1 00:00:00,200 --> 00:00:02,920 Speaker 1: What I found is that the companies that perform the 2 00:00:02,960 --> 00:00:06,360 Speaker 1: best in over a ten year period never with the 3 00:00:06,440 --> 00:00:07,480 Speaker 1: top than any one year. 4 00:00:07,840 --> 00:00:13,200 Speaker 2: The immediate volatility after the Liberation Day announcements, when is 5 00:00:13,200 --> 00:00:14,040 Speaker 2: it its first day? 6 00:00:14,680 --> 00:00:15,600 Speaker 3: It ended up the day up. 7 00:00:15,640 --> 00:00:18,079 Speaker 1: If I look at websites of FU managers often of 8 00:00:18,160 --> 00:00:20,720 Speaker 1: about a one year, three year, maybe a five year record. 9 00:00:21,040 --> 00:00:23,520 Speaker 1: If I'm investing for a longer term than that, then 10 00:00:23,600 --> 00:00:25,119 Speaker 1: actually that's not really relevant for me. 11 00:00:28,480 --> 00:00:32,520 Speaker 3: Kyoto Koto, Welcome to shared Lunch. I'm Garth Bray. Congratulations 12 00:00:32,560 --> 00:00:34,360 Speaker 3: if you've made it through the past few weeks with 13 00:00:34,520 --> 00:00:38,159 Speaker 3: your nerves holding investors haven't seen this volatility for more 14 00:00:38,200 --> 00:00:41,000 Speaker 3: than a decade. How are you coping and how are 15 00:00:41,080 --> 00:00:44,000 Speaker 3: you looking for the positives and opportunities. Well, we're in 16 00:00:44,000 --> 00:00:46,360 Speaker 3: Wellington today and helping me look for those things. We 17 00:00:46,440 --> 00:00:49,040 Speaker 3: have some sparkling talent in the form of Paul of Beth, 18 00:00:49,400 --> 00:00:52,040 Speaker 3: editor of the bottom Line, and Susan and Batley company 19 00:00:52,080 --> 00:00:55,600 Speaker 3: director and also head of Cheesey's business arm. Before we 20 00:00:55,640 --> 00:00:59,080 Speaker 3: get started, here's some important information you should always consider 21 00:00:59,120 --> 00:00:59,720 Speaker 3: an investing. 22 00:01:00,400 --> 00:01:03,000 Speaker 4: Investing involves the risk you might lose the money you 23 00:01:03,040 --> 00:01:06,320 Speaker 4: start with. We recommend talking to a licensed financial advisor. 24 00:01:07,040 --> 00:01:10,880 Speaker 4: We also recommend reading product disclosure documents before deciding to invest. 25 00:01:11,120 --> 00:01:13,520 Speaker 4: Everything you're about to see and here is current at 26 00:01:13,520 --> 00:01:14,400 Speaker 4: the time of recording. 27 00:01:14,720 --> 00:01:18,480 Speaker 3: Welcome to both of you. Paul, you took the boldest 28 00:01:18,480 --> 00:01:20,480 Speaker 3: bet I can think of in the first quarter of 29 00:01:20,480 --> 00:01:23,280 Speaker 3: twenty twenty five and launched a business, so congratulations on 30 00:01:23,319 --> 00:01:27,200 Speaker 3: the bottom line. Susanna, you're a director at deliver Easy 31 00:01:27,319 --> 00:01:29,560 Speaker 3: as well as helping out with the business side of 32 00:01:29,600 --> 00:01:31,880 Speaker 3: business here at Cheers EA's so, I mean a lot 33 00:01:31,920 --> 00:01:37,280 Speaker 3: on your plate obviously. Congratulations and welcome to twenty twenty five. 34 00:01:38,720 --> 00:01:40,399 Speaker 3: What are you doing for stress at the moment? How's 35 00:01:40,400 --> 00:01:44,160 Speaker 3: your stress levels? I find it pretty calm. 36 00:01:44,240 --> 00:01:45,560 Speaker 2: I mean we're at the bottom of the world with 37 00:01:45,920 --> 00:01:50,480 Speaker 2: one hundred thousand mile mote surrounding us. It's quite easy 38 00:01:50,520 --> 00:01:55,000 Speaker 2: to be in New Zealand and watch on while Rome burns. 39 00:01:55,800 --> 00:01:58,920 Speaker 2: I mean, it's the last couple of weeks in this 40 00:01:59,120 --> 00:02:02,880 Speaker 2: year in general have certainly thrown up a lot of 41 00:02:02,880 --> 00:02:06,640 Speaker 2: things to think about. But it's the same thing. You know, 42 00:02:06,640 --> 00:02:09,959 Speaker 2: New Zealand has that relativity thing right. Things are bad 43 00:02:10,000 --> 00:02:13,960 Speaker 2: here at times, but when you look overseas, Yeah, you're 44 00:02:13,960 --> 00:02:14,960 Speaker 2: definitely shaken. 45 00:02:14,720 --> 00:02:16,919 Speaker 3: Your head about you are you waking up every morning 46 00:02:16,960 --> 00:02:18,880 Speaker 3: checking the numbers and checking again. 47 00:02:19,080 --> 00:02:21,480 Speaker 1: I mean, I am still checking the numbers. But what 48 00:02:21,520 --> 00:02:25,040 Speaker 1: I've actually found really helpful for me is actually looking 49 00:02:25,080 --> 00:02:28,160 Speaker 1: back in history and continue to look at other times 50 00:02:28,200 --> 00:02:31,480 Speaker 1: where there have been a lot of volatility. The reasons 51 00:02:31,480 --> 00:02:34,760 Speaker 1: have been different. But I do think that if you 52 00:02:34,760 --> 00:02:38,720 Speaker 1: don't engage with history, then everything feels unprecedented. So I've 53 00:02:38,760 --> 00:02:41,240 Speaker 1: found that to be quite a calming thing to think 54 00:02:41,280 --> 00:02:43,720 Speaker 1: about and look at each time that's happened. That life 55 00:02:43,800 --> 00:02:46,799 Speaker 1: does go on and markets do continue, So. 56 00:02:46,760 --> 00:02:48,400 Speaker 3: You're looking at the cycle and trying to work out 57 00:02:48,400 --> 00:02:50,520 Speaker 3: where we are there and work out what happens next, 58 00:02:50,600 --> 00:02:52,840 Speaker 3: or at least take some stock from the fact that 59 00:02:52,960 --> 00:02:54,360 Speaker 3: this is not unprecedented. 60 00:02:55,080 --> 00:02:59,040 Speaker 1: That's right. I mean, I don't try and analyze the future. 61 00:02:59,200 --> 00:03:02,680 Speaker 1: In fact, even that is a really odd phrase, because 62 00:03:02,760 --> 00:03:05,120 Speaker 1: the future hasn't happened, so there really is nothing to analyze, 63 00:03:05,200 --> 00:03:08,520 Speaker 1: and I have really no idea what's going to happen. 64 00:03:09,000 --> 00:03:11,600 Speaker 1: And if I look back in history, history is really 65 00:03:11,639 --> 00:03:14,720 Speaker 1: a series of surprises, and so it's very hard to 66 00:03:14,720 --> 00:03:17,280 Speaker 1: then think about what that next surprise has got to be. 67 00:03:18,000 --> 00:03:20,200 Speaker 1: But I do think it is good to focus on 68 00:03:20,280 --> 00:03:22,160 Speaker 1: some of the things that we do know are likely 69 00:03:22,960 --> 00:03:25,720 Speaker 1: and sort of thinking about what a good response to 70 00:03:25,760 --> 00:03:28,600 Speaker 1: that might be. It is hard to continue to invest 71 00:03:28,639 --> 00:03:31,400 Speaker 1: when you're seeing your portfolio go down and value and 72 00:03:31,480 --> 00:03:34,120 Speaker 1: knowing that that might persist for some time and things 73 00:03:34,200 --> 00:03:37,960 Speaker 1: might look worse even the next week. In fact, Howard Marx, 74 00:03:38,360 --> 00:03:41,360 Speaker 1: who is someone that I really enjoy his books, and 75 00:03:41,400 --> 00:03:43,240 Speaker 1: he's got a very famous memo that I think he's 76 00:03:43,280 --> 00:03:46,880 Speaker 1: written since about nineteen ninety and I came across oak 77 00:03:46,880 --> 00:03:50,400 Speaker 1: Tree Capital during the GFC. We're at about the last 78 00:03:50,480 --> 00:03:53,240 Speaker 1: four months of the GFC. Oak Tree Capital. We're deploying 79 00:03:53,280 --> 00:03:56,920 Speaker 1: about six hundred million dollars US into the market every week, 80 00:03:57,280 --> 00:03:59,960 Speaker 1: and that was as a market was continuing to deteriorate, 81 00:04:00,120 --> 00:04:02,080 Speaker 1: and so every week what they had purchased the week 82 00:04:02,120 --> 00:04:04,080 Speaker 1: before was worth less, and then they kept doing it 83 00:04:04,200 --> 00:04:07,720 Speaker 1: again and again and again. And that having that high 84 00:04:07,800 --> 00:04:11,440 Speaker 1: conviction and be willing to put up with quite an 85 00:04:11,480 --> 00:04:16,599 Speaker 1: extended pair of volatility is really hard psychologically, and that's 86 00:04:16,640 --> 00:04:19,039 Speaker 1: why often in the past few have been able to 87 00:04:19,040 --> 00:04:21,279 Speaker 1: do that. But for the people that can do that well, 88 00:04:21,920 --> 00:04:25,479 Speaker 1: it's been incredibly fruitful over the long term, I guess. 89 00:04:25,520 --> 00:04:27,920 Speaker 3: I mean, you know, if you compet it to house prices, 90 00:04:27,920 --> 00:04:31,120 Speaker 3: Obviously there's been pandemonium if they dropped like fifteen percent 91 00:04:31,600 --> 00:04:33,680 Speaker 3: since February, like was sort of seen with e SMP. 92 00:04:33,880 --> 00:04:36,160 Speaker 3: But admittedly there would be people out there licking their 93 00:04:36,200 --> 00:04:38,360 Speaker 3: lips and going great, finally, this is my chance to 94 00:04:38,400 --> 00:04:40,240 Speaker 3: get into that market will double down or so on. 95 00:04:40,360 --> 00:04:42,440 Speaker 3: And it's the same effectively with equities, right. 96 00:04:42,760 --> 00:04:44,920 Speaker 1: That's right. I mean house prices, I think is an 97 00:04:44,920 --> 00:04:48,479 Speaker 1: interesting one, and I think gets overlooked a bit around 98 00:04:48,760 --> 00:04:51,760 Speaker 1: the impact of leverage that that has as well. So 99 00:04:52,520 --> 00:04:54,279 Speaker 1: you know, when people might buy a house if they 100 00:04:54,560 --> 00:04:57,360 Speaker 1: have funding it with eighty percent of a mortgage, then 101 00:04:57,520 --> 00:05:01,279 Speaker 1: that leverage really amplifies the outcome. And that's great when 102 00:05:01,320 --> 00:05:04,320 Speaker 1: things are going up, but that can get pretty catastrophic 103 00:05:04,760 --> 00:05:06,719 Speaker 1: when things are going down. And so when we've seen 104 00:05:06,720 --> 00:05:10,720 Speaker 1: house prices move down, that return on equity gets a 105 00:05:10,720 --> 00:05:15,080 Speaker 1: lot more negative. It's amplified because of the effect of leverage, 106 00:05:15,600 --> 00:05:18,520 Speaker 1: whereas in the equity markets, you know a lot of 107 00:05:18,520 --> 00:05:21,560 Speaker 1: people investing and not using leverage to that degree. So 108 00:05:21,640 --> 00:05:23,760 Speaker 1: it's interesting that house price. 109 00:05:23,600 --> 00:05:27,480 Speaker 3: Analogy not since the eighties anyway, Yeah, Yeah, I want 110 00:05:27,480 --> 00:05:28,880 Speaker 3: to get to did a little bit later on because 111 00:05:28,880 --> 00:05:30,800 Speaker 3: obviously it's a big part of what's behind what's been 112 00:05:30,839 --> 00:05:32,480 Speaker 3: going on coming out of the state, so I spots. 113 00:05:32,520 --> 00:05:36,960 Speaker 3: But the reasons about sort of stress was this is 114 00:05:37,120 --> 00:05:39,520 Speaker 3: probably a little bit like kind of a health check 115 00:05:39,560 --> 00:05:41,279 Speaker 3: time for a lot of people with their portfolio. As 116 00:05:41,320 --> 00:05:43,600 Speaker 3: would you say, Paul, Like, it's like, am I comfortable 117 00:05:43,600 --> 00:05:44,960 Speaker 3: with this amount of risk? 118 00:05:45,160 --> 00:05:48,159 Speaker 2: Definitely? And they should have been doing that already. Anyway, 119 00:05:48,200 --> 00:05:50,960 Speaker 2: if you're looking at equities, you know you're going in 120 00:05:51,000 --> 00:05:53,440 Speaker 2: with something that's volatile. There are a lot of other 121 00:05:53,480 --> 00:05:56,920 Speaker 2: products out there to mitigate that. In the handy little 122 00:05:56,960 --> 00:05:59,800 Speaker 2: risk profiles that we get in various disclosure statements to 123 00:05:59,839 --> 00:06:02,160 Speaker 2: one to seven seven bang, you're going to have to 124 00:06:02,160 --> 00:06:05,080 Speaker 2: tolerate some downs with the ups and think about it 125 00:06:05,120 --> 00:06:06,760 Speaker 2: over a long period of time. I mean, I still 126 00:06:06,760 --> 00:06:09,120 Speaker 2: struggle when I see these statements looking at a long 127 00:06:09,200 --> 00:06:11,960 Speaker 2: term investment being five years, that's not a long term investment. 128 00:06:13,240 --> 00:06:17,160 Speaker 2: You're day trading if you're thinking that's your sort of profile. 129 00:06:17,200 --> 00:06:20,960 Speaker 2: If we think about Kiwi Saber forty years, this is 130 00:06:21,000 --> 00:06:24,640 Speaker 2: a generational product, So you can go through these sorts 131 00:06:24,640 --> 00:06:28,920 Speaker 2: of things and looking at you know, the immediate volatility 132 00:06:28,920 --> 00:06:34,560 Speaker 2: after the Liberation Day announcements and ends it x first day, 133 00:06:35,160 --> 00:06:36,680 Speaker 2: it ended up the day up. We were the first 134 00:06:36,720 --> 00:06:39,799 Speaker 2: market to open. We eaked out in the final fifteen 135 00:06:39,800 --> 00:06:41,880 Speaker 2: minutes of the match where all of the big money 136 00:06:41,920 --> 00:06:44,240 Speaker 2: sort of trying to set their final prices for the day, 137 00:06:44,760 --> 00:06:46,680 Speaker 2: ends up in the green, having been sort of you know, 138 00:06:46,720 --> 00:06:48,960 Speaker 2: in the red for a lot of it. Then you 139 00:06:49,000 --> 00:06:52,360 Speaker 2: get to a Wall Street reaction the following day slaps everyone. 140 00:06:53,480 --> 00:06:55,200 Speaker 2: We finally get it on the Monday, where it comes 141 00:06:55,240 --> 00:06:59,200 Speaker 2: down a bit domestically. But you'd look at those numbers 142 00:06:59,440 --> 00:07:01,720 Speaker 2: and I remember I was looking back at say sort 143 00:07:01,720 --> 00:07:04,479 Speaker 2: of heighter GFC, hider COVID, he to COVID. Was I 144 00:07:04,520 --> 00:07:07,720 Speaker 2: mean some of that that some of those movements were nonsensical. 145 00:07:07,720 --> 00:07:10,440 Speaker 2: You couldn't quite wrap your head around it, even thinking 146 00:07:10,440 --> 00:07:13,040 Speaker 2: about the likes of West Texas and the media oil 147 00:07:13,080 --> 00:07:18,760 Speaker 2: prices going negative for a stage mad GFC going back 148 00:07:18,800 --> 00:07:20,920 Speaker 2: to you know it was it was a smaller, sort 149 00:07:21,120 --> 00:07:23,239 Speaker 2: slightly bigger than the dot com bubble in the early 150 00:07:23,240 --> 00:07:26,600 Speaker 2: two thousands. But over the course of it, you're sort 151 00:07:26,640 --> 00:07:29,520 Speaker 2: of going, Okay, we're feeling this now because it's happening 152 00:07:29,600 --> 00:07:31,800 Speaker 2: right now, but we felt like this in the past. 153 00:07:32,240 --> 00:07:35,360 Speaker 2: And that's how you try and sort of think back 154 00:07:35,360 --> 00:07:37,840 Speaker 2: into your mind. Okay, if you're thinking about equities, it's 155 00:07:37,840 --> 00:07:40,520 Speaker 2: a long term thing. It's it's so easy to get 156 00:07:40,560 --> 00:07:42,520 Speaker 2: caught up in the ups and downs. You do want 157 00:07:42,520 --> 00:07:45,240 Speaker 2: to have an idea of going into things, you know, 158 00:07:45,360 --> 00:07:47,840 Speaker 2: what am I What am I comfortable with and revisit 159 00:07:47,880 --> 00:07:50,000 Speaker 2: that every now and then, like, you know, let's have 160 00:07:50,000 --> 00:07:52,600 Speaker 2: a look at it, maybe quarterly, maybe yearly. What do 161 00:07:52,640 --> 00:07:55,040 Speaker 2: I think about my portfolio now? What do I need 162 00:07:55,120 --> 00:07:58,040 Speaker 2: sort of over the next six, twelve, twenty, fourth, thirty 163 00:07:58,040 --> 00:08:01,000 Speaker 2: months type thing? And it just accordingly or not. 164 00:08:02,160 --> 00:08:04,000 Speaker 3: It's like a health check, as you kind of check 165 00:08:04,040 --> 00:08:05,960 Speaker 3: and maybe once a year with your doctor if you 166 00:08:06,280 --> 00:08:08,920 Speaker 3: can get in to see them and go, you know, 167 00:08:08,920 --> 00:08:11,320 Speaker 3: how things looking. It's a chance to say, is my 168 00:08:11,480 --> 00:08:14,600 Speaker 3: strategy for the long term working right now? And do 169 00:08:14,680 --> 00:08:16,040 Speaker 3: I need to adjust it? Would they be right? 170 00:08:16,520 --> 00:08:20,400 Speaker 1: Yeah? And I do think sometimes living through these moments 171 00:08:20,480 --> 00:08:22,840 Speaker 1: are the reality check to actually go back and look 172 00:08:22,880 --> 00:08:25,400 Speaker 1: and go, am I dipssified enough? Do I have enough 173 00:08:25,400 --> 00:08:29,520 Speaker 1: cash on hand? Are those settings right for me? At 174 00:08:29,520 --> 00:08:32,880 Speaker 1: the stage of life and for my risk appetite, I 175 00:08:32,880 --> 00:08:35,880 Speaker 1: think when it comes to investing, it's really important to 176 00:08:36,679 --> 00:08:40,000 Speaker 1: understand whether we are trying to maximize for the short 177 00:08:40,120 --> 00:08:42,960 Speaker 1: term or optimize for the long term. And those are 178 00:08:42,960 --> 00:08:46,280 Speaker 1: two very different things, and they're actually adulds with each other. 179 00:08:46,679 --> 00:08:50,400 Speaker 1: So if you're optimizing for the long term most of 180 00:08:50,400 --> 00:08:52,600 Speaker 1: the time, I would say by definition, that means not 181 00:08:52,640 --> 00:08:55,480 Speaker 1: maximizing for the short term, and it means actually not 182 00:08:56,080 --> 00:08:59,760 Speaker 1: maximizing for returns when times are good. And again psychologically 183 00:08:59,800 --> 00:09:03,839 Speaker 1: that's quite hard. You know. For the last couple of years, 184 00:09:03,960 --> 00:09:06,360 Speaker 1: I'm very well in Nvidio, and every time that I 185 00:09:06,440 --> 00:09:08,079 Speaker 1: go and look at that stock, I go, oh, I 186 00:09:08,440 --> 00:09:10,920 Speaker 1: think it's overpriced, and I will invest, and then sure 187 00:09:11,000 --> 00:09:12,760 Speaker 1: enough I was wrong and the price will keep going up. 188 00:09:13,400 --> 00:09:15,520 Speaker 1: And I do think there are times when things are 189 00:09:15,559 --> 00:09:19,079 Speaker 1: going up where people could maximize short term returns by 190 00:09:19,200 --> 00:09:22,760 Speaker 1: taking on more debt, having lower cash levels, going more 191 00:09:22,760 --> 00:09:26,320 Speaker 1: into individual equities, and maybe having less di versification. But 192 00:09:26,480 --> 00:09:29,319 Speaker 1: what that also does is it does make your portfolio 193 00:09:29,960 --> 00:09:35,560 Speaker 1: more or less resilient to large volatility and large periers 194 00:09:35,559 --> 00:09:39,440 Speaker 1: of uncertainty, and less resilient over the long term and 195 00:09:39,480 --> 00:09:41,600 Speaker 1: for people that really are looking to optimize for the 196 00:09:41,640 --> 00:09:44,440 Speaker 1: long term. And if we look at the formula of 197 00:09:44,679 --> 00:09:47,280 Speaker 1: long term wealth, is your sort of return to the 198 00:09:47,280 --> 00:09:50,160 Speaker 1: power of time. That keyword is time, like it's to 199 00:09:50,240 --> 00:09:53,120 Speaker 1: the power of time. And so if you're thinking about 200 00:09:53,240 --> 00:09:56,600 Speaker 1: endurance and thinking about maximizing for the long term, then 201 00:09:56,640 --> 00:10:00,440 Speaker 1: sometimes that does mean holding back a bit in terms 202 00:10:00,480 --> 00:10:03,680 Speaker 1: of trying to maximize over short periods of time, because 203 00:10:03,720 --> 00:10:07,040 Speaker 1: actually you really want to make sure that you can 204 00:10:07,080 --> 00:10:09,240 Speaker 1: survive the one and twenty year event or the one 205 00:10:09,280 --> 00:10:13,200 Speaker 1: in forty year event, and that's quite different the what. 206 00:10:13,280 --> 00:10:14,880 Speaker 3: If moment that we're all kind of going through. 207 00:10:14,920 --> 00:10:18,680 Speaker 1: Now, that's right, and I think when we you know, 208 00:10:19,080 --> 00:10:21,839 Speaker 1: what we do know so far is that over long 209 00:10:21,840 --> 00:10:24,920 Speaker 1: periods of time, there's been lots of periods of volatility, 210 00:10:25,040 --> 00:10:28,360 Speaker 1: but that markets overall have done well. And so that 211 00:10:28,480 --> 00:10:31,000 Speaker 1: does go back to going, am I diverse wide enough? 212 00:10:31,120 --> 00:10:34,640 Speaker 1: What does diversifacation look like? And is my time horizon 213 00:10:34,720 --> 00:10:38,079 Speaker 1: to fuce point long enough? And I agree with five 214 00:10:38,160 --> 00:10:40,200 Speaker 1: years is just not long enough in my view to 215 00:10:40,480 --> 00:10:42,120 Speaker 1: be really thinking about the equity markets. 216 00:10:42,320 --> 00:10:44,760 Speaker 3: You're looking more like ten or longer, yeah. 217 00:10:45,160 --> 00:10:49,320 Speaker 1: Or longer? I mean, I think Warren Buffett made something like, 218 00:10:50,840 --> 00:10:53,160 Speaker 1: I think something like ninety nine percent of returns are 219 00:10:53,240 --> 00:10:56,959 Speaker 1: to returned sixty I think, and that's just because of 220 00:10:56,960 --> 00:10:59,640 Speaker 1: that exponential, that power of time that it's all been 221 00:10:59,679 --> 00:11:00,839 Speaker 1: in the the latter years. 222 00:11:01,040 --> 00:11:03,120 Speaker 3: But he made some pretty smart decisions before that, I'm 223 00:11:03,120 --> 00:11:07,520 Speaker 3: sure did. Coming back to the INSIDEX and you were 224 00:11:07,559 --> 00:11:10,160 Speaker 3: talking about how we actually managed to perform a little 225 00:11:10,160 --> 00:11:13,240 Speaker 3: bit out of step with those market moves. You know, 226 00:11:13,520 --> 00:11:16,880 Speaker 3: there's obviously a lack there. I mean, has there been 227 00:11:17,200 --> 00:11:19,960 Speaker 3: has it been a good guide for the volatility that's 228 00:11:19,960 --> 00:11:22,160 Speaker 3: out there, the performance of that market, and are we 229 00:11:22,200 --> 00:11:24,199 Speaker 3: sort of seeing it reflected or are there some local 230 00:11:24,240 --> 00:11:26,440 Speaker 3: things that we need to think about there would. 231 00:11:26,200 --> 00:11:31,400 Speaker 2: Definitely follow those trends. You're looking at it, and you 232 00:11:31,440 --> 00:11:35,800 Speaker 2: don't tend to see the same peaks and troughs that 233 00:11:36,160 --> 00:11:39,960 Speaker 2: you get on that daily basis over sort of the 234 00:11:40,000 --> 00:11:41,960 Speaker 2: short period of time. I mean, that's where you saw 235 00:11:43,240 --> 00:11:45,960 Speaker 2: five percent going on the NASDAK, you might get a 236 00:11:46,000 --> 00:11:47,160 Speaker 2: three on the fifty. 237 00:11:47,440 --> 00:11:49,120 Speaker 3: Might that make it a bit more of a defensive 238 00:11:49,440 --> 00:11:50,280 Speaker 3: A definitely. 239 00:11:51,040 --> 00:11:54,400 Speaker 2: I mean, when you're looking at the top ten, top twenty, 240 00:11:54,480 --> 00:11:58,400 Speaker 2: you're looking at utilities you've got the three government controlled 241 00:11:58,559 --> 00:12:03,560 Speaker 2: power companies, an airline which is government controlled, broadband provided 242 00:12:03,600 --> 00:12:06,080 Speaker 2: that got out of got into businesses that it probably 243 00:12:06,080 --> 00:12:08,320 Speaker 2: shouldn't have. Fisher and Pyble Healthcare is probably the most 244 00:12:08,320 --> 00:12:11,720 Speaker 2: interesting one out of there and has been an astonishing success. 245 00:12:12,200 --> 00:12:15,079 Speaker 2: There are always a lot of what if moments, and 246 00:12:15,800 --> 00:12:17,480 Speaker 2: it does often make you wonder whether or not we've 247 00:12:17,520 --> 00:12:19,959 Speaker 2: got the risk settings right. It's one thing for the 248 00:12:20,000 --> 00:12:23,520 Speaker 2: market to be defensive, but the trading volumes on the 249 00:12:23,559 --> 00:12:26,960 Speaker 2: nz X fifty were pretty low throughout this entire period, 250 00:12:27,000 --> 00:12:29,920 Speaker 2: even though activity sort of perked up throughout it all. 251 00:12:30,120 --> 00:12:32,280 Speaker 2: When you're looking back at sort of just the actual 252 00:12:32,679 --> 00:12:35,520 Speaker 2: volume of shares trading, and you're looking at maybe one 253 00:12:35,600 --> 00:12:38,320 Speaker 2: twenty one to thirty mili in turnover value of trading 254 00:12:38,360 --> 00:12:41,360 Speaker 2: going through it on a daily basis, The rewatings of 255 00:12:41,520 --> 00:12:45,400 Speaker 2: major indices a couple of weeks prior had massive volumes 256 00:12:45,480 --> 00:12:48,000 Speaker 2: over that you're looking at sort of equivalent volumes going 257 00:12:48,040 --> 00:12:50,600 Speaker 2: through the Breck search back in twenty sixteen around mid 258 00:12:50,679 --> 00:12:54,480 Speaker 2: year like that, that seems out of step when you've 259 00:12:54,520 --> 00:12:56,920 Speaker 2: got some of the biggest trading volumes going on in 260 00:12:56,920 --> 00:13:02,600 Speaker 2: Wall Street over in Australia, and yes, people are sort 261 00:13:02,600 --> 00:13:05,720 Speaker 2: of sitting and waiting to see what goes on. But 262 00:13:05,800 --> 00:13:10,560 Speaker 2: you're just wondering, why is New Zealand not actually engaging 263 00:13:10,600 --> 00:13:13,880 Speaker 2: in this? Is this just a function of the fact 264 00:13:13,880 --> 00:13:15,839 Speaker 2: that a lot of our ownership is being done through 265 00:13:15,840 --> 00:13:18,440 Speaker 2: passive ETFs now and these are the vehicles that people 266 00:13:18,440 --> 00:13:21,240 Speaker 2: are flocking to. Has really been quite curious is to 267 00:13:21,280 --> 00:13:24,160 Speaker 2: wonder have we got our risk settings right for what 268 00:13:24,280 --> 00:13:27,280 Speaker 2: should be something that is there to support not only 269 00:13:27,840 --> 00:13:31,679 Speaker 2: deeper capital markets for new businesses to be coming out there, 270 00:13:31,679 --> 00:13:34,199 Speaker 2: but for investors to get involved in. You struggle to 271 00:13:34,200 --> 00:13:36,560 Speaker 2: see the imagination getting captured by the New Zealand public 272 00:13:36,600 --> 00:13:38,880 Speaker 2: at a time when more of the New Zealand public 273 00:13:38,960 --> 00:13:42,200 Speaker 2: is finally getting over the finance company debacle, the eighty 274 00:13:42,240 --> 00:13:46,880 Speaker 2: seven crash, You're left sort of scratching your head, going 275 00:13:47,559 --> 00:13:48,400 Speaker 2: what gives. 276 00:13:48,360 --> 00:13:50,280 Speaker 3: The data would suggest though, that we are getting over 277 00:13:50,320 --> 00:13:52,679 Speaker 3: those things that if you look at even at the 278 00:13:52,760 --> 00:13:57,920 Speaker 3: Cheeses index that Cheesy's produces quarterly, people are diving into 279 00:13:57,920 --> 00:14:01,240 Speaker 3: those marks, not necessarily the nsiet x point, but they're 280 00:14:01,240 --> 00:14:02,440 Speaker 3: getting amongst it, don't they. 281 00:14:02,600 --> 00:14:06,079 Speaker 1: Yeah, I've been really hardened to see the response to 282 00:14:06,120 --> 00:14:08,920 Speaker 1: this period of volatility, where the latest figures from the 283 00:14:08,960 --> 00:14:12,640 Speaker 1: Cheesy's Index over the quarter January to March showed again 284 00:14:12,720 --> 00:14:16,720 Speaker 1: continuing strong netbuying through this period, and then also a 285 00:14:16,800 --> 00:14:21,240 Speaker 1: shift away from sort of more individual companies into more 286 00:14:21,280 --> 00:14:26,280 Speaker 1: ETFs and diversified funds as well as into defensive individual 287 00:14:26,280 --> 00:14:29,320 Speaker 1: companies as well. And I do think that reflects the 288 00:14:29,320 --> 00:14:31,560 Speaker 1: fact that we are probably in for a period of 289 00:14:31,640 --> 00:14:37,760 Speaker 1: continued volatility and divesification is a really important thing to 290 00:14:37,920 --> 00:14:41,600 Speaker 1: make your portfolio more resilient to sort of withstand withstand 291 00:14:41,640 --> 00:14:47,560 Speaker 1: that period. I also think actually even before this tariff 292 00:14:47,560 --> 00:14:50,200 Speaker 1: war and these geopolitical events that we're seeing play out. 293 00:14:50,600 --> 00:14:53,640 Speaker 1: You know, if I look at twenty twenty four, in 294 00:14:53,680 --> 00:14:55,640 Speaker 1: the year, the S and P five hundred was up, 295 00:14:55,680 --> 00:14:58,440 Speaker 1: I think about twenty five percent, but about half of 296 00:14:58,440 --> 00:15:02,680 Speaker 1: those companies had losses so had a negative return for 297 00:15:02,760 --> 00:15:05,880 Speaker 1: that period. And actually it's a very few number of 298 00:15:05,960 --> 00:15:09,520 Speaker 1: companies that accounted for the majority of that return. And 299 00:15:09,680 --> 00:15:11,120 Speaker 1: I think that is a trend that we're seeing more 300 00:15:11,160 --> 00:15:13,960 Speaker 1: and more, particularly as you have large tech players with 301 00:15:14,200 --> 00:15:19,240 Speaker 1: high operating leverage and you're seeing some more global companies, 302 00:15:20,160 --> 00:15:23,080 Speaker 1: you are seeing that the drive to the tails and 303 00:15:23,120 --> 00:15:25,960 Speaker 1: the tails that are driving for the big outcomes, and 304 00:15:26,080 --> 00:15:29,000 Speaker 1: unless you can you know, really pick who those winners 305 00:15:29,000 --> 00:15:32,720 Speaker 1: will be. And I mean I certainly can't. Definitely, we're 306 00:15:32,760 --> 00:15:35,080 Speaker 1: not near my day job if I could do that. 307 00:15:35,400 --> 00:15:39,080 Speaker 1: But you know, unless you can do that, well, then 308 00:15:40,120 --> 00:15:41,840 Speaker 1: you know you're it's going to be hard to even 309 00:15:41,880 --> 00:15:45,120 Speaker 1: beat the market return if you haven't got decent exposure 310 00:15:45,160 --> 00:15:47,320 Speaker 1: to those very few sort of fewer and fewer stocks 311 00:15:47,320 --> 00:15:50,920 Speaker 1: that are driving the big outcomes. And so I do 312 00:15:51,000 --> 00:15:55,560 Speaker 1: think that moving more to that diversified approach is really 313 00:15:55,600 --> 00:15:58,520 Speaker 1: helpful as we're seeing that trend even beyond you know, 314 00:15:58,600 --> 00:16:02,240 Speaker 1: the volatility with off the back of the Trump saga. 315 00:16:02,280 --> 00:16:04,120 Speaker 2: That's just also one of those issues that you get 316 00:16:04,120 --> 00:16:07,360 Speaker 2: around the shifting around the ETFs and the such. It's 317 00:16:07,360 --> 00:16:10,880 Speaker 2: hard to look at say like a QQQ, the Nasdaq 318 00:16:10,920 --> 00:16:13,080 Speaker 2: ETF or the S and P five hundred and really 319 00:16:13,080 --> 00:16:16,160 Speaker 2: consider either of those to be diversified given the concentration 320 00:16:16,240 --> 00:16:19,720 Speaker 2: of Magnificent seven and you know, just thinking about, like 321 00:16:19,840 --> 00:16:23,000 Speaker 2: you know, people on Shares's platform, this is we investors 322 00:16:24,040 --> 00:16:27,680 Speaker 2: being drawn more to US stocks and they're going down 323 00:16:27,760 --> 00:16:31,080 Speaker 2: this you get told to diversify your portfolio. This American 324 00:16:31,080 --> 00:16:33,240 Speaker 2: market should be one that you should go into. But 325 00:16:33,280 --> 00:16:35,800 Speaker 2: if you're only going into seven companies that are making 326 00:16:35,880 --> 00:16:37,520 Speaker 2: up the dominance of it, you know, it's hard to 327 00:16:37,520 --> 00:16:40,960 Speaker 2: wrap your head around how you're actually diversifying your investment there, 328 00:16:41,080 --> 00:16:42,680 Speaker 2: or if you're just trying to ride the wave that 329 00:16:42,720 --> 00:16:45,000 Speaker 2: we've all been don for what last seven eight nine 330 00:16:45,080 --> 00:16:45,520 Speaker 2: years now? 331 00:16:45,640 --> 00:16:47,880 Speaker 1: I mean to fourth point though. Yeah, when you look 332 00:16:47,920 --> 00:16:50,120 Speaker 1: at for example one E S and P five hundred ETF, 333 00:16:50,880 --> 00:16:54,080 Speaker 1: it is dominated by a very few number of stocks. 334 00:16:54,240 --> 00:16:56,440 Speaker 1: And I mean I remember a time on the ins 335 00:16:56,480 --> 00:16:59,400 Speaker 1: oft X fifty where I think it was fishing, Packal, Healthcare, 336 00:16:59,400 --> 00:17:02,200 Speaker 1: and A two milk collectively where something like thirty percent 337 00:17:02,240 --> 00:17:05,600 Speaker 1: of the index. And so unless you had for fund 338 00:17:05,600 --> 00:17:07,760 Speaker 1: managers that didn't have a massive exposure to those two, 339 00:17:07,800 --> 00:17:11,600 Speaker 1: they almost always underperformed index at that time. What we 340 00:17:11,640 --> 00:17:14,440 Speaker 1: are also seeing because we call a lot of our 341 00:17:14,920 --> 00:17:17,600 Speaker 1: keep we saving members, and we are talking to investors 342 00:17:17,640 --> 00:17:20,919 Speaker 1: all the time. And another thing we're seeing is we're 343 00:17:20,920 --> 00:17:24,560 Speaker 1: actually fine larging investors not disengage. They're not going I 344 00:17:24,640 --> 00:17:26,360 Speaker 1: just put my head in the set end and try 345 00:17:26,359 --> 00:17:29,280 Speaker 1: and just forget about this period we are seeing investors 346 00:17:29,400 --> 00:17:33,000 Speaker 1: actually continue to check in with their balances, but also 347 00:17:33,040 --> 00:17:35,280 Speaker 1: they're saying, actually, this is just part and parcel of 348 00:17:35,400 --> 00:17:37,919 Speaker 1: being an investor. And I think that really is a 349 00:17:37,960 --> 00:17:41,280 Speaker 1: shift in mentality of what we've seen in previous periods, 350 00:17:41,320 --> 00:17:44,520 Speaker 1: particularly amongst retail where I'm talking to investors, I've seen 351 00:17:44,520 --> 00:17:48,920 Speaker 1: a really big shift in psychology where it is much 352 00:17:48,960 --> 00:17:51,760 Speaker 1: more volatility is the price of investing, and it's not 353 00:17:51,800 --> 00:17:54,199 Speaker 1: a penalty, it's not for doing something wrong. It's literally 354 00:17:54,200 --> 00:17:57,639 Speaker 1: the price of being in the market. And actually, when 355 00:17:57,640 --> 00:18:00,440 Speaker 1: I do talk to investors, the things that they're about 356 00:18:00,640 --> 00:18:03,400 Speaker 1: is not volatility in the short term, and they shouldn't 357 00:18:03,440 --> 00:18:05,560 Speaker 1: be like for investors taking a long enough time horizon 358 00:18:05,600 --> 00:18:09,840 Speaker 1: and advertate, volatility in itself shouldn't be the issue. The 359 00:18:09,880 --> 00:18:12,800 Speaker 1: issue is, you know, can I lose some all of 360 00:18:12,800 --> 00:18:15,600 Speaker 1: my money? Or am I going to get inadequate returns 361 00:18:15,600 --> 00:18:17,720 Speaker 1: for the risk I'm taking on? Those are the issues 362 00:18:17,720 --> 00:18:20,640 Speaker 1: that investors need to be concerned with, not that short 363 00:18:20,720 --> 00:18:21,600 Speaker 1: term volatility. 364 00:18:21,960 --> 00:18:23,920 Speaker 3: Yeah, I guess key. We saver is probably a huge 365 00:18:23,960 --> 00:18:27,000 Speaker 3: part of that equation. Right, people are now directly invested 366 00:18:27,040 --> 00:18:28,520 Speaker 3: that can sort of see a little bit about their 367 00:18:28,560 --> 00:18:32,199 Speaker 3: peace of the world. And that's probably leading a lot 368 00:18:32,240 --> 00:18:34,399 Speaker 3: of financial literacy as well. I guess the fact that 369 00:18:34,400 --> 00:18:37,160 Speaker 3: it's locked in right that people are in there until 370 00:18:37,560 --> 00:18:39,800 Speaker 3: sixty five or whatever, or until they buy their first house, 371 00:18:39,840 --> 00:18:41,399 Speaker 3: if that's where they're trying to push it to. So 372 00:18:41,440 --> 00:18:42,680 Speaker 3: that's got to be a big part of this. 373 00:18:42,680 --> 00:18:45,159 Speaker 1: Yeah, totally. And dolo cost averaging in that is the 374 00:18:45,200 --> 00:18:48,880 Speaker 1: key saver strategy. Like every month money gets deployed, whether 375 00:18:49,000 --> 00:18:51,080 Speaker 1: or not people are feeling good about it and looking 376 00:18:51,119 --> 00:18:55,800 Speaker 1: at the balance and obviously only investing at the top 377 00:18:55,800 --> 00:18:57,480 Speaker 1: of the market is not a good strategy. So dolo 378 00:18:57,520 --> 00:19:01,000 Speaker 1: cost averaging does rely on investing when markets go down 379 00:19:01,080 --> 00:19:04,080 Speaker 1: and continue to deploy money during those moments, which, as 380 00:19:04,119 --> 00:19:06,440 Speaker 1: we've talked about psychologically, is challenging. 381 00:19:06,960 --> 00:19:08,600 Speaker 3: I mean, we do have some slightly unusual KEI we 382 00:19:08,680 --> 00:19:10,840 Speaker 3: server settings here where we sort of tax it going in, 383 00:19:10,880 --> 00:19:13,840 Speaker 3: whereas a lot of other countries will just say you 384 00:19:13,880 --> 00:19:15,840 Speaker 3: make the money, you grow, your pie, will have it 385 00:19:15,880 --> 00:19:17,920 Speaker 3: when you cash it out when you're retired. Things like 386 00:19:18,320 --> 00:19:20,000 Speaker 3: is it time for us to look at that and 387 00:19:20,040 --> 00:19:21,520 Speaker 3: say we need a health check on We. 388 00:19:21,480 --> 00:19:24,199 Speaker 2: Should be looking at that all the time, you know. 389 00:19:24,480 --> 00:19:29,600 Speaker 2: The esteemed commentator Brian Fellow, who is very smart columnist 390 00:19:29,600 --> 00:19:33,199 Speaker 2: at The Herald for many, many many years, would regularly 391 00:19:33,240 --> 00:19:36,040 Speaker 2: point out a bit the horrendous change that was made 392 00:19:36,040 --> 00:19:38,760 Speaker 2: when Roger Douglass was Finance Minister to change that setting 393 00:19:38,760 --> 00:19:41,160 Speaker 2: around the tax you're clipping the ticket on the way 394 00:19:41,160 --> 00:19:43,399 Speaker 2: through and what government wants to give up that money, 395 00:19:44,200 --> 00:19:49,120 Speaker 2: which the ultimate taxpayer doesn't see. You're not aware of 396 00:19:49,960 --> 00:19:53,280 Speaker 2: how much you're actually paying. Until we had the sort 397 00:19:53,280 --> 00:19:56,880 Speaker 2: of it might have been the COVID crash. When you're 398 00:19:56,880 --> 00:19:59,040 Speaker 2: looking at the annual key we save balances, it was 399 00:19:59,400 --> 00:20:01,400 Speaker 2: almost about that time where the tax take was going 400 00:20:01,400 --> 00:20:04,520 Speaker 2: to be bigger than the fees generated. Now, you know, 401 00:20:05,359 --> 00:20:07,320 Speaker 2: it's kind of a moral for the government to be 402 00:20:07,640 --> 00:20:13,320 Speaker 2: a bigger beneficiary of the privatizing of future savings than 403 00:20:13,359 --> 00:20:16,840 Speaker 2: the people that it constantly complains about. It's a horrendous setting. 404 00:20:17,359 --> 00:20:19,240 Speaker 3: I kind of imagined it's a little bit like trying 405 00:20:19,240 --> 00:20:22,000 Speaker 3: to steal food out of the mouth of the animal 406 00:20:22,040 --> 00:20:23,960 Speaker 3: that you're trying to feed. Rather than just saying, hey, 407 00:20:24,000 --> 00:20:25,960 Speaker 3: one day we're going to you know, it's going to 408 00:20:26,000 --> 00:20:27,200 Speaker 3: meet at the end and we're all going to eat. 409 00:20:27,240 --> 00:20:29,000 Speaker 3: You know, it feels like they're trying to take too 410 00:20:29,080 --> 00:20:30,920 Speaker 3: much too soon. But like you say, it's locked in 411 00:20:31,000 --> 00:20:33,040 Speaker 3: and probably hard to reverse. But are there other changes 412 00:20:33,040 --> 00:20:34,720 Speaker 3: where you trying to make well. 413 00:20:34,760 --> 00:20:39,760 Speaker 2: I mean everyone's pushing for pushing for increasing contribution rates, 414 00:20:39,800 --> 00:20:42,680 Speaker 2: which makes sense. I mean even if you go back 415 00:20:42,720 --> 00:20:45,240 Speaker 2: to doctor Cullen when he was setting it up, the 416 00:20:45,560 --> 00:20:48,199 Speaker 2: staggered rate of one, two, three, four going up one 417 00:20:48,240 --> 00:20:52,199 Speaker 2: percentage point a year to minimum and then wanting, you know, 418 00:20:52,560 --> 00:20:53,840 Speaker 2: wanting to be able to get for it to go 419 00:20:53,920 --> 00:20:54,280 Speaker 2: up to eight. 420 00:20:54,480 --> 00:20:56,359 Speaker 1: I mean, the great thing with key we save is 421 00:20:56,480 --> 00:20:59,840 Speaker 1: it really does maximize for that time horizon. And I 422 00:21:00,040 --> 00:21:02,680 Speaker 1: think as humans, for most people, and I said, it's 423 00:21:02,680 --> 00:21:06,600 Speaker 1: for myself, compounding is not insuredive. Like if someone said 424 00:21:06,600 --> 00:21:08,520 Speaker 1: to me, what's seven plus seven plus seven plus seven, 425 00:21:08,520 --> 00:21:10,640 Speaker 1: I'd give them the answer. They said, what's seven times 426 00:21:10,640 --> 00:21:12,960 Speaker 1: seven times seven times seven? I just say that's a 427 00:21:13,000 --> 00:21:16,639 Speaker 1: really big number. I personally think compounding, the compounding formula, 428 00:21:16,680 --> 00:21:21,000 Speaker 1: we're the most useful formula that my kids ever learn. 429 00:21:20,119 --> 00:21:23,200 Speaker 1: And I just think that we don't. It's very hard 430 00:21:23,240 --> 00:21:27,320 Speaker 1: to visualize and really understand how powerful that is. Over decades. 431 00:21:27,600 --> 00:21:29,800 Speaker 3: Look, we've managed to get through this mostly without a 432 00:21:29,800 --> 00:21:32,200 Speaker 3: lot of talk about Trump or tariffs or any of 433 00:21:32,240 --> 00:21:34,280 Speaker 3: those things, or it's been in the background there, right, 434 00:21:34,320 --> 00:21:37,080 Speaker 3: because every other day it's a new thing, right. But 435 00:21:37,640 --> 00:21:39,199 Speaker 3: coming back to what we're talking about with some of 436 00:21:39,240 --> 00:21:42,920 Speaker 3: those New Zealand companies, those local companies, is there any 437 00:21:42,920 --> 00:21:45,320 Speaker 3: way we can work out what those likely impacts are 438 00:21:45,359 --> 00:21:47,800 Speaker 3: to be on some of the market players that we've got. 439 00:21:47,600 --> 00:21:51,240 Speaker 2: Here, not yet, Yeah, well ofause, I mean, your first 440 00:21:51,320 --> 00:21:54,200 Speaker 2: round had so Fisher and Pugle health Care, which has 441 00:21:54,440 --> 00:21:58,199 Speaker 2: significant manufacturing operations in Mexico, which were immediately slapped with 442 00:21:58,240 --> 00:22:03,280 Speaker 2: tariffs before the big Donald Trump versus the World, which 443 00:22:03,320 --> 00:22:06,480 Speaker 2: was then peered back to Donald Trump versus China Super Slam. 444 00:22:06,480 --> 00:22:08,720 Speaker 3: We should start coming at some wrestling metaphors or something 445 00:22:08,720 --> 00:22:09,439 Speaker 3: at SummerSlam. 446 00:22:10,040 --> 00:22:15,159 Speaker 2: I mean, he is a WWE fan, but it's the 447 00:22:15,480 --> 00:22:18,000 Speaker 2: were their immediate thing was it's not going to hit 448 00:22:18,200 --> 00:22:20,919 Speaker 2: our twenty twenty five financial year because their financial year 449 00:22:21,000 --> 00:22:23,119 Speaker 2: ends in March, so that gives them a bit of 450 00:22:23,160 --> 00:22:25,600 Speaker 2: an out to then think about, well, gee, we need 451 00:22:25,640 --> 00:22:28,000 Speaker 2: to work out what the impact is going to be, 452 00:22:28,080 --> 00:22:30,000 Speaker 2: whether or not we're going to be able to pass 453 00:22:30,080 --> 00:22:32,040 Speaker 2: this on to our customers, whether or not we're going 454 00:22:32,040 --> 00:22:35,520 Speaker 2: to shift more manufacturing back to New Zealand. They went 455 00:22:35,520 --> 00:22:39,760 Speaker 2: through this in twenty sixteen after the original when NAFTA 456 00:22:39,760 --> 00:22:43,280 Speaker 2: got torn up and Trump renegotiated the free trade agreement 457 00:22:43,320 --> 00:22:47,360 Speaker 2: with Canada or Mexico. Fisher and Pigal Healthcare. We're looking 458 00:22:47,440 --> 00:22:50,159 Speaker 2: at their manufacturing footprint and thought this is too much 459 00:22:50,200 --> 00:22:53,280 Speaker 2: of a risk. We need to find another country to 460 00:22:53,880 --> 00:22:56,359 Speaker 2: build things. They ended up settling on a Chinese factory 461 00:22:56,359 --> 00:22:58,199 Speaker 2: which came on stream. It might have been last year 462 00:22:58,280 --> 00:23:01,840 Speaker 2: or the year before, quite remember, but this is this 463 00:23:01,880 --> 00:23:04,440 Speaker 2: is how every company is going to respond. They will 464 00:23:04,480 --> 00:23:06,919 Speaker 2: look at what the rules are going to be, and 465 00:23:07,000 --> 00:23:09,800 Speaker 2: they will work out what will we get hit by 466 00:23:10,080 --> 00:23:13,959 Speaker 2: and how can we get around it, and how else 467 00:23:13,960 --> 00:23:16,720 Speaker 2: should we respond. I mean, in video promising to build 468 00:23:16,800 --> 00:23:20,000 Speaker 2: half a trillion dollars worth of AI servers and there 469 00:23:20,040 --> 00:23:23,920 Speaker 2: are supercomputers in America. That's exactly the sort of behavioral 470 00:23:23,960 --> 00:23:26,440 Speaker 2: shift that this White House administration wants to see. Whether 471 00:23:26,520 --> 00:23:28,960 Speaker 2: or not you know that the tariff regime would have 472 00:23:29,080 --> 00:23:31,920 Speaker 2: forced their hand or not. Counter factual, We've got no. 473 00:23:31,960 --> 00:23:34,879 Speaker 3: Idea whether they've got the consistency coming out of the 474 00:23:34,880 --> 00:23:36,959 Speaker 3: White House that these businesses can actually use to make 475 00:23:37,000 --> 00:23:39,240 Speaker 3: those decisions as well, right, you know, can't we just 476 00:23:39,280 --> 00:23:40,120 Speaker 3: get a deal instead? 477 00:23:40,280 --> 00:23:44,240 Speaker 1: Yeah, I'm intrigued to see actually how much manufacturing will 478 00:23:44,800 --> 00:23:47,160 Speaker 1: move to the US, because there is there is quite 479 00:23:47,200 --> 00:23:49,720 Speaker 1: a lag in terms of that response to them going, 480 00:23:49,760 --> 00:23:51,359 Speaker 1: oh we actually going to build a factory or going 481 00:23:51,400 --> 00:23:53,439 Speaker 1: to set up a factory, and that that takes time, 482 00:23:54,119 --> 00:23:57,679 Speaker 1: and I'm seeing various countdowns as to when Trump, you know, 483 00:23:57,720 --> 00:24:01,359 Speaker 1: when his term will finish, and look, who knows what 484 00:24:01,359 --> 00:24:05,520 Speaker 1: will happen at that point. But you know, if that 485 00:24:05,600 --> 00:24:08,080 Speaker 1: takes time, and do you think that they will get reversed, 486 00:24:08,160 --> 00:24:10,040 Speaker 1: then you do sort of whip back and go, well, actually, 487 00:24:10,400 --> 00:24:11,200 Speaker 1: is that worth it or not? 488 00:24:11,680 --> 00:24:14,240 Speaker 2: There are always going to be winners and losers throughout 489 00:24:14,240 --> 00:24:17,480 Speaker 2: this entire sort of situation. Some people will find the 490 00:24:17,520 --> 00:24:21,320 Speaker 2: opportunities and others will get burnt, which is kind of capitalism, right. 491 00:24:21,440 --> 00:24:23,520 Speaker 2: I mean, you know, it's not a win win, win 492 00:24:23,560 --> 00:24:26,560 Speaker 2: win win, no matter how much these sort of well 493 00:24:26,560 --> 00:24:28,760 Speaker 2: manufactured press release tries to pict it is. So. 494 00:24:29,000 --> 00:24:32,000 Speaker 1: Yeah, and then another interesting thing is thinking about what 495 00:24:32,040 --> 00:24:34,600 Speaker 1: the long term consequences might be of all of this 496 00:24:34,720 --> 00:24:37,600 Speaker 1: as well. You know, even if things are completely reversed, 497 00:24:38,320 --> 00:24:41,320 Speaker 1: that doesn't necessarily take away the fact that this has happened. 498 00:24:41,440 --> 00:24:44,680 Speaker 1: And then what, you know, how will global fund managers 499 00:24:44,680 --> 00:24:47,000 Speaker 1: look at the US or you know, what will be 500 00:24:47,119 --> 00:24:50,840 Speaker 1: certain views around the US dollar moving forward, And that's 501 00:24:50,840 --> 00:24:53,080 Speaker 1: really hard to predict, you know what that might be. 502 00:24:53,440 --> 00:24:58,080 Speaker 2: I was just thinking Milford, our local fund manager in 503 00:24:58,080 --> 00:25:01,240 Speaker 2: New Zealand, they had already been looking at the valuations 504 00:25:01,320 --> 00:25:03,919 Speaker 2: in the US and gone, it's a bit toppy. And 505 00:25:03,960 --> 00:25:06,920 Speaker 2: they had been pairing back their US exposure and shifting 506 00:25:06,920 --> 00:25:11,000 Speaker 2: it to Europe where things were looking like a better value. 507 00:25:11,240 --> 00:25:13,600 Speaker 2: And you saw in the first sort of the first 508 00:25:13,640 --> 00:25:17,359 Speaker 2: quarter up until Liberation Day which liberated US at our gains, 509 00:25:18,359 --> 00:25:23,440 Speaker 2: that some of those European defense stocks have been going 510 00:25:23,520 --> 00:25:27,760 Speaker 2: through the absolute roof in Europe, primarily because they couldn't 511 00:25:27,800 --> 00:25:30,719 Speaker 2: trust on being able to source American product anymore. But 512 00:25:30,840 --> 00:25:34,040 Speaker 2: you know, these things, these things have massive budgets coming 513 00:25:34,040 --> 00:25:37,320 Speaker 2: their way as well as a result of what could 514 00:25:37,400 --> 00:25:41,119 Speaker 2: possibly be the dissolving of the NATO alliance, which is 515 00:25:41,200 --> 00:25:42,760 Speaker 2: crazy when you say that out loud. 516 00:25:42,840 --> 00:25:44,639 Speaker 3: Yeah, I did say we were going to try and 517 00:25:44,680 --> 00:25:47,720 Speaker 3: be unashamedly local. I feel like we've ranged pretty far 518 00:25:47,800 --> 00:25:49,600 Speaker 3: from home now. So I'm just going to bring it back. 519 00:25:49,600 --> 00:25:51,359 Speaker 3: If we're talking about the NZIX. There's something I need 520 00:25:51,400 --> 00:25:56,400 Speaker 3: to ask you, Susan strategic mediocrity explain. 521 00:25:56,840 --> 00:26:01,240 Speaker 1: Yeah, Strategic metirocrity was actually a term that the global 522 00:26:01,240 --> 00:26:04,399 Speaker 1: asset manager used to use. I don't know if they 523 00:26:04,440 --> 00:26:07,480 Speaker 1: still do, and it was really from a bond trader 524 00:26:07,640 --> 00:26:11,399 Speaker 1: back in the day called Ben Trotsky. In two thousand 525 00:26:11,400 --> 00:26:14,600 Speaker 1: and three, he retired with the best ten year record 526 00:26:15,280 --> 00:26:19,040 Speaker 1: at the time globally. And what ben Trotsky had done 527 00:26:19,160 --> 00:26:21,440 Speaker 1: is he analyzed a lot of a lot of history, 528 00:26:21,480 --> 00:26:24,280 Speaker 1: a lot of data, and actually found that if he 529 00:26:24,359 --> 00:26:28,200 Speaker 1: could stay within the top third of performers each year, 530 00:26:28,680 --> 00:26:30,480 Speaker 1: but not higher than that, so not on the top 531 00:26:30,520 --> 00:26:33,560 Speaker 1: twenty percent or the top twenty five percent, then naturally, 532 00:26:33,600 --> 00:26:36,040 Speaker 1: if he did that consistently over a ten year period, 533 00:26:36,520 --> 00:26:39,480 Speaker 1: he would be at the top in any competitive universe. 534 00:26:40,760 --> 00:26:45,080 Speaker 1: And really what it is about is going things change 535 00:26:45,119 --> 00:26:48,400 Speaker 1: all the time. Just as we're talking about things are 536 00:26:48,440 --> 00:26:51,600 Speaker 1: so uncertain all the time, and so an environment that 537 00:26:51,680 --> 00:26:54,960 Speaker 1: might produce sellar returns one year, if the environment changes, 538 00:26:55,080 --> 00:26:57,720 Speaker 1: then that same strategy might not produce the same outcome. 539 00:26:57,760 --> 00:27:02,239 Speaker 1: In fact, it's unlikely to so if the strategy is 540 00:27:02,280 --> 00:27:07,000 Speaker 1: more about thinking about a really resilient and robust approach 541 00:27:07,080 --> 00:27:10,000 Speaker 1: that will work in a variety of different environments. If 542 00:27:10,040 --> 00:27:13,280 Speaker 1: you apply that consistently each year, then actually over a 543 00:27:13,320 --> 00:27:15,880 Speaker 1: longer period of time, say a ten year period, then 544 00:27:15,880 --> 00:27:18,920 Speaker 1: that should produce really good outcomes. And I actually looked 545 00:27:18,920 --> 00:27:22,359 Speaker 1: at this on with instx data, and it was really 546 00:27:22,400 --> 00:27:25,639 Speaker 1: fascinating to see over I looked at a range of 547 00:27:25,680 --> 00:27:30,520 Speaker 1: different decades, and what I found is that the companies 548 00:27:30,520 --> 00:27:34,160 Speaker 1: that perform the best over a ten year period never 549 00:27:35,040 --> 00:27:39,159 Speaker 1: with the top than any one year. And I think, again, 550 00:27:39,320 --> 00:27:43,200 Speaker 1: it's that optimizing over the longer term versus maximizing over 551 00:27:43,359 --> 00:27:45,760 Speaker 1: the shorter term. And I don't think we talk about 552 00:27:45,800 --> 00:27:49,080 Speaker 1: this enough. If I look at websites or fund managers, 553 00:27:49,080 --> 00:27:50,919 Speaker 1: they often talk about a one year or three year, 554 00:27:51,040 --> 00:27:54,080 Speaker 1: maybe a five year record. If I'm investing for a 555 00:27:54,119 --> 00:27:56,879 Speaker 1: longer term than that, then actually that's not really relevant 556 00:27:56,880 --> 00:27:59,040 Speaker 1: for me. I need to be looking at what that 557 00:27:59,119 --> 00:28:02,080 Speaker 1: track record looks like over a much longer time frame. 558 00:28:03,040 --> 00:28:05,520 Speaker 1: And it was interesting seeing some of the top formers 559 00:28:05,520 --> 00:28:08,000 Speaker 1: on the insiet X. I mean, Chorus was one that 560 00:28:08,160 --> 00:28:11,600 Speaker 1: has produced some stellar returns over a ten year period, 561 00:28:12,000 --> 00:28:15,439 Speaker 1: and in fact, if you account for the sort of 562 00:28:15,600 --> 00:28:19,720 Speaker 1: risk control as well, it's probably even better. So, you know, 563 00:28:19,760 --> 00:28:22,720 Speaker 1: I think it's interesting too. Over the last few years 564 00:28:22,760 --> 00:28:25,000 Speaker 1: we've seen quite a bag shift away from the injetex 565 00:28:25,040 --> 00:28:27,359 Speaker 1: into the US markets. But I did look at a 566 00:28:27,440 --> 00:28:30,000 Speaker 1: range of Intertex companies and actually, if we take a 567 00:28:30,080 --> 00:28:33,399 Speaker 1: much longer time horizon, there's been some really really strong 568 00:28:33,440 --> 00:28:37,760 Speaker 1: consistent returns on some of these companies over a decade plus. 569 00:28:38,040 --> 00:28:40,480 Speaker 3: All are there hidden treasures in there in the insiet. 570 00:28:40,320 --> 00:28:43,160 Speaker 2: X They're always hidden treasures, but I mean it's part 571 00:28:43,200 --> 00:28:47,600 Speaker 2: of the problem around crystallizing value out of them as 572 00:28:47,640 --> 00:28:50,800 Speaker 2: the lack of liquidity throughout the entire market. People won't 573 00:28:50,880 --> 00:28:54,080 Speaker 2: touch anything outside of those top twenty companies. And when 574 00:28:54,080 --> 00:28:57,920 Speaker 2: you're looking at sort of those mid and small cap companies, 575 00:28:58,280 --> 00:29:00,520 Speaker 2: and these are why they're so often how to takeover 576 00:29:00,560 --> 00:29:05,040 Speaker 2: targets because they're trading possibly even below the net tangible 577 00:29:05,120 --> 00:29:07,440 Speaker 2: assets that you know, if you were to liquidate the 578 00:29:07,440 --> 00:29:09,160 Speaker 2: matter point in time, you would get more money than 579 00:29:09,200 --> 00:29:10,840 Speaker 2: what you could do buying them all on market at 580 00:29:10,840 --> 00:29:15,320 Speaker 2: that price. There are a lot of companies in that 581 00:29:15,400 --> 00:29:17,240 Speaker 2: sort of space, and part of it is just because 582 00:29:17,280 --> 00:29:19,920 Speaker 2: they've fallen out of favor. Part of it is that 583 00:29:20,720 --> 00:29:23,680 Speaker 2: their owners, the shareholders, don't want to sell at the 584 00:29:23,720 --> 00:29:26,320 Speaker 2: prices that someone else is out there trying to do so. 585 00:29:26,880 --> 00:29:29,760 Speaker 2: But it's just really difficult to drive that activity to 586 00:29:29,800 --> 00:29:33,400 Speaker 2: get a real, a transparent price, which is what a 587 00:29:33,520 --> 00:29:37,040 Speaker 2: stock market, a forum for people to buy and sell, 588 00:29:37,400 --> 00:29:40,080 Speaker 2: is all about. Why didn't Rocket Lab get a secondary 589 00:29:40,120 --> 00:29:42,440 Speaker 2: listing when it went to the Nasdaq? What are we 590 00:29:42,520 --> 00:29:46,840 Speaker 2: doing in New Zealand that's not encouraging those companies that 591 00:29:46,880 --> 00:29:49,280 Speaker 2: are imagining to get from small to medium to big, 592 00:29:49,840 --> 00:29:55,040 Speaker 2: or those hugely ambitious companies to think domestic, even if 593 00:29:55,040 --> 00:29:58,000 Speaker 2: that's only just a component of it. Why are they 594 00:29:58,000 --> 00:30:01,680 Speaker 2: completely assuring us? And it's very easy to take a 595 00:30:01,720 --> 00:30:04,080 Speaker 2: crack at the stock exchange operator and say, well, you're 596 00:30:04,080 --> 00:30:06,000 Speaker 2: not sticking to your knitting, you're too busy off and 597 00:30:06,040 --> 00:30:09,520 Speaker 2: funds management, wealth administration. Well that's unfair. They're just one 598 00:30:09,560 --> 00:30:12,880 Speaker 2: component to the entire thing. Is it the fifteen years 599 00:30:12,880 --> 00:30:15,680 Speaker 2: of the conduct legislation that we've been operating under, did 600 00:30:15,680 --> 00:30:18,040 Speaker 2: that get it right? Maybe it's time to have we 601 00:30:18,080 --> 00:30:21,760 Speaker 2: think about that. I mean, Cheersy's has been a magnificent 602 00:30:21,760 --> 00:30:25,719 Speaker 2: introduction into the market to at least inject, if not necessarily, 603 00:30:25,760 --> 00:30:28,400 Speaker 2: the value of trading that you see from the big houses, 604 00:30:28,840 --> 00:30:32,960 Speaker 2: the volume of it. Retail investors are getting engaged through 605 00:30:33,000 --> 00:30:36,800 Speaker 2: it and doing so, but more it just seems to 606 00:30:36,840 --> 00:30:40,160 Speaker 2: be like we've left something on the table, and if 607 00:30:40,160 --> 00:30:43,640 Speaker 2: I knew what it was, I'd probably be sitting in 608 00:30:43,680 --> 00:30:46,520 Speaker 2: the top floor of PWC's our own commercial bank. The 609 00:30:46,560 --> 00:30:48,160 Speaker 2: what if moment out of all of this and the 610 00:30:49,160 --> 00:30:51,440 Speaker 2: peaks and troughs of the SMP five hundred is we 611 00:30:51,440 --> 00:30:53,000 Speaker 2: need to look a little bit local and fix our 612 00:30:53,040 --> 00:30:55,000 Speaker 2: own house as well and fix some of these things. 613 00:30:55,160 --> 00:30:57,959 Speaker 2: Thank you so much for your insights, for your experience. 614 00:30:58,240 --> 00:31:03,160 Speaker 2: Do you come stay calm people, honestly and as you say, 615 00:31:03,280 --> 00:31:07,160 Speaker 2: just just check in when you need to and you know, 616 00:31:07,280 --> 00:31:08,080 Speaker 2: back the long game. 617 00:31:08,440 --> 00:31:10,440 Speaker 3: Thank you very much, Paul, Thank you very much. Susanna, 618 00:31:10,800 --> 00:31:12,880 Speaker 3: Thank you very much as well for listening and for 619 00:31:12,960 --> 00:31:17,480 Speaker 3: watching YouTube Spotify, Apple iHeart straight off the shares exap. 620 00:31:17,560 --> 00:31:20,120 Speaker 3: If that's where you're getting it from, Thanks very much. 621 00:31:20,600 --> 00:31:22,320 Speaker 3: Let us know what you thought, let us know what 622 00:31:22,360 --> 00:31:25,000 Speaker 3: you'd like to hear about, Kumitu. That's us for now.