Speaker 1: You mentioned leveraged ETFs before, I wonder if you want
Speaker 1: to dig.
Speaker 2: Into it a little bit. Yeah, So I'm a big
Speaker 2: I'm a big fan of leverage, and I guess for
Speaker 2: those that are unsure of what leverage is, just think
Speaker 2: of it as like your home loan. You put in
Speaker 2: a deposit and then you get a loan from the
Speaker 2: bank to give you. You know, you put in one
Speaker 2: hundred thousand, but you actually get to go out and
Speaker 2: buy a million dollar property. And so what you're putting
Speaker 2: in is amplified by the loan that the bank gives you,
Speaker 2: and that applies to investing generally. But ETFs now give
Speaker 2: you leveraged exposure. So what it means is for every
Speaker 2: dollar that I invest in the ETF, the ETF provider
Speaker 2: might go out and invest two dollars on your behalf
Speaker 2: because of the way that it's structured, and what it
Speaker 2: gives you is, as I said, an amplified exposure. They
Speaker 2: do come with a lot of risk though, because some
Speaker 2: of them are two times exposure three times exposure. And
Speaker 2: what that means is, let's say you know, the ETF
Speaker 2: goes up five percent in one day. If you have
Speaker 2: two times it's going to go up ten percent. If
Speaker 2: you have three times, it's going to go up fifteen percent.
Speaker 2: Now that sounds awesome and you can make a lot
Speaker 2: of money doing that, But with leverage, it goes the
Speaker 2: other way as well. So if it goes down five
Speaker 2: percent one day, it'll actually go down ten or twenty
Speaker 2: percent or whatever the sort of gearing ratio is. So
Speaker 2: it's something that you need to be very very clear
Speaker 2: on why it is in your portfolio, and you need
Speaker 2: to be very conscious of the impact that it can
Speaker 2: have on your total returns. There are some products that
Speaker 2: are available at the moment that have very moderate gearing,
Speaker 2: and I think it reflects the demand from retail investors
Speaker 2: at the moment to kind of get into these interesting,
Speaker 2: sort of more sexy ETFs. So I would say, but
Speaker 2: just be careful because now you're seeing crazy leveraged ETFs
Speaker 2: out there. You've got leveraged bitcoin, Like, why would you
Speaker 2: want to go leverage bitcoin three times? Leveraged bitcoin? Bitcoin
Speaker 2: can rip thirty percent in one day, like you would
Speaker 2: be up and down, you'd be a rollercoaster. Leverage, Tesla,
Speaker 2: leveraged you name it. There There are plenty out there,
Speaker 2: So buyer beware and really understand what.
Speaker 1: You're buying and whose money is that at.
Speaker 2: The end, like it's your money. But as I said,
Speaker 2: whilst it can be incredibly fun on the way up,
Speaker 2: you can lose it very quickly on the way down.
Speaker 2: For example, I have two leveraged ETFs. One is leveraged
Speaker 2: to the US, one is leveraged to this train market,
Speaker 2: and over the liberation period I watched it creater. You know,
Speaker 2: tens of thousands a day, thirty forty draw down. If
Speaker 2: you're in a position where a you've invested money that
Speaker 2: shouldn't be in the stock market altogether, or be you've
Speaker 2: invested your deposit for a house for example, or you
Speaker 2: didn't really understand the impact that that could have. Seeing
Speaker 2: your portfolio drop forty percent in twenty four to forty
Speaker 2: eight hours could be life changing, Like it could really
Speaker 2: impact you.
Speaker 1: How did it feel when it happened to you?
Speaker 2: Well, luckily, yeah, I was like, oh God, so luckily.
Speaker 2: I've been through it before with COVID and for me,
Speaker 2: very long term time horizon here. And the thing that
Speaker 2: I always remind myself is there is not a twenty
Speaker 2: year period in the US market, particularly, there is no
Speaker 2: twenty year period that you could find where from beginning
Speaker 2: to end you would have lost money. And also we
Speaker 2: would look back at any market crash and wish we'd
Speaker 2: bought more. And so for me, like, sure, the market
Speaker 2: ripped and my portfolio absolutely created, and I was like,
Speaker 2: this sucks, this hurts, but like, I'm fortunate enough to
Speaker 2: have been doing this podcast a while to know that
Speaker 2: it's not the be all and end all, and if anything,
Speaker 2: it's not only going to recover, but it's going to
Speaker 2: continue to recover and go to all time highs at
Speaker 2: some point in the future. So for me, I understood
Speaker 2: what was happening in my portfolio. But if you've just
Speaker 2: bought them blindly and seen the pullback, you could have
Speaker 2: had a different I guess feeling of what investing is.
Speaker 1: And by the sounds of it, it's like you run
Speaker 1: a pretty diversified portfolio.
Speaker 2: So my portfolio is I run a core satellite approach,
Speaker 2: which is a very simple investment investment strategy. It's where
Speaker 2: you think of it like that your house. You're building
Speaker 2: the foundations, you're building the core, something that is going
Speaker 2: to sustain and last for a very very long period
Speaker 2: of time and that's done using index ETFs, and so
Speaker 2: I split mine in four. I have an index ETF
Speaker 2: that tracks the US, one that tracks Australia. Both of
Speaker 2: those are leveraged. Then I have one that tracks all
Speaker 2: of Europe, and then I have one that tracks Asia.
Speaker 2: So really what I've got there is four ETFs that
Speaker 2: have global exposure. It doesn't matter if I guess the
Speaker 2: advantage of that is if US is doing really well
Speaker 2: and Asia is not doing so well, they kind of
Speaker 2: balance each other out and vice versa. At the moment,
Speaker 2: we're seeing US pool back a bit, Europe's going really well,
Speaker 2: and so as a whole, my portfolio kind of like
Speaker 2: acts as like the bedrock of my investments, which then
Speaker 2: gives me the enjoyment or the security in some way
Speaker 2: to take the remaining twenty percent and invest it in
Speaker 2: some of the thematic ETFs. So, for example, I've got
Speaker 2: one that just tracks tech companies. Here in Australia, we've
Speaker 2: got some great tech companies. But I don't want the banks,
Speaker 2: I don't want the miners, I don't want retail, I
Speaker 2: just want tech. So one that tracks tech. I've got
Speaker 2: one that tracks semiconductors. As I've said, and then a
Speaker 2: few individual stocks. So the idea with that part of
Speaker 2: the portfolio is that you can a have a bit
Speaker 2: of fun, hone your craft in investing in individual stocks,
Speaker 2: but also try and beat what you're doing in the core.
Speaker 2: But I know that because it's only twenty percent. If
Speaker 2: I suck and that has does really poorly, I still
Speaker 2: got eighty percent in what I know and believe is
Speaker 2: going to be a very good long term investment.
Speaker 1: Yeah. So I always think of it as like the
Speaker 1: garnish or it's like that's just your taste, like that's
Speaker 1: that's the stuff that makes your portfolio unique to you
Speaker 1: and interesting to you. But that strong foundation is like
Speaker 1: you know, I like a good to me as good
Speaker 1: sleep at night, as priceless. So I just like never
Speaker 1: and missed in a way that i'd be that would
Speaker 1: ever like contribute to a sleepless night something that whatever.
Speaker 2: It was happening, and that all comes. Yeah, it's a
Speaker 2: good point. Like you can we see a lot of
Speaker 2: portfolios come through the community and some people might have
Speaker 2: crypto as their garnish, or they might have just stocks
Speaker 2: from Europe as they're garnish, and yeah, it's a good
Speaker 2: way to put.
Speaker 1: It, Yeah, what makes it interesting?
Speaker 2: Yeah?
Speaker 1: Actually, and I.
Speaker 2: Should say I should say as well though, if you're
Speaker 2: just starting, you don't need to worry about the garnish
Speaker 2: like you don't have to do that. You can just
Speaker 2: have a core as your investment portfolio and that's it.
Speaker 2: You can just choose index ETFs and away you go.
Speaker 2: So don't feel like you need to have it at
Speaker 2: a little bit of flavor and spice. But if you
Speaker 2: I find what a lot of people do is they'll
Speaker 2: start with the core. Get comfortable that haven't lost all
Speaker 2: my money. I'm starting to get interested in this. You
Speaker 2: know what I might experiment around.
Speaker 1: The sides awesome And so we you know, last time
Speaker 1: I caught up and we've already talked about like Warren Buffett.
Speaker 1: He's come up in our chat today. It's hard to
Speaker 1: talk about and visiting about bringing up Warren Buffett. So
Speaker 1: he's stepped back from his role. What do you any
Speaker 1: thoughts on them?
Speaker 2: I mean it's it's sad. So he stepped down a
Speaker 2: CEO of Berkshire Hathaway, which is his holding company or
Speaker 2: his investment vehicle. We did a segment on it recently
Speaker 2: and he has delivered five point five million percent since gosh, yeah,
Speaker 2: five point five million percent since he started Berkshire back
Speaker 2: when he was mid thirties or whatever it was, which
Speaker 2: is just an incredible investing story. He's delivered almost twenty
Speaker 2: percent year on year for fifty years, which is unprecedented.
Speaker 2: I don't think anyone will ever do that again. So
Speaker 2: for him to be stepping out of the investment ecosystem,
Speaker 2: I think we're definitely going to miss him because he
Speaker 2: has provided so much value to me, to Alec, the
Speaker 2: other Hulf Equity mates, to a lot of people around
Speaker 2: the world. Really his investment letters that he does every year,
Speaker 2: the books that he's written like just full of full
Speaker 2: of wisdom. So it will be sad to see him go,
Speaker 2: But I think what he's built the company is enduring
Speaker 2: beyond obviously himself. He's got someone his sidekick, stepping in
Speaker 2: to continue running Berkshire, and I would be surprised if
Speaker 2: that immediately changes over night. But I think the biggest
Speaker 2: thing I've learned from him and Charlie, his co founder,
Speaker 2: was it just goes to show what like staying mentally
Speaker 2: active for as long as possible I think has serious
Speaker 2: positive implications on your health and and your lifespan. Charlie
Speaker 2: died at ninety nine, Warren's going to turn ninety five
Speaker 2: this year, and they both Warren is still and Charlie
Speaker 2: was until the day died so mentally active in investing.
Speaker 2: And I'm not saying it has to be investing, but
Speaker 2: I think one of the big things I reflect on
Speaker 2: on both of those is just staying engaged and staying
Speaker 2: mentally active, I think is something that I will remember
Speaker 2: them both by for sure.
Speaker 1: Yeah, awesome. And I think the other thing is like
Speaker 1: it really breaks the mold around like, you know, I
Speaker 1: think one of the world's most successful in visitors. But
Speaker 1: yet the approach is so kind of simple and easy
Speaker 1: to understand, you know, and it's often like this cool
Speaker 1: calm voice which hints the wisdom, like everyone's got their
Speaker 1: favorite quote. Yes, And I think it's that thing that goes, hey,
Speaker 1: it's not just good beginner advice, it's just good investing,
Speaker 1: you know. It's just it's just like like you know,
Speaker 1: the courset, like all these different ways of approach, like
Speaker 1: approaching investing, dollar cost averaging, you know, these things. It's
Speaker 1: not just when you get started, it's actually you know,
Speaker 1: these are really good tools that can lead to really
Speaker 1: great successful I agree. I think he's been a really
Speaker 1: good person that.
Speaker 2: Positive like so like life lessons, business lessons, and I
Speaker 2: think to tie it back to ETFs is he's realized
Speaker 2: over his fifty years of investing that the best investment
Speaker 2: really for long term is the index ETF, so much
Speaker 2: so that he've said that ninety five percent of his
Speaker 2: wealth when he dies, which is hundreds of billions of dollars,
Speaker 2: is going to be put into a low cost global
Speaker 2: index fund. And because he's so confident that that, over
Speaker 2: a long period of time, is more than that needs.
Speaker 2: And so for someone who's spent his whole life picking
Speaker 2: stocks to come out and say that that that you
Speaker 2: don't need anything more than that, I think, like, you know,
Speaker 2: you've got to pay attention to