WEBVTT - Finding value in volatile markets 0:00:00.320 --> 0:00:03.199 Join over seven hundred and fifty thousand people using Cheza's 0:00:03.240 --> 0:00:06.320 to build long term wealth invest with no minimum across 0:00:06.360 --> 0:00:09.840 the US, Australian and New Zealand share markets. Download the 0:00:09.920 --> 0:00:11.440 Chasas app to get started. 0:00:11.920 --> 0:00:16.400 I wouldn't say it's panicky yet, but we're moving towards that. 0:00:18.280 --> 0:00:24.279 The market's reacting in a very real time way. This 0:00:24.400 --> 0:00:27.680 is the best time to find no stocks that have 0:00:27.760 --> 0:00:33.880 been indiscriminately sold off. I suppose the biggest call we 0:00:34.120 --> 0:00:38.240 had to make was the rules of the game changing, 0:00:38.720 --> 0:00:41.280 and the framework of investing is actually changing. 0:00:43.440 --> 0:00:46.720 Hello and welcome to shared Lunch, brought to by Chairs's 0:00:47.159 --> 0:00:49.800 at Cheesea's. We're on a mission to create financial empowerment 0:00:49.840 --> 0:00:52.559 for everyone, and that's why these conversations are so important. 0:00:52.600 --> 0:00:54.560 It's a chance to really dig into what's going on 0:00:54.600 --> 0:00:57.240 in the world of investing and share that with everyone. 0:00:57.480 --> 0:01:01.520 Today I'm joined by Michelle Lopez of Australasian Equities and 0:01:01.520 --> 0:01:04.320 portfolio manager at five Funds, and we're going to talk 0:01:04.319 --> 0:01:05.880 about what's going on in the markets. 0:01:05.520 --> 0:01:06.000 At the moment. 0:01:06.360 --> 0:01:08.959 Investing involves the risk you might lose the money you 0:01:09.000 --> 0:01:12.280 start with. We recommend talking to a licensed financial advisor. 0:01:13.000 --> 0:01:16.840 We also recommend reading product disclosure documents before deciding to invest. 0:01:17.080 --> 0:01:19.480 Everything you're about to see and here is current at 0:01:19.480 --> 0:01:20.280 the time of recording. 0:01:20.360 --> 0:01:23.319 Before we get started, I'd like to acknowledge the Gettigal 0:01:23.360 --> 0:01:26.560 people of the or nation, the traditional custodians of the 0:01:26.640 --> 0:01:29.200 land we were coming to from today, and pay respects 0:01:29.200 --> 0:01:32.480 to elders, past, present and emerging. Hi. Michelle, thanks Heats 0:01:32.520 --> 0:01:33.319 for joining us today. 0:01:33.400 --> 0:01:34.440 Heie, thanks for having me. 0:01:34.800 --> 0:01:36.800 There's obviously a lot going on at the moment, but 0:01:36.920 --> 0:01:40.000 thought we'd just jumped straight in and say is now 0:01:40.040 --> 0:01:41.200 a good time to invest? 0:01:41.680 --> 0:01:44.560 Look, it's interesting, it's an interesting time to invest, and 0:01:44.600 --> 0:01:53.040 it's probably the most unpredictable market that I've worked in, 0:01:54.080 --> 0:01:58.120 and I've seen quite a few corrections having been in 0:01:58.160 --> 0:02:02.760 the role for a couple of decas now. So the 0:02:02.760 --> 0:02:05.480 one thing I'd say is we're all feeling pretty battered 0:02:05.560 --> 0:02:08.320 and bruised to be honest at the moment, just given 0:02:08.440 --> 0:02:13.000 the volatility that we're seeing, but by no means in 0:02:13.520 --> 0:02:18.120 kind of chronic pain as such. And it's been tried 0:02:18.160 --> 0:02:22.200 and tested and proven over multiple cycles and timeframes that 0:02:22.280 --> 0:02:25.400 indeed these are the times that prove to spin off 0:02:25.400 --> 0:02:29.120 the best opportunities, particularly if you are taking a bit 0:02:29.120 --> 0:02:32.640 of a longer term view, so the next six months, 0:02:33.240 --> 0:02:38.160 who knows, particularly under the US administration that we're seeing 0:02:38.160 --> 0:02:40.640 at the moment, with all the policy changes that are 0:02:40.639 --> 0:02:43.839 coming through. So I think you do need to sort 0:02:43.840 --> 0:02:46.600 of sit back a little bit and keep calm in 0:02:46.639 --> 0:02:50.040 these type of markets and really sort of think through 0:02:50.800 --> 0:02:55.280 when the dust settles, these are the times that opportunities 0:02:55.320 --> 0:02:57.440 present themselves and money is to be made. So I 0:02:57.480 --> 0:03:01.359 think it is an interesting time. I'm not calling sort 0:03:01.400 --> 0:03:04.160 of the bottom at this point, but yeah, I think 0:03:04.240 --> 0:03:07.560 volatility is definitely our friend, particularly the way that we 0:03:07.600 --> 0:03:08.280 look at the market. 0:03:09.480 --> 0:03:13.400 And so how how are the tariff's affecting sentiment and 0:03:13.760 --> 0:03:15.880 do you think there's any curveballs for us to watch 0:03:15.880 --> 0:03:18.360 out for? You mentioned like you wouldn't call the bottom 0:03:18.720 --> 0:03:20.320 now that, like, yeah, can you tell us a bit 0:03:20.360 --> 0:03:20.760 about that. 0:03:21.600 --> 0:03:27.920 I think there's multiple parts to this. The very direct 0:03:28.160 --> 0:03:33.600 impact to Australia New Zealand is actually quite minimal from 0:03:33.639 --> 0:03:36.240 a relative perspective. So I think about if you think 0:03:36.240 --> 0:03:40.840 about tariffs, and for Australia, the biggest, our biggest export 0:03:40.920 --> 0:03:44.400 to the US is beef, and for context, that's about 0:03:44.440 --> 0:03:49.000 a billion dollars that we export. You compare that to 0:03:49.880 --> 0:03:54.200 iron all to China mostly being eighty five billion, So 0:03:54.400 --> 0:03:59.280 again we're relatively immune from that perspective. But you have 0:03:59.360 --> 0:04:02.040 to think about second order effects. And you mentioned sentiment, 0:04:02.080 --> 0:04:05.880 and it absolutely hits sentiment because everything you're reading, everything 0:04:05.920 --> 0:04:11.440 you're listening to, is talking about this marketing flux, trade wars, 0:04:11.560 --> 0:04:16.560 and it really does hit sentiment. We also have to 0:04:16.600 --> 0:04:19.719 think about sort of second order effects. And you know, 0:04:19.760 --> 0:04:22.440 I mentioned iron ore as a very big export for US, 0:04:23.000 --> 0:04:28.840 but behind that is LNG, so liquefied natural gas, and 0:04:29.120 --> 0:04:33.000 again that goes into our region, being Asia, but it 0:04:33.040 --> 0:04:36.640 is pegged to oil prices, so the spot the pricing 0:04:36.760 --> 0:04:40.000 of those contracts, which are long term contracts. So there 0:04:40.040 --> 0:04:44.600 are implications around what's happening more broadly to the economy here. 0:04:45.680 --> 0:04:49.440 But having said that, it also spins off opportunities because 0:04:49.680 --> 0:04:52.120 guess what, there's going to be a lot of China 0:04:52.160 --> 0:04:56.960 product hitting our market and it could actually be deflationary 0:04:57.000 --> 0:04:58.880 for the Australian consumer, which is a good thing. 0:05:00.000 --> 0:05:03.400 How would you describe the vibe of the A six 0:05:03.520 --> 0:05:03.960 right now? 0:05:05.120 --> 0:05:09.760 Oh, it's i wouldn't say it's panicky yet, but we're 0:05:09.800 --> 0:05:13.680 moving towards that. And every day you sort of wake 0:05:13.760 --> 0:05:16.479 up and you don't know what to expect because headlines 0:05:16.680 --> 0:05:20.320 or tweets or whatever it is, there's something new, and 0:05:20.360 --> 0:05:26.920 the market's reacting in a very real time way, and 0:05:27.080 --> 0:05:31.839 you've seen it through intra day moves being huge. So 0:05:31.920 --> 0:05:36.080 I think everyone is quite nervous. Everyone is almost skittish 0:05:36.160 --> 0:05:39.799 in a way. So that's why, actually the most difficult 0:05:39.839 --> 0:05:43.719 thing to do and the hardest decision is to just 0:05:43.800 --> 0:05:48.320 remain calm until we have a sort of a clearer 0:05:48.320 --> 0:05:52.359 line of sight of where we're heading. And you know, 0:05:52.480 --> 0:05:57.039 I think tariffs have been really well broadly broadcasted. Obviously 0:05:57.080 --> 0:06:01.479 the extent of them haven't something that's been spoken about 0:06:01.520 --> 0:06:02.800 now for months. 0:06:03.440 --> 0:06:05.640 Yeah, you're right, Like we've seen, you know, we track 0:06:05.720 --> 0:06:08.400 and Vista sentiment through the quarters and over the last 0:06:08.400 --> 0:06:12.440 few months, like since the tariffs have been being talked about, 0:06:12.520 --> 0:06:16.160 we have noticed and Vista sentiment kind of dropping into 0:06:16.200 --> 0:06:19.479 what's called like cautious territory for us. But you know, 0:06:19.520 --> 0:06:24.480 people are still buying and knit buyers across the platform, 0:06:24.839 --> 0:06:27.760 so for you, you know, are you playing it safe 0:06:28.120 --> 0:06:30.480 or are you Are you seeing those opportunities? 0:06:32.040 --> 0:06:33.640 Look, I think a bit of both. So we are 0:06:33.680 --> 0:06:38.080 certainly seeing opportunities. But you know, one of the things 0:06:38.120 --> 0:06:43.920 that you've got to be really aware of is, you know, yes, 0:06:44.040 --> 0:06:47.320 absolutely picking the right companies, which is our bread and 0:06:47.360 --> 0:06:50.600 butter really from the bottom up, and understanding the companies 0:06:50.600 --> 0:06:54.279 that we're investing in. In fact, the biggest downside risk, 0:06:54.320 --> 0:06:57.680 I always say, is not knowing what you're buying. Having 0:06:57.720 --> 0:07:01.960 said that, though, portfolio construction is equally important, and it's 0:07:02.279 --> 0:07:04.919 really important in this type of market that you've got 0:07:05.839 --> 0:07:10.600 a diversity of companies with very different earnings drivers, not 0:07:10.680 --> 0:07:15.120 so much sectors because sectors can be quite misleading. And 0:07:15.240 --> 0:07:20.080 why that's important is we don't know what pathway the 0:07:20.680 --> 0:07:23.800 economy will take from here, predominantly the US economy, given 0:07:23.840 --> 0:07:28.400 it's the largest, and it absolutely moves markets because that 0:07:28.440 --> 0:07:32.200 pathway is unclear. You need to have your defensive stocks, 0:07:32.320 --> 0:07:35.200 you need to have your cyclical stocks, and then you've 0:07:35.240 --> 0:07:38.720 got your growth your compounders, and they're going to each 0:07:38.760 --> 0:07:44.560 be affected in different ways. So ensuring that is in 0:07:44.600 --> 0:07:49.000 play and you're not leveraging only one scenario and going 0:07:49.040 --> 0:07:52.280 hard into that I think that's prudent. So I suppose 0:07:52.320 --> 0:07:55.720 if you want to say that's conservative. Having said that, though, 0:07:56.200 --> 0:07:59.680 this is the best time to find stocks that have 0:07:59.760 --> 0:08:04.240 been indiscriminately sold off. You know, we've got companies that 0:08:04.280 --> 0:08:08.640 are off thirty percent, forty percent, super high quality businesses 0:08:08.800 --> 0:08:16.560 with actually quite resilient earnings regardless of tariffs, that that 0:08:16.600 --> 0:08:19.600 have come off just with market sentiment. And that's your 0:08:19.640 --> 0:08:21.240 opportunity right there. 0:08:22.120 --> 0:08:24.960 And we've seen, you know, people are sing, you know, 0:08:25.000 --> 0:08:29.240 their portfolios going down at the moment, and we're hearing 0:08:29.320 --> 0:08:31.320 you know that that can be kind of hard to see. 0:08:31.360 --> 0:08:35.000 You know, we're all human, and you know, it's hard 0:08:35.000 --> 0:08:37.240 to kind of react to that. But anything about what 0:08:37.280 --> 0:08:39.640 Invista should be doing at a time like this. 0:08:40.880 --> 0:08:44.959 Look, I think it's a market cycle, you know, and yes, 0:08:45.080 --> 0:08:49.760 the rules of the game are changing somewhat and that's 0:08:49.800 --> 0:08:53.800 what's driving this volatility. But we will come through. We 0:08:53.840 --> 0:08:56.480 will come through this. So I suppose the one thing 0:08:56.679 --> 0:09:01.520 I would say is have a time frame in mind, 0:09:02.000 --> 0:09:07.679 and if you can't stomach losses, you know, over the 0:09:07.679 --> 0:09:11.120 next six months. You know, I'm not sure why you've 0:09:11.160 --> 0:09:13.080 been invested in the equity market, but if you've got 0:09:13.120 --> 0:09:16.120 a longer time horizon, if you've got that five year 0:09:16.160 --> 0:09:21.439 plus time horizon. Again, I always encourage people to zoom 0:09:21.480 --> 0:09:26.000 out because even in this really volatile period, if you 0:09:26.200 --> 0:09:29.400 zoom out, it almost looks like a blip. You know, 0:09:29.440 --> 0:09:32.280 we've been on a trajectory like this over the last 0:09:33.000 --> 0:09:36.480 five years, and it's a small blip. And I'm not 0:09:37.280 --> 0:09:39.680 trying to say that you've got to go all in now, 0:09:40.400 --> 0:09:41.960 That's not what I'm saying at all. I think there 0:09:42.000 --> 0:09:44.440 are some very clear risks, and as I said, the 0:09:44.480 --> 0:09:47.080 rules of the game are changing and the framework of 0:09:47.120 --> 0:09:51.120 investing is actually changing. But yeah, I think just be 0:09:51.320 --> 0:09:55.559 aware that you know, this has been three months, and 0:09:56.000 --> 0:09:58.920 you really do need when you're investing in stocks, you 0:09:59.000 --> 0:10:01.360 really do need to take a lo longer time horizon. 0:10:01.800 --> 0:10:03.960 And you mentioned you know, you've been in this industry 0:10:04.240 --> 0:10:07.120 for years now, and you would have seen, like it's 0:10:07.200 --> 0:10:09.319 very normal that markets go up and down and respond 0:10:09.360 --> 0:10:12.560 to two changes that are happening in the wider environment. 0:10:13.600 --> 0:10:15.839 Is there anything you're observing this time or about this 0:10:16.000 --> 0:10:18.920 change versus other times we've gone through this type of 0:10:19.000 --> 0:10:19.880 volatility before. 0:10:20.920 --> 0:10:26.280 Look, I think this one has been particularly interesting in 0:10:26.360 --> 0:10:30.960 that it's a bit self inflicted. So if I the 0:10:30.960 --> 0:10:34.679 most recent one being COVID, that was completely out of 0:10:34.679 --> 0:10:39.160 anyone's control and we had no idea sort of the 0:10:39.200 --> 0:10:43.840 extremity of the impact that was going to have, and 0:10:43.880 --> 0:10:46.319 then the one before that was probably the major one, 0:10:46.360 --> 0:10:48.959 being the GFC. Having lived through that as well, there 0:10:49.000 --> 0:10:55.240 was financial system collapse almost whereas this time round it 0:10:55.280 --> 0:10:59.839 feels like it's a little bit more man made and 0:11:00.640 --> 0:11:03.679 there could be a very clear off rap for what's 0:11:03.760 --> 0:11:07.800 playing out at the moment. And that's the difference. That 0:11:07.880 --> 0:11:10.440 there is a clear off ramp, we actually don't think 0:11:10.520 --> 0:11:13.240 that it will be taken, which makes it a little 0:11:13.240 --> 0:11:17.080 bit trickier, But yeah, that would be the difference, I 0:11:17.120 --> 0:11:21.840 would say. And the other side of it is there 0:11:22.040 --> 0:11:27.040 is quite a bit of firepower left fiscally stimulus wise 0:11:27.200 --> 0:11:30.840 that could be injected into our market if the need 0:11:30.880 --> 0:11:34.240 is there, both in Australia and New Zealand. I mean 0:11:34.280 --> 0:11:37.960 New Zealand just cut rates today as well. That they've 0:11:37.960 --> 0:11:40.400 been on that trajectory for a little while now, so 0:11:40.440 --> 0:11:43.720 there's definitely firepower that governments can sort of come out 0:11:43.720 --> 0:11:47.439 with to underpin the consumer. 0:11:47.280 --> 0:11:49.760 And how that and the funds that you're managing, how 0:11:49.760 --> 0:11:50.439 are those tracking. 0:11:50.800 --> 0:11:55.080 I'm responsible for the Australasian equity component of PIE, but 0:11:55.200 --> 0:11:58.959 PIE does offer a whole range of products, different asset 0:11:59.000 --> 0:12:03.599 classes and balance portfolios as well. Obviously the balanced portfolios 0:12:03.600 --> 0:12:08.720 have done much better than the pure equity portfolios. So 0:12:08.760 --> 0:12:10.960 the new term has been challenging. If you look over 0:12:11.160 --> 0:12:15.240 a longer time horizon two years, five years since inception, 0:12:15.520 --> 0:12:19.920 our funds have performed, have performed well. They've outperformed their 0:12:19.960 --> 0:12:24.880 peers and their benchmarks over a longer time horizon. But yeah, 0:12:24.880 --> 0:12:27.240 the last three months have been have been quite tough 0:12:28.320 --> 0:12:29.360 in line with markets. 0:12:29.440 --> 0:12:31.880 And have you had to make any tough calls through 0:12:31.880 --> 0:12:32.400 that time? 0:12:32.880 --> 0:12:35.319 I think I get to the weekend and I'm so 0:12:35.360 --> 0:12:40.160 fatigued by decision making. Just I told my family, just 0:12:40.960 --> 0:12:44.080 make decisions that you want about dinner on your own, 0:12:44.160 --> 0:12:46.720 do not involve me, Because our day to day is 0:12:47.040 --> 0:12:50.440 all about decision making and making calls on the spot 0:12:50.520 --> 0:12:52.640 with the amount of information that we've got to hand, 0:12:53.200 --> 0:12:57.400 and when that information is constantly changing, it's very difficult. 0:12:58.440 --> 0:13:02.679 So I suppose biggest call we had to make was, 0:13:03.640 --> 0:13:08.640 you know, maybe back to your question around defensiveness. We 0:13:08.760 --> 0:13:13.800 run portfolios and we've got target cash rangers, and we 0:13:13.840 --> 0:13:17.920 brought our portfolio into up to the highest sort of 0:13:18.040 --> 0:13:20.760 level of cash that we could own towards the end 0:13:20.840 --> 0:13:24.640 of you know, beginning of March, over over the March period, 0:13:25.320 --> 0:13:27.280 and that was quite tricky because the market had already 0:13:27.320 --> 0:13:33.600 fallen you know, five six seven percent, and at that 0:13:33.720 --> 0:13:37.080 point we were kind of unsure. We hadn't had the 0:13:37.080 --> 0:13:41.320 big sort of day liberation day out of the US, 0:13:41.520 --> 0:13:44.880 and we chose to lift our cash levels quite to 0:13:44.920 --> 0:13:47.520 the max limit. And that felt a little bit risk 0:13:47.600 --> 0:13:49.880 at the time because we would have not kind of 0:13:50.000 --> 0:13:54.040 kept up if the market was to rally. But it's 0:13:54.040 --> 0:13:57.600 also positioned us really well now because we're sitting on 0:13:57.640 --> 0:14:01.280 this dry powder with a lo dramatic cash that we 0:14:01.360 --> 0:14:06.320 can start investing slowly into those companies, those opportunities which 0:14:06.440 --> 0:14:10.559 you know are popping up now. So I don't know 0:14:10.559 --> 0:14:13.160 if that answers your question around a hard a hard decision, 0:14:13.240 --> 0:14:16.960 but we've got to make calls every day around that 0:14:17.000 --> 0:14:20.880 and positioning because you know, it's very difficult to predict 0:14:21.640 --> 0:14:24.920 at this point in time given all the changes. So 0:14:25.240 --> 0:14:29.360 it's all it's more about being prepared, so prepared for 0:14:29.400 --> 0:14:32.480 those different scenarios playing out and ensuring that portfolios are 0:14:32.520 --> 0:14:33.200 positioned for that. 0:14:34.360 --> 0:14:38.200 Any're observing any changes to where money is flowing. With 0:14:38.320 --> 0:14:39.920 a result of what's going on at the moment, like 0:14:40.000 --> 0:14:42.760 often and volatile times, people might turn to gold like 0:14:42.840 --> 0:14:45.560 is that still the case or like what are you 0:14:45.600 --> 0:14:46.160 noticing there? 0:14:46.240 --> 0:14:50.560 Yeah? Absolutely, I mean gold was the best performing asset 0:14:51.320 --> 0:14:53.840 or sect or asset class or whatever you want, whatever 0:14:53.840 --> 0:14:59.800 it's categorized as in March, god was up thirteen percent. 0:15:00.040 --> 0:15:02.760 The rest of the market was down, you know, five percent, 0:15:02.840 --> 0:15:08.120 call it thereabouts. So it's definitely held its status as 0:15:08.160 --> 0:15:11.840 a safe a safe haven, you know, I think a 0:15:11.840 --> 0:15:15.040 bit more longer, longer dated. Though, There's been lots of 0:15:15.080 --> 0:15:20.040 different asset classes that have really attracted a lot of 0:15:20.080 --> 0:15:24.240 asset flow. And you know, private debt is one of those. 0:15:25.560 --> 0:15:27.960 You know, cryptocurrency is another one that's gotten a lot 0:15:27.960 --> 0:15:31.000 of attention and starting to see and started to say 0:15:31.440 --> 0:15:35.480 over you know, the last twelve eighteen months, institutional buying 0:15:35.520 --> 0:15:39.160 as well, not just retail. So yeah, there's there's been 0:15:39.240 --> 0:15:43.160 a number, but I'd say defensives at the moment gold cash, 0:15:43.360 --> 0:15:48.200 that's you've certainly seen shift shifting to that, but that's 0:15:48.280 --> 0:15:51.400 that's kind of normal. I think there's nothing that's screaming 0:15:51.960 --> 0:15:56.640 people are panicking in any way. It's just upheld its 0:15:56.640 --> 0:15:59.160 status as gold. And you know, it's a big one 0:15:59.200 --> 0:16:02.000 for for the Australia market in particular because the benchmarks 0:16:02.360 --> 0:16:06.000 that we're running our funds too, which is mostly the 0:16:06.080 --> 0:16:10.120 small ordinaries, twelve percent of that benchmarker goal producers. So 0:16:10.160 --> 0:16:13.040 it's a big part of our market and it's it's held, 0:16:13.040 --> 0:16:14.400 it's held itself. 0:16:14.560 --> 0:16:17.760 How about any other rare earth minerals. 0:16:18.720 --> 0:16:21.960 Well, rarest is interesting, right because China's just come out 0:16:22.000 --> 0:16:27.000 and banned all exports to the US. Why that's a 0:16:27.040 --> 0:16:30.320 big deal is they represent something like seventy percent of 0:16:30.360 --> 0:16:38.000 the rare earth's market and rareer actually are strategically important 0:16:38.120 --> 0:16:40.840 because they go into the manufacture of a lot of 0:16:40.880 --> 0:16:44.440 these core you know, high tech products as well as 0:16:44.480 --> 0:16:51.080 renewables and even defense. So it's it's actually a really 0:16:51.080 --> 0:16:53.520 important factor. And there's a couple there's actually a couple 0:16:53.520 --> 0:16:57.400 of ASX listed companies that are probably now looking a 0:16:57.440 --> 0:17:01.560 bit more attractive, and Linus is one of one of 0:17:01.560 --> 0:17:04.840 those companies. We don't own Linus in the portfolios, but 0:17:04.880 --> 0:17:08.520 they're mount world asset in w A. They're one of 0:17:08.520 --> 0:17:13.760 the world's highest quality as rare Earth's mine outside of 0:17:13.840 --> 0:17:17.000 China and one of the largest at scale. So I 0:17:17.040 --> 0:17:22.120 think there's that will probably be a beneficiary of what's 0:17:22.160 --> 0:17:26.000 happening from a China closing their export market to the US. 0:17:26.960 --> 0:17:29.440 And then you've got a lot of more speculative names 0:17:29.880 --> 0:17:34.800 in our market as well. You've got a Referra Northern 0:17:34.840 --> 0:17:37.960 Minerals I think is one of them as well Linden Resources. 0:17:37.960 --> 0:17:40.680 So there's a couple of real specky names in there, 0:17:40.720 --> 0:17:43.600 but probably not part of the market that we're playing in. 0:17:44.960 --> 0:17:49.480 We take the steardship of our client's capital very seriously, 0:17:49.600 --> 0:17:52.560 so again we've got to understand sort of the risk 0:17:52.640 --> 0:17:55.240 and for me, that part of the markets is quite speculative, 0:17:55.280 --> 0:17:56.879 so we tend to avoid it. 0:17:58.119 --> 0:18:01.080 And how about as we love to areas of growth 0:18:01.200 --> 0:18:03.840 or innovation, like, is there anything that you're noticing popping 0:18:03.920 --> 0:18:04.280 up there? 0:18:06.160 --> 0:18:09.399 Oh, look, there's the usual stuff that you can hear 0:18:09.440 --> 0:18:17.360 about every day around AI or healthcare and gene therapies. 0:18:18.600 --> 0:18:23.000 But you know, yesterday actually I came across a really 0:18:23.040 --> 0:18:29.159 interesting article and it was an industry piece around decommissioning 0:18:30.280 --> 0:18:33.719 of a number of these oil and gas wells in 0:18:33.760 --> 0:18:38.439 the basin for Australia and the Western Australian Basin, and 0:18:38.480 --> 0:18:40.440 you wouldn't believe it. I didn't believe it anyway. There's 0:18:40.480 --> 0:18:45.040 about sixty three billion dollars worth of work to be 0:18:45.160 --> 0:18:50.199 executed decommissioning these wells. There's a thousand wells that need 0:18:50.240 --> 0:18:53.840 to be decommissioned over the next thirty years starting now. 0:18:56.320 --> 0:18:58.840 That has to be done in a safe and environmentally 0:18:58.880 --> 0:19:02.040 friendly way. And Australia has taken a lot of learnings 0:19:02.560 --> 0:19:07.399 of issues that have happened offshore, so they've put a 0:19:07.440 --> 0:19:10.159 lot of emphasis on doing this in an effective and 0:19:11.640 --> 0:19:14.960 safe way. So I actually think this is going to 0:19:15.000 --> 0:19:20.480 be a really interesting space. It's nascent at the moment. 0:19:21.040 --> 0:19:24.960 No one's talking about it. So for me and again 0:19:25.040 --> 0:19:27.920 just trying to understand who are the players in this market. 0:19:27.640 --> 0:19:31.000 The space being the decommissioning or that the decommissioning. 0:19:31.080 --> 0:19:34.120 So think about everything from going out to these offshore rigs. 0:19:35.440 --> 0:19:37.760 The worlds have been plugged out, plugged up, sorry, so 0:19:38.520 --> 0:19:41.719 they're no longer flowing from a gas or oil perspective, 0:19:42.640 --> 0:19:45.760 and how do you remove that infrastructure in a way 0:19:45.880 --> 0:19:48.760 and get rid of it. So we've got you know, 0:19:49.240 --> 0:19:54.639 recycling companies clean Away as an example, that are playing 0:19:54.680 --> 0:19:57.600 in a very small part of that market, but given 0:19:57.640 --> 0:20:01.160 the sheer amount of work coming through. So yeah, that's 0:20:01.320 --> 0:20:07.160 that's kind of a growth industry that I think there 0:20:07.200 --> 0:20:11.600 should be some key beneficiaries of that. So when I 0:20:11.680 --> 0:20:13.679 come across something like that, I look for, Okay, so 0:20:14.480 --> 0:20:17.520 are there any barriers to entry, any licensing requirements that 0:20:17.560 --> 0:20:21.600 are required, what companies hold those licenses? And then the 0:20:21.640 --> 0:20:25.360 skilled labor you know, this is very highly skilled who 0:20:25.560 --> 0:20:27.960 has that sort of labor pool that can execute on 0:20:28.000 --> 0:20:31.520 these type of contracts. So that's an area that just 0:20:31.560 --> 0:20:33.280 caught my interest. So I was like, well, that's something 0:20:33.280 --> 0:20:37.040 I haven't even heard about, So I'll probably be delving 0:20:37.119 --> 0:20:39.000 to that in a bit more detail and see who 0:20:39.040 --> 0:20:40.000 the natural players are. 0:20:40.160 --> 0:20:42.000 Yeah, it's fascinating because you kind of think of like 0:20:42.160 --> 0:20:45.720 growth and innovation being producing something new, oras this is like, 0:20:46.640 --> 0:20:49.160 this is the almost the opposite. It's like, how too, 0:20:49.440 --> 0:20:49.880 It's at. 0:20:49.800 --> 0:20:52.520 The other end of something, but it's and that's the thing. 0:20:52.600 --> 0:20:55.359 It's so important and obviously huge health and safety impact. 0:20:55.440 --> 0:21:02.600 Absolutely, And you're spot on. Innovation isn't just new, it's 0:21:02.680 --> 0:21:08.840 also you know, a whole topic around innovation. But you 0:21:08.840 --> 0:21:12.080 know these microphones as an example, the amount that probably 0:21:12.119 --> 0:21:14.640 innovation that needs to go into that. And who's got 0:21:14.720 --> 0:21:17.800 the ip who's got the patent around whatever? Property is 0:21:17.840 --> 0:21:20.560 like it's it's it's everywhere, and if you're not, if 0:21:20.600 --> 0:21:23.520 you're not thinking about it, then you'll be left behind. 0:21:23.760 --> 0:21:28.080 And how about any exciting new companies? Are there any 0:21:28.480 --> 0:21:29.520 standouts in particular? 0:21:29.760 --> 0:21:33.960 We've had very little new companies come to market unfortunately, 0:21:34.960 --> 0:21:39.359 so there's no new kind of IPOs as such. We 0:21:39.400 --> 0:21:40.920 had a few at the end of last year. 0:21:41.320 --> 0:21:41.800 Why is that? 0:21:42.240 --> 0:21:48.040 So we had similar coscale? There was a couple the problem. 0:21:48.480 --> 0:21:53.080 The problem with IPOs is you need pretty buoyant market 0:21:53.080 --> 0:21:57.080 conditions for them to be successful, and then investors also 0:21:57.119 --> 0:22:01.359 want to see success post IPO, and unfortunately that hasn't 0:22:01.400 --> 0:22:04.320 played out for the ones that came broadly came to 0:22:04.359 --> 0:22:09.919 market last year. There's a couple of things there. You know, liquidity, 0:22:10.000 --> 0:22:12.840 particularly in the sort of small end of the market 0:22:13.080 --> 0:22:16.800 is really important. And when you're going down kind of 0:22:16.880 --> 0:22:19.760 the market cap range and sort of the risk increases, 0:22:19.920 --> 0:22:23.560 you want to make sure that new capital being allocated 0:22:24.600 --> 0:22:27.280 there's a risk reward trade off there, so that hasn't 0:22:27.280 --> 0:22:33.320 played out. Now we've got heightened market uncertainty. No company 0:22:33.359 --> 0:22:36.760 wants to come an I p O when there is investor. 0:22:40.320 --> 0:22:43.240 You need investor appetite to step in right and not 0:22:43.320 --> 0:22:47.240 just IPO but sustain a post post listing. And then 0:22:47.280 --> 0:22:52.320 maybe venture capital are still quite willing to provide to 0:22:52.400 --> 0:22:56.520 provide capital into into the businesses. So I think that's 0:22:56.640 --> 0:23:00.520 it's kind of a combination of all but there are 0:23:01.119 --> 0:23:04.760 two that have been sort of flagged meaningful ones being 0:23:04.840 --> 0:23:09.400 Virgin looks like that. I'm not sure if it's still 0:23:09.440 --> 0:23:12.880 coming to market after what's playing out, but that certainly 0:23:12.880 --> 0:23:15.840 has been flagged. And then close to home as well, 0:23:15.880 --> 0:23:18.680 New Zealand Fonterra are looking to it's a dual track 0:23:18.760 --> 0:23:22.440 process of a trade sale but also IPO the consumer 0:23:23.000 --> 0:23:25.199 part of the business as well. So they're probably the 0:23:25.200 --> 0:23:27.960 two main ones that I know of in the pipeline. 0:23:28.600 --> 0:23:31.159 But it has dried up and that's that's not a 0:23:31.200 --> 0:23:36.040 good reflection, I suppose, because you want a real vibrant 0:23:36.680 --> 0:23:43.080 market and IPOs are typically important because it attracts new capital, 0:23:44.119 --> 0:23:48.800 and we given our specialty and our niche in small 0:23:48.880 --> 0:23:52.040 in small caps, it's been a big part of how 0:23:52.040 --> 0:23:53.560 we've invested in the past. 0:23:53.359 --> 0:23:55.840 And so I guess we'll just kind of start to 0:23:55.840 --> 0:23:59.679 wrap up now. But wondering if there's any any message 0:23:59.680 --> 0:24:02.600 you've got to investors at the moment and how to 0:24:02.720 --> 0:24:04.400 kind of move through these times. 0:24:06.200 --> 0:24:10.360 Look, I think there's a famous quote that's probably been 0:24:10.400 --> 0:24:13.760 rewritten a number of times and different people adding their 0:24:13.800 --> 0:24:17.800 own little way spin to it. But you know, I 0:24:17.840 --> 0:24:23.760 always think back to investing as a business is actually 0:24:24.320 --> 0:24:27.359 the only business that when it goes on sale, which 0:24:27.400 --> 0:24:31.040 is kind of what we're seeing now, that people run 0:24:31.040 --> 0:24:35.360 for the doors. And again coming back to time frames 0:24:35.400 --> 0:24:41.159 and coming back to understanding what downside risk is, and 0:24:41.240 --> 0:24:45.119 downside risk is not knowing what you're buying if you 0:24:45.240 --> 0:24:50.359 do the analysis and you understand what the risk of 0:24:50.400 --> 0:24:54.560 those earnings are. I think these are the times that 0:24:54.840 --> 0:25:00.399