0:02

A listener production. Marker.

0:05

The ISP. The

0:07

ISX. Stocks. This is Motley Full Money.

0:10

Welcome to Motley Full Money, the podcast

0:12

that, well, is not going to mandate

0:14

Andrew or I return to work. I'm

0:16

Scott Phillips. He is Andrew,

0:18

the aforementioned Andrew, the one and

0:20

only, Andrew Page Esquire. Ram,

0:23

how are you? I'm very good, sir. How are you?

0:25

I'm exceptionally well. Life is good. It's been

0:27

a busy old week as they kind of

0:30

are at the moment. Not a lot of

0:32

corporate news around, but plenty of stuff actually

0:34

going on. Before

0:37

we do, though, before we do, we kind

0:39

of buried the lead last week. So I want

0:41

to put this one up front, front and center.

0:44

We're recording a podcast next week

0:47

live. You're coming up to the

0:49

Gold Coast. I'm going up to the Gold Coast. We

0:51

are going to be recording a live, in fact, two

0:54

live episodes of Motley Full Money in front

0:56

of, as they say in the classics, a live

0:58

studio audience. Feels like Sale of the Century or

1:00

Sons and Daughters. We are going to be filming

1:03

in front of a live studio audience when

1:05

we record Motley Full Money. So

1:07

this week, you're at your place. I'm at my place. Next

1:10

week, we are going to be sitting across from each

1:12

other, hopefully not

1:14

disappointing our, well, two or three people

1:16

who turn up, but we are

1:19

inviting our listeners to

1:21

come and join us for the podcast. Now, if you

1:23

are on the Gold Coast or are going to be

1:25

on the Gold Coast next Wednesday, the 27th of March,

1:27

if you listen to this after that, don't turn up

1:30

in a week's time because we won't be there. 27th

1:32

of March, we will be on the

1:34

Gold Coast. Now, there's lots and lots of details

1:36

to go through. It's a Wednesday evening, so it's

1:38

after work. If you're going to, you've got work

1:41

to do, or maybe you're living locally and you

1:43

want to kind of roll around to where we'll

1:45

be, just go to full.com.au/money. All

1:47

of the details are there. We're having it

1:49

at, well, some would say appropriately, at a

1:52

brewery or at least a microbrewery, a little craft

1:54

brewery. You can buy yourself a beer after the

1:56

pot or even maybe intermission. So if you're not

1:58

there for us, go there. for the

2:00

beer but come along we'd love to talk to you

2:02

we'd love to meet you we will do

2:04

a mailbag episode and we'll take some of those questions at

2:06

least from our audience live we might not take the question

2:08

live but we'll ask them in advance we've got some questions

2:11

for us we'll get you to write them down and we'll

2:13

collect those and try and get through some of those questions

2:15

so if you always had a question for Andrew if you

2:17

still wonder what Bitcoin is I went after that one

2:19

but Andrew can go take a group into the corner and

2:21

talk to them about Bitcoin but otherwise

2:23

if you want to come and see it being recorded live

2:25

meet some other listeners just have a night out on a

2:27

Wednesday night in the Gold Coast please please come along full.com.au/money

2:30

it's going to be lots and

2:32

lots of fun mate yeah

2:34

I'm really looking forward to it although I can't

2:36

let let it slip

2:39

that you reference sale of the century and sons

2:41

and daughters which I think 80% of

2:43

listeners are gonna go what's that? that's

2:48

all such... I was only thinking about this the other day

2:50

mate I as I get older

2:52

my pop culture references haven't changed and so I

2:54

just confuse more and more people I

2:56

work with people of us Boca Hooman are younger than me and I

2:58

mean something they I get a couple of smiles from a couple of

3:01

older people and the young ones look at me like what

3:03

are you talking about what is that I have

3:05

nothing I can't I have no Taylor Swift references

3:07

I have no Britney Spears references even Britney's old

3:09

these days I have no who's the

3:11

cool kids these days mate I do TikTok so

3:14

yes I don't get their references I don't get mine hey hey

3:17

so they can all get off my

3:19

grass I'm much more the... I'm becoming

3:21

Clintley Eastwood in Gran Torino it's

3:24

looking a little bit a little bit a little bit

3:26

ugly yes no I remember the whole the voice out

3:28

without those episodes right yeah sons

3:30

and daughters were filmed in front of a live studio

3:32

audience that was kind of the yeah I

3:35

don't know if they do that anymore maybe

3:37

they do I don't know and then that

3:39

kind of gradually got replaced by the laugh

3:41

track didn't it and then yeah didn't it

3:43

then the audience just disappeared yeah and now

3:45

they just that's just reality TV and now

3:47

it's reality TV yeah can I tell you I'm pretty happy

3:49

about this not even close to right land

3:51

or podcast I have not seen a single minute of

3:53

married at first sight no

3:56

I can't neither of I could that yeah

3:58

I assume I'm happy with I'm

4:01

happy to not know. I see the primos

4:03

so suffice it to say if you've seen the primos I still haven't

4:05

seen the show. I think you're probably doing well. Some people love it

4:07

and good luck to you if you're a if you're a maths tragic

4:09

then Get

4:11

a life. No, I'm kidding. You do you as Andrew

4:13

would say but in the meantime I'm gonna do me

4:16

and me does not include watching. Not

4:18

that I ever watch Sons of Dores either I did

4:20

I have to confess that sale of the century I

4:22

still miss. Great show 7 o'clock on a week on

4:24

a channel 9 Yeah, fantastic show lots of fun Should

4:27

we move on to actually the 20th How

4:31

long you drink at South the century finished like 1992

4:33

or something? Oh gosh, it

4:35

would have been a while ago but yeah,

4:38

that's it now that was that was sort of um,

4:40

I Think

4:42

that was a great Education

4:45

in of itself besides entertainment. It was a

4:47

very much a family thing you'd sort of

4:49

all sit Yeah, compare you to games. I

4:51

loved it. I loved it for

4:53

a pick of the board. Who am I? All over

4:55

all this is references here Who

4:58

was the inaugural host? Do you

5:00

remember Glenn? No, Tony Tony?

5:03

Barbara, then they yes, and the second

5:05

one was Glenn who Glenn? Mmm,

5:08

I'm gonna say Robbins. It's not role. I don't know who

5:11

is both. That's about Glen Ridge Ridge It's

5:13

it Glen Ridge Glen Ridge and then yes

5:15

plenty of co-hosts along the along

5:18

the show anyway I Well,

5:21

I think I just looked it up now. Do

5:23

you remember the narrator's name? It

5:28

away Pete Smith What

5:31

a great boy. It's myth speaking. Yeah,

5:33

exactly. Anyway back to 2024 as you

5:35

say mate. Um, let's Yeah,

5:37

come to the podcast. I was gonna say come to podcast. I

5:39

won't do any ad references I can't promise that there probably will

5:41

be a these references if you come to the podcast and we're

5:44

trying to keep us in the 21st century Mates

5:47

big news of the week rates on hold the

5:50

RBA left rates at four point three five

5:52

percent No

5:54

one was surprised. I had apparently Reuters Served

5:57

40 economists at every one of those 40 said

5:59

rates were remain on hold and surprise surprise

6:01

they remained on hold. Interestingly

6:04

enough before the decision was made there's an

6:07

article on the Finn on Mondays where from

6:09

five prominent economists including a couple that I

6:12

you know could recognize by sight Paul

6:14

Bloxham from HSBC and Warren

6:17

Warren Warren lost it now anyway who

6:20

you know they said they didn't expect the RBI to cut

6:23

at all Warren Hogan thank you they didn't

6:25

expect the RBI to cut this year at all and Shane

6:27

Elliott from AND came out on Tuesday morning and said

6:29

he thinks that's possible as well the

6:31

RBI didn't cut on Tuesday nor did

6:33

they raise which is probably a good thing for anyone with

6:36

a mortgage but

6:39

after the RBI said we're keeping rates on hold the

6:42

dollar went down and the stock

6:44

market went up and

6:46

I thought it was worth talking a little bit about this because I had

6:48

people telling me on Twitter no

6:51

one expected it what was the surprise and

6:53

the surprise was in the language in the statement now

6:56

the RBI put out a statement we've got they say

6:58

we're doing this with rates here's what we're thinking they

7:01

put in minutes of the meeting which are a more expanded

7:03

version of it out of normally in a couple of weeks

7:05

time couple weeks after it happens but this one was and

7:08

this is I never saw with

7:10

this good or bad man I know you'll be on the RBI and central banks

7:12

in general but I can never work

7:14

out we

7:17

I think I've said before the journos mostly who

7:19

want content want the RBI to have press conferences

7:21

because somehow there's a sense of if the government's

7:23

gonna ask questions and it's more transparent all that

7:25

kind of stuff now we know

7:27

these days that any executive or public service worth their solvers

7:29

so incredibly media-trained don't want to say they don't want to

7:31

say anyway it's not like all of a sudden you get

7:34

to ask a question they give you a straight answer and

7:36

you get on with it they

7:38

know well enough what to say what not to say which questions to

7:40

avoid and you know a smile and a nod and a laugh and

7:42

move on to the next thing they

7:45

they said that as in

7:47

previous months that they want

7:49

to the inflation is important I want to get they want to fix

7:51

inflation that that's been the common thing the

7:53

difference in this one this is it feels silly

7:55

to say except you have to

7:58

believe that they know what they're saying and they know the money market's

8:00

gonna pay attention. So there is that kind of,

8:02

I know you wink, we're all okay. Not in

8:04

a handaway. They

8:07

took out the phrase at the end, which was

8:09

something like quote, the board remains resolute and will

8:11

do whatever's required to get inflation under control. Whatever,

8:13

whatever that kind of, they left

8:15

out this time. And it's

8:17

the first time now, Governor Bullock's been in charge

8:20

now for six months, maybe five months. So

8:23

she had plenty of chance to change that at any

8:26

point during her tenure. The fact they changed it today,

8:29

this week, was on Tuesday, seems

8:32

to suggest that they have,

8:35

they're trying to soften us up for the rate cuts

8:37

to come. That's not what the market

8:39

took from it, because the dollar fell by eight

8:41

tenths of a percent, and the stock market jumped

8:43

by four tenths of a percent. Not big moves,

8:45

obviously, but directionally given that, you know, everyone already

8:47

knew or expected what would happen.

8:49

There was no actual event decision to

8:51

respond to. It seems to be a response to the

8:54

language. And I

8:56

have to think that that's the RBA

8:58

being very deliberate to remove that. And

9:00

the market taking that as a sign that the rate

9:02

cuts are coming, and they're kind of softening the language,

9:05

preparing us for the point at which they're gonna cut

9:07

rates. Yeah, what a pan of mine.

9:09

You know, it's like, we're not gonna

9:11

say it directly, but we're gonna kind of say it anyway.

9:13

And you know that I know that you know that I

9:15

know, you know, and it's

9:17

sort of like, just say it. Right, right. And I thought

9:19

the other thing that was interesting too, is that, Jan-Daklyer

9:22

put it well in the FIN Review,

9:24

basically, it was a masterclass in saying,

9:27

in 25 different ways that inflation has not been

9:29

tamed, policy is restrictive, and the central bank is

9:32

unsure when rates will move, or which way they

9:34

will move. And Bullock, a quote

9:36

from her directly, what the board is basically saying

9:38

is that we are uncertain. We don't know, and

9:40

we can't rule anything in or out. And

9:43

that's not to be critical. I actually think

9:45

that's the most honest statement that- That's totally,

9:47

and that's, I completely agree. And it's like

9:49

companies giving guidance. But just, and

9:51

this is my criticism of the press conference. And

9:53

frankly, the statement is, all

9:56

the RBA has up its sleeve is surprise. Because

9:59

once the market knows- what the RBA expects.

10:01

They quotes price that in. We've had

10:03

people ask what that means. It's the

10:05

jawbone tool. Right. The RBA says

10:08

we expect to cut rates three times this year. And the US

10:10

Fed does it, I think even worse. They give their so-called dot

10:12

plots where they kind of, they all give forecasts about where they

10:14

think rates will be at some point in the future. So the

10:16

market goes, okay, good. Now we know that we can price that

10:18

in. And so it's kind of like, well, then by the time

10:20

you get there and make that decision, no one's surprised. The market's

10:23

already priced that in. So you don't, you lose,

10:25

the only time you have an impact on the market is when

10:27

you do something that market wasn't expecting. Yep. Which,

10:29

whether that, whether that something is the

10:31

actual policy change itself or the change

10:34

in the rhetoric. Correct. Correct.

10:36

And this is, and this is again, the latter

10:38

is exactly what happened this time around, which was

10:40

that exact idea of they're taking that away. They

10:42

must mean something. You're right. I don't know. I,

10:47

the jawbone is useful. So I guess on one hand, you don't want to

10:49

take it away. You want there to be other influence markets by having to

10:51

use the blood tool or the blood to the tool of rates. On

10:53

the other hand, at your point about the pantomime, like I don't, I

10:57

don't know what, I don't know what, again, I

10:59

know you'll get your central banks, actually we retain central banks and

11:02

they have rate setting powers. I don't know

11:04

what else to do. My instinct is to

11:06

say, just stop the whole communication thing.

11:08

Just tell us what the rate is, when is the rate and

11:10

get on with it. Now the markets hate it because the markets

11:12

want to be told so that they can put numbers in boxes,

11:14

which is just his own swing of pantomime. I'm not sure the

11:16

bigger pantomime is the market's not the RBA, right? Which is, well,

11:18

if you don't tell me what to do, what can I think?

11:21

Well, that's kind of your job, not mine.

11:24

If I'm the

11:26

RBA, my job is not to spoon

11:28

feed you people so you can put your forecast in

11:30

and make millions of dollars trading currencies. That's not my

11:32

job. My job is to manage the economy via

11:35

monetary policy or part of the economy or have managed

11:38

to influence the economy through monetary

11:40

policy. It's just, what would

11:42

you do? Again, assuming you have to

11:44

keep central banks, do you say stop

11:46

communicating? Do you keep them communicating? They

11:49

just say, we're taking this out

11:51

because we think rate cuts might happen eventually and so we're

11:53

just getting you ready for it. I can't quite work out

11:55

what I would do if I was in this situation.

12:00

I mean, I guess what we

12:02

would hope for is honest, frank, forthright

12:04

communication, hand on heart, what's your best

12:06

guess with a cognizant. I feel like

12:08

I tried that. It didn't go well.

12:10

Well, this is the trouble, you know,

12:13

but I guess also being cognizant that

12:15

it is just a guess, an educated

12:17

guess, if you will, but that's what

12:19

it is. And I

12:21

think that's where people get really angry

12:23

is they take these prognostications as fact.

12:27

And there's nothing Machiavellian or sinister about it. It's

12:29

just like, I mean, we all have expectations of

12:31

the future that don't come to pass or not

12:34

in the way that we expect. In

12:36

fact, that's the default, right?

12:38

Like if we all had perfect clarity, you

12:40

know, we're all great soothsayers, it'd be a

12:42

very different world. So it's just, you know,

12:44

partly it's us in demanding

12:47

more than what can be given. So

12:49

yeah, I don't know if I would

12:51

do anything different. I

12:53

mean, the reality is maybe

12:55

you could sort of say, look,

12:58

we don't know, here's our best guess. But

13:01

if that doesn't happen, this is what would be the

13:03

probably we would go in this direction if this and

13:05

if that and maybe give you a few sort of

13:07

paths and this is how we're thinking about it. I

13:11

mean, yeah, for me, it really boils down

13:13

to this. It's really simple.

13:16

It's kind of like, do

13:18

you want to keep fighting inflation or

13:20

do you want to worry about growth? And at

13:22

the moment, as you've rightly said, and for a

13:24

while now, inflation has been the concern because the

13:26

growth at least, you know, in aggregate on most

13:28

of the measures that we have

13:30

of the economy is kind of okay. But

13:33

you know, as we've spoken about previously, there are a

13:35

lot of sort of signs that things are turning in

13:37

certain areas and stuff. And I just think when

13:40

push comes to shove, when you have

13:42

this devil's choice between do we want

13:44

higher inflation or do we

13:46

want to stop the economy from crashing,

13:48

you will always choose the latter. Like

13:50

inflation is like we will tolerate that

13:52

before we take anything

13:54

else. And it's kind of the same

13:57

thing that it's so pernicious that it's kind of. It's

14:00

still a whack, a very real whack

14:02

to you, but it's

14:05

the one that will always lose out when that choice needs

14:07

to be made. If

14:09

you want to know what the RBA is going to do, you

14:12

need to have a view on what the economy is going to do. If

14:14

the economy continues to sort of just

14:16

muddle ahead, then they will keep interest

14:19

rates as high as they can until

14:21

the inflation figure comes down a little

14:23

bit. If things start to tip over

14:25

and we start to see progressively worse

14:27

economic data, you can bet that the

14:29

inflation targeting takes a back seat. Then,

14:33

now we're another turtle deep, but so

14:36

what's the economy going to do? Everyone's

14:39

going to have an opinion on that and none of us

14:41

will be exactly right and some of us will be broadly

14:43

right through luck. Again,

14:45

we come back to our usual, okay, after all

14:47

of this, what is it? Well,

14:50

prepare, don't predict, expect

14:53

the unexpected, factor

14:56

in what might be the worst case scenario and make

14:58

sure that you can withstand that. That's kind of where

15:01

you always, where I always end up with this stuff.

15:05

I think, yeah, I completely agree. I'm trying to

15:08

work out, so yeah, Lo said famously, we don't

15:10

think rates will come up to late Turns

15:13

out that was wrong. By about two years.

15:17

That would have fit under your, here's my best

15:19

guess scenario. He's absolutely crucified for

15:21

it because we're idiots and we want to believe

15:23

that somehow these people have supernatural powers and we

15:26

should be able to take it to the bank

15:28

and he was wrong and therefore he should have

15:30

to pay. I think, so

15:33

I'm kind of struggling. On one hand, because

15:36

we have an imperfect democracy

15:38

and electoral system, no

15:40

treasurer wants to give an RBA

15:42

governor unfettered cover because

15:45

then it reflects on you. If Chalmers gets up

15:47

and says, yellow was wrong, but it was his best guess, lay off

15:49

him. Everyone makes mistakes, just deal with it people.

15:52

Then it becomes the headline, the shock drop has become Chalmers

15:54

doesn't care. He's

15:56

not prepared to call Philo to account, blah, blah, blah. I

16:00

think I would, in a perfect world, I

16:02

have to say exactly that. Guys,

16:04

this is the reality of economic thinking. He made his

16:07

best guess. He got it wrong. We

16:09

all do. We've got to suck it up and be mature about it. That is

16:11

the honest answer, as you said. In

16:13

absence of that, given

16:16

the incentives, frankly, we're talking

16:18

about incentives a lot, I have a

16:20

suspicion I would just say, we're not going to be forecasts. In

16:23

fact, I've said that. And then someone says, again,

16:25

the economists say, well, what are we supposed to

16:27

do with our numbers? You're probably not

16:29

a me problem. That's not the RBA's issue. I

16:32

do think the RBA is a little bit

16:34

too captured by the financial markets, quite honestly.

16:37

I think the perceived need to manage

16:39

those markets and help those markets and

16:41

help those ... That's not the real

16:43

economy, guys. If

16:47

the Master's Universe and their shiny suits want to go

16:49

and make some bets, that's their issue, not your issue.

16:52

I think I'd start there. Maybe

16:56

move from that. In

16:59

terms of this year, though, here's the other

17:01

thing. This is a stupid, exactly

17:03

your point. I didn't watch this press conference because

17:05

the last one was just too much. The last

17:07

press conference, Michelle Pollock, was asked, so

17:10

you've got two rate cuts in your effect.

17:13

The RBA puts out a set

17:15

of forecasts for the economy. We think unemployment's going to be

17:17

here, inflation's going to be there. And

17:20

to do that, they have to make an estimate of

17:22

what they expect interest rates to do. And

17:24

they have two rate cuts in that number for this year.

17:27

So Michelle Pollock's been asked, okay, so you made a forecast for that. No,

17:29

no, it's not a forecast. This is what

17:31

we think will happen. And

17:34

again, this is the problem is, obviously

17:36

it's rubbish, right? I was going to

17:38

say BS, but I won't. Obviously

17:40

it's rubbish. But again, in the context of

17:42

Phil Lowe's comment, if you're Michelle Pollock, that's exactly

17:44

what you're going to say because you're not going to point

17:46

the gun at your own head and say, actually, yeah, hold

17:48

me accountable, which is also right. If you make a forecast

17:50

about an economy and you say, in 12 months'

17:52

time, here's what you think things will be, you

17:55

have to have included interest rates in that decision making. If

17:57

you think rates are going to opt 14 times from now

17:59

and then. You're not going to say the economy is going to go up

18:01

3.5%. You have

18:03

to have said, here are the big inputs. It's

18:06

unemployment and it's economic activity and it's global

18:08

growth and it's whatever else. And so

18:10

you roll that together and you come up with a number. And

18:12

you must include interest in that. So she has and they've done

18:14

that as they should. But then it's

18:16

like, well, no sort of forecast, not a promise. It's not

18:18

a prediction. We're not saying it's going to happen. We're saying

18:21

this is what we think will probably happen. It's like, firstly,

18:23

that's just stupid, you know, it's hair splitting.

18:25

On the other hand, I don't blame it.

18:28

You know, what happened to Phil Lowe, he effectively got

18:30

turfed by Chalmers for being the bad guy to get some

18:32

political pressure off the government. So you're right.

18:35

You know, you say

18:37

we've got two cuts in the numbers, but we're

18:39

not forecasting that. And it's

18:41

just kind of gets a bit silly at that point, surely. Yeah.

18:44

I mean, you know, my view on it. I think it's all a

18:47

bit of a nonsense, frankly. I

18:50

mean, it is going to just it's just that

18:52

we are we are. You

18:56

remove the theater from it all. And let's say

18:58

that, you know, we saw what happened to

19:00

the previous governor and this let's say this one doesn't work out.

19:03

It's it's a distraction.

19:05

I mean, the system is the system is

19:07

the system. It doesn't really matter. You put

19:09

anyone there, right? They're all they're all cut

19:11

from the same mold. I've made this point

19:13

before Bullock and Lowe have the exact same

19:16

backgrounds and career partners. Yeah. Yeah.

19:19

And it's just sort of and it's like a lot of things. It's

19:21

like politics in general, right? You focus on

19:23

the on the person,

19:26

not not the substance of

19:28

the policy. You know, it's sort of like

19:30

we'll talk endlessly about Boris Johnson's hair and

19:32

Trump's hair and stuff, but not really. And

19:35

I feel as though we find hair for the record.

19:38

Yeah, pretty much. But I

19:40

mean, you can switch. You can switch

19:42

the actors and characters around.

19:44

But it's there's more of fun, which

19:46

is why we always sort of dovetail

19:48

into that conversation because it does get

19:50

philosophical. And I would argue it kind

19:52

of needs to be philosophical. We're

19:54

not talking about the Newtonian laws of

19:57

motion that are like laws

19:59

of the. universe here, all of these,

20:01

the structure of the system and the

20:03

philosophy and ideology that it rests on

20:06

is a human construct. And there are

20:08

different ways of doing things. I'm not

20:10

saying that there needs to be a

20:12

radical overhaul to any degree, but when

20:15

the current apparatus

20:18

of monetary policy is set up the

20:20

way it is and grounded in the

20:23

way it is, it is

20:27

always going to act in the same kind

20:29

of way. And we've had

20:31

decades now of seeing how it does act

20:33

and it just, it

20:36

lurches to reacting too

20:38

slowly, overreacting,

20:40

winding it back, trying

20:43

to guess what we're going to do. And

20:45

I think at a more fundamental level,

20:47

and again, I don't want to get into the conversation

20:49

again, but you sort of step back and go, wait

20:51

a second, it's really weird in these open and free

20:53

markets, how we have essentially planned money. It just seems

20:56

at odds, it seems

20:58

very disconnected. And so

21:02

I would argue, and I've made this point before too, that

21:04

all of the problems that, a

21:06

large degree of the problems that we are dealing with now in

21:08

2024 stem from COVID. A

21:11

lot of problems were percolating under

21:13

the hood there, which stemmed from sovereign

21:17

European debt crisis, which stemmed from the

21:19

GFC, which you can trace some origins

21:21

back to the tech bubble. And

21:24

it's sort of like we have this apparatus

21:26

set up to try and manage things. But

21:28

I think this is where the ideology sort

21:31

of, we sort of split.

21:33

It's just sort of like, I feel as though

21:35

you're trying to manage that which cannot be that,

21:38

not as many as effectively as you feel as

21:40

though you can. You're

21:42

kind of, you're a little boat

21:44

bobbing in this great ocean here and you can sort

21:47

of hoist to that sail and do this and that.

21:49

But at the end of the day, there are far

21:51

bigger forces at work. And I think it

21:53

all stems from a good place. Hey, we don't want

21:56

people to suffer. We want to make sure that we

21:58

fix these things here. But what we end up... creating

22:00

his bigger problems. There's unintended consequences with

22:02

all of that. So I, anyway,

22:04

yeah, I don't know what we're doing, but

22:07

for your point, which is always a good one,

22:09

which is, yeah, but for better or worse, this

22:11

is where it is. We know that there is

22:13

incredible inertia with institutional thinking and we're stuck for

22:15

decades more to come. And I suspect you got

22:18

to recognize the world as it is, not as

22:20

you would have it. And I think that's a

22:22

very good point. And making, so, you know, sort

22:24

of getting out of the

22:26

armchair and just sort of

22:28

navel gazing. I think, I

22:31

think where I sit is

22:34

we continue to have this

22:38

undercurrent of inflation, which remains higher

22:41

for longer. Again, not the seven, 8% that we

22:43

got to, but two to 3% is, I

22:46

just think it's a long way away. And,

22:48

and trying to balance that with how

22:50

much we want to stimulate, stimulate

22:53

the economy. And, and, and that

22:55

will always be the discussion. It'll

22:58

always come back to that. So again, if you want to

23:00

just go down a few layers and think, what am I

23:02

really looking at here? Again, you have to have a view

23:04

on what the broader economy is going to do. And it's

23:06

a diabolically tough question. And so again,

23:08

exactly, you know, again, and this is, this is why

23:11

I think we, we

23:13

would describe ourselves at least and to each

23:15

their own, but it's more bottom up investors

23:17

as opposed to top down investors. The top

23:19

down investor being the person who looks at

23:21

the macro, you know, landscape

23:23

and goes, well, I think the economy is heading in this

23:25

direction. Ergo, these are the

23:27

kind of companies I want exposure to the bottom

23:30

up. We will all the companies are

23:32

these, yeah, yeah, because of these bigger

23:34

macro tailwinds or headwinds if you're going

23:36

the other direction, but, but a bottom

23:38

up investor, I think we've both landed

23:41

on this. Yeah. Yeah. And

23:43

look, again, each there, I think most

23:45

investors after a while go this direction,

23:47

which is that recognition of like, I

23:49

don't know, but I do know

23:51

that whether the economic seas are rough

23:53

or smooth, I want a really

23:55

great quality company, you know, and,

23:58

and I know that if I Have

24:00

that that I will my capital be reasonably well

24:02

preserved over the long term and have some really

24:04

nice periods of growth along The way and and

24:07

and that's kind of it right and it's sort

24:09

of it's wonderfully liberating as an investor And I

24:11

speak particularly when you're new to this and you

24:13

think gosh I've got to get my head around

24:15

sort of Income statements and balance

24:17

sheets and business models and you know forecast what

24:19

the company then I've got to put that into

24:22

a wider Macro landscape and we spend all in

24:24

an order amount of time on this show talking

24:26

about the macro because it is endlessly fascinating But

24:29

it is it is a wonderful Forgive

24:32

yourself is what I'm saying to investors if you

24:34

don't want if you want to De-emphasize that stuff

24:37

not to ignore it completely certainly have a view

24:39

on it and all that kind of stuff But

24:41

don't don't let that don't put

24:43

the cart before the horse and don't let

24:45

that lead your thinking if all of this

24:47

stuff is Guys, you're just saying one thing and

24:49

then the other and I'm still ever

24:51

was like Welcome

24:54

to the party right this is this

24:57

is the reality of it But don't

24:59

feel as though you have to have

25:01

a firm and if we're flipping and dismiss

25:03

you've a lot of these things It's not because we don't

25:05

care or we don't think it's not important. It's just we

25:07

recognize that It's gonna be

25:10

really hard to predict but in anything you

25:12

can't know exactly my investment strategy is not

25:14

gonna radically change anyway I'm

25:17

gonna I'm gonna add a bit of that man actually because

25:19

looking backwards you're absolutely right about now

25:21

I you know Buffett had said Four

25:24

or five years ago now if interest rates

25:26

remain this low stocks are cheap Yes,

25:29

and and that was that was the

25:31

only time I can Recall

25:34

myself. So you're right. I'm absolutely a fundamental or a

25:36

bottom-up investor. I look at the businesses themselves But

25:40

if you don't I can recall thinking even

25:43

for a bottom-up investor that the

25:45

so-called emergency level of rates

25:47

mattered because It

25:49

will always know impacts share prices and cost of

25:52

debt and that kind of stuff in a way

25:54

that we've never needed to bother before I honestly

25:56

before before 2019 or for 2020 effectively, I would

26:00

of absolute stock, bottom up investor, don't care about rates,

26:02

don't care about the macro, it doesn't matter, over time

26:04

it won't matter. And I'm still pretty sure now five

26:06

years later we still make that same statement. But

26:08

it's also true that if you look at

26:10

the huge, huge movements in share prices over

26:13

that period of time in both directions and

26:15

sometimes at the same time, or as I

26:17

was saying, they've come up and down and up and down again,

26:19

a lot of that was you had to

26:22

at least have a view on

26:25

the likelihood of rates staying that low. And

26:27

I think it was, I hope

26:30

we said, I'm pretty sure we said many times that it

26:32

was really unlikely rates would stay that low. But

26:34

there were plenty of people saying, well, this is the new normal and rates

26:36

might go up again. You

26:40

had to believe at least that things were going to go back to

26:42

the old normal. This

26:45

is not a new normal, this is the old normal, we just had a new normal

26:47

in between for a while, or a

26:49

new abnormal for a while. That

26:51

was kind of the approach.

26:53

So I've never ever

26:55

made an investment based on top down thinking.

26:57

But in terms of valuations in particular, there

27:00

was some, for a decent

27:02

period through there, share price of a lot of

27:04

companies were high than they would have otherwise been

27:06

because of that

27:09

reality. I'll

27:11

say a great point. Well, I'll

27:13

say again, I will mention Kogan, I'll have

27:16

another drink. Kogan got to 25

27:18

bucks at some point. Now I

27:20

at that point still retained a buyer recommendation, I held

27:22

my shares. In hindsight, was that stupid? I think so,

27:24

probably. Yeah, I think I made a big mistake. And

27:26

it was partly the market getting overexcited about that

27:29

stuff. And I'm not sure Kogan can't justify a $20

27:31

share price at some point in the future, I still

27:33

own the shares. I

27:35

still think that they go higher from here. I think their market

27:37

beating from here for what it's worth, not as a plug, but

27:39

just to kind of explain why I still own them. But

27:42

they're at $8 already, but they're now not 20 or 25. So

27:46

in hindsight, should I have sold? Yeah,

27:48

because the market got carried away. And

27:51

at that point, is there any interview on

27:53

the macro? Maybe not necessarily, maybe I still could have looked at

27:55

a fundamental basis and said, if and when rates

27:57

normalised and this would happen. But you had to kind of believe that

28:00

rates would normalise. And I think that's the only time in

28:02

my investing career, I've been doing it for decades, where

28:04

I really had to think about

28:07

the role of interest rates for the first time in

28:09

forever. Because Buffett said, or Lynch has said, somebody, you

28:11

know, if you spend 15 minutes thinking about the economy,

28:13

you've wasted 10 minutes. That's absolutely right. With

28:16

the exception of even Buffett himself said, well, if rates set

28:18

this level, you know, there was a

28:21

very clear macro implication that you had

28:23

to at least reckon with, I think, for a while.

28:25

Now, that said, I'm just using that

28:27

to highlight the past, because we are now, I

28:29

believe, back in the old normal. And so we

28:31

can go back to almost directly ignoring the market,

28:34

at least in terms of valuations, at least in terms of the

28:37

impact on companies and go back to thinking about,

28:39

okay, what happens next? The other thing we need

28:41

to think about, mate, I'm just going to throw

28:44

back in quickly is cycles, cycles matter, cycles happen,

28:46

cycles are a thing. And I say that only

28:48

because we are going through economic

28:50

cycles now, we haven't had a proper economic cycle for 35

28:52

years. Yes, we had a recession

28:54

in the early 90s. Yes, we officially had a COVID recession, but

28:56

it was weird. Just

28:59

just remember there are cycles. So yes, be bottom up. This

29:02

is not by the way, at odds with what Andrew said at

29:04

all, all my own views, be bottom up, but also be bottom

29:06

up knowing that cycles happen and focus on what

29:08

I've what I've called, I'm no genius, that's

29:11

not a new phrase for me, but underlying earnings

29:13

power, that is the key three word phrase for

29:15

me, you can do any valuation work at all

29:17

ever. Underline earnings power is all about

29:19

it. In other words, if it's unusually low,

29:22

then you know, unless there's reason to believe it's permanently

29:24

lower for some reason, look at the

29:26

underlying earnings power, in other words, when things normalise,

29:28

what does that look like? If if profits are

29:30

unusually high, because I know maybe you're

29:33

a, you know, you're online retailer

29:35

in during COVID. Again,

29:38

is that really a new normal? Or is that just unusual?

29:40

In which case, commodity companies

29:42

are a great example of this, the iron ore price through the

29:44

roof or through the floor. Neither is

29:46

likely to be a continuous and ongoing state.

29:48

So just be always careful to think about

29:50

the businesses basic underlying fundamentals. Again, to your

29:52

point around, that's where we go with bottom

29:54

up because we say, right, what does this

29:57

company do? Is it going to be around,

29:59

which is your your favorite first question which I

30:01

love. Is it gonna

30:03

be bigger or smaller than this in the

30:05

future? What is some sort of ongoing, maybe

30:07

an average or a underlying, whatever phrase, whatever

30:09

framework you wanna use. You wanna

30:11

work out what is the kind of the reliable

30:13

level of ongoing profitability on average over

30:16

your holding period and use that for your

30:18

valuation. That's why bottom up is so important because

30:20

say the top down of, will

30:22

the economy be higher or lower? I don't know.

30:24

Okay, well it'll be higher or lower. I don't

30:26

know. What about the gold price? I don't know.

30:28

Is it good for retail? Think about the number

30:30

of combinations of guesses and assumptions you have to

30:32

get right as you go through that

30:34

versus saying, this is a decent, interesting company. People seem

30:36

to like it. They're using it in greater

30:39

numbers over time. Is it gonna keep being the

30:41

case? Well, probably, okay. Is everything

30:43

likely to grow on that basis? Yeah, probably, okay. That's

30:46

so much easier. Frankly, I think it's probably

30:48

more accurate to your mate and hopefully more

30:50

profitable than trying to make these big crystal ball

30:52

prognostications about the future. Yeah, so

30:55

yes, you've said a lot there. Sorry.

30:58

No, you're right to emphasize that period of

31:01

ultra low interest rates really wrong-footed a

31:03

lot of traditional value

31:06

investors where they looked

31:08

at things as

31:10

too expensive and maybe

31:12

they were right, but they just missed out

31:14

on incredible gains, right? Yeah, exactly.

31:16

And then there were other examples of, well,

31:20

no, this is the new normal and then

31:22

it wasn't. So you're right to point out

31:24

that, yeah, it matters. But

31:27

what I would say is that the reason why you

31:29

can be more flippant about it, or the only scenario

31:31

in which you can be flippant about it is if

31:33

you do have that long-term lens, which is why you

31:35

kind of, I think you're forced. If you're gonna invest,

31:38

you're kind of forced to be a long-term investor. You're

31:40

mad at trying to think else. You just, you can

31:43

normalize those things. So what, I don't know, use

31:45

your example, what interest rates are gonna be.

31:47

Just go with the average of what's been over the

31:49

last, I mean, I don't know, that's probably not gonna

31:51

be right, but it's gonna be better than trying to

31:53

predict something at the fringe. The other point I would

31:55

say is that when, when

31:58

you have a very good quality company, company and

32:00

you overpay, you will underperform and it

32:02

will be disappointing. But it's

32:05

not going to be a disaster. An example that

32:07

came to mind for me was CSL which I

32:09

think everyone listening will have heard of. It's

32:11

one of the great Aussie success stories. Created

32:13

incredible shareholder wealth over the years. But

32:16

back in early 2020, I mean that thing was through. It was

32:18

nearly $340 a share. It's

32:21

$280 now. But when you sort

32:23

of look at the chart between 2020 and 2024,

32:26

it's kind of the big sideways channel. So

32:28

it's kind of like the point I'm

32:30

making is not dismiss all of that stuff but

32:32

even if you get it wrong on

32:35

valuation with a high

32:38

quality company, you're still

32:40

okay, right? Now contrast

32:42

that with I don't know something like

32:44

Dubber for example which many

32:46

people may not have heard of. They do

32:48

software that sort of does call recordings and

32:50

that kind of stuff. Made incredible sales growth

32:52

for years and years and years and years

32:54

but just never came any profitability. Their price

32:56

went to the moon but then they're having

32:59

troubles now, right? And there was those

33:01

underlying cash flows. Another

33:04

great example as well. So my

33:06

point being is what were the dominant factors

33:08

that wrote the fortunes of the investors

33:10

in those companies? Was it the macro landscape?

33:13

Well, the macro landscape impacted both of

33:15

them in both extremes but

33:17

it was ultimately it was the fundamentals that did it. And

33:21

the other thing I'll say is you

33:23

reminded me there with when trying

33:25

to sort of forecast, you might want

33:28

to think what's an average P of the market likely

33:30

to be in five years' time. There

33:32

was this study, I'm going to get

33:34

the details wrong but it was basically

33:36

looking at the accuracy of

33:39

building quotes and so there

33:42

was two schools of thought. There was sort of

33:44

the younger generation. Have

33:47

I still got you there? I

33:49

might keep going, you might have dropped out. There

33:51

was the younger generation that would

33:54

add up all of the various components. Okay, I need

33:56

this much cement, I'm going to add that up. on

34:00

that, I'm going to put in the timber here,

34:02

then there's labour, I'm probably going to need

34:04

this people. And they go through this ostensibly fairly

34:06

scientific rigorous process in

34:10

coming up with a quote, but it was always off. It

34:13

was always off as we always know

34:16

like these, everything runs over cost. The

34:19

more experienced builders did it in

34:21

this fashion and the way that they would do

34:24

it was they would just basically say, how

34:26

many square metres is it? What's the overall quality of

34:28

the build? I'm going to multiply those two numbers together

34:30

and it turns out to

34:33

be fairly accurate. And then I

34:35

think there was something like I always had 20% myself

34:37

too, just because I know that there's going to

34:40

be that cost over. And so it's analogous

34:42

to business

34:45

forecasting. The more granular

34:47

you get, it feels more

34:49

specific. But

34:52

for these kinds of things, the rules of thumb

34:54

tend to be far more accurate. In both cases,

34:56

specifically, you're going to be probably wrong. But if you

34:58

just got to go with, and I've

35:01

talked about that with evaluating a company before,

35:03

like thumb suck what the earnings per share is

35:05

going to be in five years, thumb suck a PE,

35:07

multiply the two together, you've got a target price out

35:09

there. It's a nice elegant, easy way and it's frowned

35:11

upon by a lot of people because it is overly

35:13

simplistic and you're not going to know what the PE

35:15

is any more than you know what the price is

35:18

going to be in five years time. But

35:20

that's cool because I'm not trying to, I'm really

35:22

just sort of saying what is a reasonable kind

35:24

of number. And rather than

35:27

trying to anticipate that it's going to be

35:29

at a high end of the range or

35:31

have my investment returns predicated and reliant on

35:33

a specific number, it's kind of like if I just

35:35

go with the average, I'm probably going to be wrong but I'm

35:37

not going to be far off. I hope

35:39

all of that makes sense. No, it

35:41

does. I think that's, it's

35:45

roughly right rather precisely wrong, the idea

35:47

of the human need, I've

35:52

said so many times, investing is successfully

35:54

running in our biology. That's literally definition.

35:56

It's being able to say, well my

35:59

brain is who wants this and knowing

36:02

that it can't happen and so how to manage accordingly is

36:04

actually the answer. It's why Buffett has been so incredibly successful

36:07

because he said, I know people want me to do stuff.

36:09

I feel like I want to do stuff. I'm going to go and sit myself in

36:11

a corner in the middle of the midwest of the US, get away

36:14

from Wall Street, get off New York because, you know, as everyone's trying

36:16

to make me do something, you're telling me to do something, just sit

36:18

and think and do my thing. And

36:20

that is not instinctive for most

36:22

humans. We're not very good at it. So

36:25

you're right. Making sure you can kind of

36:27

say, well, roughly what does this look like? And am I going to be

36:29

roughly right more often than not? The

36:31

desire, the deep desire for if I just had a bit

36:33

of software, if I could just do another

36:35

component equation, if I could just chart this differently, if

36:37

I just had more data and you're right, we've talked

36:40

before about the behavioral psychology thing of, you

36:42

know, the research that was done where you give people five bits

36:44

of data, you ask them to make a prediction and

36:47

then give them a little of confidence. You give

36:49

them another 20 bits of data and do the same thing. Their

36:51

predictions are no more accurate, but their confidence goes through the roof.

36:54

And just because we've got more stuff, and so we

36:56

just are so inclined to think, if I only had

36:58

more information, I could make a better call. I

37:02

really honestly think, mate, the longer you and I have been

37:04

doing this, certainly for me, I imagine for you too, the

37:06

more I strip away that stuff, you know, you can get

37:09

to a pretty good, I

37:11

mean, you've got to have done it for a while

37:13

because a lot of this is heuristics and things you learn on

37:16

the way. So I'm not saying you could be an 18-year-old leaving

37:18

school all of a sudden, you spend five minutes and pick good

37:20

stocks. That idea of just

37:22

like, you know, how likely is this to

37:24

keep going? You mentioned the tech companies. I

37:26

imagine, you know, what drove them? The answer is

37:28

actually just sentiment fundamentally. You know, we talk about

37:30

rates. Why was that? Well, because rates are cheap,

37:32

money was free. Anyone could

37:35

get money. And so people were fair to bet that if

37:37

you throw enough money at this thing, eventually they'd make it

37:39

work. And I'm going

37:41

to say, so to be really

37:43

fair to those people, it may have been true. Yeah.

37:46

The thing was, the money being thrown was never going

37:48

to be thrown forever. And so there

37:50

was always a race against time, whether they acknowledge it at the time,

37:52

whether they knew it at the time or not. This,

37:55

you know, it's musical chairs. You only got to share until

37:57

the music stops, then we're all scrambling for a chair. And

37:59

if you're... If you're in the business of, I'll worry about the

38:01

chair later, I'm just gonna go try and grab a business

38:03

and hopefully when the music stops I'll have a chair. That

38:06

was always a dangerous game. And

38:08

again, I'll remind our listeners, it will happen again.

38:11

It happened before, it was the.com boom. Effectively,

38:14

I think, tech

38:16

didn't crash quite the same way in 2022, was

38:18

it? Or

38:20

23, as it did during the tech crash of

38:22

the, or the.com crash. But frankly, not far off.

38:24

If you look at some of the companies, not

38:26

the whole sector, obviously the Nasdaq mill, 80%

38:29

during the.com crash. So this was blood on

38:31

the streets across the board. But

38:33

if you exclude, I don't know, the top

38:36

half dozen companies, Technology One, Zero, couple

38:38

of others, and then you look at

38:40

the combination of the Afterpay, Dubbers, Appens, the

38:43

sexy hot stocks of 2018, 19, 22 and 22. A

38:49

lot of those, did they have decent models?

38:51

Yeah, was it possible? It could be successful? Yeah,

38:54

but a lot had to go right. And

38:56

I think people tended to suspend disbelief when

38:59

money's free and you can keep, as they kept throwing money at

39:01

it. That's where, again, back to the macro thing.

39:03

That's why I think it was worth thinking about the macro of

39:06

what has to happen for this to continue. And

39:08

is it likely? And I think it wasn't,

39:13

we'll move on to sec. The service I run, Motley

39:15

for shared advisors, it's not an ad for shared advisor

39:17

at all. What I will say is, during the go-go

39:20

years, shared advisors are underperformed. We

39:22

didn't recommend double or Appen or any of that stuff.

39:24

And we look like deals. There were

39:26

people getting 40% annual returns, buying

39:29

that for the staff because that was gonna be the next big thing.

39:31

And I'm sitting there going, well, I don't know,

39:33

but I'll just keep buying the stuff that seems to make

39:35

sense. Now, I'm happy to say, subsequently, we're sitting here in

39:38

March, 2024, we're beating the

39:40

market's salary, the recovery's been good. And as those

39:42

things crashed, we kind of kept going

39:44

through too. And that's not the only way to invest. That's

39:46

not even the right way to invest. I'm just saying, there

39:48

will be times when you can feel like you are missing

39:50

out. The grass is growing, everybody else is making money. They're

39:53

having fun at the party, you're sitting at home going, This

39:56

is miserable, I'm doing okay. Or maybe I can

39:58

go backwards. I Mean, this was buffing. Nodding

40:00

on my bushy last twenty four percent. While

40:02

it wasn't as aquila, eighty percent of a

40:04

ridiculous met you and Mcconaughey man how's that

40:06

in a how's that possible And it was

40:08

just because people said well for buffets for

40:10

our the Saudis off as these I suffered

40:12

badly for went on above of like he

40:14

knows if he thinks not are tied for

40:16

second one himself to buffet. My point is

40:18

boring investing can same. Boring

40:21

and even costs you money or seem to

40:23

cost you money wherever else is over excited

40:25

but you're at the fundamental yet zap it

40:27

right about the weather's great will. Tech companies

40:29

great fundamentals. Don't go back. Some of her

40:31

second sign that barrel by businesses will of

40:33

as the sentiment that drove them ah can

40:35

go I could be the comes what Madison

40:37

the long term in this country eve party

40:39

the mighty is it is the fundamental value

40:41

of the businesses on the gotta be profitable

40:43

not the get to get bigger all the

40:46

not that's what drives the that the long

40:48

term returns in the mates artists that beauty

40:50

contest to the beauty. Contest. Have

40:52

I done the walking the dog analogy recently

40:54

as you had no reason to do it

40:57

again coalesces trotted out of started as a

40:59

lot of my my resume us fund manager

41:01

in of have gone blank on the name

41:03

but he said a man l a localized

41:05

imagine is a man with a dog on

41:08

a leash very long lace and the dogs

41:10

very excited to kill be or something like

41:12

that and he starting at central station is

41:14

walking to circulate say and he's walking at

41:17

six kilometers in out on just as he

41:19

is he makes his way down sort of

41:21

George Streets and the. Dog I was obviously

41:23

going to be distracted along the way in a

41:25

see you know I'm. Appalled

41:27

at it. Can markets territory on it's. gonna

41:29

see a pool walking by it's gonna you

41:32

know chase a rat is going to see

41:34

if if you watch that dog it is

41:36

gonna go in all kinds of directions and

41:38

you never gonna be able to predict what.

41:40

what is the next thing that's gonna cut

41:42

society nice if someone dropped a sausage on

41:44

the street.off that way but it is. He

41:46

is tethered to the men and the man

41:49

is walking at sixth formers an hour from.

41:51

Their central to secular case. So.

41:54

What? Most market participants do as they

41:56

watched the dog. And. they try and

41:58

predict where the dog is going based on where

42:01

the dog has been recently. So it started laughing. It's like,

42:03

OK, it's probably going to keep going in that direction. Oh,

42:05

it's running backwards. OK, it's going to keep going in that

42:07

direction. The more fundamental oriented

42:09

investor just goes, is

42:12

no, I'm going to watch the man. And the

42:14

man is moving in that direction. Now, the obvious

42:16

metaphor here is that the man is the company and

42:18

the dog is the chef. And

42:21

it's such a nice, neat little one

42:23

because it really describes it very well.

42:26

And sometimes that mangy mutt will be

42:28

just so crazy. The

42:30

drink will be running ahead like super keen to get

42:33

to the desert. Otherwise, it's like, nah, it's just dragging

42:35

its bum as you've got to drag it on the

42:37

leash. And it's really

42:39

diabolically hard. But again, once you see

42:41

that, that that's what's going on here,

42:44

it's actually, I always say, it's a

42:46

wonderful thing. It sucks to go through

42:48

it. But it's only with the

42:50

benefit of hindsight you recognize that those challenging

42:52

periods when everyone is seemingly buying Ferraris and

42:55

flying business rice all around the world. And you're like, what am

42:58

I doing wrong? Everything

43:00

I've bought has not gone well. But it's like, well, just

43:02

bear in mind if you put your

43:04

money on someone who's walking

43:06

in a fairly straight line in a fairly

43:09

obvious direction to a fairly obvious destination, bet

43:11

on that person, right? And

43:13

forget what their pet is doing. And

43:16

by the way, the reverse is also true. If

43:19

the bloke holding the lead is a maniac

43:21

who is, I

43:24

don't want to, yeah, some down and out drunk

43:26

who's near to a world criminal. Yeah, I don't

43:28

want to. So do me, I don't know what

43:30

I'm saying. Either the dog's running ahead of a

43:32

million miles an hour. It

43:35

can disguise, so the volatile dog

43:37

can disguise a very good, sustainable, long

43:39

term business which you've just described.

43:41

It can also mask

43:43

a rubbish business. That looks better because everyone's

43:46

excited about it. And when that excitement happens,

43:48

you are tempted to look at the dog. Motley

43:51

Fool Money. For more,

43:53

subscribe to the free

43:55

newsletter at fool.com.au/listener. I

44:00

tweeted during the week, that's my

44:02

first tweet reference for the podcast, the

44:04

Tesla share price. Now Tesla over the, I

44:06

was gonna go here, but it's a good opportunity. There's not

44:09

a bad Tesla at all, by the way. That's happening

44:11

looking up the share price for God knows what reason. And

44:14

I looked at it over a five year chart and

44:17

people say, oh, how is Tesla going? Or how is company X

44:19

going? It doesn't matter what company is. And you

44:21

say, oh, it's, you know, the company's going well, company's going bad.

44:23

That's a great investment, it's a terrible investment. Those

44:26

things, when people talk about those things, tend not

44:28

to actually be about the company itself. It tends

44:30

to be about the share price. Now that's reasonable at the

44:32

end of the day, we only get the return from the

44:34

share price. We don't get the return of the company in

44:36

and of itself. But here's what I

44:38

tweeted. I said, it's important

44:41

you understand the base effect when people

44:43

talk about performance. Here's a great

44:45

example, I said, I was a couple weeks ago actually, Tesla

44:47

is up 830% over five years. Okay,

44:51

so keep that in mind. 830% over five years.

44:54

It's also flat over the past three

44:56

and a third years. And it's down 57% over

45:01

the past two years and four months. So

45:03

is Tesla a great stock or not? It's all of

45:06

those things. It's all of those things. Exactly,

45:08

exactly, exactly. And none of them. Because unless

45:10

you bought them on those, and I picked

45:12

highs and lows deliberately because I wanted to

45:14

make that point. It's

45:17

been all over the place. Now, you know,

45:19

is Tesla a great stock? Well, if you bought it

45:21

at high, you've lost, you know, 2.30 money almost. And

45:23

if you're kicking the dog, if you bought

45:25

it five years ago, you made almost 10 extra money

45:27

and you think you're a genius. Now,

45:29

are you a genius? Probably not. Are you an

45:31

idiot if you bought it two years and four

45:33

months ago because of down 6%? No. But

45:36

the reality is that you've got to be

45:38

separate the company, your point, the man from

45:40

the dog. Is Tesla a great

45:42

stock? It's actually the wrong question to ask.

45:45

In fact, looking backwards is the wrong way to do it all together. What

45:48

you're really asking yourself is, from today's price,

45:51

is Tesla likely to be a good investment? That's

45:55

the entire question. The

45:57

past is irrelevant. The basics are... the

46:00

way, if the share price went nowhere, the

46:03

one-year chart or when you return would fluctuate

46:05

all over the place because a year ago

46:07

it was down, six months ago it was up, so

46:09

the price goes nowhere, it's going to go from this

46:11

terrible underforming stock to also this market-beading stock, even

46:14

if the price doesn't move because the year-ago price

46:16

you're comparing to is all over the place

46:18

and that's why it's such a silly idea to

46:21

use charts, such a silly idea to try and

46:23

look at the path or even one-year highs, one-year

46:25

lows, all that kind of stuff, all it tells

46:27

you is what the market thinks now, what the

46:29

market used to think, tells you absolutely nothing about

46:31

the business itself. Yep, yep, well said. Have

46:33

we done that yet? Yeah, I think so. Mate,

46:36

can we go to, we were talking about macro before and

46:38

I kind of want to go back there a little bit,

46:41

only because I, as a hobby horse

46:43

of mine frankly, so maybe I'm overly

46:46

focused on it, that's fair enough, maybe or maybe it's not, Michelle

46:50

Bullock was asked about inflation and population growth

46:52

at the press conference on Tuesday and

46:55

she said that inflation had been boosted

46:57

by the levels of immigration and population

46:59

growth. We, at

47:01

the same time we heard during the week that housing

47:05

supply is likely to

47:07

hit decade lows and

47:09

stay there right through until 2026, at the end of

47:11

26 by the way, so two and a half

47:14

years away. Why do we know that? Because

47:16

we know what the housing approvals have been, we

47:19

know what the commencements look like based on

47:21

those approvals and we know how long it

47:23

takes to get the completion. So we

47:25

have this, you

47:28

know, effective, it's not exactly

47:30

a crystal ball, but

47:33

if the housing hasn't been approved, it hasn't been started, it's

47:35

not going to be finished, we know that much, sort of

47:37

dropping shipping containers, having people live in them, we

47:39

kind of know what this looks like. We can kind of see

47:42

2026, mate, and I think, you

47:44

know, Michelle Bullock kind of said that quite a bit

47:46

out loud, at least, you know, on the behalf of

47:48

the government, which is for

47:50

a government that says we are doing everything we can to deal

47:52

with the cost of living and for all the cost of living

47:54

as a cliche and all that kind of stuff these days, when

47:56

you say we're doing all we can, and

47:59

yet you've got

48:02

population growth that exceeds current

48:04

dwelling growth, let alone future dwelling growth

48:06

over the next 18 months. When

48:10

you have pressure

48:13

on both food,

48:15

electricity, energy, general prices and

48:17

housing prices, I

48:19

don't know whether I have a point other than

48:22

showing my ongoing frustrations that regardless

48:24

of what you think about how big Australia could be in 10, 20, 30,

48:26

50 years, the

48:29

simple reality now is my 11 year old

48:31

could do the maths and tell you this

48:33

is not sustainable and I don't

48:36

actually know how this finishes,

48:38

I don't frankly know what to do with

48:40

the information. It seems like for

48:42

all of the obvious maths the rest

48:44

of us can do on the back of an envelope, the

48:47

government simply chooses to ignore it for reasons of

48:50

their own national interest or self interest and

48:52

you can have your own view. The

48:55

opposition kind of raised a little bit and then

48:57

kind of shrunk back from the question. The

48:59

government announced more housing, a housing target of

49:01

1.2 million homes which is just not going

49:03

to happen. They've announced a review of immigration

49:06

levels which is maybe going to happen

49:08

at some point potentially between now and whenever those things

49:10

eventually happen. I

49:13

find it really frustrating mate because I feel like

49:16

for all of our conversation we've had lots

49:18

of times about the financialisation of housing, about

49:20

the issues around taxing of housing, all that

49:22

kind of stuff. It just

49:24

seems that you and I can

49:26

disagree or we can agree but disagree with others about

49:29

ideology and philosophy and politics and the priority

49:31

you put on certain things, the policy you'd

49:33

all put in place would be slightly different.

49:36

You'd have Bitcoin as a national currency. For

49:41

all of that this is just maths isn't it? I

49:43

don't know, I feel like I'm shouting at clouds but

49:46

I feel like I'm in this alternate universe where the

49:49

answer seems really clear without

49:51

any ambiguity or argument

49:53

and yet it's almost like are we living

49:55

in the same world as them? What's

49:58

going on? I

50:00

mean, well, there's a couple parts

50:02

to that. The first one is, well, what do you do?

50:04

Well, you slow the rate of immigration, right?

50:07

Because the supply side of things is going

50:09

to be much harder and much slower to

50:11

move. But every

50:13

action has an opposite reaction

50:15

in economics, usually. And the thing that they're

50:18

mindful of there is that it'll actually take

50:20

away the population growth. You take away the

50:23

GDP growth. And we've talked about before,

50:25

we're actually in recession, and no government

50:27

wants that. So there's that. You

50:31

talk about the financialization of housing. And

50:35

I've long talked about affordability

50:37

constraints. And I've

50:40

said many times, and we'll say

50:42

it again, that the cure for high prices is high

50:44

prices. And we know

50:46

that there's a huge demand for housing. We know that

50:49

developers like to make money. And

50:51

we know that government, at least

50:55

rhetorically, is aligned

50:57

and behind alleviating

50:59

that supply constraint. So

51:02

why isn't it happening? Is it purely a

51:05

planning issue? I think that plays a big part in

51:07

that. I think we should cut a lot of

51:09

red tape and keep all the appropriate stuff. But

51:12

I also think my broader point here

51:14

is that I

51:17

don't think the margins are there for the

51:19

developers. In other words, it's like all

51:21

of our building materials across this. Not all the

51:23

prevailing prices, yeah. Yeah. Well,

51:27

it is a business. Look at it like a business. I'm

51:29

a developer. Well, if I

51:31

build some houses and some units, there's no trouble

51:33

that there'll be people who will

51:36

want them, at least at a certain price,

51:38

if they can afford them. So I add

51:40

up all my costs, my building materials, the

51:42

land, the workers, all of that kind of

51:44

stuff. And I'm not a charity, right? Nor

51:48

should they be. So I want to make a margin to

51:50

make it worth my while to even bother taking all this

51:52

risk and doing it. Everyone

51:55

does that. And

51:57

so they do it all. And they go, OK. So

52:00

we'll have a house and if we sell it for $3 million,

52:04

it'll be worthwhile. But you're at the point now it's like,

52:07

most people can't afford that, right? So you're

52:09

butting up against, it's an immovable object, it's

52:12

an unstoppable force in a lot of ways

52:14

here. It's sort of like we

52:17

don't, we just don't

52:19

have the economic incentive. Even

52:21

if you cleared the decks

52:23

and the government said, right, you can build wherever

52:25

you like and you can do this and whatever

52:27

and as long

52:29

as there's some kind of eye to

52:32

building standards or whatever, it's like I

52:34

don't know how you solve it. And

52:36

it comes back to really, one

52:39

of the other solutions is for prices

52:41

to go down or nowhere for a

52:43

long time. We always come

52:45

back to that point. Again, it's not, everyone feels

52:47

like I'm gunning for that, I'm not gunning for

52:50

it, I can assure you. No,

52:52

I think we should be. I think we should be. I

52:55

think you're right, that is, for everyone, every politician who

52:57

talks about affordability that throws more fuel in the fire,

53:01

either wages go up or prices come down. They

53:03

are the only two things, or

53:05

both if you want to, they're the only two things that

53:07

make things more affordable. Everything else just kicks the can down

53:09

their own under the guise of affordability and I'm going

53:12

to say it's politically effective because people

53:14

are so desperately desperate. They are

53:16

prepared to say, well, at least it's something. I

53:19

said to this buddy, the LNP, we talked about this last week,

53:21

the 50 grand super. People say, well, at least

53:23

it's something. I was kind of like, no, you don't get it, this is

53:25

worse than nothing. But it's still

53:27

for people who want to believe, who need to

53:29

believe because they think, well, I can't do it

53:31

any other way, so this must be worth a

53:33

go. I'm like, no, no, it's possible that any

53:35

potential solution, not this, not

53:37

everything is better just because

53:39

they're different. But I get why people say, well, at

53:42

least give it a go because I'm not going to be able to do it

53:44

this way. My issue made about the cure

53:46

for high prices, high prices, I mean, you're absolutely right. The

53:50

difference is, to my mind, this is not a

53:52

closed system because we keep bringing more people into

53:54

the country at unsustainable rates. So

53:56

you're kind of not letting that happen. I

53:59

think the... the

54:01

cost of the land,

54:03

the ability to expand the distances away.

54:05

There are some really significant changes that

54:07

are problematic even on top of

54:09

building costs which are just the land costs and

54:12

the available land. Waconti is now 0.7%

54:14

in Australia. I

54:16

thought about it at 0.9. Under 1

54:18

is stupidly low anyway. I

54:20

just don't know how this gets resolved. As you

54:22

said, you're upset right that the

54:24

QF high prices are high prices. The problem

54:27

is I suppose it's not a closed system,

54:29

right? You've got people able to leave and arrive

54:32

and whatever, Australia is better than where they've

54:34

come from for whatever reason, whether it's meeting

54:36

up with family or social economic improvements or

54:39

avoiding wars and conflicts or claims for asylum. However,

54:41

I don't blame anyone for wanting to come to

54:43

Australia and say it's better over there. I

54:46

don't care about the average Australians' affordability problems because it's a

54:48

hell lot better than my problems I had in my home country.

54:50

I don't blame anyone for wanting to come here but when

54:52

you're in that situation, it is causing this

54:56

ongoing imbalance

54:59

I think. Until we resolve, get that

55:01

sort of back to some degree of parity,

55:04

I don't know

55:06

if it's enough outside

55:08

that closed system for high

55:11

prices to be the cure for high prices in and

55:13

of themselves given the various

55:16

motivations it worked. Yeah,

55:18

I mean that is the X factor, isn't it? I

55:22

do question the narrative a little bit and

55:24

I need to dig into the data myself

55:26

to have the answer but my

55:30

anecdotal observation is that

55:34

of all the people coming to

55:36

live to Australia, there's not a

55:38

huge percentage that are cranial

55:40

surgeons and investment bankers

55:42

and there's a lot of

55:45

students in that. Probably better off. There's fruit

55:47

pickers. Not the kind of people who are

55:49

buying up $10 million properties. Now

55:53

there is definitely a factor that is there and I'm

55:55

sure there is a factor. I

56:00

think we all know it's a factos and

56:02

people overemphasize it and get xenophobic very quickly

56:05

but there is a flight of capital from

56:07

China, right? And Vietnam and

56:09

other places on that and that is definitely a

56:11

factor, right? But we were talking

56:13

at the start of the pod of trying

56:15

to sort of predict things and you know,

56:17

what do you want to sort of have

56:19

everything predicated on? So you're right like that

56:21

it could go crazy for a lot longer

56:23

if that access to

56:26

fresh and significant capital is open.

56:30

But it kind of feels like short of that

56:33

and just ongoing government

56:36

stimulus, can

56:39

you really expect these

56:41

things to grow or to double every

56:44

seven years? I don't think that they

56:46

can. So you're back to the affordability

56:48

issue. Yeah, the mass comes down to

56:50

it. And again, I always get into

56:52

this that the debate can

56:55

get lost over specifics and

56:57

where I like to come back to is I don't

56:59

want to have a question is like that it's at

57:02

this level where it breaks. I don't know where that

57:04

level is, right? Yes, I

57:06

don't know. But logically,

57:08

I know that if you just extend the

57:10

line, extrapolate all of the

57:12

things that are in place now, it gets to

57:15

a point where it's crazy and you might think

57:17

it's $10 billion for a two

57:19

bedroom unit before it gets crazy. I might think it's much less

57:21

than that. But the point is it gets crazy at a point.

57:24

And it's only a question of where that kind

57:26

of is because the path is unsustainable.

57:28

It just is. That's just not unless

57:31

you disregard the laws

57:33

of mathematics. That's just and

57:35

so you can't just

57:37

forget the laws of math. Even

57:40

more fundamental your point about high price of Q high prices, which is

57:42

100% right is one

57:45

plus one equals two. It just does. That's

57:48

why I find it this particular issue. And

57:50

again, you know, I just go on the

57:52

long term stuff and that again, people can

57:54

absolutely ideologically and philosophically have different views on

57:56

that. That's completely fine. I'm good with that. I'm

58:00

probably wrong, you're probably right. When the

58:02

maths are just the maths, there's X number of

58:04

houses, there's Y number of households, there's what your

58:06

family's effectively. And if Y is bigger than X,

58:08

then people haven't got anywhere to live. Just like,

58:11

honestly man, I find this so stupidly frustrating. I can,

58:14

like you're frustrated by people who I don't agree with

58:16

or who seem to have a different view to me,

58:18

I think that view is wrong. But

58:20

when the maths is just, when you literally do one

58:22

minus the other is whatever, it's just, if

58:24

the number at the end is not positive, then

58:27

there's not enough houses. Like that's, it's that simple,

58:29

surely. Yep, it's really what it is. And

58:31

again, the danger is to get stuck

58:34

on specific mathematical assumptions,

58:37

but the general sort of trajectories

58:40

of these things, you just, so

58:43

this is, I'll guarantee you this, I don't know

58:45

on what way shape or form, but the problem

58:47

will resolve itself. Like one

58:49

way or the other, poorly,

58:51

fast, painfully, not too painfully,

58:54

you know, it will,

58:56

I mean, I've referenced it before that,

58:59

and Collar wrote a great piece recently, he

59:01

was just basically saying the best case scenario

59:04

for everyone here is just a very long

59:06

extended period of sideways prices for houses. That's

59:08

kind of what we should hope for,

59:11

because, and I know people who have houses now be

59:13

like, no, no, no, I want it to keep going

59:15

up, but then there's the second and third order effects

59:17

of all of that kind of stuff. And you know,

59:19

so it's just sort of, yeah, I don't know. Feel

59:22

like we're covering old ground again. Yeah,

59:25

we are, we are. Let's finish off

59:27

with, speaking of old ground, I

59:31

find the work from home, work from the

59:33

office flexible working thing, not

59:36

as clear cut as

59:38

the population versus housing, because that's

59:40

just maths, but there's, AGL have

59:43

come out this week and said, people must return to

59:45

work three days a week in the office, otherwise

59:47

it'll impact their performance reviews and their bonuses. And

59:52

so let me say upfront, as long as it's

59:54

legal, A company can mandate its employees

59:56

to do whatever it wants to do. because they're employed by the

59:58

company, the company's paying the bills. Then it as

1:00:00

a as long as legal that's definitely was

1:00:02

my have no issue with ideal. I.

1:00:05

Have no issue with the legality. Only

1:00:07

problem ideal mandating were how stuff works

1:00:09

and. I. Find though

1:00:12

the mandate. Fact:

1:00:14

The Stoop. And or between your

1:00:17

has a i would find you a crime maybe

1:00:19

way not exactly representative. I.

1:00:22

I. Think once you if you if you if if

1:00:24

you're mandate to get what you're really saying is

1:00:26

that would dollars We made them. So. That's

1:00:28

the first unless we don't want to do this and

1:00:30

you'll say why of your bonus if you want particular

1:00:32

his is a stick rights yucky about as you go

1:00:34

to be okay for israel is turn up. If.

1:00:38

You are someone who works radio or similar

1:00:41

company. And you prefer the flexibility

1:00:43

and your your product. Genuinely pretty much Upside:

1:00:45

You ought them what to do That. If

1:00:48

your valuable to him an employer. And.

1:00:51

You want to work from home? You're. Going

1:00:53

to be. Motivated. To

1:00:55

find another employer gives you more flexibility. Now.

1:00:58

If your dad employee and you want to stay

1:01:00

that he probably the of anyway so i chose

1:01:03

guy anything from that employee the good one who

1:01:05

wants to work from home more often. Who

1:01:07

says well actually gone, leave and join our

1:01:09

general joints or someone such as Jobs which

1:01:11

I President is that. Idea.

1:01:13

Loses that great employee. And

1:01:16

bolo I dislike or high be going to

1:01:18

slap on the office because you are what

1:01:20

office before we know full well if a

1:01:22

bustling says bob he had a cubicle makes

1:01:24

you somehow more productive. ah that is a

1:01:27

does a fantastic ah self delusion cause should

1:01:29

I buy by they might see the long

1:01:31

lunches. The coffee is that the that you

1:01:33

know the rumor mongering that strolling fi spokes

1:01:35

to add up the the idea that somehow

1:01:37

bay in office the manager of the present

1:01:39

and can stop any shirking but how they

1:01:41

can't I find that fascinating and a foot

1:01:43

well in up in a bizarre wife. And

1:01:46

I just feel like my i have said

1:01:48

this force if you gave me a basket

1:01:51

of flexible work companies. And a

1:01:53

basket of mandate. With. The office

1:01:55

companies. I would happily buy the former and

1:01:57

she'll the ladder. Not. Is white

1:01:59

with. To be a little company. but the brain

1:02:01

drain that this twitter a bright either comes at

1:02:03

a company like such a little if you can

1:02:05

work from home from anybody. Why?

1:02:07

Wouldn't you going to with the one where you get to have

1:02:10

what you want says you're going implore you gonna leave his I've

1:02:12

I've worked with that. We want nine them. I

1:02:14

would for company it was the brow and

1:02:16

and some was pretty bad. Rally months and

1:02:18

what you want us. What happened with a

1:02:20

the could have went to such go somewhere

1:02:22

else and the bad people with this sucks.

1:02:24

Burrow Target dummy Rosario cells die. I.

1:02:27

Think though that does over time to critically

1:02:29

the bad people Sky. Modified.

1:02:31

That either months and months And months and years. It

1:02:34

is massive, massive, just down siding with

1:02:36

the average to souls and fulfils and

1:02:38

I just I will never understand why

1:02:40

someone like an I'd are Now the

1:02:42

company thinks they can have a better

1:02:44

results by mandating attendance, presence, no work,

1:02:47

no output, just little presents. And and

1:02:49

somehow in the twenty first century Twenty

1:02:51

Three hold a spot my son's a

1:02:53

dollar of to the beginning of modest.

1:02:56

To to believe that the only way you could

1:02:58

manage someone and get decent out outcome for output

1:03:00

is by having them literally sitting at a cubicle.

1:03:03

I just i my mind is blown up people

1:03:05

it's was at all costs you want to the

1:03:07

midst of already in the office like be other

1:03:09

was law school. Number. So that some

1:03:11

well they'll be psyche and I'm like police

1:03:13

lucky. I just I don't understand the one

1:03:15

dimensional thinking that says if they're if they're

1:03:17

sitting in a chair in in an office

1:03:19

with a company bread up from the a

1:03:21

workout or be more productive I just I

1:03:23

just find that I'm I'm I'm a completely

1:03:25

mad about our go bananas was was gonna

1:03:27

sell me with ice I've caused. It also

1:03:30

is a problem that will solve itself. You

1:03:33

know when. There's. Always

1:03:35

a tension between employers and employees. Obviously

1:03:37

the employers want to had the best

1:03:39

employees of the lowest possible price. Employees

1:03:41

want to do the least amount of

1:03:44

work for the most amount of money

1:03:46

is rational ride from from both of

1:03:48

their perspectives and I'm going after. Made

1:03:50

in Them is in the middle. somewhere

1:03:52

in in in meeting in the middle

1:03:54

will. Very. heavily

1:03:57

depend on the rate of pay i

1:03:59

mean i clean toilets all day long if

1:04:01

you pay me 200 grand a year, right? Like

1:04:04

there is a price at which you will attract people.

1:04:07

But the remuneration

1:04:09

package is just part of it. I think

1:04:12

anyone who's worked full time for more than

1:04:14

a blink of an eye recognize that there

1:04:16

is a lot more about

1:04:18

the quality of work and your

1:04:20

happiness that is beyond the pay. I mean, there

1:04:23

is a certain minimum threshold. Obviously, you need to

1:04:25

sort of pass. But beyond that, I

1:04:27

know a lot of people who would happily

1:04:29

take a 20, 30 grand pay

1:04:31

cut if it meant that I have

1:04:34

much better working conditions and a much

1:04:36

better boss or any of these things.

1:04:38

Culture is massive. I've said before that

1:04:40

the core role of a CEO is

1:04:42

capital allocation and setting the culture because

1:04:44

culture is that fuzzy, intangible

1:04:47

thing that I can't

1:04:49

really get an accurate read

1:04:51

on from the outside, but I know that

1:04:53

it's vitally important. Give me, what's

1:04:56

the saying? It's like you can

1:04:59

give a bunch of sailors all the, you know, incentive

1:05:03

in the world, whip them, make them build

1:05:05

the boat, but make them yearn for the

1:05:07

sea and they will work for you tirelessly.

1:05:09

I've completely butchered that reference, but I think

1:05:12

you know the one. This

1:05:14

is one of my favorite quotes. My wife's a

1:05:16

school teacher and a trash consultant. This is one

1:05:18

of her favorite quotes too. It is,

1:05:20

if you want to build a ship, don't, hang

1:05:22

on, if you want to

1:05:24

build a ship, don't drum up people to

1:05:26

collect wood and don't assign them tasks and

1:05:28

work, but rather teach them to long for

1:05:30

the endless immensity of the sea. That's so

1:05:32

much more. I

1:05:34

said it. Yes. Oh, it is just gorgeous. But

1:05:36

it is true. And you see this, one of

1:05:38

the other reasons why I like small companies is

1:05:41

you have that, you know, you're

1:05:43

not like in general, but it's more

1:05:45

like when you work for a massive,

1:05:47

you know, 1000 employee

1:05:49

company, you're just a cog in

1:05:51

the machine. When you're one of 40

1:05:53

people and you all know each

1:05:55

other very well and you work day and night

1:05:57

and you've got a mission, right? You're solving problems.

1:06:00

There's a big financial reward for you,

1:06:02

and I like ice Those people that

1:06:04

aren't. There. Need to be

1:06:06

incentivized. I mean, they have their

1:06:08

incentivized already And and as you

1:06:10

say that there is nothing more

1:06:12

powerful than a capable person who

1:06:14

was hungry to to achieve an

1:06:16

end, meaning and purpose. Yes, It's

1:06:18

it's it's is it just many purposes or you

1:06:20

mention culture? Peter Drucker famous said culture. It's strategy

1:06:23

for breakfast. yes I just as big league level

1:06:25

the best powerpoints in the world. He have any

1:06:27

get your published summer two dollars on as he

1:06:29

bought by the great Strategy. Does. A

1:06:31

good excuse to people actually case or argued

1:06:33

my company or a rap or join the

1:06:35

Motley Fool. Those a music arts and I

1:06:37

have had fourteen a pretty decent pay cut

1:06:39

to do it. I did it because I

1:06:41

want to be part of something is not

1:06:43

perfect but would genuinely want to the podcast

1:06:45

for free right? What? We're trying to help

1:06:48

people. Learn a

1:06:50

bit, help themselves be better vs have a

1:06:52

better financial future that that media purposes was

1:06:54

getting out of bed. I have not had

1:06:56

one. maybe in law studies I have. You

1:06:59

know what? for the company? The Sunday night.

1:07:01

You like. Are. Going to work tomorrow

1:07:03

you know the wix start to six runs on

1:07:05

and on that we sought to get was all

1:07:07

bloody hell yeah I love coming to work and

1:07:09

lot of the works always great. Not because I

1:07:11

do have level my colleagues but you know you

1:07:14

provide for their Philip would do it would buildings

1:07:16

and we do something meaningful. Blue our I have

1:07:18

a reasonable you know productive positive role in that

1:07:20

that that is that is worse many for my

1:07:22

article what I remember as a quick quick behind

1:07:25

the curtain. For those this know what I were

1:07:27

going to as well I have I got a

1:07:29

memory of the boss like forcing you to take

1:07:31

a holiday feasts. Ah a fun I'd

1:07:33

assume a time and then you're like still

1:07:35

sending articles. shows like what is this a

1:07:38

certain number of earth up Some I really

1:07:40

went a long as you're at of you

1:07:42

very much had a yearning for the same.

1:07:44

Very much so was it right? And I

1:07:46

think if as I love your small companies

1:07:49

have lucky microbes that to bring back to

1:07:51

investing I think that's that's so true you

1:07:53

You've talked about the quite professional management before

1:07:55

as opposed to the founder of who Katarina

1:07:57

runs the business like gonna run as well.

1:08:00

They think they can. I tried to

1:08:02

all right things I try and make

1:08:04

these businesses successful. I don't doubt they

1:08:06

are intent necessarily bots the such a

1:08:08

difference between someone who you know the

1:08:10

hired gun. Will. Always do what they

1:08:12

can. the the person who believes braised

1:08:14

gave birth to this day still crimes

1:08:16

Hundred gets lots and arrive safely. Mckenna,

1:08:18

Brooks or scoff ah car that Lesean

1:08:20

a picnic Amethyst I love Sandra As

1:08:22

yards is was Amazon moves on Space

1:08:24

awesome. Amazon owns isn't up can be

1:08:27

couple others might be some humor some

1:08:29

feather on a commercial ah Jumbo Interactive

1:08:31

might have said the work out how

1:08:33

com blink know yeah I mean it's

1:08:35

again that are going said it's all

1:08:37

of these companies tend to do pretty

1:08:39

well. Dig it.is. got a variety. Of

1:08:41

to develop enigmatic guy a say over some

1:08:44

every well gosh I decided to go yeah

1:08:46

it's it's not a coincidence. That

1:08:49

yes exactly right the about something I think

1:08:51

that's you know in yeah that is

1:08:53

not as I voted for trump of

1:08:55

silence or a little bit of a like

1:08:57

I'm I think. Or.

1:09:01

It would take a lot for me to invest

1:09:03

in an ideal for a Telstra, and there's a

1:09:05

lot of reasons for that. That

1:09:08

a big part of the reason is just

1:09:10

the. The. Inertia of

1:09:12

the culture it it is sue

1:09:14

companies get to a size where

1:09:16

they are so big and so

1:09:19

bureaucratic that they just they get

1:09:21

a below to them which is

1:09:23

very very difficult to to get

1:09:25

out on them member when. Soldiers.

1:09:28

He own. Came. To go to

1:09:30

these are going to change the whole structure

1:09:32

and and like glad about work out for

1:09:34

I like that the Nike Ff Ff maybe

1:09:37

he wasn't was very effective or maybe only

1:09:39

possible. I asked if we stay because he

1:09:41

sounds obvious the death was like Tim also

1:09:43

north or something stupid like it yet we

1:09:45

just is really really difficult spot though I

1:09:47

think process also was you're growing a business

1:09:49

and. By by the hoses

1:09:51

what do not but you want to make so little

1:09:53

for as you grow because let's be real as you

1:09:55

by the mistake yep if you if you if you

1:09:58

are that bother you that it will take us at

1:10:00

all math I would we're we're just a little be

1:10:02

a runabout teeny I'd buy to china then because as

1:10:04

it grew those who can't calcified i've worked for i

1:10:06

he are going to what name. It's a very large

1:10:09

food company and when I got there. It.

1:10:11

Was just the most. Depressing.

1:10:13

Calcify with spurned presenters of bureaucracy

1:10:16

measure that can be depressing itself.

1:10:18

It. It was just was almost stockholm syndrome.

1:10:21

We can't do that. He We don't do

1:10:23

that. He when I you hard I've always

1:10:25

done it that way. but why? Literally Also

1:10:27

at all that. The. Other said it

1:10:29

was like or we try that Went about

1:10:31

five years ago. Soul destroying. all right Well

1:10:33

let's I was on trial is about at

1:10:35

least a kid I kid you not This

1:10:37

thing was asked ah at a of just

1:10:39

miss. Absolutely miserable and it was such a

1:10:41

shame because the suit was a drag computer

1:10:43

Rand's and and it does I think those

1:10:45

across as yet. Because. Our such vow

1:10:48

site on the other by some things that I

1:10:50

done before that's how the for investors is. Just

1:10:52

be careful about some of the capella bit as

1:10:54

you think you say July Ten mosque I've ah

1:10:56

yes according to get away with that right your

1:10:58

bra the coattails of of what's been done that

1:11:01

speed the oh thank us Italians often probably keep

1:11:03

posting the time also him from the northern trust

1:11:05

us that's going pretty well. Muslim temples hours I

1:11:07

stopped in the was like oh I see a

1:11:09

be careful that too but yeah Mike's as much

1:11:12

lot to do as much small company this is

1:11:14

you do might other you're absolutely right arm idol.

1:11:16

Love finding company run. By the founders or or

1:11:18

people who are you know that since which has

1:11:20

a a buffet of their teeth at the com

1:11:23

is that your fellow hundred years Porto.but he runs

1:11:25

it as a as if he owns it because

1:11:27

he has most of it's when I'd be a

1:11:29

large minority shareholders but people who people who ah

1:11:31

have it in a day and I. Is.

1:11:34

Just a huge huge huge difference by the

1:11:36

weather's pretty much less likely to what they

1:11:38

will return to the office. I can look

1:11:40

up the shoulders. yep they probably are. Size

1:11:42

is what we're doing, was gone. don't see

1:11:44

that we have a spotless bad people every

1:11:46

hide the first place to. Yep, I'll give

1:11:48

you a great story. This is before work.

1:11:50

seeing arm was a thing because the technology

1:11:52

didn't really exist at the other. One of

1:11:54

the very first proper jobs that I had

1:11:56

as big organization. and it's. A. we'd

1:11:59

go through Even in the relatively short time

1:12:01

I was there, we'd go through these cycles

1:12:04

of like firing everyone because they got worried

1:12:06

about costs and then like six months later

1:12:08

they'd hire everyone again. It's just crazy. I

1:12:10

remember like four or five years

1:12:12

I was there, it's like this is really

1:12:14

dumb. Anyway, one time it came

1:12:17

around that it was just like, oh, you

1:12:19

know, they're making some redundancies. We

1:12:22

don't know if this department is going to be where I was

1:12:24

at the time. It was like, oh, okay. So

1:12:26

what do you want me to do? It's like, we don't want you to do anything

1:12:28

right now. I was like, okay, can I

1:12:30

go home? I was very young at the time, right?

1:12:33

So my 20s was like, sweet, let's go. No,

1:12:35

no, no, we need you to stay here. Okay, what do you want me to

1:12:37

do? Just sit at your desk. Can

1:12:41

I help the mail room? Can I do

1:12:43

something? No, we just want you. Okay. And

1:12:46

then I got told off for like, I think

1:12:48

I was scrolling the Sydney Morning Herald or something

1:12:50

on the computer. It's like, no, no, no, you

1:12:52

can't do that here. Like this is madness, right?

1:12:54

This is insane. This is just

1:12:56

suffering for the point of suffering. You're

1:12:59

paying me. I get that. Get me to do

1:13:01

something productive and if not, send me home. But

1:13:04

the point is, is that I try

1:13:06

and be careful not to dock the company here, but it was

1:13:08

sort of known as a bit of a trading ground

1:13:11

for the industry. And they,

1:13:13

the staff turnover was relentless, partly because

1:13:16

of their actions, but also, let me

1:13:18

tell you this, anyone with any capability was not there

1:13:20

long, as long as they had enough to sort of

1:13:23

on their CV to say, I worked here for a

1:13:25

little bit. And so, you

1:13:27

know who stayed? The people who didn't have other

1:13:29

options. Right. Exactly. And, you

1:13:32

know, it looks not that I feel particularly bad for

1:13:34

this company. They've done very well for

1:13:37

various other reasons, but, you know, but

1:13:39

they, they, they, any

1:13:41

talent that they would bring in, they would

1:13:43

lose very quickly because of, not because of

1:13:45

what they were paying, paying decent industry award

1:13:47

rates, you know, just not, just

1:13:50

not trading their stuff very well. It was like, it

1:13:52

has a consequence. So, you know, from

1:13:54

what full circle here, everything you've said has just

1:13:56

made me even less want to invest in AGL.

1:14:00

There we go. I got there in the end. Mates aren't

1:14:02

we we've rather on for long enough I reckon we should

1:14:04

come back on Sunday answer some viewer listen a question. Yeah,

1:14:06

what do you reckon? Yeah, 100% Let's

1:14:08

do it. We will do that in the meantime. Enjoy

1:14:10

the rest of your weekend I wish you listening on a Tuesday

1:14:12

at lunchtime in which case you've got a couple days to go

1:14:14

I'm sorry about that, but until Sunday

1:14:16

full on cheers The

1:14:20

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1:14:22

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1:14:24

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1:14:26

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1:14:28

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1:14:33

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