50 ‑0:33:50 | Correct. |
| Cameron 0:33:50 ‑0:34:56 | All right, well, maybe we should get on the questions. Seeing where 40 minutes in and we haven’t started question yet. Here’s one from Gary, IV number one calculates from EPS where IV number two calculates from FEPS future EPS. Why is this? Is there something I need to listen to first to understand this a bit? He’s a new subscriber, I think, Gary. I sent him an email back saying they’re just two different ways of calculating IV. Calculating IV isn’t an exact science, lots of different ways you can approach it and think about it, so we used two different ways of calculating it. One looking at the current earnings per share one looking and higher hurdle right, one looking at the future and expose share in a lower hurdle rate then they all go into the mix with all of the other data points that we look at to come up with the QAV score. Would you add anything to that? |
| Tony 0:34:54 — 0:36:38 | Yeah, I just say that the second one that we use is probably the way most analysts would value your stock. They’d use consensus future earnings per share number, and they use the market hurdle rate of 6% for the risk the premium, plus for whatever the long-term interest rate is or 10year bond interest radius or the cash radius in Australia, which at the moment is .1%. so, it’s a hurdle rate of 6.1%. That’s the way that analysts tend to do it, and they focus on next year’s earnings, which makes sense because you know this year could be an unusual year, so it’s looking next year. The only problem with that, I found, is that, as we said before forecasting has got flaws in it, and often times earnings per share could be wildly inaccurate. But, if you’ve used that and that alone to base your calculation on you, can be led up the garden path sometimes. Sometimes it’s very accurate, sometimes it’s misleading. So yes, I do a couple, I use the current earnings per share just to give a balance to the future. I would say, probably a 90% of cases. Most companies air on a fairly even trajectory so the earnings per share might be slightly higher next year compared to this year. But sometimes there’s no anomaly, so it’s always good to use both. I use 19.5% as a hurdle, because I guess it’s a philosophy of trying to add companies to the portfolio that have a better return on the ones that were in there at the moment. But that does mean that although the companies fail that first five-year calculation, so that’s another reason they have a couple of different ways of doing it |
| Cameron 0:36:40 — 0:37:19 | Okay. Thank you. Thanks Gary. Murray Interested on thoughts about W BC s a QAV buyer. I’m getting a very good score of 0.49 and recent uptrend on the five-year chart. Is it time to forgive them for the royal commission and money laundering Etcetera? Or am I missing something? He had another comment, this was on Facebook back when I still had Facebook access, realise now that I probably should have drawn the by line from the five year high, which would mean it’s still a fair way off of a by roughly $26. Interested if Tony would still consider buying, though. |
| Tony 0:37:20 — 0:39:05 | Yes, I remember when the banks reported, three of the banks have a March and September deadline. We got the figures for Westpac and the other two in November and I remember saying the podcast at the time on the podcast. They look really good, they ‘ve got QAV good scores and they just started to turn up. But they were well below their five year by line so left him alone. One of the reasons why I haven’t fudged this one, I think there are some cases where you can pledge something rather than waiting for it to get up to that five year buy line and, we’ve done that with, South 32 with Eclipse, and you could do it with these banks as well. The reason why I haven’t done it with the banks is because I bought Macquarie Bank around that same time a little Cory Group is It’s now called, which is the often seen as being the fifth bank. It’s not a retail bank the other Big Four, It’s more like a Wall Street bank. You own infrastructure signs off its own book into, and it also is an investment bank, but it does have a retail bank component to it and so has some of the same sort of contexts and pressures that the retail banks are having it the moment in terms of loans, et cetera, whether they’ll be repaid I didn’t need to fudge the big fall bags to buy one of those when I could buy Macquarie groups. That’s the reason why I haven’t fudge the Big Four. I think if Murray really likes them, he can fudge it and buy them. The other thing to note about the big the Big Four banks is one of the key metrics to look for with these banks is what they call their provisions for bad debts. |
| Tony 0:39:06 — 0:40:22 | One of the reasons why they were smashed during COVID was because people were getting six months’ holidays on didn’t have to pay there their mortgage payments for six months in return for adding six months to the back of their line. So, the banks had to raise some provisions against that in case those people never did come back after six months, and they had to forfeit their loans or bank had to sell the property or whatever to try and get out of that situation. There’s been some rumblings in the last month or so that it isn’t as bad as it was first thought, that people are coming back onto paying their, they’re mortgages, and they are paying them in numbers which were higher than forecast. I think it was the CEO of Mab, said he thought they’d reached the low point in their bad debt provisioning for mortgages, that’s usually a good time to buy banking stocks on the reason is banks get most of their income, obviously from taking deposits and loaning money and taking the risk for you. That’s a very simplified version of how it works because they also go off and borrow money, particularly overseas, and come back into Australia and lend it at a higher margin to retail shareholders. |
| Cameron 0:40:22 — 0:40:24 | You’re getting you for getting money laundering there Tony. |
| Tony 0:40:24 — 0:41:47 | Yes, there are other things that they do as well if when the spread is low, say 1% or 2% on that kind of business, they have to take a provision which says that maybe 5% of those loans are going to go bad. That that provision can materially eat into the profit that year for the bank. It’s worth while watching that provision worth watching, how companies’ provisions anyway for all sorts of different things, capital depreciation, amortisation provisions for bad debts, all sorts of things get provisioned. It’s one of the skills of a CEO to be able to take money off the top in a good year and put it in front of the balance sheet and bring it back in a bad year and add it to the Profit to smooth out the profit and loss and make the company look more investable and give these CEO bonuses and down uses. That’s a sceptical way of looking at it. But, for banks, it’s particularly worth watching those provisions for bad and doubtful debts. And if I think the watershed might be the next time they report, which will be in February for CBA and then probably around May for the other banks, just to see if they have stocks, if they have written back some of those positions, that would be a big boost. |
| Cameron 0:41:49 — 0:41:54 | So, the answer to Murray’s question is, you would not fudge on the banks. |
| Tony 0:41:55 — 0:42:11 | I personally wouldn’t because Macquarie Bank was available to be invested in and I didn’t have to fudge for that, and that’s that satisfied my need to buy a bank stock. but if Murray wants to fudge and by Westpac, I think that’s legitimate even where it’s hoping the cycle. |
| Cameron 0:42:14 — 0:42:37 | Thank you, Murray. Chris is a stock consolidation and trading status RE, something to be wary of. R E stands for a reconstruction, apparently, and he’s sent us a chart from Capri CAA one of the stocks in our portfolio? Do you know what this is all about? |
| Tony 0:42:37 — 0:43:58 | Yes. So, he’s trying to make sense of some share graphs where the share price has been either consolidated or diluted. In Capitals case, I think it was a 5 to 1 consolidation, in the particular shade graph he’s used, there’s a step jump between the old share price on the old way of calculating capital share price in the new way. All share providers do this differently, but I know on in Stock Doctor they go back and back calculate so the graph looks a lot smoother than what Chris has shown us here. They apply the consolidation historically and you can still see that the graph trends that we use. I didn’t recognise what provider Chris was using when he sent us the Graph here, but you might want just to do a bit of a Google search and have a look at some of the other ones because a good provider will take these things into account and apply them retrospectively so you can still see, for like when you’re looking at a share graph. The other one he spoke about and gave us an example of was New Zealand oil and gas. I think that’s a bit of a different case because that was delisted for a long time so you’re seeing a straight-line graph in that. I think that’s just represents when it was delisted, it was delisted at one price and then came back on the market of the higher price when it re listed. |
| Cameron 0:43:59 — 0:44:09 | I also noticed on New Zealand oil and gas NZO that the average daily trade was like $700 tightly held and in pretty small. |
| Tony 0:44:09 — 0:44:48 | I’m going to have a look at that one because I think last time, I looked at it, because I was considering putting it in the buy list, they didn’t have up to date numbers in Stock Doctor, I’ll have to email them and ask to do that Their latest numbers are still December 15, so Chris be careful with New Zealand oil and gas. I think what’s happened is, it got delisted in 2015, and there hasn’t been a new set of accounts since it’s been re listed, so I didn’t put this one in the buy list for that reason. I want to see some figures and do some analysis on something more recent than 2015 before I could decide to put it in the buy list |
| Cameron 0:44:49 — 0:45:10 | Getting back to his original question, the stock consolidation that Capral went through, I know we’ve talked about it before. I think you said last time that sometimes they just feel like reducing the share price is a good thing or is it increasing it? |
| Tony 0:45:11 — 0:45:30 | I think the share price went from 15 cents to $5 or something like that when they did, and they felt that that would attract more investors to there to their stock because at 15 cents, it was seen as being a bit of a penny dreadful by some people. I don’t subscribe to that thinking, but they thought it was doing, |
| Cameron 0:45:31 — 0:45:36 | So, there’s nothing to be concerned about when they do that it’s just a psychology experiment? |
| Tony 0:45:36 — 0:45:36 | Yeah, it’s Marketing. |
| Cameron 0:45:36 - | Okay. Thank you, Chris. Here’s one from Brett MYE hit my stock loss this week, 10th of December so it got sold. Do you agree? If so, should this finally be taken from the buy list |
| Tony 0:45:58 — 0:46:53 | I took a look; this morning and I don’t agree. I think it’s kind of hugging the line and it was called up again now. MYE. So, they have this low point way back in June 2016 and then again here have been alterations, the next low point would be August 2016 butt that sell line was crossed, go to the right, it will be April 2017. But using that, that sell line was crossed. Today, I think we’re is using March 2020 so the COVID cough as the second point and the first point was June 16, just running a ruler over that it may have crossed it temporarily, but it’s gone back above and is hugging that line now. |
| Cameron 0:46:53 — 0:47:12 | It did cross a temporarily, I checked when he sent through the message. It dropped down to 68 cents or something during the week and seems to have come back up, but it would have breached 67. 5 it down to. |
| Tony 0:47:13 — 0:47:18 | If you’re looking at it now, it’s not a sell, but it went below the sell line and definitely it would have been a sell. |
| Cameron 0:47:19 — 0:47:32 | Because you’ll sell on the day if it drops below, you’re not waiting for month end. Brett’s follow up questions are, does Tony user stock a loss to automatically sell when the sell line is hit? |
| Tony 0:47:33 — 0:47:52 | No, I don’t. I do put alerts into Stock Doctor for some of the shares I own if they look like they might be getting close to a sell like and I puts alerted to Stock Doctor if something’s on the watch list that looks like it might be getting close to its buy line as well. I ‘ll wait for the alert to come through and then I’ll do to sell manually myself. |
| Cameron 0:47:56 — 0:48:01 | Is that mostly because of the volumes that you’re working in? |
| Tony 0:48:01 — 0:48:41 | Yeah, there’s that, also, often times with a sell, I’m looking at what stock to replace it with though. The order for the broker might be sell my shareholding at Mastermind and used the proceeds to buy Macquarie Group isn’t like that I don’t want to sell something, if it’s a stock loss, I could be sold out not knowing it yesterday and find out today and then maybe not be able to get to look at the Analysis for what stock to buy. I don’t want the money coming back into my account, I want to keep it reinvested which is just a simple a way for me to operate. |
| Cameron 0:48:43 — 0:48:50 | Brett’s next question is whether or not you set the stop loss at the sell line or a bit lower to confirm it’s been crossed. |
| Tony 0:48:50 — 0:49:02 | No, I don’t use a stop loss, but I set the alert at the sell line. I use the three-point trend calculating spreadsheet to work out what the sell prices is and I’ll you put that into Stock Doctors, and it work. |
| Cameron 0:49:04 — 0:49:13 | Does, he said, a stop loss for all stocks he owns, or just the ones that are close to the sell line, and if so, what is close? |
| Tony 0:49:13 — 0:49:54 | Just the ones that are close and there’s no rule for that. I’ll probably go through and review my portfolio maybe once a month, in terms of the looking at things, is something getting close to a sell line, that’s just a just to refresh myself with where things are at. Like today, if there’s an article on the FIN about coal stocks, I might go and to have a look at the coal stocks in my portfolio, I don’t have any at the moment, but if I did, I do that, and that’s when I would say. okay, that’s getting close to a sel. whether that’s 10% 20% above, it’s more around the trend, then I’ll put the alerting to Stock Doctor for that. |
| Cameron 0:49:57 — 0:50:05 | Then he asks, if you start selling and the stock rises, do you stop selling and hold on to the rest? |
| Tony 0:50:05 — 0:50:57 | I would, but often times, when I’m selling, it happens all at once, so I usually don’t get the opportunity to do that. It’s a bit different, just to explain why it’s different. If I’m selling something, I’m back to backing it with a buy, the stockbroker can execute a large trade in that, and it doesn’t go through my count. If I sell something and the money comes into my account and I want to buy something, I tend to dollar cost average back into that buy, one just because I don’t want to buy everything on the one day, but two, because I just I have to transfer the money in increments across back to the stockbroking business so I’m not doing it all that once. I tend to, on sell just back-to-back it with the buyer and the money will stay in the market basically. |
| Cameron 0:50:58 — 0:51:46 | Alright, Thanks, Brett. John has a question regarding the effect of direct ownership on the performance of shares. He says, it’s a rough exercise. I looked at this on shares currently held around in your dummy portfolio. There were much bigger increases in the owner managed ones, 132% versus 45% for the total portfolio, also looked in my portfolio over the last six months and found that shares with significant director ownership did much better than those without this included AU and UK shares and investment trusts. This needs more research, which I’ll try to do in the new year, I can see that this is why we allocate to quality points in the QAV checklist for shares with significant director interest, but should we also just select these shares for the buy list? Good question John. |
| Tony 0:51:46 — 0:52:59 | Really good question John? I’m struggling to think, I’m guessing that in terms of the outperformance this year, Fortescue Metals Group obviously springs to mind. Is being a company with a large director ownership in it and that might be skewing the results. I’ve certainly seen better results from this in the past. I don’t think they’ve been as dramatic as what you’re saying, but I think it’s a great thing to research. I’d be really keen to see your research next year when you do it, and I might add it to the whisperer in turn, so do it. It would be great if it actually did cement into place the kind of figures you’re talking about there and maybe we do either sort them to the top of the buyer list or maybe on the buyer list flag. These companies have owner founders and should get bought first and maybe in the order of their QAV scores after that. That’s the Holy Grail for me, trying to whittle the buyer list down to something which is gets a better return than what I get now and is smaller than what we have now so it’s easier to manage. |
| Cameron 0:53:01 — 0:53:22 | I wonder how much It would limit you though. What percentage of the companies that get through the buy have significant director founder or owner ship? |
| Tony 0:53:24 — 0:53:29 | I don’t think it’s something that you’ve got in the buy list columns here, but I’d be interesting to see. I might start doing that, putting it into the buy list, extra columns so we can see that. |
| Cameron 0:53:30 — 0:53:41 | Yeah, but as you say, good thing to get the intern to look at. We can regression tested over 10 20 years and see what difference that would make. |
| Tony 0:53:42 — 0:53:45 | Definitely, really good pick up their John, thanks for that. |
| Cameron 0:53:46 — 0:53:48 | Good one, John. Good to have smart people listening to the show. |
| Tony 0:53:48 — 0:53:48 | It is. |
| Cameron 0:53:48 - | Emma says, my little brother’s, nearly 20 twins, have saved up a chunk of cash each and are ready to make their first investments. First of all, well done to your little brothers, that’s a tremendous effort. What would you guys suggest they start with? I was thinking some ETFs and AFIC maybe go through share site for the loan or no fees. I think you might be thinking of superhero there for the low fees. She is not a broker; I don’t think so. |
| Tony 0:54:22 — 0:54:23 | You are not your ex-wife, is it? |
| Cameron 0:54:24 — 0:54:54 | No, I did wonder that myself haven’t been married to an Emma and I started going off the names and I forgot some of them, it’s hard to keep track, had to call my lawyer and say, have I ever been divorced from an Emma. But no, actually, it’s not her sons and their brothers, so, I don’t have a daughter called Emma to the best of my knowledge. Well, if I am your father, Emma, I’m sorry and welcome to the family. |
| Tony 0:54:57 — 0:55:00 | And do you have an active Facebook account Cameron can use? |
| Cameron 0:55:00 — 0:55:09 | My twins are over the age of 22 so it’s probably not them, I think, I hope. |
| Tony 0:55:10 — 0:57:04 | thanks for the question Emma, the first thing is way can’t give financial advice, so this is not a financial advice and the second thing is, we don’t know much about the situation that you’ve described here. I don’t know how much they’ve got to invest; I don’t know what your investment abilities are, or their investment abilities are. You’re wanting to use QAV to help them invest or teach them or what, but certainly we’ve said, all along on the podcast, there is an investing ladder approach and the first step on that leather is to is to buy an index fund. And, in this situation with family members, including my daughter, always recommend Australian Foundation Investment Corporation AFO, that’s because I do have a preference for listed investment companies versus ETFs without going into too much detail because we covered it before listed investment companies have closed ended, so you’re buying a share off somebody else, whereas an ETF is open ended. If you wanted to buy a share, they go out and buy shares in the underlying index to sell you that share in their ETF. And I think that can’t have some problems when it when the market drops, and people rush for the exits. And they’re trying to sell their shares in the ETF and the manager of the ETF has to go and sell the underlying assets. That of course, is exactly the wrong time to sell assets if you’re a long-term investor, so I prefer a listed investment company Australian Foundation Investments. If you know the where of it it’s wherever been around for a very long time, I think over 100 years it has a very low, what’s called management expense ratio. So, it’s I guess what were quite to the fees of an ETF which is It’s the cost of running the fund. |
| Tony 0:57:05 — 0:57:53 | And even though it’s not strictly an index fund, they don’t always hold the index. It does have index fund like qualities they tend to do hold things in in ratios that approximate the index, and it pays a good dividend yield. So, I see lots of things to like about Australian foundation investment, especially if it’s the first foray into the share market. And hopefully, as they start to twins start to receive statements and dividends and communications. They’ll start to ask questions and that can lead down the path of doing something more themselves rather than just being passive investors so not Share site. You said superhero. What was the other one that you use for a while there to trade on the low cost |
| Cameron 0:57:54 — 0:57:55 | So not Share site you said Superhero. What was the other one that you use for a while there to trade on the low-cost self-wealth? |
| Tony 0:57:55 — 0:58:35 | Self-wealth, thank you. That that’s the other one that you should consider using a superhero I think is good and safe. I’d be standing that. Did you see how the mobile pans out? Because it’s different to a traditional broken water. Will you place in ordering and become the recipient of the off the stock off your name is listed on the chest register, Superhero different to that. And if you want to hear how that works, is an interview with the CEO but itself. Wealth has got very low fees for training. About seven bucks a trail, I think. Remember, Isn’t it 10 10? |
| Cameron 0:58:36 — 0:58:49 | self-Wealth is. 10 superheroes five. But I think superhero are doing free transactions for ETFS the moment. I think you have 8 years. Yeah, they got a promotion. |
| Tony 0:58:49 — 0:58:56 | Okay, be a good question. It’s great to see 20-year olds getting involved in the market getting involved early. It’s really good. |
| Cameron 0:58:56 — 0:59:35 | Particularly if they’re following a sensible strategy and not just going out there and, you know, doing a fomo strategy. Okay, where were we up to, Mark? Does Has Tony ever done any analysis or made any comments comparing returns from shares board immediately after they’ve crossed their buy line compared to shares bought well after they have crossed their buy line? |
| Tony 0:59:36 — 1:00:59 | No, that’s something I should research, but they haven’t, and both of those situations come with their own issues. Kind of in reverse to the question before about selling Mastermind, but then Mastermind turns up again. You can have that in reverse if you buy something which has just gone across the buy line. Sometimes we have to sell it quickly because it’s dips down again. You would think buying that early in the process gives your better return, but I think it’s probably a wash and If you look at companies like McQuarrie Group, Fortescue Metals, they’re well above their buy lines but they continue to give good returns if you buy them after they crossed well after they cross their buy line so I’m not really sure that there’s a non-argument one way or the other. I think there’s issues with both. Obviously, if you buy Fortescue Metals at $18, you’re not giving all the upside, we did buy it at nine, but you’re still getting upside. And whether that upside is better than buying something which has just crossed, it’s by alive. And then you know how to do it two or three times because it goes back down below it. You might buy something else to replace it with, and it might take you a couple of attempts to find the one that keeps going. I haven’t done the research and don’t know sorry. I don’t have a preference so we could do some research and see, I think that’s a good candidate question for the intern. |
| Cameron 1:01:02 — 1:01:04 | To the mythical intern |
| Tony 1:01:05 — 1:01:43 | work, we’re just really trying to try the source of that I said at the moment that we could do our regression testing tomorrow, That’s exciting s Oh, it’s a Dylan. Dylan is my nephew who’s a maths whiz and he’s studying data science at university. He’s started work trying to track down a data set that we can use to do these questions and analysis on which is great good stuff. Dylan Be anchoring that relationship because I’ve been travelling for the last week and he keeps trying to get the data to get started and I’m like, we’ll email you tomorrow |
| Cameron 1:01:43 — 1:02:54 | We should refer to him as Dylan in future and not the intern, Dylan? Welcome, Dylan Last question lawyer Paul, Firstly, thanks, guys for all your hard work this year, and I hope you all have a great Christmas now for the question. Prior to QAV I was reading everything I could about the Australian share market, Company analysis, economic forecast, documents, live wire articles, etcetera, etcetera. Most of that content seems to be forecasting or people trying to pump their own stocks or funds. Since coming across QAV and now following the process exclusively, I can’t see the need to read as broadly as most of it is bullshit. When does Tony find himself being guided by economic forecasts or buy anything that he reads in the financial press? For example, I know recently he was guided by copper prices into a copper stock that was perhaps further down the QAV list, is this normal for Tony to be guided by the financial press or not so much? Cheers, guys. Looking forward. Tow a 19.5 return in 2021. Thank you, Paul. |
| Tony 1:02:54 — 1:03:03 | Thank you for Paul, nice words and I hope you got a 19.5% in 2020 return. I really do. |
| Cameron 1:03:03 — 1:03:03 | Oh, it’s a good |
| Tony 1:03:03 — 1:04:50 | I think you’ve answered it yourself. Most of the stuff that’s written is bullshit or people pumping their own stocks. The thing about the commodities turning up on with nickel and copper, certainly I got wind of those trend changes in the Financial Review and then went to Index Mundi and had a look at the three-point trendlines on those commodities. But those kinds of trainings change once every five or six years, so that doesn’t happen much and also, I kind of treat this is one off when I do things like that, and it’s not a big position in my portfolio, it might be no more than 5 to 10%. It’s really just a bit of opportunism, Mayor and I guess also, too often times those kinds of things do lead to improvements in the portfolio and investing. If it does turn out to be a really good way to invest a little, it’ll get added to the check list going forward so you’re right. That’s the kind of thing I would get from the financial press. Other things, I read the FIN review of you every day, and that’s that thought started for things like that. It obviously it gives me use about things like China’s stopping Australian coal exports. And that says to me go and see if we’ve got any coal companies in the portfolio on the watch list or the buy list or whatever and take action. So, it’s good from that point of view, and there are from time-to-time Cos specific information in the Financial Review, and that’s how I’ll get it. I probably could set up use alerts for the companies I have in my portfolio that will be equally as good so that’s where I find out things about in the capital a medium doing a share consolidation, takeovers of different companies at various times, I think Infratil. |
| Tony 1:04:51 — 1:06:36 | There was some detail from reporting on that in the Financial Review, but when we had that by listening dummy Portfolio last year, so I think it’s good to read the financial review. Just get news quickly about things that impact your portfolio. I also, as I said before, use the daily gaining tables. So, the stocks that have gained the most that day or lost the most that David, particularly those of the game, the top performance. There’s a way of starting off researching those companies on seeing if, for example, if something goes up a lot in the day, they may have gone from being on the watch list of the buy list s we’re going to have a look at that to see if there’s been a change in the trend. Other than the Financial review, though. I subscribe to Live Wire, but most of the times I just glance at the headlines and don’t read the articles from time to time. There’s an interesting interview, which I’ll read in depth. The Eureka Report I like getting Ellen Cola’s weekly summary of what’s going on in economics. But it doesn’t that’s more just for general interest. It doesn’t really lead. I can’t think of an example where it’s led. Teo decision to buy or sell a stock. I get Geoff Wilson’s communications from the WAM capital stable investment companies. Over the years, he’s been a great thought, starter, for example, his taking over Amaysim I don’t think that would meet our QAV checklist but if there was something that he was active in and it was on the watch list or the violence that would send me off during some more research into that on, that’s probably, so like you pull. I started off reading everything and subscribed to Pumpleads which became Morningstar. |
| Tony 1:06:36 — 1:07:05 | I subscribed to share analysis, to Stock, Doctor to Eureka report to few others, which I can’t even recall now, including some courses which were interesting and just had it value companies and how to understand financial accounting and think. But that really all dropped away. As the QAV the check was solidified, it’s probably in the last 10 years in particular, I’ve done much less That’s reading than what I did before that. |
| Cameron 1:07:08 — 1:07:34 | Glad you read the thing about the copper because at least one of the copper stocks that we added Copper Mountain’s done well. For us, it’s up 31% since we bought it on the 28th of October, happy Christmas. It’s one of the best performing stocks in our portfolio, and we’ve only owned it for six weeks, Yeah, One Carpal not so much it’s up 7%, that’s not as strong. |
| Tony 1:07:35 — 1:07:57 | I may have gotten that one wrong compared to the copper, the copper thesis, but and it’s starting to form in my mind that we might have to add extra checkpoint point or a couple to say, is this stock, it’s commodity that has just recently turned up, boosting up the vilest of it. |
| Cameron 1:07:58 — 1:08:05 | Or is this stock a commodity that’s recently been banned by China. |
| Tony 1:08:05 — 1:08:07 | recently turned out. |
| Cameron 1:08:07 — 1:08:52 | Counterpoint to there with this ladies and gentlemen, is the full lid for today for this week. No interviews this week, I think we might do another show next week, early in the week, depending on how your golfs going and then take a break between Christmas and New Year. But I do have that interview with Damien that I can put out that week so there will be something in the feed. Good chat with him. And then we’ll be back after New Year’s with regular show. But again, don’t send me any questions on Facebook because, well, Tony might see them, but I won’t see them. |
| Tony 1:08:53 — 1:09:01 | Yeah, we’ll work out something to handle that, whether it becomes a forum on the website or something, we’ll see, we’ll make it work. |
| Cameron 1:09:01 — 1:09:46 | Facebook might magically re enable my account, but I don’t hold much luck on that with my experience with him in the past. Well, thank you, Tony, thank you, listeners, thank you ball boys. Everyone have a great week. You enjoy your golfing and heat down there. Cape Shank, Tony and putting on your mask when you go out. Oh, we are talking about doing an event in Melbourne in January, we haven’t locked anything in yet, but we might do that, after all, I have to get onto that. I was talking to Taylor about it, about trying to find a place for a barbecue So why don’t you just go to a bar? Just go to a bar, have a drink. Make it less formal. Have a drink. What do you think about |
| Tony 1:09:46 — 1:09:51 | What? The issues are with numbers in bars, but yeah, that’s for sure. |
| Cameron 1:09:51 — 1:09:59 | I’ll do some research on that, Patron capacity allowance in Melbourne |
| Tony 1:09:59 — 1:10:03 | We should be able to find someone who’s got a backyard who can do an in formal barbecue for us. |
| Cameron 1:10:03 — 1:10:16 | Well, if anyone’s down in Melbourne wants to volunteer their backyard for a catered event of 10 or 20 QAV Club members, let me know, but don’t let me know on Facebook, email me |
| Tony 1:10:18 — 1:10:20 | And I guess early January too. |
| Cameron 1:10:21 — 1:10:33 | First week, early second week of January. Email me if you’re wanted to offer it, we’ll work something out Otherwise. Thanks, Tony. I’ll talk to you next week. Thanks Cam. |
