Another day, another bailout? August 14, 2026

26:32So yeah. 100%. 100%. Yeah. And the reason I say that, can I just, and part of the reason I want to rant on this one, the Penrith Panthers, my son's a massive Panthers fan on rugby league. The Panthers sent a press release to their member email. Right. So this is people who've paid me members who are Panthers fans. And I'm absolutely sure I know the background of why this was done, but the press release was about the new stadium. There's a new stadium being built in Penrith for the Panthers. They've knocked down the existing one, building the new one. And here's how the press release starts. The Min's Labor government is today announcing another major milestone as the new roof at Penrith Stadium is now complete.

27:10Now, firstly, it's not the Min's Labor government, it's New South Wales government. So, yes, they want to be presidential. Yes, they want the party to get the credit, but let's actually, you know, very, very annoying. But secondly, the Panthers sent this out as a PR stunt for the state government. Now, I'm sure they probably have to. I'm sure part of the agreement was we'll build your stadium if you do these things for us, and I'm sure it's all hand in glove. By the way, Panthers League Club, biggest pokey den in the country, as far as I know, and the government's absolutely captured by pokies across the board in New South Wales and most of the eastern states.

27:43So, you know, massive amounts of conflict and whatever. When a sports team sends out something, A, that's effectively a press release from the government, but B, not the New South Wales government is today announcing, the Minns Labor government is today announcing. It was just the unwillingness and the... Look, I don't even necessarily blame the journos or the sports clubs. The sports clubs, I'm sure, were told what to do. The journos regurged out whatever sent out. But can we just get off the PR? If Shawman got a big government check, I'd be singing their praise. He whose bread I eat, his song I sing.

28:16That's exactly it. It's the oldest thing ever. We get it, but just, and it was only a little bit of it. We'll get back to the smelter, but just the idea of kind of the government's inserting themselves, the name of the Premier or the Prime Minister, the name of the party. You're not the New South Wales. You're not the Min's Labor government. You're the New South Wales government. You're not the Albanese government. You're the Australian federal government. It's just, I know they do it, and do I expect them to be any different? No, because as you say, mate, they are who they are and they do what they do.

28:39but also we shouldn't just okay oh that's okay then you know let's call it out when it happens because it is and again it's not Labor or Liberal the examples I gave were both Labor because that's what we've got currently the Morrison government used to do that the Perrottet government in New South Wales used to do that and the Christofoli government in Queensland does that it's just if you want to spend someone else's money you want to get the credit for it right exactly it's absolutely maddening anyway that's bad enough even more maddening two and a half billion dollars being paid by the Australian New South Wales taxpayers.

29:11Let's not say the governments. The Australian New South Wales taxpayers. By the way, if you're in New South Wales and you're paying twice, you're paying with your taxes in the state and nationally, even if you're not. If you're in Tasmania or Darwin or Kalanara, you're paying a part of the$2.5 billion bill to keep the Tomigo aluminium speltar open for another 10 years. But jobs, mate. Jobs. I'm about to say that. 1 ,000 jobs. That's$2.5 million per job. Now, it's over 10 years. $250 ,000 per job per year to keep this thing open. We would have been better off to pay them not to go to work. Here's$150 ,000, stay home.

29:48It is just absolutely not. Yeah, but then, which is absolutely 100 % spot on. But then just the follow-up from that is just to put it out there so you can absolutely destroy it once again. But, you know, sovereign capacity is the other one. It's like, yeah, that might be true. I can maybe cede some ground on that. but we have to do that because otherwise Australia is not a real country or something. Mate. What would you say? You said that before. Thank you very much. I know, right? And look, you know, you should have a chance to rant this on too because I know you hate it as much as I do. There is a very, very real conversation about national sovereignty.

30:29What are the things that we think we should do? As long as you then say because it will have this impact, right? So there's four aluminium smelties in Australia. One closes down. Do we lose any solvent capability? No. Let's have they all closed down. We can't make aluminium anymore. By the way, go just add my normal thing. We don't just close them down and then bulldoze it to the ground. We just put a white tea towel over it and it's still there. Oh, gosh, there's a war and for some reason we need to produce it and we've also all got the other downstream manufacturing capacity to actually do something with the metal that comes out, et cetera, et cetera, et cetera, et cetera.

31:05I was like, all right, fire it up again. Here's the thing though, right? See, if you're going to have that conversation, have the conversation and do all the things. But again, let's say, God love them, let's say everyone wants to point to China as the big bogeyman, right, coming over the horizon. Let's say they're right. Let's say it's China. And the Chinese polypure get together and go, you know what, guys, we really shouldn't vote Australia. And someone in the back room goes, fellas, we shouldn't do that. They can smell aluminium. Oh, no. No, they can too. Not economically, mind you, and in pathetically small volumes, but they can.

31:40What can they do with it? Nothing. They can export. If I had that close to Tommy, we could have invaded the country, but I was going to have to leave the Navy at home. Sorry, guys. I guess we're going back to Taiwan again. I mean, it is just – so I get the instinctive. So firstly, I am sure, deep down in DNA, making things just feels good. I've seen it a million times. I've said to our listeners a million times. The feedback I get on this is the most disagreeable feedback I get on any topic. From people who choose to follow, I mean, like, Scott, I love you, but you're wrong on this one. And so it's generally, I suspect it's just deep down we feel like we should make a thing.

32:16I think that's, I really honestly think it's, you know, I think it's evolutionary, frankly. But even on top of that, the idea of that it will make a difference, the sovereign capability is important. Yes, it is. Okay, so explain to me the material difference in our national sovereign capability with or without Tommy Go. Pay me both pictures and tell me what's different. And no one's ever been able to, because you can't. It's a rhetorical question, not deliberately, but it's like, if you're going to make that case, explain to me how this changes the outcomes, not just tick a box, China says, oh, they can produce aluminium, we better not go there.

32:50Literally, how is it going to make us wealthier or safer or more resilient or any of those things? More prosperous. by producing aluminium as opposed to not if we do all the things we can have that conversation if we do none of the things we can have that conversation when you say case by case we need to smelt aluminium because unless that answer is there is a material difference in the outcomes for the country it is a really well meaning view but it's hugely hugely economically mistaken it just is people will still listen to this because we have people write in someone will write in to us and go for it by the way please write in I'm not trying to stop you from doing it but people will write in and say yeah but what you don't understand is we need sovereign capability because I'm like I know I know you're missing the point you're missing the bloody point you've got to finish off the and therefore dot dot dot we have more sovereign capability great I have a thesaurus too what is it actually changing what is going to be better because we have it and compare that to the cost and are we better off or not here's the other thing mate those workers who are now going to be a thousand people doing unproductive work uneconomic work, subsidised work, yes, some may never work again.

33:59And that's a tragedy for those people. The vast market will go and work somewhere else profitably. So not only the money we're spending, it's the opportunity cost of those people, that capital, that economic activity, going to more productive, higher value uses that actually improve our living standards. So it's only a lack of reduction. It's the absence of improvement that would come by those people going and doing something else to say. You go, please. Sorry, man. No, I was just going to... No, go, please. I wanted to clarify, I 100 % agree with what you're saying. But when you say, I say this from experience, but when you sort of say, oh, but unproductive or unprofitable, it sounds to the ill-informed that it's like, oh, so everything's about money.

34:39You know, everything only matters because these guys, if no one's going to make a profit, it's not worth doing. And yes, yes, that's it. But we've got to unpack that a little bit because it feels as though it's just like, that's all, it's just this hedonistic kind of greedy, capitalistic kind of stuff. To have a profit is just a reflection of the fact that you can create more value, that you can deliver more than what you consumed. That's what it means to be profitable. And it creates value because you're doing that. Yeah. So the alternative is if you're unprofitable, you are consuming more resources, energy, manpower, commodities, whatever it happens to be, than what you are delivering.

35:25And it's like, by definition, if you keep doing the unprofitable thing, you will just burn through all of your resources. Like it's just that. So it's not a, I just want to make that point. Cause I think it's very easily missed where it's just like, it feels like you're just trying, you're a finance bro making an argument because we all need to have money and be rich. And it's like, no, it's just, it's money is just an accounting system. And it's trying to let us know what is worth doing and what is not worth doing. And if I can't do something, if I've got, if I deliver the thing that I think people want, I have to consume so much more than what I'm actually outputting.

35:59I'm just going to burn through the burn through everything. It's just like, so it's, so it's, it's, yeah, I, I'm tying myself up in knots and in a pit of rage here to try to articulate it clearly. But so, so I would, I would, I would make that very good point too. The other one is as well, which you've said, and I'll just, just to double down on is, is that we learned this in COVID. It's like, it doesn't matter what your capacity is because your, your only, your supply chain is only as strong as the weakest link. Yeah. Let's, let's say hypothetically, I wave a magic wand and I, I, I, uh, magic 12 different Tomagos into existence and I make them all profitable and we're spitting out more animal than you can poke a stick at.

36:38It's like, great. And do we have any chips? Do we have any computer chips there? Are there rubber? Is there other componentry that is needed? It's like, yeah, there is. And, and, and the U S military is finding this out in real time right now. It's kind of like, you can have the biggest, baddest, nastiest sort of military in the world. It's just like, but if all your chips come from one spot that's in a very strategically sensitive area, you're screwed. It doesn't matter. The rest doesn't count for anything. And so it's kind of like, to your exact point, it's sort of like, okay, I guess it plugs a hole on that one thing, but without everything else, it's mute.

37:13It doesn't make any difference. Another point I will make on this as well. I want to talk about your chip thing. Can you remember what you're going to say? Because I was trying to call this out a little bit. Yeah, yeah, yeah, absolutely. You're saying, the US is finding this out right now. Some of us have been like, exactly, they should make their own chips. It sounds like you're making the argument for Kim and Tom and Tom, right? Right, right. The reality is, okay, let's say they make their own chips and you made the, what about their own rubber? Okay, they should do that. What about their own clothing?

37:38I guess they should do that. What about their own ballpoint pens? I guess they should do that. What about their own computer screens? I guess they should do that. And you finish that logic to the point where you literally need to produce absolutely everything or functionally everything, 99 % of everything. So you can do these things. It's not just they can't do the chips, because, again, you were making the broader point, but as you were saying, yeah, that's the point. So they should make their own chips. Like, okay, let's say they do that. What's the next critical failure? And you can choose to plug them all.

38:07Other than, well, you can't actually, because you haven't got all the raw materials in the ground, right? So it's the old who can make a pencil. If we said tomorrow, we're going to put a massive barbed wire fence around Australia. We're going to do our own things here. Nothing's going to come in, nothing's going to go out. We want to be completely self-sufficient. We're going to make it all here. Firstly, you wouldn't have all the minerals you need. Just you wouldn't, right? Secondly, if you did, the cost of doing all those things ourselves is bearable. But we're living in 1820s. Oh, we're all much poorer.

38:34Yeah. And we can choose to do that. We absolutely choose to do that if we want to. But this is the point. Can I just buy some of that off my mate? Can I just buy some of it off my - He's got it. Sell it to me. He wants to sell it to me. I want to buy it. He makes really good stuff and it's really cheap. Make it better than I can, cheaper than I can. We have boats. We've got the technology. We've had boats for thousands of years. We should use the boats. The international came and harvested sea cucumbers from Northern Territory and 16's up there. Put it on a boat. On a plane if you must. If your view is we should do it all and live in 1820s living standards, that's cool.

39:14I disagree with you, but that's a fair case to try to make, right? Or you say, we will trade. Anywhere in between there is literally the chasm between the two cliffs. There is no, almost everything, no good. Some of the things, not enough. None of the things, we can still trade for them. You can't, you're either self-sufficient or you're not. You can't be half pregnant. You can't be half self-sufficient, right? We can do 95 % of the stuff we need. The other 5%, oh, that's critical. Do we do it? No. So what's the point of doing the other 95? If a sea blockade is a problem, it's a problem. Unless you do absolutely literally everything here, you can't solve for that.

39:52So you've got to choose one or the other extreme, literally. And trading isn't extreme, but you're either going to say, we will trade, we will do everything. There is no room in between. Here's the other thing. Here's the other thing. People go, yeah, but shipping lanes will close and this will happen. Again, we're all apparently on the cusp of World War III. Everything's just going to grow into a halt. Now, look, if we were talking about a military stockpile of prawns, we've got a problem because we can't. They don't last forever. Look, I don't know if this is news to anyone, but chunks of aluminium just sits there forever.

40:25Like, we can stockpile this. Yes, yes. You know, with the exception of all of a sudden, China just launches World War III tomorrow. And it's complete. Like, just stockpile it. Put a massive pile there. the worst comes to the worst take two and a half billion dollars go build a massive warehouse and fill it full of aluminium and then it's just like that'll last us for years and years and if after that like it's just because it's like it's a siege warfare type scenario like things are so dark at this point that this ain't the swing factor that you think it is that's exactly the point I say to people tell me the material difference in outcomes yeah okay in one way there's time to go in other words no time to go literally explain to me materially what is the different outcome for us right?

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41:19Mate, I cut you off before because I wanted to go on that chip thing. Go back to what you were going to talk about. Oh, I've got several points. Good. The first one is that when you look at the issue with Tomago, there's a lot of issues. It's just not, I don't think it's, I think it's too controversial will say just hasn't been incredibly well run, but even that's a little bit unfair because they are dealing with cost pressures that doesn't matter, you'd be the most genius operator in the world. And you're not going to solve for these things. And the biggest cost pressure is electricity. Yep. And so with that$2.5 billion, just on large scale solar, we could have a 1.8 gigawatt plan.

42:04You know, it's enough to sort of power 650 ,000 homes or a very large and several aluminium smelters. So it's like, why? Hey, I think any engineer would sort of say, hey, there's a problem. Oh, what's the problem? Oh, we can't viably produce aluminium. Okay. Well, what's causing the issue? Let's look at the whole process here and identify the root cause, we go, oh, I guess we should just throw a bunch of money at it and pay people to stay open. It's like, that is the dumbest thing in the world. Even if you're going to outlay this money, go build a massive power plant with it, right? And that'll have a whole other bunch of downstream consequences.

42:44I don't want to, one, let's do data centers next week or soon because I've got lots to say on that too because that's getting a lot of coverage at the moment. But that always comes down to power. We as a nation are, you know, the root of all prosperity is energy, you know, and we feel as though in this country that the way to prosperity is just to ration ourselves to wealth. You know, it's a stupid square that you will never, a squircle you will never square on that way. And it's like, and then people get, you know, it becomes a climate debate and it's like, no, do it with renewables, right? Like there's so many things.

43:21why we aren't just doing everything we can to expand electricity capacity. Do you know what also that solves? It also solves the manufacturing hurdle. Everyone loves to say this is an outdated thinking, is that people go, well, China's got such an advantage because of all the sweatshops. It's not true. It's not true. It was true. They had a huge population of people who were prepared or forced, depending on how you want to do it. to work very, very poor conditions and very, very low pay. And I don't want to pretend for a second that that stuff doesn't still happen, right? But China is a story of automation.

44:01You think all these BYDs are being made in sweatshops? They are being made in state-of-the-art facilities with state-of-the-art sort of robots. And I tell you what robots need, they need power, right? And it's sort of like, again, if I was to wave my magic wand and do one kind of, oh gosh, that'd be hard actually. But certainly in the top three would be making an abundance of energy because all of a sudden the things that people worry about, oh, it's not made in Australia. Well, it could be if we had really, really cheap power. It's like, oh, we can't do aluminium. Yep, we could if we had power.

44:34Oh, we can't do data centres because of this and that. Well, we could if we had power. In fact, power, cheap power enables so much downstream. And let's do it in an environmentally friendly way. I'm not saying that we don't do that stuff. It's just that the narrow-mindedness and the myopic sort of view of this, here's a problem, throw money at it. And it's like, well, at least can we direct the money to the root cause to an area that is going to have much more flow-on effects, much more multiplier effects than just let's just keep this unviable operation afloat by subsidizing with taxpayers' money.

45:14100%. You know? So there's that issue as well. two more this is the classic Friedman always talked about this it's it's it's beautiful for a politician because the people who benefit really benefit and the people who it impacts and at cost barely notice it because you've got a very concentrated group of beneficiaries and a very very very very large pool of of people who are footing the bill so it's like we can rage about it but you and me and anyone listening here like on a per person basis it's not a lot right so it's It's very politically easy to get away with because even those like us who are a bit annoyed with it, it's not like it's radically changing it, which some might actually say, well, that's the point, Andrew.

45:55Why wouldn't we do it if it's just a little bit, but we can do all of this other stuff? The trouble is that once you start going, it's the slippery slope argument as well. It's like it actually does matter. And there is a thing called opportunity cost, and this is$2.5 billion. That's not a hospital. That's not a power plant. That's not a thousand other things that we could need. Or just consumer spending that grows the economy because it's not being collected in tax revenue. Yep. Absolutely. Absolutely. And I did – I said to you, I normally – as everyone knows, I like to – have you ever seen someone in a car shouting to the extent that there's spittle oil over the inside of the windscreen?

46:34Oh, that was Andrew. It's probably me. Especially if it's a beaten down old Nisantina. and and the minister, Tim what's his name, just one of those you know, one of those, like they're all this way political interviews Don't get some trouble Don't answer the question and just keep reciting talking points and the poor old Jerno, she's there going he said at some point, oh we get profit share on this and she's going, oh, with Tom and I he's like, what's that? Oh, it's a complex set of thing, like well and she did, she did, she tried to dig a little bit more. And basically it came out and I looked it up afterwards.

47:12So I was sort of like, there is a profit share arrangement, but only at the point of where it's super profits. So here's the other thing I hate with government handouts is it's like, at least if you're going to do it, right? Like this Qantas was the one that was just the cherry on the top of all of this stuff. It is the prime example of just stupidity with bailouts. In the sense of at least say, okay, okay, we're going to do this thing. It doesn't make any sense. It's completely stupid. We're going to do it anyway. However, we're going to take a massive equity stake in the business. We are going to demand a certain payback.

47:49So at least that way the Australian taxpayer can go, okay, I guess we're spending$2.5 billion, but there is actually a return on that for us. So we can sort of have the capacity, keep the jobs, and we can make money. Now, of course, it doesn't go that way because it's not a magic pudding and there is actually no money there to be had at the end of it. That actually completes the circle while we're in this place in the first place. But the way it was being sold was like, no, it's great for all of these reasons. And don't worry, we will get to share in the upside. Only if there is sustained, unusual, excessive profits.

48:23Beyond a very, very high point, mind you. So it's just, you can always imagine when these negotiations are happening. And let's not forget, Rio TNJ didn't want it. They were like, no, we don't want your money. Honestly, we really don't want this. and the government force fed it down their throat. And at that point you kind of go, you know, but when you're strategising before the meeting, it's like, listen, we're playing a game. We're thinking in a decade plus, right? These guys are thinking to the next election. And as a consequence, it's so easy to get the better part of the deal. If you're going to do it, it's like, hey, they're going to force this deal down our throat.

48:59Let's make it as advantageous as possible for us. Of course they would. You know, before anyone, oh, you're an evil corporate boss. Well, maybe, but wouldn't you? Who else doesn't look after their own interest in a negotiation? And I'm just saying the government, which is our representative, should look after our interest when they're in the negotiation. It's like, okay, we're going to do it. But we're going to make sure that the Australian taxpayer at least gets something out of it. And it's just, it's a bad deal, top to bottom. And that's, I've run out of puff. I don't know what else there is to say.

49:34except we'll be doing more of this and we've already done more of it and it's a taste of things to come I saw a number this morning 7.6 billion someone estimated has been committed for these random bailouts around the country and I will say the other thing mate the thing that frustrates me more than more maybe probably is the politics of this and again Christopher has done it in Queensland he's an LNP Premier this is not a party political view at all but it's all about the votes and why is it about the votes because Labor know for example this instance in Queensland, sorry, New South Wales, and the Libs and Labor New in Queensland, one nation is breathing down the next in the Hunter, right?

50:11The populism of if we do this, we will get votes. Albo was quoted in the paper this morning as saying something, he put out a press release or something, saying, a year ago I stood in the rain and told the workers we have their backs and we've delivered on that promise. And it's solidly nonsense politics. Never an easier than spending someone else's money, Albo. Thanks, mate. It's bad ideology, it's terrible economics, and it's just craven politics. And I don't know what proportion of each directly is involved, but there are three bad areas no matter what combination you put them in. But let's just be really honest.

50:43Yes, they're appealing to some of these reasons. Oh, well, we have to do this because, and everyone goes, well, national sovereignty, yes, capability, yes. Do you reckon, does anyone really think that the state government or the federal government believe we need aluminium for national sovereignty? Does anyone really think, does anyone who thinks, I just gave the question before, and I'm back on this one, but does anyone really think that's what they're trying to do? Do they really think it's worth$2.5 million per job of a decent economic return? Of course they don't. This is purely and simply.

51:13Behind the scenes, there's a million experts going, you know how you told me to look into this, boss? Well, I looked into it, and it's a bad idea. Yeah, I'm going to do it anyway. Right. It's like a first-time buyer's grant. Not to set you off on another ramp, mate, but same thing. Every expert, including those on both sides of the political spectrum, and go, well, that's stupid. And then it goes, yeah, we're going to do it anyway. It's like... And not stupid in a really highly technical, complicated way that only an expert with four PhDs could possibly comprehend. No, we could shave down a chimp and explain it to them.

51:44I get it in like three seconds. It's not... Can you put the square peg through the square hole? Yes, okay, then you can understand how dumb this is. Just, anyway, we'll move on. But just get angry about it. And, you know, again, I know people are angry at us now because they still disagree with us and that's fine. But it's important and we need to talk about it. First level versus second level thinking. It's all it is. And I'll sympathize with those because emotionally it does make sense. Like it's just the first time you hear it, you go, yeah, that's good. Good on you. Like I really do sympathize with that view.

52:21We're just saying just dig a little bit deeper and think about the – You've got to think about cost-benefit type things in the aggregate, not in the point in time per a particular group of people. Like it's just – it just doesn't make sense. So, you know, just think about it. Yeah. No, fair, fair, fair. Yeah. Banks. Yeah, you mentioned about banks. So suddenly people are only halfway through. No, we'll finish. We'll finish. We won't go another 50 minutes probably maybe. Well, maybe. So some really interesting stuff we're on in the banks at the moment, mate. And I kind of just dropped some notes and let you go for it, I think.

52:55We know that property prices are falling in the major capital cities, I think, even out of the earth, but I could be wrong. Can I very quickly interrupt, though? Yeah, go. Man, the hand-wringing and pearl-clutching over... The property market is crashing. 2%. Like, that's a Thursday. They just, like, even if you're... Go on. I just, I, someone who has regularly watches their entire net wealth fluctuate by five or 10 % in a single day, you might be down 2 % in a year and the sky is falling. I don't know. I don't know what to say. And it's also, not only is it, you know, toughen up princess kind of stuff, but it's also like, what did you expect going into this investment or any kind of investment?

53:44Did you really think it was just, do you know how economic? and markets. It must have been an inevitability at some point that if beforehand, do you say to someone, hey, do you reckon there's a chance over the 30-year life of your mortgage or investment that you might see a fluctuation or a dip in values of a few percent, single digits? I'm not even talking. I'm taking crash off the table. I'm not even talking correction. I'm not even talking half a correction. Like not even like a barely, you know, a double digit kind of fall. It's just like we get a single digit fall and it's sort of like, and it's wall to wall coverage and oh my gosh, and what's going to happen?

54:25I just feel like it just makes me think that if there is ever a crash, it's like, God, can you imagine? Like we don't handle. Anyway, so I just, I feel as though it's sort of like, you say that the property market's falling and it is, and that's what everyone's talking about. It's like, I would barely call that a fluctuation, right? Like it's like a wiggle. I don't know. Sorry, go on. Well, yeah, particularly because that's only for the quarter. It's still up for the year. Right. I know. And not only that, if I read somewhere, I think it might have been Scott Pate, a great article, by the way, if you want to look it up.

54:56I think he said something. I don't want to misquote him, but something like, if prices fell 10 % from here, they go back to 2024 levels. Oh. Right? Oh, the tragedy. Oh, my gosh. There are people who will say, people bought the last couple of years and they will be underwater, and that's true. And that has ramifications, right? That has very real personal ramifications. If you want to refinance, if you want to sell a move somewhere else, if your circumstances get such you need to sell, you may well sell for less than you owe. And that's just crap. So I don't want to - But also, it's totally crap, but it's also it's investing.

55:31It's not a guarantee. No, no, but even residential homeowners. Yeah, okay. But still - If you're working next door, go on, go on. Yeah. I think we need to remember the personal element, not just assume everyone could and should and would have, you know, kind of had that in their minds because of the last 40 years of experience. I say it all the time. The nurse shouldn't have to understand the financial markets to be able to buy a house, right? And that's why I've always said we should grandfather negative gearing rather than scrap it just because pulling it right out of the business kind of sucks.

55:58Well, it's also too, it's hard to put too much blame at the personal level when every single institution around them is telling them that this is sensible. It would be different if it was like, oh, this is really common knowledge that there are, with any investments, there are risks. You can invest in bonds and fixed interest. There is risk. You know, you can be the bluest of the blue chip. There is risk. Property, there is risk, you know? And it's just sort of like, but when the mortgage broker is telling you it's a sure thing, the real estate agent's telling you it's a sure thing, the bank's telling you it's a sure thing, the investment plan is telling you it's a sure thing, the accountant's telling you it's a sure thing, the politicians are telling you it's a sure thing, every bloody, you know, old uncle at every family gathering is telling you it's a sure thing.

56:43I do. I'm glad you raised that point, mate. You're right. But at the same time, a bit of hard talk here. I just, I just want to, for those that aren't in that situation yet, I'm not just, this is normal and it should be normal that prices move around as we try and sort of figure out values. If there's people just interacting and it's just, it's just the height of naivety to think that you're going to make literally million-dollar investments in, and by the way, on the spectrum of volatility, you've kind of got equities, then property. It's sort of like the second most volatile asset class generally sort of, unless you want to talk about derivatives and more esoteric kind of things.

57:21I mean, it's not a straight line. Like you have to go into that eyes wide open. And I think that's the social contract that is breaking, and I think that is where people are so upset. And again, as you rightly say, for reasons that is understandable because of everything that's been pushed down their throat. But it's just we genuinely think that it is an outrage and a failure of the system that prices don't always just go up at a rate that's greater than our actual productive capacity. Like that is just what we expect. and we reference recent history as proof positive as to why that will always be the case.

58:05And it's the same with share market investing, mate. We say it all the time. Who are the people who come into the market and you know they're just going to get washed out very quickly? It's always the same people. It's the same people who don't have any realistic expectation. I'm going to buy the thing. It's going to go to the moon. I'm going to buy the Lambo. Job done. It's like, well, it doesn't work that way. And they're like, yeah, it does. And I was like, okay, well, you'll figure it out, I guess. And it's just like, it sounds harsh and I'm not trying to have a go. I'm not trying to call people stupid, but I am really trying to sort of slap the face and kind of go, just be aware, right?

58:37There is no guarantees in life. And if you've structured everything, whether it's a home unoccupied or an investment, that a 2 % dip from an all-time record high is enough to sort of wipe you out, you really got to have a look in the mirror and just, you know, ask some, I don't know. I don't know. No, totally fair, totally fair. I'm just making the point that we can say since 2024 is not a big deal, and it's not in price terms, percentage terms, any of that kind of stuff. It just does have ramifications for people who, in good faith, didn't kind of have a – and your point, mate, every bit of social proof saying, I made money buying property, that's how I built my wealth, you should leverage up, you should get on the property ladder, your favourite phrase.

59:21Should have mentioned that one at the start, property ladder. Yes, yes. But, you know, the nurse, the fire, the factory worker, the taxi driver shouldn't have to, you know, work this stuff out. And that's my – so I'm not saying we shouldn't do anything about it. I'm just saying I've got sympathy for those people. Me too. So price is down. We've seen massive falls in auction clearances. And this week we heard – or this week and last week we heard from three of the big four banks that they're – actually, no, four are now out. Two, Commonwealth Bank and NAB, I'm pretty sure I'm right in saying, said their loan applications were down 15 % in volume terms since the budget.

59:56CBA was down 20%. No. That's huge. CBA was 15%. Such a big number. Westpac was 20%. ANZ was down 12%, but ANZ numbers are value, not volume. So none of these are unnecessarily clear. Yes, so there was a massive, massive change. Commonwealth Bank said on Wednesday their investor numbers are down 28%. Frankly, I'm surprised it's not more because if you're not getting negative gearing benefits, you've got to come up with a lot of money to cover the gap between the rent and the repayment. So I'm surprised it's not larger, but it is what it is. So those are the numbers we've seen. So we've got the property market, the property price is falling.

1:00:30We've got auction clearances falling, and we've got loan applications falling. So that's the property backdrop. Same time, bank profits roughly flat, but CBA, I've got to say, mate, you don't have to talk about the share price of CBA a lot, but full credit to the bank for its operational performance. You know, you've got to separate the business from the investment. You don't have to give an investment credit because it's a good business and a bad investment. But as a business analyst, which should be first and foremost, we look to price. CBA grew their profit 7%. They grew their loan book and their deposit base by more than their competitors.

1:01:04They are just getting done. I wrote an old post I wrote in 2023 saying they can't sustain 7 % profit growth forever. Right? Bloody important. Good one, Andrew. Yeah. Well, and the thing is that the only way you can do it is taking share, right? Yeah. So the system you're right about, but individual companies, if they take share from others, absolutely can. I think we've said on the pod, there was some data out, was it two months ago maybe? Macquarie Group's mortgage book's going so fast. If the rate of growth continues, it'll be bigger than ANZ on a mortgage book basis in like four or five years.

1:01:39So you can absolutely take share in a – And this is the other thing, by the way, about companies, right? We're not top-down investors. I would say to you, the banking industry is a low-growth future by definition because the industry is already mature. It's captured the entire Australian market by definition. Where are they going to expand to as a group? They can't. It doesn't mean individual businesses can't do remarkably well by taking some from others. It's a harder thing to do. It's easy to grow in a growing market. But if you've got a market that's pretty flat and you are doing something better than the other guy, You've got to be a gutsy investor to believe that'll continue forever because at some point, you know, the growth will slow.

1:02:16But they're doing an amazing, amazing, amazing job. So with those numbers on top of that, the last thing I'll drop and then you can jump in and share some thoughts. Commonwealth Bank boss Matt Common said, as the cook is said, the quiet bit out loud in comments that he gave this week. Now, I don't know whether he is genuinely believing it. I'll give him the credit and assume he does. There is some value in sucking up to the government of the day, not liberal, just of the day. No such side his bread is buttered. Right. You might want to put a positive spin on what's otherwise bad news, so maybe there's that.

1:02:47But Common basically came out and said, it's good that house prices are falling. Wasn't that what they wanted in the budget? Right. Isn't that part of the solution to the housing crisis? Here's the irony, right? The bank CEO, the capitalist bank CEO, comes out and says, it's probably good for the country. Albo and Chimp Chalmers cannot bring themselves to say house price down. They just will not. So you're talking about avoiding the question. No one in the government will say, we want to make housing more affordable, so we want the prices to come down. No, no, no, no, no. We don't. And that's political, right?

1:03:16Because I know that two-thirds of people own or pay a mortgage. So it's all politics. But it's just a hell of a world where the bank CEO and the banks make more money by lending more cash out. He's saying, yeah, it's probably a good thing the prices are falling and the government can't say it, even though it's their policy, as you said, mate. And of course it was able to do that. Of course it was. Did they really think they were going to sort of thread the needle and have growth just slow a little bit for a while? I think maybe. Maybe there was a part of that, those wishful thinking. I got horribly wrong.

1:03:41Yeah, exactly, exactly. Anyway, but I had full credit to Coleman for actually saying it. I mean, he could have shut up. He could have said nothing, whether he believes it or not. He came out and said, it's probably good. The other thing, again, massive credit for him, and maybe I'm being too generous. Maybe it's all just spin and PR. He also came out and said, actually, business should be campaigning for more changes, and we might have to deal with a bit more pain before things get better, but that's the right thing to do. And I was like, you know what? Full credit. Absolute, absolute, you know.

1:04:06Chef's kisses, you might say around. he did he said again let's give him at least the presumption of credit and saying he actually believes it and saying it because he thinks it's the right thing he's the only one who's doing it and it's I think a worthwhile addition to the public debate when everyone else is particularly the business community is kind of basically talking out of their own wallet they're talking in their book comments yeah yep you're going to struggle to get a compliment from me mate but oh come on Oh, you can do it. You can do it. He's no idiot. I mean, I think it's actually a very smart kind of thing to do.

1:04:47You put the positive spin on it. I mean, what else do you want to say, right? It's like, oh, no, price is going down, and actually that's the main engine of our profit growth, and that doesn't bode well. Oh, no, you put the positive spin on it. Oh, okay, he said it, and a lot of others wouldn't have. So, okay, okay, I'll give him some credit there. He also gets a nice reward in terms of his remuneration, So I don't think he needs my praise or anyone else's to feel good about himself. Just to put that in the mix. Look, I think you're right to point out, I actually, you'd be surprised that I actually made a quick late night post on Strongman last night, just sort of saying, actually, the numbers aren't terrible.

1:05:25You know, you can cherry pick and I saw plenty of that, you know, Oh, look at this and look at that. And you can, right. And I'm guilty of that having done that in the past, but, But the numbers are pretty good. I think where two sides of the debate talk past each other is that one side talks income statement, the other side talks balance sheet. So the income statement just tells you over the last 12 months, how much money did you make? And what were your revenues? What were your costs? What was left over? And that's always a phenomenal good number. When the music's playing, that's a great number for a bank, right?

1:05:57And I've got no qualms of that. And I expect that to be generally the case more often than not for an industry that has incredible regulatory moats and a literal license to print money. Yeah, yeah, I get it. It's good. It's good business. It's good business to have. What people miss, though, is the balance sheet. And the balance sheet just tells you what you own and what you owe. And when you scrutinize, when you glance at the balance sheet, you will find that you have something like, in CBA's case, what is it? Two-thirds of their loan book is exposed to one asset class, namely residential property.

1:06:35They are by definition leveraged to that themselves. Their own balance sheet is leveraged to a far higher degree than is, I think, accepted or recognized. Outside of Australia, it's more people are more cognizant. Here we forget the degree of leverage in the sense that, you know, I did the maths at one stage and I forget it off the top of my head, but it was something in the order of, you know, and these are big numbers, but if 10 % of their loan book was, you know, what's the word I'm looking for, failed, they'd be insolvent, right? Because of the leverage that's involved, inherent in their business model, and I could spend a long time on picking that, but we don't have the time.

1:07:18So you're leveraged to one particular asset class overwhelmingly. That asset class itself is leveraged up to the eyeballs on global standards, historical standards. You really have to look hard to find examples of where that leverage has been more excessive. And not just that, the actual trading values, notwithstanding a 2 % fall in prices, we're still looking, whether you want to talk about it in real yields or price to income or service, Any of these kind of things, it's just like, let's just agree that it's on the more dangerous end of the spectrum. And that is not a portent to anything necessarily, but we can now cast.

1:07:59We don't have to forecard. We can just say that, wow, I've had three bottles of tequila, probably a little bit tipsy, right? Like it is regardless of what happens tomorrow, like I can say now. I know where I am. So again, a very narrow exposure in a very leveraged way to an asset class that is very leveraged itself and that is trading at very, very, very high multiples. Okay, now that is not a robust, there's not a lot of fortitude in that balance sheet, I would say. But the cherry on the top here is that to gain exposure to this incredible deal, you have to pay tech stock style growth multiples.

1:08:40So you say that 7 % growth is an outstanding result. I agree. It's an outstanding result for a hyper, hyper mature business. You know? Yeah, yeah. But that's it. This is as good. I'll eat these words, I'm sure, in a few years. But this is as good as it gets. There is no way on God's green earth a company of this magnitude domestically, given the economy it operates in, is going to grow at 10 % sustained in any enduring capacity, right? And yet they're trading at 27 times earnings. Like these are very, very high multiples. People love their franking credits and their dividends. It's always the thing that people point to.

1:09:15It's like it's 2.9 % fully franked. You do the math on that, you normalize it to account for the franking credits, 4.1%. I will literally get a better deal by buying a term deposit from the Commonwealth Bank than by buying in its shares. And by the way, as a bondholder, a fixed interest investor in their bonds, I'm actually at the top of the capital stack, which is a fancy way of saying if things go really pear-shaped, then I get paid out before everyone else. Yep. Right? So lower risk. Just to be fair, though, you don't get the capital appreciation potential either. You don't. That can fall. But just to put it clearly, because I want the dividends and I think there's going to be upside.

1:09:57You've made the point that at current valuation, current growth rates, that might be unlikely or at least you've got to be careful. But I just want to, again, add that for the conversation. No, it's a really great point. I'm just going to do this very quickly on the fly. All right. Okay, so we're getting about three and a half odd percent average, 4%. Let's round it up to 4 % sort of sustained dividend growth rate over the years. There's an old model called the Gordon growth model, which is kind of a handy one for your income investors. You just sort of add your starting yield to your expected growth in the yield to exactly account for your point.

1:10:32So if we sort of start, gross it up, go 4%, add in another 4%, I'm looking at an 8 % return. Now, it's just asymmetry again. It's sort of like maybe things just go swimmingly, absolutely fantastically, and I get 10%. I get the market average return. But my point has always been, it's just like we are on a knife edge here. It's just like not that something will go wrong, and it will go wrong at this point, and it will go wrong to that extent. I learned as a younger man that's a mugs game, and I learned the hard way. Don't make those specific bets. But I said a few weeks ago, and I forget the person who said it, but something that can't go on forever will eventually stop.

1:11:08Yep. Right? And when it does, when that leverage, or if that leverage, leverage being a double-edged sword, when that goes against you, it's like you could absolutely lose half of your capital and then some. So heads-eye win, maybe 8%, 9%, 10 % per annum with everything thrown in, income, franking credits, capital gains, or maybe I lose half my money or more. And it just like, it makes no sense. It makes absolutely no sense. And we happen to be going into, well, seemingly going into a bit of a tough patch for the market. I can't rationalize it. All I can do is yell and shake my finger, shake my fist at the sky.

1:11:51But I guess I would say, can't give advice, but I would say anyone out there holding bank shares, and please bear in mind my track record on this front, the form that I have. but man just just just the pollyanna yeah it'll be fine is just like your capital your savings is too important to hand wave that away is that'd be all right i i i just i just think you you it is a it is an awful bet and and here's the other thing too when you read all the announce um i i i went and hunted for for what the the sell side analysts all the all the masters of the universe in the fancy Armani suits in the big glass towers are sort of saying.

1:12:29And it's like the funny thing, the really bizarre thing about all of this is like, I ain't giving you a hot take. Like everyone is in agreement. I'm on ComSec right now looking at their consensus forecast. It says, I scroll down, strong sell, overvalued, right? Even the Morningstar quantitative team, which I think has been pretty generous to come up this time, we values it at$138. It's$170. You know, it's just like, make it make sense to me, dude. Make it make sense. Exactly, exactly. Yeah. I can't. I can't. So, and I guess the question too, mate, is for all of that, everything you just said, I'm not as bearish in the banks as you are, but overlay everything you just said with the possibility slash probability that the house price falls unfinished yet.

1:13:21Oh, yeah. And so, even in a, it doesn't have to be a disastrous outcome. Even if you say it's a 50 % chance or 30 % chance. Right, right, right. Yeah. But even if - It doesn't have to be a faint and complete. Even if it is, that's not necessarily a disastrous outcome for anybody. Could be. Might be. But it might not be. You are still very unlikely to get a particularly good return because what's bank's inventory? It's money. Now, some of it is in credit money, as Ren will tell us. So that's a whole different conversation. But the point is, if you've got fewer people wanting a loan and the loans they're taking out are lower because prices have fallen, that's a thing, right?

1:14:00And so the growth that you're expecting, even if CBA managed to beat the other banks, even if it's the best bank in the country for a long time, the question would still be what might happen in a world where their loan volumes fall? they probably I suspect almost always but probably make a bit of money but probably don't make as much as they are now and so whatever price earnings ratio you're looking at in that world if earnings fall P's get larger the prices have to go up for a P to get higher right earnings just fall now if they bounce back it's a blip and that's okay too we have I own lots of companies that have volatile earnings so that's okay but just think about what assumptions you're including again it doesn't have to be disaster.

1:14:42It doesn't have to be a full equity wipeout. It doesn't have to be any of that stuff. It can literally just be, huh, if this happened, what would that look like? And in that circumstance, I suspect profits are, at best, probably not going to grow. Now, again, Commonwealth Bank might take more share from others. Maybe Commonwealth Bank's fine. Maybe ANZ's going to get it or whatever it is. But if the system can't grow or isn't going to grow, then someone's carrying that can. And just be mindful of what that might look like. Again, it's not a prediction. It's not anything else other than, as you said, mate, just be mindful of the assumptions you are baking in deliberately, consciously or otherwise, to what that might need to look like and what happens from there.

1:15:18Oh, it's such a great point. Can I, I'll give you an example because it's easy to do, right? So it's a really nice point because what you're saying is that, okay, maybe things aren't as good as they were in the past, but they're still okay, right? And I'm always, I say this a lot on the pod and I just, I find it so helpful is just do some scenario analysis. I think investors, we always feel like I have to have a vision, a specific vision of the future, and then everything's on that. And it's like, well, just throw some numbers at a calculator and just get a feel for the spread of likely or at least plausibly reasonable kind of outcomes here.

1:15:53And I think it's probably, you know, if you wanted to be not necessarily bullish, but like far from a bear, you would sort of say, all right, CBA made$6.57 per share this year. I reckon we're going to avoid all of these things that the bears keep talking about. And in fact, I actually think they're going to keep growing their earnings. And I think they're going to do it without a single speed bump. I think they're actually probably going to grow at about 4 % per year in an economy that's growing at half that rate, which again, you know, so they're going to take market share. They're going to be more efficient.

1:16:21They're going to do all these kinds of things. Okay. And are they going to do that for the next three years? Brilliant. Oh, and at that point in time, they're still going to trade at a PE multiple of 20, which is, you know, the average long-term PE on the market is 16. Before more recent money printing sort of times, that was kind of where the banks tended to trade at. So all I'm trying to say is who knows what the PE is going to be, but I don't think anyone would accuse me of being bearish by calling it a PE of 20, right? Now, if I know what the earnings, well, if I've got an estimate for the earnings and I've got an estimate for the PE, I can do a bit of maths and figure out actually what the target price is.

1:16:56And that actually comes out at $147.80. In other words, I could buy today for$170. I can see 4 % consistent profit growth for the next three years and the market maintain a very above average multiple and I lose money on a capital basis. And it's just sort of like, as I said, this is the asymmetry that comes back at you. It's sort of like, you don't have to be negative or bearish on the basis, not a good deal. you know i'll pick on straw man right it's like i'm but i think it's okay it's a nice little nice little business right fine it's not worth a billion dollars it's not would you buy it for a billion i wouldn't right you know is your book good yeah i i love you man but i'm not spending ten thousand dollars to buy your book like everything has a price and so i think people go oh yeah but it's a great business yeah okay we just spent the first half of the pod talking about Appen and, you know, and WiseTech and all of these things, you know, and these are good businesses like for the most part, you know, these are businesses that have done well, but this is what happens when you overpay.

1:18:04And it's like, we tend to focus on SpaceX at 90 times sales or this or that or the other. And it's like, yeah, the biggest, most bluest of blue chip stock in the land, which basically lifts, does most of the lifting for the wider market here. And it's trading at these valuations, it just makes no sense. It makes no sense. Anyway, the gods will now send this on a bull run, the likes of which none of us have ever seen. So my advice, I can't give advice, but if I could, I would say do the exact opposite of whatever I am saying. Because I have no credibility on this front. It's a funny one, isn't it?

1:18:40It's a funny one. I don't know what to do about it. Mate, I think we're probably - You're not buying any shares. as you say, you're not short enough, you're not buying any. That's right. And that's kind of the, it goes back, we've come full circle, right? Because we're back where we started, which is effectively, I don't know, you don't have to bet on everything. Yeah, right. So, you know, do you have to buy bank shares? No. Do you have to hold your bank shares? No. Do you have to short them? No. You can just look at it and go, huh, I'm not sure I know what happens here. I'll move on. Yep. But you're never going to have perfect knowledge, by the way, so I'm not saying that.

1:19:13But just think about what that looks like and go, well, okay, if I don't know, I don't know. And that's okay. So I'm going to step aside. And that's perfectly, perfectly reasonable. But I do know this though, and this is where I think forecasts, we've got to be humble with our forecasts. But also remember there are two types of, multiple types of forecasts, but two broad types of forecasts. There is the hyper-specific forecast and there is the general vibe sort of forecast. So what's Commonwealth Bank's per share earnings going to be in the year 2029? I don't know, no clue. But I don't think it's heroic just kind of say, Well, in every period, any longstanding period in history, PEs tend to be a mean reverting quantity.

1:19:51Yeah. So I don't know when or how or what the catalyst will be, but at some point, it's probably likely to head closer to the mean, to the average than the other. It's far more likely in three years' time that the PE of CBA is 16 instead of 42. It's probably a pretty good bet. It's also a pretty good bet too that given the nature of its business and its position and the rest of it, that it is going to fight very hard for any sustained above average kind of profit growth. So you can tie yourself in knots with silly specific forecasts, but you can also be a generalist and just go, look, it's not about – I absolutely agree with your point.

1:20:31If you don't know, you don't know. That's the three most important words an investor can absolutely utter. But I think I can know. Maybe you need to slap me down a bit here. This is a bit hubristic. But I feel as though I can know that PEs will mean revert and that excessive super tight profit rates of growth cannot be sustained forever. And if those are the only two things that you sort of base it on, it's just really hard to put together a buy thesis for me. I think that's right. I think – so I 100 % agree with you. I will, for the sake of fun, just kind of put some dressing around the edges of that, I think.

1:21:07Yep. So PE is going to stay high for decades. Yes. So your point about - It could be a new normal. Right. Does it make logical sense? No. Is it likely probable? Is it a good idea that PE stays this high? Can I make a case for it? No. Does it mean it won't happen? No. The old quote, the market can be irrational longer than you can remain solvent, right? So to your point, mate, I think any rational assessment says the range of assumptions you have to believe are true for this to be worth buying are not particularly likely. And so on a probabilistic basis, you are a million percent right. I will say, again, just your point about your track record earlier is, you know, Commonwealth Bank looked like it couldn't do this for years, and it has.

1:21:47The property market itself has been unreasonably – so to answer your question, yes, you can make money buying Commonwealth Bank shares if it was to go from unreasonably expensive to even more unreasonably expensive in two, three, four, five years. And you go, so, yeah, I bought at$170 ,000, I sold at$250 ,000, I was right, Andrew, you were wrong. And this is where we talk about resulting. Andy Duke, the professional poker player and author, I talk about resulting, which is rather saying, did I make a good bet? You look at the result and go, it must have been a good bet because I won. Now, we all know deep down that's not right.

1:22:21I mean, yes, the result is all that matters at the end of the day. You've either got cash or you haven't, right? So on one level that matters. But if you're analysing your decision, you say, did I make a good decision or did I get lucky? And so if the Commonwealth Bank share price stays high, You might have a thesis which is I think people will just always pay stupid prices. And if that's the thesis that happens, I guess you're right for the right reasons, I guess. But being right – so take AppenMate, a great example, right? It went from$1 to$35 and back to$2. Now, if your thesis was I think this will 30x in value over the next five years, and it did, and you sold, well, that's why I said my thesis played out, right?

1:22:57Yeah, yeah. If you hold it till now, you're like, well – Right for the right reasons. Correct. Correct. So only to say, and not to disagree with you, but just to kind of paint it for our listeners. There is a scenario where Commonwealth Bank is still unreasonably highly valued in five years' time. Oh, absolutely. And so it's not necessarily a bad investment. It's probably a bad bet in probabilistic terms, but you may still do well. Your point about profit, mate, is the other one. Could Commonwealth Bank grow profit at 7 % a year for the next 15 years? Yes. Yes, I think it could. Because it may well be much, much, much, much, much bigger than its competitors who stagnate or go backwards.

1:23:29So, you know, and again, you're talking probabilistically, which is why I wanted to make the point, which is you're saying, is it likely? Yeah, I'm not saying is it impossible? Right. Would I invest on that basis? Well, the odds aren't very high, so no. But you aren't saying it can't possibly happen. You're just saying I would have to believe that to happen and probabilistically it's not very likely. So I know you're trying to wrap it up, but I'll sneak this one in. I think this is why you've got to – I'm, there are some people doing some victory laps on the bank. It's like, well, in the last three years, I've got 15.

1:24:01Forget the dividends. I've made 15 % per annum on this thing. And it's like, yeah, but I said before, right for the right reasons. One of the things that are really wrong for you in this game is, is when you are right for the wrong reasons. In other words, you make money on an investment. Yes. Yes. Not because your thesis played out, it was something else sort of happened, you know, and it was kind of like the, the, the results was, it was resulting, right. As any talk about the result was good, but, but not for the reasons that you thought. So the person who bought in 2023 and has enjoyed those returns, if you turn around and said, yeah, but I thought that the PE was got the multiple was going to expand to a level on which the bank has never, ever traded at history.

1:24:39And it was going to enjoy a rate of earnings per share growth. That's probably 60, 70 % above its long-term average. Then full credit to you, you nailed it. You called it and it actually happened. But I would also call BS on it. most of it because like that is a very weak argument. Statistically, it's sort of like you can be right, but you can also be extremely lucky. You know, it's sort of like I went into the casino, I put it all on the number 13 and it won. It's like, yeah, but that doesn't mean it was a good decision, right? Like I don't know. And I feel as though now where we are at and you are, you have to again make that argument.

1:25:20You have to say, well, now we're at 28 or whatever we're at. We'll either stay there or we'll go to 38, right? And we're going to do this. And it's like, again, your point is such an on point. It is on point. Like it could happen. It absolutely could happen. But it could also not happen. And if it doesn't happen, again, look at this, look at the spread of like, okay, scenario A, this all happens. Hey, I made a little bit of a return. Or even 15 % per hour, which is an exceptional rate of return, by the way. And there's nothing wrong with that. Okay, but let's call that the absolute best that you are reasonably likely to do, unless we go to Six Sigma type statistical events.

1:25:56Or I could lose half my money without doing – and it just – anyway, I've made the point. I've made the point. I don't get it at all. One day I'll be validated like a broken clock. I will be right. When the price falls for$1 ,900, you're going to do victory laps. I told you. So let's really, you know, not flog it here, but just summarise kind of basically the cold conversation, which is just the idea of you don't have to have a view on everything. Your money is finite. Your capital deserves to be put in the places where you have the highest conviction of a positive result and the highest possible result.

1:26:36Again, not highest positive intake, specular leave, lotto tickets, but you've got X dollars of money and your job is to make that X be larger than X. And so, yes, consider the risk of the business, consider the valuation, consider the business quality, all the things. But you don't have to buy everything. If you look at this and go, Andrew might be right, I'm not sure. That's probably enough reason for you to go, unless I'm sure, unless I really think Andrew's wrong for these specific reasons, you don't have to be, you don't have to know for sure. No one knows anything for sure about the future.

1:27:03But if you're like, well. But just don't vibe it though. Don't just go, I think, I think, I think because. I reckon. Yeah. So, yeah, the point is you don't have to invest in everything. And it's not just about banks. It's about app. It's about Prometicus, about all the things we've talked about, every company we've talked about, right? It's like, does it make sense for me to use a portion of my finite capital in this company rather than the others, given the potential up and downsides of each investment? And if your answer is still yes, knock yourselves out. As an answer, I'm not giving you advice.

1:27:31If you want to buy CBA shares or hold them, go for it. Just don't do the whole, well, it's been good in the past, I'll probably keep being good. Or I'm not going to think about it. I just hope, reckon, think, believe, guess. Make sure you really do the work and put your capital to work because it's been hard to get, right? Put your capital to work in the places you think you have the best chance of generating good long-term returns. If that's CBA, knock yourself out. If it's not, maybe it gives you an opportunity to look and go, I think I might do something else. Well said, mate. Well said. Thank you, mate.

1:27:58Hey, go to strawman.com. I hear if you use the code Munger, you can save 10%, but only until Sunday at midnight. As I said earlier, don't wait that long. Do it now. Then you can spend the whole weekend tooling around the strawman brand new newly designed newly coded by this bloke over here go to the website have a look start using it I think well as I said it doesn't matter I think his members are very very happy they hang around they like what he's doing they like each other that's a key part of it as well so check it out strawman.com and use the code do it so you can read all my old posts on CBA going back over the years there's a bit of reading for you there you go that'll be like if you want some entertainment like you know I'll give you some very sophisticated sounding reasons as to why the thing that happened was impossible to happen.

1:28:44There's your money's worth right there. There you go. Go to strawman.com. Use the code Munger when you sign up to save 10%, courtesy of Andrew Ram of Page. And then when we come back on Sunday for the mailbag, you'll be a Strawman member and you'll get plenty more entertainment and hopefully some education and reasonable thoughts as well. Until then. You're a good man. Enjoy your weekend. Fool on. Cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned. General advice only. Please speak to your financial professional to understand how it may pertain to your situation.

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