Speaker 1: You're listening to a share these podcast. I guess a
Speaker 1: few things that we would look at as an active
Speaker 1: investment manager would be undervalued stocks, or in fact overvalued
Speaker 1: stocks in terms of the decision to sell. But let's
Speaker 1: take an undervalued stock. For example, there might be a
Speaker 1: really well run company that has some temporary bad news
Speaker 1: that's going to affect the share price. A passive fund
Speaker 1: will take that bad news and it'll just hit the index.
Speaker 1: An active manager will look at that bad news and say, hmm,
Speaker 1: does that bad news fundamentally change the strategic price of
Speaker 1: this company and its outlook? Take for example, in video
Speaker 1: sold off a couple of weeks ago on the Deep
Speaker 1: seek News twenty percent. I think drop on the day.
Speaker 2: Yeah, massive, like a trillion dollar loss.
Speaker 1: But absolutely however, fundamentally quite a strong company. So a
Speaker 1: number of active managers at that point might have gone,
Speaker 1: you know what, we might be continuing to hold, or
Speaker 1: we might acquire a little bit over this period of
Speaker 1: time as we see how that Deep seek news plays out.
Speaker 2: If we're looking at the activity that you do as
Speaker 2: an active fund manager, you're kind of testing the market,
Speaker 2: aren't you. You're kind of discovering prices so to some extent,
Speaker 2: then are the passive funds kind of taking a bit
Speaker 2: of a free ride on you.
Speaker 1: Well, I think the passive funds aren't really doing too much.
Speaker 1: I mean, the passive funds, in my eyes, are like
Speaker 1: a train getting from A to B on a train track.
Speaker 1: You know. The active funds are probably more like having
Speaker 1: a GPS in there and they're kind of going, oh,
Speaker 1: my goodness, there's a bit of traffic here, or there's
Speaker 1: a bit of weather here, and therefore we're going to
Speaker 1: have to take this route to get there quicker or faster,
Speaker 1: Whereas the train you kind of just actually that noise
Speaker 1: in the market you're probably not making decisions on because
Speaker 1: you are just buying the index and you're taking the
Speaker 1: ups and downs with the index. I think one of
Speaker 1: the bigger risks that those are in passive funds need
Speaker 1: to consider obviously, is that you know, in periods of
Speaker 1: under perform months, you will just take the underperformance, whereas
Speaker 1: an active manager will be working hard to consider where
Speaker 1: the opportunities are to beat the index in terms of
Speaker 1: that underperformance. They might be doing that maybe because you know,
Speaker 1: they've recognized the market trend. For example, one market trend.
Speaker 1: You know that I kind of look back in our
Speaker 1: portfolios is around Spotify. At the beginning of COVID. You know,
Speaker 1: we were looking at what Spotify might do, where they're
Speaker 1: going to play a place in streaming, where are they
Speaker 1: going to play a place in podcasts, Through research, through insights,
Speaker 1: through for sights, I guess on what might happen at
Speaker 1: an industry level.
Speaker 2: It must be hard to filter that noise out of
Speaker 2: the market that you were talking about there, because there
Speaker 2: just seems to be so much going on.
Speaker 1: It's funny, I was reading something the other day around
Speaker 1: the noise in the market has never been greater. You know,
Speaker 1: take America for example. In the past, decision would be
Speaker 1: made in the White House, they would then be well
Speaker 1: thought about and pushed out publicly. But today decisions are
Speaker 1: being discussed in real time like theater. Effectively, you're watching
Speaker 1: you're watching what's happening out there. But it is really
Speaker 1: important to get back down to the fundamentals of a
Speaker 1: company that you're investing in, the fundamentals of a region,
Speaker 1: or the fundamentals of a sector in terms of where
Speaker 1: we might play and shuffle investments around in those spaces
Speaker 1: and the noise has to be filtered, otherwise you kind
Speaker 1: of drown. Investing involves a risk you might lose the
Speaker 1: money you start with. We recommend talking to a licensed
Speaker 1: financial advisor.
Speaker 2: We also recommend reading product disclosure documents before deciding to invest.