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Speaker 1: Jim and Dale, welcome back.

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Speaker 2: Thank you for having me.

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Speaker 1: Boy, it's going to be interesting here. We're going to

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Speaker 1: tell me about twenty twenty four, how the year played out,

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Speaker 1: and what you guys are thinking about it. NAB at

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Speaker 1: for twenty twenty five, But just to be clear, you're

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Speaker 1: still the director of SMSF and Investor Behavior now at

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Speaker 1: NAB and you're the host of your Worth podcast. So okay,

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Speaker 1: let's just talk about twenty twenty four. At this time

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Speaker 1: last year, we're all talking about twenty twenty four as

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Speaker 1: being I don't think about it. I don't think your

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Speaker 1: bank said this, but some other banks said up to

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Speaker 1: seven rate reductions in studying in about June. That was

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Speaker 1: a year ago, and here we are no rate reductions,

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Speaker 1: and we're talking about the same sort of stuff. But

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Speaker 1: how do the markets investor markets? It is, and let's

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Speaker 1: just put properties off of them and just invest markets

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Speaker 1: generally in terms of various investor products, gold shares, equities.

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Speaker 1: How did invest markets perform in twenty twenty Yeah, it's such.

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Speaker 3: A good question because if you're not watching closely and

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Speaker 3: you are listening to the headline saying it's going to

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Speaker 3: be a dreadful year. We're just going to have this

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Speaker 3: catastrophic economic outlook because rates are so high and it's

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Speaker 3: crushing the consumer, and we know things are dreadful and

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Speaker 3: it will just all be very painful for everybody. You

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Speaker 3: may have missed the fact it was a superbia for

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Speaker 3: investors pretty much across the board, putting property to one side.

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Speaker 3: If you were in Australian equities, so I sit in

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Speaker 3: the NAB trade part of the business, which is the

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Speaker 3: share investing share trading part of the business. If you're

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Speaker 3: in Australian equities and you just bought the ASX, you

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Speaker 3: just bought the top two hundred companies. Yeah, absolutely, you

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Speaker 3: had a great year, right, four and a half five

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Speaker 3: percent dividend yield.

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Speaker 2: Market's up eight nine percent for the year, depending on

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Speaker 2: when you started.

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Speaker 4: If you bought the S and P.

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Speaker 3: Five hundred, which is the top five hundred companies in

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Speaker 3: the US, and we found more of our investors doing

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Speaker 3: that over time. Right, they had an ab doozy of

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Speaker 3: a year. It was beautiful, sort of about well over

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Speaker 3: twenty percent. That was mostly driven by the Magnificent Seven,

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Speaker 3: So the sort of seven companies that have been driving

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Speaker 3: most of the growth and that was largely a lot

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Speaker 3: of excitement about AI and even with quite a few

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Speaker 3: extraordinary things happening through the year, that appetite just didn't dim.

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Speaker 3: We kept expecting those guys to kind of pull back

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Speaker 3: a little bit.

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Speaker 2: It was an incredible year for them.

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Speaker 3: Gold was up what thirty forty percent in Australian dollar terms,

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Speaker 3: quite incredible across the board most people. And if you

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Speaker 3: were holding cash in term deposits, which is where people

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Speaker 3: tend to sort of hold their fixed income that don't

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Speaker 3: tend to onond portfolio specifically, but more term deposits, you're

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Speaker 3: getting decent yield on your cash.

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Speaker 2: So most of your portfolio had a great year.

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Speaker 1: So is that the reason why some parts of inflation

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Speaker 1: appear to be stubborn Because the investor market was making

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Speaker 1: a lot of money and as a result of that,

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Speaker 1: and they felt quite comfortable. They weren't sort of seeing

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Speaker 1: a lot of losses. Therefore, their risk appetite was sort

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Speaker 1: of fairly buoyant. People were prepared to spend at some

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Speaker 1: levels of the marketplace.

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Speaker 3: I think that's very true. We know there is a

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Speaker 3: wealth effect. People feel wealthier, even if it's just in assets.

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Speaker 3: They haven't actually sold right, doesn't crystallized any cash or anything.

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Speaker 3: But particularly older people, we've seen this data cut beautifully.

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Speaker 3: Older people who own assets, so they have housing, they

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Speaker 3: have shares, they have other investments.

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Speaker 2: They've done extraordinarily well.

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Speaker 3: And it's not just that the assets are going up

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Speaker 3: in value, but the yields are really good on those

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Speaker 3: as well. So they've actually found themselves in the extraordinary

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Speaker 3: position of even though things got tighter for retail, for

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Speaker 3: spending in so many ways, particularly one group doing really

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Speaker 3: well and still spending quite nicely.

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Speaker 1: So is that different to what normally happens in high

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Speaker 1: interest rate environments? Are we seeing some let's call it

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Speaker 1: structural change.

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Speaker 3: I think a structural change is such a good way

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Speaker 3: to describe it. We have an issue now where economists

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Speaker 3: for years have talked about a third or thirty third

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Speaker 3: in the Australian population, where you have a third of

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Speaker 3: the population renting, a third of the population with a mortgage,

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Speaker 3: and a third of the population who own their homes outright,

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Speaker 3: and they tend to be retirees, and retirees for a

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Speaker 3: long time didn't have a lot of cash. They didn't

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Speaker 3: have the superannuation system to support them, so they were

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Speaker 3: fairly constrained in their spending. Isn't have a huge amount

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Speaker 3: of money to live on for the rest of their lives.

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Speaker 3: And now you've got a really different situation where you've

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Speaker 3: got a much larger group of renters. You've got a

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Speaker 3: fairly sizeable group of people who own their homes outright

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Speaker 3: and they have a lot of other assets. And then

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Speaker 3: those in the middle is a smaller group with mortgages,

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Speaker 3: but the mortgages are way higher than they've been historically

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Speaker 3: and they're really getting squeezed. So it's a really different

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Speaker 3: cut to what it was twenty thirty years ago, and

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Speaker 3: definitely fifty years ago.

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Speaker 1: And would you put that down to the group who

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Speaker 1: own their own home, let's call them over fifty five's

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Speaker 1: and some of which are retired. Would you put that

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Speaker 1: down to the guaranteed super that you know, I think

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Speaker 1: it was bourkeeading introduced in the mid nineties. Is it

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Speaker 1: because those people they just get right now, they'd be like,

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Speaker 1: it's like thirty years ago, they're probably he introduced it

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Speaker 1: when they were thirty, they're now nearly sixty five. Those

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Speaker 1: who are ripping the benefits of that superinnoation scheme.

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Speaker 3: That is definitely part of it. I mean, there's a

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Speaker 3: whole variety of other things which you're very familiar with.

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Speaker 4: There's a lot of.

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Speaker 3: Tax opportunities attached to investments that are not available to

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Speaker 3: those who are way journers. And they made sense when

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Speaker 3: you assume everyone was able to buy a home and

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Speaker 3: eventually become an investor. When you look at a category

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Speaker 3: now where you go, a lot of these people will

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Speaker 3: never own a home and will never have the opportunity

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Speaker 3: to become investors and homeowners. At the same time, you

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Speaker 3: end up with those who are investors in homeowners doing

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Speaker 3: extremely well and people not able to kind of crack

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Speaker 3: that challenge. So there are lots and lots of tax

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Speaker 3: and social security incentives for homeowners that don't exist for

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Speaker 3: those who are not already in that category. And the

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Speaker 3: superannuation scheme makes perfect sense if you want to ensure

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Speaker 3: the population is not going to be dependent on the

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Speaker 3: age pension when they retire. But it has also accrued

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Speaker 3: a lot of tax benefits to a small group of people.

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Speaker 1: So who's losing. Is anyone losing out on this in

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Speaker 1: twenty twenty four and man, maybe twenty twenty five who's

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Speaker 1: losing out look.

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Speaker 3: Renters are the ones who are struggling the most, so

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Speaker 3: we know even though mortgage holders have found it extremely

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Speaker 3: difficult over the last little while, if they're relatively new

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Speaker 3: mortgage holders worth noting that and the RBA's publishers done

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Speaker 3: multiple times, there is.

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Speaker 4: Also a third to thirty third in the and the mortgage.

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Speaker 3: Category where people have had mortgages for a long time

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Speaker 3: tend to be two or more years ahead in their repayments,

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Speaker 3: and they had an opportunity to get way ahead when

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Speaker 3: rates are really low, so they're really doing quite well

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Speaker 3: and they're happy to just run down their mortgages overtime

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Speaker 3: got a group in the middle who were okay, and

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Speaker 3: then the people who had to borrow at low rates,

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Speaker 3: but they spiked really quickly but had to borrow very

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Speaker 3: large amounts to buy very expensive houses. They've really struggled.

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Speaker 3: So the mortgage category there are winners and losers, and

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Speaker 3: renters are the ones who found it most difficult though,

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Speaker 3: because rents have accelerated really rapidly and they don't have

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Speaker 3: other assets to rely on.

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Speaker 1: So what would you say then to rent a market

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Speaker 1: And like some of these people just started working, so

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Speaker 1: it's difficult for them. But what would you say for

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Speaker 1: renters who want to achieve the greatest range dream? So

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Speaker 1: how do they know they can't touch the super how

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Speaker 1: do they get a start or how should they manage

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Speaker 1: their expectations and their aspirations for one day owning home

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Speaker 1: no matter where it is, like Mum and Dad did

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Speaker 1: in Australia, What should they be doing in terms of

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Speaker 1: maybe saving for a deposit?

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Speaker 2: Yeah, so saving for a deposit is everything as step one.

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Speaker 4: And there is the.

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Speaker 3: Real difficulty that obviously, with the rising cost of living,

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Speaker 3: you may not have a lot.

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Speaker 2: Of surplus cash flow.

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Speaker 3: But doing whatever you can to get yourself some surplus

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Speaker 3: cash flow to find some savings in a fairly difficult

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Speaker 3: environment is going to be really important. And I'm not

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Speaker 3: even going to begin to pretend that things were easier

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Speaker 3: back in the day, because there's nothing more offensive, I

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Speaker 3: think if you're a young person than nearing that. But

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Speaker 3: you know, those of us who took on second jobs

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Speaker 3: or weekend jobs to just earn that little bit of

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Speaker 3: extra money in order to put some money away. That

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Speaker 3: did happen in the past, and it happens now. And

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Speaker 3: it is one opportunity to think if you're finding that

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Speaker 3: you can't make ends meet with your current salary or

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Speaker 3: your current income, other ways to earn money, perhaps as

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Speaker 3: a way to put some aside. Making sure that you're

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Speaker 3: deliberately paying yourself first and that you are getting the

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Speaker 3: best interest rate on your cash. Not taking undue risks

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Speaker 3: is another one. I think one of the challenges go yeah.

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Speaker 4: One of the challenges for young people.

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Speaker 3: Hear these amazing stories about people who just did exceptionally

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Speaker 3: well and some fairly speculative assets, and you want to

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Speaker 3: chase those. It's amazing when it works, and it's horrendous

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Speaker 3: when it doesn't. So perhaps don't take on your risks

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Speaker 3: if you don't have to. It might take longer, but

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Speaker 3: it also might be more likely that you get the

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Speaker 3: outcome you're after.

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Speaker 1: And it's also like one in thousand, So the one

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Speaker 1: in one thousand do well nine hundred and ninety nine

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Speaker 1: don't tell you about the stories they don't do well.

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Speaker 1: You just don't want to be one of the unlucky statistics,

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Speaker 1: which is the majority by far, overwhelmingly, overwhelmingly by far.

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Speaker 1: So let's look at twenty twenty five. It can't keep

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Speaker 1: you going on and on on forever. Good good, good

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Speaker 1: good markets, good property markets, good equity markets, good asset

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Speaker 1: class markets. Can it or can't? I mean, I don't know. Man.

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Speaker 1: We've got Trump in the US, and we've got tariffs

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Speaker 1: being imposed and threatened. We've got reactions and responses from

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Speaker 1: Canada and Mexico and China, hopefully not Australia because we

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Speaker 1: haven't had anything dropped on us yet. What do you

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Speaker 1: think about twenty twenty five? I found it quite confusing,

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Speaker 1: But and in those cases I usually just step back

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Speaker 1: and wait, what do you think?

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Speaker 3: I think we've all been proven wrong multiple times in

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Speaker 3: the last coup year.

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Speaker 4: You made that point about the forecast for last year,

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Speaker 4: and if.

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Speaker 3: You use US markets as well, like US markets were

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Speaker 3: pricing in six rate cuts before June last year, and

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Speaker 3: that clearly did not happen.

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Speaker 4: Either. Markets are also wrong.

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Speaker 3: It's not just pundits people putting their money on the

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Speaker 3: line going I'm pretty sure this is going to happen,

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Speaker 3: and still finding out they're not correct. So it's quite

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Speaker 3: extraordinary how much has not played out the way we anticipate.

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Speaker 3: I think the key things we're looking at as an organization.

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Speaker 3: As a bank, we've now priced in a rate cup

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Speaker 3: for February, which is a pullback. We were expecting May. Now

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Speaker 3: we're like, look, February looks like it in play. I

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Speaker 3: think the most important thing for people to recognize is

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Speaker 3: the neutral rate, like where rates will probably land if

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Speaker 3: the economy is okay, okay, you not.

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Speaker 4: Amazing but not dreadful.

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Speaker 3: Is much higher than maybe what people think. So you're

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Speaker 3: probably talking about a neutral rate of like three percent,

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Speaker 3: and then the bank will take a margin on top

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Speaker 3: of that.

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Speaker 4: So your mortgage.

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Speaker 3: The most important thing I think people need to take

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Speaker 3: away is those days of two percent mortgages won't ever

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Speaker 3: happen again unless it's a crisis.

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Speaker 2: We don't want a crisis. We've had one of those.

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Speaker 3: It wasn't fun, you know, So we do anticipate rates

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Speaker 3: coming down, but not dramatically, not back to what it

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Speaker 3: was before. You know, you're still talking about a personal

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Speaker 3: mortgage rate of you know, five percent, four and a

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Speaker 3: half five percent at best, and that's probably twelve to

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Speaker 3: eighteen months away.

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Speaker 2: But things amaye.

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Speaker 1: So it's a Nabit you mentioned. NAB has joined the

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Speaker 1: other three in terms of the eighteenth of February momentum

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Speaker 1: seems to be in favor of a rate cut. Money

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Speaker 1: markets are saying the same thing. In fact, that money

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Speaker 1: markets are saying a ninety five chance of a chance

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Speaker 1: of rate cut. But I just wonder, and I don't

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Speaker 1: know if this is right or not. But when I

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Speaker 1: saw the trim mean the other day of the underlying

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Speaker 1: inflation number, when you take out all those political moves

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Speaker 1: that have been made to make inflation look like it's

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Speaker 1: two point four percent, when in fact it's closer to

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Speaker 1: three point two percent, I think to myself, and given

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Speaker 1: what's going on in America, and given the fact that the

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Speaker 1: Federals of the United States has said no more rate

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Speaker 1: cuts at the moment, we're just going to hang out

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Speaker 1: and see what happens. Do you think that we might

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Speaker 1: be being a little bit premature relative to what there's

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Speaker 1: that big government is going to announce on the eighteenth.

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Speaker 1: Do you think there's a chance that she might say

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Speaker 1: just just wait, wait for the next set of numbers

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Speaker 1: to come through, which I don't think come through to

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Speaker 1: the end of middle of April or sometime late April,

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Speaker 1: so to reflect the March quarter, which by the way,

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Speaker 1: won't be great politically for the government, the current government.

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Speaker 1: Do you think that there's a chance that she might

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Speaker 1: say that, let's just have one more read on the

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Speaker 1: inflation number. Let's see if it's still staying at three

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Speaker 1: point two trimmean or maybe even less.

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Speaker 3: What do you think No, I think that's absolutely fair.

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Speaker 3: The labor market's still really strong. We have four percent unemployment.

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Speaker 1: And that sounds good, but it's also worry because.

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Speaker 3: Wages wages were still looking at sort of three and

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Speaker 3: a half four percent maxe in terms of wages growth.

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Speaker 3: That's very modest, that's not super inflationary. Your point about

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Speaker 3: tariffs is really interesting, right, So Trump did say that

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Speaker 3: he was a global tariff everybody gets hit by April.

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Speaker 3: If that happens, that is a very good reason for

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Speaker 3: the RBA to go well, that would be highly inflationary

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Speaker 3: and very problematic for growth, and we would warn to

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Speaker 3: perhaps reconsider our position if that does get announced. And

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Speaker 3: god knows what's going to happen, to be honest, given

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Speaker 3: the news flow, so absolutely I can see despite our

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Speaker 3: forecast changing, there are a lot of risks to that forecast,

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Speaker 3: and you can see why central banks are being extremely

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Speaker 3: cautious at the moment.

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Speaker 2: They've got good reason too.

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Speaker 1: I guess it's not for us to argue that we

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Speaker 1: can certainly we can discuss this. You and I can

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Speaker 1: just discuss this, because it is dangerous for people to

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Speaker 1: make an assumption and therefore make a decision off the

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Speaker 1: back of the assumption that it's overwhelmingly rate reduction, and

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Speaker 1: generally speaking, rate reductions don't happen one, they happen in

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Speaker 1: a series. I can't see. I can't see right now,

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Speaker 1: given the unemployment number, it's only four point one percent,

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Speaker 1: given the inflation, which is three minutes above three percent,

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Speaker 1: GDP is not great, but it's not it's not as

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Speaker 1: it's not zero with a minuses. It definitely doesn't minus.

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Speaker 1: We've done it. We're not in recession like New Zealand

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Speaker 1: went into another places in Europe went into and we're

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Speaker 1: not relative to the rest of world. Our interestrate's not

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Speaker 1: that high, our official cash rate's not that high relative

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Speaker 1: for the rest of the world. We didn't go up

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Speaker 1: as much as everybody else. I sort of can see

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Speaker 1: an argument that I can see a delay. I think

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Speaker 1: she probably would think that's The Reserve Bank Governor Michaell

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Speaker 1: Bullock would think, yes, I will probably want to do

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Speaker 1: a rate reduction this year because we're hitding the right direction.

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Speaker 1: But really, Ifebruary, given all the other stuff that's going,

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Speaker 1: it might be a bit difficult because last thing I

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Speaker 1: want to do is put the rates down and not

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Speaker 1: make another move after that, or alternatively, put the rates

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Speaker 1: down then put the rates back up. That's a really

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Speaker 1: bad outcome, and I don't I've got one set of

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Speaker 1: numbers here which they'd give. It gave to me the

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Speaker 1: end of January, But like, who knows what's going to

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Speaker 1: happen in Februy, March, April, and particularly if I put

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Speaker 1: the rates down, everyone might go nuts and start like

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Speaker 1: they did in the US and start spending up big

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Speaker 1: and feeling really confident. And this is an election year,

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Speaker 1: so who knows what changes I'll be sort of running

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Speaker 1: into in that regard. I don't know. I would have thought.

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Speaker 1: I think I think I won't go against the momentum.

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Speaker 1: Right all the big four banks have said a rare reduction.

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Speaker 1: I'm not going to go against it. But I actually think,

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Speaker 1: in my deep in my heart, I think I think

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Speaker 1: I should be saying to do my brain but that

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Speaker 1: she might wait. If I was her, I would wait.

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Speaker 3: I think that's a very fair assessment of where we're at.

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Speaker 3: I would add, also, we just had retail sales and

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Speaker 3: they were much stronger than expect.

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Speaker 1: And that's a worry too, well, not a worry, but

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Speaker 1: you know, I mean a.

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Speaker 3: Stugg that tells you the consumer is maybe not as

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Speaker 3: weak as we fear it. Yeah, and therefore people are

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Speaker 3: holding up and maybe you don't need to.

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Speaker 4: Rush into a cut, as you say.

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Speaker 3: The worst case scenario for the RBA is what happened

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Speaker 3: in the US, where they made a fifty basis point cup,

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Speaker 3: which is sort of the big one, right, you only

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Speaker 3: do fifty if you're really anxious about where things are

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Speaker 3: at prior to the election, and mortgage rates went the

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Speaker 3: other way. They actually, so in the US we have

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Speaker 3: thirty year mortgage rates. It's not the same as Australia,

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Speaker 3: so the price very differently in the market before they

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Speaker 3: get to the consumer. But effectively the market went, oh,

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Speaker 3: that was the wrong decision, and we think rates are

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Speaker 3: going higher.

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Speaker 4: From here, and so even though.

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Speaker 2: And we're right and we're absolutely correct.

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Speaker 3: Yeah, So that's the worst case scenario if you are

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Speaker 3: a central bank governor seeing a scenario where you've made

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Speaker 3: a move and the market goes you're wrong and prices

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Speaker 3: in the opposite direction. That's a terrible outcome. So there

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Speaker 3: may be some anxiety off the back of that year.

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Speaker 1: She's sort of damned if she doesn't Damn if she doesn't.

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Speaker 1: It's something stent because if she doesn't move, the government's

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Speaker 1: not going to be happy, and I'm sure there's going

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Speaker 1: to be a lot of discussion about it, and also the

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Speaker 1: money the markets are expecting it. By the way, markets

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Speaker 1: are pretty resilient. They will recover. It's not going to

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Speaker 1: cause any major drama, but you know, the government won't

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Speaker 1: be happy. So you damned if you don't reduce it.

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Speaker 1: If you do reduce it, by the way, and you

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Speaker 1: make the wrong call and it's you know, reduced by

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Speaker 1: twenty five base points, we'll get something happens overseas, or

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Speaker 1: inflation starts to kick back in, or the retail sales

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Speaker 1: keep going up, or unemployment starts going down, and then

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Speaker 1: we start to get some proper wage pressure on, you know,

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Speaker 1: on employers, and wages go up and retail prices go up,

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Speaker 1: and prices reflect that increase. That would be bad reputationally

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Speaker 1: for the Reserve Bank as well. And there's a new

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Speaker 1: a new board meet this meeting. The new Reserve Bank board,

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Speaker 1: do they meet? This is their first meeting. I think

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Speaker 1: the new one that was a point in December. Well,

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Speaker 1: you know, if I was on it, and I'm right,

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Speaker 1: But if I was on the Reserve on the new board,

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Speaker 1: I'll be well, I don't want to make the wrong decision,

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Speaker 1: as opposed to saying I want to make the right decision.

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Speaker 1: So maybe not making the wrong decisions making the right decision.

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Speaker 1: So if I'm personally involved, I would be saying I'd

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Speaker 1: rather on the side of conservatism and not make the

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Speaker 1: wrong decision. And therefore, as opposed to saying no, we

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Speaker 1: should would race down, because that's sort of like the

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Speaker 1: right decision. I think I'd love to see rates come

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Speaker 1: down for our borrows. I would love to see rates

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Speaker 1: come down for our borrows, your borrows, everyone's borrows. I'd

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Speaker 1: like to see Australians get some relief on their mortgage payments.

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Speaker 1: And by the way, we are talking about that one

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Speaker 1: third of the population or whatever, the number is slightly

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Speaker 1: less one third, and we are talking about the two

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Speaker 1: thirds within the one third. So who are doing it tough.

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Speaker 1: We're talking about the people who have got large mortgages

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Speaker 1: but maybe borrowed in twenty twenty two and they borrow

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Speaker 1: a three percent or yeah, three percent, let's say, or

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Speaker 1: two point nine nine or one point nine nine. Actually

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Speaker 1: it was two percent or one point nine to nine.

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Speaker 1: Those people are doing are really tough. I'd love to

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Speaker 1: see a rate reduction for them. I'd like to see

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Speaker 1: a series of re reductions for them. I don't know general,

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Speaker 1: I just I've got a feeling in the back of

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Speaker 1: my head, like I just my gut feeling is she

403
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Speaker 1: still hasn't seen enough information, enough data, and it is data.

404
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Speaker 1: Maybe you could explain her decisions are not political, her

405
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Speaker 1: decisions are based on data. Maybe you could explain that

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Speaker 1: a little bit.

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Speaker 4: Yeah.

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Speaker 3: Absolutely, So the RBA is an independent body, and it

409
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Speaker 3: was set up with an independent charter very deliberately to

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Speaker 3: ensure that they were not subject to political pressure. And

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Speaker 3: you can see globally how it plays out when there

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Speaker 3: is political pressure. Joon Powell and the US Trump saying

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Speaker 3: quite explicitly, I'm going to get rid of them. He's

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Speaker 3: gone if I get in Like, that's.

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Speaker 4: Not a great scenario to be and if you're.

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Speaker 1: It's bad for markets.

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Speaker 3: It's bad for everybody, right that uncertainty. Markets hate uncertainty.

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Speaker 3: So the IBA was set up with an independent charter

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Speaker 3: and an independent bored and they make their decisions based

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Speaker 3: on the data that's available. I mean, the primary objective

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Speaker 3: is managing inflation, which for those of us who've been

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Speaker 3: around for a long time sort of seems a bit

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Speaker 3: funny because CPI was just comfortably in the band for

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Speaker 3: close to two decades and didn't do anything very interesting. Australily,

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Speaker 3: with such an outlier, we only had quarterly inflation data.

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Speaker 3: So every other country had monthly inflation data. We had quarterly.

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Speaker 3: It didn't matter terribly much, you know, for all of

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Speaker 3: the twenty tens and the decade prior to that, because

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Speaker 3: inflation came in comfortably within that band between two and

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Speaker 3: three percent, which is what they're trying to target. We

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Speaker 3: did start getting monthly data, but the monthly basket, so

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Speaker 3: the basket that they to noomenally go and collect and

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Speaker 3: check the prices on, is mostly weighted to goods on

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Speaker 3: the monthly basis, so it doesn't pick up services very well,

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Speaker 3: so it doesn't necessarily pick up wage inflation very well.

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Speaker 2: So you've made the point.

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Speaker 3: That they'll wait till April because that's when they've got

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Speaker 3: the good data.

439
00:21:50,840 --> 00:21:57,400
Speaker 1: So given we're talking about that, is it all sort

440
00:21:57,400 --> 00:22:02,280
Speaker 1: of pretty much a nonsense then? Irrespective because they're calling

441
00:22:02,359 --> 00:22:06,159
Speaker 1: for rate reductions last year, you know, they were baking

442
00:22:06,560 --> 00:22:09,399
Speaker 1: a number of eight reductions during twenty twenty four and

443
00:22:09,440 --> 00:22:12,760
Speaker 1: it didn't happen a bit. Irrespective of that, the markets,

444
00:22:12,760 --> 00:22:16,000
Speaker 1: as you said, performed really well. The investment market I'm

445
00:22:16,000 --> 00:22:19,920
Speaker 1: talking about the markets to invest in. Is it sort

446
00:22:19,960 --> 00:22:22,400
Speaker 1: of irrelevant that conversation other than for those people who

447
00:22:22,400 --> 00:22:26,520
Speaker 1: sit in the mortgage button belt? Does it make much difference?

448
00:22:26,680 --> 00:22:29,760
Speaker 1: And should we just say whatever happens happens on that day.

449
00:22:30,640 --> 00:22:35,119
Speaker 1: But if you're an investor, follow your plan, follow your strategy.

450
00:22:35,880 --> 00:22:38,679
Speaker 3: I think that's absolutely key. The very last thing you

451
00:22:38,680 --> 00:22:42,159
Speaker 3: said is the most important thing. Yes, it matters a

452
00:22:42,240 --> 00:22:44,719
Speaker 3: lot at an individual level. And it's really easy when

453
00:22:44,760 --> 00:22:47,320
Speaker 3: you look at macroeconomic data to forget that it's people

454
00:22:47,600 --> 00:22:50,080
Speaker 3: and it's their personal experience. And frankly, if you have

455
00:22:50,119 --> 00:22:53,520
Speaker 3: a mortgage, the interest rate is critical to your daily

456
00:22:53,560 --> 00:22:55,679
Speaker 3: cash flows, like matters a lot and it can make

457
00:22:55,760 --> 00:22:59,560
Speaker 3: or break you, but you do want to have a

458
00:22:59,640 --> 00:23:02,920
Speaker 3: plan for if it rises to a much higher level

459
00:23:02,960 --> 00:23:05,120
Speaker 3: than you expected, which is what happened to people three

460
00:23:05,160 --> 00:23:08,160
Speaker 3: years ago, or if it falls and we saw people

461
00:23:08,280 --> 00:23:12,000
Speaker 3: take advantage if it falls a great deal, having some

462
00:23:12,119 --> 00:23:16,640
Speaker 3: flexibility and being really committed to your own personal finances

463
00:23:17,080 --> 00:23:19,560
Speaker 3: to making it work. It's sort of the only thing

464
00:23:19,600 --> 00:23:21,720
Speaker 3: you can do right. You don't have any control over it,

465
00:23:21,880 --> 00:23:23,920
Speaker 3: and you can do your best to predict. The best

466
00:23:24,000 --> 00:23:26,960
Speaker 3: is still pretty average at it. You know, you really

467
00:23:27,000 --> 00:23:29,359
Speaker 3: have to kind of keep a focus on what you

468
00:23:29,400 --> 00:23:30,840
Speaker 3: can control and work within that.

469
00:23:31,200 --> 00:23:37,320
Speaker 1: So and is that if you're say a mid level investor,

470
00:23:37,600 --> 00:23:39,280
Speaker 1: you know, maybe you've got a house, you got a mortgage,

471
00:23:39,320 --> 00:23:41,640
Speaker 1: you got some equity, you got some money in the bank,

472
00:23:41,640 --> 00:23:45,240
Speaker 1: you got your super which is independent of everything because

473
00:23:45,280 --> 00:23:49,800
Speaker 1: you can't touch it. Would you say to those individuals

474
00:23:49,800 --> 00:23:53,600
Speaker 1: who reason a good job, maybe family, you can might

475
00:23:53,600 --> 00:23:57,120
Speaker 1: be two hundred, you might have a one point two

476
00:23:57,200 --> 00:24:02,080
Speaker 1: children or whatever. The Australian statistic is, do they still

477
00:24:02,119 --> 00:24:05,760
Speaker 1: say those people third cash, third equities and third property

478
00:24:06,119 --> 00:24:07,680
Speaker 1: a third or third or third? Do they still talk

479
00:24:07,720 --> 00:24:11,520
Speaker 1: about that stuff or around that stuff, around that territory.

480
00:24:11,720 --> 00:24:12,639
Speaker 4: You know what's really interesting.

481
00:24:12,640 --> 00:24:14,639
Speaker 3: So I work with a lot of investors, and I

482
00:24:14,680 --> 00:24:18,600
Speaker 3: work with our private wealth investors, people with lots and

483
00:24:18,640 --> 00:24:20,120
Speaker 3: lots of money, and I work with people who are

484
00:24:20,160 --> 00:24:20,920
Speaker 3: just starting out.

485
00:24:21,160 --> 00:24:22,119
Speaker 2: Most people can never.

486
00:24:22,040 --> 00:24:23,720
Speaker 3: Afford to get a third to a third to a

487
00:24:23,720 --> 00:24:26,720
Speaker 3: third in Australia because property is so expensive, so they

488
00:24:26,800 --> 00:24:29,680
Speaker 3: tend to focus in one area or another. It's really

489
00:24:29,680 --> 00:24:35,040
Speaker 3: interesting how much people tend to concentrate in a field

490
00:24:35,040 --> 00:24:38,840
Speaker 3: where they feel they've got some expertise. And I find

491
00:24:38,840 --> 00:24:41,720
Speaker 3: that really interesting. So even though diversification is an amazing strategy,

492
00:24:41,960 --> 00:24:45,080
Speaker 3: and the idea is that you have your assets spread

493
00:24:45,080 --> 00:24:47,879
Speaker 3: across a range of different asset classes and that you

494
00:24:47,920 --> 00:24:50,359
Speaker 3: can then benefit if the property market is amazing and

495
00:24:50,400 --> 00:24:52,920
Speaker 3: shares a terrible at least you didn't have a terrible year.

496
00:24:53,520 --> 00:24:55,919
Speaker 3: And if vice versa, you're still doing okay and you

497
00:24:55,960 --> 00:24:59,880
Speaker 3: get that sort of blended return. Interestingly enough, in reality,

498
00:25:00,040 --> 00:25:02,720
Speaker 3: looks like people don't do that, partly because to buy

499
00:25:02,800 --> 00:25:05,000
Speaker 3: a single property is just such an enormous chunk of

500
00:25:05,000 --> 00:25:07,639
Speaker 3: people as well, If they're doing that, that's what they're doing.

501
00:25:09,160 --> 00:25:10,639
Speaker 1: This is my final question for you, Jem. If you

502
00:25:10,640 --> 00:25:14,320
Speaker 1: don't mind. Is the third or third or third sort

503
00:25:14,320 --> 00:25:21,360
Speaker 1: of mentality? Is that a mentality of not losing, whereas

504
00:25:22,960 --> 00:25:26,120
Speaker 1: I'm just going to go into in equities, and that's

505
00:25:26,119 --> 00:25:30,040
Speaker 1: more mentality. I want to win, so I'm backing these

506
00:25:30,240 --> 00:25:33,000
Speaker 1: investments to win, whereas if I'm doing a third or

507
00:25:33,000 --> 00:25:35,280
Speaker 1: third or third, I'm trying to make sort of you know,

508
00:25:35,320 --> 00:25:37,640
Speaker 1: balance things out. If something goes wrong, I've got something here.

509
00:25:37,680 --> 00:25:41,199
Speaker 1: If something goes good over here, I'm made sure I'm

510
00:25:41,240 --> 00:25:43,760
Speaker 1: in every I'm in. One of the categories is the

511
00:25:43,760 --> 00:25:49,840
Speaker 1: Australian mentality from your experience? Are we do we invest

512
00:25:51,000 --> 00:25:53,040
Speaker 1: so that we don't lose? Or do we invest to win?

513
00:25:53,240 --> 00:25:56,159
Speaker 1: Are we all all in? Or we just sail it

514
00:25:56,200 --> 00:25:58,119
Speaker 1: and let's just be nice and conservative.

515
00:25:59,280 --> 00:26:02,359
Speaker 2: So I think institutional level, you're super fund.

516
00:26:03,160 --> 00:26:06,479
Speaker 3: They're investing to get a little bit of everything and

517
00:26:06,520 --> 00:26:11,119
Speaker 3: to be diversified so they can give you a consistent return.

518
00:26:11,200 --> 00:26:13,359
Speaker 3: So I don't think you're trying not to lose, but

519
00:26:13,440 --> 00:26:17,200
Speaker 3: you're going for consistency. What I find in people's personal

520
00:26:17,240 --> 00:26:19,080
Speaker 3: lives is they're going for the one thing they feel

521
00:26:19,119 --> 00:26:22,639
Speaker 3: pretty confident about. They feel like they can manage or

522
00:26:22,680 --> 00:26:26,040
Speaker 3: control that, or they have more expertise in that than

523
00:26:26,080 --> 00:26:28,359
Speaker 3: they do in something else. So I think it's really

524
00:26:28,359 --> 00:26:31,240
Speaker 3: interesting when you look at what an institution does. You're

525
00:26:31,280 --> 00:26:33,080
Speaker 3: super fund, for example, where they're managing it for one

526
00:26:33,119 --> 00:26:37,520
Speaker 3: hundred thousand people or a million people. They're going for consistency.

527
00:26:37,920 --> 00:26:40,040
Speaker 3: You as an individual are probably going for what you

528
00:26:40,080 --> 00:26:40,680
Speaker 3: feel good at.

529
00:26:41,000 --> 00:26:45,360
Speaker 1: And is that when you say what you feel good at?

530
00:26:47,280 --> 00:26:49,919
Speaker 1: Is that what you learned as a kid? Not you,

531
00:26:50,080 --> 00:26:52,639
Speaker 1: but is it something our parents did, or is that

532
00:26:52,760 --> 00:26:55,679
Speaker 1: something we are a financial planner told us about, or

533
00:26:55,720 --> 00:26:57,359
Speaker 1: is that something we have a great deal of interest in.

534
00:26:57,400 --> 00:27:02,520
Speaker 1: We might love gold for some reason. What do you

535
00:27:02,520 --> 00:27:07,080
Speaker 1: thinks driving that personal or that private investor sort of

536
00:27:07,560 --> 00:27:09,760
Speaker 1: enthusiasm about a particular asset class.

537
00:27:10,640 --> 00:27:11,639
Speaker 2: That's such a good question.

538
00:27:11,920 --> 00:27:16,080
Speaker 3: I think it is that people gravitate to something that

539
00:27:16,200 --> 00:27:17,560
Speaker 3: is all personal interest to them.

540
00:27:17,640 --> 00:27:17,760
Speaker 1: Right.

541
00:27:17,800 --> 00:27:18,159
Speaker 2: Property.

542
00:27:18,160 --> 00:27:21,200
Speaker 3: People love property. They love it, They understand it. It's

543
00:27:21,240 --> 00:27:23,400
Speaker 3: tangible for them. Their dad might have been a builder,

544
00:27:23,640 --> 00:27:25,720
Speaker 3: you know, their parents may have renovated a house.

545
00:27:25,920 --> 00:27:27,760
Speaker 2: They really feel it quite strongly.

546
00:27:28,200 --> 00:27:31,120
Speaker 3: Shares love watching the market go up and down, Love

547
00:27:31,160 --> 00:27:33,159
Speaker 3: the idea of being able to pick a great company

548
00:27:33,200 --> 00:27:35,879
Speaker 3: over an average company, Love the idea of getting a

549
00:27:35,920 --> 00:27:38,679
Speaker 3: dividend in my bank account. People have a feel for

550
00:27:38,720 --> 00:27:41,000
Speaker 3: something and they love it. Crypto is not my area

551
00:27:41,000 --> 00:27:43,159
Speaker 3: of expertise at all, but for those who go for crypto,

552
00:27:43,240 --> 00:27:46,160
Speaker 3: they feel like they understand it and they're passionately interested

553
00:27:46,160 --> 00:27:49,600
Speaker 3: in it. Generally, I think most people are very reluctant

554
00:27:49,600 --> 00:27:51,720
Speaker 3: to put their money in something that they're not interested in.

555
00:27:52,119 --> 00:27:54,800
Speaker 1: That's really interesting. I mean, I'm apart from the fact

556
00:27:54,800 --> 00:27:57,840
Speaker 1: that we have all these technical experts out there and

557
00:27:58,040 --> 00:28:00,320
Speaker 1: financial planning people and they ask you to you know,

558
00:28:01,200 --> 00:28:03,520
Speaker 1: risk profile and everything. It's probably at the end of

559
00:28:03,520 --> 00:28:05,960
Speaker 1: the day, people are investing in stuff they're interested in.

560
00:28:06,400 --> 00:28:07,200
Speaker 4: Yeah, yeah, yeah.

561
00:28:07,320 --> 00:28:09,680
Speaker 3: And if you're going to a professional to get them

562
00:28:09,720 --> 00:28:11,639
Speaker 3: to do it for you, they're going to do a

563
00:28:11,680 --> 00:28:13,920
Speaker 3: whole lot of stuff that you might not understand and

564
00:28:13,960 --> 00:28:15,639
Speaker 3: may not have a particular passion for.

565
00:28:15,720 --> 00:28:17,680
Speaker 2: But that's what you're paying them for in the first place. Right.

566
00:28:18,720 --> 00:28:21,399
Speaker 1: They're more the institutional style investors do. They'll give you

567
00:28:21,480 --> 00:28:25,280
Speaker 1: balanced portfolios, et cetera. Well, Jemmy Dale, thanks very much again,

568
00:28:25,600 --> 00:28:28,240
Speaker 1: and it's good to see that NABS jumped on board

569
00:28:28,240 --> 00:28:30,560
Speaker 1: with all the other three big guys, the four big

570
00:28:30,560 --> 00:28:31,760
Speaker 1: guys and the four of you, I don't done where

571
00:28:31,760 --> 00:28:33,199
Speaker 1: macquary's I had to say this five of you. I

572
00:28:33,200 --> 00:28:36,439
Speaker 1: guess mccrary's probably saying a rate reduction as well. I

573
00:28:36,480 --> 00:28:39,600
Speaker 1: can't wait to see what albums are being Governor in

574
00:28:39,640 --> 00:28:43,000
Speaker 1: her press conference, says after the meeting, if it's up,

575
00:28:43,000 --> 00:28:45,400
Speaker 1: it's going to be on. Sorry. If the interest rates

576
00:28:45,400 --> 00:28:46,880
Speaker 1: go down, it's going to be honest, everyone's going to

577
00:28:46,920 --> 00:28:49,720
Speaker 1: be going crazy about that and expecting three or four more.

578
00:28:50,240 --> 00:28:51,840
Speaker 1: And if there's no move, it's going to be on

579
00:28:51,840 --> 00:28:53,320
Speaker 1: as well because they're going to say, why didn't you

580
00:28:53,320 --> 00:28:54,160
Speaker 1: give us rate reduction?

581
00:28:54,560 --> 00:28:56,520
Speaker 2: Thanks very much, Jemma, thank you for having me