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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 Weather editor at The Australian. Welcome aboard, everybody.

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Speaker 1: I expect you're more than aware just how good share

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Speaker 1: market investing is right now. Our share market, folks. Even

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Speaker 1: the ASX is up eleven percent in over the last

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Speaker 1: twelve months. Dividends to that there's fifteen percent in the bag.

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Speaker 1: The US market is steaming along. It's up twenty four

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Speaker 1: percent in the last twelve months. And more than that,

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Speaker 1: there are so many signs that this market has got

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Speaker 1: the ideal conditions to keep going. On a broad basis,

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Speaker 1: there's always things you can worry about, and you can

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Speaker 1: always worry. I can tell you about a slump or

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Speaker 1: a surprise setback or a correction in the September or

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Speaker 1: October period when the Americans get wobbly every year as

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Speaker 1: they face Christmas. Winter is coming. You've seen Game of Thrones,

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Speaker 1: you know what it means, same thing in the share market. Now,

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Speaker 1: on top of all that, we've got Donald Trump, who

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Speaker 1: you know. I think we might as well take it

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Speaker 1: as read this morning that the markets at least think

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Speaker 1: he's going to be re elected, and there's like a

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Speaker 1: sixty to sixty seven percent probability in the money markets

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Speaker 1: right now, but that he will be re elected. That

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Speaker 1: means a Republican administration, that means pro business administration, and

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Speaker 1: that means a big lift in stocks. Traditionally, you know

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Speaker 1: Trump first time round, from the day he was elected

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Speaker 1: to when COVID arrived the US market went up sixty

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Speaker 1: percent or so, people will be thinking that there's a

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Speaker 1: good chance that will happen again. So I want to

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Speaker 1: talk about chairs today, and just before I start, by

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Speaker 1: the way, one or two pieces of correspondence about when

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Speaker 1: I talk about chairs, and do I have a conflict

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Speaker 1: of interest, et cetera. I mean I have an SMSF

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Speaker 1: and of course I want to invest. I have all

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Speaker 1: the things that you have in terms of shares, just

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Speaker 1: to clear the air in terms of ordinary shares. This

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Speaker 1: isn't ETF re funds in my portfolio I have. I

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Speaker 1: try to keep it to ten always. Just now, these

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Speaker 1: are the ten shares I have. I am not going

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Speaker 1: to give you wastings aroundthing, but here they are. Are

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Speaker 1: you ready? Come on with bank CSL Hansen technology a

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Speaker 1: quarry bank. Quarry technology NAB, Next, DC, Cube, Ramsey and Reo.

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Speaker 1: Some of them I've had for twenty years. Some of

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Speaker 1: them I've had four a year. My guest today is

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Speaker 1: a regular on the show Friend of the Show. It's

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Speaker 1: Jemma Dale, head of Investor Behavior and SMSF at NAB Trade.

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Speaker 1: Oh are you, Gemma?

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Speaker 2: I'm well, thank you? How are you?

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Speaker 1: What do you think of my portfolio?

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Speaker 2: That's the million dollar question, isn't it?

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Speaker 1: Instinctive response?

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Speaker 2: Probably my first question would be what else do you have?

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Speaker 1: I'm not telling you what else I have? Oh, I

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Speaker 1: have ECF, since I have some active fun and I

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Speaker 1: have gold, and I feel I like to think my

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Speaker 1: SMSF is very well diversified. I mean, I'm obsessed with

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Speaker 1: deir feresssification, and I do think it's very well diversified,

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Speaker 1: though I find the share component constantly gets bigger than

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Speaker 1: I meant it to for the simple reason shares have

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Speaker 1: been so good for so long.

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Speaker 2: Yeah, that's quite interesting. I mean the most interesting thing

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Speaker 2: about that is we focus on the individual stocks because

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Speaker 2: you can see their performance. It's very hard to get

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Speaker 2: excited about the performance of your ETFs, to be honest,

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Speaker 2: and some of the very well diversified components of your portfolio,

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Speaker 2: even though they're going to be thousands of securities by

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Speaker 2: the time you add them all, lot would be my guess,

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Speaker 2: and so you've probably got exposure to thousands of things,

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Speaker 2: and yet you look at the ten that you can

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Speaker 2: definitely put a number on and worry about those. And

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Speaker 2: we're all the same. We all do it very You've

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Speaker 2: got a lot of banks in there, but you're doing

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Speaker 2: very well out of them, so certainly can't complain at

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Speaker 2: the moment.

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Speaker 1: There's no dogs in there. There's one dog. Let me

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Speaker 1: call it out loud and clear. I wish I didn't

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Speaker 1: have it. I'm stuck with it, and I should have

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Speaker 1: the guts to sell it. But then every time I

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Speaker 1: look at it, I say, maybe it's coming round, which

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Speaker 1: is Ramsey Healthcare. And there's one absolute ripper in there,

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Speaker 1: which is next TOC, followed closely, I might add, by

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Speaker 1: mcquari Technology, and both those docks are AI plays in

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Speaker 1: my mind, though I have next TC for years, but

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Speaker 1: to Mcquarie Technology relatively recently. Anyway, I'm just putting that

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Speaker 1: out there, folks, just to clear the air, and because

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Speaker 1: we're going to talk about shares today. Exclusively because I

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Speaker 1: think it's a terrific market. Jem At tell me, first

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Speaker 1: of all, because you see all the data and a

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Speaker 1: trade and you see what's coming in and what people

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Speaker 1: are doing. Do you detect any change in the flavor

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Speaker 1: of shared trading, the volume of shared trading, the demographics

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Speaker 1: of shared trading in this last few months as people

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Speaker 1: are starting to realize, gee, the market's damn good for

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Speaker 1: quite some time.

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Speaker 2: Yeah, it's so interesting. The last few years have been fascinating.

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Speaker 2: I mean, we've talked about this before, but the well

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Speaker 2: over half of our investor base has joined us since COVID,

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Speaker 2: so the huge influx of new investors and new accounts

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Speaker 2: for us. But new investors came through in that COVID

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Speaker 2: period when the market fell off a cliff, so that

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Speaker 2: thirty percent in three weeks dip on the ax and

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Speaker 2: saw very similar responses from share markets around the world.

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Speaker 2: Was when the vast majority of our new accounts were opened,

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Speaker 2: and in the subsequent sort of twelve months, so people

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Speaker 2: came to investing during that period and had this incredible

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Speaker 2: opportunity to buy shares at a very discounted price, and

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Speaker 2: then they rocketed back very quickly. So many of our

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Speaker 2: investors have had a really interesting first experience. If you

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Speaker 2: started training for the first time in nineteen ninety nine,

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Speaker 2: you had a very different experience that somebody started in

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Speaker 2: two thousand and A lot of people you know who

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Speaker 2: have been around for a long time felt that was

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Speaker 2: a normalist that period, but it was your first experience,

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Speaker 2: it wasn't right. That's what share investing is for you now,

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Speaker 2: and so those people are familiar with a pretty strong market.

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Speaker 2: That's half of our investors. Those who've been around a

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Speaker 2: long time tend to have much bigger portfolios. I've had

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Speaker 2: a lot more time to build up their wealth. You

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Speaker 2: mentioned you've got CBA and McCrory and CSL. They're the

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Speaker 2: kind of shares that have made people a lot of

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Speaker 2: money over the long term. You know, if you're buying

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Speaker 2: those in the nineties, and a lot of our investors were,

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Speaker 2: then you have done extremely well. Those people are moving

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Speaker 2: money around but feeling reluctant to throw a lot of

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Speaker 2: money at this market, which I find really interesting. So

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Speaker 2: our cash book is very high at the moment. Newer

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Speaker 2: and younger investors are mostly buying ETFs and just buying

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Speaker 2: them consistently as a wealth creation strategy. That's a very

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Speaker 2: common strategy now more and more people are doing it,

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Speaker 2: and they're pretty agnostic as to mine market movements. They

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Speaker 2: will buy more on a down day, which I find fascinating.

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Speaker 2: So you think they're agnostic, but they're very aware of

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Speaker 2: what is going on in the market, and they will

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Speaker 2: absolutely buy more if the market gets hammered in the

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Speaker 2: US overnight and futures are down, they will throw more

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Speaker 2: into an ETF that day than they would if futures

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Speaker 2: were really positive. But it's a long term strategy for them,

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Speaker 2: and they tend to do it consistently. And then our

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Speaker 2: more mature investors are a little bit anxious, right They're

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Speaker 2: seeing CBA above one hundred and thirty dollars, They're seeing

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Speaker 2: prices that feel quite stretched in some areas of their portfolios.

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Speaker 2: And because those portfolios have been around a long time

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Speaker 2: and tend to hold things they're very familiar with and

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Speaker 2: know very well. Yeah, they're a little bit of nov

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Speaker 2: I would guess, you know, they're not super keen to

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Speaker 2: chase these prices.

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Speaker 1: Right. Okay, let's take it on board. One of the

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Speaker 1: things we were saying about, and I imagine our listeners

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Speaker 1: are something broadly similar. Right, So they have the ETF

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Speaker 1: so core and satellite, they have the maybe they only

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Speaker 1: have ETFs, Maybe they have some ETFs, like I have

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Speaker 1: to achieve certain things right to access the most of

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Speaker 1: the offshore. As you notice, all those stocks are Australian

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Speaker 1: an offshore. I'm using atfs and funds mostly. But when

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Speaker 1: you look at the composition of the market, so people

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Speaker 1: will say the thing, we're obsessed. Why do we talk

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Speaker 1: about individual shares when ETFs are so important or they

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Speaker 1: may be for our listeners because they're the swing factor. Right,

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Speaker 1: that's the difference between having an ordinary year the same

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Speaker 1: as everyone else, winning big or losing. And that's I

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Speaker 1: think that that will never I don't know, but I

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Speaker 1: don't think that will ever change. That will never go.

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Speaker 1: The attraction of shares and the particular attraction of shares

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Speaker 1: that they can do so well. And ETFs are fine,

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Speaker 1: they're great, but you will never ever do any better

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Speaker 1: than the norm.

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Speaker 2: With an ETF. Yeah. Absolutely, really think to me, as

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Speaker 2: I said, there is this very strong preference for ETFs,

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Speaker 2: particularly in younger investors. And funnily enough, you talk about

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Speaker 2: using ETFs for offshore. But our investors tend to start

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Speaker 2: with the AX. And when I say tend to, I

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Speaker 2: mean there is a dramatic difference between the number of

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Speaker 2: investors and the amounts of money they put to the

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Speaker 2: ASX two hundred. It is the first investment versus what

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Speaker 2: is a long way down the list, which is the

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Speaker 2: S and P five hundred. As this second option, it

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Speaker 2: is a long way behind. So people start buying the

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Speaker 2: ASEX first and then they diversified beyond that, which I

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Speaker 2: find fascinating. And yeah, the appeal is really obvious, which

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Speaker 2: for so many young people and so many people new

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Speaker 2: to market, I don't know what to buy. That's always

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Speaker 2: the biggest question. I don't know what to buy. ETF

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Speaker 2: just takes that problem away for you. Right, just buy

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Speaker 2: the whole market. You'll be fine. And as you say,

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Speaker 2: then you don't have any opportunity to outperform. You're going

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Speaker 2: to get the market minus the tiny feet. But you're

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Speaker 2: gonna get market. That's great. It's better than enough, right,

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Speaker 2: it's very good based on how performance has been over

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Speaker 2: the last twelve months. There are many others who are

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Speaker 2: looking for something much better than that, and they feel

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Speaker 2: very strongly about making their own choices. Funnily enough, they

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Speaker 2: tend to be more experienced investors. They're not young people,

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Speaker 2: you know, willing to bet their shirts, right, it's quite

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Speaker 2: the opposite. It's people who are very experienced. They know

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Speaker 2: what they're doing, and they're absolutely going to try to

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Speaker 2: get a better return than the market or and it

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Speaker 2: was something I didn't ask you about your portfolio. They've

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Speaker 2: got a very specific need. So a lot of our

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Speaker 2: older investors invest for yields, and they are not looking

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Speaker 2: for high growth. That's not what they're after. They're not

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Speaker 2: going to take a punt on ZIP. They just want

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Speaker 2: yield and that's what they're going to invest for.

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Speaker 1: Yeah, very true. The irony is that there would have

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Speaker 1: been twice literally haven't met twice as much money if

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Speaker 1: they had bought a US ETF rather the S and

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Speaker 1: P if I found it, rather than the ear six

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Speaker 1: year after year.

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Speaker 2: Certainly, the last twenty years have been pretty astonishing for

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Speaker 2: US equities.

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Speaker 1: Twenty years was due Jemma.

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Speaker 2: That will do it for the vast majority of people.

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Speaker 2: For most of us, that is long enough as a timeframe.

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Speaker 2: So yeah, absolutely, the US has been astonishingly strong in

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Speaker 2: terms of its performance, and that has been the rise

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Speaker 2: of tech. Right. It's very clear what drove that performance,

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Speaker 2: and it's very clear when you look at the composition

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Speaker 2: of the S and P five hundred, now what has

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Speaker 2: driven that performance. There's a lot of people making comparisons

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Speaker 2: to sort of the ninety nine two thousand era right

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Speaker 2: now based on the hype around AI, but we haven't

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Speaker 2: seen the pullback. We thought we saw it in twenty two,

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Speaker 2: and it just came around again, right.

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Speaker 1: Comes around again. The other thing is, yes, I know,

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Speaker 1: nineteen ninety nine, sure you know, but maybe it's not

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Speaker 1: nineteen ninety nine. Maybe it's nineteen ninety five. Yeah, and

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Speaker 1: there's four fabulous years to go. I mean, I don't know,

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Speaker 1: and I'm not going to Both of us have experienced

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Speaker 1: enough that I'm not silly enough to ask you, do

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Speaker 1: you know where the market's going? And I'm not going

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Speaker 1: to puntificate as to where it's going. But a couple

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Speaker 1: of things I do want to ask you when we

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Speaker 1: sit there now as investors on the share market, so

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Speaker 1: we look at that, we look at the return on

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Speaker 1: the share market, and it's well above average, okay above

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Speaker 1: average on historical figures. It's above average on recent figures.

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Speaker 1: There is four percent inflation of course, okay, so really

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Speaker 1: you know, you got to put that in If you say,

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Speaker 1: oh my my shares did ten percent last year, it's great,

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Speaker 1: Yeah they did, but it's four percent inflation, so you

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Speaker 1: got to put that in mind. When there was no inflation,

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Speaker 1: six percent would have been the same. That's one thing.

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Speaker 1: And we have the dividends. The big dilemma I think

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Speaker 1: for Australian investors is you mentioned about so many people

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Speaker 1: who want yield and the older very broadly, the older

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Speaker 1: you are, the more you want yield. It's as simple

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Speaker 1: as that. And by the time you retire, it's all

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Speaker 1: you want, right. I talked to someone the other day,

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Speaker 1: very very well known financial journalist, and they are for

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Speaker 1: the first time in their life, they're looking for advice

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Speaker 1: because they're so confident in their own ability that they

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Speaker 1: never thought of asking anybody as for advice before. But

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Speaker 1: I said, well, what do you want? You know, what

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Speaker 1: do you want? And this person simply said, I just

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Speaker 1: want income. We hit his wife and just want income.

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Speaker 1: And that's what happens when you get to a certain point,

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Speaker 1: and that's fair enough, and you maybe do you think

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Speaker 1: you lose your nerve as you get older as well

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Speaker 1: in terms of investing.

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Speaker 2: I don't think it's not necessarily you just don't need

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Speaker 2: to take the risk anymore. You know, a young person

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Speaker 2: is trying to build from nothing. You know, it's unless

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Speaker 2: you've inherited some money or you happen to cross a

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Speaker 2: windfall or something. You are taking any excess cashflow you've

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Speaker 2: got from your job and trying to build something aggressively.

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Speaker 2: You've got to build it fast, you know. When you're young,

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Speaker 2: you've got to build it fast because you're coming off

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Speaker 2: with such a low base, Whereas when you're older, it's

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Speaker 2: about the preservation of what you have and you're far

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Speaker 2: more to lose. And we know about sequencing risks, so

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Speaker 2: for anyone who's not familiar with the concept, you understand

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Speaker 2: it intuitively, but it's really there's a lot of academic

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Speaker 2: work around it now. Sequencing risk is effectively when you

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Speaker 2: are drawing down on your money. So say you have

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Speaker 2: a million dollars to provide for your retirement and you're

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Speaker 2: taking out fifty thousand dollars a year. If you suffer

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Speaker 2: a massive downturn in the market in year one, and

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Speaker 2: that million dollars turns into six hundred thousand dollars, which

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Speaker 2: sounds dramatic, But this happened to a colleague of mine

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Speaker 2: in two thousand and eight, two thousand and nine, he

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Speaker 2: was back at work.

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Speaker 1: It happened to everyone in two thousand and eight too.

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Speaker 1: Then the market felt fifty percent of us never forget that.

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Speaker 2: Yeah, And he had a diversified portfolio, he'd taken a

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Speaker 2: lot of care, he worked in finance and markets, he

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Speaker 2: knew what he was doing, and he was back at

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Speaker 2: work twelve months after retirement to rebuild. Because when you're

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Speaker 2: pulling down fifty thousand dollars a year out of six

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Speaker 2: hundred thousand, it runs out very quickly compared to pulling

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Speaker 2: it out of a million that might be growing. So

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Speaker 2: that sequencing risk, if you suffer an adverse event right

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Speaker 2: at the beginning of your retirement, is very damaging to

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Speaker 2: the long term outcome of your portfolio and your wealth frankly,

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Speaker 2: and your lifestyle. So people, it makes sense to be

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Speaker 2: anxious about losing a lot early in retirement in particular,

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Speaker 2: And as you get older, does it matter so much?

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Speaker 2: You're okay? The vast majority of older people I speak

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Speaker 2: to and retired people they don't want to draw down

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Speaker 2: on the capital at all, and retirement they want to

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Speaker 2: preserve the whole lot and just live off the income.

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Speaker 2: And that's where that desire for yield comes from. It's

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Speaker 2: not a really chunky yield. And I don't want to

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Speaker 2: think about drawing down on the capital. That's too much

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Speaker 2: risk for me.

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Speaker 1: Yeah, yeah, And that is I suppose in a way,

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Speaker 1: it's the optimal it's the optimal situation. I think we

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Speaker 1: should be careful. And we had actually awn on the

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Speaker 1: show Very Interesting a few weeks ago about that whole

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Speaker 1: issue about how you know, I mean, yes, you'd rather

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Speaker 1: not draw down on capital, but similarly, you're not going

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Speaker 1: to live for a thousand years, okay, there is a

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Speaker 1: point of which you could safely actuarially make an esspence

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Speaker 1: say okay, and as soon I live to one hundred

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Speaker 1: and ten, you know, and then you can walk backwards

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Speaker 1: from there. That would be I would imagine safe enough

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Speaker 1: for most people even today with the longevity risk that

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Speaker 1: we have. But on the market and where it's going.

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Speaker 1: So we crossed the eight thousand mark on the ASX

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Speaker 1: two hundred the other day, big number very important milestone,

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Speaker 1: important to show that we are in blue sky, that

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Speaker 1: the ASEX is really starting to move, and let's just

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Speaker 1: put the US to one side just for the moment

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Speaker 1: at this part of the show and talk about the ASEX.

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Speaker 1: One other very big change occurred just around the same

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Speaker 1: time that was happening, and that was that that our

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Speaker 1: market is, as everyone knows very much based on two things,

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Speaker 1: banks and minors and BHP had been the biggest stock

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Speaker 1: in the market for years, and CBA on Monday morning

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Speaker 1: this week, because I was going to do a story

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Speaker 1: gem about how it was going to overtake BHP, and

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Speaker 1: as I was doing it on Monday morning, I had

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Speaker 1: it actually written, and I had it written in this

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Speaker 1: way that said it's going to overtake. I had a

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Speaker 1: about lunchtime, I looked again and the numbers had changed

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Speaker 1: around and it had overtaken. So a bit of luck

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Speaker 1: that I was able to say on the day, hey,

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Speaker 1: CBA is after becoming the biggest stock. It happened before

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Speaker 1: my eyes. But and I think this time around it

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Speaker 1: is going to stay there. And I think it's stayed

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Speaker 1: there before about four years ago, it was there for

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Speaker 1: a year. And here we are again. What does that mean?

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Speaker 1: Do you think that our biggest stock is a bank

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Speaker 1: now and the banks are under the pinning our ASX now,

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Speaker 1: not the miners.

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Speaker 2: Yeah, it's an interesting one, not least because I work

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Speaker 2: for a bank.

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Speaker 1: Yeah, but we talk about bank stocks as a generic.

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Speaker 2: I'll talk about them generally, but it's worth calling out CBA.

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Speaker 2: CBA is broadly understood to be the most expensive bank

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Speaker 2: in the world based on share pricense valuation. That's an

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Speaker 2: extraordinary thing. And it is a very high quality bank.

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Speaker 2: You know, it doesn't carry the risk of US banks

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Speaker 2: and a lot of the other alternatives out there in

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Speaker 2: the world. It is very exposed to the Australian consumer

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Speaker 2: through home loans. It's a very strong franchise and it

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Speaker 2: continues to maintain this massive premium over the other Australian

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Speaker 2: banks and over other global banks because over literally decades,

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Speaker 2: it's continued to maintain its margins to an extent, you know,

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Speaker 2: better than others, let's put it that way. It continues

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Speaker 2: to have this very strong footprint and have the largest

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Speaker 2: home loan share in the Australian market. The Australian homelan

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Speaker 2: market continues to hold up despite constant predictions of fallen

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Speaker 2: house prices. All of the things that are supposed to

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Speaker 2: undermine the share price of CBA and the Australian banks

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Speaker 2: just don't come to fruition. It doesn't mean they never will.

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Speaker 2: It just means that it's called the win. Don't make

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Speaker 2: a trade for a reason shorting the Australian banks. It

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Speaker 2: has cost a lot of people a lot of money.

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Speaker 2: We keep thinking that can't continue to grow at this

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Speaker 2: right in terms of the share prices.

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Speaker 1: And yet and it's really worth thinking about the folks.

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Speaker 1: And it's not just because Jemma works for a bank.

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Speaker 1: And by the way, I mean, I would think a

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Speaker 1: lot more of her. There's no way that she would

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Speaker 1: simply talk her book or anything like that. Because I've

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Speaker 1: had her on the show lots of time.

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Speaker 2: She didn't work for bank.

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Speaker 1: I was like, oh no, no, but she doesn't talk

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Speaker 1: her book. And anyway, here's the facts. It's very hard

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Speaker 1: to find a buy notes. It's almost impossible to find

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Speaker 1: a single stoff broker in the Australian stock market that

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Speaker 1: would tell you to buy banks right now. There's there,

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Speaker 1: there's holds and underweights and everything across the board. On

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Speaker 1: all the banks and on CBA. And here's the thing.

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Speaker 1: All those brokers are wrong, and they're wrong all year,

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Speaker 1: and they're wrong month after a month. This is August.

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Speaker 1: They're saying it since late last year. That doesn't mean,

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Speaker 1: as Jemma says, they will be wrong in the future,

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Speaker 1: But I tell you what, right now, they're wrong. So

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Speaker 1: the point I'm making is that we have the banks

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Speaker 1: now dominant on our market, and then we have the miners,

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Speaker 1: and we have the usual suspects CSL and some of

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Speaker 1: the biggest stocks. Macquarie Bank two also never forget in

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Speaker 1: there very much, so now in the top ten, even

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Speaker 1: though it's an investment bank and not typical and would

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Speaker 1: have a lot more risk and a different nature of

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Speaker 1: risk than what we might call high street banks, the

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Speaker 1: big four that we all know. So, Jemy, what are

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Speaker 1: your troops on n AB trade? What else are people buying?

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Speaker 1: Because you know, one of the things that I always

399
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Speaker 1: think about one of the great quotes about stock market

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Speaker 1: investing is that it's you can look at a stock

401
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Speaker 1: and you can have your opinion on us, and you

402
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Speaker 1: could be very good mathematically. You could have it all

403
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Speaker 1: worked out, and you might think that it's going to

404
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Speaker 1: go up, and that's all fine, But actually what matters

405
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Speaker 1: is whether other people think it's going to go up.

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Speaker 1: That's what matters. Right. So I'm digging here and I'm

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Speaker 1: trying to find out from you, what are your database

408
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Speaker 1: are millions of investors? What are they looking at now?

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Speaker 1: What are they like?

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Speaker 2: It's always the best question. The one thing I found

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Speaker 2: about working in this part of the industry so working

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Speaker 2: with non advice. The people who trade via and a'm

413
00:21:12,320 --> 00:21:14,800
Speaker 2: trade generally don't have a financial advisor. They're making their

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Speaker 2: own decisions, non advised individuals managing their own money. Is

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Speaker 2: it is amazing how astute people are when it's their

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Speaker 2: own money on the line. They are not outsourcing this decision,

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Speaker 2: and they tend to be very thoughtful about it. There's

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Speaker 2: a lot of talk about how ignorant retail investors can be,

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Speaker 2: and they refer to the dumb money. We just don't

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Speaker 2: see that at all. You see quite the opposite, very thoughtful,

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Speaker 2: very well considered investing. And the COVID period was the

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Speaker 2: classic example where people went out and the top ten

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Speaker 2: stocks were stuff your mum would tell you to buy.

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Speaker 2: All big four banks were in there, all four of them.

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Speaker 2: BHPM re overre in the AASX two hundred ETF was

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Speaker 2: in there, right, that's what people bought during COVID. Every

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Speaker 2: single one of those things has performed extremely strongly since,

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Speaker 2: and it was an incredible opportunity. So to your question

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Speaker 2: about what peop doing, they are all loaded to the

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Speaker 2: eyeballs with banks. Right. Everyone has bought banks at various

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Speaker 2: points over the last couple of decades, in some cases

432
00:22:08,440 --> 00:22:10,880
Speaker 2: back in the nineties, and then they bought a ton

433
00:22:11,000 --> 00:22:14,240
Speaker 2: more during COVID, which was a brilliant decision across the board.

434
00:22:14,359 --> 00:22:16,359
Speaker 2: If you're buying three of the big four sort of

435
00:22:16,359 --> 00:22:19,119
Speaker 2: sub sixteen dollars, you had a good time, and you

436
00:22:19,119 --> 00:22:22,560
Speaker 2: know seventy dollars range for CBA. People have so many banks, right,

437
00:22:22,600 --> 00:22:25,040
Speaker 2: and so they're not buying banks at the moment. This

438
00:22:25,240 --> 00:22:28,120
Speaker 2: is not what they need. There's been a very dramatic

439
00:22:28,280 --> 00:22:30,880
Speaker 2: rotation into materials, and that's been going on for about

440
00:22:30,880 --> 00:22:31,720
Speaker 2: twelve months now.

441
00:22:32,160 --> 00:22:35,600
Speaker 1: Explain broadly what materials are, because it's more than just miners, isn't.

442
00:22:35,440 --> 00:22:38,159
Speaker 2: It it is? But to be honest with you, for

443
00:22:38,200 --> 00:22:41,920
Speaker 2: our guys, it's mostly BHVAN round right. So I'm using

444
00:22:41,960 --> 00:22:44,600
Speaker 2: a general term, but I'll be more specific. A lot

445
00:22:44,720 --> 00:22:48,000
Speaker 2: of interest in BHP, a lot of interest in rio

446
00:22:48,760 --> 00:22:52,359
Speaker 2: ford eskew has been our biggest trade for literally years,

447
00:22:52,440 --> 00:22:56,040
Speaker 2: but that's a small handful of very wealthy traders who

448
00:22:56,200 --> 00:22:58,480
Speaker 2: mostly trade it very actively, so it doesn't.

449
00:22:58,320 --> 00:23:00,240
Speaker 1: And they're literally they're treating it off the in oor

450
00:23:00,320 --> 00:23:02,520
Speaker 1: placed because it's a pure it's a pure connection.

451
00:23:02,280 --> 00:23:04,280
Speaker 2: To pure plate, right. So it's a very straight line

452
00:23:04,320 --> 00:23:06,680
Speaker 2: between what happened with the iron ore price what happens

453
00:23:06,720 --> 00:23:08,720
Speaker 2: with the fortescue price. And if you're very onto that,

454
00:23:09,240 --> 00:23:10,760
Speaker 2: you can make a lot of money, but you need

455
00:23:10,840 --> 00:23:12,880
Speaker 2: to be very onto it. So we have people who

456
00:23:12,960 --> 00:23:15,480
Speaker 2: do that that is very much that's their thing, and

457
00:23:15,560 --> 00:23:18,000
Speaker 2: there's another group of investors who are very interested in

458
00:23:18,160 --> 00:23:21,159
Speaker 2: Fortescue comes and goes from their portfolios as well. There

459
00:23:21,280 --> 00:23:23,439
Speaker 2: was a brief liftier moment and there are people who

460
00:23:23,560 --> 00:23:26,000
Speaker 2: kind of flirt with it again at the moment. But

461
00:23:26,359 --> 00:23:31,040
Speaker 2: we just have seen this real shift back to materials

462
00:23:32,720 --> 00:23:39,920
Speaker 2: from an investing perspective because people feel that perhaps everything's

463
00:23:40,080 --> 00:23:44,399
Speaker 2: not fully priced yet, whereas they feel with financials they are,

464
00:23:45,000 --> 00:23:47,120
Speaker 2: and then when they're looking to the broader market, there's

465
00:23:47,160 --> 00:23:49,119
Speaker 2: sort of less that people are excited about, and we

466
00:23:49,240 --> 00:23:51,440
Speaker 2: start to see more ETF investing in someone.

467
00:23:52,600 --> 00:23:56,119
Speaker 1: Okay, all right, I hope they're right about to miss you.

468
00:23:57,119 --> 00:23:59,320
Speaker 1: I mean, the iron ore is the thing. I mean,

469
00:23:59,440 --> 00:24:01,040
Speaker 1: you can have all all the interest in Nikola and

470
00:24:01,119 --> 00:24:03,800
Speaker 1: Lithian that you like, but really, if the iron ore

471
00:24:03,880 --> 00:24:06,760
Speaker 1: price things, folks, I'm sorry, the ship goes with it. Okay,

472
00:24:07,040 --> 00:24:09,000
Speaker 1: we have to stop right there. We're going to take

473
00:24:09,000 --> 00:24:10,800
Speaker 1: a break. When we come back, we're going to talk

474
00:24:10,840 --> 00:24:14,640
Speaker 1: about the Trump trade, What would the election Trump mean,

475
00:24:15,560 --> 00:24:19,200
Speaker 1: how important is the US to our market and what

476
00:24:19,520 --> 00:24:21,840
Speaker 1: may be ahead in the rest of the year. Back

477
00:24:21,880 --> 00:24:34,960
Speaker 1: in a moment, Hello, Welcome back to the Australians Money

478
00:24:35,000 --> 00:24:41,119
Speaker 1: Puzzle podcast. James Kirby here with Jemma Dale from NAB Trade. So, Jemma,

479
00:24:41,320 --> 00:24:43,680
Speaker 1: I thought the market was pretty looking pretty good. I

480
00:24:43,800 --> 00:24:47,000
Speaker 1: thought the US markets were steaming along. Because I'm looking

481
00:24:47,080 --> 00:24:50,200
Speaker 1: at it for forty years, I'm very aware that the

482
00:24:50,280 --> 00:24:54,159
Speaker 1: September October period is our damn rocky period in global

483
00:24:54,240 --> 00:24:56,960
Speaker 1: markets because of the US, and the US now represents

484
00:24:57,520 --> 00:25:01,920
Speaker 1: Just to reiterate, folks, the US represent sense seventy percent

485
00:25:02,200 --> 00:25:05,840
Speaker 1: of the global market just now. The Morgan Stanley Capital

486
00:25:05,920 --> 00:25:09,960
Speaker 1: International Index. That's extraordinary. What happens in the US is

487
00:25:10,200 --> 00:25:13,800
Speaker 1: of extreme importance to what happens to all markets, including ours.

488
00:25:14,119 --> 00:25:16,280
Speaker 1: And if it rises, we will rise with it, and

489
00:25:16,359 --> 00:25:18,600
Speaker 1: if it falls, we will fall with it. And so

490
00:25:19,520 --> 00:25:22,200
Speaker 1: it really matters. And so we leads us to the question,

491
00:25:22,800 --> 00:25:26,520
Speaker 1: if Trump wins with his pro business agenda, with his

492
00:25:26,640 --> 00:25:30,000
Speaker 1: track record of lifting markets the last time, with his

493
00:25:30,160 --> 00:25:34,800
Speaker 1: track record of pushing old industry, fossil fuels, oil coal,

494
00:25:35,200 --> 00:25:40,000
Speaker 1: he's anti certainly anti environmental advocacy. He's not pro electric

495
00:25:40,080 --> 00:25:42,640
Speaker 1: cars despite all the money Elon Musk wants to give him.

496
00:25:42,920 --> 00:25:46,080
Speaker 1: He's going to dictate to a serious extent the nature

497
00:25:46,359 --> 00:25:48,600
Speaker 1: of the market as it comes along. Used to be

498
00:25:49,040 --> 00:25:52,080
Speaker 1: mixed on tech. But he now has JD Vance as

499
00:25:52,160 --> 00:25:55,640
Speaker 1: he's running mate, as he's the VP who is big

500
00:25:55,760 --> 00:25:59,080
Speaker 1: with Silicon Valley, backed by Peter Thiel, who I'm sure

501
00:25:59,160 --> 00:26:05,560
Speaker 1: you will know who's behind Planter with that extraordinary preamble.

502
00:26:06,000 --> 00:26:08,560
Speaker 1: It's tough, isn't it, Gym. I ask you what difference

503
00:26:08,600 --> 00:26:11,240
Speaker 1: will trumpon make? Just tell us what do you think?

504
00:26:11,720 --> 00:26:16,320
Speaker 2: It's fascinating, is it? There's so many questions that all

505
00:26:16,480 --> 00:26:20,880
Speaker 2: market participants are trying to answer because the biggest question

506
00:26:20,960 --> 00:26:22,840
Speaker 2: in markets for the last twelve months then when's the

507
00:26:22,880 --> 00:26:23,600
Speaker 2: Fed going to cut?

508
00:26:23,760 --> 00:26:23,879
Speaker 1: Right?

509
00:26:24,200 --> 00:26:28,320
Speaker 2: So question one was when do we cut? And that

510
00:26:29,000 --> 00:26:33,400
Speaker 2: answer at the moment is September. Previously been six cuts

511
00:26:33,440 --> 00:26:35,320
Speaker 2: in the year, that's what we were expecting. That's the

512
00:26:35,400 --> 00:26:37,680
Speaker 2: market was pricing, and six cuts now the back to

513
00:26:37,760 --> 00:26:41,040
Speaker 2: two they're expecting September. So it was always about rate cuts.

514
00:26:41,119 --> 00:26:48,480
Speaker 2: And despite the market's extraordinary enthusiasm for cuts, historically, the

515
00:26:48,560 --> 00:26:51,240
Speaker 2: Fed is cutting because the economy is falling off a cliff,

516
00:26:51,359 --> 00:26:53,800
Speaker 2: and so those first cuts are quite positive for the market,

517
00:26:53,800 --> 00:26:56,560
Speaker 2: and then after that it all looks very bleak, and

518
00:26:56,680 --> 00:26:59,080
Speaker 2: so you actually you want to you can get out

519
00:26:59,080 --> 00:27:00,560
Speaker 2: in front of the first couple, and then after that

520
00:27:00,640 --> 00:27:03,159
Speaker 2: it really looks ugly. In terms of what Trump is

521
00:27:03,200 --> 00:27:05,159
Speaker 2: going to do, it's fascinating. So the first question I

522
00:27:05,200 --> 00:27:07,119
Speaker 2: think for a lot of investors what is going to

523
00:27:07,160 --> 00:27:09,840
Speaker 2: happen with tax cuts at a corporate level. If we

524
00:27:10,000 --> 00:27:14,440
Speaker 2: look at his first election win, there was a dramatic

525
00:27:14,960 --> 00:27:18,480
Speaker 2: uplift in corporate profitability post Trump, and it was all

526
00:27:18,720 --> 00:27:21,520
Speaker 2: tax cuts. Every dollar of it was tax cuts. That

527
00:27:22,080 --> 00:27:24,760
Speaker 2: has some implications for an economy that is as heavily

528
00:27:25,040 --> 00:27:27,560
Speaker 2: indebted or a government that's as heavily indebted as the US.

529
00:27:28,040 --> 00:27:30,120
Speaker 2: So there's a lot of questions about the US dollar.

530
00:27:30,400 --> 00:27:34,240
Speaker 2: There's a lot of questions about what happens with the

531
00:27:34,320 --> 00:27:38,639
Speaker 2: treasury and the debt that is being carried currently and

532
00:27:38,800 --> 00:27:43,840
Speaker 2: being raised regularly. It is it's quite extraordinary to try

533
00:27:43,880 --> 00:27:46,960
Speaker 2: and unpick the range of things that are on the

534
00:27:47,040 --> 00:27:50,119
Speaker 2: table currently. There's tariffs as well, and trade wars that

535
00:27:50,359 --> 00:27:52,840
Speaker 2: may start again do we know about this? And obviously

536
00:27:53,000 --> 00:27:56,240
Speaker 2: feeding into the Nasdaq at the moment, there is talk

537
00:27:56,760 --> 00:28:01,080
Speaker 2: that Jamie Diamond may become the next set the Secretary

538
00:28:01,119 --> 00:28:03,840
Speaker 2: of the Treasury. That is very appealing to a lot

539
00:28:03,880 --> 00:28:07,359
Speaker 2: on Wall Street for a lot of reasons. I love that,

540
00:28:08,200 --> 00:28:09,800
Speaker 2: but I think that would also come the market a

541
00:28:09,840 --> 00:28:13,040
Speaker 2: bit because he's obviously not known to be a highly

542
00:28:13,119 --> 00:28:16,880
Speaker 2: political character. He's known to be money guy. He knows

543
00:28:16,920 --> 00:28:17,360
Speaker 2: what he's doing.

544
00:28:18,080 --> 00:28:21,000
Speaker 1: But can I ask you between the lines? To me,

545
00:28:21,119 --> 00:28:23,280
Speaker 1: it seems to me that you're saying, Okay, the definsits,

546
00:28:23,280 --> 00:28:25,040
Speaker 1: et cetera. That's going to push up interest rate, it's

547
00:28:25,040 --> 00:28:27,800
Speaker 1: going to push up inflation to the US. And we

548
00:28:28,000 --> 00:28:29,600
Speaker 1: just put that to one side, but that would seem

549
00:28:29,680 --> 00:28:33,040
Speaker 1: to be a natural consequence of his disposition and the

550
00:28:33,080 --> 00:28:37,280
Speaker 1: American administration's disposition that we could expect under Trump advance.

551
00:28:37,560 --> 00:28:41,600
Speaker 1: Here's the thing. Tell us, then, what the most interesting

552
00:28:41,680 --> 00:28:44,640
Speaker 1: thing is about the US dollar? And I noticed more

553
00:28:44,720 --> 00:28:47,280
Speaker 1: and more of this talk about d dollarization. Can you

554
00:28:47,400 --> 00:28:51,240
Speaker 1: explain what the theory is about the US dollar, what

555
00:28:51,400 --> 00:28:53,080
Speaker 1: could happen to it and what would it mean for

556
00:28:53,240 --> 00:28:54,800
Speaker 1: us as Australian investors.

557
00:28:55,440 --> 00:28:57,880
Speaker 2: This it's a really interesting one and it is getting

558
00:28:58,120 --> 00:29:01,960
Speaker 2: more and more attention. Trump appears to be of the

559
00:29:02,120 --> 00:29:05,040
Speaker 2: view that the US dollar is too strong and is

560
00:29:05,120 --> 00:29:07,400
Speaker 2: the world's reserve currency and has been for a long time,

561
00:29:07,920 --> 00:29:12,360
Speaker 2: and at current and historical levels it is too strong.

562
00:29:12,440 --> 00:29:14,560
Speaker 2: And more to the point that everyone has been happily

563
00:29:14,640 --> 00:29:19,120
Speaker 2: devaluing their currencies against the US, which allows them to

564
00:29:19,280 --> 00:29:23,040
Speaker 2: export to the US and has, in his view and

565
00:29:23,680 --> 00:29:29,880
Speaker 2: advances an interesting choice, hollowed out American industry, particularly manufacturing,

566
00:29:30,400 --> 00:29:32,520
Speaker 2: that you can't produce goods in the US because they're

567
00:29:32,560 --> 00:29:36,200
Speaker 2: too expensive to export. He mentioned tractors, which is quite interesting.

568
00:29:36,680 --> 00:29:39,240
Speaker 2: So his view is when you've got a very strong dollar,

569
00:29:39,960 --> 00:29:43,440
Speaker 2: you're hollowing out US manufacturing the sort of Middle America

570
00:29:43,520 --> 00:29:47,200
Speaker 2: that votes for them, and to that extent, he does

571
00:29:47,400 --> 00:29:50,320
Speaker 2: not want a strong US dollar. He would like the

572
00:29:50,440 --> 00:29:54,960
Speaker 2: dollar to fall relative to other currencies, which would allow

573
00:29:55,080 --> 00:29:59,440
Speaker 2: them to be far more competitive in export markets in manufacturing,

574
00:29:59,520 --> 00:30:03,840
Speaker 2: but has hum implications for everybody else. And so it's interesting.

575
00:30:03,920 --> 00:30:06,320
Speaker 2: I mean Australia, the US is not our number one

576
00:30:06,360 --> 00:30:09,680
Speaker 2: you export market, and the things that we export are

577
00:30:09,800 --> 00:30:13,040
Speaker 2: not easily substitutable. So your point about iron ore is

578
00:30:13,080 --> 00:30:14,680
Speaker 2: a really good one. Right. You're not going to go

579
00:30:14,800 --> 00:30:16,920
Speaker 2: and get your iron or from a waterbup places. There

580
00:30:16,960 --> 00:30:20,000
Speaker 2: are alternatives, and most of it goes to China. Then

581
00:30:20,080 --> 00:30:23,080
Speaker 2: the question becomes, if China can't export to the US,

582
00:30:23,200 --> 00:30:26,120
Speaker 2: do that have implications for Australia When you look at

583
00:30:26,160 --> 00:30:29,040
Speaker 2: a company like CSL where their earnings are pricing US dollars,

584
00:30:29,160 --> 00:30:31,760
Speaker 2: is that a problem. So you can see ripple effects

585
00:30:31,800 --> 00:30:35,080
Speaker 2: across so many different areas, and this is I think

586
00:30:35,160 --> 00:30:37,200
Speaker 2: why so many people would be very keen for someone

587
00:30:37,280 --> 00:30:39,840
Speaker 2: like Diamond to go in and be working with the

588
00:30:39,880 --> 00:30:43,000
Speaker 2: administration to ensure that maybe some of those implications are

589
00:30:43,040 --> 00:30:45,640
Speaker 2: thought through before we aggressively try to devalue the currency.

590
00:30:46,280 --> 00:30:49,640
Speaker 1: Right, and if they did devalue the currency, which cause okay,

591
00:30:49,760 --> 00:30:53,760
Speaker 1: so quick win for US Heartland America feels better about itself.

592
00:30:54,280 --> 00:30:57,200
Speaker 1: But then the US wouldn't be the US. The decline

593
00:30:57,240 --> 00:30:59,400
Speaker 1: of the US as a reserve currency, which by the way,

594
00:30:59,720 --> 00:31:02,840
Speaker 1: has barely occurred, but if it started to occur, what

595
00:31:02,920 --> 00:31:03,480
Speaker 1: would that mean?

596
00:31:03,560 --> 00:31:07,040
Speaker 2: Then for Australia, there's a few different things to consider.

597
00:31:07,120 --> 00:31:10,160
Speaker 2: One is how much in Australia is priced in US dollars.

598
00:31:10,240 --> 00:31:13,800
Speaker 2: We're not a country that is as heavily dependent on

599
00:31:13,880 --> 00:31:16,200
Speaker 2: the US dollar as many others, you know, so you

600
00:31:16,280 --> 00:31:19,240
Speaker 2: can see the implications for China, for example. For US,

601
00:31:19,400 --> 00:31:23,240
Speaker 2: they're probably secondary effects rather than direct, and so we

602
00:31:23,480 --> 00:31:29,040
Speaker 2: don't see quite as much anxiety here. It's more going

603
00:31:29,280 --> 00:31:31,719
Speaker 2: if we have to work through this, what are the implications?

604
00:31:31,760 --> 00:31:35,400
Speaker 2: But for some companies and some sected the implications and

605
00:31:35,520 --> 00:31:36,440
Speaker 2: quite significant.

606
00:31:36,560 --> 00:31:39,440
Speaker 1: Okay, one last thing, what would it mean for gold?

607
00:31:40,800 --> 00:31:41,920
Speaker 1: Rhetorical question.

608
00:31:43,400 --> 00:31:46,040
Speaker 2: Rallying for a while, right, people have been watching this

609
00:31:46,880 --> 00:31:51,920
Speaker 2: and it's quite interesting to observe. And the major hypothesis

610
00:31:51,960 --> 00:31:53,920
Speaker 2: for why it's been rallying is that central banks have

611
00:31:54,000 --> 00:31:57,160
Speaker 2: been buying. Have they been buying in anticipation of a

612
00:31:57,240 --> 00:32:01,480
Speaker 2: d dollarization. Maybe they have, so there is a hypothesis

613
00:32:01,520 --> 00:32:04,160
Speaker 2: that there will be more upward pressure on the gold price,

614
00:32:04,760 --> 00:32:07,440
Speaker 2: and then it's quite attractive, even though it has rallied

615
00:32:07,520 --> 00:32:08,040
Speaker 2: very strongly.

616
00:32:08,680 --> 00:32:10,640
Speaker 1: By the way, talking about the top ten stocks, we

617
00:32:10,720 --> 00:32:13,480
Speaker 1: talked about banks and miners, but you know the miner

618
00:32:13,520 --> 00:32:16,920
Speaker 1: that's appeared in the top ten is Neumont. Newcrest just

619
00:32:17,080 --> 00:32:23,520
Speaker 1: sold the wrong time, folks, Sorry but you are, oh lord, Newcrest.

620
00:32:23,560 --> 00:32:26,320
Speaker 1: It's tough. Honestly, they've floundered around for years and years

621
00:32:26,320 --> 00:32:29,240
Speaker 1: and then they sold to Numant and guess what gold

622
00:32:29,360 --> 00:32:33,280
Speaker 1: is going beautifully. Remember folks, that just because gold is

623
00:32:33,360 --> 00:32:35,640
Speaker 1: going up doesn't mean the gold miners go up because

624
00:32:36,040 --> 00:32:39,160
Speaker 1: they have to mine and often they get it wrong

625
00:32:39,280 --> 00:32:41,920
Speaker 1: big time. But in the main they should do better.

626
00:32:42,280 --> 00:32:43,960
Speaker 2: It's never a perfect correlation.

627
00:32:44,120 --> 00:32:48,400
Speaker 1: That it's disappointed, no, oh man, it's the most it's

628
00:32:48,400 --> 00:32:52,360
Speaker 1: a particularly unreliable relationship the direction of the gold price

629
00:32:52,400 --> 00:32:55,560
Speaker 1: and the direction of gold miners. Okay, that's for another show.

630
00:32:55,720 --> 00:32:57,440
Speaker 1: We'll be back in a moment. If that's a great question.

631
00:33:08,680 --> 00:33:12,120
Speaker 1: Hello and welcome back to The Australian's Money Puzzle podcast.

632
00:33:12,200 --> 00:33:15,000
Speaker 1: I'm James Kirby, the Wealth editor at The Australian, talking

633
00:33:15,040 --> 00:33:18,000
Speaker 1: to a friend of the show, Gemma Dale, head of

634
00:33:18,400 --> 00:33:22,120
Speaker 1: Investor Behavior and SMSF at NAB Trade. As I have

635
00:33:22,240 --> 00:33:24,680
Speaker 1: often said, one of my favorite job titles. It's funny

636
00:33:24,680 --> 00:33:26,640
Speaker 1: when I go on other people shows they say, oh,

637
00:33:26,680 --> 00:33:30,800
Speaker 1: I love your title wealth editor, but I like kind

638
00:33:30,800 --> 00:33:32,760
Speaker 1: of investor behavior. I must say I love that one.

639
00:33:33,080 --> 00:33:35,080
Speaker 2: All right. Now I'm not telling them what to do.

640
00:33:35,240 --> 00:33:36,920
Speaker 2: I'm just looking at it. Yeah.

641
00:33:37,080 --> 00:33:40,120
Speaker 1: No, but it's such an interesting area, all right. Bruce says,

642
00:33:40,320 --> 00:33:43,840
Speaker 1: what is the difference between infrastructure investments made by private

643
00:33:43,920 --> 00:33:48,160
Speaker 1: equity and those led by infrastructure ETFs and does this

644
00:33:48,360 --> 00:33:53,160
Speaker 1: explain the relatively poor performance of infrastructure ETFs? Bruce, that's

645
00:33:53,160 --> 00:33:56,680
Speaker 1: a terrific question. I wonder, are we perhaps thinking that

646
00:33:56,760 --> 00:34:00,280
Speaker 1: the private equity performance of infrastructure is better and they

647
00:34:00,320 --> 00:34:02,440
Speaker 1: say it is, or we're late to believe it's so good,

648
00:34:02,480 --> 00:34:04,640
Speaker 1: because how do we know? But what do you think, Gema?

649
00:34:05,480 --> 00:34:07,760
Speaker 2: I think there's multiple parts of this question. I thought

650
00:34:07,760 --> 00:34:12,080
Speaker 2: about a lot. Actually, private equity firms will have an

651
00:34:12,480 --> 00:34:14,880
Speaker 2: infrastructure arm in many cases, but that doesn't mean they

652
00:34:14,960 --> 00:34:17,239
Speaker 2: approach it the same way they do private equity. The

653
00:34:17,320 --> 00:34:19,920
Speaker 2: way they would to text sort of startup for example.

654
00:34:20,040 --> 00:34:22,160
Speaker 2: So the goal of private equity is to get in

655
00:34:22,480 --> 00:34:25,720
Speaker 2: very early, take a very active role in the company,

656
00:34:25,960 --> 00:34:28,160
Speaker 2: and sometimes it will turn around the big company that's

657
00:34:28,160 --> 00:34:30,920
Speaker 2: existed for a long time it's really broken. Private equity

658
00:34:31,000 --> 00:34:35,040
Speaker 2: buy it up, get in there, restructure it, turn it around.

659
00:34:35,680 --> 00:34:39,560
Speaker 2: That's quite different to infrastructure, where your goal is effectively

660
00:34:39,640 --> 00:34:44,680
Speaker 2: to own something that generates a pretty consistent return over time.

661
00:34:44,960 --> 00:34:47,000
Speaker 1: It's just tipping over. It's tipping along.

662
00:34:47,719 --> 00:34:50,279
Speaker 2: Yeah, something that's ticking overs are quite different. So even

663
00:34:50,320 --> 00:34:53,160
Speaker 2: though it maybe a private equity firm that is owning

664
00:34:53,239 --> 00:34:56,440
Speaker 2: the assets, it's not approaching it like a private equity business.

665
00:34:56,840 --> 00:34:59,600
Speaker 2: There is a lot of unlisted infrastructure. It's not stuff

666
00:34:59,600 --> 00:35:02,920
Speaker 2: that isvailable on the ESSEX or a listed exchange. And

667
00:35:03,040 --> 00:35:05,640
Speaker 2: then you've got your listed plays and then you've got ETFs,

668
00:35:05,680 --> 00:35:07,960
Speaker 2: and then you've got passive versus active. So it's all

669
00:35:08,120 --> 00:35:10,920
Speaker 2: very It depends on what you're comparing. Infrastructure is a

670
00:35:11,040 --> 00:35:13,919
Speaker 2: really good example of where it's a very broad term

671
00:35:14,360 --> 00:35:16,560
Speaker 2: that covers a lot of different things, and you need

672
00:35:16,600 --> 00:35:18,320
Speaker 2: to look at the underlying assets to got is this

673
00:35:18,400 --> 00:35:20,560
Speaker 2: something I want to invest in? Because the performance will

674
00:35:20,560 --> 00:35:24,920
Speaker 2: be dramatically different. We saw during COVID that all of

675
00:35:25,040 --> 00:35:27,560
Speaker 2: these things that were supposed to be great long term

676
00:35:27,640 --> 00:35:30,360
Speaker 2: investments that just spit out a long term return and

677
00:35:30,440 --> 00:35:33,160
Speaker 2: you don't have to worry too much about volatility, ended

678
00:35:33,239 --> 00:35:37,480
Speaker 2: up being very volatile. Toll roads, airports, all of that

679
00:35:37,680 --> 00:35:41,480
Speaker 2: stuff complete disaster during COVID did the exact opposite of

680
00:35:41,520 --> 00:35:43,800
Speaker 2: what they were supposed to do long term because of

681
00:35:44,440 --> 00:35:47,680
Speaker 2: very dramatic change in the world. So the other thing

682
00:35:47,760 --> 00:35:51,240
Speaker 2: that is very important to some people, less so others,

683
00:35:51,280 --> 00:35:54,120
Speaker 2: but absolutely matters if you're an institutional investors. There's a

684
00:35:54,200 --> 00:35:58,839
Speaker 2: lot of energy exposure in some font So you'll see

685
00:35:58,920 --> 00:36:03,440
Speaker 2: some with thirty percent more exposed to non renewable energy

686
00:36:03,640 --> 00:36:07,640
Speaker 2: sources fossil fuels, let's be frank. And then they will

687
00:36:07,680 --> 00:36:10,760
Speaker 2: have pipelines which are also, let's be frank, non renewable

688
00:36:10,880 --> 00:36:13,360
Speaker 2: energy sources. In most cases that can be forty or

689
00:36:13,360 --> 00:36:16,680
Speaker 2: fifty percent of the assets, and if that's not for you,

690
00:36:17,960 --> 00:36:19,799
Speaker 2: you need to think about that. But also there are

691
00:36:19,840 --> 00:36:22,319
Speaker 2: a lot of institutional investors who will not touch something

692
00:36:22,360 --> 00:36:25,880
Speaker 2: that's fifty percent fossil fuels. It's just a much bigger

693
00:36:26,040 --> 00:36:29,120
Speaker 2: universe than perhaps people anticipate and you want to look

694
00:36:29,160 --> 00:36:31,799
Speaker 2: at what is actually being held in it and think

695
00:36:31,880 --> 00:36:33,400
Speaker 2: long and hard about whether or not it's for you

696
00:36:33,600 --> 00:36:35,040
Speaker 2: and whether you think it's going to perform the way

697
00:36:35,080 --> 00:36:36,239
Speaker 2: it wanted to. Right.

698
00:36:36,640 --> 00:36:38,640
Speaker 1: Yeah, it's a really good answer. As you say, it's

699
00:36:38,680 --> 00:36:42,520
Speaker 1: a world within a world, Bruce. And you know, with

700
00:36:42,680 --> 00:36:45,880
Speaker 1: an infrastructurrey Ta, if you know, you know what the

701
00:36:45,960 --> 00:36:49,640
Speaker 1: deed is. With the private equity infrastructure player, you have

702
00:36:49,760 --> 00:36:52,080
Speaker 1: no idea what's going on there. They might be firing

703
00:36:52,120 --> 00:36:54,799
Speaker 1: the entire management, they might be changing the entire plan.

704
00:36:55,120 --> 00:36:58,080
Speaker 1: You know, don't build that bridge, build another one completely different.

705
00:36:58,239 --> 00:37:01,560
Speaker 1: It's almost not comparing apples with apples, though it sounds

706
00:37:01,680 --> 00:37:04,120
Speaker 1: like it. Okay, really good, thank you for that, Gemma.

707
00:37:04,480 --> 00:37:06,960
Speaker 1: Now Bruce cleverly puts in the second question, and that's

708
00:37:06,960 --> 00:37:09,000
Speaker 1: always fine. Folks. You can put in two questions. If

709
00:37:09,000 --> 00:37:11,720
Speaker 1: they both make sense to me, and they're both relatively succinct,

710
00:37:12,000 --> 00:37:13,759
Speaker 1: they have a very good chance of being read out. Okay.

711
00:37:14,040 --> 00:37:16,840
Speaker 1: The second one is the debate over the minimum amount

712
00:37:17,320 --> 00:37:21,799
Speaker 1: required for a self managed super fund rages on. One

713
00:37:21,960 --> 00:37:25,920
Speaker 1: factor often mentioned is the running cost. Scary figures are

714
00:37:25,960 --> 00:37:30,719
Speaker 1: sometimes used last year our SMSF costs a total of

715
00:37:30,800 --> 00:37:34,680
Speaker 1: two thousand, six hundred. That's the tax turn preparation Order's

716
00:37:34,719 --> 00:37:38,600
Speaker 1: an asseic. No, no financial advice, as we didn't use any,

717
00:37:38,960 --> 00:37:41,040
Speaker 1: and we keep getting lesters from people offering to do

718
00:37:41,120 --> 00:37:44,680
Speaker 1: it for less. Can you explain the discrepancy between the

719
00:37:44,760 --> 00:37:47,239
Speaker 1: quoted figures. This is a great question, Bruce, again, two

720
00:37:47,280 --> 00:37:49,839
Speaker 1: in a row. Well done, Bruce. I'm the same, okay.

721
00:37:49,920 --> 00:37:53,239
Speaker 1: I have ANMSF for about twenty years and I get

722
00:37:53,440 --> 00:37:55,960
Speaker 1: letters all the time from these people. I don't know

723
00:37:56,000 --> 00:37:58,279
Speaker 1: how they get my name and address. I love to

724
00:37:58,360 --> 00:37:59,840
Speaker 1: know how they get it, because I didn't give it

725
00:37:59,840 --> 00:38:03,240
Speaker 1: to them, and they're offering. They just said the SMSF owners.

726
00:38:03,280 --> 00:38:05,920
Speaker 1: They don't actually know who I am, but they've got

727
00:38:06,000 --> 00:38:09,480
Speaker 1: enough information to get a letter to my home and

728
00:38:09,600 --> 00:38:14,799
Speaker 1: they offer to do my SMSF for tiny amounts. The discrepancy,

729
00:38:14,920 --> 00:38:17,320
Speaker 1: I imagine, is the same as anything else. You know,

730
00:38:17,440 --> 00:38:19,480
Speaker 1: You'll have two people drop it a leafless in your door,

731
00:38:19,560 --> 00:38:21,600
Speaker 1: saying they'll clean your gotters, and one says they'll do

732
00:38:21,640 --> 00:38:23,920
Speaker 1: it for fifty bucks, and one says five hundred. And

733
00:38:24,040 --> 00:38:26,760
Speaker 1: you can kind of guess why one's fifty and wants

734
00:38:26,800 --> 00:38:30,600
Speaker 1: five hundred. Maybe that's rather simplicitic. Gemma, who is Russ

735
00:38:30,800 --> 00:38:33,560
Speaker 1: You must remember at a SMSF at one of the

736
00:38:33,640 --> 00:38:37,040
Speaker 1: nation's biggest banks may have a more sophisticated answer. Ah.

737
00:38:37,239 --> 00:38:39,759
Speaker 2: So this is funny because a friend of mine uses

738
00:38:39,840 --> 00:38:43,120
Speaker 2: one of the very low cost administrators for his SMSF.

739
00:38:43,160 --> 00:38:44,839
Speaker 2: And when I say he uses it, what I mean

740
00:38:45,000 --> 00:38:48,080
Speaker 2: is his wife is an accountant and she does all

741
00:38:48,200 --> 00:38:50,640
Speaker 2: the paperwork and then submits it to them, and then

742
00:38:50,719 --> 00:38:55,880
Speaker 2: they do the last tiny bit. So it's quite fascinating. Effectively,

743
00:38:55,920 --> 00:38:57,759
Speaker 2: what happens is you do most of the work and

744
00:38:57,920 --> 00:39:01,040
Speaker 2: then you provide the administrator. They do the bare minimum

745
00:39:01,120 --> 00:39:04,640
Speaker 2: at the end, just require I imagine cost it out

746
00:39:04,760 --> 00:39:07,720
Speaker 2: at her hourly rate. It's probably a very poor decision

747
00:39:07,800 --> 00:39:10,160
Speaker 2: on their part, but you know it's got to be done.

748
00:39:10,480 --> 00:39:12,480
Speaker 2: So this is I find this fascinating and I've looked

749
00:39:12,480 --> 00:39:16,040
Speaker 2: at this so many times, and it's always worth noting

750
00:39:16,080 --> 00:39:18,320
Speaker 2: who has done this research and emphatter commas about what

751
00:39:18,400 --> 00:39:22,040
Speaker 2: the cost is and what their motivation might be for

752
00:39:22,680 --> 00:39:25,239
Speaker 2: putting it out there. The assumption is often that you

753
00:39:25,360 --> 00:39:28,520
Speaker 2: have a financial advisor, which in your case was Bruce.

754
00:39:28,960 --> 00:39:30,920
Speaker 2: Is not the case right, you don't have an advisor,

755
00:39:31,000 --> 00:39:33,279
Speaker 2: so you can chuck out several thousand dollars worth of

756
00:39:33,920 --> 00:39:37,520
Speaker 2: fees that have been assumed in this situation. And there

757
00:39:37,560 --> 00:39:40,520
Speaker 2: are always a lot of assumptions. The other thing they

758
00:39:40,560 --> 00:39:44,960
Speaker 2: will assume is asset management fees, So they assume that

759
00:39:45,080 --> 00:39:49,400
Speaker 2: you have managed funds generally, well they used to. Maybe

760
00:39:49,480 --> 00:39:52,120
Speaker 2: they will say now they're actively managed dtfs and they

761
00:39:52,160 --> 00:39:53,960
Speaker 2: will put in one hundred basis points for that, or

762
00:39:53,960 --> 00:39:56,200
Speaker 2: one hundred and fifty basis points for that, or they

763
00:39:56,280 --> 00:39:58,080
Speaker 2: might assume you have a retail managed fund and it

764
00:39:58,120 --> 00:40:00,600
Speaker 2: might be two hundred basis points for that, so they

765
00:40:00,760 --> 00:40:03,160
Speaker 2: layer them right, So they go, your accountant's going to

766
00:40:03,239 --> 00:40:04,960
Speaker 2: charge you five thousand dollars a year, and then the

767
00:40:05,120 --> 00:40:07,080
Speaker 2: order is going to charge you one thousand dollars a year,

768
00:40:07,480 --> 00:40:10,080
Speaker 2: and then you are going to pay two percent of

769
00:40:10,160 --> 00:40:12,759
Speaker 2: your assets if you're in managed funds. Now they may

770
00:40:12,840 --> 00:40:15,960
Speaker 2: have brought these down because obviously fees, all of these

771
00:40:16,000 --> 00:40:18,279
Speaker 2: things have fallen dramatically over the last ten years. So

772
00:40:18,320 --> 00:40:20,960
Speaker 2: I'm not quite sure exactly what their assumptions are. Now

773
00:40:21,600 --> 00:40:25,680
Speaker 2: they have hopefully reflected the market a bit better, and

774
00:40:25,800 --> 00:40:28,600
Speaker 2: then an advisor fee, so many people will pay an

775
00:40:28,600 --> 00:40:31,560
Speaker 2: advisor a fee of anywhere between sixty and one hundred

776
00:40:31,640 --> 00:40:34,120
Speaker 2: basis points if you pay an asset based fee. So

777
00:40:34,280 --> 00:40:36,080
Speaker 2: once you add all of those things up, you can

778
00:40:36,160 --> 00:40:38,560
Speaker 2: be talking ten thousand dollars plus to run a fund.

779
00:40:38,840 --> 00:40:40,680
Speaker 2: But the vast majority of people don't do that, right, Like,

780
00:40:40,719 --> 00:40:42,239
Speaker 2: when I look at what we have on NAB trade,

781
00:40:42,239 --> 00:40:46,160
Speaker 2: which is a very meaningful number of estimatests, they're people

782
00:40:46,239 --> 00:40:51,080
Speaker 2: running their own share portfolio. There's no holding cost because

783
00:40:51,080 --> 00:40:53,880
Speaker 2: they're hint based assets, and they just sit on the platform.

784
00:40:54,239 --> 00:40:56,320
Speaker 2: Then you get your statement at the end of the

785
00:40:56,400 --> 00:40:58,000
Speaker 2: year and just give it to your accountant, so you

786
00:40:58,080 --> 00:40:59,880
Speaker 2: give it to your administrative.

787
00:41:00,280 --> 00:41:02,080
Speaker 1: What percentage of them use advisors?

788
00:41:02,360 --> 00:41:05,400
Speaker 2: I'm n AB traide virtually none, Right, Yeah, I.

789
00:41:05,400 --> 00:41:07,000
Speaker 1: Would have thought so. I would have thought so, because

790
00:41:07,000 --> 00:41:08,960
Speaker 1: the whole thing is it's self.

791
00:41:08,880 --> 00:41:12,799
Speaker 2: Managed, That's right. And it's not to say that investors

792
00:41:12,960 --> 00:41:16,279
Speaker 2: who have smsfs don't use advisors. Many of them do.

793
00:41:17,120 --> 00:41:21,640
Speaker 2: They tend to be, ironically, the wealthy ones who want

794
00:41:21,840 --> 00:41:25,279
Speaker 2: quite sophisticated advice, and so we do see a lot

795
00:41:25,320 --> 00:41:27,879
Speaker 2: of that. To NAB owns JBWIR for example, and most

796
00:41:27,920 --> 00:41:30,239
Speaker 2: of our Jbear clients will have a self managed super fund,

797
00:41:30,400 --> 00:41:33,240
Speaker 2: but they don't have it necessarily for the share advice.

798
00:41:33,719 --> 00:41:35,760
Speaker 2: They have it because they have a business, real property

799
00:41:35,800 --> 00:41:38,160
Speaker 2: in there, because they have other assets in there that

800
00:41:38,239 --> 00:41:40,759
Speaker 2: are quite complex and would not otherwise be able to

801
00:41:41,160 --> 00:41:45,040
Speaker 2: be held inside super So for the vast majority of people,

802
00:41:45,200 --> 00:41:47,560
Speaker 2: you have a self managed super fund for a specific

803
00:41:47,640 --> 00:41:50,120
Speaker 2: set of reasons. A lot of people do it just

804
00:41:50,200 --> 00:41:52,560
Speaker 2: for control because they want to run it themselves. If

805
00:41:52,600 --> 00:41:55,680
Speaker 2: you're doing that and you're only holding shares and ETFs,

806
00:41:55,960 --> 00:41:59,000
Speaker 2: your running costs are super low. If you have a

807
00:41:59,080 --> 00:42:02,360
Speaker 2: far more complex and you're trying to hold those assets

808
00:42:02,400 --> 00:42:05,120
Speaker 2: for specific reasons, and you wanted to own business for

809
00:42:05,120 --> 00:42:08,399
Speaker 2: your property, so you can own a property that your

810
00:42:08,560 --> 00:42:13,120
Speaker 2: business leases from your SMSF inside super that's an amazing strategy.

811
00:42:13,160 --> 00:42:14,759
Speaker 2: For some people, you might want to borrow to by

812
00:42:14,840 --> 00:42:16,960
Speaker 2: property inside souper, which is much harder to do than

813
00:42:17,000 --> 00:42:18,640
Speaker 2: it used to be, but it does work for some people,

814
00:42:18,760 --> 00:42:21,879
Speaker 2: usually very wealthy people. That's got a completely different set

815
00:42:21,880 --> 00:42:24,600
Speaker 2: of costs, right, So you can't compare these things again,

816
00:42:24,800 --> 00:42:28,319
Speaker 2: not apples with apples. If you're happy to cost your

817
00:42:28,360 --> 00:42:30,719
Speaker 2: paying and a couple of grande a year is not bad.

818
00:42:31,760 --> 00:42:34,520
Speaker 2: You're just not Those assumptions that you use are just

819
00:42:34,640 --> 00:42:36,800
Speaker 2: not relevant to you. Don't worry about it.

820
00:42:37,239 --> 00:42:40,960
Speaker 1: Yeah, yeah, I think that's broadly right too. As you see.

821
00:42:41,360 --> 00:42:44,920
Speaker 1: You know, if it's two grand on an SMSF and

822
00:42:45,040 --> 00:42:49,799
Speaker 1: we're assuming your sms if isn't tiny, then it's going

823
00:42:49,880 --> 00:42:52,800
Speaker 1: to make sense really, And you don't use financial advice,

824
00:42:52,880 --> 00:42:54,719
Speaker 1: and if you did, the number is supposed to be

825
00:42:54,800 --> 00:42:57,240
Speaker 1: four thy three hundred a year, which is so different

826
00:42:57,600 --> 00:43:00,799
Speaker 1: and would change everything. Unfortunately, I think that just must

827
00:43:00,840 --> 00:43:04,399
Speaker 1: be paid. And the discrepancy between the quoted figures because

828
00:43:04,400 --> 00:43:06,440
Speaker 1: all sorts of games, as Gema alluded to, some of

829
00:43:06,480 --> 00:43:09,160
Speaker 1: which I didn't even know. But I also, I mean,

830
00:43:09,160 --> 00:43:10,879
Speaker 1: you get what you pay for you would think as well.

831
00:43:11,120 --> 00:43:14,960
Speaker 2: I should note though, financial advice is not just what

832
00:43:15,120 --> 00:43:17,399
Speaker 2: to hold in your smasef right, So the advice might

833
00:43:17,480 --> 00:43:20,160
Speaker 2: be what contributions you should be making every year, how

834
00:43:20,280 --> 00:43:22,680
Speaker 2: much you should be withdrawing. There can be some tax

835
00:43:22,760 --> 00:43:25,320
Speaker 2: advice in that, not the accounting sense of tax advice,

836
00:43:25,360 --> 00:43:27,560
Speaker 2: but just how you structure those things. There could be

837
00:43:27,680 --> 00:43:30,279
Speaker 2: all sorts of value added advice in there that's not

838
00:43:30,480 --> 00:43:34,880
Speaker 2: specifically just about how the SMSF is run. So again

839
00:43:34,960 --> 00:43:37,920
Speaker 2: a bit disingenuous to include the whole cost of financial

840
00:43:38,000 --> 00:43:43,440
Speaker 2: advice in that cost of running an SMSF. It's a

841
00:43:43,520 --> 00:43:44,360
Speaker 2: lot of assumptions.

842
00:43:44,960 --> 00:43:48,239
Speaker 1: Very interesting. Now, Bruce, you monopolize the question segment of

843
00:43:48,360 --> 00:43:50,480
Speaker 1: our show this week with are two very smart questions,

844
00:43:50,560 --> 00:43:54,440
Speaker 1: so congratulations. No one's ever done that before, but you

845
00:43:54,600 --> 00:43:57,320
Speaker 1: have because we've run out of time, but that was terrific.

846
00:43:57,440 --> 00:44:01,040
Speaker 1: Thank you very much. Jemmerdale, head of Investor Behavior and

847
00:44:01,360 --> 00:44:03,920
Speaker 1: SMSF at NAPTA. Great to have you on as always.

848
00:44:04,280 --> 00:44:08,520
Speaker 1: Thank you so much, Thank you and we'll talk again. Okay, folks,

849
00:44:08,760 --> 00:44:11,480
Speaker 1: do recall that we have an email which I would

850
00:44:11,520 --> 00:44:16,680
Speaker 1: love you to send some questions, observations, complaints to the

851
00:44:16,760 --> 00:44:20,120
Speaker 1: Money Puzzle at the Australian dot com dot au. Talk

852
00:44:20,160 --> 00:44:20,560
Speaker 1: to you soon.