1 00:00:09,080 --> 00:00:12,280 Speaker 1: Hello and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:12,400 --> 00:00:16,160 Speaker 1: James Kirby, the Wealth editor at the Australian. Welcome aboard everybody. 3 00:00:16,239 --> 00:00:19,079 Speaker 1: It's the last regular show of the year, and while 4 00:00:19,079 --> 00:00:21,360 Speaker 1: I have a chance to say it, I just want 5 00:00:21,400 --> 00:00:27,160 Speaker 1: to wish all our listeners a good relaxing break over 6 00:00:27,200 --> 00:00:31,320 Speaker 1: the holidays and a prosperous new year. Maybe we can 7 00:00:31,360 --> 00:00:33,839 Speaker 1: help you with the chances of a prosperous twenty twenty five, 8 00:00:33,880 --> 00:00:37,199 Speaker 1: So watch out on the comic weeks for some special shows. 9 00:00:37,240 --> 00:00:42,600 Speaker 1: There's a terrific special episode on the fire movement, financial independence, 10 00:00:42,640 --> 00:00:45,479 Speaker 1: retire early movement, which a lot of people have been 11 00:00:45,479 --> 00:00:48,279 Speaker 1: interested in. I've saved a special show for you on 12 00:00:48,320 --> 00:00:51,240 Speaker 1: that with Lion Lee. That'll be out on Christmas Eve, 13 00:00:51,560 --> 00:00:53,960 Speaker 1: and then we'll roll out a four part special summer 14 00:00:54,280 --> 00:00:57,560 Speaker 1: series on how to prepare as an investor in twenty 15 00:00:57,560 --> 00:00:59,680 Speaker 1: twenty five. The first two shows will be on the 16 00:00:59,720 --> 00:01:02,800 Speaker 1: share markets. They're really good, if I may say so, 17 00:01:02,920 --> 00:01:06,640 Speaker 1: On the on the Outlook for markets that is all markets, 18 00:01:06,640 --> 00:01:09,759 Speaker 1: the ASEX, the NASDAK, whatever you've got. I've got Mark 19 00:01:10,040 --> 00:01:13,360 Speaker 1: Dokum of global X. And then there's a second show 20 00:01:13,400 --> 00:01:17,600 Speaker 1: in the series, which is on share selection and share 21 00:01:17,640 --> 00:01:21,319 Speaker 1: picking for you the Australian investor on the ASEX, and 22 00:01:21,360 --> 00:01:25,399 Speaker 1: that's with June Belieu of ten Capital. Or later in 23 00:01:25,400 --> 00:01:28,200 Speaker 1: the series we'll have some shows on property and once 24 00:01:28,280 --> 00:01:31,000 Speaker 1: you've put all that together, there's a final show on 25 00:01:31,200 --> 00:01:34,960 Speaker 1: managing your investment portfolio in the year ahead. So we 26 00:01:35,040 --> 00:01:37,360 Speaker 1: look forward to all that, but first let's take a 27 00:01:37,360 --> 00:01:40,440 Speaker 1: look at what actually happened in twenty twenty four. And 28 00:01:40,480 --> 00:01:43,480 Speaker 1: I'm joined by the most regular guest of twenty twenty four, 29 00:01:44,240 --> 00:01:47,280 Speaker 1: James Gerard of Financial Advisor dot com dot you. How 30 00:01:47,280 --> 00:01:47,520 Speaker 1: are you? 31 00:01:48,560 --> 00:01:51,840 Speaker 2: I'm doing great for this pre Christmas episode. Love to 32 00:01:51,840 --> 00:01:52,360 Speaker 2: be here with you. 33 00:01:53,200 --> 00:01:55,080 Speaker 1: Well, it's good that you could get the time. I 34 00:01:55,200 --> 00:01:58,480 Speaker 1: presume like everything else, it's like for most people. It's 35 00:01:58,520 --> 00:02:03,520 Speaker 1: actually murderous, difficult and busy the last few days because 36 00:02:04,040 --> 00:02:07,600 Speaker 1: I always have to sort of accelerate to take a break, 37 00:02:07,640 --> 00:02:09,399 Speaker 1: so by the time I actually take a break, I'm 38 00:02:09,800 --> 00:02:11,799 Speaker 1: in much worse condition than I would be on the 39 00:02:11,840 --> 00:02:12,919 Speaker 1: average weekend. 40 00:02:13,040 --> 00:02:15,400 Speaker 2: Are you the same, Yeah, I'm same. I was looking 41 00:02:15,400 --> 00:02:18,200 Speaker 2: at my calendar tomorrow I've got nine meetings before we 42 00:02:18,240 --> 00:02:20,240 Speaker 2: have our Christmas party at five point thirty. So I'm 43 00:02:20,240 --> 00:02:22,359 Speaker 2: not sure how to drink or just pass out when 44 00:02:22,360 --> 00:02:22,839 Speaker 2: I get there. 45 00:02:23,520 --> 00:02:28,680 Speaker 1: Oh god, oh that's bad. Yes, I've had some What 46 00:02:28,720 --> 00:02:30,600 Speaker 1: can I say? I have to be very diplomatic here. 47 00:02:30,800 --> 00:02:35,440 Speaker 1: I've had a surprise, some surprise requests from the editorial 48 00:02:35,480 --> 00:02:39,080 Speaker 1: desk of The Australian the day before I'm supposed to finish. 49 00:02:39,080 --> 00:02:41,600 Speaker 1: So what can I say? Accept, James, It's great to 50 00:02:41,639 --> 00:02:44,960 Speaker 1: have experience, because I've had lots of surprises at Christmas 51 00:02:45,120 --> 00:02:48,080 Speaker 1: in the past. So I was waiting. I was just waiting, 52 00:02:48,120 --> 00:02:51,079 Speaker 1: and of course it came in this morning, don't you know. Okay, 53 00:02:51,480 --> 00:02:55,120 Speaker 1: now let's take a look. You know, it's funny every people. 54 00:02:55,160 --> 00:02:57,680 Speaker 1: Of course they do their wraps for the year too fast. 55 00:02:57,720 --> 00:03:00,480 Speaker 1: I reckon, there's people doing all these wraps of the 56 00:03:00,520 --> 00:03:03,480 Speaker 1: year saying the Australian share market will do sixteen looks 57 00:03:03,520 --> 00:03:06,960 Speaker 1: like it's going to do sixteen percent. Eighteen percent. Thing is, 58 00:03:07,120 --> 00:03:09,320 Speaker 1: believe it or not, Folks, as we speak to you 59 00:03:09,720 --> 00:03:14,040 Speaker 1: on the nineteenth of December, the ASX two hundred, Well 60 00:03:14,080 --> 00:03:16,840 Speaker 1: it's hey, it's good, don't you worry about that. But 61 00:03:17,160 --> 00:03:20,000 Speaker 1: in fact it has waned ever so slightly in the 62 00:03:20,080 --> 00:03:22,600 Speaker 1: last the last few days, and we are now looking 63 00:03:22,680 --> 00:03:24,840 Speaker 1: if we rule off the books this morning, James, we're 64 00:03:24,880 --> 00:03:27,960 Speaker 1: looking at about eight and a half percent for the year, 65 00:03:28,240 --> 00:03:33,760 Speaker 1: plus four and a bit for dividends, so maybe we'll 66 00:03:33,800 --> 00:03:37,040 Speaker 1: still be in the teens of thirteen percent share market return. 67 00:03:37,200 --> 00:03:40,240 Speaker 1: And chant West this morning said for super funds, for 68 00:03:40,280 --> 00:03:43,320 Speaker 1: most super funds, the average default balance fund maybe eleven percent. 69 00:03:44,080 --> 00:03:47,080 Speaker 1: Either way, you've got to think double digits whatever happens 70 00:03:47,120 --> 00:03:49,560 Speaker 1: in the next few days, and double digits is pretty good. 71 00:03:49,640 --> 00:03:53,400 Speaker 2: Huh. Yeah, No, it's been great. So for the average 72 00:03:53,440 --> 00:03:55,280 Speaker 2: super fun balance that they're looking at, I you say, 73 00:03:55,280 --> 00:03:58,120 Speaker 2: double digit returns. And for retirees have had it even 74 00:03:58,240 --> 00:04:01,120 Speaker 2: bitter because we've had the cash breaker up thirteen times 75 00:04:01,160 --> 00:04:03,120 Speaker 2: over the past two and a half years. So for 76 00:04:03,160 --> 00:04:05,960 Speaker 2: a retiree, regardless if they're in bonds or they're in shares, 77 00:04:05,960 --> 00:04:07,000 Speaker 2: they're having a crack in year. 78 00:04:07,480 --> 00:04:10,800 Speaker 1: Yes. Yeah. And when people come into you, if I 79 00:04:10,840 --> 00:04:16,880 Speaker 1: come into you, you know, a wide eyed twenty six 80 00:04:17,000 --> 00:04:20,000 Speaker 1: year old by first time sitting opposite a financial advisor 81 00:04:20,040 --> 00:04:22,880 Speaker 1: and I know nothing, And I said to you, so 82 00:04:22,960 --> 00:04:25,479 Speaker 1: what can I expect? You know, what should I expect 83 00:04:25,520 --> 00:04:27,760 Speaker 1: on my super each year? What should I expect on 84 00:04:27,839 --> 00:04:30,839 Speaker 1: my shares each year? Sort of numbers would you give then? 85 00:04:30,880 --> 00:04:33,599 Speaker 1: Would they be considerably different than the numbers I've just 86 00:04:34,040 --> 00:04:34,840 Speaker 1: called out. 87 00:04:35,800 --> 00:04:38,120 Speaker 2: Similar, probably a little bit lower. So it's just looking 88 00:04:38,200 --> 00:04:41,200 Speaker 2: at the long term averages over say ten or fifteen years, 89 00:04:41,200 --> 00:04:43,880 Speaker 2: and so for we've got middle of the road balanced 90 00:04:43,920 --> 00:04:46,440 Speaker 2: super fun which probably be a bit too conservative for 91 00:04:46,520 --> 00:04:49,560 Speaker 2: this younger investor, but that's where most people end up 92 00:04:49,560 --> 00:04:51,960 Speaker 2: if they don't make a choice. You're looking at a 93 00:04:52,000 --> 00:04:54,760 Speaker 2: long term return of around that eight nine percent. But 94 00:04:54,880 --> 00:04:57,680 Speaker 2: for that younger investor, we'd probably be steering them more 95 00:04:57,720 --> 00:05:00,800 Speaker 2: towards the growth based portfolio or high growth if they 96 00:05:00,800 --> 00:05:03,839 Speaker 2: have a higher risk tolerance, purely because that the investment 97 00:05:03,839 --> 00:05:05,800 Speaker 2: timeframe they have is a lot longer. They can't touch 98 00:05:05,839 --> 00:05:09,200 Speaker 2: their super for another thirty five forty odd years, and 99 00:05:09,240 --> 00:05:12,120 Speaker 2: so the return on that type of growth or high growth, 100 00:05:12,279 --> 00:05:15,240 Speaker 2: then you're sort of pushing that those double digit returns 101 00:05:15,839 --> 00:05:16,560 Speaker 2: on average. 102 00:05:16,600 --> 00:05:20,240 Speaker 1: Of course, they won't always do that, that's what years 103 00:05:20,279 --> 00:05:23,520 Speaker 1: there won't be anything remotely like double digit. Yes, okay, 104 00:05:23,839 --> 00:05:29,240 Speaker 1: And if someone came into you now and they were 105 00:05:29,360 --> 00:05:33,480 Speaker 1: switching from you know, the mediocre advisor to something better 106 00:05:34,240 --> 00:05:36,560 Speaker 1: and they said, listen, you know it's been pretty good. 107 00:05:36,560 --> 00:05:37,960 Speaker 1: I'm quite happy with my portfolio. 108 00:05:38,040 --> 00:05:38,320 Speaker 2: This year. 109 00:05:38,400 --> 00:05:42,080 Speaker 1: I did twelve thirteen percent on my on my Australian shairs, 110 00:05:42,120 --> 00:05:44,680 Speaker 1: and I'm expecting to do twenty to thirty percent of 111 00:05:44,720 --> 00:05:47,280 Speaker 1: my overseas shares and my money is coming in at 112 00:05:47,320 --> 00:05:50,400 Speaker 1: five percent in my cash and I want much much 113 00:05:50,400 --> 00:05:53,040 Speaker 1: better performance next year. And I want you to guide 114 00:05:53,080 --> 00:05:55,239 Speaker 1: me as an advisor. What would you say? 115 00:05:56,279 --> 00:05:59,120 Speaker 2: You just have to bring people down to reality and 116 00:05:59,240 --> 00:06:02,000 Speaker 2: just look at these long term averages and look at 117 00:06:02,040 --> 00:06:04,880 Speaker 2: the possibility of a negative return, which on the average 118 00:06:05,040 --> 00:06:07,120 Speaker 2: growth based port filio is once in every four or 119 00:06:07,160 --> 00:06:09,320 Speaker 2: five years we're going to have a negative return on 120 00:06:09,400 --> 00:06:12,640 Speaker 2: share markets. And so if a new client comes in 121 00:06:12,680 --> 00:06:15,040 Speaker 2: the first thing I'm saying, if they have high expectations 122 00:06:15,080 --> 00:06:17,280 Speaker 2: is don't expect this again next year, because it'd be 123 00:06:17,320 --> 00:06:19,240 Speaker 2: great if we have it, but the history shows us 124 00:06:19,240 --> 00:06:22,160 Speaker 2: we're probably not going to get another twenty percent year. 125 00:06:22,279 --> 00:06:25,920 Speaker 2: And if anything, where we're transitioning clients across from one 126 00:06:25,960 --> 00:06:28,359 Speaker 2: super fund or one investment account to the one that 127 00:06:28,400 --> 00:06:30,760 Speaker 2: we recommend, we're holding a little bit of cash at 128 00:06:30,760 --> 00:06:33,320 Speaker 2: the moment. We're not fully investing. So although they may 129 00:06:33,640 --> 00:06:36,159 Speaker 2: have a strategy where say eighty percent of their money 130 00:06:36,240 --> 00:06:38,280 Speaker 2: should be in share markets and twenty percent should be 131 00:06:38,320 --> 00:06:40,680 Speaker 2: in bonds, we're actually going, well, let's put sixty or 132 00:06:40,720 --> 00:06:43,400 Speaker 2: seventy percent into shares and keep a little bit more 133 00:06:43,640 --> 00:06:46,680 Speaker 2: dry powder, because we just look at some of the 134 00:06:46,760 --> 00:06:50,159 Speaker 2: metrics around share markets and we go, well, the share 135 00:06:50,200 --> 00:06:53,120 Speaker 2: market is priced today at a high evaluation compared to 136 00:06:53,160 --> 00:06:56,120 Speaker 2: the long term averages, and over time everything reverts back 137 00:06:56,120 --> 00:06:57,479 Speaker 2: to it to mean. And so we don't know if 138 00:06:57,520 --> 00:07:00,240 Speaker 2: it's going to be tomorrow or next month, but there's 139 00:07:00,240 --> 00:07:02,080 Speaker 2: probably a little bit of weight there for share markets 140 00:07:02,120 --> 00:07:03,280 Speaker 2: to drop, and we're s done to see that a 141 00:07:03,279 --> 00:07:05,920 Speaker 2: little bit now, and so we're taking a little bit 142 00:07:05,920 --> 00:07:08,160 Speaker 2: more of a conservative view. We're still investing because we 143 00:07:08,160 --> 00:07:11,000 Speaker 2: don't want to miss out, but we're not fully investing 144 00:07:11,040 --> 00:07:13,280 Speaker 2: in appreciating that we have had a bumper year and 145 00:07:13,360 --> 00:07:15,000 Speaker 2: things do look a little bit expensive. 146 00:07:16,320 --> 00:07:19,160 Speaker 1: What would be the acid areas that you would be 147 00:07:19,280 --> 00:07:21,120 Speaker 1: taking some profits. 148 00:07:22,160 --> 00:07:27,040 Speaker 2: Us tech basically everywhere that has growth tilts towards it 149 00:07:27,080 --> 00:07:30,480 Speaker 2: has gone up a lot, whereas the value based investments, 150 00:07:30,560 --> 00:07:33,640 Speaker 2: the boring ones which are sort of there where the 151 00:07:33,640 --> 00:07:36,040 Speaker 2: times are good or bad, they haven't gone up as much. 152 00:07:36,080 --> 00:07:39,520 Speaker 2: So we're looking at the investments that are priced today 153 00:07:39,640 --> 00:07:42,000 Speaker 2: based on the growth and the revenue they're going to 154 00:07:42,000 --> 00:07:45,200 Speaker 2: get tomorrow, and where things turn in an economy and 155 00:07:45,240 --> 00:07:48,360 Speaker 2: where people take profits, and if there's an unexpected event 156 00:07:48,360 --> 00:07:51,320 Speaker 2: that occurs with say global conflict, people sell off this 157 00:07:51,560 --> 00:07:54,280 Speaker 2: high growth investments because they're the ones that have the 158 00:07:54,360 --> 00:07:56,600 Speaker 2: highest risk to them. So that's where we're taking profit 159 00:07:56,680 --> 00:07:59,280 Speaker 2: and where we're quote unquote underweighting at the moment. 160 00:08:00,040 --> 00:08:02,920 Speaker 1: The thing is everyone's saying move into small caps, right, 161 00:08:02,960 --> 00:08:05,920 Speaker 1: this is this big theme small caps. Small caps is 162 00:08:05,920 --> 00:08:08,200 Speaker 1: where you going to be small captains where this market 163 00:08:08,200 --> 00:08:10,440 Speaker 1: has been really good, and now the next tier is 164 00:08:10,480 --> 00:08:14,280 Speaker 1: small caps. This is a surprise event. That's the first 165 00:08:14,320 --> 00:08:15,560 Speaker 1: thing that's going to fall, isn't it? 166 00:08:15,840 --> 00:08:20,200 Speaker 2: Oh massively? Yeah, The volatility in that sector is much 167 00:08:20,240 --> 00:08:23,960 Speaker 2: more than most other segments of the markets. So it 168 00:08:24,040 --> 00:08:26,720 Speaker 2: is true that the large technology companies in the US 169 00:08:26,760 --> 00:08:30,440 Speaker 2: have performed really well and they're quite large, take up 170 00:08:30,440 --> 00:08:32,240 Speaker 2: a large percentage of the index, and there is a 171 00:08:32,280 --> 00:08:34,840 Speaker 2: lot of value in these smaller technology companies, But don't 172 00:08:34,880 --> 00:08:36,880 Speaker 2: forget the risk that's are attached to them, and people 173 00:08:37,080 --> 00:08:39,000 Speaker 2: have rather short memories. You don't have to go back 174 00:08:39,040 --> 00:08:41,880 Speaker 2: a couple of years where we saw twenty thirty forty 175 00:08:41,880 --> 00:08:44,719 Speaker 2: percent drops in a lot of US technology companies. But 176 00:08:44,760 --> 00:08:46,360 Speaker 2: we've gone through this bit of a purple patch, and 177 00:08:46,400 --> 00:08:49,760 Speaker 2: then people's risk appetite tends to ratchet up a little 178 00:08:49,760 --> 00:08:52,720 Speaker 2: bit because they're feeling good, their portfolios up. They don't 179 00:08:52,720 --> 00:08:54,600 Speaker 2: want to miss out. But you just have to sort 180 00:08:54,640 --> 00:08:57,720 Speaker 2: of bring ourselves back to reality because other investors, we 181 00:08:57,760 --> 00:09:00,000 Speaker 2: get a bit carried away at times with the way 182 00:09:00,080 --> 00:09:03,760 Speaker 2: we invest. The emotional behavior can sometimes get the bitter 183 00:09:03,840 --> 00:09:04,440 Speaker 2: of us. 184 00:09:04,960 --> 00:09:11,320 Speaker 1: And just on the local market, it's simply that that's 185 00:09:11,440 --> 00:09:15,680 Speaker 1: even more pronounced the blue chip small cap gap and 186 00:09:16,320 --> 00:09:21,680 Speaker 1: inside the market the banks driving the whole thing. Come 187 00:09:21,840 --> 00:09:27,600 Speaker 1: a bank of for in one year inconceivable really, And 188 00:09:27,600 --> 00:09:31,760 Speaker 1: then this notion that there's will be a switch to minors, 189 00:09:32,960 --> 00:09:37,480 Speaker 1: but just interrogating that, I understand why someone would say 190 00:09:37,640 --> 00:09:40,600 Speaker 1: there should be a switch to miners, but I could 191 00:09:40,960 --> 00:09:42,480 Speaker 1: I can understand why filone would say they could be 192 00:09:42,480 --> 00:09:44,960 Speaker 1: a switch out of banks, but I don't necessarily see 193 00:09:45,080 --> 00:09:48,040 Speaker 1: the attraction of the switch to miners pera se, because 194 00:09:49,280 --> 00:09:52,480 Speaker 1: the commodity outlook isn't that good, and the iron ore 195 00:09:53,440 --> 00:09:57,320 Speaker 1: doesn't and the China plate doesn't quite offer the readings 196 00:09:57,360 --> 00:10:01,200 Speaker 1: you'd like to see if you were switching, what do 197 00:10:01,240 --> 00:10:04,520 Speaker 1: you say to people who are thinking along those lines. 198 00:10:04,600 --> 00:10:06,720 Speaker 1: You know, I've done so well out of the ASX 199 00:10:07,160 --> 00:10:10,520 Speaker 1: and the big banks and some of the other blue 200 00:10:10,559 --> 00:10:13,400 Speaker 1: chip industrials that I should take profits now and swing 201 00:10:13,440 --> 00:10:15,960 Speaker 1: it into small caps and minus. What would you say 202 00:10:16,200 --> 00:10:17,520 Speaker 1: if I was planning to do that. 203 00:10:18,800 --> 00:10:22,160 Speaker 2: I think it's from a valuation perspective, it makes sense 204 00:10:22,280 --> 00:10:24,520 Speaker 2: to sell out of something that's gone up by forty 205 00:10:24,520 --> 00:10:27,520 Speaker 2: to fifty percent. And my rule of thumb with the 206 00:10:27,559 --> 00:10:29,520 Speaker 2: banks is I like to buy the banks when they're 207 00:10:29,559 --> 00:10:32,640 Speaker 2: paying a ten percent grossed up dividend, whereas CBA at 208 00:10:32,679 --> 00:10:34,800 Speaker 2: the moment, I think they're based dividends about three percent, 209 00:10:34,840 --> 00:10:36,680 Speaker 2: so grossed up it's probably like four and a half 210 00:10:36,720 --> 00:10:39,880 Speaker 2: five percent, So it's way off that very basic valuation 211 00:10:40,040 --> 00:10:42,480 Speaker 2: metric I have in terms of when it's attractive time 212 00:10:42,520 --> 00:10:44,880 Speaker 2: to buy the bank. Look, I probably wouldn't switch out 213 00:10:44,880 --> 00:10:47,800 Speaker 2: of it all together because the banks make up a 214 00:10:47,880 --> 00:10:50,400 Speaker 2: large part of the Australian share market and by selling 215 00:10:50,440 --> 00:10:53,360 Speaker 2: out of your whole bank exposure. You're just creating more 216 00:10:53,400 --> 00:10:57,640 Speaker 2: issues or you're providing bringing more volatility into your portfolio, 217 00:10:57,640 --> 00:11:00,160 Speaker 2: is what I'm trying to say. So they're a good anchors, 218 00:11:00,160 --> 00:11:02,000 Speaker 2: a good long term thing to have. But in terms 219 00:11:02,040 --> 00:11:03,559 Speaker 2: of if you want to be tactical and you want 220 00:11:03,600 --> 00:11:05,720 Speaker 2: to try and sell out of something that's gone up 221 00:11:05,760 --> 00:11:08,440 Speaker 2: and then move it into something undervalued, well then sure, yeah, 222 00:11:08,480 --> 00:11:11,240 Speaker 2: pursue that strategy. And we're confident with that as well, 223 00:11:11,240 --> 00:11:13,120 Speaker 2: and we're moving a bit of money into the res 224 00:11:13,120 --> 00:11:15,640 Speaker 2: all sector. But it's not an all or nothing type thing. 225 00:11:15,679 --> 00:11:17,400 Speaker 2: It's a find the balance with it. 226 00:11:18,000 --> 00:11:20,280 Speaker 1: Yes, okay, but it is. But there is a switch 227 00:11:20,320 --> 00:11:25,360 Speaker 1: going on out of overpriced financials into what might be 228 00:11:25,480 --> 00:11:28,880 Speaker 1: underpriced miners. What about gold, James. 229 00:11:29,440 --> 00:11:31,880 Speaker 2: Yeah, Well, the predictions earlier in the year was that 230 00:11:32,160 --> 00:11:33,960 Speaker 2: I was reading this and I was looking at my 231 00:11:34,000 --> 00:11:37,200 Speaker 2: notes from January February this year that the US investment 232 00:11:37,240 --> 00:11:39,240 Speaker 2: banks we were saying that gold might go up by 233 00:11:39,480 --> 00:11:41,560 Speaker 2: ten percent or so. But it's gone out by much 234 00:11:41,600 --> 00:11:44,000 Speaker 2: more than that. And if I'm looking at the forecast 235 00:11:44,080 --> 00:11:47,120 Speaker 2: for next year, people standingly are saying there's still more 236 00:11:47,160 --> 00:11:50,120 Speaker 2: to go. So I'm advising clients to take profit and 237 00:11:50,200 --> 00:11:52,720 Speaker 2: sell down, not completely, but take a decent chuck of 238 00:11:52,760 --> 00:11:55,840 Speaker 2: that gold profit off the table and move it into 239 00:11:55,880 --> 00:11:58,040 Speaker 2: something else. Because also we have to remember that the 240 00:11:58,080 --> 00:12:01,040 Speaker 2: bonds generating quite a lot of yield the moment. Property 241 00:12:01,040 --> 00:12:03,679 Speaker 2: stocks are given a lot of dividends, so the alternative 242 00:12:03,760 --> 00:12:07,520 Speaker 2: to gold quite attractive. Remembering that gold doesn't pay you anything. 243 00:12:07,559 --> 00:12:09,520 Speaker 2: It's just a hunk of metal that you just hold 244 00:12:09,559 --> 00:12:11,480 Speaker 2: in a little box somewhere, Whereas you can buy other 245 00:12:11,520 --> 00:12:14,679 Speaker 2: stuff that will hopefully hold its value but also pay 246 00:12:14,720 --> 00:12:17,000 Speaker 2: you an income to So in short, we're not see 247 00:12:17,040 --> 00:12:18,720 Speaker 2: on it completely, but we're reducing exposure. 248 00:12:19,920 --> 00:12:25,560 Speaker 1: And what are the areas if you were trimming off 249 00:12:25,600 --> 00:12:28,480 Speaker 1: gold that you would look at. 250 00:12:29,760 --> 00:12:33,280 Speaker 2: It depends on the profile, the risk appetite of the investor, 251 00:12:33,760 --> 00:12:36,240 Speaker 2: and why they bought gold in the first place. Some 252 00:12:36,280 --> 00:12:39,400 Speaker 2: people bought gold on an opportunistic basis, hoping that it 253 00:12:39,440 --> 00:12:41,640 Speaker 2: would go up a lot, and it has, so for 254 00:12:41,679 --> 00:12:44,319 Speaker 2: those people, it's taking the profit and moving into something 255 00:12:44,360 --> 00:12:47,800 Speaker 2: else that is opportunistic. So whether that's as you mentioned, 256 00:12:47,800 --> 00:12:51,240 Speaker 2: the smaller technology companies or the mining stocks that would 257 00:12:51,280 --> 00:12:53,840 Speaker 2: be a good replacement for the gold exposure. Whereas for 258 00:12:54,080 --> 00:12:56,839 Speaker 2: other people it's a defensive part of their portfolio they 259 00:12:56,840 --> 00:13:00,360 Speaker 2: wanted as a hedge against bad times. And so where 260 00:13:00,360 --> 00:13:02,480 Speaker 2: we're selling down gold exposure, we may move it into 261 00:13:02,520 --> 00:13:05,360 Speaker 2: something defensive in nature, like Australian government bonds. 262 00:13:05,640 --> 00:13:08,680 Speaker 1: Oh yes, I see, Okay, very good. All right now, 263 00:13:08,760 --> 00:13:10,960 Speaker 1: one other thing I want to just take a look 264 00:13:11,000 --> 00:13:14,640 Speaker 1: at before we take a break cash. So we've done, 265 00:13:14,679 --> 00:13:16,800 Speaker 1: We've had a sort of run around through the share market, 266 00:13:17,960 --> 00:13:21,040 Speaker 1: which I think the essential point listeners from James and 267 00:13:21,120 --> 00:13:23,520 Speaker 1: from many other people on the show is enjoy your 268 00:13:23,559 --> 00:13:27,240 Speaker 1: returns this year and do not expect them to be 269 00:13:27,320 --> 00:13:30,000 Speaker 1: repeated next year. And I'd lovely it'd be delighted to 270 00:13:30,040 --> 00:13:33,600 Speaker 1: be wrong about this, But the chances are that, I mean, honestly, 271 00:13:33,640 --> 00:13:35,680 Speaker 1: when you see Combank going of forty five percent in 272 00:13:35,679 --> 00:13:38,600 Speaker 1: a year, or NAB if you don't mind going up 273 00:13:38,600 --> 00:13:41,280 Speaker 1: thirty percent in the year after doing nothing for a decade, 274 00:13:41,760 --> 00:13:44,040 Speaker 1: it's the same bank, right, the same economy. I didn't. 275 00:13:44,080 --> 00:13:47,720 Speaker 1: I don't see it being redrawn or spectacularly redesigned in 276 00:13:47,800 --> 00:13:53,200 Speaker 1: that time. You can't. History would suggest, and the economic 277 00:13:53,320 --> 00:13:56,160 Speaker 1: rationalism would suggest that it would be very unlikely that 278 00:13:56,200 --> 00:13:59,400 Speaker 1: we see all that happen again in twenty twenty five. 279 00:14:00,160 --> 00:14:05,000 Speaker 1: In relation to Linkedwin banks is cash and cash deposits James. 280 00:14:05,000 --> 00:14:09,520 Speaker 1: So because the rate cuts never came this year, the 281 00:14:09,679 --> 00:14:14,200 Speaker 1: term deposit rates remained really good. That is really good 282 00:14:15,400 --> 00:14:18,160 Speaker 1: compared to what they used to be over the last decade, 283 00:14:18,320 --> 00:14:20,560 Speaker 1: we say, where they were hopeless for a couple of years. 284 00:14:20,840 --> 00:14:23,360 Speaker 1: What's your view in the year ahead. 285 00:14:23,720 --> 00:14:27,040 Speaker 2: So it's looking like that will get some rate cuts. 286 00:14:27,160 --> 00:14:29,360 Speaker 2: And it was interesting that the Reserve Bank have sort 287 00:14:29,360 --> 00:14:32,200 Speaker 2: of split up their board into two different boards. They 288 00:14:32,320 --> 00:14:34,640 Speaker 2: brought in two new board members onto this thing called 289 00:14:34,640 --> 00:14:37,880 Speaker 2: the Monitory Board. So seven existing and RBA board members 290 00:14:38,160 --> 00:14:40,720 Speaker 2: have moved across to the Monetary Board. There's two new members, 291 00:14:40,720 --> 00:14:43,280 Speaker 2: one a former banking CEO and the other one an 292 00:14:43,440 --> 00:14:47,600 Speaker 2: economics professor. So the view is that this new Monetary Board, 293 00:14:47,600 --> 00:14:50,600 Speaker 2: which is responsible for interest rate or cash rate decisions, 294 00:14:51,120 --> 00:14:54,360 Speaker 2: they're not meeting in January, but there maybe around that 295 00:14:54,560 --> 00:14:56,960 Speaker 2: February March April, we may see the first rate cut. 296 00:14:57,080 --> 00:14:58,640 Speaker 2: If you look at the sheer marker, what they're betting 297 00:14:58,640 --> 00:15:00,640 Speaker 2: on that they're betting that there's a s sixty percent 298 00:15:00,760 --> 00:15:02,800 Speaker 2: chance that will see a rate cut. The first one 299 00:15:02,880 --> 00:15:05,400 Speaker 2: to happen in February, and the sheer market's spending on 300 00:15:05,480 --> 00:15:08,280 Speaker 2: three rate cuts, three zero point two five percent rate 301 00:15:08,320 --> 00:15:12,120 Speaker 2: cuts by December twenty twenty five. So when you look 302 00:15:12,160 --> 00:15:15,720 Speaker 2: at that as the what the experts quote unquote are predicting, 303 00:15:16,000 --> 00:15:18,680 Speaker 2: what should you do with your term deposits? And the 304 00:15:18,720 --> 00:15:21,760 Speaker 2: banks have actuaries, they're pretty smart at calculating what the 305 00:15:21,800 --> 00:15:24,000 Speaker 2: cash rate's going to be into the future. So if 306 00:15:24,040 --> 00:15:26,120 Speaker 2: you look at your turn deposit rate sheet and what 307 00:15:26,160 --> 00:15:27,800 Speaker 2: you have on off of, you'll probably notice that the 308 00:15:27,840 --> 00:15:30,040 Speaker 2: longer you go into the future, the lower the turn 309 00:15:30,080 --> 00:15:32,800 Speaker 2: deposit rate will be because the banks are already figured 310 00:15:32,800 --> 00:15:34,640 Speaker 2: out that, ah, yes, the Reserve Bank is going to 311 00:15:34,640 --> 00:15:37,960 Speaker 2: cut the cash rate. So it doesn't really matter if 312 00:15:38,000 --> 00:15:39,720 Speaker 2: you go for a six month turn deposit or a 313 00:15:39,760 --> 00:15:42,160 Speaker 2: twelve month You can't really beat the cycle because the 314 00:15:42,200 --> 00:15:44,840 Speaker 2: bank is already factored in what's likely to happen with 315 00:15:45,040 --> 00:15:45,920 Speaker 2: the cash rates. 316 00:15:46,480 --> 00:15:51,120 Speaker 1: Yes, except I suppose the further out more likely the 317 00:15:51,240 --> 00:15:52,360 Speaker 1: one party will be wrong. 318 00:15:52,520 --> 00:15:54,920 Speaker 2: That's that's correct. That is true if you're. 319 00:15:54,840 --> 00:15:56,880 Speaker 1: Locking away for three years, if the banks don't know 320 00:15:57,800 --> 00:15:59,160 Speaker 1: what the rates are going to be, they'll be a 321 00:15:59,280 --> 00:16:01,240 Speaker 1: bit better on the or term like we all are. 322 00:16:01,280 --> 00:16:03,760 Speaker 1: I suppose because they're able to read the tea leaves 323 00:16:03,920 --> 00:16:08,120 Speaker 1: over a shorter, shorter space of time. Okay, very useful, folks. 324 00:16:08,120 --> 00:16:19,520 Speaker 1: Will be back in a moment. Hello, Welcome back to 325 00:16:19,560 --> 00:16:23,160 Speaker 1: The Australian's Money Puzzle podcast. James Kirby talking to James 326 00:16:23,200 --> 00:16:26,680 Speaker 1: Girard on our last regular show of the year. I 327 00:16:26,720 --> 00:16:28,840 Speaker 1: wanted to take a look at two other things, James, 328 00:16:28,920 --> 00:16:33,000 Speaker 1: just in terms of review of the year, but also 329 00:16:33,080 --> 00:16:35,840 Speaker 1: the review only on the basis of what it tells 330 00:16:35,920 --> 00:16:38,600 Speaker 1: us about the coming year, or it's what it might 331 00:16:38,640 --> 00:16:41,080 Speaker 1: indicate will come down the line in the coming year. 332 00:16:41,840 --> 00:16:45,760 Speaker 1: We mentioned about super returns and they're looking pretty good. 333 00:16:46,160 --> 00:16:49,240 Speaker 1: We're talking about eleven percent for the average default balanced fund. 334 00:16:49,600 --> 00:16:53,160 Speaker 1: If you have a self managed super fund, I reckon 335 00:16:53,200 --> 00:16:55,920 Speaker 1: you're going to do a lot better than eleven percent, 336 00:16:56,000 --> 00:16:59,200 Speaker 1: especially if your shares are coming in at fourteen fifteen 337 00:16:59,320 --> 00:17:04,479 Speaker 1: maybe in the ASEX and twice that on American markets. 338 00:17:04,520 --> 00:17:06,520 Speaker 1: And if you happen to have and I bet you do, 339 00:17:07,320 --> 00:17:09,800 Speaker 1: happen to have something like Calmbank or even in AB 340 00:17:11,119 --> 00:17:13,560 Speaker 1: then that's going to bounce your portfolio. In fact, it 341 00:17:13,600 --> 00:17:16,000 Speaker 1: was pretty hard to pick a bat. I mean, everyone 342 00:17:16,040 --> 00:17:20,399 Speaker 1: can manage it. Of course, pick one bad stock. 343 00:17:20,840 --> 00:17:21,360 Speaker 2: Every year. 344 00:17:21,400 --> 00:17:23,439 Speaker 1: There's always one, isn't there. My one this year, by 345 00:17:23,480 --> 00:17:26,760 Speaker 1: the way, for everyone, just so you know, is Ramsey Healthcare. 346 00:17:27,800 --> 00:17:31,000 Speaker 1: Good God, that was the wrong call. But the rest, 347 00:17:31,040 --> 00:17:33,199 Speaker 1: and I only have twelve individual stocks. The rest have 348 00:17:33,240 --> 00:17:36,600 Speaker 1: been absolutely delightful, oh so good. And Combank, which I 349 00:17:36,640 --> 00:17:40,800 Speaker 1: have by the way since I think two oh on 350 00:17:40,840 --> 00:17:43,040 Speaker 1: the very first day I started my fund I suppose, 351 00:17:43,080 --> 00:17:46,000 Speaker 1: which was around two oh six. Well, that's just been 352 00:17:46,119 --> 00:17:51,080 Speaker 1: splendid it. The AI stocks have done well, but only 353 00:17:51,600 --> 00:17:55,640 Speaker 1: market average really, so some of my beauties this year 354 00:17:55,680 --> 00:17:57,560 Speaker 1: certainly have been Combank in any by which I did 355 00:17:57,640 --> 00:17:59,840 Speaker 1: not expect them to be. But I'm so glad that 356 00:18:00,000 --> 00:18:02,600 Speaker 1: there and that I held them through that. The point 357 00:18:02,640 --> 00:18:06,280 Speaker 1: I'm leading to is that just that smsfs probably had 358 00:18:06,359 --> 00:18:09,159 Speaker 1: much better probably most smsfs most of the time, but 359 00:18:09,200 --> 00:18:11,320 Speaker 1: I have had much better trans than eleven. Would you 360 00:18:11,359 --> 00:18:14,440 Speaker 1: say over the year, I'd. 361 00:18:14,280 --> 00:18:18,400 Speaker 2: Agree with that. SMSF trustees tend to swing the bat 362 00:18:18,400 --> 00:18:20,480 Speaker 2: a little bit harder and take a little bit more 363 00:18:20,560 --> 00:18:22,600 Speaker 2: risk when it comes to things, but it goes both ways. 364 00:18:22,720 --> 00:18:24,600 Speaker 2: In bad times, they tend to hold cash more and 365 00:18:24,600 --> 00:18:26,880 Speaker 2: they tend to hold it for for longer. But we've 366 00:18:26,880 --> 00:18:29,239 Speaker 2: had a decent period of time of upward markets and 367 00:18:29,320 --> 00:18:32,400 Speaker 2: so i'd agree with you that the super funds, self 368 00:18:32,400 --> 00:18:35,480 Speaker 2: managed super funds would on average have better returns because 369 00:18:35,480 --> 00:18:38,120 Speaker 2: they would be more exposed to these individual stocks which 370 00:18:38,160 --> 00:18:40,439 Speaker 2: have done well. They would have picked a few US 371 00:18:40,480 --> 00:18:42,680 Speaker 2: direct shares in addition to some of the blue chips 372 00:18:42,680 --> 00:18:43,520 Speaker 2: here that have done well. 373 00:18:44,080 --> 00:18:45,560 Speaker 1: Yes, I should have had. I wish i'd had no 374 00:18:45,680 --> 00:18:50,879 Speaker 1: cash at all held over the year, and my SMSF similarly, 375 00:18:51,320 --> 00:18:53,800 Speaker 1: they're not listed. The unlisted assets were okay, they were 376 00:18:53,840 --> 00:18:56,200 Speaker 1: all right, But I think like the shares or the 377 00:18:56,320 --> 00:18:58,880 Speaker 1: shares in the US and share funds in the US 378 00:18:58,880 --> 00:19:01,240 Speaker 1: and specialist share funds the US, which I have been great, 379 00:19:01,800 --> 00:19:05,040 Speaker 1: But that's the advantage of an SMSF, and it's it's 380 00:19:05,119 --> 00:19:08,800 Speaker 1: nimble and you have that tactical advantage. And similarly, you 381 00:19:08,880 --> 00:19:10,959 Speaker 1: must always keep cash. And I'm sure you'd say that 382 00:19:11,040 --> 00:19:12,920 Speaker 1: to all listeners. So even on the best of times, 383 00:19:12,920 --> 00:19:15,159 Speaker 1: you've got to keep that cash because you never know 384 00:19:15,440 --> 00:19:17,560 Speaker 1: what's going to happen. And even in the last few days, 385 00:19:17,720 --> 00:19:20,280 Speaker 1: it's a bit of fear isn't there with the Digico 386 00:19:20,400 --> 00:19:23,240 Speaker 1: floating in the local market, who is supposed to be 387 00:19:23,280 --> 00:19:26,320 Speaker 1: the float of the year has been a flop. That's 388 00:19:26,440 --> 00:19:29,480 Speaker 1: very disappointing because IPOs are a key indication. This was 389 00:19:29,520 --> 00:19:32,680 Speaker 1: the biggest ipo of the year. The US Fed cut 390 00:19:32,760 --> 00:19:35,200 Speaker 1: rates last night. That's all good, but people aren't listening 391 00:19:35,280 --> 00:19:39,119 Speaker 1: to the cut. They're listening to the outlook from j. Powell, 392 00:19:39,160 --> 00:19:44,280 Speaker 1: and the outlook was was pretty pretty hokish. So markets 393 00:19:44,320 --> 00:19:46,800 Speaker 1: can turn on the dial, can't they? 394 00:19:47,000 --> 00:19:49,679 Speaker 2: They can, And in the US Drove Power made an 395 00:19:49,720 --> 00:19:52,960 Speaker 2: interesting observation in terms of he said that they gave 396 00:19:53,000 --> 00:19:54,719 Speaker 2: the indication that they're only going to do two right 397 00:19:54,760 --> 00:19:57,760 Speaker 2: cuts next year, rather than for which the market had expected, 398 00:19:57,800 --> 00:20:00,359 Speaker 2: and so that's why we saw some substantial drop overnight. 399 00:20:00,440 --> 00:20:02,200 Speaker 2: But he made an interesting comment that he said, look, 400 00:20:02,800 --> 00:20:04,280 Speaker 2: what do you want me to do? He goes, this 401 00:20:04,440 --> 00:20:07,080 Speaker 2: future is uncertain. We don't know what twenty twenty five 402 00:20:07,200 --> 00:20:09,600 Speaker 2: is going to look like. We have a new president 403 00:20:09,720 --> 00:20:12,199 Speaker 2: in place, and he use the analogy it's like at 404 00:20:12,280 --> 00:20:13,800 Speaker 2: night time, if you come out of your bedroom and 405 00:20:13,800 --> 00:20:15,679 Speaker 2: you're trying to find your way to the toilet, do 406 00:20:15,760 --> 00:20:17,480 Speaker 2: you run down the hallway in the dark or do 407 00:20:17,520 --> 00:20:20,240 Speaker 2: you sort of like slowly ease your way down the hallway. 408 00:20:20,560 --> 00:20:22,959 Speaker 2: So that's what he's doing metaphorically when it comes to 409 00:20:23,000 --> 00:20:24,040 Speaker 2: the US. 410 00:20:24,119 --> 00:20:28,960 Speaker 1: And labor metaphor, Yeah, very much, the metaphor that a 411 00:20:29,000 --> 00:20:30,639 Speaker 1: man in his late sixties would come up with that 412 00:20:31,400 --> 00:20:36,760 Speaker 1: said sixties. Yes, I see, okay, we'll chake that on 413 00:20:36,800 --> 00:20:40,320 Speaker 1: board from Jpower. Hey, yeah, tell me also running through 414 00:20:40,320 --> 00:20:42,480 Speaker 1: the sort of acid classes, and we are running through 415 00:20:42,520 --> 00:20:45,800 Speaker 1: the folks. But that's the nature of the time of 416 00:20:45,840 --> 00:20:47,879 Speaker 1: the show, the time frame of the show, and what 417 00:20:47,920 --> 00:20:51,080 Speaker 1: I would expect is the concentration span of the average listener. 418 00:20:52,040 --> 00:20:52,639 Speaker 2: Bitcoin. 419 00:20:53,440 --> 00:20:55,679 Speaker 1: Tell me where are you on that? 420 00:20:55,920 --> 00:20:56,080 Speaker 2: Right? 421 00:20:56,160 --> 00:21:00,840 Speaker 1: Most advisors always give the weary answer that, oh, you know, 422 00:21:00,920 --> 00:21:04,400 Speaker 1: if our client since this will get it for them AMP. 423 00:21:04,800 --> 00:21:09,160 Speaker 1: Of all people, AMP have broken the mold by announcing 424 00:21:09,280 --> 00:21:12,320 Speaker 1: that they had put twenty seven million into bitcoin, which 425 00:21:12,440 --> 00:21:15,159 Speaker 1: costs cut lots of headlines, even though, as we all know, 426 00:21:15,320 --> 00:21:19,239 Speaker 1: twenty seven million for a big super is you know 427 00:21:19,240 --> 00:21:21,719 Speaker 1: what they spend on tea bags in the year. But 428 00:21:21,840 --> 00:21:26,320 Speaker 1: nonetheless they did it right. They've put it in a 429 00:21:26,440 --> 00:21:33,600 Speaker 1: leading major opera regulated super fund. So what is your 430 00:21:33,720 --> 00:21:36,480 Speaker 1: view on bitcoin and what do you say again to 431 00:21:36,560 --> 00:21:39,200 Speaker 1: the client who comes in and says, I want bitcoin 432 00:21:39,240 --> 00:21:42,359 Speaker 1: in my super fund, and I'm going to choose the 433 00:21:42,400 --> 00:21:44,480 Speaker 1: super fund that has it, and if I can't find one, 434 00:21:44,560 --> 00:21:47,440 Speaker 1: I'll find a way to do it in an SMSF. 435 00:21:48,440 --> 00:21:50,080 Speaker 2: Yeah, a lot of people have had their head in 436 00:21:50,119 --> 00:21:54,240 Speaker 2: the sand when it comes to cryptocurrency, and when it 437 00:21:54,280 --> 00:21:57,560 Speaker 2: comes to financial advisors. We're very guilty of that because 438 00:21:57,600 --> 00:21:59,879 Speaker 2: a lot do not understand it, They don't like it, 439 00:22:00,119 --> 00:22:02,080 Speaker 2: that don't make money from it, So what's the point 440 00:22:02,160 --> 00:22:05,880 Speaker 2: of recommending it to clients? So they generally don't. I'm 441 00:22:05,920 --> 00:22:08,400 Speaker 2: supportive of it, but it comes down to that risk 442 00:22:08,480 --> 00:22:12,520 Speaker 2: return metrics, and you look at what the potential range 443 00:22:12,560 --> 00:22:14,920 Speaker 2: of returns from say bitcoin can be in a year. 444 00:22:15,000 --> 00:22:17,240 Speaker 2: It could be positive one hundred percent or it could 445 00:22:17,240 --> 00:22:19,760 Speaker 2: go down eighty or ninety percent in a year. So 446 00:22:19,840 --> 00:22:21,280 Speaker 2: do you really want to have more than a few 447 00:22:21,280 --> 00:22:24,560 Speaker 2: percent of your retirement assets exposed to something that has 448 00:22:24,600 --> 00:22:29,280 Speaker 2: such massive swings upwards and downwards. So similar to the 449 00:22:29,280 --> 00:22:32,080 Speaker 2: general view, Yeah, happy for people to have some exposure 450 00:22:32,400 --> 00:22:35,560 Speaker 2: to it, but just don't forget, like what we see 451 00:22:35,560 --> 00:22:38,239 Speaker 2: with sheer markets, that good times don't always carry on 452 00:22:38,320 --> 00:22:42,320 Speaker 2: and particularly with cryptocurrency, where there's very pronounced upward markets, 453 00:22:42,400 --> 00:22:45,440 Speaker 2: but then it falls off a cliff and goes down dramatically, 454 00:22:45,480 --> 00:22:48,160 Speaker 2: And if you look at the chart, you have to go, well, 455 00:22:48,200 --> 00:22:50,800 Speaker 2: we're not down the bottom. We're probably closer to the 456 00:22:50,800 --> 00:22:53,479 Speaker 2: top than we are down the bottom. So be wary 457 00:22:53,520 --> 00:22:57,439 Speaker 2: about putting large chunks of money into cryptocurrency now because 458 00:22:57,840 --> 00:23:00,359 Speaker 2: to a large degree, some of the good return have 459 00:23:00,400 --> 00:23:02,600 Speaker 2: been already made and the late money tends to be 460 00:23:02,640 --> 00:23:05,479 Speaker 2: the sucker money. And as the late investors come in, 461 00:23:05,520 --> 00:23:08,200 Speaker 2: that's when the early investors are cashing out their big profits. 462 00:23:08,840 --> 00:23:12,000 Speaker 1: You don't have any inprinciple objection to people putting money 463 00:23:12,040 --> 00:23:14,760 Speaker 1: into bitcoined or even bitcoin into their super by the 464 00:23:14,840 --> 00:23:15,560 Speaker 1: sounds of it, not. 465 00:23:15,880 --> 00:23:18,880 Speaker 2: In principle, And it really comes down to the masses 466 00:23:18,880 --> 00:23:22,160 Speaker 2: where we're seeing the US Investment Bank start to gain 467 00:23:22,280 --> 00:23:24,840 Speaker 2: exposures to it. We're seeing the amps of the world. 468 00:23:25,119 --> 00:23:27,320 Speaker 2: Commonwealth Bank had a bit of a flurry into setting 469 00:23:27,640 --> 00:23:30,560 Speaker 2: up their own little exchange a few years ago. So 470 00:23:30,640 --> 00:23:34,119 Speaker 2: it seems that's the direction that mainstream finance is moving 471 00:23:34,240 --> 00:23:38,159 Speaker 2: is in terms of accepting cryptocurrency. And I still have 472 00:23:38,200 --> 00:23:41,760 Speaker 2: an issue with it in generally that there's no intrinsic value, 473 00:23:41,880 --> 00:23:45,399 Speaker 2: So unlike the Australian dollar which is backed by the 474 00:23:45,480 --> 00:23:48,439 Speaker 2: Australian government and gold Reserve and those type of things, 475 00:23:49,040 --> 00:23:51,639 Speaker 2: that there's no value in cryptocurrency. It's just something that 476 00:23:51,720 --> 00:23:54,320 Speaker 2: someone's made up and decided I'm going to launch a 477 00:23:54,359 --> 00:23:56,000 Speaker 2: coin and this is the name of it, and then 478 00:23:56,040 --> 00:23:57,960 Speaker 2: other people like it and they buy it and that 479 00:23:58,000 --> 00:24:00,359 Speaker 2: pushes up the price. There's no real use, there's no 480 00:24:00,400 --> 00:24:03,920 Speaker 2: tangible asset there. So although it has these fundamental flaws, 481 00:24:04,359 --> 00:24:06,120 Speaker 2: on the other hand, if you look at it pragmatically, 482 00:24:06,160 --> 00:24:08,639 Speaker 2: it's not going away, and you just need to accept 483 00:24:08,640 --> 00:24:11,080 Speaker 2: that if you invest into it, you may be one 484 00:24:11,119 --> 00:24:13,679 Speaker 2: hundred percent richer or you may be ninety percent poorer 485 00:24:13,720 --> 00:24:14,560 Speaker 2: in twelve months time. 486 00:24:15,400 --> 00:24:17,879 Speaker 1: It's worth as much as people will pay for. Roger 487 00:24:17,920 --> 00:24:22,080 Speaker 1: Montgomery did an entertaining sidebar in his piece which is 488 00:24:22,200 --> 00:24:25,600 Speaker 1: his last for the year, which we'll run at the weekend, 489 00:24:26,200 --> 00:24:31,400 Speaker 1: where he mentioned this Italian artist who got a write 490 00:24:31,400 --> 00:24:34,919 Speaker 1: banana from the supermarket and then he put tape doctor 491 00:24:34,920 --> 00:24:36,480 Speaker 1: across it and put it on the wall of a 492 00:24:36,520 --> 00:24:41,360 Speaker 1: gallery and it sold for six million, which is kind 493 00:24:41,359 --> 00:24:45,080 Speaker 1: of very close in some ways to some aspects of bitcoin. 494 00:24:45,160 --> 00:24:48,840 Speaker 1: It's worth whatever. How much is the banana with the 495 00:24:48,920 --> 00:24:52,119 Speaker 1: tape doctor, what's the intrinsic value? Thetrinsic value is probably 496 00:24:52,119 --> 00:24:56,199 Speaker 1: about what ten cents and it's worth six million, So 497 00:24:57,920 --> 00:25:02,000 Speaker 1: don't go try to assess its value with an intrinsic 498 00:25:02,119 --> 00:25:05,720 Speaker 1: value traditional value investing estimate, because you're wasting your time. 499 00:25:05,760 --> 00:25:08,360 Speaker 1: And I imagine bitcoin is very similar. But maybe as 500 00:25:08,480 --> 00:25:10,639 Speaker 1: us pass people are accepting that. And there's an element 501 00:25:10,680 --> 00:25:12,639 Speaker 1: of that in gold as well, isn't the gems? I mean, 502 00:25:12,680 --> 00:25:15,359 Speaker 1: there's an element of that in the price of gold. 503 00:25:15,520 --> 00:25:18,880 Speaker 1: Is not the accumulation of how much all the jewelry 504 00:25:19,240 --> 00:25:21,960 Speaker 1: and drill bits in the world are worth. It's a 505 00:25:21,960 --> 00:25:22,720 Speaker 1: different thing. 506 00:25:23,200 --> 00:25:26,160 Speaker 2: That's correct. You're right, there's an element of the same 507 00:25:26,520 --> 00:25:29,520 Speaker 2: type of it's worth what people are prepared to pay 508 00:25:29,520 --> 00:25:32,440 Speaker 2: for it with gold as well, because what has changed 509 00:25:32,480 --> 00:25:35,000 Speaker 2: with the global gold supply for it to have gone 510 00:25:35,040 --> 00:25:37,760 Speaker 2: up thirty percent? Say, you know, in recent times there 511 00:25:37,760 --> 00:25:40,959 Speaker 2: hasn't been thirty percent less discovery of gold or supply 512 00:25:41,200 --> 00:25:43,920 Speaker 2: of gold. It comes down to people and what they're 513 00:25:43,920 --> 00:25:46,840 Speaker 2: demanding and what they're wanting to sell. And at the 514 00:25:46,840 --> 00:25:50,000 Speaker 2: moment people are like in cryptocurrency, and they're continuing to 515 00:25:50,240 --> 00:25:52,400 Speaker 2: buy into it. So it's just a matter of question 516 00:25:52,440 --> 00:25:54,840 Speaker 2: of is this time different or are we going to 517 00:25:54,840 --> 00:25:57,960 Speaker 2: see what happened last couple of cycles, where invariably we 518 00:25:58,000 --> 00:25:59,840 Speaker 2: get to this peak of the cycle and then we 519 00:26:00,000 --> 00:26:02,480 Speaker 2: see a very sharp and dramatic fall in the value 520 00:26:02,520 --> 00:26:03,720 Speaker 2: of bitcoin and other coins. 521 00:26:04,359 --> 00:26:07,040 Speaker 1: Yeah, and I can hear a whole cohort of our 522 00:26:07,080 --> 00:26:10,520 Speaker 1: listeners saying, you guys have forgotten one big thing, which 523 00:26:10,560 --> 00:26:14,080 Speaker 1: is of course Trump. And Trump was re elected on 524 00:26:14,200 --> 00:26:17,639 Speaker 1: a variety of notions, of one of them being that 525 00:26:17,720 --> 00:26:22,720 Speaker 1: he would he would install crypto deep into the US system. 526 00:26:23,400 --> 00:26:27,720 Speaker 1: And so he replaced the former SEC commissioner who was 527 00:26:28,040 --> 00:26:32,200 Speaker 1: literally anti crypto with an SEC commissioner who's pro crypto, 528 00:26:32,720 --> 00:26:35,840 Speaker 1: and they're actually talking about not just institutionalizing crypto, but 529 00:26:35,960 --> 00:26:38,600 Speaker 1: you know, putting it into US strategic reserves, et cetera. 530 00:26:38,760 --> 00:26:43,080 Speaker 1: So no wonder it's had to run, No wonder. But 531 00:26:43,320 --> 00:26:47,120 Speaker 1: the points I think listeners that James makes that it 532 00:26:47,200 --> 00:26:50,119 Speaker 1: has no intrinsic value, et cetera, and that it is 533 00:26:50,440 --> 00:26:55,639 Speaker 1: highly volatile and can be rigged I think to a 534 00:26:55,680 --> 00:26:58,920 Speaker 1: degree by the whales much more than other assets and 535 00:26:59,320 --> 00:27:01,840 Speaker 1: that would include gold is something that you got to 536 00:27:01,920 --> 00:27:04,480 Speaker 1: keep in mind, folks. We want to have some questions. 537 00:27:04,560 --> 00:27:08,840 Speaker 1: I've tried to get through all your questions this year. 538 00:27:08,960 --> 00:27:12,200 Speaker 1: I didn't but I came pretty close. And I have 539 00:27:12,400 --> 00:27:17,040 Speaker 1: a handful of absolute beauties that I have kept. So 540 00:27:17,080 --> 00:27:28,240 Speaker 1: we'll be back to those in one moment. Hello, Welcome 541 00:27:28,240 --> 00:27:32,199 Speaker 1: back to The Australian's Money Puzzle podcast. James Kirby, Well, 542 00:27:32,359 --> 00:27:35,760 Speaker 1: editor at The Australian, talking to James Gerard of Financial 543 00:27:35,800 --> 00:27:38,960 Speaker 1: Advisor dot com dot au. Okay, would you like to 544 00:27:39,000 --> 00:27:40,680 Speaker 1: read the first one from Andrew? 545 00:27:41,400 --> 00:27:44,120 Speaker 2: I can? It would be great to discuss the impact 546 00:27:44,160 --> 00:27:47,640 Speaker 2: of AMP recently purchasing twenty seven million dollars in bitcoin. 547 00:27:48,560 --> 00:27:51,720 Speaker 2: This would be a game ranger for the Australian superannuation sector. 548 00:27:52,200 --> 00:27:56,119 Speaker 1: Yes, we jumped to go on, Andrew, we did just 549 00:27:56,200 --> 00:27:58,280 Speaker 1: talk about. I meant to say as part of that 550 00:27:58,400 --> 00:28:01,720 Speaker 1: is that the RBA no let yes, the ultimate really 551 00:28:02,480 --> 00:28:05,760 Speaker 1: power in our financial system, has said there's no place 552 00:28:05,800 --> 00:28:12,120 Speaker 1: in the economy for crypto an AMP, once the greatest 553 00:28:12,440 --> 00:28:15,440 Speaker 1: fund manager in Australia, is certainly the most storied, one 554 00:28:15,440 --> 00:28:19,960 Speaker 1: of the oldest, somewhat battered and shrunken, but nonetheless still 555 00:28:20,040 --> 00:28:24,960 Speaker 1: powerful and possibly turning the corner as an operation just 556 00:28:25,040 --> 00:28:29,080 Speaker 1: put retire money into it twenty seven millions. So I 557 00:28:29,200 --> 00:28:32,639 Speaker 1: think that it is a game changer, Andrew, and I 558 00:28:32,640 --> 00:28:36,240 Speaker 1: think you're on the money there. And I think we'll 559 00:28:36,240 --> 00:28:39,280 Speaker 1: see more of it over time, and it will become 560 00:28:39,280 --> 00:28:43,240 Speaker 1: an asset class and it's no more it's no more 561 00:28:43,520 --> 00:28:49,320 Speaker 1: unreliable than some of the more exotic products that we 562 00:28:49,480 --> 00:28:52,880 Speaker 1: see in the market that retirement funds are also in. 563 00:28:53,240 --> 00:28:55,240 Speaker 1: And I would say one other thing about the whole 564 00:28:55,280 --> 00:28:58,440 Speaker 1: thing in relation to bitcoin is that it can remain 565 00:28:58,520 --> 00:29:01,400 Speaker 1: an asset class, but it will always just be on 566 00:29:01,440 --> 00:29:05,400 Speaker 1: the speculative side. I think maybe the changes in behind them, 567 00:29:05,440 --> 00:29:08,240 Speaker 1: blockchain and everything else will be relevant. But also, James, 568 00:29:08,280 --> 00:29:12,280 Speaker 1: it's correlated. Now it's just another ascid class and it's correlated. Right, 569 00:29:12,280 --> 00:29:16,200 Speaker 1: So strong markets means strong bitcoin. Week markets mean weak bitcoin. 570 00:29:16,240 --> 00:29:18,880 Speaker 1: I mean it's not half as interesting from an investor 571 00:29:18,880 --> 00:29:20,440 Speaker 1: point of view as it might have been if it 572 00:29:20,480 --> 00:29:24,080 Speaker 1: was non correlated. I think, what do you think you know. 573 00:29:24,080 --> 00:29:27,440 Speaker 2: That that's true. It's like a magnified exposure or a 574 00:29:27,520 --> 00:29:31,760 Speaker 2: geed exposure to shared markets by buying cryptocurrency's. The only 575 00:29:31,760 --> 00:29:33,520 Speaker 2: other thing I'd say is that it's still a little 576 00:29:33,560 --> 00:29:36,040 Speaker 2: bit of the wild West. We don't have full regulations 577 00:29:36,360 --> 00:29:38,240 Speaker 2: in place. So for example, in the US, there's this 578 00:29:38,440 --> 00:29:41,760 Speaker 2: influencer who is Lady became really famous by in this 579 00:29:41,960 --> 00:29:44,880 Speaker 2: viral ten second clip, and so she started her own podcast. 580 00:29:45,000 --> 00:29:48,239 Speaker 2: She's doing all this advertising, making money through products and 581 00:29:48,280 --> 00:29:51,640 Speaker 2: things like that, and she started her own meme coin recently. 582 00:29:52,040 --> 00:29:55,200 Speaker 2: And this is very similar to the share market. How 583 00:29:55,240 --> 00:29:57,040 Speaker 2: back in the nineties, there were a few people who 584 00:29:57,080 --> 00:29:59,920 Speaker 2: had investment newsletters and they'd build this big database of 585 00:30:00,000 --> 00:30:02,840 Speaker 2: people that would listen to their newsletter that would come out, 586 00:30:02,960 --> 00:30:05,920 Speaker 2: but the a person writing the newsletter would buy the 587 00:30:05,920 --> 00:30:08,320 Speaker 2: stock before he wrote the newsletter, so it being these 588 00:30:08,320 --> 00:30:11,600 Speaker 2: microcap stocks. He's very similar where somebody will come out 589 00:30:11,600 --> 00:30:14,360 Speaker 2: with their own coin, but they'll hold like ninety percent 590 00:30:14,360 --> 00:30:16,400 Speaker 2: of the supply of the coin, and when it comes 591 00:30:16,440 --> 00:30:19,280 Speaker 2: out to the public, the public buys it, but then 592 00:30:19,320 --> 00:30:21,320 Speaker 2: the person who's started the coin, they just pull their 593 00:30:21,360 --> 00:30:23,040 Speaker 2: eighty percent out and the price of the coin goes 594 00:30:23,560 --> 00:30:25,400 Speaker 2: through the floor. So this coin went down like ninety 595 00:30:25,400 --> 00:30:27,960 Speaker 2: percent in space for a few hours. His influencer made 596 00:30:27,960 --> 00:30:30,360 Speaker 2: tens of millions of dollars, but upset a lot of 597 00:30:30,360 --> 00:30:32,760 Speaker 2: people along the way. But the thing is it's legal 598 00:30:32,840 --> 00:30:35,080 Speaker 2: to do because there's no regulations around it at the moment. 599 00:30:35,200 --> 00:30:39,760 Speaker 1: Yeah, yeah, buyer beware. Okay, buyer beware. You've heard. Can 600 00:30:39,840 --> 00:30:40,800 Speaker 1: we say it more clearly? 601 00:30:41,000 --> 00:30:41,400 Speaker 2: All right? 602 00:30:41,880 --> 00:30:46,960 Speaker 1: Stewart Stuort. In relation to Macpherson's, this is an interesting question, 603 00:30:47,000 --> 00:30:49,600 Speaker 1: not so much about macperson's, but what happened to Stuart 604 00:30:49,640 --> 00:30:54,000 Speaker 1: in his Macpherson's investments. That's the share of Macpherson's and folks, 605 00:30:54,000 --> 00:30:56,480 Speaker 1: this is never advice. It's on the information. He cites 606 00:30:56,520 --> 00:30:58,920 Speaker 1: a letter that he's sent into a correspondence that he's 607 00:30:58,920 --> 00:31:03,320 Speaker 1: sent in. You're on marketable parcels share facility announced to 608 00:31:03,360 --> 00:31:06,000 Speaker 1: the ESX earlier in December is disgraceful. It makes my 609 00:31:06,080 --> 00:31:09,600 Speaker 1: blood boil. It's one thing to offer the facility and 610 00:31:09,720 --> 00:31:13,240 Speaker 1: an entirely another thing to compulsively acquire your investors' shares 611 00:31:13,280 --> 00:31:18,360 Speaker 1: without their explicit consent. Furthermore, the reason many people have 612 00:31:18,440 --> 00:31:22,160 Speaker 1: unmarketable parcels of shares is because of the appalling performance 613 00:31:22,200 --> 00:31:23,040 Speaker 1: of the company. 614 00:31:23,880 --> 00:31:24,760 Speaker 2: I get it stured. 615 00:31:24,920 --> 00:31:27,360 Speaker 1: It's bloody awful to get caught in that situation, So 616 00:31:27,400 --> 00:31:30,280 Speaker 1: you buy shares in the company, the company is so 617 00:31:30,480 --> 00:31:33,120 Speaker 1: bad that it shrinks and shrinks to the point that 618 00:31:33,200 --> 00:31:36,560 Speaker 1: you can't even sell the shares anymore, and you're left 619 00:31:36,600 --> 00:31:39,760 Speaker 1: with an unmarketable parcel. And then guess what they do 620 00:31:39,920 --> 00:31:43,200 Speaker 1: some sort of special arrangement where they share sale facility. 621 00:31:43,240 --> 00:31:45,800 Speaker 1: Thank you very much, you'd say, this is not so 622 00:31:45,840 --> 00:31:50,000 Speaker 1: much about McPherson's it's about that process. We don't hear 623 00:31:50,080 --> 00:31:52,600 Speaker 1: much about that process right now because these are good times, 624 00:31:52,960 --> 00:31:55,400 Speaker 1: this share market that's going up in double digits. We've 625 00:31:55,440 --> 00:31:58,000 Speaker 1: had three years of good times, folks. When you have 626 00:31:58,080 --> 00:32:00,000 Speaker 1: bive times, this sort of stuff goes on all the time. 627 00:32:00,120 --> 00:32:04,560 Speaker 1: People are forever complaining about being caught in in nonmarketable facilities, 628 00:32:04,760 --> 00:32:09,280 Speaker 1: or share reconstructions and share consolidations. These are all the 629 00:32:10,040 --> 00:32:12,959 Speaker 1: damn all of the things you get downtime in markets. 630 00:32:12,960 --> 00:32:14,880 Speaker 1: And I think it's very interesting, isn't it, Jage just 631 00:32:14,880 --> 00:32:19,360 Speaker 1: to remind people that what is now a rarity where 632 00:32:19,400 --> 00:32:21,760 Speaker 1: the share market goes against you and where there is 633 00:32:21,840 --> 00:32:25,200 Speaker 1: distinct advantages of being an institution over a retail investor. 634 00:32:26,040 --> 00:32:28,080 Speaker 1: They come into play when things go down and we 635 00:32:28,120 --> 00:32:29,720 Speaker 1: don't see much of it right now. 636 00:32:29,960 --> 00:32:32,600 Speaker 2: That's right now. I agree with that. And we were 637 00:32:32,600 --> 00:32:34,800 Speaker 2: mentioned talking about this the other day. Remember that guy 638 00:32:34,840 --> 00:32:36,400 Speaker 2: who used to send letters out used to get the 639 00:32:36,400 --> 00:32:39,320 Speaker 2: share registers a certain companies, and he sort of acted 640 00:32:39,520 --> 00:32:42,000 Speaker 2: very official and it seemed like that he was the 641 00:32:42,000 --> 00:32:44,440 Speaker 2: shared register or the company. But it's actually just this 642 00:32:44,480 --> 00:32:46,640 Speaker 2: guy in his living room sending off letters to people 643 00:32:46,720 --> 00:32:49,520 Speaker 2: offering them to buy their unmarketable parcels of shares, but 644 00:32:50,040 --> 00:32:52,920 Speaker 2: I'm not sure exactly the details, but offering them a 645 00:32:52,960 --> 00:32:55,640 Speaker 2: lot less than what the actual value was. So he 646 00:32:55,720 --> 00:32:57,680 Speaker 2: must be on a holiday at the moment because times 647 00:32:57,680 --> 00:32:59,040 Speaker 2: are pretty good, as you just saying, has not a 648 00:32:59,080 --> 00:33:00,960 Speaker 2: lot of opportunities. 649 00:33:01,440 --> 00:33:07,760 Speaker 1: McPherson is perhaps, yes, that process where it exploited. Often 650 00:33:07,800 --> 00:33:10,280 Speaker 1: people would be so happy to get an offer of 651 00:33:10,320 --> 00:33:14,440 Speaker 1: any description. And this is the thing you must watch, folks, 652 00:33:13,560 --> 00:33:18,680 Speaker 1: on all marketable securities and listed securities. Just keep in 653 00:33:18,720 --> 00:33:22,240 Speaker 1: mind that the market can, as we said earlier in 654 00:33:22,280 --> 00:33:25,960 Speaker 1: the show, can turn on the dial, and issues which 655 00:33:25,960 --> 00:33:30,320 Speaker 1: we rarely hear about, like share reconstructions, consolidation of capital, 656 00:33:30,400 --> 00:33:36,200 Speaker 1: et cetera, compulstory, acquisition facilities. These are all the downside 657 00:33:36,240 --> 00:33:38,240 Speaker 1: and the challenge you will have as a share investor, 658 00:33:38,280 --> 00:33:40,240 Speaker 1: and they will return. I hope they don't return in 659 00:33:40,280 --> 00:33:43,880 Speaker 1: twenty twenty five, but who says that they won't. All right, 660 00:33:44,080 --> 00:33:45,840 Speaker 1: what's the question from Lisa there, if you'd like to 661 00:33:45,880 --> 00:33:46,200 Speaker 1: read it. 662 00:33:46,800 --> 00:33:49,920 Speaker 2: Lisa writes, thank you for airing my recent question on 663 00:33:49,960 --> 00:33:53,080 Speaker 2: this week's show regarding how to invest outside my super account. 664 00:33:53,160 --> 00:33:56,080 Speaker 2: Until twenty twenty seven with Tim McKay, you had said 665 00:33:56,080 --> 00:33:57,680 Speaker 2: that you would like to know where you can get 666 00:33:57,680 --> 00:34:00,440 Speaker 2: the four point eighty five percent on savings with no 667 00:34:00,640 --> 00:34:05,520 Speaker 2: terms and no conditions, which I, as in Lisa, had mentioned. 668 00:34:05,720 --> 00:34:08,799 Speaker 2: So the right is available through Bank of Queensland my 669 00:34:08,960 --> 00:34:12,680 Speaker 2: BOQ Simple Savor account, which is only available through their 670 00:34:12,719 --> 00:34:13,839 Speaker 2: app online. 671 00:34:14,200 --> 00:34:17,320 Speaker 1: Okay, all right, well, thank you very much, Lisa focus. 672 00:34:17,320 --> 00:34:20,120 Speaker 1: This is not an advert or indeed a promotion of that. 673 00:34:20,160 --> 00:34:24,520 Speaker 1: I haven't looked at it. I find it still amazing, Lisa, 674 00:34:24,640 --> 00:34:26,960 Speaker 1: that there are no terms and conditions on it, but 675 00:34:27,000 --> 00:34:29,880 Speaker 1: if you say so, we will take that on notice. 676 00:34:30,239 --> 00:34:34,239 Speaker 1: And just good to note that there are offerings out 677 00:34:34,239 --> 00:34:39,560 Speaker 1: there that give a deposit rate without all the strings attached, 678 00:34:39,560 --> 00:34:41,720 Speaker 1: which have become so notorious. It's one of the bug 679 00:34:41,760 --> 00:34:44,080 Speaker 1: bears for me at least in the market. So thank 680 00:34:44,120 --> 00:34:47,560 Speaker 1: you Lisa for the correspondent. All right, the final question 681 00:34:48,080 --> 00:34:51,880 Speaker 1: is from Andrew and it's called It's about black swans, 682 00:34:51,920 --> 00:34:54,080 Speaker 1: which shall love this question. What is the origin of 683 00:34:54,120 --> 00:34:57,719 Speaker 1: the term black swan event? I always assumed it meant 684 00:34:57,719 --> 00:35:00,920 Speaker 1: an event which was extremely rare, being in Australia. The 685 00:35:00,920 --> 00:35:04,440 Speaker 1: only color of swans I see are black. It's even 686 00:35:04,480 --> 00:35:07,279 Speaker 1: on the flag for Western Australia. Well, thank you, I 687 00:35:07,320 --> 00:35:11,239 Speaker 1: didn't know that. Two things here. Historically black swans, all right, 688 00:35:11,400 --> 00:35:16,080 Speaker 1: The term came from historically, way way back seventeenth century. 689 00:35:16,400 --> 00:35:20,719 Speaker 1: Everyone in Europe was of the opinion that swans were white, 690 00:35:21,200 --> 00:35:24,600 Speaker 1: and when some European voyagers I think they were Dutch 691 00:35:24,640 --> 00:35:30,040 Speaker 1: Camp two the Australian region, they saw black swans and 692 00:35:30,120 --> 00:35:34,160 Speaker 1: so this was seen as an unexpected event. Now in 693 00:35:34,280 --> 00:35:41,320 Speaker 1: economics and in finance more recently, it became popularized Nicholas 694 00:35:41,600 --> 00:35:45,239 Speaker 1: nas Seem Teleb with his book which very usefully came 695 00:35:45,280 --> 00:35:49,040 Speaker 1: out during and after during the GFC, whereverybody was wondering 696 00:35:49,040 --> 00:35:52,240 Speaker 1: what on earth happened, And his book was perfectly timed 697 00:35:52,280 --> 00:35:55,120 Speaker 1: because it was all about the black swan events. In finance, 698 00:35:55,239 --> 00:35:59,719 Speaker 1: it's the thing you don't see coming, and that is 699 00:35:59,760 --> 00:36:05,160 Speaker 1: what gets all investors, no matter how highly trained or 700 00:36:05,200 --> 00:36:08,160 Speaker 1: highly paid they are. The origin of the black swan event, 701 00:36:08,200 --> 00:36:10,600 Speaker 1: as I say, historically, is actually about swans, and your 702 00:36:10,640 --> 00:36:14,560 Speaker 1: black swans in West Australia are pretty special and wonderful, 703 00:36:14,680 --> 00:36:17,520 Speaker 1: but that's the historical sort of surprise aspect of them 704 00:36:17,520 --> 00:36:21,560 Speaker 1: that they existed and they were black. More pointedly, it's 705 00:36:21,600 --> 00:36:28,879 Speaker 1: about the unexpected in financial markets. So James and I, 706 00:36:29,040 --> 00:36:32,480 Speaker 1: like many others around the world at every level, would say, oh, 707 00:36:32,480 --> 00:36:34,440 Speaker 1: what's going to happen next year? This is going to happen, 708 00:36:34,480 --> 00:36:36,279 Speaker 1: That's going to happen. But the thing that's going to 709 00:36:36,400 --> 00:36:38,839 Speaker 1: rock markets is the thing Unfortunately we can't tell you 710 00:36:39,040 --> 00:36:43,600 Speaker 1: because it is a black swan. Any black Swan suggestions. 711 00:36:43,040 --> 00:36:47,600 Speaker 2: James, No, nothing comes to mind. 712 00:36:47,400 --> 00:36:51,480 Speaker 1: Because cleverly dodged there. Why would you walk into that. 713 00:36:52,000 --> 00:36:54,439 Speaker 1: I don't blame you, Yes, and I have no black 714 00:36:54,440 --> 00:36:57,920 Speaker 1: swan suggestions because by nature, Andrew, we don't know what 715 00:36:58,239 --> 00:37:01,280 Speaker 1: they are. And I think that just be the perfect 716 00:37:01,320 --> 00:37:05,240 Speaker 1: way to leave us and leave the show for the year. Folks, 717 00:37:05,560 --> 00:37:09,080 Speaker 1: we don't know what's ahead. We've given you every chance 718 00:37:09,160 --> 00:37:11,759 Speaker 1: to understand the context of what's ahead and how to 719 00:37:11,840 --> 00:37:14,680 Speaker 1: deal with what's ahead, regardless of what it is, and 720 00:37:14,760 --> 00:37:16,120 Speaker 1: let the black Swan come. 721 00:37:16,200 --> 00:37:16,840 Speaker 2: We'll be ready. 722 00:37:16,840 --> 00:37:18,480 Speaker 1: We'll be ready, and we'll be able for it, and 723 00:37:18,520 --> 00:37:21,279 Speaker 1: this show will guide you through. Hey, thank you very 724 00:37:21,360 --> 00:37:24,800 Speaker 1: much James for all your help this year and particularly 725 00:37:24,840 --> 00:37:26,960 Speaker 1: obviously on today's show. Really good to have you on 726 00:37:27,040 --> 00:37:28,000 Speaker 1: as always. 727 00:37:28,200 --> 00:37:31,000 Speaker 2: That's my pleasure. And I leave our listeners. If you 728 00:37:31,040 --> 00:37:32,160 Speaker 2: need to wake up in the middle of the night 729 00:37:32,200 --> 00:37:34,600 Speaker 2: and go to the toilet, according to Jerome Powell, walk 730 00:37:34,719 --> 00:37:36,839 Speaker 2: down the hallway, do not run because you may hit 731 00:37:36,840 --> 00:37:39,480 Speaker 2: your head on a wall. Right. 732 00:37:39,600 --> 00:37:42,040 Speaker 1: Oh well, thank you, Thank you very much mister Powell 733 00:37:42,080 --> 00:37:45,120 Speaker 1: for that very sensible piece of advice. I wanted to 734 00:37:45,120 --> 00:37:47,160 Speaker 1: do one or two other things. Thank you very much, 735 00:37:47,360 --> 00:37:49,480 Speaker 1: say one or two other things. Thank you very much 736 00:37:49,480 --> 00:37:51,359 Speaker 1: for listening to in the year. I really have been 737 00:37:51,360 --> 00:37:54,279 Speaker 1: delighted with everything, Delighted with the lifting audience that we 738 00:37:54,360 --> 00:37:57,160 Speaker 1: got of course through the year, and particularly the response 739 00:37:57,239 --> 00:37:59,600 Speaker 1: to the second weekly show that was really good. If 740 00:37:59,680 --> 00:38:02,840 Speaker 1: you want to give us a Christmas present, mentioned that 741 00:38:02,880 --> 00:38:05,279 Speaker 1: you'd like to show to one other person over the 742 00:38:05,360 --> 00:38:08,440 Speaker 1: Christmas break. I keep the emails coming we'd have to 743 00:38:08,440 --> 00:38:11,480 Speaker 1: collect them for the new Year. The Money Puzzle at 744 00:38:11,480 --> 00:38:14,960 Speaker 1: the Australian dot Com dot U. Thanks James, thanks everybody. 745 00:38:15,280 --> 00:38:15,960 Speaker 1: Talk to you soon.