Speaker 1: Hello, my name's Santasha Nabananga Bamblet. I'm a proud yor
Speaker 1: the Order Kerni Whaltbury and a waddery woman. And before
Speaker 1: we get started on She's on the Money podcast, I
Speaker 1: would like to acknowledge the traditional custodians of the land
Speaker 1: of which this podcast is recorded on a wondery country,
Speaker 1: acknowledging the elders, the ancestors and the next generation coming
Speaker 1: through as this podcast is about connecting, empowering, knowledge sharing
Speaker 1: and the storytelling of you to make a difference for
Speaker 1: today and lasting impact for tomorrow.
Speaker 2: Let's get into it.
Speaker 3: She's on the Money, She's on the Money.
Speaker 2: Hello, and welcome to She's on the Money. The podcast
Speaker 2: at Demas defies the world of finance. You can make
Speaker 2: smart money moves, no finance degree or secret decodering requires.
Speaker 2: I still want a decodering. Yeah, me too. Actually, I'm
Speaker 2: beck sired and as always I'm here to ask all
Speaker 2: the questions you've been too shy to ask or don't
Speaker 2: actually know how to google. I'm not shy to google things.
Speaker 2: I'm not shy to google things.
Speaker 4: I'm trying to show you my Google history. Of course,
Speaker 4: I'm not shy to look it up, though, I'll look
Speaker 4: it up. But if you got hold of my phone,
Speaker 4: if something really bad happened to me, beck and you
Speaker 4: somehow have a hold of my phone, just wipe.
Speaker 2: It for me. I'm going to look at it first.
Speaker 2: You can look, you can look. I trust you to
Speaker 2: look at and then and then I'll like nobody else
Speaker 2: can see. Say for me, how to spell? What does
Speaker 2: this mean? Like? I just it's a lot. I've got
Speaker 2: how spelled me the other day? Yet look, I would too,
Speaker 2: honestly lookle it, like, how do I spell the word
Speaker 2: that I can't spec? You know how I do that?
Speaker 2: I voice? Yeah, that's a good idea. Actually that's voice
Speaker 2: to text. Thank you. It's got me. So today we're
Speaker 2: diving into the world of IPOs. So I know IPOs
Speaker 2: kind of sounds like financial jargon. I actually don't know
Speaker 2: what it is. It is actually financial certainly is. But
Speaker 2: they're actually something you might come across more than you think,
Speaker 2: and understanding them can give you a big investing advantage.
Speaker 4: And also you'll sound more like a finance bro if
Speaker 4: you start talking about IPOs that brunch.
Speaker 2: It does sound pretty cool. So lucky for us, we've
Speaker 2: got Victoria Divine, our financial expert who knows the ins
Speaker 2: and outs of investing. I do Hello, thank you for
Speaker 2: having me on my own show. Very grateful to be here,
Speaker 2: but also grateful you're letting me talk about IPOs. And
Speaker 2: I was really glad we're talking about it. You really
Speaker 2: just my arm with this.
Speaker 3: Yeah.
Speaker 4: You were like what and I was like, Ah, sit down.
Speaker 4: This is going to be a juicy one, but also
Speaker 4: one that makes us feel smarter at the same time
Speaker 4: as going finance isn't that complicated? I feel like so
Speaker 4: many of these jargon y terms just make us feel overwhelmed,
Speaker 4: and then when you break them.
Speaker 2: Down, you're like, that's not that hard. The finance bros
Speaker 2: be brown baby browing baby brow in.
Speaker 4: So IPOs are actually one of the most common questions
Speaker 4: we have been getting recently from our listeners.
Speaker 2: Yeah. I think it's because lots have been in the media. Yeah,
Speaker 2: to be more like, what is that? Why is it
Speaker 2: in the media? What does that mean?
Speaker 4: And everyone wants to know if there are a chance
Speaker 4: of getting in early on the next big thing, right,
Speaker 4: or if it's more of a gamble, And honestly, there's
Speaker 4: a bit of both.
Speaker 2: Going on.
Speaker 4: So today I'm going to break down exactly what IPOs
Speaker 4: really mean, why companies go public, and what investors need
Speaker 4: to look out for when those exciting new shares.
Speaker 2: Hit the market. Okay, okay, I think it's going to
Speaker 2: be really fun. I mean, you're not sold yet, not yet,
Speaker 2: But I actually don't know what it is, and so
Speaker 2: that's I think my first question will be what actually
Speaker 2: doesn't mean? Like what is an IPO?
Speaker 4: So an IPO means initial public offering, which sounds really boring,
Speaker 4: but it's essentially like the company's first time on the
Speaker 4: share market. It's when a private business decides, you know what,
Speaker 4: we're a pretty good business and we would like to
Speaker 4: sell shares to the public. And it's often to raise
Speaker 4: money so that they can grow. But it's not just
Speaker 4: like a money move. It changes the whole company's structure
Speaker 4: and their goals because they have a whole heap of
Speaker 4: other responsibilities. So like if I said, oh, Beck, I'm
Speaker 4: going to sell shares in shes on the money. Instead
Speaker 4: of me just being in control, I now have shareholders
Speaker 4: to report to. I'm going to have like a board
Speaker 4: who I have to justify my decisions to. It's not
Speaker 4: a small decision by any stretch for the imagination. But
Speaker 4: essentially IPO is the first time a company deboos on
Speaker 4: the share market.
Speaker 2: And so that's I'm assuming just based off what you've said,
Speaker 2: it's kind of their decision. So why do some companies
Speaker 2: decide to IPO? Is that the right my say? You
Speaker 2: can say that, yeah, Why does some companies decide to
Speaker 2: list themselves on the share market? Why to IPO and
Speaker 2: why to not IPO? To IPO or to not IPO?
Speaker 2: That is the question, that's the question.
Speaker 4: But companies often decide to go, all right, we're going
Speaker 4: to list on the share market and have an IPO
Speaker 4: to raise really big funds really quickly, especially if they're
Speaker 4: like expanding or the company carries some debt that they
Speaker 4: want to pay off.
Speaker 2: But there's also, I guess the flip side.
Speaker 4: When you go on the share market and when you
Speaker 4: decide to list publicly, companies lose a little bit of control,
Speaker 4: which is why some people are really happy to stay private.
Speaker 4: And it's one of those things where you know, even
Speaker 4: if my business has got absolutely massive, I like not
Speaker 4: having other people tell me what to do. I don't
Speaker 4: want to have to, you know, talk to shareholders and
Speaker 4: justify the decisions I make inside my business, so it's
Speaker 4: not for me, Like going public is a really big shift.
Speaker 4: It means that the company is now accountable to shareholders
Speaker 4: and has to produce finance reports and post them publicly,
Speaker 4: and there's pressure to meet earning expectations, which I guess
Speaker 4: can then change how they're going to internally run the
Speaker 4: business as well, Like no longer can you just make decisions?
Speaker 2: Right? Okay, So in my head, I'm thinking a company
Speaker 2: that maybe like a little small business, maybe they're getting
Speaker 2: big enough, they need more money, they need expects maybe
Speaker 2: they even need like publicity to some extent exactly, and
Speaker 2: then so they decide to go Yeah, and I think
Speaker 2: you think She's on the money.
Speaker 4: As an example of this throughout this episode is going
Speaker 4: to really help, right, So, like, let's pretend that I'm
Speaker 4: thinking about listing. I'm not, but let's pretend I'm thinking
Speaker 4: about listing, And it's because beck I really want She's
Speaker 4: on the Money to grow even bigger than it is.
Speaker 4: And I want to create an app, and like I
Speaker 4: want to She's on the Money app because you know one.
Speaker 2: And we all know this already. One doesn't exist in
Speaker 2: the market. But it costs hundreds of thousands of dollars
Speaker 2: to create an app and keep it updated, like it's
Speaker 2: not for me being completely transparent, it's not feasible for
Speaker 2: me to do that on my own. So maybe in
Speaker 2: order to.
Speaker 4: Do that and actually create this app that I want
Speaker 4: to that in the back of my mind, I go,
Speaker 4: if I create this app that She's on the Money,
Speaker 4: community will like triple and we'll, you know, gain a
Speaker 4: whole heap more revenue. I'm going to list, which means
Speaker 4: I'm going to do what's called an IPO, which is
Speaker 4: the initial public offering, and that's the first time I'm
Speaker 4: issuing shares. And everyone wants to get in on a
Speaker 4: good thing. Like beck I think you love shees on
Speaker 4: the money, so you might go fire out Brussels sprout,
Speaker 4: I love what VI's up to you. I love She's
Speaker 4: on the money. I would love to get in on
Speaker 4: this because I reckon her shares have been valued expert
Speaker 4: it's worth more. So you go and buy a few
Speaker 4: of the She's on the Money shares, and then you go,
Speaker 4: when she finally does this app that I know she's
Speaker 4: been talking about, my shares are going to be worth
Speaker 4: so much more because I believe in the company. And
Speaker 4: that's often what people want to do when they have
Speaker 4: an initial public offering. They go, oh, that's the first
Speaker 4: time that that company is listing, and irrespective of what
Speaker 4: the company is, you might go, I really believe in
Speaker 4: what they're doing, and I'm hoping that when they're listing,
Speaker 4: that's like the first time price and it's not an
Speaker 4: all time high price like you were assuming that. Often
Speaker 4: when you get involved in an IPO, you get to
Speaker 4: purchase first, but it means that you might be getting
Speaker 4: a really good deal because then the market is ultimately
Speaker 4: going to start seeing what you're seeing in Shees on
Speaker 4: the Money?
Speaker 2: Does that make sense? Y?
Speaker 4: Solutally, you and I know She's on the money and
Speaker 4: it's a little bit niche like it's a finance podcast.
Speaker 4: Not many people know about it, so you can see
Speaker 4: the value. But if I went to Joe Blow down
Speaker 4: the street and said, hey, would you buy She's on
Speaker 4: the Money shares, Joe Blow might be like, I don't
Speaker 4: even know who She's on the Money is, and then
Speaker 4: you'd be like, oh, it's Victoria to buyne and then
Speaker 4: they'd be like, I've literally never heard of this person,
Speaker 4: but you should buy shares.
Speaker 2: It's got so much potential.
Speaker 4: He's going to go I don't see the value so
Speaker 4: often an IPO, and I mean it can go one
Speaker 4: of two ways. So an IPO often they'll release shares
Speaker 4: and then over time they increase in value and you've
Speaker 4: got a good deal when you got in at the start,
Speaker 4: or there was a whole heap of market hype and
Speaker 4: you got in at the start and then your share
Speaker 4: price started to drop. So that's why we're talking about
Speaker 4: it kind of being a risk at the same time
Speaker 4: as being a really good opportunity if you know what.
Speaker 2: You're talking about. Okay, this actually makes a lot of sense.
Speaker 2: I just I guess I wonder if you're about to
Speaker 2: go public, or if a company's about to go public
Speaker 2: and you've kind of had your r on it, where
Speaker 2: like what do you actually find out? Like where is
Speaker 2: this information? Can you just like google that company and
Speaker 2: then you can you can.
Speaker 4: There will often be a lot of like PR releases
Speaker 4: and media releases. You'll also learn about it from the ASEX.
Speaker 4: So the ASEX is the Australian Stock Exchange and their
Speaker 4: website has a whole heap of information. Like I'm telling
Speaker 4: you right now, if a company is going to go
Speaker 4: through an IPO process, they are jumping up and down
Speaker 4: and trying to let everybody know about it because everybody
Speaker 4: wants a good IPO.
Speaker 2: Right.
Speaker 4: It's kind of like a launch party. I see it
Speaker 4: as a launch party, right, Like I want to have
Speaker 4: a launch party for my really fancy business. If no
Speaker 4: one shows up, low key embarrassing, you want to write
Speaker 4: coy h Yes, yes, we want a Corey Worthington launch.
Speaker 4: So we want everyone to want yellow sunglasses. Yeah, and
Speaker 4: we want everyone to buy because that gives the rest
Speaker 4: of the market confidence because if they haven't seen our company,
Speaker 4: they haven't seen shees on the money, they don't know
Speaker 4: what it's about. And then they see the IPO and
Speaker 4: it's gone hectic. You'd be like, oh my god, maybe
Speaker 4: I'm missing out on something. Because at the end of
Speaker 4: the day, the share market is inherently psychological, right, Like,
Speaker 4: and you and I as investors, we.
Speaker 2: Like seeing other people get in on a good thing
Speaker 2: and then go, oh, hold on, what are they doing
Speaker 2: that looks good?
Speaker 4: So you want to create that sense of fomo with
Speaker 4: an IPO, like they're going to be jumping up and
Speaker 4: down about it.
Speaker 2: Yeah, okay, that's good to know. Maybe I'll have a
Speaker 2: browse because I assume that even if you're not fully
Speaker 2: looking at one place, I don't know where to start,
Speaker 2: but I could just kind of have a brows and
Speaker 2: then see what's absolutely And like your favorite companies, if
Speaker 2: they're planning on launching, they will start talking about it
Speaker 2: and prepping for it because you have to change your
Speaker 2: entire business structure and like the way you report things
Speaker 2: and the things that go on in the business. It
Speaker 2: takes literally like eighteen months to prep a business for launch.
Speaker 2: So they'll be probably whispers at the start about it,
Speaker 2: and then once they have a lot of confidence that
Speaker 2: they have a date and they're ready, they'll talk about it.
Speaker 2: It's kind of like a book.
Speaker 4: Launch okay, actually sounds like it's actually a bit it's
Speaker 4: a massive process. Like as I said, it can take,
Speaker 4: you know, eighteen months just to prep a company to
Speaker 4: go into their IPO because they're launching. And obviously, if
Speaker 4: you're going to buy a share in my company, beck,
Speaker 4: you're going to go, well, I want to make sure
Speaker 4: that you've got everything organized. I'm not going to buy
Speaker 4: a share in your company. If you're running a circus
Speaker 4: behind the scenes, there's obviously the financial prep, there's going
Speaker 4: to be audits, and then there's a really big I
Speaker 4: get excited about this document. It's called a prospectus. You
Speaker 4: probably don't care about it. Prospectus it sounds bougie, right,
Speaker 4: but it's essentially a really big document that outlines everything
Speaker 4: about the company. It has all of the financials, it
Speaker 4: has all of the risks, all of the goals of
Speaker 4: the launch, what they want to achieve, what their company
Speaker 4: structure looks like, who works for them. And during this process,
Speaker 4: you can't just do it on your own right, so
Speaker 4: they'll often hire underwriters who are going to help set
Speaker 4: the share price and attract investors.
Speaker 2: Because if you ask me, while she's on the money's work,
Speaker 2: I'll be like.
Speaker 4: One million dollars, one billion dollars, Like I'm going to
Speaker 4: tell you.
Speaker 2: It's worth heaps.
Speaker 4: But when need to actually hire someone called an underwriter.
Speaker 4: You might not have heard of the term underwriter, but
Speaker 4: an underwriter assesses risk. So insurance companies usually have them,
Speaker 4: and these are the people that if you go through
Speaker 4: the insurance process and say, oh, the I really want
Speaker 4: to get income protection. What will happen is your financial
Speaker 4: advisor will apply to the insurance company, and the underwriters
Speaker 4: will view your application, assess what type of risk you
Speaker 4: have and then put a number on that and go, oh, well,
Speaker 4: you know, Beck loves a vape, so she's probably a
Speaker 4: little bit more of a risk than the average bear.
Speaker 4: So we might add a little bit of a loading,
Speaker 4: which is a little bit more money that you pay
Speaker 4: per month to cover yourself. So what happens in the
Speaker 4: space of shares is an underwriter will look at it,
Speaker 4: review the company and give a suggestion as to what
Speaker 4: the share price should be, like should it be a
Speaker 4: dollar per share, should it be five hundred dollars per share.
Speaker 4: You can't just ask the company, oh, how much money
Speaker 4: did you want to sell shares for? Like that's not
Speaker 4: how works. It is actually a really long, really extensive process.
Speaker 4: But when it's done correctly, it can really pay off.
Speaker 4: Just it cost a lot of money, Oh yeah, absolutely, Like.
Speaker 2: An order to just doesn't come in and says oh, yeah,
Speaker 2: i'll do you solid and like we'll just do this
Speaker 2: for free.
Speaker 1: Yeah.
Speaker 4: Like underwriters are very very educated, Like they have to
Speaker 4: go through so much university and to be really technical.
Speaker 4: They're not just looking at that prospectus document. They're looking at,
Speaker 4: you know, the market. They're looking at what the economic
Speaker 4: circumstances are. They're looking at, you know, the demand for
Speaker 4: the product into the future. They'll do a whole like
Speaker 4: swat analysis. They'll look at your strengths, your weaknesses, your opportunities,
Speaker 4: and your threats. They'll look at all your competitors and
Speaker 4: like try and place you.
Speaker 2: If that makes sense that it's a lot. I would
Speaker 2: be too fragile for that process.
Speaker 4: I love reading the documents, though, Beck it's so I
Speaker 4: don't know, it's like it's pervy because you get all
Speaker 4: the information about a company that's previously been private.
Speaker 2: Like don't you want to Like, I'm so pervy.
Speaker 4: I want to know what other people are earning and
Speaker 4: spending and like what debt do they carry?
Speaker 2: Why did they take on their I need to know.
Speaker 2: Just a bit of light reading. Yeah, just a grab
Speaker 2: a prospective to a glass of wine, and you got
Speaker 2: a good Friday night. Because I was like heaven or
Speaker 2: for you and hell for me. Maybe maybe I'll read
Speaker 2: it to you, like you can sit on the couch
Speaker 2: with your little soda water and I'll be like, get
Speaker 2: this and you'll be like, I don't care. Maybe a
Speaker 2: bedtime story.
Speaker 4: Yeah, maybe we can have Netflix on and I'll read
Speaker 4: it while we watch it. Actually that I'm doing the
Speaker 4: work so that I can then explain it to you
Speaker 4: and you'll be like I didn't even need to read
Speaker 4: it because you did the hard way exactly.
Speaker 2: I appreciate that You're welcome. Don't say I don't do
Speaker 2: anything for you. So just in case someone's listening to
Speaker 2: this and they're like, this is a fool proof way
Speaker 2: to make money fast, I'm assuming there's a bit more
Speaker 2: to it, is that, right? Yeah?
Speaker 4: As I said before, like it could be a really
Speaker 4: really good thing, or it could be a flop.
Speaker 2: Like we've all seen launch parties where it's like, oh,
Speaker 2: that's nice, they're finally launching, and that's terrible, Like you
Speaker 2: know what I mean, Like it's like a launch right,
Speaker 2: And I've said this literally in this episode before, So
Speaker 2: what could happen is like so much hype, so much marketing,
Speaker 2: the cover of the book so incredible, and then you
Speaker 2: get the book and you're like this is terribly written,
Speaker 2: Like this is just not for me. Like finally the
Speaker 2: launch party happens. You brought the book Beck, you were
Speaker 2: like this twenty nine dollars book worth it? And you're like,
Speaker 2: I would not pay ten dollars for this? What have
Speaker 2: I done? Pictures in here? No, there's no pictures, no drawings,
Speaker 2: like what is this? And there's like more than one
Speaker 2: hundred pages. Ill.
Speaker 4: No, So just because a company goes public doesn't mean
Speaker 4: it's gonna like skyrocket, Like you do your initial launch,
Speaker 4: which is the IPO, But then you've got to kind
Speaker 4: of sustain the business. You can't just sell shares for
Speaker 4: an inflated amount and then expect the market to not
Speaker 4: see through that if it's a sham, if that makes sense.
Speaker 4: So in fact, some IPOs flop literally right after they're listed.
Speaker 4: Like any investment, it carries risk, and we need to
Speaker 4: be on top of that risk and kind of weigh
Speaker 4: it up.
Speaker 2: Right.
Speaker 4: So, and this goes back to she's on the money,
Speaker 4: and it's not because I think the business is good.
Speaker 4: It's just a good example. You know, she's on the
Speaker 4: money so deeply, right, So, like you know.
Speaker 2: The team, you know how it works.
Speaker 4: You have this prime position, like you're kind of in
Speaker 4: the like the director's box of being like I actually
Speaker 4: know their ethics, I actually know who works for them,
Speaker 4: how they even edit their podcasts. I know, you know
Speaker 4: in the pipeline, like you know what's gone on in
Speaker 4: twenty twenty five and probably twenty twenty.
Speaker 2: Six, Like you've seen a bitstess plan.
Speaker 4: Yeah, so you're like, no, that's pretty solid, Like I'm
Speaker 4: pretty bought into this, Like I know that's pretty good.
Speaker 4: But not everyone has that director's seat right, And sometimes
Speaker 4: companies can put out this shiny version and you might
Speaker 4: feel like you've had a director's seat, but it was
Speaker 4: a really curated version. Another example is kind of like
Speaker 4: brand new restaurant opening night, so excited it's just opened
Speaker 4: in your area. Beck, Like, let's imagine pizza shop down
Speaker 4: from your house. You haven't had a restaurant there ever,
Speaker 4: and you're just so stoked that a restaurant is opening
Speaker 4: your house, have cheap wine. You're just like, oh my god,
Speaker 4: this is going to be the perfect date location for
Speaker 4: Jess and I.
Speaker 2: I love it.
Speaker 4: There's long waitlists, so you're like, oh, this is popular.
Speaker 2: Good sign love seeing a buzzing environment.
Speaker 4: You're so excited, but you're not really sure yet, Like
Speaker 4: what if you don't like the menu. Some opening nights
Speaker 4: there's everyone lighting up around the corner, and then the
Speaker 4: night after they've given emveryone food poisoning. Ah, And then
Speaker 4: you went and had a really shitty time. The weight
Speaker 4: stuff were really rude. You know, you were paying forty
Speaker 4: eight bucks for a margarita pizza. You're like, oh, actually,
Speaker 4: this was all really good. When I saw them building
Speaker 4: the locations, when they started marketing, I thought this is
Speaker 4: going to be lit.
Speaker 2: I went, I never want to go back there again. Yeah,
Speaker 2: I had a crap time.
Speaker 4: I'd actually prefer to just order Dominoes online and just
Speaker 4: sit at home, do you know what I mean? Like
Speaker 4: that is what could happen. So like some are an
Speaker 4: absolute hit and some are a miss. That might mean
Speaker 4: that the company has to then go back to scratch
Speaker 4: and kind of go, all right, we need to have
Speaker 4: a look at our business model, and maybe they like
Speaker 4: drop the prices of their pizza, fire someome stuff and
Speaker 4: hire some kind ones and the whole situation changes and
Speaker 4: maybe then it becomes your local. But they have to
Speaker 4: prove themselves. You can't just do a fancy IPO and bebougie.
Speaker 2: Yes, does that make sense? Totally makes sense. I imagine
Speaker 2: if you are in that situation, it's hard to come
Speaker 2: back from negative. It's from exactly and if an IPO happens,
Speaker 2: like if a company has an IPO and it flops,
Speaker 2: deck media love that, yeah, like they want to talk
Speaker 2: about that. They want to be like, oh my god,
Speaker 2: did you see Victoria's company iPod It launched it like
Speaker 2: sixty bucks a share and the next day it was
Speaker 2: ten dollars a share, Like they're gonna slam that because
Speaker 2: the investment news or like the investment news cycle, they
Speaker 2: love a negative story or they love it.
Speaker 4: Do you want to be like, oh, yes, Victoria's launch
Speaker 4: happened and she sold her shares for sixty dollars per share,
Speaker 4: and look at that. Overnight they are now it's sixty
Speaker 4: one dollars. That is solid and consistent ross. We love
Speaker 4: to see it, no one cares. But if it crashes,
Speaker 4: you love. Everyone wants to watch juicy, Juicy juicy. We
Speaker 4: need the juice and I get it. That's why I exist.
Speaker 4: I love a little bit of drama, but I also
Speaker 4: need to balance it out with reality. And that's why
Speaker 4: it's so important to always kind of have your blinkers
Speaker 4: on when you're making a decision about investment for yourself,
Speaker 4: because you need to make a decision that's right for you,
Speaker 4: not what the market is saying. Really good example of
Speaker 4: that bitcoin and cryptocurrency. Yeah, so everybody in the market
Speaker 4: and everyone in the media was talking about how incredible
Speaker 4: bitcoin was and how incredible crypto was, and it was
Speaker 4: the next big thing. And people who'd never even invested
Speaker 4: on the share market were going and purchasing crypto assets
Speaker 4: because their friends were. They had a little bit of fomo.
Speaker 4: They thought that everybody else was onto a good thing.
Speaker 4: But what they were hearing was market noise. Yeah, did
Speaker 4: that make the actual asset that they were purchasing more valuable? No,
Speaker 4: The price was actually driven by the demand as opposed
Speaker 4: to the value of the product. So wanting it more
Speaker 4: meant if more people are buying it, the share price
Speaker 4: goes up. And that's really exciting if you can back yourself.
Speaker 4: But then the share price crashes because people go, hold on,
Speaker 4: hold on, I paid eighty bucks a share for X.
Speaker 2: I don't think it's worth it. Oh, do you know
Speaker 2: what I'll do?
Speaker 4: I don't think it's worth it, So I'm going to
Speaker 4: sell my share at eighty bucks today because I just
Speaker 4: want to cut my losses, like I want my money back.
Speaker 4: And so the market starts to see these shares selling,
Speaker 4: and your share price starts to drop because there's not
Speaker 4: as much demand for it. And then you see your
Speaker 4: share price dropping and you go, oh my god, like
Speaker 4: I bought in at eighty dollars too, Now it's worth
Speaker 4: seventy Should I just cut my losses and sell right now?
Speaker 4: And because you didn't have a commitment to that product,
Speaker 4: because you didn't have a commitment to that share and
Speaker 4: fully understand it, you're like, oh, I just want to
Speaker 4: cut my losses, you know, whereas it might be a
Speaker 4: really great opportunity. But if a lot of people are
Speaker 4: selling down, you might want to get on that train too.
Speaker 4: So we need to put blinkers on and not look
Speaker 4: at what other people are doing, yeah, and look at
Speaker 4: what works for you. So I guess this entire model
Speaker 4: means you need to have your head screwed on properly.
Speaker 2: You can't just get excited because it's an IPO and
Speaker 2: it's super shiny, and they're obviously going to get a
Speaker 2: whole heap of market press.
Speaker 4: They're obviously like the today show wants to interview them, like,
Speaker 4: you know, it might be a skincare company and they've
Speaker 4: just done this incredible you know, skincare range and they're
Speaker 4: finally taking it public.
Speaker 2: That's good news story. So you see it and you
Speaker 2: get in on the hype. But I guess you need
Speaker 2: to understand that the hype is just hype and you
Speaker 2: need to analyze it yourself to make sure it's a
Speaker 2: good decision so that it doesn't end up being a
Speaker 2: bad money loss. You know, yes, So after the break,
Speaker 2: we're going to go to a quick breakback because I've
Speaker 2: been talking about IPOs and I need to come down
Speaker 2: a little bit. I'm going to give you the inside
Speaker 2: scoop on spotting the real opportunities and what's just smoking
Speaker 2: mirrors because I've told you to look out for it,
Speaker 2: but how how do I see? How do I see?
Speaker 4: So stick around you don't want to miss this.
Speaker 2: Welcome back everyone. Before the break, you promise us all
Speaker 2: the hot tips for investing in IPOs. So where should
Speaker 2: we start? Do you get it now? Though? Like before
Speaker 2: we go, like IPOs, do they feel as overwhelming as
Speaker 2: they did at the start of the episode, Because you're,
Speaker 2: like I don't know what an IPO And I'm like,
Speaker 2: I am glad you are here. Then yeah, totally. And
Speaker 2: I just like when you see the abbreviation of anything,
Speaker 2: it's like that is scary. I don't want to know. Yeah,
Speaker 2: but it really is making sense.
Speaker 4: But also like it's just the first time a share
Speaker 4: is available on the market. Yeah, and I think a
Speaker 4: lot of people again the finance bros be browing. Investing
Speaker 4: in IPOs is my passion. Okay, suit down, bru. They
Speaker 4: got me, good, they got you. But like also that's
Speaker 4: why we don't like finance bros.
Speaker 2: That's true. So let's go back to basics.
Speaker 4: I want you to understand the business model. If it
Speaker 4: comes to you know, understanding I guess whether you should
Speaker 4: invest in a company's IPO or not. We really want
Speaker 4: to just like strip it back and have a look
Speaker 4: at the business model. How does the company make money,
Speaker 4: what does it sell? What does the.
Speaker 2: Company actually do, whether it's in a growth industry or not.
Speaker 2: I want to understand a solid business model is going
Speaker 2: to have long term potential as opposed to something clearly
Speaker 2: short term. And to me, that's essential before considering an
Speaker 2: IPO investment. Why Beck, Because I am not the type
Speaker 2: of person who buys like penny stocks. I'm not the
Speaker 2: type of person who is in it to get rich quick.
Speaker 4: That is not my game. I'm a long term investor.
Speaker 4: So if you've got a short term business model, how's
Speaker 4: that going to fit into your long term portfolio? Like,
Speaker 4: how are you going to hold that for ten plus years?
Speaker 4: Like if you wouldn't hold a share for more than
Speaker 4: ten years, Beck, you should not hold it for ten minutes. Well,
Speaker 4: but like you shouldn't. You shouldn't because why are we
Speaker 4: buying it? Because if you're buying it for a short
Speaker 4: period of time, you are probably just buying it because
Speaker 4: of market hype. You're probably buying it because you see
Speaker 4: a little opportunity to get rich quick. That's not who
Speaker 4: we are, that's not what we do. We are long
Speaker 4: term investors because that is the safest way to invest.
Speaker 4: And we know and I'm probably getting a little bit
Speaker 4: off track here, but we know that if if you
Speaker 4: took any thirty year period in the Australian stock market history, Beck,
Speaker 4: and anyone who has invested for that period has not
Speaker 4: lost money. Well invested for a shorter period like ten years, Yeah,
Speaker 4: the markets go up and down, Like you can sell
Speaker 4: out and lose some money, but if you stretch it
Speaker 4: out and go to thirty years, nobody in the Australian
Speaker 4: share market has lost money over a thirty year period.
Speaker 4: Woll But isn't that really cool to think?
Speaker 2: Okay?
Speaker 4: Cool if I zoom out and we always say went intown,
Speaker 4: zoom ount, but zoom out and look at the bigger picture,
Speaker 4: and IPO is shiny. It's really exciting. I love it,
Speaker 4: and I get so in aviod like I am going
Speaker 4: to read that prospectus. I get it, but like I'm
Speaker 4: reading it because I think and I'm hoping that I'll
Speaker 4: get into a good thing at the start and be
Speaker 4: able to ride the wave for a ten year plus
Speaker 4: period of time. I'm not trying to ride the wave
Speaker 4: for five minutes because it launched and then I'm going
Speaker 4: to sell my shares.
Speaker 2: That's not who I am.
Speaker 4: Back to the prospectus, though I can't talk about this enough.
Speaker 4: It's going to sound really unsexy, and I don't think
Speaker 4: I sold you on it before I told you could
Speaker 4: watch Netflix. But it's really important if you're actually going
Speaker 4: to make the investment to read the prospectus Okay.
Speaker 2: That document.
Speaker 4: It's going to reveal, usually in quite simple terms, financials,
Speaker 4: the business risk, what their future plans are going to
Speaker 4: look like. What I would be doing is spending some
Speaker 4: time here to understand exactly why you're buying into it
Speaker 4: and questioning yourself the entire time being like, am I
Speaker 4: just buying into this ipeo because it sounds shiny? Am
Speaker 4: I buying into it because another podcast talked about it?
Speaker 4: Am I buying into it because my friend at brunch said,
Speaker 4: oh my gosh, there's this really cool IPO going on
Speaker 4: and I'm interested too. You need to understand exactly what
Speaker 4: you're buying into and any risks that might actually not
Speaker 4: be immediately obvious.
Speaker 2: Okay, we're going to critically think about this, and now
Speaker 2: I just have a quick question. You were allowed many
Speaker 2: questions and they do not have to be quick, Thank you.
Speaker 2: I don't know, I'm so obsessed with the actual logistics
Speaker 2: of this. But the prospectus is of publicly else Yes,
Speaker 2: and it's on would you find ax or on the
Speaker 2: website of the Bony both.
Speaker 4: We're going to spam it everywhere because we want everybody
Speaker 4: to read our perspectives and think this company is lit
Speaker 4: I'm gonna invest, So like the ax is going to
Speaker 4: list their prospectives, but also the company is going to
Speaker 4: be like, hey, did you see this?
Speaker 2: Did you see my respective? They're going to put it
Speaker 2: on their website. Like this isn't a gate keeping kind
Speaker 2: of document where they're like, oh, I hope no one
Speaker 2: reads this. Like they're pushing their best foot forward in
Speaker 2: this document. It's kind of like it's kind of like
Speaker 2: a pitch. Ye, Like it's not a pitch, but like
Speaker 2: it's kind of like them saying, hey, here's why we're listing.
Speaker 2: Because if you're listening for no good reason, why are
Speaker 2: you doing that? You're not going to make money? And
Speaker 2: can anyone read this or just have to be translated by.
Speaker 4: Like no, no, no, no, anyone will be able to
Speaker 4: read it. I mean you might not fully comprehend the
Speaker 4: balance sheets in it, and you might be like, oh,
Speaker 4: I don't really understand what this means. That's why you
Speaker 4: should have done my investing masterclass, because I would have
Speaker 4: taught you exactly how to read a business P and
Speaker 4: L and you know, a cash flow statement and all
Speaker 4: of that. But that's okay, but you're going to have
Speaker 4: a look at it, and there will be usually summaries
Speaker 4: of what.
Speaker 2: Each of those things mean, like, oh, great, this cash.
Speaker 4: Flow statement shows that this business has been functioning with
Speaker 4: positive cash flow for the last four years or whatever
Speaker 4: it means. So I can going to outline it, whether
Speaker 4: it outlines all of the risks maybe like sometimes, maybe, yes,
Speaker 4: sometimes or maybe. Know that's where you have to put
Speaker 4: your like critical analysis hat on and go hold on.
Speaker 4: Like let's zoom out. Let's say it's like a skin
Speaker 4: care brand. You need to zoom out and be like, oh,
Speaker 4: is this an oversight traded market? Like how well can
Speaker 4: a skin care company do in this market? Like what
Speaker 4: do all my friends and family do? Like you're thinking
Speaker 4: about it from a lens that you know the company's
Speaker 4: not going to write about.
Speaker 2: I see very cheeky, isn't it?
Speaker 3: Well?
Speaker 2: Cheeky bed Like that's the game. Yeah, that's the name
Speaker 2: of the game. Okay, So I've read the prospectus and
Speaker 2: I know what I'm doing. Yep, How do I now
Speaker 2: know that the price that's been set is a good price.
Speaker 4: It's a hard question to answer, but picture this right,
Speaker 4: maybe like you're shopping for a bag beck, so you're
Speaker 4: like in the market and you're like, A really want
Speaker 4: a nice backpack, like I want it to fit this
Speaker 4: in that right, But then you start looking into it
Speaker 4: and there's one on TikTok and it's probably the same quality,
Speaker 4: but every single TikToker that you follow is currently using
Speaker 4: this bag, and like you start to feel influenced by
Speaker 4: them and decide, I think I want that one. But
Speaker 4: it's pricier than the others. And it's pricier than the
Speaker 4: others because of the hype behind it, right, Like it's
Speaker 4: been like driven up, not because there's a better quality bag,
Speaker 4: not because it's actually even better, but like you've seen
Speaker 4: it everywhere, all your favorite influencers have it, Like the
Speaker 4: hype is there. IBOs can kind of be the same way,
Speaker 4: you know how I was talking about the pizza shop,
Speaker 4: Like everyone's really excited about it, like you're driving up
Speaker 4: the hype. Then you get there and you're like, wait,
Speaker 4: this isn't Like now I'm inside the shop, it's not
Speaker 4: actually that good companies sometimes set a high price because
Speaker 4: of the buzz that's been generated. Right back to our
Speaker 4: pizza shop, Like you got inside the shop and the
Speaker 4: pizzas astronomically expensive.
Speaker 2: You like, hold up, Like the buzz was.
Speaker 4: There and I had hoped for a different price, but
Speaker 4: the company that owns the pizza shop was like, oh
Speaker 4: my god, there are so many people interested in our
Speaker 4: pizza shop. We can charge more for the pizzas. That's
Speaker 4: why they said their price really high. You were pissed
Speaker 4: off about it, but the company saw that as an
Speaker 4: opportunity because there was so much buzz, and they assumed
Speaker 4: that because the demand was there, they could absolutely charge more.
Speaker 4: But that doesn't mean forty eight dollars for a margarita
Speaker 4: pizza's worth it. Like, that doesn't mean that it is
Speaker 4: worth it to the consumer. Just because everyone's talking about
Speaker 4: it and there's buzz on the street about the new
Speaker 4: pizza shop, it doesn't mean that you're getting good value,
Speaker 4: and it doesn't mean that you should be investing in it,
Speaker 4: right because you could have spent half the price and
Speaker 4: gotten a Domino's version and been.
Speaker 2: Really happy with it. To see if you're now we're
Speaker 2: going to get a little bit technical. Sure, if you're
Speaker 2: listening to this, honestly, you might want to listen back
Speaker 2: to this a couple of times. And this is not
Speaker 2: because I'm being super technical. It's just because like we're
Speaker 2: going to talk about ratios, and sometimes that text a
Speaker 2: little bit like see not in a contents anyway, Absolutely not.
Speaker 4: But if you've never talked about this, why would you
Speaker 4: be like, Oh, yes, Victoria, the price to earnings ratio
Speaker 4: absolutely makes sense in this situation. But to see if
Speaker 4: you're paying I guess the hype tax, you're going to
Speaker 4: check the IPO's price to earnings ratio okay, or it's
Speaker 4: price to sales ratio compared to similar companies in the
Speaker 4: same industry. So what I want to say before I
Speaker 4: explain the PE ratio is that you wouldn't use it
Speaker 4: in isolation, beck like it's one factor, but you would
Speaker 4: make sure that you have additional context around the business
Speaker 4: before relying on the PE ratio. And when I say
Speaker 4: additional context, like you understand the market, you know what
Speaker 4: the pizza shop's about, Like you're not just looking at
Speaker 4: a number and going, oh, PE ratio of x okay
Speaker 4: in or out, Like that's not how it works, because
Speaker 4: you might go, oh, PE ratio is down, but this
Speaker 4: makes sense because there's this much to or that doesn't
Speaker 4: make sense because you know it just doesn't right. So
Speaker 4: even though you should always use a PE ratio with
Speaker 4: additional context. I guess here are some common situations I've
Speaker 4: like written down of like what a high PE or
Speaker 4: a low PE means. So a high PE ratio means
Speaker 4: that the ratio is actually higher than similar shares in
Speaker 4: its industry, not across the board, not across the entire market,
Speaker 4: but in its industry. And this means that investors actually
Speaker 4: might believe that the stock's earnings will increase. They're like, oh,
Speaker 4: this is a pretty good share, Like I want to
Speaker 4: get in on this, so they're paying a bit more.
Speaker 4: And this also means on the flip side, that the
Speaker 4: stock might actually be overvalued, like you might actually be
Speaker 4: paying too much for it.
Speaker 2: I see.
Speaker 4: On the flip side, if you get a low PE ratio,
Speaker 4: that's where the ratio is lower than similar shares in
Speaker 4: the same industry, it might mean that the investors believe
Speaker 4: that the stock earning is going to decrease, like they
Speaker 4: don't really trust it. They're like, oh, whatever, like this
Speaker 4: isn't like a good pizza shop. I'm not that interested
Speaker 4: in buying stock. But on the flip side, it could
Speaker 4: also mean that the stock is undervalued and it's a
Speaker 4: really good opportunity for you. So PE ratio, like, it's
Speaker 4: a formula of essentially taking the share price. So the
Speaker 4: price that they've listed at, let's pretend it's like sixty dollars.
Speaker 4: They're like, oh, share price is sixty dollars. So you
Speaker 4: take the share price of sixty.
Speaker 2: Dollars and then divide it by how much money you
Speaker 2: would earn per share. So the E is the earnings
Speaker 2: per share, so the company is profit divided by the
Speaker 2: number of shares that exist. So it's basically saying that.
Speaker 4: You would how much money you're you going to make
Speaker 4: from the share, Like if they have a dividend that
Speaker 4: they would pay out, what is that and those figures
Speaker 4: you won't have to calculate your earnings per share because
Speaker 4: that will be public knowledge. So you just take the
Speaker 4: stock price and divide it by the earnings per share
Speaker 4: and that will give you a PE ratio.
Speaker 2: Okay, now give me five years to absorb that. I
Speaker 2: told you I want to listen to it a couple
Speaker 2: of times. And it's not because I'm, you know, being
Speaker 2: smart or using terms that are complex. It's just because
Speaker 2: it's a topic that we've never talked about before, and
Speaker 2: it's really important to understand that this is a really
Speaker 2: solid ratio in this industry and if you can wrap
Speaker 2: your head around it, like it's essentially I'm saying, Beck,
Speaker 2: I need you to find two numbers and do a
Speaker 2: little calculation, which is, take number A and divide it
Speaker 2: by number B, and that will give you a price
Speaker 2: to earnings ratio which will help you, not make the
Speaker 2: decision for you, but it will help you make a decision.
Speaker 2: And I guess to give you some sense of what
Speaker 2: the average for the market is because you're like, well,
Speaker 2: what happens when I get a number? Like what's high?
Speaker 2: Is it a billion? What's low? Is it negative billion?
Speaker 2: Like what does that mean? So many value investors would say, okay,
Speaker 2: the like twenty to twenty five is a average p ratio.
Speaker 2: If it's low, it's low. If it's high, it's high,
Speaker 2: And you would go from there.
Speaker 4: These are things and like back to you, you know
Speaker 4: how we're talking at the start, You're like, oh, you
Speaker 4: can google things, like you could literally google what is
Speaker 4: a good price to earnings ratio for the food and
Speaker 4: beverage industry?
Speaker 2: Like I can go from there. If we're talking about
Speaker 2: the pizza shop.
Speaker 4: Right, you could be like, well, I've calculated the pe ratio,
Speaker 4: but I don't know how to use it. Now you
Speaker 4: could look at the actual industry and then you could
Speaker 4: go and look at, like, you know, the pizza shop
Speaker 4: down the road and go, well, what is their pea
Speaker 4: ratio because they do a boom in trade? Like is
Speaker 4: that an overvalued stock? Is it undervalued? Is it like
Speaker 4: on market?
Speaker 2: Like should I be paying more for this ipo or
Speaker 2: for this first time that the brand new pizza shop
Speaker 2: is offering pizza.
Speaker 4: Should I be buying in with them? Or am I
Speaker 4: going to look over it to this other pizza shop?
Speaker 4: Because if you found that they had like a peer
Speaker 4: ratio of ten, which is a low pee ratio, you
Speaker 4: might be like, well, is that because the pizza industry
Speaker 4: is undervaluing a company that's been around for a long time,
Speaker 4: or is this an opportunity there? Or if it's overvalued,
Speaker 4: is that like the most popular pizza shop in town?
Speaker 4: Does everybody want to be in with that? Or is
Speaker 4: it overvalued or is it actually just a really good investment.
Speaker 4: So we want to not just take that number and
Speaker 4: go oh, yep, it was twenty, So that's good. We
Speaker 4: want to kind of contextualize it once we have it. Okay, Okay,
Speaker 4: does that make sense? It makes a lot of sense,
Speaker 4: but I just want to quickly double check with you.
Speaker 4: So the way to get that number is to find
Speaker 4: the profit of the company and divide that by the
Speaker 4: number of shares available.
Speaker 2: Not no, no, You're going to take how much they
Speaker 2: are going to sell their share for. Okay.
Speaker 4: So that's a very easy number to find. So you're
Speaker 4: going to take their share price and then divide it
Speaker 4: by the earnings per share, which is how much you
Speaker 4: would make from owning that share.
Speaker 2: Okay. And that's available on that's all available online, and
Speaker 2: it should be in the perspectives. If it's not in
Speaker 2: the prospectus, you would be able to find that information
Speaker 2: via the ASX. Great, thank you. And so price to
Speaker 2: earnings and now priced to sales is different, okay. So
Speaker 2: price to sales ratios is nice. So we've got like
Speaker 2: price to earning, so we're like, what are they charging?
Speaker 2: What's the pe ratio? Now we need to look at
Speaker 2: price to sales and a price to sales ratio I
Speaker 2: think is quite important and I always use the two
Speaker 2: of them when I'm looking at a stock like, I
Speaker 2: would never use one in isolation. I always do the two.
Speaker 4: But a price to sales ratio is essentially a valuation
Speaker 4: ratio that compares a company's like share price to its income,
Speaker 4: So like.
Speaker 2: Are they actually making enough money?
Speaker 4: Like not just what they're paying you, which we look
Speaker 4: at in the price to earnings, but like how much
Speaker 4: revenue is coming into this business?
Speaker 2: And it's usually an.
Speaker 4: Indicator of the value that the financial markets or like
Speaker 4: the investing market as a whole, has placed on each
Speaker 4: dollar of a company's sales or revenue. So I guess
Speaker 4: TLDR because like I don't want to like dive too
Speaker 4: deep into it, but we can do a whole ratios
Speaker 4: podcast at some point. But the price to sales ratio
Speaker 4: shows how much investors are willing to pay per stock, Okay,
Speaker 4: like how much they will to pay per dollar of
Speaker 4: sales for a stock, if that makes sense. So like,
Speaker 4: if they're doing like a million dollars worth of trade,
Speaker 4: that will translate directly to like a dollar for a
Speaker 4: dollar share price valuation, if that makes sense.
Speaker 2: So the PS ratio PS I love you.
Speaker 4: But PS ratio is calculated by dividing the stock price
Speaker 4: by the underlying companies sales per share, which again will
Speaker 4: be accessible. You don't need to do all of these
Speaker 4: calculations in the background to then get this calculation. This
Speaker 4: information is available, but you do have to kind of
Speaker 4: plug it in. And do you know what you can do?
Speaker 4: You can google price to sales ratio calculator on one
Speaker 4: will come up and you can just plug it in
Speaker 4: and it will do it for you so that you
Speaker 4: know that it's correct.
Speaker 2: Okay, right, Like lots.
Speaker 4: Of investing platforms have this for free. But back to
Speaker 4: what I was saying before, because we compared the low
Speaker 4: PE ratio to a high PE ratio, a low price
Speaker 4: to sales ratio could imply that, like, shares are currently
Speaker 4: being undervalued, and so like that why you know how
Speaker 4: I said, I always do the two together. Obviously, if
Speaker 4: the PE ratio and the price to earnings ratio is saying, oh,
Speaker 4: this stock's undervalued, but then my price to sales ratio
Speaker 4: is saying it's overvalued, we need to.
Speaker 2: Do some more research, beck.
Speaker 4: We kind of want them to make sense together. So
Speaker 4: a low ratio BECK could essentially imply that the share
Speaker 4: is undervalued and it might be a goodbye. While a
Speaker 4: ratio that's higher than average, it could actually show you
Speaker 4: that the stock is currently being overvalued, and then we're
Speaker 4: going to look at it again in context. We never
Speaker 4: just look at these ratios on their own. One of
Speaker 4: the downsides to having a PS ratio or a price
Speaker 4: to sales ratio is that it doesn't take into account
Speaker 4: whether the company makes any earnings or whether it will
Speaker 4: ever make any earnings as a whole. It depends on
Speaker 4: how you're doing it. And I mean, at the end
Speaker 4: of the day, to PS ratio is a key tool
Speaker 4: that analysts use when it comes to valuation. Like it's
Speaker 4: kind of like the bread and butter in the investment market,
Speaker 4: and I think it just it makes sense that you
Speaker 4: get to understand that. Whether you do that or not
Speaker 4: completely up to you. But my job is to give
Speaker 4: you all the tools and resources so that you could
Speaker 4: like quickly calculate something and be like, oh, that kind
Speaker 4: of makes sense to me, and it makes you feel
Speaker 4: empowered making decisions.
Speaker 2: Yeah, totally. That felt extremely complex to me.
Speaker 4: But hopefully that but if we sat down and did
Speaker 4: it a couple of times, Like the price to earnings
Speaker 4: ratio is just taking two numbers dividing them by that
Speaker 4: totally ave.
Speaker 2: Reages twenty to twenty five.
Speaker 4: And then you've got a price to sales ratio and
Speaker 4: that's going to tell you what a share is trading
Speaker 4: at per dollar. Like, and they make sense when we
Speaker 4: start to really break them down again, the bros have
Speaker 4: browed too hard and made us think that it is
Speaker 4: really complex, but their jobs they're just still a little boys.
Speaker 2: Well that's very true. It always can do it exactly.
Speaker 2: We're on the same pay we have the same algorithm.
Speaker 2: It we do it seems okay. So beyond the numbers,
Speaker 2: is there anything else you look at to get a
Speaker 2: read on like the company? What clues are they feel
Speaker 2: in my portfolio? Cute? They got to look cute.
Speaker 4: They've got to look cute, Like I don't want to yea, yeah,
Speaker 4: if I'm gonna like buy into a stock like and
Speaker 4: you've got ugly logo, absolutely not no. So I think
Speaker 4: obviously beyond the aesthetics, which absolutely play no role in this,
Speaker 4: I'm going to look at their leadership team. Okay, creepy
Speaker 4: little store cart and you should be too, right, So, like,
Speaker 4: I want to look at their leadership team and what
Speaker 4: their track record is you can go down an absolute
Speaker 4: rabbit hole.
Speaker 2: But what you're going to do is have a look
Speaker 2: at like who's the CEO? Who has that CEO led?
Speaker 2: Before you can look.
Speaker 4: At their LinkedIn? Do you know how many people I
Speaker 4: look at on LinkedIn? Like, I have no shame? You
Speaker 4: know how it sometimes tells you who has seen your profile? Yeah,
Speaker 4: there will be six million CEOs, six million market analysts
Speaker 4: who all have Victoria Devine has looked at your profile,
Speaker 4: and they'll be like, why I'm judging your business?
Speaker 2: Yeah, I'm here. I have no shame.
Speaker 4: But you're going to look at the track record of
Speaker 4: a company because if they have a strong record of success,
Speaker 4: they might be more likely to steer the new company
Speaker 4: that they're working for in a profitable direction. Sure, and
Speaker 4: I've done this before, right, Like I was not sure
Speaker 4: about it ETF that had just launched market. I didn't
Speaker 4: get in on ipo because like, sometimes I'm just a
Speaker 4: little bit conservative, like IPOs are fund I've gotten in
Speaker 4: on IPOs before.
Speaker 2: That makes sense. But sometimes I just like to watch
Speaker 2: and I like to wait, and I like to see
Speaker 2: that it does what it says it's going to do,
Speaker 2: and if it means like Hey, a tiny bit more
Speaker 2: for that stock.
Speaker 4: My plan is to hold it for a really long time.
Speaker 4: So with that intention, my money should double anyway, right, So,
Speaker 4: like whether I saved a little bit or not, Like,
Speaker 4: that's not my problem to me. That's an investment in
Speaker 4: making sure that I'm making the right decisions for me
Speaker 4: and my portfolio. But there was an ETF so an
Speaker 4: exchange traded fund yeah that I was like, Oh, this
Speaker 4: kind of looks interesting. It was by a good company,
Speaker 4: but they'd never done this segment before. And so I
Speaker 4: looked at the fund manager, and then I went on
Speaker 4: his LinkedIn and saw where he used to work. And
Speaker 4: then I went on his old company's page, and I
Speaker 4: looked at what ETFs he used to manage there and
Speaker 4: how that worked, and saw that he did a really
Speaker 4: good job, and then handed over the reins to somebody
Speaker 4: to go into bigger and better things. And I'm thinking, oh,
Speaker 4: this guy knows this industry, because it was one of
Speaker 4: the first ethical like portfolios that this company had done.
Speaker 4: And I was like, how do they know how to
Speaker 4: construct an ethical portfolio? Because like, as much as you
Speaker 4: might think that's quite simple, it's actually quite complicated to
Speaker 4: make sure that not only are the businesses in that
Speaker 4: portfolio ethical, but also they perform, because like, I'm not
Speaker 4: going to buy an ETF that's ethical and then be
Speaker 4: happy losing money, Like I want my investments to create
Speaker 4: wealth for me, right, So I did the biggest deep dive.
Speaker 2: This poor guy's.
Speaker 4: LinkedIn, His old assistants LinkedIn, got looked at like everyone
Speaker 4: who managed him on his manager I was a super
Speaker 4: creepy stalker. And I regret nothing because that gave me
Speaker 4: a lot of validation that that was probably an investment
Speaker 4: that I wanted to get involved in. So like, if
Speaker 4: the leadership team is new, you can have a look
Speaker 4: at that.
Speaker 2: But also I want to know.
Speaker 4: Had I I've gone and done this research beck and
Speaker 4: found that this guy had never actually constructed an ETF before,
Speaker 4: he'd never picked shares out.
Speaker 2: Why would he know that? Why would he have any
Speaker 2: experience in ethical investing? Like that would have been a
Speaker 2: red flag to me that they had just done I
Speaker 2: guess a tokenistic portfolio that I wasn't probably interested in.
Speaker 2: But what I found was like he had a background
Speaker 2: in ethical investing, he had put together ETFs before, he'd
Speaker 2: actually spoken at international conferences on constructing ethical portfolios. And
Speaker 2: I was like, this guy, like, I back that. So
Speaker 2: we want to find good things. Yeah right, Like it's
Speaker 2: kind of like you work for a radio station, beck, Yeah,
Speaker 2: So new guy comes into the office, You're like, oh,
Speaker 2: what does he do? Like, Oh, he's coming pretty top dog.
Speaker 2: You go on his LinkedIn, you see that he's worked
Speaker 2: at other radio stations and he's kind of worked his way.
Speaker 2: I'd be like, Oh, this guy's got some good experience.
Speaker 2: I can't wait for him to join the team. That's
Speaker 2: what we're doing, but with our shares.
Speaker 4: Okay, that's super creepy, stalker. We don't mind if people
Speaker 4: see that we've been on their LinkedIn, Right, you don't mind.
Speaker 2: Yeah.
Speaker 4: The next thing you want to do is check for
Speaker 4: insider selling. Okay, So insider activity can I think be
Speaker 4: quite telling if founders or like early investors are starting
Speaker 4: to sell really large portions of shares at the initial
Speaker 4: public offering. To me, that might signal doubt about the
Speaker 4: company's future performance. Like why is the CEO selling all
Speaker 4: of their shares.
Speaker 2: Once it got listed? Why they scared?
Speaker 4: Because often in a company like a company might issue
Speaker 4: shares to their existing employees. Yeah, so I might go, oh, beg,
Speaker 4: you've worked for shares on the money. I'm going to
Speaker 4: give you a few shares as like you know, part
Speaker 4: of your remuneration package, and you go sweet. They but
Speaker 4: then we go we're going to go to market, Beck,
Speaker 4: and you're like, thank god, I've got time to get out,
Speaker 4: but I'm going to sell my shares the second it
Speaker 4: gets listed to some unknowing other person.
Speaker 2: Yeah, okay, but.
Speaker 4: If they're holding onto their shares, or even if the
Speaker 4: CEO is buying more shares, that could be a really
Speaker 4: positive sign that it's a good company and the CEA
Speaker 4: is like, I really believe in this. Yeah, okay, that's
Speaker 4: doing some creepy stocker things again.
Speaker 2: Yes, I love that.
Speaker 4: It's market research if it is publicly accessible information, Beck,
Speaker 4: it's research research.
Speaker 2: It's research. I'm great, My great. The other thing, I've
Speaker 2: got a whole list here. I do apologize.
Speaker 4: So we're going to have a look at the company's
Speaker 4: industry trends and their growth potential. So like investing in
Speaker 4: IPOs in industries with like really strong long term growth potential,
Speaker 4: like maybe like renewable energy or like tech can be advantageous.
Speaker 4: So we're probably gonna want to And this is maybe
Speaker 4: just personal advice, avoid IPOs in sectors that have been
Speaker 4: stagnant or like overly trend dependent, as they might actually
Speaker 4: not have sustainable long term returns. Like I don't want
Speaker 4: to get in on something that's like it's a bit done. Yeah,
Speaker 4: So I guess a good example of this, Like I'm
Speaker 4: just gonna say, like a Stanley cup. Right, So like
Speaker 4: last year on TikTok, last even eighteen months on TikTok,
Speaker 4: every man in his dog has their like Stanley drink cup, Right,
Speaker 4: so I would say that that trend might be a
Speaker 4: bit done. I don't know what the long term growth
Speaker 4: potential of a you know, a new drink bottle company
Speaker 4: might be.
Speaker 2: I'm a little bit you know, wary.
Speaker 4: They're not exactly you know, a tech company or renewable
Speaker 4: energy that's going to positively contribute to our society for
Speaker 4: a long period of time. Like maybe and I'm not
Speaker 4: saying that Stanley Cup's had its day. It's like absolutely
Speaker 4: still a thing, but like maybe a new drink bottle
Speaker 4: company that's coming in to be their competitor. You're kind
Speaker 4: of like, oh, but people have already done that, Like
Speaker 4: do I want to be buying that, Like I can
Speaker 4: go get a fake Stanley cup tomorrow from kmart. This
Speaker 4: isn't new technology, This isn't something that I think is
Speaker 4: going to be sustainable in the long term.
Speaker 2: Right. And obviously we're not talking about Stanley specifically here
Speaker 2: because they.
Speaker 4: Have market share at the moment. It's a new company
Speaker 4: coming in and you're like, oh, they're iboing, Like oh,
Speaker 4: I love the Stanley drink cups. That makes sense, But
Speaker 4: like if Kmart's doing them, is it done now?
Speaker 2: Like it's the trend over?
Speaker 4: Like I want sustainable long term returns, and then reputation.
Speaker 4: Reputation is really important, And I mean I have been
Speaker 4: on the slam multi level marketing companies for a really
Speaker 4: long time bandwagon, and I'm just going to continue to
Speaker 4: talk about it. But if you're not googling a company
Speaker 4: name and the word scam or controversy or cork case,
Speaker 4: like what are you doing?
Speaker 1: Oh?
Speaker 2: This information is public knowledge, Beck, Like you can google,
Speaker 2: for example, money scam, You could google money, cork case,
Speaker 2: and so much information would come up to me. If
Speaker 2: I was then going to invest in that company, that
Speaker 2: might be a red flag that they have so many
Speaker 2: court cases against them, right, is that free to do? Yes?
Speaker 4: Back to it is simple to google, but you just
Speaker 4: need to know what to google. So when we're looking
Speaker 4: for reputation, obviously that's not just googling like you know,
Speaker 4: keywords and scam whatnot. Like that's just me being a
Speaker 4: little bit spicy. But like we're gonna have a look
Speaker 4: at like media coverage, like what coverage have they gotten?
Speaker 2: Has it been positive? Has it been negative?
Speaker 4: Usually now in you know, twenty twenty four, there's reviews everywhere.
Speaker 4: Having a look at the company's reviews, Like what do
Speaker 4: their Google reviews say. We're going to also look on
Speaker 4: their Instagram and their social media because often people will
Speaker 4: take to Facebook or take to Instagram to vent, like
Speaker 4: what are the comments sections saying? What are their tagged posts?
Speaker 2: We're not looking at what the company is put out
Speaker 2: on their pretty little grid. We're looking at what have
Speaker 2: they been tagged in? What hashtags are being used? Like,
Speaker 2: cause if it's like a pizza company, right, you're going
Speaker 2: to go to their Instagram. They're gonna have beautiful pictures
Speaker 2: of the Margarita pizza. They're gonna have beautiful pictures of
Speaker 2: this happy team. And then you're going to go to
Speaker 2: tagged and there might be a post from Beck being like,
Speaker 2: look at this cockroach in my pizza? Right? Do you
Speaker 2: know what I mean?
Speaker 4: You're like, oh, that's not what you said you were.
Speaker 4: So we're going to look at the brand reputation. In
Speaker 4: a perfect world, you'll also be able to understand employee satisfactions.
Speaker 4: So websites like glassdoor can really help you understand if
Speaker 4: the team is there. Also, again publicly accessible information, but
Speaker 4: we are going a little bit creepys talker. How long
Speaker 4: have their employees been there? LinkedIn will tell you that
Speaker 4: if you go to the company's LinkedIn page, Yes, say
Speaker 4: an average tenure, it's less than a year.
Speaker 2: What's going on? Yeah? What's that? Why is everyone leaving
Speaker 2: after twelve months? What's the average tenure of their leadership team? Specifically,
Speaker 2: like do they get a new CEO every eighteen months? Like?
Speaker 2: What's going on here? Red flag?
Speaker 4: And then understanding their company's culture and their core values.
Speaker 4: Is the company run by people who are also associated
Speaker 4: with a cult?
Speaker 2: Good thing? To figure out if it is, I'd probably
Speaker 2: be concerned. I would be I'd be asking some questions.
Speaker 2: I would be asking some questions and being like is
Speaker 2: this for me?
Speaker 4: Rolemably not, and then we're obviously going to have a
Speaker 4: look at the market condition. So this isn't specifically for
Speaker 4: your industry or your specific share, but like IPOs tend
Speaker 4: to perform better in stable or bullish market. So remember
Speaker 4: back to like when I say bullish, do you know
Speaker 4: what bullish means?
Speaker 2: Bullish? I can't remember.
Speaker 4: It's aggressive, like going up, like the red flag is
Speaker 4: like flying, and the bull is running for the red flag.
Speaker 2: And the markets are like doing really well, and a
Speaker 2: bear bears like to hibernate. They like to have a
Speaker 2: little nap and they're not doing much work.
Speaker 4: So a bull market is where it's doing really well
Speaker 4: and it's growing. In a bear market, it's gone into
Speaker 4: a little bit of hibernation. It's just chilling, like it's
Speaker 4: probably going to come back because you know it ebbs
Speaker 4: and flows.
Speaker 2: But in a bullish market, obviously an IPO is going
Speaker 2: to go better because the market sentiment and people are
Speaker 2: ready to buy. Whereas in like a period of lull
Speaker 2: or hibernation.
Speaker 4: If I said do you want to buy aniche, You're
Speaker 4: like no, I might just continue napping, like I'm not
Speaker 4: that interested, Like I'm seeing everybody else, you know, not buying,
Speaker 4: so I'm not going to buy? Does that make sense?
Speaker 4: And then in a volatile market, So in a bear market,
Speaker 4: new stocks they can experience I guess really dramatic like
Speaker 4: price rings. They might like launch it a really high
Speaker 4: price and then go down, but that might not actually
Speaker 4: be reflective of their value. So I would weigh what
Speaker 4: the current market conditions are? Okay, go what kind of
Speaker 4: market are we in? But also if you are a
Speaker 4: company and you are considering ipoing and going onto the
Speaker 4: share market, and you're like, let's do this during economic downturn?
Speaker 2: What are you doing? That's like a really dumb decision.
Speaker 2: You're selling yourself into a period of time where people
Speaker 2: aren't that confident in investing, let alone investing in new things. Right,
Speaker 2: you want to do it in a bulls market? Yeah,
Speaker 2: So I'd be like, why are you doing it in
Speaker 2: a bear market? To you, potato? And how do we
Speaker 2: find out if it's a bull or bear? Right now?
Speaker 4: So you can just google it, like what's the Australian
Speaker 4: share market up to at the moment? I do a
Speaker 4: lot of obviously investing content you can ask me. I'll
Speaker 4: talk about it, but yeah, I feel like I've yapped
Speaker 4: on and on and on about this.
Speaker 2: So V I think the question on everyone slips remains,
Speaker 2: Will Shees on the Money ever be the next IPO?
Speaker 2: Absolutely not, absolutely not, Like I know that you might
Speaker 2: want us to IPO and it would be really fancy,
Speaker 2: And I feel like this is not like a mean
Speaker 2: thing to say, but I feel like sometimes if you
Speaker 2: are a business owner, ipoing and selling shares can be
Speaker 2: quite ego driven. Sure, like you're like, I'm list it,
Speaker 2: like okay, cool, Like no one gets like literally like
Speaker 2: I don't think you're cooler because you have a company
Speaker 2: that iPod.
Speaker 4: I just don't like the idea that I would be
Speaker 4: responsible for shareholders.
Speaker 2: Yeah, Like I like that the buck stops with.
Speaker 4: Me and I make the decisions because, like, let's be honest,
Speaker 4: a lot of the decisions that I make in my
Speaker 4: business a company would be like, oh, I'm sorry, Like
Speaker 4: you could increase shareholder profit by not sending your team
Speaker 4: members on international conference trips. And on the flip side,
Speaker 4: I'm like, oh, I love that I can have a
Speaker 4: business that gets to invest in the growth of my team,
Speaker 4: like and that's not like the values that I hold
Speaker 4: sometimes don't align with high shareholder return.
Speaker 2: Right, Okay, does that make sense? Yeah, and you're allowed.
Speaker 2: I could do what I want. You can do what
Speaker 2: you want the free world, including right now. I reckon,
Speaker 2: let's go do what we want. Let's have a coffee.
Speaker 2: There's diet coke in the frigid work now. Oh my god,
Speaker 2: I know Josh hooks us up. So we've got to
Speaker 2: go get one of those. But I think before I
Speaker 2: leave you, Obviously with investment, all investments carry risk, we
Speaker 2: know that. But with the right research, I think you
Speaker 2: can pick investments that fit your goals and what you
Speaker 2: want to achieve, not just the investments that everybody's talking about.
Speaker 2: Great call, We're going to go get a little cheeky
Speaker 2: diet coke. But if you've just met us, and this
Speaker 2: is one of the first episodes you've listened to, please
Speaker 2: hit subscribe and join us each week as we kind
Speaker 2: of help you to get closer to financial freedom.
Speaker 4: And also we're trying to make finance fun. And if
Speaker 4: you want to share that money confidence with your friends,
Speaker 4: please don't keep it to yourself. We want a bigger,
Speaker 4: better community. The more people who are financially free.
Speaker 2: The better beck, I love that it's so true. V
Speaker 2: Die coke time, but I got's go bye. The ad
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Speaker 2: and does not consider your individual circumstances. She's on the
Speaker 2: Money exists purely for educational purposes and should not be
Speaker 2: relied upon to make an investment or financial decision. If
Speaker 2: you do choose to buy a financial product, read the
Speaker 2: PDS TMD and obtain appropriate financial advice tailored towards your needs.
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