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Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm

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Speaker 1: James Kirby, the World editor at The Australian. Welcome aboard everybody.

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Speaker 1: You know an issue that's increasing the front and center

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Speaker 1: at the Money Puzzle is this enormous hurdle, if you like,

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Speaker 1: for everyone of buying a home, and many people get

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Speaker 1: help from mom and dad, and many mom and dads

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Speaker 1: give help. But you know, in financial in our financial world,

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Speaker 1: in our investment world, it's like the elephant in the room,

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Speaker 1: and because no one has any numbers on it until recently.

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Speaker 1: Now Richard Shellback is the equities strategist at UBS, the

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Speaker 1: global investment bank based out of Sydney, and though he

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Speaker 1: spends most of his time looking at investment markets and

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Speaker 1: macroeconomics etc. As you would expect the investment strategists to

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Speaker 1: an investment bank to do, he did take the time

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Speaker 1: usefully to take a look at this issue and we

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Speaker 1: actually have some numbers on it. I thought it was

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Speaker 1: a great opportunity to have him on the show. I

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Speaker 1: wanted to have him on the show for a while.

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Speaker 1: So here we go. How are you, Richard?

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Speaker 2: I'm very well, James.

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Speaker 3: I hope you are also and hollowed all the listeners

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Speaker 3: out there.

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Speaker 1: Good to have you on. So this was an issue,

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Speaker 1: and I'm not saying that you've nailed it or that

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Speaker 1: you've done this sort of we now know everything we

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Speaker 1: ever need to know about this issue. But it was

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Speaker 1: a very interesting report that you guys did on this.

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Speaker 1: Could you, first of all, if you can just sort

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Speaker 1: of encapsulate what you know now that you didn't know

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Speaker 1: about this, what would we call it phenomena in Australian life?

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Speaker 3: Sure, well, what we did know and have for some

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Speaker 3: time is that this existed. It's real, it happens, So

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Speaker 3: that didn't surprise us when we surveyed people and asked

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Speaker 3: about it and got responses that indicated it existed.

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Speaker 2: That's not new.

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Speaker 3: But what we were able to get out of this

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Speaker 3: survey of a thousand people around Australia was that the

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Speaker 3: magnitude and the prevalence of it is possibly stronger than

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Speaker 3: many would have suspected. So, for example, we found that

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Speaker 3: a bit over twenty percent of people indicated that they

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Speaker 3: receive financial assistance from other family members over the last

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Speaker 3: twelve months, and similarly, about another twenty percent of people

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Speaker 3: acknowledged that they gave financial assistance to other people within

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Speaker 3: their family of the previous twelve months. So it essentially

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Speaker 3: means half of the sample that we surveyed a thousand

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Speaker 3: people are either givers or recipients of meaningful amounts of

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Speaker 3: financial assistance over the last twelve months.

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Speaker 1: They're involved basically in the bank of mom and Dad

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Speaker 1: as they call it. Yeah, they're involved. And what is

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Speaker 1: it the case that you discovered that mom and dad

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Speaker 1: when they were asked, tended to give a bigger number,

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Speaker 1: bigger dollar number than son or daughter of mum and

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Speaker 1: dad when they were asked how much they received.

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Speaker 2: Yeah, they did.

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Speaker 3: And you know, like there's a bit possibly behavioral finance

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Speaker 3: involved in that, but also just the way that family

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Speaker 3: structures work. So when we asked the people who transferred

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Speaker 3: money to a family member over the last twelve months,

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Speaker 3: the common sums given were between one hundred thousand and

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Speaker 3: two hundred thousand or above two hundred thousand.

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Speaker 1: That's an enormous figure to me. That's like who on

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Speaker 1: earth has that in cash? If they have super for instance,

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Speaker 1: where would they get two hundred thousand cash to hand over?

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Speaker 1: Because it has got to be cash it's got to

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Speaker 1: be liquid.

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Speaker 3: Well, they could have potentially sold down an asset in

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Speaker 3: time being an investment property, downsize their house and ended

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Speaker 3: up with a lot of cash through that. Alternatively, they

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Speaker 3: could have drawn down super in a quicker way. There

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Speaker 3: are various channels. But what we were getting in indication

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Speaker 3: from the givers of these flows was that we're talking

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Speaker 3: about numbers of one hundred and two hundred thousand or more.

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Speaker 3: When we ask the recipients, they sort of more indicated

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Speaker 3: that it was possibly, you know, one hundred thousand dollars,

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Speaker 3: eighty thousand dollars, fifty thousand dollars. Now, I think the

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Speaker 3: detachment between those two series of a product are two things. Firstly,

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Speaker 3: many of the givers they're people in their sixties, seventies, eighties,

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Speaker 3: They possibly have two or three children, so they're not that,

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Speaker 3: you know, four hundred thousand they're giving away is split

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Speaker 3: between three, and hence the recipients report a lower number.

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Speaker 1: It makes sense, so both parties may have been telling

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Speaker 1: the twoth Actually.

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Speaker 2: They may have been.

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Speaker 3: Now the other element is there no doubt is exaggeration

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Speaker 3: that goes on because sometimes the givers like to reflect

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Speaker 3: about their generosity in a more glowing way. And the

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Speaker 3: recipients are a little bit embarrassed story shame that they

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Speaker 3: may be thirty or forty years old and they're getting

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Speaker 3: financial help from their parents and they like to somewhat

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Speaker 3: downplay it.

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Speaker 1: I wonder, yes, you know, you know, I'm able to say, oh,

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Speaker 1: I never got any help from my parents buying a house,

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Speaker 1: you know. But the fact is that the house.

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Speaker 2: I did the.

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Speaker 1: Numbers because I covered your report in print, of course,

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Speaker 1: and I did some of my own numbers. And you see,

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Speaker 1: I bought a house in the middle of Melbourne and

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Speaker 1: it was exactly three and a half times my salary.

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Speaker 1: And my salary at the time was fifty grand a

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Speaker 1: year and that doesn't sound like much now, but it

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Speaker 1: wasn't bad at the time, and I was able to

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Speaker 1: buy a house that was slightly above the average cost.

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Speaker 1: Now here's the thing. I did this kind of reverse

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Speaker 1: exercise where I looked and said, the house is still there,

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Speaker 1: and I met out that if my adult children, and

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Speaker 1: they're just like they're just a university age, were to

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Speaker 1: try and buy that's it house. Now, I was able

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Speaker 1: to three and a half time salary, which is exactly

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Speaker 1: what it costs me, then they'd need three hundred and

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Speaker 1: seventy one thousands. Basically, the house at the time was

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Speaker 1: something like one hundred and seventy six and I was

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Speaker 1: way over it. It is somewhere close coming up on

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Speaker 1: two million. So I made out that someone on fifty

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Speaker 1: grand a year could buy that house when I was

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Speaker 1: buying a house, but someone now would have to be

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Speaker 1: on three hundred and seventy one thousand a year to

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Speaker 1: buy the same house. The point being that there was

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Speaker 1: no way that I was going to be on three

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Speaker 1: hundred and seventy one at thousand year at the age

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Speaker 1: of thirty. There are very few people who are, and consequently,

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Speaker 1: I don't think at all the issue should be the

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Speaker 1: embarrassment of manufacture, because it's such a ludicrous amount that

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Speaker 1: is needed when you put it up against other costs

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Speaker 1: in our society.

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Speaker 3: Sure, well, yeah, the affordability story has changed chalk and cheese,

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Speaker 3: But the uncomfortableness with the situation probably stems from the

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Speaker 3: fact that not all people are receiving these flows because

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Speaker 3: not everybody has wealthy parents who are asset owners now

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Speaker 3: gain fifty percent of the people that we surveyed indicate

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Speaker 3: that they have no participation in these flows. So it's

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Speaker 3: almost split down the line. Half the people out there

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Speaker 3: are transferring between generations and half are not interesting.

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Speaker 1: And have you any other data as to, for instance,

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Speaker 1: the methodology, is it casual, is it gifts? Is it loans?

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Speaker 1: Have you any sense of that?

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Speaker 2: What we do know is what people are using it for. Now.

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Speaker 3: The perception is that much, if not all, of it

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Speaker 3: is properly related. We found that actually not the case.

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Speaker 3: Now close to thirty percent of the people who receive

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Speaker 3: these financial aid from other family members are using it

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Speaker 3: for mortgage repayments.

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Speaker 2: And then about you know, twenty.

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Speaker 3: Five percent of people say they're using it as a

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Speaker 3: lump sum to buy a property. About another twenty percent

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Speaker 3: of people say that they're using it for collateral or

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Speaker 3: guidance guarantee for a loan. Okay, so you know, you

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Speaker 3: sort of lump all them together, and you've got maybe

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Speaker 3: fifty percent of people saying, you know, it's it's.

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Speaker 2: Property related, it's property related.

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Speaker 3: But we've got another fifty percent of people who say

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Speaker 3: that actually they're using that money for living expenses. Okay,

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Speaker 3: So they're using those cash transfers that they receive from

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Speaker 3: their parents or grandparents just to fund regular consumption.

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Speaker 2: So that could be you know, their.

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Speaker 3: Groceries and utilities and cars and insurance and everything.

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Speaker 1: That could be just going out on a Saturday night

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Speaker 1: living expenses. It's a very robbery phrase, right, Okay, So

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Speaker 1: I'm i to talk to you as an investment strategist rather,

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Speaker 1: you know, rather than another observer on all this. Do

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Speaker 1: you think this is structural? Is this here to stee?

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Speaker 1: And if it's here to steed, how do you think

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Speaker 1: it might evolved? Will it evolve perhaps in a more

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Speaker 1: formal manner than it has, because you've got to think

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Speaker 1: the number of gifts and ar engines that are going

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Speaker 1: to go off the rails and end up in the

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Speaker 1: courts will mushroom in the years to come.

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Speaker 3: All right, Well, it is structural and it's here to stay,

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Speaker 3: and it's a defining feature of the economy now and

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Speaker 3: will be for decades going forward. And there's a reason

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Speaker 3: why the generation of Australians who are currently now in

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Speaker 3: their late fifties, sixties, seventies, etc. They are the first

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Speaker 3: generation that have hit retirement where they basically timed it

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Speaker 3: to perfection because over their adult working lives i e.

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Speaker 3: The preceding three decades, we saw a bull market in equities,

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Speaker 3: a bullmarket and bonds, a ballmarket.

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Speaker 2: And residential property.

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Speaker 3: They also spent the bulk of their working age and

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Speaker 3: adult life within the superannuation system. Yes, he's they're the

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Speaker 3: first generation actually to hit or near retirement whereby they

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Speaker 3: were paying into this nest egg.

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Speaker 1: Because it kept going in the nineties, Really didn't it, Yes,

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Speaker 1: so you.

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Speaker 2: Early nineties and it kept growing and growing and growing.

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Speaker 3: And not only have they been paying super through their

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Speaker 3: working life, but it's been happening in a period where

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Speaker 3: equities were in a ball market and property was in

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Speaker 3: a ball market. So they've timed it to perfection and

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Speaker 3: they've ended up in their sort of golden years with

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Speaker 3: far more wealth than they probably ever would have imagined,

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Speaker 3: and also more wealth than they.

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Speaker 2: Will realistically be able to spend.

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Speaker 1: It's very interesting, you know. It just makes you think

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Speaker 1: at the end of the day of what this means

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Speaker 1: is you're standing at an auction on a Saturday morning

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Speaker 1: and there's forty people at the front gate bidding on

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Speaker 1: a house. You can safely assume that half of those

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Speaker 1: bidders had helped from their Mum and dad, and you

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Speaker 1: can also some of the other half didn't. And that

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Speaker 1: really changes the dynamics, isn't it of the property market

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Speaker 1: in particular, and the structures of our worth ladder.

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Speaker 2: That's right.

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Speaker 3: And look, the way I like to think about it

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Speaker 3: is assets have become wealth, whereas in decades past, income

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Speaker 3: was wealth. So think about twenty thirty forty years ago.

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Speaker 3: If you thought about somebody who probably had a higher

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Speaker 3: or better lifestyle financially than others, it was a product

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Speaker 3: of their income. They were in a higher paying job, right,

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Speaker 3: Whereas the way that things have evolved now is that

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Speaker 3: a lot of those people that appear to be in

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Speaker 3: quite a favorable financial position, you scratch behind the surface

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Speaker 3: and you go, oh gee, that's not you know, what's

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Speaker 3: their job. Their job's not necessarily a job that I

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Speaker 3: traditionally would have thought is super high income earning, but

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Speaker 3: they own assets. Those assets may have been assets they

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Speaker 3: accumulated themselves, it may have been through inheritance. Baker moment,

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Speaker 3: Dad xyzaid, but certainly it means that, you know, the

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Speaker 3: balance sheet has become far more meaningful to household now

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Speaker 3: and it's no longer just the income statement.

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Speaker 1: That's so interesting, and you know, folks are thinking just

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Speaker 1: bringing it back to that simple sort of analogy about

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Speaker 1: houses and salaries. I mentioned how to buy that house.

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Speaker 1: At the time that I bought my first house, you'd

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Speaker 1: need fifty grand a year to buy that house. Now

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Speaker 1: is your first home in the center of the metropolitan

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Speaker 1: city of Australia, you need a salary of three hundred

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Speaker 1: and seventy one thousand. To look at it another way,

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Speaker 1: you know, we were told that the huge and three

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Speaker 1: seventy one thousand is a huge salary. But if all

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Speaker 1: it can justify is a house that was as basically

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Speaker 1: what was once upon a time of workers cottage, as

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Speaker 1: Richard is saying, it's the work a cottage. The ownership

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Speaker 1: of that asset is so powerful now VISI v the salary,

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Speaker 1: so you get an extra twenty grand, thirty grand, forty

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Speaker 1: grand on your salary. Unfortunately it's not as powerful as

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Speaker 1: it used to be. Really interesting, we could talk about

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Speaker 1: it a lot more. I want to talk to you

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Speaker 1: about a few other things. Richard. Let's take a short break.

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Speaker 1: We'll be back in a moment. Hello and welcome back

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Speaker 1: to the Australians Money Puzzle Podcast. James Kirby here with

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Speaker 1: Richard Shellback, the equity strategist at UBS. Now, Richard, because

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Speaker 1: I I've got you, I think it'd be great to

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Speaker 1: talk briefly, if it could, about your view, your particular

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Speaker 1: view on investment markets. As we go into early twenty

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Speaker 1: twenty five, there is a perception consensus almost couple of

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Speaker 1: things this year that the US market will remain the

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Speaker 1: best share market, that the Australian share market will be

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Speaker 1: pretty ordinary this year, that the US shares will be

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Speaker 1: considerably a better place to have money. To some extent,

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Speaker 1: the AX is overvalued, mind you, so or is the US,

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Speaker 1: but some would say that we're even more overvalued than

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Speaker 1: they are. Where do you stand on that look?

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Speaker 3: US leadership within this equity cycle has been something that

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Speaker 3: we've observed for most of the last fifteen years, and

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Speaker 3: developments over the last few months with respect to economic

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Speaker 3: data in the US being consistently strong. The new US

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Speaker 3: president coming in that's likely to follow more favorable policies

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Speaker 3: with respect to regulation and tax that are business friendly

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Speaker 3: tells us that the stronger for longer cycle in the

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Speaker 3: US and its equity market remains intact. So we're still

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Speaker 3: positive US equities, we see them moving up this year.

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Speaker 3: At the same time, the rate at which they move

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Speaker 3: up won't be as strong from a price point of

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Speaker 3: view as last year, because they've already that was twenty

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Speaker 3: two percent last year. Yeah, they've already front loaded much

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Speaker 3: of this good news, and you're really still equities in

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Speaker 3: the US begin to move up quite meaningfully from about

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Speaker 3: September October when the polls started firming in favor of Trump,

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Speaker 3: and hence the better earnings outlook that we see for

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Speaker 3: US companies this year and the better growth outlook we

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Speaker 3: see for the US economy this year. Too much of

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Speaker 3: an extent is already in the share prices, and therefore

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Speaker 3: share prices may see more muted gains over twenty twenty five.

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Speaker 1: Okay, I'll just put the consensus to you, and I

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Speaker 1: wonder what you have to say about it. As I understand,

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Speaker 1: the consensus on US shares is that they will return

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Speaker 1: something in the order of air point five percent this year.

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Speaker 1: The consensus on Australian shares is that the price appreciation

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Speaker 1: would be virtually flat. So we'll just get to four

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Speaker 1: and a half that we get from dividends. So there's

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Speaker 1: the US been taste as good as the ax. Again,

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Speaker 1: what have you anything to say about that consensus view

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Speaker 1: which is out there just now.

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Speaker 3: Yeah, Look, the census view with respect to the U

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Speaker 3: S equity market moving up around eight percent, between eight

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Speaker 3: and ten percent, maps with our view for the U

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Speaker 3: S equity market. On the Australian equity market, I'm a

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Speaker 3: little bit more positive. I believe that you know, prices

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Speaker 3: can move about five percent higher, So that's the share

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Speaker 3: prices themselves, independent of the dividend payments, and that's largely

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Speaker 3: off the back of the fact that you know, the

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Speaker 3: Australian equity market was not quite as strong last year

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Speaker 3: versus what you saw in the US. And we've got

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Speaker 3: a earning story developing here, aided by interest retcuts from

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Speaker 3: the RBA over the coming twelve months, which will allow

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Speaker 3: for an earning's recovery across a range of sectors and

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Speaker 3: therefore the overall Australian equity market can give gains this

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Speaker 3: year that are comparable to the US.

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Speaker 1: Yeah, I was thinking that if you were right, if

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Speaker 1: it did five percent in the yeard was four just

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Speaker 1: nine on armor. This is the thing about our market,

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Speaker 1: isn't it that you always have that starter of the

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Speaker 1: dividend yield a four percent or so. Okay, just quickly,

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Speaker 1: I don't need you to tell me or anyone else

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Speaker 1: to tell me that the banks did exceptionally well last

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Speaker 1: year that they couldn't possibly do all that again this year.

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Speaker 1: I just wonder what areas of the market might carry

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Speaker 1: that earnings revival sector early on the ESX, if you

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Speaker 1: had any views on that.

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Speaker 3: Look the sector from an earning's point of view, where

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Speaker 3: we're particularly positive in Australia over the coming twelve months

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Speaker 3: are the industrial space. So when I think of some

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Speaker 3: of the key industrials, I'm skewing towards names that have

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Speaker 3: operations on the ground in the US. These are sometimes steel, building, material, energy,

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Speaker 3: infrastructure type businesses, and what they're able to capture is

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Speaker 3: the stronger top line growth environment the US economy is

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Speaker 3: going to experience through twenty twenty five, and that is,

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Speaker 3: as I mentioned, a product of the fact that the

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Speaker 3: US economy is charging and Trump's policies are very pro business,

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Speaker 3: pro profits. The additional thing that those Australian industrial companies

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Speaker 3: capture is the weakening US dollar.

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Speaker 2: Now.

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Speaker 3: Trump policies very much support a firming US dollar, and

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Speaker 3: that is what we have seen. But with that meaning

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Speaker 3: that the Ossie dollar ends up very low against the

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Speaker 3: US dollar, it means that when those US profits are

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Speaker 3: transferred back to Australia, they get that additional currency boost.

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Speaker 3: So that's the space where we see the most upside,

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Speaker 3: and it's somewhere where many of the stocks haven't necessarily

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Speaker 3: been star performers over the last five years in the

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Speaker 3: way that tech has.

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Speaker 1: Okay, you mentioned what did you say, building materials and

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Speaker 1: what was the other industry sort of steel.

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Speaker 3: Building material names, some steel names, some energy infrastructure stocks.

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Speaker 1: Okay, I didn't know there was any building materials stocks left.

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Speaker 1: I thought they were all taken over in recent times.

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Speaker 1: A lot of the big ones, weren't they.

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Speaker 3: Very big one called James Hardy and their operations are

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Speaker 3: heavily skewed to the US and it's got a cracking

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Speaker 3: business over there.

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Speaker 1: I see. Very good. Okay, terrific. Look, we take a

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Speaker 1: short break and you'll stay with us. I hope for

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Speaker 1: some questions which I have selected. Okay, back in a moment. Hello,

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Speaker 1: Welcome back to the Money Puzzle podcast. James Kirby here

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Speaker 1: with Richard Shellback. Of Uba secuity strategists. Now, a couple

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Speaker 1: of questions, Owen, I'm interested in the potential impact of

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Speaker 1: Trump's policies on the share market. What was the impact

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Speaker 1: of the tariffs in his last term, and what is

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Speaker 1: the likely outcome this time around? He also mentions a

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Speaker 1: few other issues, but I think immigration plans, et cetera.

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Speaker 1: But the outstanding one is tariff's Richard, they say he

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Speaker 1: did some tariffs all the last time, they didn't make

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Speaker 1: a big difference. Tell me if I'm wrong about that.

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Speaker 1: But that's my reading of it. What's your view about

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Speaker 1: the Trump tariff effort which is largely hypothetical still, isn't

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Speaker 1: that he hasn't actually imposed much just yet?

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Speaker 3: Right? So, firstly, when we look back to that twenty

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Speaker 3: sixteen to twenty twenty period and Trump tariffs in Trump one,

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Speaker 3: I think I'd summarize it as his bark being worse

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Speaker 3: than his bite. So yes, initially there was a lot

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Speaker 3: of retoric on it, but the ultimate follow through and

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Speaker 3: impact on economies and markets was far more muted. Now

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Speaker 3: this time, in all likelihood that will not be the case.

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Speaker 3: The tariffs that are being speculated and proposed are more

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Speaker 3: meaningful but Australia's in a far more favorable space than

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Speaker 3: almost anywhere else. Now, it doesn't necessarily mean that tariffs

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Speaker 3: will help Australia.

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Speaker 2: They hurt everyone.

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Speaker 1: Do you mean they're not going to impose part of

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Speaker 1: tariffs and US because we run a surplus with them,

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Speaker 1: Is that right?

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Speaker 3: Well, look, we don't know ultimately what will happen, but

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Speaker 3: what we do know are a few things, which is,

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Speaker 3: Australia we buy more than the US than we export

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Speaker 3: to it, so you know, they're not looking to pick

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Speaker 3: a fight with us. And also from a diplomatic point

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Speaker 3: of view, we've got a long standing, very close relationship

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Speaker 3: with the US. So we think we are so far

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Speaker 3: down the pecting order in terms of the type of

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Speaker 3: markets that they're likely to single out that it becomes

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Speaker 3: an immaterial issue.

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Speaker 1: Im material even including arn Ora and Cole in China.

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Speaker 3: Well that's that's where it all starts linking together, because indirectly,

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Speaker 3: if the US puts big tariffs on Europe and Asia,

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Speaker 3: then these customers in Europe and Asia have less ability

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Speaker 3: to pay for our goods because their economies slow down.

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Speaker 2: Now that's a risk and hence that's why.

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Speaker 3: I you know, began, you know this answering this question

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Speaker 3: by saying that tariffs are ultimately not good for anyone,

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Speaker 3: even if you don't get hit with them, because your

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Speaker 3: other customers and trading partners do get hit with them.

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Speaker 3: But on some of those sort of key exports iron ore,

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Speaker 3: for example, you know, the Chinese property construction steel cycle

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Speaker 3: is more a product of you know, the capacity of

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Speaker 3: the Chinese government to stimulate as opposed to having you know,

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Speaker 3: direct linkages into US tariffs.

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Speaker 1: Okay, right, okay, very interesting. Hopefully that's useful to you all,

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Speaker 1: and I expect it is. The main thing was saying

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Speaker 1: that Richard, was that this time they will do something

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Speaker 1: as opposed to the last time, there will there will

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Speaker 1: be some Australia's low on the pecking order, as you say,

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Speaker 1: or low on the target range, at the far end

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Speaker 1: of the target range, because why would they because they

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Speaker 1: can't have a problem with us since we buy more

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Speaker 1: from them, which most people don't realize. I expect it's unusual,

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Speaker 1: but it means it's unlikely to be directly impact, so

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Speaker 1: the impact would be indirect. Okay. Question from Malar M

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Speaker 1: A L A R. This is an entertaining question. I

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Speaker 1: love your show and the Scottish accent is very reassuring.

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Speaker 1: Thank you, Malar, except, of course I'm not Scottish, but

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Speaker 1: I do like the Scottish accent. Who wouldn't. I'm Irish. Okay.

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Speaker 1: On the back of Donald Trump's huge announcement of five

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Speaker 1: hundred billion in the AI space stargate, I'm curious about

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Speaker 1: and he mentions a stock called a d I S

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Speaker 1: y N, which is a small Australian company developing semiconductor

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Speaker 1: chipsmid from graphene. Do you think they're worth bank stocks in? Sorry, Malar,

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Speaker 1: I'm not going to answer that. And Richard Shellback is

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Speaker 1: not going to go in on one Chinese stock and

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Speaker 1: give a call on it either. I'm sure I don't

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Speaker 1: even have to ask him, but I will ask you this, Richard.

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Speaker 1: The scare about deep Seek, which came from you know,

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Speaker 1: even I was reading some extraordinary issues about how the

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Speaker 1: impact of this deep Seek threat that basically there was

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Speaker 1: a much cheaper startup in China that could threaten in VideA,

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Speaker 1: and in a single day in video lost in dollar terms,

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Speaker 1: the biggest selloff of a single stock in dollar terms

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Speaker 1: in the history of Wall Street. So we have to

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Speaker 1: say that the markets were terribly, if not worried, sensitive

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Speaker 1: and ready to sell off on the sense of a

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Speaker 1: threat to the AI boom and companies as diverse as

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Speaker 1: pure AI plays to like property trusts in Australia being

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Speaker 1: sold off because of Chinese startup which no one ever

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Speaker 1: heard of, announced that they could do things cheaper than

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Speaker 1: in Vidia, the world's biggest stock, which happens to be

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Speaker 1: an AI play. Is the AI boom more vulnerable than

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Speaker 1: we expect and could it if there's a major selloff

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Speaker 1: in the market, Is this what will trigger it?

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Speaker 2: AI?

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Speaker 1: I don't mean deepsea, but something in the AI space.

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Speaker 3: Look so far, it appears to be a situation that's

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Speaker 3: not reverberating through the tech space. What we saw earlier

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00:25:21,840 --> 00:25:24,639
Speaker 3: in the week when this news came out was some

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00:25:24,720 --> 00:25:29,919
Speaker 3: of the specific AI companies, both the chip manufacturers and

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00:25:29,960 --> 00:25:36,120
Speaker 3: the utilities data centers which provide the energy needed.

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00:25:35,880 --> 00:25:38,200
Speaker 2: By them, sold off heavily.

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Speaker 3: But other tech names you know, and I think of,

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00:25:43,359 --> 00:25:47,159
Speaker 3: you know, your standard tech names that you know, household

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00:25:47,280 --> 00:25:50,639
Speaker 3: have been around for you know, often ten or fifteen years,

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00:25:50,960 --> 00:25:52,919
Speaker 3: that have nothing to do with AI actually saw their

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00:25:52,920 --> 00:25:56,240
Speaker 3: share prices move up, so investors are not looking to

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00:25:56,320 --> 00:25:59,920
Speaker 3: flee tech. What they're doing is maintaining exposure to tech,

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00:26:00,080 --> 00:26:04,399
Speaker 3: but possibly lightening up on AI exposure and instead going

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Speaker 3: back to other forms of tech hardware, software.

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Speaker 1: Okey, And do you think that was a sensible approach.

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Speaker 2: Look, we're still positive on technology stocks.

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Speaker 3: You know, when we look at our market in Australia,

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00:26:19,720 --> 00:26:23,400
Speaker 3: our tech index is not AI exposed. We've got one

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00:26:23,480 --> 00:26:25,480
Speaker 3: or two that are in the data sped to space,

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00:26:25,520 --> 00:26:28,800
Speaker 3: but elsewhere they are totally detached from there, and they're

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00:26:28,840 --> 00:26:35,200
Speaker 3: generally software type businesses that offer services to other businesses

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00:26:35,880 --> 00:26:40,560
Speaker 3: to use their platforms, and hence they've seen strong earnings

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00:26:40,600 --> 00:26:43,480
Speaker 3: growth over the last three and five years.

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Speaker 2: Multiples are high, but our.

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Speaker 4: Expectation is their earnings growth can continue because they've got

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00:26:49,560 --> 00:26:54,000
Speaker 4: such great business models that continue to capture market share

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00:26:54,400 --> 00:26:58,800
Speaker 4: and still have fantastic profit margins, return on equities and

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00:26:58,920 --> 00:27:00,800
Speaker 4: motes set up around my businesses.

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Speaker 1: Well, I suppose in some way sort of packing up

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00:27:03,160 --> 00:27:07,040
Speaker 1: what you say. When Nvidia lost its title of the

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00:27:07,119 --> 00:27:10,120
Speaker 1: world's most biggest stock in the world after that set off,

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00:27:10,119 --> 00:27:11,960
Speaker 1: which was a hell of a sell off, seventeen percent

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00:27:12,000 --> 00:27:14,840
Speaker 1: in a day, well it was replaced by Apple, So

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00:27:14,920 --> 00:27:17,040
Speaker 1: that just kind of backs up what you're saying, really

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00:27:17,080 --> 00:27:21,639
Speaker 1: that the tech sector remains the dominant earnings kind of

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00:27:21,680 --> 00:27:25,680
Speaker 1: machine in world markets. Okay, very interesting, David says, thanks

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00:27:25,680 --> 00:27:29,000
Speaker 1: for the summer series. I really enjoyed it. The first

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00:27:29,040 --> 00:27:32,359
Speaker 1: commentator of Sorrow, sorry I've forgotten his name, was one

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00:27:32,400 --> 00:27:35,040
Speaker 1: of the very best I've heard anywhere. That, by the way,

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00:27:35,160 --> 00:27:38,680
Speaker 1: was Mark Jokum of Global XCTF, so would be delighted

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00:27:38,680 --> 00:27:41,280
Speaker 1: to hear that, David. Thank you. And David also says

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00:27:41,320 --> 00:27:43,880
Speaker 1: one thought about the Fire movement fire that is a

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00:27:43,880 --> 00:27:46,639
Speaker 1: financial independence hutar early, which we had a show on

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00:27:46,720 --> 00:27:50,080
Speaker 1: which got a lot of response, he says. David says,

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00:27:50,480 --> 00:27:54,600
Speaker 1: what is the point of financial independence? Retire early? You

484
00:27:54,680 --> 00:27:58,920
Speaker 1: live a miserable existence saving everything you can. Then when

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00:27:59,000 --> 00:28:02,040
Speaker 1: you retire, you have no friends to enjoy retirement with

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00:28:02,240 --> 00:28:05,440
Speaker 1: because they're still working. That's if you still have any

487
00:28:05,480 --> 00:28:08,600
Speaker 1: friends after saying no to anything that costs money while

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00:28:08,640 --> 00:28:13,880
Speaker 1: you worked. Oh I love that, Thank you, David. A

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00:28:13,880 --> 00:28:16,879
Speaker 1: contentious view which might perhaps be challenged by some of

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00:28:16,920 --> 00:28:20,440
Speaker 1: the faithful in the Fire movement. All Right, terrific, Thank

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00:28:20,440 --> 00:28:23,040
Speaker 1: you everyone for listening. Thank you very much, Richard shellback

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00:28:23,080 --> 00:28:26,800
Speaker 1: of UBS, both on your view on the markets and

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00:28:26,840 --> 00:28:29,800
Speaker 1: particularly on the Bank of Mom and Dad, which had

494
00:28:29,880 --> 00:28:34,160
Speaker 1: so much attention but so little numbers or serious analysis

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00:28:34,240 --> 00:28:36,439
Speaker 1: so far. I think you'd be well rewarded if you

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00:28:36,440 --> 00:28:38,800
Speaker 1: took a look at that again in the near future.

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Speaker 1: Thanks Richard, thank you, and thanks everyone. Keep those emails

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00:28:42,520 --> 00:28:45,880
Speaker 1: coming please. We get great value from them and I

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00:28:45,920 --> 00:28:49,400
Speaker 1: get to answer. I think I get to answer every

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00:28:49,400 --> 00:28:51,880
Speaker 1: single one of them. I hope I have. There are

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00:28:52,040 --> 00:28:55,959
Speaker 1: very few. If they're unanswered, they were in some way impossible.

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00:28:56,000 --> 00:28:58,360
Speaker 1: The Money Puzzle at the Australian dot com dotu for

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00:28:58,560 --> 00:29:03,000
Speaker 1: that correspondence show was produced by Leah Summer Glue Talk

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00:29:03,080 --> 00:29:03,400
Speaker 1: you soon.