1 00:00:00,960 --> 00:00:04,760 Speaker 1: You're listening to a Chersi's podcast Koto. 2 00:00:04,840 --> 00:00:07,240 Speaker 2: Welcome to Shared Lunch, brought to you by Chasy's. I'm 3 00:00:07,280 --> 00:00:09,480 Speaker 2: Garth Bray and I'm probably on holiday by now, and 4 00:00:09,520 --> 00:00:12,400 Speaker 2: I bet you are too. Let's take a look at 5 00:00:12,440 --> 00:00:14,960 Speaker 2: what I did this year, what you might have missed, 6 00:00:15,000 --> 00:00:17,239 Speaker 2: because I think you might quite like it. 7 00:00:17,440 --> 00:00:17,560 Speaker 3: Now. 8 00:00:17,600 --> 00:00:20,040 Speaker 2: I love this next one because it taught me a 9 00:00:20,160 --> 00:00:26,439 Speaker 2: very interesting phrase, strategic mediocrity. What's that? Well have listened 10 00:00:26,480 --> 00:00:29,200 Speaker 2: to what Susanna Batley from Cheers? He's told me about that? 11 00:00:30,160 --> 00:00:33,960 Speaker 1: Yeah, Strategic meurerocrity was actually a term that PIMCO, the 12 00:00:34,159 --> 00:00:37,559 Speaker 1: global asset manager, used to use. I don't know if 13 00:00:37,600 --> 00:00:40,360 Speaker 1: they still do, And it was really from a bond 14 00:00:40,400 --> 00:00:44,279 Speaker 1: trader back in the day called Ben Trotsky. And in 15 00:00:44,280 --> 00:00:47,160 Speaker 1: two thousand and three he retired with the best ten 16 00:00:47,240 --> 00:00:51,960 Speaker 1: year record at the time globally. And what Ben Trotsky 17 00:00:52,000 --> 00:00:54,279 Speaker 1: had done is he analyzed a lot of a lot 18 00:00:54,320 --> 00:00:57,040 Speaker 1: of history, a lot of data, and actually found that 19 00:00:57,240 --> 00:01:00,880 Speaker 1: if he could stay within the top third of performers 20 00:01:00,960 --> 00:01:03,480 Speaker 1: each year, but not higher than that, so not on 21 00:01:03,520 --> 00:01:05,919 Speaker 1: the top twenty percent or the top twenty five percent, 22 00:01:06,360 --> 00:01:08,720 Speaker 1: then naturally if he did that consistently over a ten 23 00:01:08,800 --> 00:01:11,800 Speaker 1: year period, he would be at the top in any 24 00:01:11,840 --> 00:01:17,160 Speaker 1: competitive universe. And really what it is about is going 25 00:01:17,800 --> 00:01:20,760 Speaker 1: things change all the time, just as we're talking about 26 00:01:21,200 --> 00:01:24,280 Speaker 1: things are so uncertain all the time, and so an 27 00:01:24,360 --> 00:01:27,320 Speaker 1: environment that might produce sellar returns one year, if the 28 00:01:27,400 --> 00:01:30,360 Speaker 1: environment changes, then that same strategy might not produce the 29 00:01:30,400 --> 00:01:34,759 Speaker 1: same outcome. In fact, it's unlikely to. And so if 30 00:01:34,800 --> 00:01:37,920 Speaker 1: the strategy is more about thinking about a really resilient 31 00:01:38,240 --> 00:01:41,720 Speaker 1: and robust approach that will work in a variety of 32 00:01:41,720 --> 00:01:45,880 Speaker 1: different environments, if you apply that consistently each year, then 33 00:01:45,920 --> 00:01:48,000 Speaker 1: naturally over a longer period of time, say a ten 34 00:01:48,080 --> 00:01:51,640 Speaker 1: year period, then that should produce really good outcomes. And 35 00:01:51,640 --> 00:01:55,120 Speaker 1: I actually looked at this on with XX data, and 36 00:01:55,160 --> 00:01:58,240 Speaker 1: it was really fascinating to see. Over I looked at 37 00:01:58,440 --> 00:02:02,800 Speaker 1: a range of different decades, and what I found is 38 00:02:02,840 --> 00:02:05,320 Speaker 1: that the companies that perform the best over a ten 39 00:02:05,400 --> 00:02:09,800 Speaker 1: year period never with the top in any one year. 40 00:02:10,880 --> 00:02:14,760 Speaker 1: And I think, again, it's that optimizing over the longer 41 00:02:14,840 --> 00:02:18,359 Speaker 1: term versus maximizing over the shorter term. And I don't 42 00:02:18,360 --> 00:02:21,040 Speaker 1: think we talk about this enough. If I look at 43 00:02:21,120 --> 00:02:23,440 Speaker 1: websites of five managers, they often talk about a one 44 00:02:23,520 --> 00:02:26,440 Speaker 1: year or three year, maybe a five year record. If 45 00:02:26,480 --> 00:02:29,200 Speaker 1: I'm investing for a longer term than that, then actually 46 00:02:29,280 --> 00:02:31,200 Speaker 1: that's not really relevant for me. I need to be 47 00:02:31,320 --> 00:02:33,720 Speaker 1: looking at what that track record looks like over a 48 00:02:33,800 --> 00:02:37,880 Speaker 1: much longer timeframe. And it was interesting seeing some of 49 00:02:37,919 --> 00:02:40,679 Speaker 1: the top formers on the insiet X. I mean, Chorus 50 00:02:40,760 --> 00:02:44,200 Speaker 1: was one that has produced some stellar returns over a 51 00:02:44,200 --> 00:02:47,639 Speaker 1: ten year period, and in fact, if you account for 52 00:02:47,720 --> 00:02:51,920 Speaker 1: the sort of risk control as well, it's probably even better. So, 53 00:02:52,880 --> 00:02:55,639 Speaker 1: you know, I think it's interesting too. Over the last 54 00:02:55,680 --> 00:02:57,760 Speaker 1: few years, we've seen quite a bag shift away from 55 00:02:57,800 --> 00:03:00,560 Speaker 1: the injetex into the US markets. But I did look 56 00:03:00,560 --> 00:03:02,760 Speaker 1: at a range of insie X companies and actually, if 57 00:03:02,800 --> 00:03:05,639 Speaker 1: we take a much longer time horizon, there's been some 58 00:03:05,760 --> 00:03:09,120 Speaker 1: really really strong consistent returns on some of these companies 59 00:03:09,480 --> 00:03:10,880 Speaker 1: over a decade plus. 60 00:03:11,360 --> 00:03:13,639 Speaker 2: Paul Are they're hidden treasures in there in the insiet X. 61 00:03:13,800 --> 00:03:16,440 Speaker 3: They're always hidden treasures, but I mean it's part of 62 00:03:16,480 --> 00:03:20,880 Speaker 3: the problem around crystallizing value out of them, as the 63 00:03:20,960 --> 00:03:23,960 Speaker 3: lack of liquidity throughout the entire market. People won't touch 64 00:03:24,000 --> 00:03:27,120 Speaker 3: anything outside of those top twenty companies, and when you're 65 00:03:27,160 --> 00:03:30,480 Speaker 3: looking at sort of those mid and small cap companies, 66 00:03:31,120 --> 00:03:33,840 Speaker 3: and these are why they're so often tauted as takeover targets, 67 00:03:33,880 --> 00:03:38,440 Speaker 3: because they're trading possibly even below the net tangible assets 68 00:03:38,520 --> 00:03:41,040 Speaker 3: that if you were to liquidate the matter point in time, 69 00:03:41,040 --> 00:03:42,520 Speaker 3: you would get more money than what you could do 70 00:03:42,560 --> 00:03:46,440 Speaker 3: buying them all on market at that price. There are 71 00:03:46,520 --> 00:03:49,200 Speaker 3: a lot of companies in that sort of space, and 72 00:03:49,240 --> 00:03:51,160 Speaker 3: part of it is just because they've fallen out of favor. 73 00:03:51,240 --> 00:03:55,480 Speaker 3: Part of it is that their owners, the shareholders, don't 74 00:03:55,520 --> 00:03:57,800 Speaker 3: want to sell at the prices that someone else is 75 00:03:57,840 --> 00:04:01,160 Speaker 3: out there trying to do. So it's just really difficult 76 00:04:01,240 --> 00:04:05,360 Speaker 3: to drive that activity to get a real, a transparent price, 77 00:04:05,400 --> 00:04:08,880 Speaker 3: which is what a stock market, a forum for people 78 00:04:08,920 --> 00:04:12,720 Speaker 3: to buy and sell, is all about. Why didn't Rocket 79 00:04:12,800 --> 00:04:14,600 Speaker 3: Lab get a secondary list and when it went to 80 00:04:14,600 --> 00:04:18,400 Speaker 3: the NASDAT, what are we doing in New Zealand. That's 81 00:04:18,520 --> 00:04:21,800 Speaker 3: not encouraging those companies that are imagining to get from 82 00:04:21,800 --> 00:04:26,760 Speaker 3: small to medium to big or those hugely ambitious companies 83 00:04:27,279 --> 00:04:30,120 Speaker 3: to think domestic, even if that's only just a component 84 00:04:30,200 --> 00:04:34,360 Speaker 3: of it. Why are they completely assuring us? And it's 85 00:04:34,520 --> 00:04:36,799 Speaker 3: very easy to take a crack at the stock exchange 86 00:04:36,839 --> 00:04:38,680 Speaker 3: operator and say, well, you're not sticking to your knitting, 87 00:04:38,920 --> 00:04:42,479 Speaker 3: you're too busy off funds management, wealth administration. Well that's unfair. 88 00:04:42,760 --> 00:04:45,840 Speaker 3: They're just one component to the entire thing. Is it? 89 00:04:45,839 --> 00:04:48,480 Speaker 3: The fifteen years of the conduct legislation that we've been 90 00:04:48,480 --> 00:04:51,280 Speaker 3: operating under, did that get it right? Maybe it's time 91 00:04:51,320 --> 00:04:54,800 Speaker 3: to have we think about that. I mean, Chezy's has 92 00:04:54,880 --> 00:04:58,919 Speaker 3: been a magnificent introduction into the market to at least inject, 93 00:04:59,160 --> 00:05:01,240 Speaker 3: if not necessary leave, the value of trading that you 94 00:05:01,279 --> 00:05:05,560 Speaker 3: see from the big houses, the volume of it. Retail 95 00:05:05,600 --> 00:05:09,120 Speaker 3: investors are getting engaged through it and doing so, but 96 00:05:10,279 --> 00:05:13,040 Speaker 3: more it just seems to be like we've left something 97 00:05:13,040 --> 00:05:15,560 Speaker 3: on the table, and if I knew what it was, 98 00:05:16,560 --> 00:05:19,360 Speaker 3: I'd probably be sitting in the top floor of PwC 99 00:05:19,520 --> 00:05:20,640 Speaker 3: to our own commercial bay. 100 00:05:21,040 --> 00:05:23,640 Speaker 1: Investing involves the risk you might lose the money you 101 00:05:23,680 --> 00:05:26,960 Speaker 1: start with. We recommend talking to a licensed financial advisor. 102 00:05:27,680 --> 00:05:31,520 Speaker 1: We also recommend reading product disclosure documents before deciding to invest.