Is passive investing enough?

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28:10That's vanta.com forward slash making money. There's a link in the description though, so you can just click that. To give the listeners an idea, how's your personal portfolio split up? Is it active versus passive? And then how many stocks do you have in the active? Oh, Craigie, that's a difficult question for me to answer it because I've got different pots for different things. But I will use ETFs, but I'll use ETFs. So I'll use ETFs typically. India has been one of my biggest positions for, I don't know, more than a decade. So I think India is a fantastic stock market. Unfortunately, if you're a private individual, it's very difficult to invest in Indian stock market unless you're Indian, because you need a special license.

28:56And so for the funds, we had to have this special certification. And I can invest in individual Indian stocks, but only if they've got a US listing. So they call that an ADR, American Depository Receipt. So there's a limited number of stocks, HDFC, ICICI banks, some of the biggest stocks in India. So what do I do in India? I have a combination of, I've got three different exposures to the Indian market. I've got a guy who's solid, steady, and safe, who is a low-risk Indian fund. I've got a guy who's very at the other end of the spectrum. So when the Indian market goes up, his fund goes up a lot.

29:38And when the Indian market doesn't go up, his fund goes down a lot. And I've got an Indian ETF. And I'll put money into those three, depending on what I think about the Indian stock market at the time. The Indian stock market has been very fashionable recently. So I'm taking money away from the guy that's going through the roof and putting it into the guy that's safe and into the ETF. So typically that's what I'll do. So I have a mix of... So even I, individual stock expert, I will have ETFs and I'll have active funds. What do you think around the fees of active funds though, and how they destroy the returns over time?

30:21Well, you say they destroy the returns. I mean, they only destroy the returns if the funds don't do well. Well, a 1 % fee over 30 years takes 25 % of your portfolio, doesn't it? So they do destroy returns. Look, I've worked for funds that charge 2 % in 20, 2 % management fee per annum, 20 % of the upside. And we made lots of money for our investors because the funds did really, really well. And I'm very relaxed. I own funds that charge 2 % in 20. I'm very, very relaxed about it because the people that run those funds are really, really good. And their funds do really a lot better than the index.

30:56The problem you've got as a lay person looking at a bewildering range of funds is you don't know who's good and who's not and who sounds good and who isn't really. So, you know, I understand why people look at fees as being a risk. because clearly it is a risk because the funds don't do well and you're paying fees. It's costing you a lot of money. But how many active fund managers do you think that you can name that consistently be in the market their whole career? I think there's a handful of those and there's many that have not. No, absolutely. I mean, the data doesn't lie. There's lots of statistics.

31:38So why bother? Well, I'm not suggesting that people should bother. I'm not here as a proponent of active fund management. Why do you bother? Well, why do I bother? Because I'm invested with people I know and I trust. And I think they're good and I think they're better than I am. And so I give them a portion of my wealth because I don't want to manage my entire portfolio myself because it creates a risk. Because I'm not doing this professionally anymore. Yeah. So you have like connections almost within the space. So it makes it a bit easier for you to identify. Oh, it's much easier for me. The average Joe going on HL and being like, oh, who's the star guy is tricky.

32:20Absolutely. It's not an easy endeavour. And I think in some respects, buying individual stocks is almost easier because you're not making a judgment on a person you don't know and the fact they've done well. Because the problem is that very few people want to invest in a fund that's gone down. They want to invest in a fund that's gone up. And then if the guy's had a good run, you're relying on him carrying on. And, you know, people have cycles. Yeah, all those ups must come down eventually. It's not. I mean, you know, I know lots of people that have outperformed the stock market for years and years and years.

32:56I had breakfast a couple of weeks ago with a guy called Bob Robotti. And he said that he'd beaten the S &P 500 by, I think it was 2 % or 3 % per annum over 40 years. You made a lot of money. And, you know, you'd be three times as well off. I don't know what the number is, but over 40 years. It makes a big difference, yeah. It made a huge difference. But of course, the fact is, you can quote all these statistics, very few people stay with a fund manager for 40 years. He would have had a period in that where he dipped a few times and everyone ducked out. Yeah, yeah, yeah. Absolutely. They've seen it with Peter Lynch.

33:30You know, the average person in his fund underperformed his return because, as Patrick Boyle said, people trade the trader. You know, they dip in and out of the returns, don't they? They don't stick with the fund manager and their long-term returns. No, and that's perfectly understandable. If somebody starts to do badly, it takes a lot of faith to stick with them. And what I've learned is when people I've picked do badly, I've picked them for a reason and I don't get them. So this is like a temperament thing that I think like, you know, I'm not here to say that I think you're right about, you know, a bit of knowledge is a great thing because it informs you on the market and it helps with your emotions.

34:11But like with an index, say you buy a global index, you don't have that question of like, God, is this guy the right fund manager? Have I made the wrong choice? It's like, it's layers of choice that you add that make the emotional side worse for the average Joe. But anyway, I hold about 10 % of my assets in individual companies. And by some magic, I actually outperform my indexes. So it's weird for me to see it. You're the last person I would expect to say that. You're like, who outposts in the history? So my proposition isn't that daft, right? I'm not saying it's daft. I'm not saying it's daft.

34:44What I'm saying is I'm a finance YouTuber. You're a finance professional. But what I think, you know, there's an off-the-shelf version of investing, which is an index, which for 90 % of people is probably the most sensible thing. Yeah, I don't know whether it's 90 % or 70%. I mean, I think, you know, a lot of people get put off investing in individual shares because they feel they don't understand. And interestingly, I did a competition. So I've got a sub stack, which goes out every Sunday morning. And I said to people, look, we're going to do a competition. And we asked you to pick stocks using three different styles.

35:20One of them was just pick a company you've had a good experience with. You think the product's really good. And it's really fascinating, some of the entries to the competition. You know, lots of people did this. And it was fun. And the lady that won, her name is Victoria, and she bought an appliance from a company based in Hong Kong. And I don't know why she'd had such a good experience with the appliance. I think it was a Hoover or something. It was a vacuum cleaner. But she really, really liked the company. And then she went off and she looked at the stock. She looked at the valuation of the stock.

35:55She looked at the record of the stock. She looked at the fact it was a family-owned business and the founder was still involved in the business. and the thing had done really well. And she picked this stock and that stock has continued to do fantastically well. And, you know, she said, oh, I've never, I've always been interested in this, but I've never had the confidence to actually go and buy anything. And by doing your competition, actually, I thought, oh, actually I could do this. And it's a confidence thing. Most people just feel scared. And of course they feel scared because they worked hard to make that money, earn that money, and they don't want to lose it.

36:32And all I'm saying is, look, if you educate yourself a bit, it's actually not that difficult. It's not easy, but it's Richard Allfield's book title. It's simple, but not easy. You're using the, like, a company I like as the initial screener, really, to whittle down. So that's like your selection criteria. And then you're getting into the numbers and the value. Yeah, well, that was one of the three. So we did three. We're given three tasks. One was a company, they knew the product. One was a lateral, so reading across from a different industry, a different market. So I used the example in the course of Aldi and Lidl destroyed the share prices of Tesco, Sainsbury's, et cetera.

37:20And then what did they do? They went to Australia. So if you were an investor, you'd seen this happen in the UK. You knew what was going to happen in Australia. is you just short the Australian food retailers. And the other one was find a stock that a famous investor has bought a lot of. So you find investors that you think are really, really good. You know, well, you know, he's bought a big position in that share. Why has he done that? And, you know, because you don't have to be original in the stock market, right? There's lots of amazing investors around that are buying stocks. And, you know, I've got one pal of mine, he keeps a record.

38:01I think he follows about 15 or 20 different investors, highly successful people. And he watches what they all own. So, you know, he'll take 20 people and nine of them will own Visa, the credit card company. Well, chances are Visa is going to be a pretty good company, right? And if they all own it, the chances are it's probably not stupidly valued. Yeah. Doing things like that. So you mentioned earlier that you shouldn't have less than 15 or 20 stocks to be diversified. How much time are you spending researching these 15, 20 stocks? Well, obviously, you don't want to be spending the six weeks I would spend as a professional investor because you couldn't do anything else.

38:41So it's really a question of what are your own skills and experiences? So if you're, to use your example of your friend who's really into gaming, if you're looking at a gaming stock, you'll be intimately familiar with the product. So all you then need to work out is, okay, well, does the valuation make sense? And you might need to look at, oh, okay, so gaming stocks are very popular in Asia. Am I better off in a Swedish, UK, US gaming stock? Or maybe there's that Korean gaming stock whose name I've forgotten that actually that looks really, really cheap right now. So you might want to spend a little bit of time looking at the context of it, but you don't need to spend very much time on the product.

39:29There might be another stock where you spend much more time on the product and satisfying yourself, oh, this really is a good company. And it's impossible for me to say, oh, you should spend a day or spend two days because you can't generalize. You need to spend enough time to get the information that you feel comfortable and that you feel that you've got enough knowledge to make the investment and that's different for everyone and once they're in your portfolio do you continue to monitor them like how often do you check up on your each company how they're doing whether it's on target you've really got to and i i'm slightly critical people say oh you shouldn't be checking your your share prices every day because this loss aversion you know people feel losses twice as much as they as they feel gains.

40:10I think it's very important to watch not just how the companies are doing, but also the share price, because the stock market every day is giving you information about how people perceive that stock. And if the thing is falling, you want to find out why, because you don't want to find out there's been a very good reason why it's been falling, because the biggest shareholder has thought, oh man, this company is going to run into a wall and has been selling all the stock. You want to understand why sentiment is turning against the falling stock. Yeah. So do you think, though, there's another argument to say, all this effort, just go focus on doing whatever it is you do for your day job and earn a bit more money there, because that's where you can produce the outsized returns.

40:55So for me, there's no more valuable activity that I can do than making a video. And for some other people, a pay rise might be more impactful in terms of their ability to save than spending hours trying to pick stocks. Yeah, I'm not saying you should do this unless you think it's interesting. But I think it's a fascinating thing to do. And it's great fun. If you think you might be enthusiastic about it, you should learn a bit about it. Because it might be a hobby that you can carry on doing until you're 80 years old. And not only will you have an intellectual stimulation satisfaction, but you'll make some money out of doing it.

41:34And over time, that money will grow and grow and grow. So if you're in a relatively low paid job and only saving a bit, the balance as to what you should do, that might be quite difficult. I mean, I'm at the opposite end of the spectrum. I spend more time than I should do working because I love what I'm doing. I should probably spend more time looking after my portfolio. I don't think most people don't have enough time to do the research they need to pick stocks. That's what I think. Because everyone's got to, well not everyone, but a lot of people have jobs, you know, got kids to look after, you know.

42:09Oh, sure. Some people got side jobs, actually. So it's like the time to actually sit down and like no kids distracting you to like research stocks for like months on end and then to pick them. I don't think most people have that time. So like, oh, I know Netflix. I like movies. I'll buy Netflix. Oh, I bought something off Amazon. I'll buy Amazon shares. And it's like, that's not really - Electric cars of the future. I'll buy an eBay. And I think that's how most people, and they're like, oh, I lost some money in that. oh, the stock market isn't for me. And then it kind of gives them like a bias to the stock market because they didn't do the research because they didn't have the time to do the research.

42:38You said something at the start of the conversation around indexes, you were like, you know, or investing in general. You said in the past, it's been good. It was a sensible thing to do. That might not be the future. And we can talk about that. So let's talk about that. Well, I'm a student of financial history. And I think if you're going to invest in the stock market or in any market, you know, looking back at history, He's very, very instructive. And I have this presentation that I did for the first time in 2023. And I've got a picture of a Tesla and a picture of a center door Model T Ford. And I say, let's pretend that we're not in 2023, but we're in 1923.

43:19And in 2023, you think stock markets can only go up, or 2022, actually. You think stock markets can only go up because you've seen 10 years of stock market going through the roof. If you'd been in 1922, you'd have thought stock markets can only go down. Because 85 % of the time you'd been in a bear market for the previous not quite 100 years. And if you extrapolate over a longer time frame, you don't think about stock markets can only go up. The last 40 years have been an exceptional period because they've been driven by falling interest rates. I mean, the primary driver of valuation is interest rates.

43:59And the lower the interest rate, the more value there is for future cash flows because you're discounting them at a lower rate. Conversely, if you've got high interest rates, the value of something in 20 years' time is less today than it would be if you've got lower rates. Very simple philosophy. So what we've had over from 1982, we've had interest rates when long bonds went from 15 % or 18 % at one point down to negative yielding bonds. So effectively, we've had rates go from 15 % to zero. And now you've got rates at five. And rates are not going back to zero because central banks have realized that having zero interest rates is not a good idea.

44:47It creates all sorts of distortions in the economy. Money becomes too cheap. It gets misallocated. It's really, really bad for the economy and for society. And I don't believe - Took them 14 years to realise though, didn't it? Well, I think that it couldn't really see another way out. But obviously with COVID, the situation changed. And now I believe we've got endemic inflation. I know that might sound a bit odd because as we speak, We had US figures yesterday which showed disinflation. The service numbers are still high in the UK though, aren't they? Yeah, I mean, I tend to look more at the United States.

45:25The UK is kind of a peripheral economy. And I try and think about the world. You know, the UK stock market is very cheap, but it's been very cheap for a long time. And the UK economy doesn't, it's not really creating, the UK stock market isn't about the UK economy. So I try and think about America as being the principal driver. But my view is that inflation is here to stay. Interest rates are not going to zero anytime soon and probably never. And if you've got higher inflation, higher interest rates, that means valuation is not going to go up as it has. And that means you've got to be driven by earnings.

46:09and yeah, you know, lots of companies are going to grow their earnings, but we've had a very bad situation. We've had a huge amount of inequality in the world where the corporate is taking a much bigger share of the cake than labour and workers are going to be taking a bigger share now. And that means that corporations aren't going to see their margins expand from already extremely high levels. They aren't going to expand as they have done over the last 40 years. So you've had a stock market that's gone up at 8 % per annum for the last century. And it's highly unlikely it can go up at 8 % per annum for the next century.

46:46It's just, you know, the maths just doesn't work. So, you know, people who are assuming that are going to be disappointed.

46:58So why do you think people assume it then? Well, because people would like seeing out a ruler and drawing a straight line, you know. If you look back and say, well, the stock market's done this over an extended period, why wouldn't you think that it would continue? And there's a feeling that people are ingenious, that companies are clever and AI will improve productivity. And let's hope AI does improve productivity because we've seen very, very little productivity in the last 25 years in spite of the introduction of the internet. And so I'm quite hopeful about that. But the maths is very simple.

47:43If you look at the last 40 years, it's been a story of increasing valuations and falling rates. And that simply cannot happen. And you're starting from a position in which the starting valuation is much higher than it was in the early 1980s when stocks were very cheap. So you're starting from a position which stocks are quite expensive. The American markets you're talking about. I'm talking about the American market. Yeah. So what about if the American market just isn't the narrative of the next 100 years? Well, the American market is 60 plus percent of the world, right? So if the American market is not going anywhere, the world market isn't going anywhere.

48:18I'm not saying that the UK market can go up. The UK market is incredibly cheap. And the UK market may end up in the hands of private equity because private equity has got a couple of trillion dollars sitting in the sidelines, which it wants to invest. And there are very few places, UK and Japan seem obvious places for them to come. And we're seeing that already. But just looking globally over the next 10, 20 years, it's perfectly conceivable to me that the stock market will be no higher in real terms than it is today. If you look at the 70s as a period, high inflation, there was a negative return of about 2.3 % a year over that whole decade because the inflation rate was so high and performance was pretty lackluster.

49:05Well, the real returns in the 1970s were disastrous. And the only place that you could have protected your wealth was in small caps. And interestingly, small caps today are quite cheap. So if you believe that the 1970s is the parallel, then that's probably where you should look. But, you know, the 1970s were a very odd period. It was a period that was driven by the oil price and a huge increase in the price of the commodity. And it may well be that we see similar increases in the prices of commodities over the next 10, 20 years, actually, I think. Yeah. You've got periods like the 30s, the 70s, and the noughties.

49:46And I guess there's kind of elements of all of those that you could say that we're at right now. Tech speculation, which is similar to the 20s. Yeah, very similar. But do you think there's the debt levels that are synonymous with great crashes? Well, the debt levels are kind of an interesting thing because many companies have been very clever at terming out their debt. So when interest rates were very low, they borrowed over a long period. So they're now benefiting from rising interest rates on their cash balances. And they've fixed the cost of the cheap debt. Fixed in the mortgages, basically.

50:25So that will take some time to unwind. And it's not unwinding 24, 25. I mean, the maturities start 26, 27, 28. So they've benefited from that. The market's slightly bifurcated because there's these very big tech giants. with huge amounts of cash and the debt is in the smaller companies. The real problem with the debt is in the private markets. Private equity has really got a problem, I think, with the debt. Right. Okay. So do you think then that the antidote to potentially declining returns in the stock market is through the picking of individual companies that perform well? I think this idea that if the markets aren't as benign as they've been in the last 10, 20 years, picking individual stocks becomes actually a lot more important because it gives you much greater opportunity.

51:25Because, you know, there's always much more money to be made in an individual stock than there is in the market at all by definition, right? So, you know, I think that's another reason that people should think about it. And I absolutely must emphasize, I don't mean that this is for everyone. If you've got, you know, two young kids and you can't get any peace and quiet, and when you do get some peace and quiet, you just want to sleep, then buying, you know, going and buying stocks probably isn't the best thing you can do with your time. The best thing you can do with your time is spend your time with those young children.

51:55But if you've got the time and you've got the inclination, you've got the interest, and you want to build your wealth, it's a fantastic thing to do. There are a lot of financial influences, especially on social media. And I see all these ads on YouTube and LinkedIn and they're like, oh yeah, they're sitting in the pool. They're like, oh, I'm a trader. I'll just put on this big trade. If you want to learn trading, I've got this free course that you can learn. You can learn to be a trader. And I think a lot of them are a bit scammy. And when I was working in crypto, we went to a similar concept.

52:25We went to this big project crypto token. They had a big office. They had a Lamborghini, a Bentley, and like a Ferrari outside, all wrapped with their company. logo and their crypto token all over the paint job of the cars. And they had all these big graphs, big events. We went black tie events in the city. And like a year later, they were like, all gone. The graph went like that and then tanked straight to zero. It was a pump and dump. It was a pump and dump. But they, it looks so, they had the Bentleys, they had all the cars they had in the city, rented out buildings, everyone in a black tie event.

52:54And then it was all just a scam. So not only they're the ones on YouTube and Instagram saying, oh, I can make you really rich, learn, I'll teach you how to trade. You've also got the ones in real life who are like, come to my office, I'll teach you how to trade, but they're not actually reliable and reputable. But I think a lot of people, I bought some of the crypto tokens. I was like, yeah, these guys are making loads of money. Look at the graph and it's still going up. It keeps going up until it went down to zero. So since there were so many different voices you hear, how do you know where to go for like reliable, reputable financial advice or where to learn?

53:25Well, I think it's really difficult, right? Because there are so many people. And, you know, it's people that make the most noise and it's on YouTube or whatever. And I think all you can do is almost every provider of this sort of thing will give you a certain amount of free stuff. And you should just look at the free stuff and try and work out, do these people sound genuine? And I think reading the commendations and what people have said about them, and is it Joe from Lancashire with no name and you know or is it somebody that whose name you recognize and i beyond that i'm i'm not sure what i can suggest i mean the the speaking to the people asking them questions is always a good idea i mean i get a lot of inquiries on my website oh how do i know that this is any good and you know i always try i always try and address those you know it's perfectly legitimate that people should ask questions.

54:29And then there should always be a person behind it. And then go, say, what have they written? What have they, have they been in a podcast? And go and listen to them. Because you can tell from, you know, somebody's being interviewed in a podcast, you can tell whether they know what they're talking about or not, right? Yeah, that's good advice, thanks. And what investment approach do you teach? It sounds like value investing at a glance, but I'm slightly weary of the term value investing because I don't think there is another thing. Everything is value investing, right? Because you're trying to buy something for less than it's worth, right?

55:04So by definition, all investing is value investing. What I teach is a very fundamental process that's focused on the financials. And I'm not saying that this is for everyone because I've got friends that invest without ever looking at the balance sheet or doing a bare minimum. But, you know, what I reckon that, you know, the best way of investing is to know as much as you can about the business, know as much as you can about the sentiment towards business, is what you're really trying to do. Where you really make money is the difference between perception and reality. So you can spend time looking at the products, looking at the valuation, looking at what the company does.

55:48But you also got to spend time understanding, well, why is it not the right price? So you've got to have some knowledge, some understanding of why is the stock market not valuing this correctly. Unless you have both of those arms, it's really, really difficult to make money. So you've got to understand both sides of it. And that's what I teach. I teach you how to understand the accounts, how to understand what the business does, how to understand is it a good business, is it well managed. And then I teach how you value it. And then I say, well, look, you've got to look at the sentiment. and you're going to understand, well, if the share has been going down every year for the last five years, there's probably a good reason for that.

56:26And why do you think it's going to correct now? And you're going to understand why it's been going down. So Barclays had been going down for a long time and interest rates changed and that's why I bought it. And I thought it looked very cheap on paper as well. And I remember the sentiment, I was on a, there's a channel called Pension Craft, Romain, he's a big YouTuber. He worked in the city before, but I'd said Barclays and everyone laughed because they were like, oh it's a it's a rubbish company since 08 blah blah blah but i you know the narrative had changed around interest rates and obviously banks do okay and yeah it went up a lot in the time but i still i still think a bit of it i'm just like i'm just probably a bit lucky here well i think you know a stock like barclays is you know it's not a high quality stock so it's not the stock that i would recommend you know people that are starting out to get involved with because what you want to do is you want to buy high-quality businesses that earn good returns in capital.

57:22Whereas if you pay too much for it, it'll be able to bail you out because it'll grow. Stock like Barclays is inherently a low-return business. All banks are low-return businesses. You can argue about whether Barclays or NatWest is a better business, right? But as banks, they're not good businesses. They've got to have a huge amount of leverage to make a return. So, you know, it's quite possible that they could have a bad time year after year after year. Well, I'm selling them at a minute. I'm rolling it into the index. Yeah. So, but that's fair. Do you think like, I do a bit like Deimos, but mine's probably a bit more like instinct.

58:02Do you think you can make just a gut call decision on the stock? That's a bit of me, isn't it? No, like I said this before, but like in lockdown, all the plane airline prices went down. And I'm like, there's no way, like, I guess it's a pandemic, but there's no way we're not going to fly again. I travel a lot before my kid. So I was like, yeah, there's no way we're not going to fly again. Like I fly every month, what's going on? So I bought like British Airways, like a few of them. And then they all went up a lot, like after like a few, a bit later, then I saw them. Do you think there were times in life you can say this X, Y, Z, like there's a war in Russia, blah, blah, blah, this, and then make a decision without looking at the balance sheets and everything.

58:37Or do you think you should always do the research? Well, I mean, I probably should say that you should. But from your personal experience. I mean, as a professional investor, I've gone into an investment conference. So the brokers all host these conferences and they get loads of companies to go in and present. And I mean, not just once. I mean, I've been sitting there and I can remember after 30 seconds thinking, oh, shit, that's nonsense. and texting the office to say, sell this now. And, you know, I mean, the thing is, you're a professional investor, you're making a gut decision. You can then, you know, in an hour's time, you can say, oh, that was wrong and just buy it back.

59:23You know, you kind of, but yeah, I mean, there's this sometimes that things are very obvious. You're a professional though, right? And it's like with YouTube is I can say, that's a good title and thumbnail. And people will be like, how do you know it? And I'm like, I just know because this is what I do, you know, and it's a gut thing. But other people, they spend thousands on courses talking about like how to make a good thumbnail. But I mean, you know, with investing, yeah, you know, experience teaches you because you, you know, you've made that mistake before. So you're less likely to make it again.

59:56So, yeah, I mean, the more experience you have, hopefully the better decisions you should make. I want to end on a question then. And so if someone thinks, yes, I want to, I've got a spark for this. I want to, I push back on you a bit because I think it's makes for a better conversation. But I can agree with what you're saying that if you have an interest in finance and you dislike lights a fire under you, don't listen to me going, oh, everyone should just be indexes. What I'm saying is for the majority of people and index and go focus on your job. I just want people investing. That's the main thing.

1:00:28But let's say there's those people that, you know what, I actually do love this. Have you got any book recommendations that you think that's a good place to start in terms of valuation? Well, I mean, all the books in valuation are horrendously tall. Not very interesting. I mean, I recommend, I think, about 10 books for people starting out. And I think you do need to read a broad selection. But Richard Oldfield's book, Simple But Not Easy, I think is a great book. I've just finished reading the eighth edition of The Letters of Warren Buffett, which is edited by Larry Cunningham. He likes a bank.

1:01:06Well, he's probably better than average at investing, so he probably knows more than most. But Larry Cunningham, the letters are really, really well written. I mean, Buffett's a genius, and they're very well organized in that book. The Most Important Thing by Howard Marks. Howard Marks is another genius, and he talks a lot about market cycles and then you can take away a lot from that book. Well, thank you so much for your time. And I think, you know, like I can probably completely agree with what you're saying and how you frame it. Like you're not saying that active is better. You're just saying that for the people that are that way inclined, if they've got the time and the energy to put into it, then they probably can do slightly better than the index.

1:01:48Absolutely. Thank you so much. I never thought we'd get that as a conclusion. Well, no, I mean, I don't know if I agree. There you go. There he is. There he is. No, I mean, it's about balance, isn't it? Sometimes I think we can be too like, the argument has to be it's either active or passive. One is better than the other. That's not what you're saying. You're just saying that there's this area and actually active, if we exclude active fund managers, which, you know, they have their forces that act against them that mean that they underperform is what you were saying. Picking a few stocks to spice things up a bit and keep you engaged, that might teach you a lot and it might even make you a better index investor as well because your temperament will be better and stuff.

1:02:30So you understand the market more, you know. Yeah, well, I think you understand the dynamics better. Yeah. You feel more comfortable. You sounded like you were quite an active investor yourself. So, you know, you – and look, at the end of the day, I mean, I admire what you're doing and you're trying to encourage people to invest and that's a really good thing. And if, you know, you don't want to dilute the message, you'll say this is what you should do and then people, they get convinced and they go off and do it. But actually, you know, it is more nuanced. Yeah, no, 100%. And I'm not saying that that's the only thing they should do.

1:03:04I'm saying this is the option that most people can pick up and like have a play with. And I think what most people do then is five years down the line and they go, oh, I get that now. I'm going to try some individual stock picking. They lose all their money and then they run back to the index. That's what I did anyway. Yeah, I did so. Yeah, yeah. hey guys did you know that we summarized all of our episodes in the newsletter you can find a link in the description and please remember this is not financial advice like we say a lot on the podcast investments can fall and rise in fact it's pretty much a guarantee past performance is no guarantee of future results so your money is at risk with investing and other fees may apply as with everything financial please do your own research we really encourage that because no one cares more about your money than you.

1:03:47I'm Damo. I'm T. This was an episode of Making Money from our company Most. It was filmed and edited by the team at Flowspire, Jack and Ben. It was produced by Ruth Edwards and brought together by Will Stollerman. What about Ruth and Ruth is a dog? Yeah, shout out them too.