Chris Judd on the Macro Themes Moving the Market

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After King's birthday in WA, JD,
we got the day off over here,

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mate.
I, I don't really want to spoil

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it.
I don't know where to start

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because a lot of people might
not actually be expecting the

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pedigree of the, the great man
that you've interviewed today.

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He's I'm excited, mate.
I'm excited.

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He's a mate.
He's reached the absolute top of

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his field as an athlete and now
he's now in his tenure as a fund

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manager, he's, he's killing the
charts once again.

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It actually reminds me pretty
clearly of Axis Mining

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technology because they are the
top name in drill hole

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orientation, instruments and
data management.

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Maybe if you're a geologist or a
driller.

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Get onto your team, let them
know you want a Champ Ori and a

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Champ Gyro on site ASAP.
The team and Axis have all the

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surveying tools you need to make
your life easy.

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Pick up the phone and give them
a buzz.

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Numbers in the show notes.
JD, what have you got for us

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today?
Mate, we have a conversation

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with none other than Chris Judd.
So he's a, he's a man that needs

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very little introduction to our
Aussie listeners.

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For those overseas who may not
know though, like you said, top

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level athlete now is looking to
do the same as a fund manager.

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He, he started his macro fund
early last year.

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He'd been investing privately
some time before that, super

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keen on the investing world.
And I was very excited to, to

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chat with him for a number of
reasons.

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First and foremost, the Sarity
macro fund, it's in the name,

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it's a macro fund.
And everything that has happened

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in the, in the past couple weeks
has been all macro.

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You know, we've got the, the US
rights decision a couple weeks

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before that with the, the sort
of yen crisis appreciation and

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quick depreciation, all this
talk out of China, you know,

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stimulus and all that.
So I thought it would be the

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perfect time to to have him on.
He he views.

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The world in a in a quite a
unique way, quite different to

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the bottom up fun pickers that
we speak with.

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So we're going to run through
his sort of macro themes, the

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trends that he sees playing a
big role in markets at the

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moment.
Then he's also got this sort of

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liquidity cycle lens through
which he observes the market

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equally fascinating seeing how
what central banks are doing

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throughout, you know, economies,
whether that be the US, Japan,

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Australia, and then of course,
how commodities kind of pieced

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that in pieced into his fund as
a sort of protection against

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inflation and all other sort of
sorts with gold playing their

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role as well.
So I think with all that said

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mate, let's just jump to the
conversation and and hear it

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from the man himself, Chris
Judd.

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Can't wait mate, couldn't be a
better time for a macro chat.

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Chris Judd, thanks for making
the time coming on Money of

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Mine.
Thanks JD.

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Big fan of the show, so I'm very
excited to talk to you.

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Well, I thought.
It'd be it'd be a great time to

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to get you on given everything
that's happened in macro.

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That's your your focus of the
fun.

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It's been a, a pretty huge week
with the the chocker block, you

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know, 50 basis point cut from
the Fed and then a few other

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decisions around the world.
So how are you kind of seeing

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things to start?
What's the What's the lay of the

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land?
Well, the 50 basis point cut was

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really significant and it sort
of marks the start of a rate

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cutting cycle in the US, which
has already started in other

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jurisdictions around the world.
You know, we don't view the US

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economy as being, you know, we
think it's softening, but we

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don't think it's dire or
recessionary at this stage.

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So we think A50 basis point cut
was really aggressive and we

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think it, you know, we think
asset prices are gonna, are

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gonna love it.
And that's whilst the initial

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reaction was very much muted and
there was talk even that the 50

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basis point cut was a a hawkish
50 basis point cut.

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I mean, I, I don't understand
what a hawkish, a hawkish 50

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basis point cut.
Is it it for us?

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It's a cut that was probably
bigger than what consensus was

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initially, particularly before
it felt like the Fed mouthpieces

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were trying to tell us it was
going to be a 50 basis point

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cut.
So yeah, we think, we think

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equity prices are going to love
it and they certainly proved

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that way overnight in the US.
You've got these sort of three

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kind of channels which with you
look at that the kind of market

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you've got the, the macro
themes, the liquidity cycle and

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then the bottom up under
research.

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And this one really sort of
plays into the the liquidity

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cycle.
Do you think we're at the the

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kind of beginning where you
know, it's perhaps a dash for

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traction staff in time as asset
prices might inflate with

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liquidity measures sort of blown
out a bit more Or do you think

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we got might we might have that
recession coming and I'm going

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to be a bit more nervous and
hold a bit more cash?

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Yeah.
Look, this is the first time

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since we've started the
fundament 15 months ago where we

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feel really bullish.
So that's, that's a exciting

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time for us.
But we think, you know, we're

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reasonably bearish on the
economy and we very much

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separate asset prices and, and
the economy, I guess while we're

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bullish is, is largely around
the, the fiscal situation the US

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finds themselves in.
So if you look at GDP in the US

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call it around 28 trillion bucks
a year and the trailing deficit

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of a bit over 2 trillion bucks a
year.

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So that 7% of GDP is now deficit
that's really significant

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outside of recession or or
wartime.

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And if you think those deficits
are occurring at a time when

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you've got basically full
employment, you've got equity

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markets at or near all time
highs and property markets at a

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near all time highs.
So in terms of the revenues

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they're receiving from the tax
base, capital gains is really

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high, stock based compensation
is really high and income tax

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receipts are really high.
And they've still got a deficit,

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you know, north of 7% of of GDP.
Coupled with that, you've got 8

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1/2 trillion dollars worth of
debt, U.S. government debt that

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needs to be refinanced within
the next 12 months.

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So you're probably better at
maths than me, but ain't half

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trillion.
I'm not so sure about that.

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Ain't half trillion feels like a
big number.

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So.
And, you know, this is occurring

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in a time when Russia is no
longer allowed to buy U.S.

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government debt.
China's appetite for U.S.

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government debt has softened
after seeing Russia's FX

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reserves being sanctioned in in
2022.

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The Saudis, while still buying
some U.S. government debt, are

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buying more gold to store their
surplus reserves than they used

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to and, and storing some of
their surplus reserves in soccer

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teams and infrastructure
projects and, and places they

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haven't in the past when we're
in the the petrodollar system.

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So we think, you know, the
central authorities in the US to

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deal with that environment are
left with sort of four options.

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Their option one is they can
just term out their debt at a

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much higher interest rate than
they're already paying, which is

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going to be really hurt, hurt
that deficit spending even more

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because their interest payments
are going to go up.

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They can just fund refinance
that debt in short term

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government debt T-bills, which
they're doing more of.

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I mean, it's unrealistic to
expect they could do the whole 8

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enough trillion in that in that
way.

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But let's say they want to do
that.

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But that's obviously the higher
interest rate they're currently

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paying.
And there's a view that that's

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inflationary because the shorter
duration you get, the more akin

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that becomes too looking like
cash.

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And it also doesn't solve the
problem.

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It still means you've got to
refinance that debt within

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another 12 months.
They could cause a recession and

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refinance it at a much lower
interest rate, but that's going

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to really hurt tax receipts
because you're going to get

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income tax go down, you need
capital gains and stock

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compensation go down and your
entitlement spending is going to

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go through the roof.
So that seemed unattractive.

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No.
So then what's your fourth

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option is to drop interest rates
outside of a recessionary

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environment.
You boost tax receipts by

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boosting capital gains and stock
based compensation.

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You also lower the the, the cost
of interest you've got to pay on

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those new bonds you sell.
And we think that's where they

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that's where they land at.
We think that's the situation we

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find ourselves in, which is bad
for things like inequality and

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social harmony, but we think
it's going to be really good for

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asset prices.
There is like so many avenues to

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to run down there.
I think the, the underlying 1 is

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inflation.
And you made the comment in the

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past that you think it's sort of
stubbornly kind of baked in.

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And that's going to be the case
for, you know, perhaps the, the

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next kind of 10 years.
Is that, is that a theme that

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you think is going to play
through for the twenty 30s or

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maybe even longer?
And that sort of how does that

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kind of dictate how, how you
fund is that in the longer term?

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You know, I guess without any
government interference or

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central bank interference, we
think the most likely outcome

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would be a deflationary bust.
But even any sort of deflation

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when you've got government debt
to GDP at 129%, deflation's

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terrifying when you compare it
to inflation.

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So we we could see a scenario
where you get either deflation

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or inflation, but we think when
push comes to shove, the choice

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will be inflation because that's
the only political way to pay

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down the debt in real terms, not
in nominal terms, but in real

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terms.
And that that was certainly the

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avenue the US went down post
World War 2, which was the only

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other time when when we've had
government debt to GDP this

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high.
So you know, we do think it's

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worth sort of splitting up
inflation into different, you

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know there's there's CPI or Main
St inflation and then there's

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monetary inflation.
We think those two often get

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sort of mixed up.
But broadly speaking, we think

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both those things will be higher
than they have been in recent,

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in particular CPI when we had a
huge monetary inflation post GFC

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in things that have been
financialized, but we didn't

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have any of that CPI inflation.
Now with fiscal spending in the

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US roaring back to life, we're
starting to see that Main St

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inflation and we think that's
it's not a great outcome, but

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it's the better outcome when
you've got debt to GDP this

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high.
So how does that kind of play

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into how you think about
commodities, real assets, all

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these sorts of things here?
You know, potentially playing a

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portion of that through
financial assets that you think

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will inflate and then maybe
hedge in your bets a bit with

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commodities housing or rates or
whatever.

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Just give yourself a bit of a a
a cushion that the actual value

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of that is not being eaten away
in time.

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Yes.
I mean, we don't have a heap of

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commodity exposure.
We've got some gold exposure,

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which is more a monetary
inflation hedge.

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And you look back to how
confused and angry everyone was

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when CPI was ripping and gold
was soft.

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So I mean, we think that's what
can get missed with gold.

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It it's a hedge for US against
currency debasement.

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We view gold increasing supply,
you know, a bit over 1% a year.

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And money supply in the US on
average increases supply at

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around 7% a year.
And we think that's why gold is

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such a structural long term
bullish bet.

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This doesn't necessarily need to
mean revert like other

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commodities.
So they still get overbought and

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it'll still sell off at times.
Clearly nothing goes up in a

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straight line, but we sort of
have a different view of how

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that could behave compared to
industrial commodities where

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they might have a run.
But we think over time they do

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end up mean reverting as as
supplier comes on board.

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Is that goal just become a sort
of cornerstone with, you know,

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with the idea of you might be
holding that for quite a while

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unless you see a real change in
government attitudes and, you

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know, action towards austerity,
which.

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Yeah, that's right.
That's right.

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And and even then, in a
deflationary bust, gold's not a

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bad place to be.
So it can sort of play 2 roles

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in a portfolio.
So I mean, it, it was so odd

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post COVID US, you had money
supply.

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00:11:42,000 --> 00:11:44,960
I think it was about 25% in a
year at one stage.

226
00:11:45,080 --> 00:11:47,960
And then you had negative money
supply, which is just unheard

227
00:11:47,960 --> 00:11:48,840
of.
You know, you're going, I think

228
00:11:48,840 --> 00:11:51,960
you have to go back to the Great
Depression, the 1930s actually

229
00:11:51,960 --> 00:11:55,720
have negative money supply.
So when that's the time in the

230
00:11:55,720 --> 00:12:01,280
short term, we'd be nervous
about holding gold because money

231
00:12:01,280 --> 00:12:03,080
supply is becoming more scarce
versus gold.

232
00:12:03,080 --> 00:12:05,320
It's increasing it, you know,
about 1% a year.

233
00:12:06,000 --> 00:12:10,200
But if we stay in that world for
too long, you know, we could see

234
00:12:10,200 --> 00:12:12,720
the whole financial world
crumbling.

235
00:12:12,720 --> 00:12:19,240
And in that, in that situation,
having you, you know, gold is,

236
00:12:19,240 --> 00:12:21,400
is not a, is not a horrible
place to be either.

237
00:12:21,400 --> 00:12:24,440
So in the interim, if we were to
see negative money supply again,

238
00:12:25,360 --> 00:12:28,240
we'd be hesitant to hold gold,
perhaps in the short term, But

239
00:12:28,240 --> 00:12:31,040
if, if that were to go on for
long enough, then gold would

240
00:12:31,040 --> 00:12:33,120
essentially be be attractive in
a, in a different way.

241
00:12:33,120 --> 00:12:35,880
I'm.
I'm keen to maybe take a, a big

242
00:12:35,880 --> 00:12:39,840
step back and, and understand
why you structured the fund as a

243
00:12:39,840 --> 00:12:43,640
sort of macro kind of top down
to start with you.

244
00:12:43,640 --> 00:12:46,560
I mean, we've, we've spoken with
a bunch of fundies for the past

245
00:12:46,560 --> 00:12:50,560
year or so and almost all of
them are bottom up.

246
00:12:50,640 --> 00:12:53,000
You know, I mean, they might
have a bit of an overlay and try

247
00:12:53,000 --> 00:12:56,040
and understand modity or
whatever, depending on what type

248
00:12:56,040 --> 00:12:59,880
of sector they focus on.
But it, it's quite rare we get

249
00:12:59,880 --> 00:13:03,200
people that have it, you know,
written out in the mandate macro

250
00:13:03,200 --> 00:13:06,120
themes is the top point, you
know, witty cycles.

251
00:13:06,280 --> 00:13:08,040
Why is that just a, a personal
interest?

252
00:13:08,040 --> 00:13:09,240
You wanted to start the fund
like that?

253
00:13:09,440 --> 00:13:11,720
Well, it's both.
I mean, the the most important

254
00:13:11,720 --> 00:13:16,160
thing, I guess is we want
different results to the average

255
00:13:16,160 --> 00:13:20,280
fund and certainly the index.
And we've never understood

256
00:13:20,280 --> 00:13:22,520
people that want different
results but have the same

257
00:13:22,520 --> 00:13:25,480
processes as everyone else.
That doesn't make a lot of sense

258
00:13:25,480 --> 00:13:27,720
to us.
And I guess that's a reference

259
00:13:27,720 --> 00:13:32,680
to our my experiences in sport.
You know, you see so many people

260
00:13:32,680 --> 00:13:35,360
talk about wanting their team to
have a different outcome, but

261
00:13:35,360 --> 00:13:37,520
when you looked at the way they
trained and the way they thought

262
00:13:37,520 --> 00:13:40,200
about high performance, it was
exactly the same as all the

263
00:13:40,200 --> 00:13:41,680
other teams they were competing
against.

264
00:13:41,680 --> 00:13:48,760
That always struck me as odd.
But more personally I think post

265
00:13:48,760 --> 00:13:50,360
football it was just macro
investing.

266
00:13:50,360 --> 00:13:53,640
It really energised me.
So I I started working as a

267
00:13:54,160 --> 00:13:57,800
analyst at the VC fund post
Football for about 18 months and

268
00:13:57,800 --> 00:14:00,160
was really lucky to be given
that job and they were a really

269
00:14:00,160 --> 00:14:02,280
good team to to work with and to
learn off.

270
00:14:04,200 --> 00:14:07,840
But I can still remember I was
driving around in between

271
00:14:07,840 --> 00:14:12,080
meetings and I listened to the
first macro podcast that had

272
00:14:12,080 --> 00:14:14,440
come across my desk, which was
Grant Williams.

273
00:14:14,800 --> 00:14:18,360
It was a podcast he doesn't do
anymore with, with two other

274
00:14:18,520 --> 00:14:21,000
poms.
And it was just like, it's just

275
00:14:21,000 --> 00:14:22,520
something had been set off in my
brain.

276
00:14:22,600 --> 00:14:27,160
And yeah, I'm always acutely
watching when I'm doing

277
00:14:27,160 --> 00:14:29,240
something that's really
energising because it's sort of

278
00:14:29,240 --> 00:14:31,520
a clue that's where you SH, you
should be directing your

279
00:14:31,520 --> 00:14:32,960
energies.
Yeah, sort of ebb into your

280
00:14:32,960 --> 00:14:34,240
interests, right?
That's right.

281
00:14:34,240 --> 00:14:37,280
And it was really that that just
sparked this, this interest that

282
00:14:37,280 --> 00:14:39,120
became more of an obsession than
anything else.

283
00:14:39,120 --> 00:14:43,120
And I could just find myself
consuming 678 hours of content a

284
00:14:43,120 --> 00:14:46,200
day in that field and not, not
being tied by it.

285
00:14:46,320 --> 00:14:49,160
And that felt very different to,
you know, if I spent six or

286
00:14:49,160 --> 00:14:53,520
seven hour hours doing bottom up
analysis on, on individual

287
00:14:53,520 --> 00:14:55,680
stocks, I'd find that really
tiring and exhausting.

288
00:14:57,040 --> 00:14:59,680
Whereas the macro stuff I, I
could just keep going and, and

289
00:14:59,680 --> 00:15:01,520
just loved it.
So that, that's sort of how it,

290
00:15:01,960 --> 00:15:03,880
it came about.
So that, that's because I found

291
00:15:03,880 --> 00:15:05,920
it interesting.
That's how I invested my own

292
00:15:05,920 --> 00:15:08,440
capital.
And then I put on Tom, who's the

293
00:15:08,440 --> 00:15:12,920
current analyst for Serity about
four or five years ago now when

294
00:15:12,920 --> 00:15:14,440
I was investing in a private
capacity.

295
00:15:15,120 --> 00:15:18,520
And then we got approached by a
family office a couple of years

296
00:15:18,520 --> 00:15:20,400
ago to take some outside
capital.

297
00:15:21,040 --> 00:15:22,680
And we initially agreed to do
that.

298
00:15:22,760 --> 00:15:26,560
And once we worked out licencing
and just had expensivities to do

299
00:15:26,560 --> 00:15:29,760
that properly, we just thought
it was time to to take the

300
00:15:29,760 --> 00:15:31,800
plunge and and start a fully
fledged fund.

301
00:15:31,800 --> 00:15:33,520
So that's that's how Sarity
began.

302
00:15:33,640 --> 00:15:34,480
So.
So why are the?

303
00:15:35,200 --> 00:15:38,360
Equities only kind of things
because I, you know, I read

304
00:15:38,360 --> 00:15:41,120
about these macro investors as
well and it's, it's fascinating.

305
00:15:41,120 --> 00:15:43,120
It's kind of mind boggling.
You read about Soros and

306
00:15:43,120 --> 00:15:46,680
Druckenmiller and they're using
every, every tool in the drawer,

307
00:15:46,680 --> 00:15:50,600
you know, currencies,
commodities, storing physical

308
00:15:50,680 --> 00:15:53,800
commodities, derivatives and all
these sorts of things.

309
00:15:53,800 --> 00:15:57,960
Is is that more a point of
selling that as a fund is very

310
00:15:57,960 --> 00:16:00,360
hard to understand to outside
investors?

311
00:16:00,360 --> 00:16:02,480
I think you've got to understand
where your limits are and what

312
00:16:02,480 --> 00:16:05,200
your skill set is.
And you know, I can make good

313
00:16:05,200 --> 00:16:07,280
investments on themes that I
think will work.

314
00:16:07,600 --> 00:16:11,280
Timing is not my long suit.
I'm not a, I'm not a technical

315
00:16:11,280 --> 00:16:14,800
trader.
I'm not brilliant at timing the

316
00:16:14,800 --> 00:16:20,360
market and I don't want to Chuck
a heap of leverage in Cos

317
00:16:20,360 --> 00:16:23,480
equities is about as comfortable
as I can get with my risk

318
00:16:23,480 --> 00:16:25,160
profile, particularly taking
outside capital.

319
00:16:25,160 --> 00:16:31,920
I've trad, I've traded commodity
CFDS before privately and done

320
00:16:31,920 --> 00:16:34,760
really well out of it, but I
couldn't sleep when I was doing

321
00:16:34,760 --> 00:16:36,560
it.
It just there's no longevity in

322
00:16:36,560 --> 00:16:39,240
it.
Yeah, whatever you're doing, it

323
00:16:39,240 --> 00:16:43,320
has to be repeatable over a long
period of time to work.

324
00:16:43,680 --> 00:16:47,800
And I know that during COVID,
trading CFDS with, I don't know

325
00:16:47,800 --> 00:16:50,200
that would give me up to 400
times leverage on this.

326
00:16:50,200 --> 00:16:52,760
I mean, I wasn't going that
extreme, but it's, it's pretty

327
00:16:52,760 --> 00:16:54,360
wild.
And, you know, the kids would

328
00:16:54,360 --> 00:16:58,400
come up and they'd be talking
and it, it just was just no

329
00:16:58,400 --> 00:16:59,800
good.
Even though it was a profitable

330
00:16:59,800 --> 00:17:01,800
experience.
I just thought I, I couldn't do

331
00:17:01,800 --> 00:17:03,760
this for a long period of time.
Yeah.

332
00:17:05,319 --> 00:17:08,599
And, And so, yeah, we, we've
just got no edge in that space.

333
00:17:08,599 --> 00:17:13,800
I mean, at least with equities,
we can clearly articulate where

334
00:17:13,800 --> 00:17:16,119
an edge lies.
Like we're a small fund when

335
00:17:16,119 --> 00:17:20,200
liquidities, we're in a good
liquidity environment, we want

336
00:17:20,200 --> 00:17:23,319
to invest largely in small and
midcap companies where larger

337
00:17:23,319 --> 00:17:25,920
funds can't play because they
can't allocate enough capital

338
00:17:25,920 --> 00:17:27,839
to.
When those equities are in

339
00:17:27,839 --> 00:17:31,160
Australia, we can meet
management even as a fund our

340
00:17:31,160 --> 00:17:35,560
size.
And I guess we want to find the

341
00:17:35,560 --> 00:17:39,200
least sophisticated counterparty
to the other side of each trade.

342
00:17:39,520 --> 00:17:43,840
So I mean, small cap equities,
when we're buying or selling,

343
00:17:44,160 --> 00:17:46,800
it's quite likely the person on
the other side of that trade is

344
00:17:46,800 --> 00:17:49,920
a mum or a dad that's working
full time, doesn't have access

345
00:17:49,920 --> 00:17:51,960
to management.
It's overly emotional either

346
00:17:51,960 --> 00:17:53,920
way.
And we feel that's an advantage

347
00:17:53,920 --> 00:17:56,320
for us.
If I'm trading FX or

348
00:17:56,320 --> 00:17:58,920
commodities, you know, buddy
Druckenmiller's potentially on

349
00:17:58,920 --> 00:18:01,280
the other side of that trade and
good luck.

350
00:18:02,480 --> 00:18:06,520
So that that's the why equities
only, albeit from a top down

351
00:18:06,520 --> 00:18:11,360
view, if it works for us.
You've mentioned in the past

352
00:18:11,360 --> 00:18:15,120
you've got a bit of a, a valued
bias, but you, you know, you,

353
00:18:15,640 --> 00:18:17,680
you didn't say that in sort of
glowing terms.

354
00:18:17,680 --> 00:18:20,360
It was more like a real bias
that you have to actually, yeah,

355
00:18:20,440 --> 00:18:23,080
fight in the portfolio so that
you don't get sucked into a

356
00:18:23,080 --> 00:18:26,200
portfolio of or one and the same
type of thing.

357
00:18:26,200 --> 00:18:29,280
How do you think about that and
sort of managing the portfolio

358
00:18:29,280 --> 00:18:31,400
more more broad?
Yeah, something I I want to be

359
00:18:31,400 --> 00:18:34,000
really conscious of.
And the investors I admire the

360
00:18:34,000 --> 00:18:37,880
most are ones that are able to
earn money in different

361
00:18:37,880 --> 00:18:40,120
environments.
And, you know, in a really tight

362
00:18:40,120 --> 00:18:44,200
liquidity environment, yeah,
sort of low PE stocks can, can

363
00:18:44,200 --> 00:18:46,200
do really well on a relative
basis.

364
00:18:46,240 --> 00:18:48,720
But it's not necessarily where
you want to park all your

365
00:18:48,720 --> 00:18:51,720
capital over the long term.
And I think it's just a case of

366
00:18:51,720 --> 00:18:56,280
when I first started reading
about markets in in my 20s, I I

367
00:18:56,280 --> 00:18:58,080
read all the Warren Buffett
stuff.

368
00:18:58,560 --> 00:19:01,560
And he's obviously, you know,
the world's most famous value

369
00:19:01,560 --> 00:19:04,400
investor.
And that'll intrinsically made

370
00:19:04,400 --> 00:19:10,280
sense and, and worked until you
see, you know, companies like,

371
00:19:11,520 --> 00:19:15,280
you know, Facebook back then, or
Google or, or, or Apple to a

372
00:19:15,280 --> 00:19:19,880
lesser extent, or companies that
certainly on APE basis were

373
00:19:19,880 --> 00:19:22,000
bloody expensive, but just kept
going up and up.

374
00:19:22,000 --> 00:19:26,160
And it really had to change the
way I view markets.

375
00:19:26,160 --> 00:19:31,120
And now, yeah, I, I guess we
almost view our, our market as a

376
00:19:31,520 --> 00:19:34,000
as a bit of a football team.
We have some positions which are

377
00:19:34,200 --> 00:19:36,920
defensive.
We have some positions which are

378
00:19:37,200 --> 00:19:39,800
like midfielders, which might be
higher quality companies, but

379
00:19:39,800 --> 00:19:42,960
are neither really cheap nor at
the spivvy end of the market.

380
00:19:42,960 --> 00:19:45,920
And then you, you've your
attackers, which are perhaps

381
00:19:46,640 --> 00:19:49,360
spivy or non cash generating
yet, but have huge growth

382
00:19:49,360 --> 00:19:52,000
potential in, in certain
environments.

383
00:19:52,000 --> 00:19:54,000
And then your cash is almost
like you're interchange.

384
00:19:54,040 --> 00:19:58,240
You can turn and and put it more
in in defensive positions, mids

385
00:19:58,240 --> 00:20:00,680
or or attackers depending on
what the market's giving you.

386
00:20:01,160 --> 00:20:04,120
Do you sort of prefer to be
fully invested or always have a

387
00:20:04,120 --> 00:20:06,920
sort of popular cash there in
case, what's your kind of glossy

388
00:20:06,920 --> 00:20:10,840
on that?
Well, we prefer to be fully

389
00:20:10,840 --> 00:20:14,360
invested because we, we think
that means liquidity is good and

390
00:20:14,360 --> 00:20:16,880
that's a, a preferred
environment we'd like to be in.

391
00:20:16,880 --> 00:20:20,640
But if liquidity is tight, like
when we first started the fund,

392
00:20:20,640 --> 00:20:25,400
I mean we had 40% cash first
month or two just because we

393
00:20:25,400 --> 00:20:27,520
couldn't get it out the door as
quickly as we would have liked.

394
00:20:27,520 --> 00:20:30,000
And then, you know, liquidity
was pretty tight.

395
00:20:30,000 --> 00:20:31,680
So we were sitting in about 20%
cash.

396
00:20:33,560 --> 00:20:36,240
But yeah, we, we would like to
be under 10% cash.

397
00:20:36,240 --> 00:20:40,120
We have less than less than 5%
cash now because we, we, like I

398
00:20:40,120 --> 00:20:41,360
said, we're, we're pretty
bullish.

399
00:20:41,400 --> 00:20:43,000
What's going to happen over the
next few months?

400
00:20:43,680 --> 00:20:46,040
So looking forward then to the
next few months, you've, you've

401
00:20:46,040 --> 00:20:48,760
spoken about these macro themes
that you break it out the, the

402
00:20:48,760 --> 00:20:52,160
ones that are probably sort of
near and dear to what we speak

403
00:20:52,160 --> 00:20:53,480
about on the show pretty
regularly.

404
00:20:54,200 --> 00:20:57,480
The electrification of
everything we've touched on data

405
00:20:57,480 --> 00:21:00,160
centre CapEx.
There's a whole other other

406
00:21:00,480 --> 00:21:03,200
whole bunch of other ones, you
know, cost of living kind of

407
00:21:03,200 --> 00:21:06,240
crisis across Australia and the
Western world more broadly.

408
00:21:06,240 --> 00:21:08,880
What, what are the ones that are
sort of, you know, filling up

409
00:21:08,880 --> 00:21:10,520
your brain space at the moment?
The ones that you're getting

410
00:21:10,520 --> 00:21:12,320
your most excited?
Yeah.

411
00:21:12,320 --> 00:21:17,320
I mean, ALS probably been the
biggest in terms of thematic

412
00:21:17,320 --> 00:21:18,720
investing.
That's probably been the biggest

413
00:21:19,640 --> 00:21:23,560
theme since we started the fund.
We haven't had really clean

414
00:21:23,560 --> 00:21:28,680
direct exposure there.
We haven't owned NVIDIA, you

415
00:21:28,680 --> 00:21:32,440
know, or any of the other chip
companies that have have clean

416
00:21:32,440 --> 00:21:34,720
AI exposure.
But one thing we have had

417
00:21:34,720 --> 00:21:37,560
exposure to is that data centre
CapEx that that you speak of

418
00:21:37,560 --> 00:21:41,280
that's pretty predictable in
terms of the the billions of

419
00:21:41,280 --> 00:21:44,120
dollars that's been committed to
that space going forward both

420
00:21:44,120 --> 00:21:47,200
here and abroad.
So that's been a theme we've

421
00:21:47,200 --> 00:21:48,400
really liked.
We play that through an

422
00:21:48,400 --> 00:21:51,200
electrical engineering company
which is a big beneficiary of

423
00:21:51,200 --> 00:21:54,840
that space.
Ageing demographics is a really

424
00:21:54,840 --> 00:22:00,520
predictable long term trend.
Currency debasement is a really

425
00:22:00,520 --> 00:22:02,560
we think it's a predictable long
term trend.

426
00:22:03,720 --> 00:22:06,640
The electrification of
everything we see we don't have

427
00:22:06,640 --> 00:22:08,680
a lot of commodity exposure at
the minute.

428
00:22:08,680 --> 00:22:12,920
We, we've got gold in the other
main commodity which we like at

429
00:22:12,920 --> 00:22:17,400
the minute is uranium, which
plays into that electrification

430
00:22:17,400 --> 00:22:21,240
of everything and, and decarboni
decarbonisation theme.

431
00:22:22,520 --> 00:22:27,560
And probably also I think, you
know, the, the modelling for EV

432
00:22:27,680 --> 00:22:32,520
uptake was too aggressive and,
and likely we think the

433
00:22:32,520 --> 00:22:36,640
modelling for how effective
solar and wind can be for base

434
00:22:36,640 --> 00:22:38,440
load power has been too
aggressive.

435
00:22:38,560 --> 00:22:42,920
And we think over time,
uranium's going to be a a big

436
00:22:42,920 --> 00:22:47,480
beneficiary of that.
How do you expose, how do you

437
00:22:47,480 --> 00:22:50,920
get your exposure that do you
just get a basket of miners?

438
00:22:50,920 --> 00:22:53,120
Do you buy the, you know, spot
physical for us?

439
00:22:53,120 --> 00:22:54,200
What do you what do you do
there?

440
00:22:54,200 --> 00:22:56,520
Yeah.
So we we get a basket of miners.

441
00:22:56,520 --> 00:23:01,000
So because we're not technical,
we're not geologists, we're not

442
00:23:01,320 --> 00:23:04,280
overly technical, technically
skilled when it comes to

443
00:23:04,280 --> 00:23:07,880
analysing mining projects.
We don't want to express a

444
00:23:08,080 --> 00:23:10,520
positive commodity view with
with one stop because you can

445
00:23:10,520 --> 00:23:12,760
get the metallurgy wrong and
miss the trade, even though

446
00:23:12,760 --> 00:23:14,160
you're thinking around it was
correct.

447
00:23:14,160 --> 00:23:15,600
And that that sort of drives us
crazy.

448
00:23:15,600 --> 00:23:21,160
So generally for us, we'll get a
basket of usually 3 stocks, 3 or

449
00:23:21,160 --> 00:23:23,480
4 stocks that we like to express
that view.

450
00:23:25,520 --> 00:23:30,080
There's spot uranium trust is an
interesting one where it's sort

451
00:23:30,080 --> 00:23:33,160
of a Safeway to play it and it
makes intuitive sense.

452
00:23:33,160 --> 00:23:37,280
But we just felt if, if that
runs and uranium price runs, the

453
00:23:37,280 --> 00:23:38,920
miners are probably gonna
outperform.

454
00:23:39,160 --> 00:23:42,360
And if it doesn't run, then you
don't wanna be there anyway.

455
00:23:42,400 --> 00:23:45,240
Like it it it's it's a less
volatile way to play it.

456
00:23:45,840 --> 00:23:49,680
And you know, miners do make
mining such a bloody hard

457
00:23:49,680 --> 00:23:52,800
industry.
It's a way to be in the trade

458
00:23:52,800 --> 00:23:56,600
and be right as opposed to
potentially being the, the

459
00:23:56,600 --> 00:23:59,560
miners be right, but but still
lose money.

460
00:23:59,600 --> 00:24:01,400
So I, I get the urge to be in
that.

461
00:24:01,400 --> 00:24:04,920
But but for, for that trade in,
in getting back to that team

462
00:24:05,200 --> 00:24:07,720
side of it, those uraniums are
really an attacker for us.

463
00:24:07,800 --> 00:24:10,840
Like that trade works.
We want them to really go, we're

464
00:24:10,840 --> 00:24:13,080
not shooting for 20% out of
them.

465
00:24:14,120 --> 00:24:16,400
And that's, that's that role
that's playing in the portfolio.

466
00:24:16,400 --> 00:24:19,800
There's maybe a low PE stock we
might be in where we could say

467
00:24:19,800 --> 00:24:23,200
if things go well, we hope this
makes us 20% or or 30%.

468
00:24:23,200 --> 00:24:26,040
The uraniums are a really
aggressive way to play,

469
00:24:28,160 --> 00:24:32,440
basically a secular thing we
like, but also be there at the

470
00:24:32,440 --> 00:24:35,600
turning of a liquidity cycle.
So you wrote about uranium

471
00:24:35,600 --> 00:24:37,800
pretty, pretty early in the in
the fund's history.

472
00:24:37,800 --> 00:24:40,360
It may be over or something last
Yeah.

473
00:24:40,400 --> 00:24:43,200
How's your thinking kind of
changed because we saw the spot

474
00:24:43,200 --> 00:24:46,480
price, you know, surge up at
almost 100 or whatever.

475
00:24:46,480 --> 00:24:49,080
Then it's it's pulled off a bit
and everyone's talking about

476
00:24:49,080 --> 00:24:51,880
what's happening in the term
market and things have all the

477
00:24:51,880 --> 00:24:55,680
equities have peeled right off.
Is it a trend you just see

478
00:24:55,680 --> 00:24:59,080
consistently paying and you you
use this opportunity to the buy

479
00:24:59,080 --> 00:25:00,880
up or if you just held it
through?

480
00:25:00,880 --> 00:25:03,400
No, we've tried it.
So we when we buy something, we

481
00:25:03,400 --> 00:25:04,840
want to hold it for two or three
years.

482
00:25:04,840 --> 00:25:07,080
That's the mindset we're going
into all longer.

483
00:25:07,760 --> 00:25:11,600
But we hate holding stuff that
we think is now overvalued.

484
00:25:11,800 --> 00:25:15,200
So I mean, we initially
expressed the writing trade

485
00:25:15,200 --> 00:25:20,640
through boss and Paladin.
They ripped and and they just

486
00:25:20,640 --> 00:25:23,600
started to look really expensive
to us and we sold both of them.

487
00:25:24,720 --> 00:25:29,880
So we don't no longer hold
either of those stocks and then

488
00:25:30,360 --> 00:25:32,720
but we still like the we still
like the theme.

489
00:25:32,720 --> 00:25:36,200
We just thought, you know, every
second crypto bro was tweeting

490
00:25:36,200 --> 00:25:40,400
about it positioning wise, it
just felt like it was toppy and

491
00:25:40,680 --> 00:25:42,360
we just felt like those things
were overboard.

492
00:25:42,360 --> 00:25:45,000
So we sold them.
You know, luckily timed it well

493
00:25:45,440 --> 00:25:49,960
and then we bought back in some
different stocks to express the

494
00:25:49,960 --> 00:25:54,080
same view recently because we
felt we felt it was more

495
00:25:54,080 --> 00:25:57,880
positioning based that crunched
uranium equities than anything

496
00:25:57,880 --> 00:26:01,760
that was actually happening.
So we felt there was a lot of

497
00:26:01,760 --> 00:26:05,720
crypto Bros in the uranium trade
and crypto was getting smacked

498
00:26:05,720 --> 00:26:08,160
around a bit.
And we thought the other people

499
00:26:08,160 --> 00:26:10,840
in the uranium trade were
commodity guys and commodities

500
00:26:10,840 --> 00:26:12,040
were getting smacked around a
bit.

501
00:26:12,040 --> 00:26:14,280
And, and particularly lithium,
like lithium's such an

502
00:26:14,280 --> 00:26:17,160
aggressive commodity play as is
uranium.

503
00:26:17,200 --> 00:26:20,080
And we just felt people were
treating that as a similar trade

504
00:26:20,080 --> 00:26:23,280
where we felt, you know, long
term, the amount of money that

505
00:26:23,280 --> 00:26:26,160
had gone into increasing lithium
supply was very different to

506
00:26:26,160 --> 00:26:28,760
uranium.
But we felt uranium was getting

507
00:26:28,760 --> 00:26:31,560
punished, even though, like you
said, the long term price for

508
00:26:31,560 --> 00:26:33,800
uranium wasn't getting punished.
The spot market was.

509
00:26:33,800 --> 00:26:36,320
But as he's regularly spoken
about, that's not really the,

510
00:26:36,520 --> 00:26:40,480
the market to, to be aware of.
So that, that was sort of our

511
00:26:40,480 --> 00:26:41,960
reasons for re entering the
trade.

512
00:26:42,000 --> 00:26:47,840
And whilst we like uranium on a,
you know, 10 year plus basis, if

513
00:26:47,840 --> 00:26:51,280
it rips what we feel is too
much, we'll just, we'll, we'll

514
00:26:51,400 --> 00:26:54,960
sell it or shave down some of it
again, even though we still like

515
00:26:54,960 --> 00:26:56,200
it on a longer term basis.
So.

516
00:26:56,760 --> 00:27:00,280
You've, you've touched on
lithium there EVs, the trend

517
00:27:00,280 --> 00:27:03,120
perhaps like hybrids kind of
playing into that conversation

518
00:27:03,440 --> 00:27:05,520
as well.
How do you think about that now?

519
00:27:05,520 --> 00:27:09,760
It's been like so beaten up the
the equities in particular, even

520
00:27:10,160 --> 00:27:12,880
commodity itself, it's really in
the doldrums.

521
00:27:13,120 --> 00:27:16,720
Is that sort of that sort of
discussion, that sort of

522
00:27:16,720 --> 00:27:19,800
sentiment get you, get you
excited with your kind of

523
00:27:19,960 --> 00:27:22,520
contrarian face?
Not for lithium, no.

524
00:27:22,520 --> 00:27:26,160
Like I mean, we, we miss lithium
in the fund and the way out and

525
00:27:26,160 --> 00:27:27,600
I missed it as a private
investor.

526
00:27:27,600 --> 00:27:30,160
So it always hurt.
But then I felt smart just to

527
00:27:30,160 --> 00:27:34,800
get about it all over.
But oh, I was a big cobalt guy

528
00:27:34,880 --> 00:27:37,960
years ago. 17 I thought trade
was brilliant for me.

529
00:27:38,120 --> 00:27:41,160
Played Javoir or I.
Played cleantech back then, the

530
00:27:41,160 --> 00:27:42,480
Friedland one.
OK, Yeah.

531
00:27:42,640 --> 00:27:45,040
So that was a really kind
position.

532
00:27:45,080 --> 00:27:46,440
I mean, I played Javro as well,
but.

533
00:27:46,440 --> 00:27:49,960
But cleantech now, Sunrise was
the one, yeah, at the time,

534
00:27:49,960 --> 00:27:55,440
which made me smile.
But I never you know.

535
00:27:55,920 --> 00:27:57,360
Things can change so quickly,
right?

536
00:27:57,360 --> 00:28:02,880
They can and they can.
So, yeah, like, I, I just think

537
00:28:03,560 --> 00:28:06,480
so much supply came on with
lithium, so many people were in

538
00:28:06,480 --> 00:28:11,920
the trade and the forecast for
EV demand was so extreme.

539
00:28:12,000 --> 00:28:14,880
And it, it turns out a lot of
people just don't want EVs.

540
00:28:14,880 --> 00:28:18,520
The resale value is shocking.
You know, people eat range

541
00:28:18,520 --> 00:28:22,320
anxiety, the batteries don't
last as long as people would

542
00:28:22,320 --> 00:28:25,320
like.
And and hybrids, you could see a

543
00:28:25,320 --> 00:28:27,840
world where hybrids are a much
more attractive option and much

544
00:28:27,840 --> 00:28:29,960
better for the environment too,
potentially.

545
00:28:29,960 --> 00:28:33,760
So, yeah.
So I mean, that's a long way of

546
00:28:33,760 --> 00:28:37,000
saying we never got in lithium
and, and we felt it was really

547
00:28:37,000 --> 00:28:38,720
concentrated around the EV
trade.

548
00:28:38,920 --> 00:28:42,360
We had some chunky copper
exposure at one stage, but we

549
00:28:42,360 --> 00:28:44,640
like copper because you got the
data centre exposure, you got

550
00:28:44,640 --> 00:28:48,240
the renewable exposure, you got,
you know, Bitcoin mining

551
00:28:48,240 --> 00:28:50,080
everywhere you look, things are
being electrified.

552
00:28:50,080 --> 00:28:52,680
And we felt copper played into
that in a much broader way,

553
00:28:53,840 --> 00:28:57,080
whereas perhaps lithium where it
was a really concentrated bet on

554
00:28:57,120 --> 00:28:58,800
on EV take up.
Yeah.

555
00:28:58,800 --> 00:29:01,880
So how do you kind of think
about copper now and by

556
00:29:01,880 --> 00:29:04,360
extension, what are you, what
are you thinking of China more

557
00:29:04,360 --> 00:29:06,560
broadly?
So much of it's been dictated in

558
00:29:06,560 --> 00:29:09,960
particular last year with the
permanent refining charges being

559
00:29:09,960 --> 00:29:13,800
tweaked in in China, but often
in China.

560
00:29:13,800 --> 00:29:15,560
What's sort of on your mind with
those two?

561
00:29:16,040 --> 00:29:22,440
Well, we're sort of nervous
about China and their economy.

562
00:29:22,440 --> 00:29:24,920
I don't know, medium, long term,
but so is everyone.

563
00:29:25,520 --> 00:29:27,320
Worrying mate.
Worrying, worrying, worrying.

564
00:29:27,320 --> 00:29:28,880
You know what would make worries
go away?

565
00:29:28,880 --> 00:29:31,080
When I'm worried I just think of
one thing.

566
00:29:31,080 --> 00:29:33,680
I need to pick up the phone and
I need to call the good guys at

567
00:29:33,680 --> 00:29:36,160
CRE Insurance because they make
my worries go away.

568
00:29:37,280 --> 00:29:41,480
Mate, Steve adds tarry.
They are more than happy to

569
00:29:41,480 --> 00:29:43,560
help.
It's a it's a complex world, if

570
00:29:43,560 --> 00:29:46,200
you haven't sort of picked that
up from what Judy's said so far.

571
00:29:46,200 --> 00:29:49,600
But these guys, they thrive on
complexity, don't they mate?

572
00:29:49,600 --> 00:29:54,000
They will go to any corner of
the globe, you know, Africa,

573
00:29:54,880 --> 00:29:57,120
North America, South America,
Asia.

574
00:29:57,120 --> 00:30:00,520
These guys will do it all.
Any commodity, anywhere, any

575
00:30:00,520 --> 00:30:03,200
sort of scale, not even just
mining, you know, if you're in

576
00:30:03,200 --> 00:30:06,720
the energy world, manufacturing,
construction, these guys cover

577
00:30:06,720 --> 00:30:08,360
it all and even better, I
reckon.

578
00:30:08,360 --> 00:30:11,000
Judd, he got his his Brownlow
Medal insured by them just in

579
00:30:11,000 --> 00:30:13,240
case he went missing or stolen.
I would, yeah.

580
00:30:13,360 --> 00:30:15,600
That that is what I would do if
I was him, absolutely.

581
00:30:15,600 --> 00:30:18,520
And I mean, the good thing about
these guys, officers in Perth,

582
00:30:18,520 --> 00:30:21,360
in Sydney, in Brizzy, you can
see them face to face.

583
00:30:21,360 --> 00:30:24,680
Just get in the show notes, give
them a call, take things from

584
00:30:24,680 --> 00:30:25,920
there.
They can run through your

585
00:30:25,920 --> 00:30:27,920
current policy.
Even better, you can see where

586
00:30:27,920 --> 00:30:30,920
there's where there's holes
where you're exposed at, you

587
00:30:30,920 --> 00:30:34,280
know, free of charge it, it
makes no sense not to do it.

588
00:30:34,440 --> 00:30:36,880
They provide tailored insurance.
They cover any quirks your

589
00:30:36,880 --> 00:30:40,360
projects might have.
Look after your business, pick

590
00:30:40,360 --> 00:30:42,560
up the phone, do the right
thing, give them a call.

591
00:30:43,000 --> 00:30:44,560
Sounds good mate.
You're, I know that you like to

592
00:30:45,320 --> 00:30:47,120
save money and save, save costs
everywhere.

593
00:30:47,120 --> 00:30:50,080
Well, a, a free insurance check
sounds like the perfect thing

594
00:30:50,080 --> 00:30:52,040
for for the packages out there
like JD.

595
00:30:52,040 --> 00:30:54,800
All right, back to the show.
So it's hard to know what is

596
00:30:54,800 --> 00:30:58,040
already in the price there.
I mean, the stock market in

597
00:30:58,040 --> 00:31:02,600
China has been a horrible place
to be for I, I mean, I quite, I

598
00:31:02,600 --> 00:31:04,960
think they're coming up to their
fourth year of negative stock

599
00:31:04,960 --> 00:31:07,520
market returns.
Sound about right, because it's

600
00:31:07,520 --> 00:31:10,920
sort of 21 they they really went
in hard on their tech names,

601
00:31:11,320 --> 00:31:13,800
smashed them up themselves.
That's right, all the education

602
00:31:13,800 --> 00:31:20,600
businesses got zeroed.
And so you know, so and the

603
00:31:20,600 --> 00:31:23,120
property market's been really
hurt in China, which is

604
00:31:23,120 --> 00:31:26,440
obviously a huge driver of iron
ore and, and met coal prices in

605
00:31:26,440 --> 00:31:31,680
Australia and around the world.
So you know, China's export

606
00:31:31,680 --> 00:31:34,360
market is still really strong.
So if, if the commodity's linked

607
00:31:34,360 --> 00:31:37,280
to Chinese exports like EVs
where they're exporting a tonne

608
00:31:37,840 --> 00:31:42,080
and copper plays into that, we
still think it's, it's

609
00:31:42,080 --> 00:31:44,280
reasonably attractive, albeit
copper's also linked to the

610
00:31:44,280 --> 00:31:48,200
Chinese housing market, which
we'd be really nervous about the

611
00:31:48,200 --> 00:31:52,560
bulks we'd be nervous about for
that same reason.

612
00:31:52,560 --> 00:31:55,640
But, you know, nuclear power
capacity in China is just

613
00:31:55,640 --> 00:31:58,360
exploding and it, and looks like
it's going to be exploding

614
00:31:58,360 --> 00:32:03,480
through a long time to come.
So we think uranium, even though

615
00:32:03,480 --> 00:32:06,720
that's linked to China, you
know, is, is still bullish given

616
00:32:06,720 --> 00:32:09,040
what they're passionate about.
We, we also think, and Louis

617
00:32:09,040 --> 00:32:12,720
Visa Gay's written about this a
lot, which thinks an interesting

618
00:32:12,720 --> 00:32:16,240
way to look at things is, is
which market does the government

619
00:32:16,240 --> 00:32:19,240
want to protect?
You know, in in Australia, the

620
00:32:19,240 --> 00:32:22,840
government really wants to
underwrite housing and you can

621
00:32:22,840 --> 00:32:24,680
see that from the various
policies they implement.

622
00:32:24,680 --> 00:32:27,480
It's all designed around
boosting house price and keeping

623
00:32:27,480 --> 00:32:29,840
them high.
In the US, it's equities.

624
00:32:30,000 --> 00:32:33,280
It feels like that's the market
the government is constantly

625
00:32:33,280 --> 00:32:34,840
trying to get.
We can't have a down week.

626
00:32:34,960 --> 00:32:36,400
That's right.
That's right.

627
00:32:36,480 --> 00:32:39,120
And, and in China, that's more
and more appearing to be the

628
00:32:39,120 --> 00:32:41,640
bond market.
The bond market's really strong.

629
00:32:41,640 --> 00:32:44,440
Bond yields are low, lower than
the US.

630
00:32:46,040 --> 00:32:48,680
That appears to be the the
market where that government's

631
00:32:48,680 --> 00:32:51,400
sort of looking to underwrite it
and certainly not the equities.

632
00:32:51,400 --> 00:32:57,520
And equities are very much under
owned by the average Chinese

633
00:32:57,520 --> 00:33:01,920
resident properties owned a lot
of their wealth stored in

634
00:33:01,920 --> 00:33:03,880
property.
And you've seen some measures

635
00:33:03,880 --> 00:33:08,200
recently where they're trying to
stimulate property or or take

636
00:33:08,200 --> 00:33:11,000
some pressure over people that
have property debt.

637
00:33:12,360 --> 00:33:15,200
But we're we're conscious of
which, which assets in which

638
00:33:15,200 --> 00:33:17,320
jurisdictions are the ones where
the government are really trying

639
00:33:17,320 --> 00:33:19,080
to underwrite it.
And and certainly in China, it

640
00:33:19,080 --> 00:33:21,320
doesn't feel like it's equities.
Yeah, yeah.

641
00:33:21,320 --> 00:33:24,800
The sort of negative wealth
effect that could be felt, I

642
00:33:25,680 --> 00:33:29,200
don't think of concern for the
CCP to really protect right to

643
00:33:29,200 --> 00:33:30,440
look after those property
values.

644
00:33:30,480 --> 00:33:32,760
That's right.
And then I think it's Louis

645
00:33:32,760 --> 00:33:36,000
Vincent gave again, has the view
that they haven't been able to

646
00:33:36,000 --> 00:33:38,920
stimulate their economy before
the US starts the rate cutting

647
00:33:38,920 --> 00:33:42,480
cycle.
And you could see that

648
00:33:42,480 --> 00:33:45,320
potentially being true.
So they've they've had little

649
00:33:45,640 --> 00:33:49,840
bite sized pieces of stimulus
recently, China, but nothing

650
00:33:49,840 --> 00:33:51,760
that has really moved the needle
significantly.

651
00:33:51,760 --> 00:33:55,240
Now that the US has cut 50 basis
points, you wonder if there's

652
00:33:55,240 --> 00:33:57,160
the potential for them to
stimulate a bit more

653
00:33:57,160 --> 00:33:59,960
aggressively without putting
pressure on their currency.

654
00:33:59,960 --> 00:34:04,320
Because I think the traditional,
the traditional model of China

655
00:34:04,320 --> 00:34:08,719
just devoting their currency in
a time when the consumer

656
00:34:08,719 --> 00:34:11,639
spending is so low and, and, and
the, the part of their economy

657
00:34:11,639 --> 00:34:16,600
they really need to get going.
If they just keep, you know,

658
00:34:16,600 --> 00:34:19,560
devaluing their currency all the
time, their exports are already

659
00:34:19,560 --> 00:34:21,880
flying like they don't need any
more export growth.

660
00:34:21,880 --> 00:34:24,960
They really need to stimulate
that internal consumption.

661
00:34:25,040 --> 00:34:27,840
And and a DVAL certainly doesn't
feel like it's going to do that.

662
00:34:28,239 --> 00:34:30,920
Yeah, it'd be fascinating to see
what, what plays out in in

663
00:34:30,920 --> 00:34:33,600
November in the States and
whether these, you know, pardon

664
00:34:33,600 --> 00:34:37,840
tariffs come through what that
that kind of means when you look

665
00:34:37,840 --> 00:34:40,560
across the the world.
Are there other regions,

666
00:34:40,560 --> 00:34:43,520
countries that kind of get you
excited?

667
00:34:43,520 --> 00:34:46,040
I think I guess the kind of and
we've seen is people pretty

668
00:34:46,040 --> 00:34:49,960
bullish India, pretty airish,
the EU, these sorts of things.

669
00:34:50,159 --> 00:34:52,800
They're they're pockets that you
look to play out there.

670
00:34:53,679 --> 00:34:56,920
Look, India is the one that
feels like it's the most

671
00:34:56,920 --> 00:35:01,720
attractive, you know, for a
number of reasons, like the

672
00:35:01,720 --> 00:35:06,080
demographics are really good,
they're a democracy, you know,

673
00:35:06,080 --> 00:35:13,000
highly tech savvy population.
So we looked at it, but for us,

674
00:35:13,360 --> 00:35:14,880
their companies are bloody
expensive.

675
00:35:14,880 --> 00:35:16,320
I don't know if you've ever
looked at them, they're so

676
00:35:16,320 --> 00:35:20,200
expensive.
We're they're also short oil.

677
00:35:20,760 --> 00:35:24,360
So we don't hedge currency.
We could have seen a world where

678
00:35:25,960 --> 00:35:27,960
maybe the stocks went up, the
currency went down and we were

679
00:35:27,960 --> 00:35:31,480
no, no better off.
And we think, you know that

680
00:35:31,480 --> 00:35:33,560
under investment in oil.
We don't think oil is going to

681
00:35:33,560 --> 00:35:35,840
RIP to 200 bucks a barrel, but
we think it's going to be

682
00:35:35,840 --> 00:35:37,360
reasonably strong over a long
period of time.

683
00:35:37,360 --> 00:35:39,520
We think that's going to hurt
India.

684
00:35:39,520 --> 00:35:45,400
The other thing we think is, is
so much of their their, their

685
00:35:46,160 --> 00:35:48,760
more investable businesses
around IT outsourcing.

686
00:35:49,080 --> 00:35:53,520
And when you think of which,
which industries is AI

687
00:35:53,520 --> 00:35:58,440
potentially going to RIP apart,
you know, outsize outsourced

688
00:35:59,280 --> 00:36:02,400
reasonably low scale tech
services, tech services is going

689
00:36:02,400 --> 00:36:06,040
to be at the forefront.
So we don't have any exposure

690
00:36:06,040 --> 00:36:08,640
there.
We, we don't, we have very

691
00:36:08,640 --> 00:36:10,400
limited overseas exposure, full
stop.

692
00:36:10,400 --> 00:36:14,240
It's really only when we see
something that feels so obvious

693
00:36:14,240 --> 00:36:16,800
we almost can't not play there,
we do something.

694
00:36:16,800 --> 00:36:19,400
So we've got, we've got 3
Japanese supermarkets we're

695
00:36:19,400 --> 00:36:22,880
investing at the minute, which
we view as sort of one position,

696
00:36:24,440 --> 00:36:27,640
not because we've got an edge in
Japanese supermarkets, but just

697
00:36:27,640 --> 00:36:30,600
when we saw the yen get to 100
and. 61.

698
00:36:31,440 --> 00:36:34,800
I mean this one against the US
dollar and it might have ticked

699
00:36:34,840 --> 00:36:39,280
109 against the Aussie so.
Up and down in in a month, Yeah,

700
00:36:39,320 --> 00:36:43,000
I mean.
For us, like we saw that and you

701
00:36:43,080 --> 00:36:46,920
you look back and it's sort of
150 to 100 versus the US dollar.

702
00:36:46,920 --> 00:36:51,040
It's sort of a reasonable range
for the the yen and the Aussie

703
00:36:51,040 --> 00:36:55,160
call it 100 between 170, yeah,
is a reasonable sort of range.

704
00:36:55,280 --> 00:37:02,000
And so when the yen just ripped,
sorry, and the Aussie and the US

705
00:37:02,000 --> 00:37:05,520
dollar ripped against the yen at
a time when US was going to

706
00:37:05,520 --> 00:37:09,760
start dropping rates and the
Japanese central bank said

707
00:37:09,760 --> 00:37:14,000
they're going to start raising
rates and Japan's got inflation

708
00:37:14,000 --> 00:37:17,400
for the first time in forever,
that just felt like a trade we

709
00:37:17,400 --> 00:37:22,640
couldn't ignore.
So, So that is almost a currency

710
00:37:22,640 --> 00:37:25,920
trade for us really.
I mean, supermarkets generally

711
00:37:25,920 --> 00:37:28,600
do reasonably well in an
inflationary environment.

712
00:37:30,640 --> 00:37:33,760
You know, the, the companies
we're in a good balance sheet,

713
00:37:33,760 --> 00:37:36,640
significant amount of yen on
their balance sheet and and

714
00:37:36,640 --> 00:37:39,640
their revenue is all in yen.
I mean that was one of the hard

715
00:37:39,640 --> 00:37:41,760
things when we decided we just
had and it's a pretty small

716
00:37:41,760 --> 00:37:43,760
position for us, but we decided
we had to do something.

717
00:37:43,760 --> 00:37:47,600
There was so many of the good
Japanese companies are exporters

718
00:37:47,600 --> 00:37:50,080
earning USD, which isn't going
to help you expressing that

719
00:37:50,080 --> 00:37:53,960
trade.
So yeah, the, the overseas stuff

720
00:37:53,960 --> 00:37:56,600
for us just gives us the
flexibility which other Aussie

721
00:37:56,600 --> 00:37:59,280
funds don't have, a lot of
Aussie funds don't have.

722
00:37:59,640 --> 00:38:04,040
If we see something like that, I
mean, we, we almost have a bit

723
00:38:04,040 --> 00:38:05,400
of muscle memory dating back to
you.

724
00:38:05,400 --> 00:38:08,120
Remember when the Aussie hit 110
against the US?

725
00:38:08,640 --> 00:38:10,760
It's going back a while now.
Yeah, it was, it was.

726
00:38:11,200 --> 00:38:15,320
Was it like 2000?
And. 10 or.

727
00:38:15,960 --> 00:38:17,880
Yeah, around about 7:00 to
12:00.

728
00:38:17,880 --> 00:38:20,000
Yeah, when I know it's just
lying.

729
00:38:20,000 --> 00:38:21,760
And, and you just had to buy
something.

730
00:38:21,760 --> 00:38:24,200
I bought some Google shares.
You're like, you just know it's

731
00:38:24,200 --> 00:38:28,080
not going to stay at 110 so.
Take the family, go to America.

732
00:38:28,080 --> 00:38:29,200
Yeah, that's.
Right, That's right.

733
00:38:29,240 --> 00:38:31,840
Otherwise, yeah, that's what we
would go to Japan for a holiday,

734
00:38:32,040 --> 00:38:34,640
yeah, but it just felt like that
sort of moment.

735
00:38:34,640 --> 00:38:39,360
So, I mean, yeah, the Aussies
bounce back a bit against the

736
00:38:39,400 --> 00:38:43,920
end today, but that's quite a
nice trade for us and it's a bit

737
00:38:43,920 --> 00:38:48,160
of a natural hedge because I
mean we're in diggers early

738
00:38:48,160 --> 00:38:48,880
August.
Yep.

739
00:38:49,840 --> 00:38:54,080
And that strengthening of the
yen strip markets apart briefly,

740
00:38:54,080 --> 00:38:57,720
is the the carry trade unwound?
Hang on a minute there.

741
00:38:58,000 --> 00:39:00,080
Coming at conferences, Dickies
got me thinking.

742
00:39:00,280 --> 00:39:04,000
You know, the idea drilled 24
conferences, only 21 days away.

743
00:39:04,240 --> 00:39:06,720
That's three weeks left to scoop
up your tickets and get yourself

744
00:39:06,720 --> 00:39:08,960
down there.
Three weeks mate, I'm getting a

745
00:39:08,960 --> 00:39:11,560
bit a bit itchy. 21 sleeps to
go.

746
00:39:11,560 --> 00:39:15,760
It's running from the 15th of
October to the 17th just down at

747
00:39:15,760 --> 00:39:18,720
the Perth Convention Centre.
That is all you need to know.

748
00:39:18,720 --> 00:39:22,440
Money miners get on down there.
It's going to have all the the

749
00:39:22,440 --> 00:39:25,400
latest drilling equipment, tech.
There's going to be reps from

750
00:39:25,560 --> 00:39:29,120
all the big miners down there
there, and if that wasn't

751
00:39:29,120 --> 00:39:31,520
incentive enough, you got
Maddie, Michael doing a bit of

752
00:39:31,520 --> 00:39:33,360
MC.
We're going to be floating

753
00:39:33,600 --> 00:39:35,840
around.
There's a couple events in the

754
00:39:35,840 --> 00:39:39,560
evenings, a couple great chats
that we're came to get down and

755
00:39:39,560 --> 00:39:41,480
see.
I think it's well worth your

756
00:39:41,480 --> 00:39:42,960
time.
All the details are in the show

757
00:39:42,960 --> 00:39:44,320
now.
It's just like, get on down

758
00:39:44,320 --> 00:39:45,480
there.
Maddie Michael was not a big

759
00:39:45,480 --> 00:39:47,800
offshore guy for me anymore.
You brought Chris Judd to the

760
00:39:47,800 --> 00:39:49,920
podcast.
You know, he's, he's, you got to

761
00:39:49,920 --> 00:39:51,120
tell me, Judd, he's going to be
there too.

762
00:39:51,120 --> 00:39:53,440
In fact, that he's going to be
there.

763
00:39:53,440 --> 00:39:54,400
He'll be.
There he is mate.

764
00:39:54,560 --> 00:39:56,160
We were chatting about it.
He is pumped.

765
00:39:56,480 --> 00:39:58,800
October in Perth, Get your
tickets.

766
00:39:59,080 --> 00:40:00,920
Go Adia.
Cheers Adia.

767
00:40:01,320 --> 00:40:02,760
That volatility sort of
surprising.

768
00:40:03,520 --> 00:40:05,640
Yes, yeah, it did.
Wild.

769
00:40:06,240 --> 00:40:08,080
It was wild.
And then the futures on, you

770
00:40:08,080 --> 00:40:10,960
know, the S&P 500 and everything
it was, you know, there was some

771
00:40:10,960 --> 00:40:14,440
nervous faces on Monday through
Monday.

772
00:40:16,080 --> 00:40:19,480
Turned out to be be kind of
nothing burger in the end, but a

773
00:40:19,480 --> 00:40:24,680
lot of it's unwound.
But the the Nikko is down 12%,

774
00:40:24,840 --> 00:40:27,360
Yeah, on the first day and then
sort of avid a lot of it.

775
00:40:27,880 --> 00:40:30,680
Do you think there's, you know
that sort of volatility is going

776
00:40:30,680 --> 00:40:32,800
to be sort of theme we're going
to see more of?

777
00:40:32,960 --> 00:40:35,160
I think so, yeah, I think so.
When you're this much debt in

778
00:40:35,160 --> 00:40:38,760
the system and momentum's become
such a big part of trading, and

779
00:40:38,760 --> 00:40:41,400
then you've got so many trading
decisions not even made by human

780
00:40:41,400 --> 00:40:46,480
actors now, I think you've just
got to embrace that volatility

781
00:40:46,480 --> 00:40:50,280
and, and rather than try and
smooth it out, I think just

782
00:40:50,280 --> 00:40:53,600
embracing it and accepting it is
is a better way to go.

783
00:40:54,920 --> 00:40:58,160
Is is passive?
Investing one of the trends you

784
00:40:58,160 --> 00:41:01,480
kind of look at, I'm not sure if
you've heard of Mike Green or

785
00:41:01,480 --> 00:41:04,960
seen him in one Grant Williams
think a couple of times and the

786
00:41:05,760 --> 00:41:08,960
way he's kind of laid it out
just kind of made made perfect

787
00:41:08,960 --> 00:41:11,840
sense to me.
But ultimately it's it's more

788
00:41:11,840 --> 00:41:16,240
volatility because more and more
passive dollars just chasing the

789
00:41:16,240 --> 00:41:19,880
same names as they get bigger,
that compounds, they get even

790
00:41:19,880 --> 00:41:22,720
bigger.
Is is that a brand you see an

791
00:41:22,720 --> 00:41:25,080
opportunity to to play in as an
active manager?

792
00:41:25,800 --> 00:41:27,400
Yeah.
Well, I mean, there's, there's

793
00:41:27,400 --> 00:41:31,040
no doubt that when companies, if
you look at what's been the, the

794
00:41:32,400 --> 00:41:34,640
most effective investing site
for a long time, it's been

795
00:41:34,640 --> 00:41:38,560
momentum.
And that speaks of almost a non

796
00:41:38,560 --> 00:41:44,080
economic buyer as, as you know,
people and often young people

797
00:41:44,080 --> 00:41:46,320
invest in index funds.
Those index funds are forced to

798
00:41:46,320 --> 00:41:49,920
buy whichever companies.
And it doesn't matter what price

799
00:41:49,920 --> 00:41:51,760
those companies are at, they're
going to buy that stock.

800
00:41:53,280 --> 00:41:55,720
And so we, we just got to be
aware of that.

801
00:41:55,720 --> 00:41:58,960
And you can see as companies
outperform and they grow and

802
00:41:58,960 --> 00:42:01,960
they get included in that, that
those indexes, you often get a

803
00:42:01,960 --> 00:42:04,400
nice bump as, as an equity
holder.

804
00:42:04,400 --> 00:42:10,080
So it's something we're aware of
and it's something why we view

805
00:42:10,080 --> 00:42:13,320
the Aussie banks have performed
so well because, you know, CBA

806
00:42:13,320 --> 00:42:17,120
in particular plays such a big
role of, of those that the ASX

807
00:42:17,120 --> 00:42:22,560
200 is an, is an index fund.
But it also speaks to the power

808
00:42:22,560 --> 00:42:25,240
of buybacks too.
Like we, we've seen how powerful

809
00:42:25,240 --> 00:42:29,040
buybacks can be with, with
companies we own, particularly

810
00:42:29,040 --> 00:42:31,040
when they're small and, and
largely illiquid.

811
00:42:31,120 --> 00:42:35,640
And we think that speaks to the
the same type of the phenomena

812
00:42:35,640 --> 00:42:38,040
you get from index investing
when a company is buying back

813
00:42:38,040 --> 00:42:41,760
its stock and it's still depends
on price to some extent, but

814
00:42:41,760 --> 00:42:43,720
they're sort of committed to
buying that stock with cash

815
00:42:43,720 --> 00:42:45,280
that's already there ready to go
so.

816
00:42:45,600 --> 00:42:49,800
It gets exponential, right?
The more and more they buy back,

817
00:42:50,080 --> 00:42:52,200
it becomes a greater portion of
their stock that they're buying

818
00:42:52,200 --> 00:42:55,400
back the returns, you know, once
they've sort of bought more than

819
00:42:56,240 --> 00:42:59,240
80%, you know, I think it's
something we could see in some

820
00:42:59,280 --> 00:43:02,480
of the coal names in the in the
next 10 years, you know, because

821
00:43:03,560 --> 00:43:06,280
the lack of active managers that
are that can buy them, right,

822
00:43:06,480 --> 00:43:08,680
Yes.
And it just shoots up kind of

823
00:43:08,680 --> 00:43:10,600
sharply.
And it speaks to flows, the

824
00:43:10,600 --> 00:43:12,000
importance of flows in
investing.

825
00:43:12,000 --> 00:43:15,760
So that's what if you look at
Aussie smalls and really micro

826
00:43:15,760 --> 00:43:19,280
cap names, there's just been no
buyers, there's been no flows

827
00:43:19,680 --> 00:43:21,680
and and they're not getting any
index flows.

828
00:43:21,720 --> 00:43:25,800
And and we think why there's no
buyers is because cost of living

829
00:43:25,800 --> 00:43:27,800
is just smashing people at the
minute.

830
00:43:28,120 --> 00:43:31,120
And so we don't think that
liquidity for those companies

831
00:43:31,120 --> 00:43:33,360
that rely on retail investors,
we don't think that will be back

832
00:43:33,360 --> 00:43:36,120
until you actually see rate cuts
in Australia, you know,

833
00:43:36,960 --> 00:43:39,080
particularly at the smaller end
of the market, so.

834
00:43:39,440 --> 00:43:41,200
How do you think about?
Rate cuts in Australia, is that

835
00:43:41,200 --> 00:43:42,720
sort of mid 25 you kind of
think?

836
00:43:42,920 --> 00:43:46,360
Yeah, We think it's February or
March next year.

837
00:43:46,520 --> 00:43:50,640
Not sure what consensus is.
I think Barry and Joey have

838
00:43:50,640 --> 00:43:54,400
February.
We just think once the US start,

839
00:43:55,040 --> 00:43:56,920
you know, we think we're
probably going to go within six

840
00:43:56,920 --> 00:44:00,840
months of that.
We didn't rise our rates as

841
00:44:00,840 --> 00:44:05,280
quickly and our inflation's been
a bit stickier and we've jammed

842
00:44:05,280 --> 00:44:09,640
so many people into the country,
you know, 600,000 yeah, people

843
00:44:09,640 --> 00:44:14,880
jammed into a country our size,
whilst that may ease some of the

844
00:44:14,880 --> 00:44:17,960
wage inflation, the inflation on
shelter and power and food and

845
00:44:17,960 --> 00:44:20,440
used cars, you know, naturally
it's going to be a lot sticky

846
00:44:20,440 --> 00:44:23,240
and it would be without that
population increase.

847
00:44:24,120 --> 00:44:27,480
So do you try and play?
I mean, a lot of them are coming

848
00:44:27,680 --> 00:44:30,360
kind of gone bust, but like home
builders or something like this,

849
00:44:30,360 --> 00:44:34,680
like just ways in which you can
play government infrastructure

850
00:44:34,680 --> 00:44:37,520
build outs, housing build outs
and these sorts of things.

851
00:44:37,520 --> 00:44:38,480
How do you kind of think about
that?

852
00:44:38,480 --> 00:44:40,560
Yeah, No, we haven't played home
builders at all.

853
00:44:40,600 --> 00:44:43,720
And I guess one of the
challenges home builders are

854
00:44:43,720 --> 00:44:46,520
facing is they're being crowded
out by public spending.

855
00:44:46,520 --> 00:44:48,600
Yeah, and they've got.
Inflation as well.

856
00:44:48,640 --> 00:44:51,280
Going to compete for labour with
government infrastructure

857
00:44:51,280 --> 00:44:54,640
projects that are quoted cost
plus and you know, it's like

858
00:44:54,640 --> 00:44:56,880
good luck.
So I mean, I mean something like

859
00:44:56,880 --> 00:44:59,000
childcare, we've got exposure
with childcare company.

860
00:44:59,000 --> 00:45:02,960
We like because cost of living,
you know, everyone's got to

861
00:45:02,960 --> 00:45:05,480
work.
It's not like we in an era where

862
00:45:05,480 --> 00:45:08,280
you could have one income
supporting a house, unless that

863
00:45:08,280 --> 00:45:12,440
one income's ginormous.
So you know, childcare would be

864
00:45:12,440 --> 00:45:13,720
an example.
It's going to benefit from

865
00:45:13,720 --> 00:45:16,360
population growth at a time when
it's going to be a potential

866
00:45:16,360 --> 00:45:20,960
vote winner for for Albanese.
So he's out there talking about

867
00:45:20,960 --> 00:45:26,120
different measures to encourage
staff increases to, to childcare

868
00:45:26,120 --> 00:45:27,760
workers, which the government's
going to fund.

869
00:45:27,800 --> 00:45:30,960
And it's one of those businesses
where their costs go up.

870
00:45:31,040 --> 00:45:34,000
But basically all those costs,
well, 70% of those costs get

871
00:45:34,000 --> 00:45:37,880
passed on to the government at
the end of the day, so they can

872
00:45:37,880 --> 00:45:40,400
maintain their, their margins
really well.

873
00:45:40,960 --> 00:45:44,400
So that would be an example of a
pretty simple business that that

874
00:45:44,400 --> 00:45:47,280
should benefit from population
growth and cost of living

875
00:45:47,280 --> 00:45:49,880
pressures internally.
What about superflows?

876
00:45:49,880 --> 00:45:53,080
That's another one I, I heard
you mention and it's a, you

877
00:45:53,080 --> 00:45:56,200
know, enormous trend we we see
in Australia specifically and

878
00:45:56,440 --> 00:45:58,840
everything we just mentioned
plays into that, right?

879
00:45:59,160 --> 00:46:02,080
Aussie super and the like just
get more and more dollars no

880
00:46:02,080 --> 00:46:03,760
matter what just bumped into
them.

881
00:46:04,640 --> 00:46:06,400
How do you see that, that
playing out?

882
00:46:06,400 --> 00:46:08,960
And again, are there ways in
which you think you can find a

883
00:46:09,360 --> 00:46:12,760
piggyback on that or is that
just a good trend for the ASX to

884
00:46:12,760 --> 00:46:16,480
have with others going in?
Yeah, it's a good trend for for

885
00:46:16,480 --> 00:46:19,200
the ASX to have like we've been
in and out of the platform

886
00:46:19,200 --> 00:46:23,080
stocks before, but they're an
obvious beneficiary of that.

887
00:46:23,560 --> 00:46:28,240
Even some, some of the ancillary
businesses around around funds,

888
00:46:29,680 --> 00:46:32,520
you know that service funds
where the funds have to be each

889
00:46:32,520 --> 00:46:36,240
year benefit from that.
But like like you said, there's

890
00:46:36,240 --> 00:46:38,160
just money coming in year after
year.

891
00:46:38,400 --> 00:46:41,640
It's really predictable.
So that's another one of those

892
00:46:41,640 --> 00:46:45,280
long term trends that feels easy
to predict and just an enormous

893
00:46:45,280 --> 00:46:47,760
tale in that you don't want to
be backing against, you know,

894
00:46:47,760 --> 00:46:49,920
and the inverse of that would be
sort of an industry like

895
00:46:49,920 --> 00:46:53,480
gambling where you just feel the
asymmetry sort of wrong.

896
00:46:53,640 --> 00:46:57,280
Either those companies don't
make money or if they do make a

897
00:46:57,280 --> 00:46:59,440
buck a load of money, you know,
the government's just going to

898
00:46:59,440 --> 00:47:02,160
come and tax the absolute crap
out of them because no one feels

899
00:47:02,160 --> 00:47:06,000
sorry for a gambling company.
So we're we're conscious of

900
00:47:06,000 --> 00:47:08,840
those different dynamics and
we've just found it's easy to

901
00:47:08,840 --> 00:47:11,960
make money in sectors where
you've got the wind at your back

902
00:47:11,960 --> 00:47:13,920
instead of the wind in your
face.

903
00:47:14,880 --> 00:47:19,560
The last sort of the trend I'm
keen to touch on is reassuring,

904
00:47:19,600 --> 00:47:22,400
reshoring, whatever you kind of
call it, the globalisation.

905
00:47:22,400 --> 00:47:26,680
This was, you know, all across
the headlines maybe 2-3 years

906
00:47:26,680 --> 00:47:29,680
ago on the back of COVID, it's
gone a bit wider.

907
00:47:30,600 --> 00:47:34,880
Do you think that is a trend
that was perhaps overstated or

908
00:47:34,880 --> 00:47:37,360
do you think that is something
we are we are definitely seeing

909
00:47:37,840 --> 00:47:40,800
and perhaps underweighted still?
No, I don't think it's

910
00:47:40,800 --> 00:47:45,920
overstated at all.
And, you know, the recent

911
00:47:45,920 --> 00:47:50,600
situation with the Israeli pager
situation with Hezbollah

912
00:47:51,680 --> 00:47:54,400
probably reinforces another
micro example of why it's going

913
00:47:54,400 --> 00:47:56,880
to become more and.
More and more going.

914
00:47:56,880 --> 00:48:00,480
Forward.
So, yeah, look, I think that

915
00:48:00,480 --> 00:48:04,160
speaks to, I mean, we think
that's going to be highly

916
00:48:04,160 --> 00:48:08,320
inflationary because being able
to manufacture, you know, the

917
00:48:08,320 --> 00:48:11,440
vast majority of goods in the
lowest cost country is a really

918
00:48:11,440 --> 00:48:16,480
cheap way to live.
But if we're moving towards a

919
00:48:16,480 --> 00:48:19,920
world where there's potential
for a hot war and we all hope

920
00:48:19,920 --> 00:48:23,360
that doesn't happen, but I guess
everyone would have to think

921
00:48:23,360 --> 00:48:26,480
that's a possibility in the next
10 years.

922
00:48:27,160 --> 00:48:31,240
You know, it's not going to work
for America to to ring up China

923
00:48:31,240 --> 00:48:34,120
and say, hey, you know, we're
keen to go to war in six months,

924
00:48:34,120 --> 00:48:36,920
but we don't have any bullets.
Can you send over a truckload of

925
00:48:36,920 --> 00:48:43,040
them to us?
So, yeah, look, we think, you

926
00:48:43,040 --> 00:48:46,680
know, the US has started CapEx
spending on on building out

927
00:48:46,680 --> 00:48:51,280
their own internal industrial
base and ability to manufacture

928
00:48:51,280 --> 00:48:54,600
goods.
We think for that to really work

929
00:48:54,600 --> 00:48:59,240
on a long term basis, the US
dollar needs to be lower than

930
00:48:59,240 --> 00:49:02,200
where it is now.
And Trump's spoken about having

931
00:49:02,200 --> 00:49:07,040
a a lower, a weaker U.S. dollar.
Camilla's policies sort of point

932
00:49:07,040 --> 00:49:09,960
to the same thing.
And so we think rebuilding that

933
00:49:09,960 --> 00:49:13,320
industrial base in in Western
worlds is, is going to be a long

934
00:49:13,320 --> 00:49:14,800
term trend.
Yeah, we don't think that's just

935
00:49:14,800 --> 00:49:17,800
a COVID thing.
There was one other thing that

936
00:49:18,400 --> 00:49:21,280
that stood out doing a bit of
research on your, your website

937
00:49:21,280 --> 00:49:22,880
that I was, I was keen to touch
on you.

938
00:49:23,800 --> 00:49:27,840
You compared investing against
the investing business and you

939
00:49:27,840 --> 00:49:32,560
know, it really hit home the the
kind of contrast you see can can

940
00:49:32,560 --> 00:49:34,200
you kind of expand on that and
kind of.

941
00:49:34,200 --> 00:49:37,760
It's really different and you
know, like even our business is

942
00:49:37,760 --> 00:49:43,280
a our fund, he's not a great
fund to sell because most funds

943
00:49:43,280 --> 00:49:45,320
they go to an allocator and they
say, look, we're your growth

944
00:49:45,320 --> 00:49:47,960
partner, we're going to invest
in growth stocks or we're your

945
00:49:47,960 --> 00:49:51,920
value partner, we'll invest in
value stocks or you know, we're

946
00:49:52,360 --> 00:49:53,760
commodity fund.
We're just going to invest in

947
00:49:53,760 --> 00:49:56,240
commodities and the allocator
can make a call or I like growth

948
00:49:56,240 --> 00:49:59,600
or I like value, I like
commodities Right now I'll

949
00:49:59,600 --> 00:50:02,960
invest.
Whereas, you know, my fund

950
00:50:02,960 --> 00:50:05,680
sounds like a word salad like
we're going to take, we're going

951
00:50:05,680 --> 00:50:10,840
to invest in high conviction,
high conviction bets depending

952
00:50:10,840 --> 00:50:13,400
on what the liquidity cycle is
doing and on, on long term

953
00:50:13,400 --> 00:50:14,880
secular macro.
You've.

954
00:50:15,400 --> 00:50:16,840
Lost it.
They're like, what's that?

955
00:50:16,840 --> 00:50:21,520
So yeah, we think for us that's
the best way for us to be able

956
00:50:21,520 --> 00:50:23,400
to make money over the long
term.

957
00:50:23,480 --> 00:50:26,960
And you know, my liquid capital
is in this fund, so I don't have

958
00:50:26,960 --> 00:50:29,680
the luxury to be investing
elsewhere when the cycle turns.

959
00:50:29,680 --> 00:50:33,920
So on a long enough time frame,
we think it's the best way for

960
00:50:33,920 --> 00:50:35,440
us to invest given our skill
set.

961
00:50:35,440 --> 00:50:38,800
But it's a messy fun to market
or to sell because it's not a

962
00:50:38,800 --> 00:50:42,120
neat growth value.
Commodities.

963
00:50:42,240 --> 00:50:46,240
Name your other idea.
Do you think that that issue?

964
00:50:46,240 --> 00:50:49,840
With the with the broader
investment management market is

965
00:50:49,880 --> 00:50:51,760
is in a way your edge though
the.

966
00:50:52,040 --> 00:50:55,280
We think, we think it's an edge
being small.

967
00:50:55,400 --> 00:50:59,360
Yeah, we think, you know,
anytime I do some finance

968
00:50:59,360 --> 00:51:05,040
content and anytime I spoke to
different fund managers, they'd

969
00:51:05,040 --> 00:51:08,280
say, you know, it was so easy
when we were only managing 200

970
00:51:08,280 --> 00:51:09,600
million bucks.
Now we've got over a billion

971
00:51:09,600 --> 00:51:10,760
bucks.
It's so hard for us to

972
00:51:10,760 --> 00:51:13,560
outperform the index.
And it always begged the

973
00:51:13,560 --> 00:51:17,000
question, why not stop at 200?
And the answer is, of course,

974
00:51:17,000 --> 00:51:19,520
management fees are a hell of a
drug and recurring revenue's

975
00:51:19,520 --> 00:51:23,800
great, and I get all that.
But for us, you know, we've got

976
00:51:23,800 --> 00:51:25,400
a bit over 30 million bucks
under management.

977
00:51:25,400 --> 00:51:28,920
Now our lofty goal is to get to
150 into a hard close of the

978
00:51:28,920 --> 00:51:32,480
fund and then we hope to grow
the, the, the capital to 300

979
00:51:32,480 --> 00:51:34,240
million and give everyone half
their money back.

980
00:51:34,560 --> 00:51:39,000
So we're always protecting that
edge of being small and even,

981
00:51:39,360 --> 00:51:41,000
you know, because a chunk of the
capital is their own.

982
00:51:41,120 --> 00:51:43,720
It's just so unlikely increased
management fees would outweigh

983
00:51:43,720 --> 00:51:46,680
the benefit we get from being
able to get in and out of under

984
00:51:46,680 --> 00:51:49,000
research, under researched
opportunities.

985
00:51:49,000 --> 00:51:52,480
So that's very much the the
mandate and something we plan on

986
00:51:52,480 --> 00:51:55,360
sticking to.
Last question, what is behind

987
00:51:55,360 --> 00:51:57,560
the name Sarati?
Sarati.

988
00:51:57,560 --> 00:52:00,360
So it's named after Percy
Sarati, who is Herb Elliott's

989
00:52:00,360 --> 00:52:05,640
athletics coach.
So Percy was almost dead in his

990
00:52:05,640 --> 00:52:09,520
30s from ill health and then
took up running and became

991
00:52:09,520 --> 00:52:14,400
obsessed with diet.
You know, this was back 80 or 90

992
00:52:14,400 --> 00:52:18,400
years ago and kind of obsessed
with eating, you know, nuts and

993
00:52:18,400 --> 00:52:21,320
fruit and vegetables and hated
white flour at a time when

994
00:52:21,760 --> 00:52:23,960
conventional wisdom was was very
different.

995
00:52:23,960 --> 00:52:27,240
Hated sugar.
And then he ended up coaching

996
00:52:27,280 --> 00:52:29,400
Herb Elliot.
He was still doing PBS in

997
00:52:29,400 --> 00:52:33,160
marathons into his 50s or 60s.
I was annoyed even in his 70s

998
00:52:33,160 --> 00:52:35,200
when he wasn't doing PBS for
marathons.

999
00:52:35,200 --> 00:52:39,200
So the relevance to the fund is
he was late to his profession of

1000
00:52:39,200 --> 00:52:43,200
athletics coaching.
He's a first principal thinker.

1001
00:52:43,200 --> 00:52:46,800
So he didn't just follow the
conventional trends of the day

1002
00:52:47,120 --> 00:52:49,440
and he could put up with more
pain than most.

1003
00:52:49,440 --> 00:52:52,280
And as a fun, we want to embrace
volatility rather than trying to

1004
00:52:52,600 --> 00:52:55,400
to smooth it out.
So that was the sort of that was

1005
00:52:55,400 --> 00:52:57,600
the relevance for for how we
want to invest.

1006
00:52:58,120 --> 00:53:00,400
Admirable traits, Richard,
thanks for making the time.

1007
00:53:00,400 --> 00:53:02,560
Thanks JD.
Great fun Duty.

1008
00:53:03,080 --> 00:53:05,440
That was wicked, mate.
I feel electrified.

1009
00:53:06,120 --> 00:53:09,440
I'm invigorated.
I was, yeah, I was pretty pumped

1010
00:53:09,440 --> 00:53:12,320
to to share that win, that one
with the money miners.

1011
00:53:12,320 --> 00:53:16,080
I thought the yeah, how we how
we kind of ended the chat and

1012
00:53:16,320 --> 00:53:21,000
what Chris has in store for his
fund, his his sort of ambition

1013
00:53:21,000 --> 00:53:23,080
and the way he thinks through
things are fascinating.

1014
00:53:23,080 --> 00:53:25,040
So, yeah, very excited to share
that one.

1015
00:53:25,800 --> 00:53:27,720
And I think we can, we can leave
it there, mate.

1016
00:53:27,720 --> 00:53:30,240
Money miners have a awesome
public holiday.

1017
00:53:30,240 --> 00:53:34,080
If you're in WA, we'll just
round out by thanking the good

1018
00:53:34,080 --> 00:53:36,720
people at Access Mining
Technology, Mineral Mining

1019
00:53:36,720 --> 00:53:41,840
Services, Verify Adia, DSI
Underground, Silverstone, CRE

1020
00:53:41,840 --> 00:53:45,440
Insurance who we had in the show
Greenlands Equipment Cadre and

1021
00:53:45,960 --> 00:53:50,200
use the Spark.
Chart Guys Information contained

1022
00:53:50,200 --> 00:53:52,920
in this episode of Money of Mine
is of general nature only and

1023
00:53:52,920 --> 00:53:55,880
does not take into account the
objectives, financial situation

1024
00:53:55,920 --> 00:53:57,920
or needs of any particular
person.

1025
00:53:58,240 --> 00:54:01,280
Before making any investment
decision, you should consult

1026
00:54:01,280 --> 00:54:04,320
with your financial advisor and
consider how appropriate the

1027
00:54:04,320 --> 00:54:08,040
advice is to your objectives,
financial situation and needs.