A listener for induction Yes, please, the ejector stops. This is Motleyful Money. Welcome to Motleyful Money, the podcast that will have $160 million just to say offload. I'm sure Phil is from Motleyful, he is Andrew Page, the man who puts the word man in straw, man or what's store in straw, man or does a straw, man he thinks he created straw and he is straw, man he designed, he implemented like the six million dollar man they had the technology, they did rebuild him and now he is the straw man.
Mr Page, I tell ya. Six million dollars I ain't gonna build you much of a bionic man. Yes, I did. That's not all on a way.
Isn't that like a great like I love looking at old movies and it's a classic Austin Powers doctor. He was like $1 million like, well it's actually not a lot of money. Oh, six million dollars, wow. I'm gonna take it.
Yeah, you take it. But I mean if I was gonna build a bionic man I think I'd need a little bit more than that. I possibly not. I possibly not.
Straw not a great material for bionic passes. It's starting on the way. Have you seen some of the exoskeleton military stuff that they're doing? I'm a new, I just got it in the new.
Oh, it's pretty wild. Yeah, yeah, it's like just like you can increase your strength and stamina and stuff. It's like in the field kind of tech now, it's sort of closer to like, it's not widespread, it's not very deployed in any way, shape or form, but it's getting there, right? Like the kind of stuff we were reading about in the comments when we were 12 was like, huh?
It's really not, man. It's really not. That's not fiction though, right? It's just, it's not fiction.
It's just early. Yeah, it is. It really is. Star Trek.
I mean other warps made of it. What if Star Trek doesn't exist today? Yeah, transporters. That's true.
So we're sorry, Boxes is the otherwise known. You're not going for that one. Oh, there's a real, there's actually spawned a whole, there's a whole thing. You can get right down the rabbit hole on YouTube.
I'm not surprised you've been down to YouTube rabbit hole science fiction. Can I say that? That's why it doesn't surprise me. Well, not surprise that little while I go to.
I love YouTube so much. It's like a comic. That's a win. Yeah.
So I said to you the other day, right? So like you go to the homepage on YouTube and it knows you so well, right? So it's like, you might like this. You might like that.
Actually, I do. I do. I do. I do.
Thank you very much. But what's interesting is that, um, as I said to you, the AI content that's now being generated there. Yeah, yeah. Yeah.
So like, because you can, I've been playing around with it a lot lately and you can do stuff like, I want a 15 minute video on this based on this and it's, you can, you can tell it's AI right at this stage, but it's not super obvious and it's a lot less obvious than it was. And it's like, it's a little bit stilted and whatever, but it's not terrible. No, it's well, I'll put in context. It's not terrible relative to the input.
Yeah. Right. Exactly. Sorry.
I'm sorry. I'm probably spent an afternoon on it and you've now got something that's actually hard, which would previously, I'm sure would have taken a week worth of research and writing and clipping and all of this kind of stuff. So it's the future's just coming out of so fast. Very, very much.
Speaking of the future, let's start a bit of a down note. We obviously, a couple things are happening this week. US FIB was out overnight, outside of this recording Thursday morning. So when they're not holding rates, but downgrading the US growth forecasts, surprising nobody other than maybe I'll do find the first place.
And again, we've talked a lot about predictions, but when you think about what's happening in the US with tariffs, everything else, you know, you're not sure that's the figure that might actually be problematic for the US economy. So that was one thing. The thing that I was sharing all of that, of course, is I don't know what a conflict becomes, exchange of missiles and conflict becomes a war, but around in Israel, going out at toe to toe, fire rockets at each other. And we've seen some meaningful impact on financial markets.
Now, I say this every time, and I will say every time, far more about the financial impact is the humanitarian costs, the lives lost injuries, times destroyed that kind of stuff. And there is, there is some pause we should take for we're running along with some of these things, which are at the financial impact. And we will because that's what we do. But also, I don't want to do it in a way that says, hey, let's ignore the actual realities on the ground, just talk about what it means for paper shuffling out the world.
So, but I'll say button and go to move on. There's no way to say away from that to what it means for markets. But let's do that. We saw oil, the oil price spike, meaningfully as a result, going up in the short term seems to come back down again.
Stock markets, a little bit. Well, here's the interesting thing about I reckon. Oil prices up meaningfully. Energy stocks are up 15% straight over last month from memory.
And yet the market itself hasn't taken anywhere near as much of a fall as that otherwise might apply. And you kind of have this thing from time on, you know, I've occasionally talked about the bond market, the equity market responding differently to things. And I know there's necessarily right or wrong one might be the truth might be somewhere in between. But it kind of strikes me that energy market's gone.
Oh my God, an equity market's gone. Oh, maybe. It feels like a very different response. Yeah, it does.
I've got no good explanation for it. I mean, the markets are always going to do what they're going to do. They're always going to surprise you. Yeah.
And I think there is a teen-up phenomenon that's just an acronym for there is no alternative. Now, the markets have morphed over our careers. So it was much more of a stock specific kind of thing. Now, there's the amount of money that's tied up in what you'd call passive funds, all these passive funds.
Very, very significant. So there are people, a lot of people, a very significant report. I don't know what the exact number is, which is like, I'm just, the stock market is just my savings vehicle is all it is. And I just put money in.
I'm not thinking about valuations. I'm not saying it's in a critical way, though, by the way. But it's not the Gordon geckos, you know, it's been into a car and saying sell by, sell by, it's just sort of like paychecks come through by. Yeah.
Because I'm probably looking at a 20, 30-year time horizon. Yeah. I think for people, it's just a different mechanic in the market. Yeah.
And it's a multi-factorial kind of thing, right? So that's just one out of 15 other sort of factors, but you know, 15,000 factors. So yeah, it's weird. But I guess for me, it's just yet another reminder is to don't try and second guess these kinds of things, right?
Like just sort of like the knee-jerk reaction is always tempting. It's like, oh my gosh, war, sell. It's like, yeah, well, not necessarily, right? Global pandemic sell.
Well, we know now, not necessarily. You know, it's just, it's always going to surprise you in that way. Well, though I did notice this, I'm already off the agenda. Was it REST Super?
They're the super fun for retail industry. Yeah, I think retail employees are running way should trust us. Are they an industry super fun? Yeah.
Yep. So they, I noticed them in the paper sort of saying they contacted, was it ASIC or Aperis? Yeah. So I was like, hey, I love it.
I love it. You've got to, you can only read between the lines, right? Because there's not, no one speaks English in this industry. You know, not plain English is what I mean.
And we said, we might have some liquidity issues. We just want to put that on the radar. Now who voluntarily goes up to the regulator and says, yeah, unless, you know, always, don't always make anything in my cynical, conspiratorial mind. It's like the fact that you're just saying anything at all means that I would suspect whatever's happening under the wood is, is worse than what you're presenting.
Because no one goes, oh my God, we're in deep trouble here. Please help us out until, you know, it's too obvious to sort of hide. But anyway, the point is, is that they said in response to some initially the Trump tariffs and some of this is like, oh, we, we, like cutting out all the, the Jargas, like we might have enough cash. Yeah.
And now you think, well, wait a sec. How is that even possible, right? Like you've invested, people have given you the money and you've invested it. So what they're really saying, again, trying to read through the goblicook and the way it sort of said is just sort of like, well, we can free up the cash, but we're going to have to liquidate a bunch of our investments that can have impacts on markets, people doing the right thing.
There's a lot of hand ringing over all of it. I was sort of, I actually reread these articles a couple times just thinking, I don't get it. I don't get it. Maybe you can help explain it to me in the sense that, okay, so let's say people are being people and they're freaking out in response to these things that we just sort of started talking about in their super fun.
We've got people who are approaching retirement, whatever, draw down phase and they've said, I want to go to cash and rest goes, okay. So they sell their shares. What's the problem here? Where's the liquidity problem?
Now, they are the size that they are and the entity they are. They're not investing in $20 million micro caps on the assets. They're hyper hyper mega liquid sort of things. So is it just like, are we worried that we'll push the mark down or?
I don't understand. My shoes both. So yeah, they were, I guess, saying, hey, we're seeing a thing and that thing could, it's the old stock market panic. I also use sell, sell, sell, sell, share, that's half of it.
The other half of it I suspect, I give them neither of us no because we're speculating based on what we had been reported. I wish I said the report isn't even a formal, ignore the price of the report, they've said something so we should allow for some other. No, that's the one. No, that's the one.
That's the one. Yes. Well, that's not actually what's the last. I'm just making the point.
We shouldn't take it. We're in the paper as a fact. That's true. The other thing is the analysis that's held.
So we know that superannuation funds are increasing holding on this. That's why. Well, ironically because they're kind of missing the micro caps. So you've got to get big somehow.
So what do you do? You might be HP, you can buy an entire airport, which I think you can buy it, right? Or you can buy, you know, entire businesses around them internally. So that's part of why.
The other way is they tend to like businesses that are really, really cash generative. Because a lot of the people who are members have income, so if you can buy an airport and you know that every day I plan to land on your ticket on that, and that just spews out cash, and that's a pretty attractive asset for the superfunds to hold. The downside of that is that in normal times, that's great because you're just getting income. In the bad times, I like money back, so you can't, you own a full date of an airport and we can't sell the whole airport.
Because that's actually the airport, we own the whole thing. So we don't have to find somebody somewhere else. So what it does is it increases the selling pressure on the other assets that are liquid back to my first one, which is then okay, well, we can't sell the airport and we can't sell whatever else we can't sell even more BHP shares or more commercial back shares away. And again, that has impact on liquidity.
Now, and then again, part of the challenge here, and this is, I'm not saying it's okay, we'll get back to what they should do differently. But once that starts falling, the member balances for, so I remember going to cash, and then it's the feedback loop. And that's always, bank runs are a classic example of the same thing. Bank runs are not issue until it becomes an issue, the run creates the issue itself.
In this case, I suspect, I suspect that was their broader concerns is what it does to the liquidity, what it does to the valuations of the assets they hold because it kind of creates that very problem. It's literally the vicious circle that feeds on itself. I still hear that, I hear that, but it's kind of like, in essence, you're just a rapper is all you are. You are just some intermediary custodial kind of rapper that just sort of helps people do this for them.
It's a tight little business, by the way. Not for profit, of course, but doesn't mean people aren't paid extremely well. Gosh, I've got to stop with this. Don't you?
Yes, that works out for this week. I will. It's about to be a week six, could I be? I'm really not.
It's going to be a damn, it's going to be a great one. Thank God, I've got so much to get off my chest. I've got a list. But you could almost argue that you could be agnostic about this.
You want your money bag? In a falling market? Yeah. We're going to have to sell at a depressed price.
I'm not saying that's great. Maybe it's a long term thing. I think that's, yeah. But it's sort of like, if people want to do it, then people are going to want to do it, right?
And also too, this is how, I don't know what percentages, maybe you know, but the percentage of people who are close to retirement or in retirement are only one subset of a larger. There are a very, very significant waiting of people in there who are still in the accumulation phase and will be decades away before they can touch their money. In which case, where's the liquidity concern? It's still the only cash problem.
I don't disagree with you, mate, at all. It does come down to a kind of fiduciary, for example, and the role of the people in the fund. Is it just a wrap-up? It's a wrap-up.
A wrap-up is a wrap-up. Superfunded theory has brought, I think it's a law actually, has broader responsibilities for best interest of members, not just, I will do what you're talking about. And that clash there, I think is probably the key one here, because I've been on social media during the post-tariff market falls. And by the way, it happens every single time.
I've got hundreds of them, I'm 40, I'm going to get hundreds of them, I can get back in later. You get the combination of the cut and the suck, right? So you get the combination of genuinely going to cash because they're in retirement and want the money. A lot of people other than that, people like you and I, not like you and I, but you know, I actually might say, this is scary.
I don't want to be aggressive or balanced anymore, I want to be a conservative super option, I'm going to get a cash. And so I've got to adjust the liquidity of going to through withdrawals. It's the, I've got to go to cash, my member says, switch me from the high growth option to the cash option now. And the super fund goes, well, then I can do this, I'll let you do this, I'll let you do this, I'll let you do this.
Or again, I can sell this, that's it, but put pressure on that as I share with the title fund. I need to then do something to transition your account for you, Mr. Smith, from high growth to cash. Okay, now I'm selling a bank and I'm buying shares in, sorry, I'm going to cash and holding cash on to me there.
For example, I'm not saying it's right. If that's the law, like that's that's we've set up the system rules and regulations and they say, yeah, you can do that. You can at any time go to cash like so. So yeah, there's a fiduciary duty to sort of look up to your client's best interest, but there is also a very important legal responsibility to adhere to the law.
adhere to the law and to people have right, whether you like it or don't like it, they've got rights. And within that framework, wouldn't it only be prudent to manage these, like in the event of... Right, so that's what I wanted to come back to, is this is the broad issue for me. I don't have any issue with...
And look, I might give not a lot of funds more credit than they were, but in theory they might get paid well, but they're fundamentally out for their members business, which is not just a profit margin, there's no, you know, maybe you'll pay more maybe I don't, but now I've got my high salary, I'm going to look after the members because that's my job. I think people genuinely want to do that. Another thing, Rich Offens, I'm trying to get it, they've just got split incentives and two funds don't, I'm largely trying, I was like industry funds don't do a large degree. I figure they are just saying hey, this thing is happening and we want you to know, make this a regular because it might become problematic.
So I think that's true, I don't mind that having happened. To your point that I was going to come back to, which is perfect, which is what do you then do as a super fun? And again, everything's in hindsight, right, but unless you learn the lesson, you're going to repeat them. So the question now is, hey, rest, if this report is true, you had yourselves in a situation that risked not being able to deliver what your members wanted needed because of some investment decisions you made.
And this is the challenge, that's about rest, so that's about everything, right, and anyone is going to be their own investing. It's back to that question of, you know, never foreseller be, frankly, and never lie on the kindness of strangers. And that's, you know, we should find a tough job, I mean, you'll say they get paid well, they are, but you're going to do two things at the same time, you've got to maximize your members' returns at the same time, prudently managing your members' risks. And there is a real, you know, game theory thing going on here, because if I'm, great example is the GFC, go way back to the credit cross, the TD Bank in Canada, Toronto Dominion Bank, everything they were called, were the only large North American bankers, I know, that didn't play the CDO game, the collateralised in the GFC because the CDO went, that's stupid.
Who does that? And meanwhile, the other banks got bigger and bigger and bigger and more profitable, everything went on, this guy's still there going, well, I still don't think this makes sense. Now, full credit to the TD Bank, amazing work for them to have the courage of their convictions and say, you're all getting rich, you're doing stupid things, I'm not going to, when everybody else, like are you stupid, there's not even made here, what the hell is wrong with you, come and join the party? Yeah, the music's fine.
Right, now think about that in the context of a superfund, the superfund that says, we're not going to buy this assets, we're not going to have to make sure we got 30 cents cash or whatever, the other ones superfunds, by the way, they can't hold excess cash, they hold the cash, they members till and hold. So that's the first two, they get a little bit of this, they're saying, members, we can't choose to hold cash because we think members of each are aggressive, we're trying to manage the fund. We are literally at your point, like the black middle or black middle or the most of our members choices, if they want to be all in on pick whatever, some speaking minor ETF, I mean, that's okay, that's the fund structure, what it lies up, the rest was terrible. No, it kind of falls on you guys' toes.
It's a really important issue. How can they blow up though? How can they blow up? Sorry, I mean, but to the truth, when the members balances fall and when someone says, restful falls issue, she was, yeah, right, but that's what I mean about the role of the superfunds, having those two things go up the same time.
If you don't give decent returns, what do you members go? I guess I'm also superfunds, it turns better over there. And I thought you can't come back and say, well, I was being safe, I was the TD Bank of the GFC, and you guys, I used to go to the money over there, again, Michael Barry saying, fine, you're not doing anything, we don't make money for us, we're just scared. It's just tough, it's tough because, and this is a T-word stuff, it's tough because, you know, in a fair and righteous world, all the people who were playing silly bud, this would have gone bankrupt, and TD would now be one of the biggest banks in the world, they would be rewarded for the product, and they're proper fiscal management, people would recognize them for the brand value that they have.
But, I mean, this is, it's a term that we've completely forgotten, and it's such in recent history of moral hazard. I would say to you, not from a moral perspective, but from a maximise your power and profit perspective, TD did absolutely the wrong thing, because here they are doing the exact right thing. They completely missed out, now, is Bank of America bankrupt? Is JP Morgan out of business?
They're like, no, there's a record high as a strong as ever. So in retrospect, you look back and go, no, here's the lesson, here's the lesson, TD, go up to the eyeballs and take as much risk as you possibly can, because you're going to be left behind if you don't, and then someone there might be going, well, wait a second, that could be really risky. You have to worry about it, because you get bailed out. Oh yeah, oh yeah, so wait a second, are you telling me there's no downside?
Oh, there's massive downside for society. There's no downside for you. Oh, and I'm not even joking. Literally, that is what has happened.
I'm not disagreeing with you, right? You've framed it up perfectly well. But this is something that I hope we never have to reconcile with in Australia, where people, at some point, we're going to have another GFC, right? I don't know where or why, that's just the history of markets.
I'll finish about that as some. Wait, wait, wait, wait, you're not going to be in the financial meltdown description because of risk cycle. Always, there's always is like, you know, it's going to say like clockwork, but like, you know, a funny kind of clock that sort of rhymes, but doesn't exactly repeat. And, and people are going to come to this hard realization that there is a tradeoff between risk and return, because the way that we kind of position things is that, oh, you can have the equity like returns, but with cash like risk.
Yeah. And they're like, and it's like, yeah, I don't get, I get the desire of that. I would love to have my cake and eat it too. Also, let me do that.
That's right. I can understand the person who's actually a productive member of society doing a real job out there. Just like putting money in the soup. I'll be like, Oh, what?
You're going to do that? Oh, what? I get an eight or nine to 10% sort of average return. Oh, and this is looking after my time.
Yeah, go do it. You're the experts. And then to turn around and go, what? It's, it's all gone.
Oh, well, it's not really our fault. It's only we never, we, it's a really good system. It works perfectly, except in these edge cases, but let's just pretend that those edge cases never happen. What?
The edge cases that happen like everything between those ones. So once this is before that happens every 10 years, you know, like those ones you haven't prepared for. I just, it's getting so angry because it is, I want to hear this kind of like this financing kind of thing. Who cares?
It's like, no, it's real people's savings and livelihoods here. And they're the ones who, and the taxpayer who bails them out and the kids that aren't yet born, you have to pay back this mountain of debt that is taken on to kind of do it. And it's just like the people who, who engineer it, the people who regulate it just, there's no consequences, right? It's just that I can't believe there's people don't march down the street with pitchforks and torches like, you know, it's a gallows you're like, we want blood here.
You buggers really, really screwed up. And it's just like, now the incentives that they have is are the incentives that they have. But you would imagine that the government and the regulator that sits above that would go, you just, you just got to work within the framework of reality, right? Yes, you've got to maximize this.
Yes, you've got to re-ish it, but you've got to manage your liquidity. And if you can't do that, you get the license taken off you or something. Don't be a naughty boy. We might have to bail you out.
So I think this is why I want to come back to rest. I think, so Blozzock was bad for us because of the intention of a rent, which is absolutely valid. No, it's entirely valid rent. I remember the GFC, no one else said, I remember it.
I should have said, rest returns could be terrible for its members. Right. Okay. And this kind of comes back to Texas for so long.
I am, I am always, I tried to really balance where I can. So my challenge for my concern with this, we don't have to listen for either of too many people making too many choices for their own super, which sounds like me saying, don't you worry a little head, I'll look after I'm the expert, you just go and keep working, I'll take the fees and do it. And I don't even have the slightest. What I do mean is that because of those changes that are happening, because of those people who are, and you're right, investing is investing, but given the role of super as a retirement vehicle, I have no issue.
If people are getting money on a speaking, I'm not going to stop you. But if you want to come and stop you, I don't, I don't, I don't, I don't get to publish anything. Super's my money. Just back off.
Super in that context of, do you have to decide whether to be in high growth or conservative or cash? If they want to, I guess we let them to some degree, but we promote a choice to the point of an ideological right, and it maybe should be, but at some levels, we're going to take your retirement savings, contributions for your whole working life, and make sure something left at the end. And do I, am I saying that I am the grandpa who should decide or that the overcharging millionaire finance bro should decide? No, of course not.
But I am saying that defaultity, you have to admit it. But yeah, you're only mean like that's, risk shouldn't, in the perfect world, rest should have been able to say, we are going to manage our fund the right way. And again, there's no right way. And I'm, I'm hedging every time I say anything because I know there are, there are examples of horrible behavior and bad behavior just poor returns, ain't it?
Fun, pretend we use it, or Troosius, right? So, could the average person have a bad impact? Yes. But it does, it just, it just, it's just, there's something they made up, maybe I go back to my preferred idea, which is a national default super fund run by the future fund, just in ETFs or something.
Just like, you know, I don't want 58 year old John or barrel or Sam or Susie saying, Oh my God, that feels really scary. I'm going to get a cash just in case. When they don't have the background, I don't know you know, I've just talked about the fact that market fell in recovered. I'm going to cash because I know what's going to happen next and I don't want to be caught up by this.
And I'm not saying that, I was always right, they're always wrong. I just, for a super fund perspective, I don't think we serve the national interest and the interest of the average super fund member particularly well by inviting them to take a view. No, no, no, I can't start saying that, it's got, I can fix your car for five ways, which way, which way do you think you want to do the aggressive solution or the balance, which like you're the expert to fix my car. And yes, let me dodge the mechanics, but at least the car gets fixed properly, right?
And if you had some sort of default fund, which was free of, as free as possible, of all the incentive, you know, dramas, I don't know, I just, I think for me, the story here is, I think it's clear at the time, frankly, and subsequently the rest of the super members who change their options, they're making bad choices. I think it's objective of the case, objective of the case, some of the people say, but that should be, after me, I'll be able to cash, I'll get it. It's probably the same person who cries fail and wants someone to help me out. And what's the paychecks I scored up?
You see it all the time with them, not to rate it to another territory. I'll go on. Well, some nurse buys 18 different negatively geared properties and it goes bad and the other bank should never have lent me that money. But if the bank is with, like, with held it, then you'd be angry about that.
So I'm all for personal response to that. I'm all for personal choice. I think you absolutely do. But then you just, you, part of that is you can't then turn around and go, Oh, but I should never have been able to do that.
It's like, well, you did. Welcome. Welcome to consequence, right? I agree with that.
Oh, I don't think it's policy. We serve the nation well, as a policy by saying to everybody that the nurse, the trade either, factory worker, taxi driver, you should choose your super option. You know, you know, you should choose the search, which would you like? I don't know, Docker.
You know, you can play it or confuse it. You choose, you choose your research. I'm on Google. Ask a couple of bucks on a surgery podcast, what they reckon and then go make your own choices.
Like, you know, I just, I think, again, we've overcomplicated it because it's, we have, it's, it's just a cash cow. I mean, it's a gravy train. You want to be on that train, right? It's a business is good, you know, rather businesses, boom.
Right. Like you want to, you have, you have mandated cash flows 10% of every more than of everyone's in the country's 12% of everyone who earns money in Australia is going into into a pot. So it's not small business. Yeah, yeah.
Sorry. You want to, you want to, you want to, you want to, you want to, to the little tiny of the ticket? Yeah, we are, we are 2% of the global economy, but we've got one of the biggest retirement funds in the world. It's brilliant, but I come back to my point.
That is going to be tapped. It's over my lifetime. I don't know when I will bet my first born on it. Sorry, buddy.
It's going to happen. Right. For all of these kinds of, yeah. So anyway, it's just so horribly done.
But I just, it's what's interesting are these sort of stories are coming out now, which is we just said the other week, we're at record highs, baby. Yes, yes. We're record highs. Unemployment's what, four?
I got a four handle on it. Sorry. Like, I'm the first to say, well, there's a whole bunch of problems in the economy. Right.
These are very high level surface sort of numbers that, you know, there's more nuance to it than that. But we're actually having one of our major super funds going, um, it could be some problems here. Like what now? I can understand the market was down 30%.
Unemployment was 8%. It's sort of, yeah, if ever, I just, my greatest concern with all of this is just it reveals how anti-fragility is the whole system that we built, which is for each. Sorry, how fragile it is. Sorry.
You're right. You know, I'm just sort of like the whole, you know, the North Star with designing a system such as this should be like, oh, we must, we must be as anti-fragile as possible. Because if there is one thing that like the sun will rise tomorrow, you will die at some point in time. You'll have to pay tax along the way and there will be a share market climate at some point over your working career, probably three, probably four.
So like, maybe a good idea to plan for that. Just saying, we got the subject about war markets, mate. Let's go back to that. I always love the conversation.
Just go back to that, mate. I don't really have a so other than to remind our listeners that things generally improve over time that by the second world war, market finished higher than the second world war war. So keep that in mind, it's going to happen again. I don't know.
Just remember what horrible, horrible, horrible time that six years was, market finished higher. Remember that things improve over time. And I think I suppose to that shorter term point is for all that people still think, well, I can tell you I can play it right. I can tell you I can buy it all that kind of stuff.
Your point where I don't need all time highs, the US market feel 15% recovered all of that in the space of four months, five months. Those who said Trump is killing the world, new world order, anything's going to be, you know, I can't make it happen, but it probably doesn't. And just kind of, I don't really know about the bottom of the other thing, you know, for all of that, for all of that, you know, who knew that was going to fall, something like that. Like, did you know how far, how fast, when I was going to stop, when you got to buy back in, feel free to add me on Twitter if you were the person showing me the trade receipts, we sold on the inauguration day and bought back a few times that lower and then you've held the whole way through.
If you're that person, you're like, you're like, you know what else did, like being the killer. Exactly. So because even in the circumstance, what you see in hindsight is absolute, wasn't certain at the time. So even when you go, it's not like I think that exactly knew what I knew was going to happen.
I knew this and knew that well, you're lucky because you couldn't have known it. So whatever premise you think of, I knew it was, I got lucky because I thought I knew what happened to be lucky to be right, rather than there was something obvious that was going to tell you this was the bottom or this was the top. So I just want to keep that point front and center. And the other is my oil prices shot up as I said, and the questions come a week later.
It's now the time to buy oil because it all prices high. And it gives you a remember that, you know, unless you're in front of the trade, jumping out the end when everyone knows everything you already know means everyone's already positioned accordingly. That doesn't mean you can't buy and price goes up. It may well, it's got to be the world gets worse, but maybe does, but maybe doesn't, right?
And so just because it's happened, I get the question, I got to take a couple of dollars a week ago. I'll go and recognize it's time to buy now. So well, maybe, but probably not because the price that's not that there's not the tell you're looking for to make it worth. All you need to know really for the vast majority of people in their interest on any particular asset is has it been going up lately?
Yes. And if the answer is yes, then there is, there's there's so many said for momentum in prices because it's just sort of like higher prices attract more people, which make the price go up, which attracts more people, not that I would ever ever ever advocate a strategy on that because it's not like it's like, yeah, it's not like cannonball, I can send to the laws of momentum. It's like shooting a cannonball that just stops halfway through on the back. Is that going to happen in markets?
Right. So we have to kind of go quality, quality style. I mean, we say you and I have been in this industry for decades, right? When things are bombed out and you're going, oh my god, this is this is exactly what everyone says that they weren't waiting for.
Things are super cheap. This isn't this fantastic. And like, you can't you can't get arrested and then things are super toppy and frothy and whatever. And like, there's people just beating your door down to like, oh, I need to invest.
I need to invest. So it's pretty it's pretty scary. Yeah, what? So, so with this latest situation, I think you've framed it out well.
But what else is your view do absolutely nothing different? So there's two. And I'm saying that is if I'm about to suggest that I disagree. Yeah.
But I'm yeah. So I've said this point in different contexts, but two things for me is, firstly, if you're not doing it right, start doing it differently. And so what I mean by that is, I'm not saying everyone listening now should just do whatever they already do. Because if you're and others are smart people, I probably should, but other people not listening because they're not that smart.
I have bad services in place. In which case, if this is a wake up call, then yes, fix what's going on. So I'm not saying everybody do nothing differently. I'm saying, if you've realized all of a Simon, for example, you're not especially diversified, that's a good lesson to turn into something.
So maybe do something a bit differently. If you're using leverage and you got close to a margin call, you know what, maybe something different. Because next time you might, you might get wet. So, should you do things differently?
Yes, if you're not doing it correctly. Now, I'm not out of a mortgage on correctly, but you know what I'm saying. Do it properly. And if you're not doing it as well, as you could, then yes, use the wake up call.
Second thing. So the second thing I'll do differently, I'm only to is look at areas where an unexpected event or circumstance may have actually changed the investment horizon for your company or companies, plural, right? If you are some and terms for a great example of this, if you realize that you're massively concerned to, can you're manufacturing selling noise in any product of the US, then should you sell the upper one? Now that goes back to the diversity I mentioned before, but you may not have thought about source of products, the country manufacturer, as a diversification consideration.
But now I think we know that you can and should. So if it's opened up your eyes to areas where you are exposed to a reasonable amount of concentrated risk, and I say I'm reasonable, not just Australia, because you can be constrated with that. Hang on reasonable if you're doing the work properly. But yeah, and that circumstances, with this one, with the wall, I don't know, you know, are you more exposed to the energy market than you want to be or underexposed to the energy market?
They are not a reasonable question to ask and maybe consider changing. I wouldn't on that score, but you might want to do that for yourself. So am I doing anything differently? No, I've done absolutely nothing.
I'm not bought or sold anything as a result. I have not changed my investment strategy over the last years, really. I find better ways to implement it hopefully. I probably am the tech boom and bust was a great example, right?
I've never asked the answer. It's all about success. I'll test it anymore. We've got an upcoming mailbag question a couple of weeks on this.
I won't steal the thunder of that one. But there are times when you feel like you're right because the market is telling you you're right. That's not the case. So if anything I would use all of it, it's only in your market location, use as an opportunity for you to go back to your core investing principles and values, go back to your process and say, does the process still work?
Firstly, secondly, do I need to reorient myself to the process? You can get really lazy and really hubristic when things go well. And you can stop being as critical as better as you can invest. So for me, I'm a value first guy, right?
So I call your first guy, all about quality. And then I'll build out from there. But can I convince myself that something is worth investing you? The price is going up and the growth rate looks good and everyone loves it.
Can I get a second? Can I think? Does my attention quality expand as the market goes on? I probably get really honestly.
And so when you get a fall, it's like, all right, I've got bent that one. What should I have been doing? So do differently know, recommit to the things I think work and try and be more disciplined? Yeah, that's probably the thing I'm doing differently.
And by the way, not as a knee joke, not as a hurt me there, so they're going to change anything because I'm not in fact, if you change as a result of these things, you're generally not making it worse because you say, well, I'm going to be about that because I feel 15% last month, well, if I grew 400% last four years, then yeah, it's probably worth doing it taking the risk. So don't don't short term trade, don't base it on the recent past only. But take up your learn some lessons and recalibrate your investment process to make sure you're doing this, as well as you should. That's that.
What are you? No, I'm actually I'm the same. I really led into that hinting that I've got some take now. I really don't.
I don't at all. I mean, I think I've always expected this to happen. Let me clarify right, it's like my second political strategist that called it in June of 2025 around and Israel, we're going to go to it. And of course I didn't.
But it doesn't take Nostra Jaimas to think that the humans are probably going to find missiles at each other at some point. Like that's a pretty safe bet. And particularly in that part of the world and particularly the way things have been going. So it's sort of like you're surprised by this.
That's the surprising thing to me is that people who do this for a living seem surprised. Yeah. I always say that. You look at the way the market responds to these things like, what did you expect?
Like, what did you seriously expect? It's like, this happens like all the time, like all the time, right? And so that's that's yeah, yeah, I and what I'm always trying to do is that when you're making any kind of investment, you're obviously focusing on the upside. How much money can I make this?
But it's just so important to go. We have a what can go wrong? And of all the things that can go and is this investment, how is that going to act in that kind of scenario? And so it's sort of like, yeah, I didn't know the exact nature or character of how events were going to sort of unfold.
But there was always going to be some stuff. Yeah, I know. And so as you say, I think you've you said it really well, which is why quality is always first. It's own good stuff.
It's own good stuff, right? Like it's just you don't have to have a good people, but they tend to. They tend to, right? If you're if you're so much of the strategies and nonsense out there, it's picking up pennies in front of steam roll.
It's like, it's a great gig. It's a great gig for a while. It's just like, oh, there's one, there's another one, there's another one. There's another one.
You're picking up money, I'm making all this money. And so you should get stuck in a crack. And then it's like, things go bad very, very quickly. And you know, I should get paid every time I say this word, but it's just asymmetry.
I don't want an investment that like, oh, it should be okay. And if it does, maybe I go, I make a little bit of a term, but if it doesn't, I'm completely wiped out, which like, which a lot of people who know a lot better continue to sort of do those kinds of strategy. Maybe back to the earlier point, moral hazard is a component of that. But I just I'm just constantly, I'm constantly aware of the downside.
What have I got wrong? What's going to what's going to what's going to unfold here? And as this stuff is sort of I'm reading about it, like I'm looking at my portfolio and I'm going, yeah, I'm pretty cool. Yeah, I'm not, I'm not going to say happy about the share price.
Well, the share prices don't great at the moment. I'm happy in every regard. But even if the market, even if my portfolio was down 30, 40%, it has been regularly recently, not that long ago. If you go to Stromain to come forward, like the free account hides the actual positions, but you'll see the chart of my performance there.
And it's like, there was a rough period there for a while. I just like wore it big time. It's easy to sort of say, whatever, I didn't bother me, but I didn't do anything differently. It was always like, yeah, but most of the stuff I'm holding, I'm pretty confident in.
So has anything changed? Yeah, the price has changed. Okay, but anything, any important has changed? No, nothing's changed at all.
So that's what I would take this opportunity if you are feeling a bit nervous. So just stop trying to look into a crystal wall because it's a waste of time. Just ask yourself scenario plan, right? Like, okay, fall on nuclear exchange here.
What does this company do? Maybe that's a little preachy. I'm sure there's all this back wins and crazy. Take the broad.
Big issue for your station is catwalk, right? It's like, what's going to happen to professionals with everyone around the world going to start watching professional sports? I don't think so. Professional sports teams still likely to want to give their players an edge.
Yes, I mean, there, I just don't think that there's going to be any kind of serious long term structural impact, or my self group shares. No, I don't think anything's really going to happen to them in terms of industrial equipment. Like, that's still going to be needed. You know, I shouldn't be listening to my stocks.
My point is, is that go through what you're holding and ask. And it's like, I do worry, like, trying to shield a good example at the moment, right? Not to have had shares in them in the past. I'm quite happy of how they performed honestly.
But having been a shareholder, you see that a lot of people are like, oh, things are really scary, drones are a thing, that's why I'm going to buy. And it's just like, whoa, that is 100% the wrong way to look at that particular company. And I don't want to say anything negative about the company. I actually think they're doing very interesting things.
But the share price is very much driven on first order thinking. And without any viewers to what might happen if some of these tailwinds don't proceed in the way that you expect them to, right? It's like, I'm making an investment on a very peripheral kind of view of the world, and one that is extremely bullish for this story. But I'm not considered anything else outside of that.
And I just think that is, so please don't at me and say, well, I'm not all the droneshield people who love it will be. It's not about the company really. It's just a good example of, you know, think about it now. I think about for whatever reason, everyone's singing Kumbaya and holding hands at six months time and world peace has been ushered in.
I don't know, right? I was just like, is that still a good thing? Not that it's going to happen, but think about these things in advance. That's the prompting I always have when things get scary is like, because you should have thought about it already.
And you're clearly having it because that's why you're nervous. So take the opportunity, take the opportunity now to do that. And if there's anything that you go in there and go, gosh, this only is good. If an if, then you've got a bad investment, you've got a fragile investment, you want the high quality anti fragile investment.
And yes, you're still going to be on a rollercoaster, but it's going to end like it's not going to fall off the tracks. The only thing I'm going to add to that, I think it's perfect, is just you say, investment, I'm saying a broadnet to portfolio as well. So you're the company level and do that company in the context of a portfolio where you're not taking concert risk on individual risk areas where they may be, it can be currency geography industry, country manufacturers, say before, all that. So just be mindful of what that looks like.
I think so. Motley for more, subscribe to the free newsletter at full.com.au forward slash listener. Let's change take a little bit. Imagine if yes, but we're about superannuation.
And I just want to throw this one. You know, I didn't get this one to you. I put the note in the agenda as we were chatting before. I don't know if you saw yesterday, it's a Wednesday, the Vanguard announcement about the Vanguard ASX 300 ETF.
Yeah, yes. Yeah. We've done it. So that's where I mean, that that we took our companies.
Any investments? I literally had to say it. The AC is the code. They hit $20 billion in funds under management.
They are the two to be the largest ETF in the country. Here's the stat. They matter, they're managing in that single ETF quadrupled in the last five years. Wow.
It's astonishing. That's a story of the ascent and descent of ETFs right there. It's not totally as subtle as I am. It's really funny too.
People are really offended by ETFs, some people on social media. I post this, like, I said, right. That was all I said, right? And I said, yeah, well, how was that?
Was fun? How much that's performance? It's not really the point. Some said, yeah, well, the other ETFs, like, that's not really the point.
It was just really, I don't have to stop because you don't like it or people like the fact that the bank goes off the profit or I don't know what it was, but it was a real How could I feel this thing? And you post it on a non-trivagment individually and a lot of people following into it and listening to this advice first. But actually, the response was fascinating. Like, somebody didn't deserve it or it wasn't okay or there was a yeah, but it was like, just what it is.
You know, you're like, it's a couple of people to say, what's a lot of money printing? Like, dude, no, it's not for weeks in five years. If it rounds, I'm going to find money printing on that one. I thought it was a bit of money for it.
Just like, okay, but, you know, remember the hammer. This is not that. So, I thought it was fascinating, man, because again, most of it is not actual performance that would have been driven by money. This is genuinely just people going, you know what?
I want to go to the ETF. I don't really have a star what, but other than it's just really, really meaningful. I think it's, you know, I like Vanguard as an organization for the reason we talked about before. But even aside from that, just for any passive ETF to 4X in five years in terms of the funds, I thought it was just amazing.
And the growth, we know there's more inflows into passive ETFs than, I don't think they're managed funds. They're winning that war and we get comprehensively speaking of, I don't know, speaking of, you know, kind of burning platforms. If you're a fine manager, it's not living out performance, look out, because there are so many better alternatives these days for people to grab. They have made for years, but, you know, it's almost, it's a small amount.
It's kind of the snowball at the same time. It's like, it's sore. It's bigger, it's bigger. Look around and say, oh my God, what happened there?
And it's the other one I've suggested that takes, you know, in this case, you know, in this case, right? Exactly. And obviously, not the, we talked about for ages, people know what's happening, but if you see the sheer site, it could dribble. I mean, if you ask me in 2020, it was, I thought it'd be easy, actually.
If you ask me in 2020, how much are you chasing to grow? I'd say, ah, fasten the average market into the fund, not return. Are you tempted to give, 20, if you're lucky, like, you're tripling five years, I don't know that compared to that, it's probably 60%. No, no, no, no, no.
But just mind-blowingly phenomenal, how much money is going to pass ETFs? There's, there is nothing more powerful than an idea whose time has come. And, and, et probably, what's the world? Like, ETFs just change the game, massively change the game.
And, and, yeah, I mean, it's interesting, like they charge not 1% in management fees, not 0.1% but 0.07 or 8%. So, $20 billion, they make $14 million in fees per year off that, but it's good business, right? It's good business, even though that's, I'm not trying to suggest that's an egregious fee. It's very, very, very low.
But when you're dealing with very big numbers, it's like, it ain't bad, particularly when this is largely run by a computer, right? Because it just follows the index. So there's no, there's no big committee of high-paid gigabrains there trying to figure out what do we buy, what do we sell, the computer will just do it all for you. So it's, it's a nice, it's a nice little business.
Like, these things scale really well. To me, though, it actually points to a more fundamental problem. I think because it's kind of like, it's not like everyone woke up one day and said, yeah, I'd really love to play the markets. It's just like, again, it's like, what do you do as an average person?
It's like property I'm priced out of, right? I don't know, share market stuff, it's hard, it's hard, and it's risky, right? It's like, do EMU farms or stupid crypto coins or whatever. It's like, put into an ETF, you know?
And that, why I'd say COVID is a big part of it as well, because there's nothing, there is nothing, no better incentive or encouragement to, to start taking investing seriously than watching a quarter of your purchasing power. Yeah, that's right. Saving is just a viscerated, right? And it's just sort of like, I guess I have to invest into my earlier point.
Well, these things seem really easy and low risk and gosh, it's been going up. So I guess I'm going to do it. And as I say, it's a super powerful idea. We as stock pickers in direct interest to our own companies in livelihoods often spruick the benefits of ETFs because they are such a good, good solution.
They're amazing, they're fantastic for people who don't want to try to beat the market. ETFs are big. They're gods, and they're literally gods, and it's like, you don't have to do any of the stocks to get the market return. I mean, Jack Bogle should be knighted and sainted and whatever else to give them.
Whatever, whatever, what about what I want to you can find for them? Because it's credit and all of a ton of people who now feel like can get into the market, they can do it with different trying picks locks. They're probably going to get scared out when they're stuck, speak despite the estimates go badly. The other thing is social proof.
And then the idea of his time has come, by the way, VCU goes closest apparently, 1802, 2095. But that's a range of a range of potential quotes in combination of thoughts. But yeah, social proof of that. I've just like, you're also doing it.
So that's the snowball, right? It just tracks more and more people as it goes. It's incredible. That's what it's like because it's an opportunity to, I think, to some degree, because the few people who are competing with us for ideas is great.
And if it does create distortions, is that something that you can potentially profit from? Yeah. I don't really have any further. I just like, I'm in a way because it is unfortunate that we sort of have a force to do that.
And it's also, I think what we haven't yet had is, in particularly in the Australian context, there's a lot of people who have discovered that, and I'm not being critical. These are great products. They are the best product for most people who are interested in getting exposure to the market. But no one's had since these things have been introduced and since they've gone mainstream Australia, we haven't had a share market crash.
Yeah. We had COVID. I know we had COVID. That was a month.
It was a 30% blip in a couple months, I mean, fastest bear market history, though. Not nothing. I'm not, yeah, but it's like, and history is useful here. You can have bear markets that last two years, drop 50%.
I'm not going back to the TNO4 here. Multiple times in the last 50 years. 16 months, I think. Yeah.
Just for God. Oh, and something like 10 years to get back to the previous peak. So it's sort of, my worry is that, no, no, no, it's not a worry. Again, it's just something that you must go into eyes wide open.
And it'll happen. It'll happen at some point, and then people are going to be people and they're going to panic. And this thing that was really great and easy and it gave me this wonderful exposure and it helped me sort of get under the shadow of inflation, et cetera, et cetera. Oh, great.
I'm going to sell because it's scary. And that is going to happen. So if you are listening to all of this, I'm just, again, back to the earlier point here, internalize that beforehand, because it's going to happen at some point, and then people are going to be going, well, you're going to see those $20 billion shrink radically, because the fund itself, the market has gone down and because people withdraw their funds. I don't want to make pointies other than just, I'm hoping it's not always rainbows and lollipops, not to be doom and gloom, but it's again, it's the cake and eating it too kind of thing.