1 00:00:11,720 --> 00:00:14,320 Speaker 1: You mentioned leveraged ETFs before, I wonder if you want 2 00:00:14,320 --> 00:00:14,640 Speaker 1: to dig. 3 00:00:14,560 --> 00:00:16,760 Speaker 2: Into it a little bit. Yeah, So I'm a big 4 00:00:17,079 --> 00:00:22,319 Speaker 2: I'm a big fan of leverage, and I guess for 5 00:00:22,360 --> 00:00:25,320 Speaker 2: those that are unsure of what leverage is, just think 6 00:00:25,360 --> 00:00:27,920 Speaker 2: of it as like your home loan. You put in 7 00:00:27,960 --> 00:00:31,960 Speaker 2: a deposit and then you get a loan from the 8 00:00:32,000 --> 00:00:34,040 Speaker 2: bank to give you. You know, you put in one 9 00:00:34,120 --> 00:00:36,040 Speaker 2: hundred thousand, but you actually get to go out and 10 00:00:36,040 --> 00:00:40,360 Speaker 2: buy a million dollar property. And so what you're putting 11 00:00:40,400 --> 00:00:43,680 Speaker 2: in is amplified by the loan that the bank gives you, 12 00:00:44,520 --> 00:00:49,440 Speaker 2: and that applies to investing generally. But ETFs now give 13 00:00:49,479 --> 00:00:52,160 Speaker 2: you leveraged exposure. So what it means is for every 14 00:00:52,159 --> 00:00:55,320 Speaker 2: dollar that I invest in the ETF, the ETF provider 15 00:00:55,400 --> 00:00:58,760 Speaker 2: might go out and invest two dollars on your behalf 16 00:00:58,840 --> 00:01:00,840 Speaker 2: because of the way that it's structured, and what it 17 00:01:00,880 --> 00:01:05,080 Speaker 2: gives you is, as I said, an amplified exposure. They 18 00:01:05,120 --> 00:01:07,039 Speaker 2: do come with a lot of risk though, because some 19 00:01:07,080 --> 00:01:10,880 Speaker 2: of them are two times exposure three times exposure. And 20 00:01:10,920 --> 00:01:15,720 Speaker 2: what that means is, let's say you know, the ETF 21 00:01:15,760 --> 00:01:18,440 Speaker 2: goes up five percent in one day. If you have 22 00:01:18,520 --> 00:01:20,600 Speaker 2: two times it's going to go up ten percent. If 23 00:01:20,600 --> 00:01:22,840 Speaker 2: you have three times, it's going to go up fifteen percent. 24 00:01:23,240 --> 00:01:28,360 Speaker 2: Now that sounds awesome and you can make a lot 25 00:01:28,400 --> 00:01:31,080 Speaker 2: of money doing that, But with leverage, it goes the 26 00:01:31,160 --> 00:01:33,720 Speaker 2: other way as well. So if it goes down five 27 00:01:33,760 --> 00:01:36,880 Speaker 2: percent one day, it'll actually go down ten or twenty 28 00:01:36,880 --> 00:01:40,679 Speaker 2: percent or whatever the sort of gearing ratio is. So 29 00:01:40,720 --> 00:01:43,759 Speaker 2: it's something that you need to be very very clear 30 00:01:43,800 --> 00:01:46,120 Speaker 2: on why it is in your portfolio, and you need 31 00:01:46,160 --> 00:01:49,040 Speaker 2: to be very conscious of the impact that it can 32 00:01:49,120 --> 00:01:52,800 Speaker 2: have on your total returns. There are some products that 33 00:01:52,840 --> 00:01:55,480 Speaker 2: are available at the moment that have very moderate gearing, 34 00:01:55,640 --> 00:01:58,720 Speaker 2: and I think it reflects the demand from retail investors 35 00:01:58,760 --> 00:02:01,640 Speaker 2: at the moment to kind of get into these interesting, 36 00:02:01,840 --> 00:02:04,360 Speaker 2: sort of more sexy ETFs. So I would say, but 37 00:02:04,560 --> 00:02:08,160 Speaker 2: just be careful because now you're seeing crazy leveraged ETFs 38 00:02:08,160 --> 00:02:11,000 Speaker 2: out there. You've got leveraged bitcoin, Like, why would you 39 00:02:11,040 --> 00:02:14,320 Speaker 2: want to go leverage bitcoin three times? Leveraged bitcoin? Bitcoin 40 00:02:14,320 --> 00:02:17,040 Speaker 2: can rip thirty percent in one day, like you would 41 00:02:17,040 --> 00:02:20,079 Speaker 2: be up and down, you'd be a rollercoaster. Leverage, Tesla, 42 00:02:20,680 --> 00:02:23,520 Speaker 2: leveraged you name it. There There are plenty out there, 43 00:02:23,560 --> 00:02:26,400 Speaker 2: So buyer beware and really understand what. 44 00:02:26,280 --> 00:02:29,320 Speaker 1: You're buying and whose money is that at. 45 00:02:29,160 --> 00:02:33,280 Speaker 2: The end, like it's your money. But as I said, 46 00:02:33,800 --> 00:02:37,480 Speaker 2: whilst it can be incredibly fun on the way up, 47 00:02:38,480 --> 00:02:40,600 Speaker 2: you can lose it very quickly on the way down. 48 00:02:40,800 --> 00:02:43,760 Speaker 2: For example, I have two leveraged ETFs. One is leveraged 49 00:02:43,800 --> 00:02:46,880 Speaker 2: to the US, one is leveraged to this train market, 50 00:02:48,040 --> 00:02:53,000 Speaker 2: and over the liberation period I watched it creater. You know, 51 00:02:53,160 --> 00:03:00,120 Speaker 2: tens of thousands a day, thirty forty draw down. If 52 00:03:00,120 --> 00:03:02,640 Speaker 2: you're in a position where a you've invested money that 53 00:03:02,639 --> 00:03:06,480 Speaker 2: shouldn't be in the stock market altogether, or be you've 54 00:03:06,560 --> 00:03:12,720 Speaker 2: invested your deposit for a house for example, or you 55 00:03:13,240 --> 00:03:16,440 Speaker 2: didn't really understand the impact that that could have. Seeing 56 00:03:16,480 --> 00:03:19,920 Speaker 2: your portfolio drop forty percent in twenty four to forty 57 00:03:19,919 --> 00:03:23,880 Speaker 2: eight hours could be life changing, Like it could really 58 00:03:23,919 --> 00:03:24,520 Speaker 2: impact you. 59 00:03:26,320 --> 00:03:27,680 Speaker 1: How did it feel when it happened to you? 60 00:03:27,800 --> 00:03:33,880 Speaker 2: Well, luckily, yeah, I was like, oh God, so luckily. 61 00:03:33,880 --> 00:03:36,080 Speaker 2: I've been through it before with COVID and for me, 62 00:03:36,400 --> 00:03:38,840 Speaker 2: very long term time horizon here. And the thing that 63 00:03:38,880 --> 00:03:42,600 Speaker 2: I always remind myself is there is not a twenty 64 00:03:42,680 --> 00:03:47,000 Speaker 2: year period in the US market, particularly, there is no 65 00:03:47,160 --> 00:03:50,200 Speaker 2: twenty year period that you could find where from beginning 66 00:03:50,240 --> 00:03:55,400 Speaker 2: to end you would have lost money. And also we 67 00:03:55,480 --> 00:03:58,160 Speaker 2: would look back at any market crash and wish we'd 68 00:03:58,160 --> 00:04:01,640 Speaker 2: bought more. And so for me, like, sure, the market 69 00:04:01,680 --> 00:04:04,440 Speaker 2: ripped and my portfolio absolutely created, and I was like, 70 00:04:04,920 --> 00:04:08,440 Speaker 2: this sucks, this hurts, but like, I'm fortunate enough to 71 00:04:08,440 --> 00:04:10,120 Speaker 2: have been doing this podcast a while to know that 72 00:04:10,160 --> 00:04:13,120 Speaker 2: it's not the be all and end all, and if anything, 73 00:04:13,120 --> 00:04:14,920 Speaker 2: it's not only going to recover, but it's going to 74 00:04:14,920 --> 00:04:17,880 Speaker 2: continue to recover and go to all time highs at 75 00:04:17,920 --> 00:04:22,040 Speaker 2: some point in the future. So for me, I understood 76 00:04:22,200 --> 00:04:24,520 Speaker 2: what was happening in my portfolio. But if you've just 77 00:04:24,600 --> 00:04:27,880 Speaker 2: bought them blindly and seen the pullback, you could have 78 00:04:28,960 --> 00:04:31,680 Speaker 2: had a different I guess feeling of what investing is. 79 00:04:32,120 --> 00:04:33,480 Speaker 1: And by the sounds of it, it's like you run 80 00:04:33,480 --> 00:04:35,279 Speaker 1: a pretty diversified portfolio. 81 00:04:35,680 --> 00:04:39,640 Speaker 2: So my portfolio is I run a core satellite approach, 82 00:04:39,680 --> 00:04:44,480 Speaker 2: which is a very simple investment investment strategy. It's where 83 00:04:44,520 --> 00:04:47,000 Speaker 2: you think of it like that your house. You're building 84 00:04:47,040 --> 00:04:49,320 Speaker 2: the foundations, you're building the core, something that is going 85 00:04:49,360 --> 00:04:51,640 Speaker 2: to sustain and last for a very very long period 86 00:04:51,680 --> 00:04:55,359 Speaker 2: of time and that's done using index ETFs, and so 87 00:04:55,440 --> 00:04:58,400 Speaker 2: I split mine in four. I have an index ETF 88 00:04:58,440 --> 00:05:02,279 Speaker 2: that tracks the US, one that tracks Australia. Both of 89 00:05:02,279 --> 00:05:04,880 Speaker 2: those are leveraged. Then I have one that tracks all 90 00:05:04,920 --> 00:05:07,320 Speaker 2: of Europe, and then I have one that tracks Asia. 91 00:05:07,400 --> 00:05:09,359 Speaker 2: So really what I've got there is four ETFs that 92 00:05:09,440 --> 00:05:14,039 Speaker 2: have global exposure. It doesn't matter if I guess the 93 00:05:14,080 --> 00:05:16,440 Speaker 2: advantage of that is if US is doing really well 94 00:05:16,480 --> 00:05:18,200 Speaker 2: and Asia is not doing so well, they kind of 95 00:05:18,200 --> 00:05:20,480 Speaker 2: balance each other out and vice versa. At the moment, 96 00:05:20,560 --> 00:05:23,560 Speaker 2: we're seeing US pool back a bit, Europe's going really well, 97 00:05:23,760 --> 00:05:26,520 Speaker 2: and so as a whole, my portfolio kind of like 98 00:05:26,960 --> 00:05:31,880 Speaker 2: acts as like the bedrock of my investments, which then 99 00:05:31,920 --> 00:05:35,200 Speaker 2: gives me the enjoyment or the security in some way 100 00:05:35,279 --> 00:05:38,240 Speaker 2: to take the remaining twenty percent and invest it in 101 00:05:38,320 --> 00:05:42,000 Speaker 2: some of the thematic ETFs. So, for example, I've got 102 00:05:42,080 --> 00:05:45,800 Speaker 2: one that just tracks tech companies. Here in Australia, we've 103 00:05:45,800 --> 00:05:48,080 Speaker 2: got some great tech companies. But I don't want the banks, 104 00:05:48,320 --> 00:05:50,599 Speaker 2: I don't want the miners, I don't want retail, I 105 00:05:50,760 --> 00:05:53,560 Speaker 2: just want tech. So one that tracks tech. I've got 106 00:05:53,560 --> 00:05:56,240 Speaker 2: one that tracks semiconductors. As I've said, and then a 107 00:05:56,240 --> 00:05:59,000 Speaker 2: few individual stocks. So the idea with that part of 108 00:05:59,040 --> 00:06:00,920 Speaker 2: the portfolio is that you can a have a bit 109 00:06:00,920 --> 00:06:06,120 Speaker 2: of fun, hone your craft in investing in individual stocks, 110 00:06:06,400 --> 00:06:08,960 Speaker 2: but also try and beat what you're doing in the core. 111 00:06:09,720 --> 00:06:12,000 Speaker 2: But I know that because it's only twenty percent. If 112 00:06:12,120 --> 00:06:15,479 Speaker 2: I suck and that has does really poorly, I still 113 00:06:15,520 --> 00:06:18,719 Speaker 2: got eighty percent in what I know and believe is 114 00:06:18,720 --> 00:06:20,440 Speaker 2: going to be a very good long term investment. 115 00:06:20,760 --> 00:06:22,599 Speaker 1: Yeah. So I always think of it as like the 116 00:06:22,640 --> 00:06:24,880 Speaker 1: garnish or it's like that's just your taste, like that's 117 00:06:25,160 --> 00:06:27,479 Speaker 1: that's the stuff that makes your portfolio unique to you 118 00:06:27,920 --> 00:06:32,000 Speaker 1: and interesting to you. But that strong foundation is like 119 00:06:32,279 --> 00:06:34,240 Speaker 1: you know, I like a good to me as good 120 00:06:34,240 --> 00:06:36,599 Speaker 1: sleep at night, as priceless. So I just like never 121 00:06:36,640 --> 00:06:39,080 Speaker 1: and missed in a way that i'd be that would 122 00:06:39,080 --> 00:06:42,520 Speaker 1: ever like contribute to a sleepless night something that whatever. 123 00:06:42,279 --> 00:06:44,120 Speaker 2: It was happening, and that all comes. Yeah, it's a 124 00:06:44,120 --> 00:06:46,120 Speaker 2: good point. Like you can we see a lot of 125 00:06:46,160 --> 00:06:48,400 Speaker 2: portfolios come through the community and some people might have 126 00:06:48,440 --> 00:06:51,920 Speaker 2: crypto as their garnish, or they might have just stocks 127 00:06:51,920 --> 00:06:54,160 Speaker 2: from Europe as they're garnish, and yeah, it's a good 128 00:06:54,200 --> 00:06:54,760 Speaker 2: way to put. 129 00:06:54,640 --> 00:06:57,320 Speaker 1: It, Yeah, what makes it interesting? 130 00:06:57,480 --> 00:06:57,680 Speaker 2: Yeah? 131 00:06:57,720 --> 00:06:58,640 Speaker 1: Actually, and I. 132 00:06:58,600 --> 00:07:00,799 Speaker 2: Should say I should say as well though, if you're 133 00:07:00,960 --> 00:07:04,000 Speaker 2: just starting, you don't need to worry about the garnish 134 00:07:04,040 --> 00:07:06,760 Speaker 2: like you don't have to do that. You can just 135 00:07:06,839 --> 00:07:10,480 Speaker 2: have a core as your investment portfolio and that's it. 136 00:07:10,560 --> 00:07:13,400 Speaker 2: You can just choose index ETFs and away you go. 137 00:07:13,520 --> 00:07:16,000 Speaker 2: So don't feel like you need to have it at 138 00:07:16,040 --> 00:07:17,800 Speaker 2: a little bit of flavor and spice. But if you 139 00:07:18,720 --> 00:07:20,320 Speaker 2: I find what a lot of people do is they'll 140 00:07:20,360 --> 00:07:23,240 Speaker 2: start with the core. Get comfortable that haven't lost all 141 00:07:23,320 --> 00:07:25,960 Speaker 2: my money. I'm starting to get interested in this. You 142 00:07:26,000 --> 00:07:28,040 Speaker 2: know what I might experiment around. 143 00:07:27,800 --> 00:07:32,240 Speaker 1: The sides awesome And so we you know, last time 144 00:07:32,240 --> 00:07:35,600 Speaker 1: I caught up and we've already talked about like Warren Buffett. 145 00:07:35,760 --> 00:07:37,480 Speaker 1: He's come up in our chat today. It's hard to 146 00:07:37,480 --> 00:07:40,760 Speaker 1: talk about and visiting about bringing up Warren Buffett. So 147 00:07:40,800 --> 00:07:43,600 Speaker 1: he's stepped back from his role. What do you any 148 00:07:43,680 --> 00:07:44,240 Speaker 1: thoughts on them? 149 00:07:44,560 --> 00:07:47,680 Speaker 2: I mean it's it's sad. So he stepped down a 150 00:07:47,720 --> 00:07:52,360 Speaker 2: CEO of Berkshire Hathaway, which is his holding company or 151 00:07:52,600 --> 00:07:56,400 Speaker 2: his investment vehicle. We did a segment on it recently 152 00:07:56,440 --> 00:08:02,160 Speaker 2: and he has delivered five point five million percent since gosh, yeah, 153 00:08:02,560 --> 00:08:06,960 Speaker 2: five point five million percent since he started Berkshire back 154 00:08:06,960 --> 00:08:10,000 Speaker 2: when he was mid thirties or whatever it was, which 155 00:08:10,040 --> 00:08:14,480 Speaker 2: is just an incredible investing story. He's delivered almost twenty 156 00:08:14,480 --> 00:08:19,120 Speaker 2: percent year on year for fifty years, which is unprecedented. 157 00:08:19,120 --> 00:08:22,280 Speaker 2: I don't think anyone will ever do that again. So 158 00:08:22,480 --> 00:08:27,560 Speaker 2: for him to be stepping out of the investment ecosystem, 159 00:08:27,600 --> 00:08:29,720 Speaker 2: I think we're definitely going to miss him because he 160 00:08:30,120 --> 00:08:33,520 Speaker 2: has provided so much value to me, to Alec, the 161 00:08:33,520 --> 00:08:36,480 Speaker 2: other Hulf Equity mates, to a lot of people around 162 00:08:36,480 --> 00:08:40,560 Speaker 2: the world. Really his investment letters that he does every year, 163 00:08:40,640 --> 00:08:44,040 Speaker 2: the books that he's written like just full of full 164 00:08:44,080 --> 00:08:46,800 Speaker 2: of wisdom. So it will be sad to see him go, 165 00:08:46,880 --> 00:08:50,160 Speaker 2: But I think what he's built the company is enduring 166 00:08:50,240 --> 00:08:54,520 Speaker 2: beyond obviously himself. He's got someone his sidekick, stepping in 167 00:08:55,360 --> 00:08:58,440 Speaker 2: to continue running Berkshire, and I would be surprised if 168 00:08:58,480 --> 00:09:02,480 Speaker 2: that immediately changes over night. But I think the biggest 169 00:09:02,480 --> 00:09:06,520 Speaker 2: thing I've learned from him and Charlie, his co founder, 170 00:09:06,720 --> 00:09:11,160 Speaker 2: was it just goes to show what like staying mentally 171 00:09:11,200 --> 00:09:16,360 Speaker 2: active for as long as possible I think has serious 172 00:09:17,200 --> 00:09:22,800 Speaker 2: positive implications on your health and and your lifespan. Charlie 173 00:09:22,800 --> 00:09:25,480 Speaker 2: died at ninety nine, Warren's going to turn ninety five 174 00:09:25,520 --> 00:09:29,400 Speaker 2: this year, and they both Warren is still and Charlie 175 00:09:29,520 --> 00:09:33,440 Speaker 2: was until the day died so mentally active in investing. 176 00:09:33,480 --> 00:09:35,040 Speaker 2: And I'm not saying it has to be investing, but 177 00:09:35,080 --> 00:09:36,720 Speaker 2: I think one of the big things I reflect on 178 00:09:36,720 --> 00:09:40,640 Speaker 2: on both of those is just staying engaged and staying 179 00:09:40,679 --> 00:09:43,840 Speaker 2: mentally active, I think is something that I will remember 180 00:09:43,880 --> 00:09:44,880 Speaker 2: them both by for sure. 181 00:09:45,400 --> 00:09:49,720 Speaker 1: Yeah, awesome. And I think the other thing is like 182 00:09:50,000 --> 00:09:55,160 Speaker 1: it really breaks the mold around like, you know, I 183 00:09:55,160 --> 00:09:58,600 Speaker 1: think one of the world's most successful in visitors. But 184 00:09:58,760 --> 00:10:04,520 Speaker 1: yet the approach is so kind of simple and easy 185 00:10:04,559 --> 00:10:07,080 Speaker 1: to understand, you know, and it's often like this cool 186 00:10:07,120 --> 00:10:09,880 Speaker 1: calm voice which hints the wisdom, like everyone's got their 187 00:10:09,920 --> 00:10:13,880 Speaker 1: favorite quote. Yes, And I think it's that thing that goes, hey, 188 00:10:13,880 --> 00:10:16,880 Speaker 1: it's not just good beginner advice, it's just good investing, 189 00:10:16,920 --> 00:10:19,679 Speaker 1: you know. It's just it's just like like you know, 190 00:10:19,960 --> 00:10:22,120 Speaker 1: the courset, like all these different ways of approach, like 191 00:10:22,200 --> 00:10:25,440 Speaker 1: approaching investing, dollar cost averaging, you know, these things. It's 192 00:10:25,440 --> 00:10:28,480 Speaker 1: not just when you get started, it's actually you know, 193 00:10:28,520 --> 00:10:31,600 Speaker 1: these are really good tools that can lead to really 194 00:10:31,600 --> 00:10:34,360 Speaker 1: great successful I agree. I think he's been a really 195 00:10:34,400 --> 00:10:35,719 Speaker 1: good person that. 196 00:10:35,760 --> 00:10:39,719 Speaker 2: Positive like so like life lessons, business lessons, and I 197 00:10:39,760 --> 00:10:45,920 Speaker 2: think to tie it back to ETFs is he's realized 198 00:10:46,000 --> 00:10:49,480 Speaker 2: over his fifty years of investing that the best investment 199 00:10:49,960 --> 00:10:53,080 Speaker 2: really for long term is the index ETF, so much 200 00:10:53,120 --> 00:10:55,400 Speaker 2: so that he've said that ninety five percent of his 201 00:10:55,520 --> 00:10:59,199 Speaker 2: wealth when he dies, which is hundreds of billions of dollars, 202 00:10:59,840 --> 00:11:02,840 Speaker 2: is going to be put into a low cost global 203 00:11:03,280 --> 00:11:07,000 Speaker 2: index fund. And because he's so confident that that, over 204 00:11:07,040 --> 00:11:11,120 Speaker 2: a long period of time, is more than that needs. 205 00:11:11,880 --> 00:11:14,800 Speaker 2: And so for someone who's spent his whole life picking 206 00:11:14,840 --> 00:11:18,200 Speaker 2: stocks to come out and say that that that you 207 00:11:18,320 --> 00:11:21,680 Speaker 2: don't need anything more than that, I think, like, you know, 208 00:11:21,760 --> 00:11:22,760 Speaker 2: you've got to pay attention to