WEBVTT - Red-hot sharemarket - your next moves 0:00:11.400 --> 0:00:14.760 Hello, and welcome to The Australian's Money Puzzle podcast. I'm 0:00:14.840 --> 0:00:18.639 James Kirby, the Weather editor at The Australian. Welcome aboard, everybody. 0:00:19.400 --> 0:00:24.640 I expect you're more than aware just how good share 0:00:24.680 --> 0:00:28.560 market investing is right now. Our share market, folks. Even 0:00:28.840 --> 0:00:32.960 the ASX is up eleven percent in over the last 0:00:33.000 --> 0:00:37.400 twelve months. Dividends to that there's fifteen percent in the bag. 0:00:37.720 --> 0:00:41.320 The US market is steaming along. It's up twenty four 0:00:41.360 --> 0:00:43.680 percent in the last twelve months. And more than that, 0:00:44.680 --> 0:00:48.800 there are so many signs that this market has got 0:00:48.800 --> 0:00:53.000 the ideal conditions to keep going. On a broad basis, 0:00:53.080 --> 0:00:55.040 there's always things you can worry about, and you can 0:00:55.080 --> 0:00:57.400 always worry. I can tell you about a slump or 0:00:57.440 --> 0:01:00.120 a surprise setback or a correction in the September or 0:01:00.160 --> 0:01:03.959 October period when the Americans get wobbly every year as 0:01:04.000 --> 0:01:06.720 they face Christmas. Winter is coming. You've seen Game of Thrones, 0:01:06.720 --> 0:01:09.600 you know what it means, same thing in the share market. Now, 0:01:09.800 --> 0:01:12.040 on top of all that, we've got Donald Trump, who 0:01:12.160 --> 0:01:13.600 you know. I think we might as well take it 0:01:13.640 --> 0:01:16.440 as read this morning that the markets at least think 0:01:16.440 --> 0:01:18.319 he's going to be re elected, and there's like a 0:01:18.400 --> 0:01:22.040 sixty to sixty seven percent probability in the money markets 0:01:22.080 --> 0:01:23.959 right now, but that he will be re elected. That 0:01:24.000 --> 0:01:28.160 means a Republican administration, that means pro business administration, and 0:01:28.200 --> 0:01:32.000 that means a big lift in stocks. Traditionally, you know 0:01:32.240 --> 0:01:36.120 Trump first time round, from the day he was elected 0:01:36.600 --> 0:01:39.800 to when COVID arrived the US market went up sixty 0:01:40.360 --> 0:01:44.520 percent or so, people will be thinking that there's a 0:01:44.560 --> 0:01:46.160 good chance that will happen again. So I want to 0:01:46.160 --> 0:01:48.680 talk about chairs today, and just before I start, by 0:01:48.680 --> 0:01:51.840 the way, one or two pieces of correspondence about when 0:01:51.840 --> 0:01:54.080 I talk about chairs, and do I have a conflict 0:01:54.120 --> 0:01:57.080 of interest, et cetera. I mean I have an SMSF 0:01:57.720 --> 0:01:59.880 and of course I want to invest. I have all 0:01:59.880 --> 0:02:02.680 the things that you have in terms of shares, just 0:02:02.760 --> 0:02:05.760 to clear the air in terms of ordinary shares. This 0:02:05.840 --> 0:02:08.480 isn't ETF re funds in my portfolio I have. I 0:02:08.520 --> 0:02:11.840 try to keep it to ten always. Just now, these 0:02:11.880 --> 0:02:13.480 are the ten shares I have. I am not going 0:02:13.480 --> 0:02:15.280 to give you wastings aroundthing, but here they are. Are 0:02:15.320 --> 0:02:19.520 you ready? Come on with bank CSL Hansen technology a 0:02:19.639 --> 0:02:28.440 quarry bank. Quarry technology NAB, Next, DC, Cube, Ramsey and Reo. 0:02:28.639 --> 0:02:30.320 Some of them I've had for twenty years. Some of 0:02:30.360 --> 0:02:35.080 them I've had four a year. My guest today is 0:02:35.120 --> 0:02:37.640 a regular on the show Friend of the Show. It's 0:02:37.760 --> 0:02:43.120 Jemma Dale, head of Investor Behavior and SMSF at NAB Trade. 0:02:43.240 --> 0:02:43.919 Oh are you, Gemma? 0:02:44.200 --> 0:02:45.480 I'm well, thank you? How are you? 0:02:46.360 --> 0:02:47.720 What do you think of my portfolio? 0:02:49.320 --> 0:02:51.360 That's the million dollar question, isn't it? 0:02:52.120 --> 0:02:53.040 Instinctive response? 0:02:53.240 --> 0:02:55.280 Probably my first question would be what else do you have? 0:02:55.639 --> 0:02:57.720 I'm not telling you what else I have? Oh, I 0:02:57.760 --> 0:03:00.560 have ECF, since I have some active fun and I 0:03:00.639 --> 0:03:03.760 have gold, and I feel I like to think my 0:03:03.880 --> 0:03:09.160 SMSF is very well diversified. I mean, I'm obsessed with 0:03:09.200 --> 0:03:12.480 deir feresssification, and I do think it's very well diversified, 0:03:13.040 --> 0:03:18.480 though I find the share component constantly gets bigger than 0:03:18.480 --> 0:03:20.720 I meant it to for the simple reason shares have 0:03:20.760 --> 0:03:22.240 been so good for so long. 0:03:22.720 --> 0:03:25.399 Yeah, that's quite interesting. I mean the most interesting thing 0:03:26.280 --> 0:03:32.560 about that is we focus on the individual stocks because 0:03:32.600 --> 0:03:35.920 you can see their performance. It's very hard to get 0:03:35.960 --> 0:03:38.600 excited about the performance of your ETFs, to be honest, 0:03:39.040 --> 0:03:43.240 and some of the very well diversified components of your portfolio, 0:03:43.280 --> 0:03:46.960 even though they're going to be thousands of securities by 0:03:47.000 --> 0:03:49.200 the time you add them all, lot would be my guess, 0:03:49.400 --> 0:03:52.600 and so you've probably got exposure to thousands of things, 0:03:52.720 --> 0:03:54.880 and yet you look at the ten that you can 0:03:54.920 --> 0:03:57.200 definitely put a number on and worry about those. And 0:03:57.200 --> 0:04:00.160 we're all the same. We all do it very You've 0:04:00.160 --> 0:04:01.720 got a lot of banks in there, but you're doing 0:04:01.880 --> 0:04:04.600 very well out of them, so certainly can't complain at 0:04:04.600 --> 0:04:05.120 the moment. 0:04:06.640 --> 0:04:09.840 There's no dogs in there. There's one dog. Let me 0:04:09.920 --> 0:04:11.920 call it out loud and clear. I wish I didn't 0:04:11.960 --> 0:04:13.720 have it. I'm stuck with it, and I should have 0:04:13.760 --> 0:04:15.440 the guts to sell it. But then every time I 0:04:15.440 --> 0:04:17.240 look at it, I say, maybe it's coming round, which 0:04:17.279 --> 0:04:20.480 is Ramsey Healthcare. And there's one absolute ripper in there, 0:04:20.520 --> 0:04:23.039 which is next TOC, followed closely, I might add, by 0:04:23.120 --> 0:04:27.360 mcquari Technology, and both those docks are AI plays in 0:04:27.400 --> 0:04:30.039 my mind, though I have next TC for years, but 0:04:30.120 --> 0:04:33.080 to Mcquarie Technology relatively recently. Anyway, I'm just putting that 0:04:33.120 --> 0:04:34.800 out there, folks, just to clear the air, and because 0:04:34.800 --> 0:04:39.200 we're going to talk about shares today. Exclusively because I 0:04:39.240 --> 0:04:43.080 think it's a terrific market. Jem At tell me, first 0:04:43.120 --> 0:04:45.240 of all, because you see all the data and a 0:04:45.440 --> 0:04:47.440 trade and you see what's coming in and what people 0:04:47.480 --> 0:04:51.040 are doing. Do you detect any change in the flavor 0:04:51.080 --> 0:04:54.440 of shared trading, the volume of shared trading, the demographics 0:04:54.480 --> 0:04:56.760 of shared trading in this last few months as people 0:04:56.800 --> 0:04:59.480 are starting to realize, gee, the market's damn good for 0:04:59.560 --> 0:05:00.360 quite some time. 0:05:00.880 --> 0:05:04.799 Yeah, it's so interesting. The last few years have been fascinating. 0:05:04.839 --> 0:05:08.040 I mean, we've talked about this before, but the well 0:05:08.080 --> 0:05:13.600 over half of our investor base has joined us since COVID, 0:05:13.760 --> 0:05:17.680 so the huge influx of new investors and new accounts 0:05:17.680 --> 0:05:20.400 for us. But new investors came through in that COVID 0:05:20.400 --> 0:05:22.320 period when the market fell off a cliff, so that 0:05:22.400 --> 0:05:25.640 thirty percent in three weeks dip on the ax and 0:05:25.680 --> 0:05:28.640 saw very similar responses from share markets around the world. 0:05:29.080 --> 0:05:31.640 Was when the vast majority of our new accounts were opened, 0:05:32.040 --> 0:05:34.880 and in the subsequent sort of twelve months, so people 0:05:34.960 --> 0:05:38.360 came to investing during that period and had this incredible 0:05:38.360 --> 0:05:42.680 opportunity to buy shares at a very discounted price, and 0:05:42.720 --> 0:05:46.360 then they rocketed back very quickly. So many of our 0:05:46.360 --> 0:05:49.359 investors have had a really interesting first experience. If you 0:05:49.400 --> 0:05:51.960 started training for the first time in nineteen ninety nine, 0:05:52.040 --> 0:05:54.000 you had a very different experience that somebody started in 0:05:54.000 --> 0:05:56.440 two thousand and A lot of people you know who 0:05:56.480 --> 0:05:58.680 have been around for a long time felt that was 0:05:58.720 --> 0:06:01.080 a normalist that period, but it was your first experience, 0:06:01.120 --> 0:06:04.320 it wasn't right. That's what share investing is for you now, 0:06:05.000 --> 0:06:09.360 and so those people are familiar with a pretty strong market. 0:06:09.760 --> 0:06:13.200 That's half of our investors. Those who've been around a 0:06:13.240 --> 0:06:15.520 long time tend to have much bigger portfolios. I've had 0:06:15.560 --> 0:06:18.880 a lot more time to build up their wealth. You 0:06:18.920 --> 0:06:22.360 mentioned you've got CBA and McCrory and CSL. They're the 0:06:22.440 --> 0:06:24.600 kind of shares that have made people a lot of 0:06:24.640 --> 0:06:27.440 money over the long term. You know, if you're buying 0:06:27.440 --> 0:06:29.560 those in the nineties, and a lot of our investors were, 0:06:29.600 --> 0:06:35.560 then you have done extremely well. Those people are moving 0:06:35.680 --> 0:06:41.719 money around but feeling reluctant to throw a lot of 0:06:41.760 --> 0:06:43.919 money at this market, which I find really interesting. So 0:06:44.000 --> 0:06:48.120 our cash book is very high at the moment. Newer 0:06:48.160 --> 0:06:51.559 and younger investors are mostly buying ETFs and just buying 0:06:51.600 --> 0:06:55.159 them consistently as a wealth creation strategy. That's a very 0:06:55.160 --> 0:06:57.880 common strategy now more and more people are doing it, 0:06:58.360 --> 0:07:01.279 and they're pretty agnostic as to mine market movements. They 0:07:01.440 --> 0:07:04.480 will buy more on a down day, which I find fascinating. 0:07:04.520 --> 0:07:07.160 So you think they're agnostic, but they're very aware of 0:07:07.200 --> 0:07:08.960 what is going on in the market, and they will 0:07:09.000 --> 0:07:11.320 absolutely buy more if the market gets hammered in the 0:07:11.440 --> 0:07:14.200 US overnight and futures are down, they will throw more 0:07:14.240 --> 0:07:17.400 into an ETF that day than they would if futures 0:07:17.400 --> 0:07:21.320 were really positive. But it's a long term strategy for them, 0:07:21.320 --> 0:07:24.480 and they tend to do it consistently. And then our 0:07:24.520 --> 0:07:28.560 more mature investors are a little bit anxious, right They're 0:07:28.640 --> 0:07:31.520 seeing CBA above one hundred and thirty dollars, They're seeing 0:07:31.640 --> 0:07:35.280 prices that feel quite stretched in some areas of their portfolios. 0:07:35.480 --> 0:07:37.800 And because those portfolios have been around a long time 0:07:38.240 --> 0:07:41.040 and tend to hold things they're very familiar with and 0:07:41.120 --> 0:07:43.920 know very well. Yeah, they're a little bit of nov 0:07:44.120 --> 0:07:46.280 I would guess, you know, they're not super keen to 0:07:46.360 --> 0:07:47.360 chase these prices. 0:07:48.200 --> 0:07:50.840 Right. Okay, let's take it on board. One of the 0:07:50.880 --> 0:07:54.200 things we were saying about, and I imagine our listeners 0:07:54.200 --> 0:07:56.960 are something broadly similar. Right, So they have the ETF 0:07:57.000 --> 0:07:58.960 so core and satellite, they have the maybe they only 0:07:59.000 --> 0:08:01.320 have ETFs, Maybe they have some ETFs, like I have 0:08:02.840 --> 0:08:05.960 to achieve certain things right to access the most of 0:08:06.000 --> 0:08:09.880 the offshore. As you notice, all those stocks are Australian 0:08:10.640 --> 0:08:15.800 an offshore. I'm using atfs and funds mostly. But when 0:08:15.840 --> 0:08:18.840 you look at the composition of the market, so people 0:08:19.120 --> 0:08:22.400 will say the thing, we're obsessed. Why do we talk 0:08:22.440 --> 0:08:26.200 about individual shares when ETFs are so important or they 0:08:26.240 --> 0:08:29.640 may be for our listeners because they're the swing factor. Right, 0:08:30.320 --> 0:08:33.320 that's the difference between having an ordinary year the same 0:08:33.360 --> 0:08:36.680 as everyone else, winning big or losing. And that's I 0:08:36.720 --> 0:08:38.480 think that that will never I don't know, but I 0:08:38.520 --> 0:08:41.439 don't think that will ever change. That will never go. 0:08:41.640 --> 0:08:46.680 The attraction of shares and the particular attraction of shares 0:08:47.040 --> 0:08:50.080 that they can do so well. And ETFs are fine, 0:08:50.120 --> 0:08:53.120 they're great, but you will never ever do any better 0:08:53.200 --> 0:08:59.679 than the norm. 0:08:57.400 --> 0:09:01.839 With an ETF. Yeah. Absolutely, really think to me, as 0:09:01.880 --> 0:09:05.280 I said, there is this very strong preference for ETFs, 0:09:05.320 --> 0:09:08.320 particularly in younger investors. And funnily enough, you talk about 0:09:08.400 --> 0:09:12.040 using ETFs for offshore. But our investors tend to start 0:09:12.080 --> 0:09:15.400 with the AX. And when I say tend to, I 0:09:15.440 --> 0:09:18.640 mean there is a dramatic difference between the number of 0:09:18.679 --> 0:09:20.640 investors and the amounts of money they put to the 0:09:20.640 --> 0:09:23.560 ASX two hundred. It is the first investment versus what 0:09:23.760 --> 0:09:25.720 is a long way down the list, which is the 0:09:25.800 --> 0:09:28.760 S and P five hundred. As this second option, it 0:09:28.880 --> 0:09:32.199 is a long way behind. So people start buying the 0:09:32.240 --> 0:09:35.360 ASEX first and then they diversified beyond that, which I 0:09:35.360 --> 0:09:40.360 find fascinating. And yeah, the appeal is really obvious, which 0:09:40.400 --> 0:09:42.480 for so many young people and so many people new 0:09:42.520 --> 0:09:44.439 to market, I don't know what to buy. That's always 0:09:44.440 --> 0:09:46.640 the biggest question. I don't know what to buy. ETF 0:09:46.720 --> 0:09:48.920 just takes that problem away for you. Right, just buy 0:09:48.920 --> 0:09:51.000 the whole market. You'll be fine. And as you say, 0:09:51.080 --> 0:09:55.000 then you don't have any opportunity to outperform. You're going 0:09:55.080 --> 0:09:58.319 to get the market minus the tiny feet. But you're 0:09:58.320 --> 0:10:00.480 gonna get market. That's great. It's better than enough, right, 0:10:00.520 --> 0:10:03.400 it's very good based on how performance has been over 0:10:03.400 --> 0:10:07.440 the last twelve months. There are many others who are 0:10:07.480 --> 0:10:11.200 looking for something much better than that, and they feel 0:10:11.280 --> 0:10:14.920 very strongly about making their own choices. Funnily enough, they 0:10:14.920 --> 0:10:18.040 tend to be more experienced investors. They're not young people, 0:10:18.679 --> 0:10:21.560 you know, willing to bet their shirts, right, it's quite 0:10:21.640 --> 0:10:24.080 the opposite. It's people who are very experienced. They know 0:10:24.160 --> 0:10:27.960 what they're doing, and they're absolutely going to try to 0:10:28.000 --> 0:10:30.680 get a better return than the market or and it 0:10:30.720 --> 0:10:33.560 was something I didn't ask you about your portfolio. They've 0:10:33.559 --> 0:10:35.520 got a very specific need. So a lot of our 0:10:35.559 --> 0:10:38.480 older investors invest for yields, and they are not looking 0:10:38.520 --> 0:10:41.200 for high growth. That's not what they're after. They're not 0:10:41.240 --> 0:10:44.040 going to take a punt on ZIP. They just want 0:10:44.160 --> 0:10:45.880 yield and that's what they're going to invest for. 0:10:46.559 --> 0:10:50.280 Yeah, very true. The irony is that there would have 0:10:50.320 --> 0:10:52.720 been twice literally haven't met twice as much money if 0:10:52.760 --> 0:10:56.720 they had bought a US ETF rather the S and 0:10:56.720 --> 0:10:58.439 P if I found it, rather than the ear six 0:10:58.800 --> 0:10:59.600 year after year. 0:11:00.400 --> 0:11:03.680 Certainly, the last twenty years have been pretty astonishing for 0:11:03.880 --> 0:11:04.800 US equities. 0:11:05.240 --> 0:11:06.680 Twenty years was due Jemma. 0:11:07.760 --> 0:11:10.080 That will do it for the vast majority of people. 0:11:10.200 --> 0:11:12.840 For most of us, that is long enough as a timeframe. 0:11:12.880 --> 0:11:16.400 So yeah, absolutely, the US has been astonishingly strong in 0:11:16.520 --> 0:11:18.400 terms of its performance, and that has been the rise 0:11:18.440 --> 0:11:21.720 of tech. Right. It's very clear what drove that performance, 0:11:22.120 --> 0:11:24.160 and it's very clear when you look at the composition 0:11:24.240 --> 0:11:25.920 of the S and P five hundred, now what has 0:11:26.000 --> 0:11:28.960 driven that performance. There's a lot of people making comparisons 0:11:29.000 --> 0:11:31.480 to sort of the ninety nine two thousand era right 0:11:31.480 --> 0:11:35.400 now based on the hype around AI, but we haven't 0:11:35.400 --> 0:11:37.600 seen the pullback. We thought we saw it in twenty two, 0:11:37.640 --> 0:11:40.439 and it just came around again, right. 0:11:40.800 --> 0:11:43.080 Comes around again. The other thing is, yes, I know, 0:11:43.200 --> 0:11:46.120 nineteen ninety nine, sure you know, but maybe it's not 0:11:46.240 --> 0:11:49.880 nineteen ninety nine. Maybe it's nineteen ninety five. Yeah, and 0:11:49.920 --> 0:11:52.400 there's four fabulous years to go. I mean, I don't know, 0:11:52.480 --> 0:11:55.040 and I'm not going to Both of us have experienced 0:11:55.120 --> 0:11:57.040 enough that I'm not silly enough to ask you, do 0:11:57.080 --> 0:11:59.400 you know where the market's going? And I'm not going 0:11:59.440 --> 0:12:02.480 to puntificate as to where it's going. But a couple 0:12:02.520 --> 0:12:04.720 of things I do want to ask you when we 0:12:04.760 --> 0:12:08.440 sit there now as investors on the share market, so 0:12:08.480 --> 0:12:10.320 we look at that, we look at the return on 0:12:10.360 --> 0:12:13.880 the share market, and it's well above average, okay above 0:12:13.920 --> 0:12:18.560 average on historical figures. It's above average on recent figures. 0:12:18.960 --> 0:12:22.280 There is four percent inflation of course, okay, so really 0:12:22.320 --> 0:12:24.480 you know, you got to put that in If you say, 0:12:24.520 --> 0:12:26.839 oh my my shares did ten percent last year, it's great, 0:12:26.920 --> 0:12:29.920 Yeah they did, but it's four percent inflation, so you 0:12:30.240 --> 0:12:32.520 got to put that in mind. When there was no inflation, 0:12:32.800 --> 0:12:34.800 six percent would have been the same. That's one thing. 0:12:35.000 --> 0:12:37.760 And we have the dividends. The big dilemma I think 0:12:37.800 --> 0:12:41.600 for Australian investors is you mentioned about so many people 0:12:41.600 --> 0:12:44.840 who want yield and the older very broadly, the older 0:12:44.920 --> 0:12:47.640 you are, the more you want yield. It's as simple 0:12:47.679 --> 0:12:50.320 as that. And by the time you retire, it's all 0:12:50.360 --> 0:12:52.680 you want, right. I talked to someone the other day, 0:12:53.000 --> 0:12:57.280 very very well known financial journalist, and they are for 0:12:57.320 --> 0:12:59.800 the first time in their life, they're looking for advice 0:13:01.480 --> 0:13:03.800 because they're so confident in their own ability that they 0:13:03.880 --> 0:13:06.600 never thought of asking anybody as for advice before. But 0:13:06.920 --> 0:13:08.880 I said, well, what do you want? You know, what 0:13:08.920 --> 0:13:11.920 do you want? And this person simply said, I just 0:13:11.960 --> 0:13:15.320 want income. We hit his wife and just want income. 0:13:15.520 --> 0:13:17.680 And that's what happens when you get to a certain point, 0:13:17.760 --> 0:13:20.600 and that's fair enough, and you maybe do you think 0:13:20.640 --> 0:13:23.400 you lose your nerve as you get older as well 0:13:23.520 --> 0:13:25.280 in terms of investing. 0:13:26.320 --> 0:13:28.920 I don't think it's not necessarily you just don't need 0:13:28.960 --> 0:13:31.960 to take the risk anymore. You know, a young person 0:13:32.280 --> 0:13:36.160 is trying to build from nothing. You know, it's unless 0:13:36.160 --> 0:13:38.560 you've inherited some money or you happen to cross a 0:13:38.600 --> 0:13:42.520 windfall or something. You are taking any excess cashflow you've 0:13:42.520 --> 0:13:46.200 got from your job and trying to build something aggressively. 0:13:46.320 --> 0:13:48.640 You've got to build it fast, you know. When you're young, 0:13:48.720 --> 0:13:50.360 you've got to build it fast because you're coming off 0:13:50.360 --> 0:13:53.040 with such a low base, Whereas when you're older, it's 0:13:53.080 --> 0:13:57.439 about the preservation of what you have and you're far 0:13:57.600 --> 0:14:00.160 more to lose. And we know about sequencing risks, so 0:14:00.200 --> 0:14:03.040 for anyone who's not familiar with the concept, you understand 0:14:03.040 --> 0:14:05.480 it intuitively, but it's really there's a lot of academic 0:14:05.520 --> 0:14:09.320 work around it now. Sequencing risk is effectively when you 0:14:09.360 --> 0:14:12.079 are drawing down on your money. So say you have 0:14:12.120 --> 0:14:14.640 a million dollars to provide for your retirement and you're 0:14:14.679 --> 0:14:18.320 taking out fifty thousand dollars a year. If you suffer 0:14:18.360 --> 0:14:21.880 a massive downturn in the market in year one, and 0:14:21.960 --> 0:14:24.960 that million dollars turns into six hundred thousand dollars, which 0:14:25.000 --> 0:14:27.520 sounds dramatic, But this happened to a colleague of mine 0:14:27.640 --> 0:14:29.600 in two thousand and eight, two thousand and nine, he 0:14:29.720 --> 0:14:30.760 was back at work. 0:14:31.000 --> 0:14:32.800 It happened to everyone in two thousand and eight too. 0:14:32.840 --> 0:14:35.400 Then the market felt fifty percent of us never forget that. 0:14:35.640 --> 0:14:38.000 Yeah, And he had a diversified portfolio, he'd taken a 0:14:38.000 --> 0:14:39.840 lot of care, he worked in finance and markets, he 0:14:39.920 --> 0:14:41.600 knew what he was doing, and he was back at 0:14:41.600 --> 0:14:45.200 work twelve months after retirement to rebuild. Because when you're 0:14:45.240 --> 0:14:47.800 pulling down fifty thousand dollars a year out of six 0:14:47.880 --> 0:14:51.440 hundred thousand, it runs out very quickly compared to pulling 0:14:51.480 --> 0:14:53.960 it out of a million that might be growing. So 0:14:54.080 --> 0:14:56.920 that sequencing risk, if you suffer an adverse event right 0:14:57.000 --> 0:15:00.600 at the beginning of your retirement, is very damaging to 0:15:00.800 --> 0:15:03.920 the long term outcome of your portfolio and your wealth frankly, 0:15:04.000 --> 0:15:08.560 and your lifestyle. So people, it makes sense to be 0:15:08.640 --> 0:15:11.760 anxious about losing a lot early in retirement in particular, 0:15:11.800 --> 0:15:13.600 And as you get older, does it matter so much? 0:15:13.680 --> 0:15:16.480 You're okay? The vast majority of older people I speak 0:15:16.480 --> 0:15:18.400 to and retired people they don't want to draw down 0:15:18.440 --> 0:15:21.080 on the capital at all, and retirement they want to 0:15:21.080 --> 0:15:23.080 preserve the whole lot and just live off the income. 0:15:23.120 --> 0:15:25.520 And that's where that desire for yield comes from. It's 0:15:25.560 --> 0:15:28.040 not a really chunky yield. And I don't want to 0:15:28.040 --> 0:15:30.400 think about drawing down on the capital. That's too much 0:15:30.480 --> 0:15:31.000 risk for me. 0:15:31.680 --> 0:15:35.480 Yeah, yeah, And that is I suppose in a way, 0:15:35.480 --> 0:15:38.440 it's the optimal it's the optimal situation. I think we 0:15:38.440 --> 0:15:41.680 should be careful. And we had actually awn on the 0:15:41.680 --> 0:15:44.480 show Very Interesting a few weeks ago about that whole 0:15:44.560 --> 0:15:47.720 issue about how you know, I mean, yes, you'd rather 0:15:47.760 --> 0:15:50.760 not draw down on capital, but similarly, you're not going 0:15:50.800 --> 0:15:52.680 to live for a thousand years, okay, there is a 0:15:52.720 --> 0:15:55.840 point of which you could safely actuarially make an esspence 0:15:55.840 --> 0:15:57.400 say okay, and as soon I live to one hundred 0:15:57.400 --> 0:15:59.680 and ten, you know, and then you can walk backwards 0:15:59.720 --> 0:16:01.680 from there. That would be I would imagine safe enough 0:16:01.680 --> 0:16:04.640 for most people even today with the longevity risk that 0:16:04.720 --> 0:16:06.880 we have. But on the market and where it's going. 0:16:06.920 --> 0:16:10.240 So we crossed the eight thousand mark on the ASX 0:16:10.240 --> 0:16:14.320 two hundred the other day, big number very important milestone, 0:16:14.520 --> 0:16:17.240 important to show that we are in blue sky, that 0:16:17.280 --> 0:16:22.200 the ASEX is really starting to move, and let's just 0:16:22.240 --> 0:16:24.360 put the US to one side just for the moment 0:16:24.400 --> 0:16:26.520 at this part of the show and talk about the ASEX. 0:16:26.880 --> 0:16:31.120 One other very big change occurred just around the same 0:16:31.160 --> 0:16:35.040 time that was happening, and that was that that our 0:16:35.120 --> 0:16:38.200 market is, as everyone knows very much based on two things, 0:16:38.440 --> 0:16:42.000 banks and minors and BHP had been the biggest stock 0:16:42.560 --> 0:16:46.920 in the market for years, and CBA on Monday morning 0:16:47.040 --> 0:16:50.120 this week, because I was going to do a story 0:16:50.240 --> 0:16:53.520 gem about how it was going to overtake BHP, and 0:16:53.600 --> 0:16:55.800 as I was doing it on Monday morning, I had 0:16:55.800 --> 0:16:57.640 it actually written, and I had it written in this 0:16:57.720 --> 0:17:00.040 way that said it's going to overtake. I had a 0:17:00.040 --> 0:17:03.880 about lunchtime, I looked again and the numbers had changed 0:17:03.920 --> 0:17:06.120 around and it had overtaken. So a bit of luck 0:17:06.160 --> 0:17:08.640 that I was able to say on the day, hey, 0:17:08.880 --> 0:17:11.879 CBA is after becoming the biggest stock. It happened before 0:17:11.920 --> 0:17:14.879 my eyes. But and I think this time around it 0:17:14.920 --> 0:17:17.000 is going to stay there. And I think it's stayed 0:17:17.040 --> 0:17:19.720 there before about four years ago, it was there for 0:17:19.760 --> 0:17:23.480 a year. And here we are again. What does that mean? 0:17:23.520 --> 0:17:26.080 Do you think that our biggest stock is a bank 0:17:26.160 --> 0:17:29.800 now and the banks are under the pinning our ASX now, 0:17:29.880 --> 0:17:30.640 not the miners. 0:17:30.840 --> 0:17:33.400 Yeah, it's an interesting one, not least because I work 0:17:33.480 --> 0:17:33.960 for a bank. 0:17:34.800 --> 0:17:38.280 Yeah, but we talk about bank stocks as a generic. 0:17:38.560 --> 0:17:41.120 I'll talk about them generally, but it's worth calling out CBA. 0:17:41.600 --> 0:17:47.280 CBA is broadly understood to be the most expensive bank 0:17:47.720 --> 0:17:51.800 in the world based on share pricense valuation. That's an 0:17:51.840 --> 0:17:56.520 extraordinary thing. And it is a very high quality bank. 0:17:56.800 --> 0:17:59.119 You know, it doesn't carry the risk of US banks 0:17:59.119 --> 0:18:01.040 and a lot of the other alternatives out there in 0:18:01.080 --> 0:18:05.560 the world. It is very exposed to the Australian consumer 0:18:05.680 --> 0:18:10.560 through home loans. It's a very strong franchise and it 0:18:10.640 --> 0:18:17.879 continues to maintain this massive premium over the other Australian 0:18:17.880 --> 0:18:22.640 banks and over other global banks because over literally decades, 0:18:22.800 --> 0:18:28.320 it's continued to maintain its margins to an extent, you know, 0:18:28.600 --> 0:18:31.399 better than others, let's put it that way. It continues 0:18:31.440 --> 0:18:35.160 to have this very strong footprint and have the largest 0:18:35.160 --> 0:18:39.360 home loan share in the Australian market. The Australian homelan 0:18:39.480 --> 0:18:44.720 market continues to hold up despite constant predictions of fallen 0:18:44.800 --> 0:18:48.679 house prices. All of the things that are supposed to 0:18:48.840 --> 0:18:51.760 undermine the share price of CBA and the Australian banks 0:18:51.800 --> 0:18:56.280 just don't come to fruition. It doesn't mean they never will. 0:18:56.760 --> 0:18:59.000 It just means that it's called the win. Don't make 0:18:59.040 --> 0:19:02.040 a trade for a reason shorting the Australian banks. It 0:19:02.080 --> 0:19:04.040 has cost a lot of people a lot of money. 0:19:04.080 --> 0:19:06.040 We keep thinking that can't continue to grow at this 0:19:06.240 --> 0:19:08.320 right in terms of the share prices. 0:19:08.600 --> 0:19:12.080 And yet and it's really worth thinking about the folks. 0:19:12.080 --> 0:19:15.080 And it's not just because Jemma works for a bank. 0:19:15.119 --> 0:19:17.240 And by the way, I mean, I would think a 0:19:17.240 --> 0:19:19.120 lot more of her. There's no way that she would 0:19:19.119 --> 0:19:22.320 simply talk her book or anything like that. Because I've 0:19:22.359 --> 0:19:23.400 had her on the show lots of time. 0:19:24.240 --> 0:19:25.040 She didn't work for bank. 0:19:25.119 --> 0:19:27.320 I was like, oh no, no, but she doesn't talk 0:19:27.359 --> 0:19:30.840 her book. And anyway, here's the facts. It's very hard 0:19:30.840 --> 0:19:33.480 to find a buy notes. It's almost impossible to find 0:19:33.520 --> 0:19:35.840 a single stoff broker in the Australian stock market that 0:19:35.880 --> 0:19:38.960 would tell you to buy banks right now. There's there, 0:19:39.080 --> 0:19:43.320 there's holds and underweights and everything across the board. On 0:19:43.359 --> 0:19:46.320 all the banks and on CBA. And here's the thing. 0:19:47.400 --> 0:19:49.800 All those brokers are wrong, and they're wrong all year, 0:19:49.840 --> 0:19:51.960 and they're wrong month after a month. This is August. 0:19:52.000 --> 0:19:54.800 They're saying it since late last year. That doesn't mean, 0:19:54.920 --> 0:19:57.280 as Jemma says, they will be wrong in the future, 0:19:57.320 --> 0:20:00.439 But I tell you what, right now, they're wrong. So 0:20:00.480 --> 0:20:02.600 the point I'm making is that we have the banks 0:20:02.640 --> 0:20:05.360 now dominant on our market, and then we have the miners, 0:20:05.359 --> 0:20:08.480 and we have the usual suspects CSL and some of 0:20:08.520 --> 0:20:11.600 the biggest stocks. Macquarie Bank two also never forget in 0:20:11.680 --> 0:20:14.840 there very much, so now in the top ten, even 0:20:14.840 --> 0:20:17.240 though it's an investment bank and not typical and would 0:20:17.240 --> 0:20:19.679 have a lot more risk and a different nature of 0:20:19.760 --> 0:20:23.000 risk than what we might call high street banks, the 0:20:23.000 --> 0:20:26.080 big four that we all know. So, Jemy, what are 0:20:26.119 --> 0:20:29.119 your troops on n AB trade? What else are people buying? 0:20:29.160 --> 0:20:31.840 Because you know, one of the things that I always 0:20:31.880 --> 0:20:34.240 think about one of the great quotes about stock market 0:20:34.280 --> 0:20:37.080 investing is that it's you can look at a stock 0:20:38.160 --> 0:20:39.760