Can I trust a CEO I don’t agree with? January 4, 2026

25:02I'm going to charge lower. That's the market share. Of course you would. And you would do it in a hundred times a day. And they won't get wiped out. And you would do it a hundred times a day if you got the opportunity to. So pricing defines its level. Not always perfect. There are cycles of pricing and insurance, but you're 100 % right, mate. Yep. Right. But let's say in my example, the person is a climate change denier and they do that. And they go, we're not going to price, we're not going to increase our premiums because we don't see it as an increased risk. And then just over the next three to five years, we do see a higher incidence of storm damage for whatever reason.

25:29And they find that their insurance book has been running at a massive loss. Now, this is very relevant. So it's beyond just, you know, idle, you know, personal ideology and viewpoint on a particular issue. This is very hyper-relevant to the company in question. So that's a different kettle of fish, Paul, and if that is the situation, yeah, yeah, it would at the very least give me pause for thought. Yeah, I find it really difficult. I think you've highlighted it beautifully, mate, because Paul asks specifically, in my way of thinking, if this worldview is used to allocate capital for the company going forward, then one of us is wrong about the future.

26:14And it kind of matters whether, as you say, you're running a coal company or an insurer or you're making stocks and undies. Because if I would...

26:25Two things. I try to hold open the probability that I could be wrong. Now, it sounds arrogant in itself as if, well, of course I'm not, but I can hold open the probability. There's a 0.1 % chance. That's right. Exactly. I mean, yeah, I thought I was wrong once, but I was mistaken, you know. So the reality of, you know, my point is we have opinions. Ram, you're not talking about strong opinions, weakly held. So that's kind of what I'm trying to say here is I've got opinions, but I try and make sure I'm open to them. i will say i'm not gonna talk about climate change a lot but what i will say is i have a very decent amount of sympathy for someone who says and they often don't say the whole sentence right this is where it falls down but just stick with me for a second who says climate change is real it's really important we do something about it but australia is not doing australia change is not doing anywhere near enough and if the yanks and the chinese won't change either then there's no point us making ourselves worse off economically and suffering exactly the same environmental outcomes regardless.

27:25I think that's absolutely spot on. There is absolute logic there. My response generally is we should change and we should use that as an example and help lead change in the world to get the angst and the Chinese to change. That's what I would do because doing nothing and saying, well, the world's who went to hell, but at least we made$15 while we waited. You've got to, if you genuinely, and that's why I put the first bit of the sentence in. I believe climate change really should take action. There are plenty of people who don't believe in it and it's just a simple excuse, a way to distract by saying, yeah, well, they're not doing anything either, so we shouldn't.

27:57It's like, that's just because you don't really want to do anything at all. You don't believe in it. You don't care. You don't want to think about it. And you're using that as an excuse. That is a poor excuse. And it's a gutless excuse. If your view is generally, and I said, I have absolute faith, I have absolute, what's the word? Lost it. I think it's a very reasonable view to say, we absolutely should fix the environment. But if no one else is doing anything, it's not going to get fixed. You know, self-inflicted pain for no benefit is just self-inflicted pain. You know, if there's some self-inflicted pain for benefit, well, then we can have a talk about how reasonable the pain is.

28:31And it's also not black and white, right? Correct. Like there are mitigating steps that you can do which might be prudent with much less downside than upside. You know, on one end of the spectrum, it's just like the Prime Minister says, tomorrow all fossil fuels are banned. Tomorrow. Yep. And we're going to full renewables, in which case every... Everything collapses, right? And there's another one who says, no, it's all nonsense. Actually, we're going to ban renewables and we're going to go. It's like there is a lot of distance between those two extremes, right? And there's delay and denial in the meantime and lots of things going on.

29:00Look, I don't want to talk about climate change. I bring it up, Paul, to make the point that I have a view on what I think we should do on climate change. There are other people with that continuum of views that Ram's making the point of between it's the lizard people on a NASA hoax and let's, you know, fireball me every coal-fired power station tomorrow and deal with the consequences. And so why do I raise that? I raise that because I would suggest we need to be careful being too absolute with that view of that person doesn't agree with my take on it, therefore I want to reconsider my investment cash.

29:34Now, you should. If you're not happy with it, if you can't sleep, you don't do it. I'm not saying you shouldn't do it at all. I wouldn't give you personal advice either way, Paul, as you know. but I wouldn't necessarily say that that person's view, I don't know who you're talking about by the way, but a person's view on climate change that I didn't agree with, I don't know that I would extrapolate that to therefore they're an idiot and come a good capital management decision. In fact, Paul, you said you've done very well with this company over an extended period of time. It's possible that it's done well despite those views or maybe because of them and I won't rave on about ethical investing again.

30:08I'll just simply say Google the inconvenient truth about ethical investing. I've written an article about it. Ram disagrees, which is huddled to do. I won't ram my stuff down people's throats again, just other than say if you want to read it, do it. The question for you really is are you objecting to this person's personal views, a la Ram's point about meeting your heroes, or do you actually really deep down think this impacts your ability to make money and be invested in that company for the long term? Because they feel like the same question, but they're really, really, really different, right?

30:39So, yeah, that's probably – have I come across it before? Yeah. So in one case, I've got a really – a little bit, yeah, almost entirely. So I'll perhaps own shares in. You mentioned coal mines. They own shares in New Hope Coal. Yeah. Now, New Hope Coal is a very, very, very well-run coal mine. They do an amazing job. And if you're going to own a coal mine, I own New Hope, in my view, personally, right? I don't own shares directly. I obviously own shares indirectly. directly um they i would if it was up to me i would have new hope distribute every single dollar of cash flow in dividends because i suspect there's a very real risk not a good not a guarantee or certainty a very real risk that at some point in the future coal may become a stranded asset and if it is and all i've done is got deeper and deeper and deeper into coal mining then i've made everything until i've eventually spun up a zero and lost everything you know anything times zero is still zero and if i make a fortune but reinvest it all in the business and eventually the business goes broke i got nothing to show for it so if i was new hope if i was if i saw pats frankly i demand you pay every dollar out in dividends because i am not i know it's going to be stranded just because of probability i think well i don't know maybe it operates for 30 years maybe 40 years maybe 100 years or maybe seven years or maybe something in between so i want the money now guys i don't i don't want you to keep it give me everything you can get well they've worked on mining coal i want it um but they don't now i've had to make my peace with that in the context of Solpats more broadly, which is I would be very happy if they sold a New Hope coal mine for a good price.

32:06Could it take some of that risk out for me? I don't like the resources, the coal mine particular risk they've got at the moment. Not because I know what's going to happen, just because I don't know what's going to happen. I'd rather not have the risk than have it. There's a point, maybe it's cheap enough to buy, maybe there's a point it's expensive enough to sell, I don't know. But also I had to make my peace with these are smart, capable people doing their job. They've got a massive portfolio of other businesses, not just New Hope. And overall, do I think they're going to make money? Yes. Would I like them to do something different with the coal mine proceeds?

32:36Yes. I don't like coal-fired power in general. I do have a view, which is if, I don't know which country we're selling it to. Are we selling it to India? Maybe. If India's going to buy coal from someone, they might as well buy it from us, is my view. Now, that puts me at odds with people who are deep, deep, deep green. I'm a greenie, like capital, lowercase G, greenie. I'm a tree hugger. I want fewer dams and I want fewer people in the country and I want more wilderness and I want more protection from native animals and I want less pollution and I want more water in the rivers and, you know, come at me.

33:07So I'm that person, right? But if you're just going to buy coal and they're going to buy 100 tonnes of it from somebody, saying, well, don't buy our coal, buy their coal instead, does no one any favours. They still buy the same amount of coal. Maybe it's slightly more expensive because there's fewer supplies, but realistically, is it a big deal? Probably not. So I'm actually okay. even though I want fast, significant action on climate change, I'm okay with us selling coal to India, if that's what we're selling. Until I'm not, I know I want India to stop doing it. When India stops doing it, I'll happily stop selling it to them.

33:34But abandoning the market to another exporter, to me, makes no sense. Now, people disagree and that's completely cool. I'm just giving that example because I have a view on what I would like the world to move to. I have a, what I hope is, pragmatic view of how we get there and what costs or benefits we should incur or forsake, respectively. So yeah, I don't love that Solpads owns New Hope. I wish they didn't. Is it enough to make me sell the shares? No. Now, as I said, the ethical investing reference I make is I don't think it matters. I think Solpads are going to be as profitable as it's going to be regardless of what I think about the New Hope investment.

34:13So I've got to make a choice. I can simply say, no call in my portfolio ever. Nope, don't want it. Go away. not going to happen and lose the opportunity to own Solpats or I can say I don't like New Hope, I like Solpats, I think on balance I'll do well regardless of what happens with New Hope so I'm happy enough to just let that one ride and that's the decision I've made because I don't think it makes a difference. The ethical investing thing again just for quick reference is I don't think it matters whether I own the shares or not, the company will do almost everything it's going to do anyway, it doesn't need capital, any capital it needs is going to get from Solpats, whether I own the shares or not makes zero difference to New Hope's future and the amount of coal we dig up and export, in my opinion.

34:47So that's my view. But, yeah, so, Paul, I feel your pain, mate. I mean, exactly that situation. If there was a CEO who was a fundamentally or, yeah, CEO, I don't know, you say senior management team, so maybe it wasn't a CEO. If there was a person working for my company who I didn't think could make good capital decisions in general, they were simply incapable, that would be incapable, that would be a different kettle of fish. But if it's just kind of like, hey, this is tangential, I mean, again, to a ransomware, if it's a coal CEO, they're going to make coal, right? If it's iron ore, if it's guns, if it's drugs, I don't know, whatever else you want to pick, they'll keep doing their thing.

35:24But for me, I am happy to analyse the investment merits on their own and go from that. That's why for me, Solpats has been a very good investment, a good investment I expect, regardless of what happens with the new Hope shareholding. It's not going to be nothing. If it falls dramatically, it'll hurt probably a little bit. If it goes well, it'll probably do nicely for me a little bit. Yeah, that's my view. Ram, do you have anything else to add on top of that? No. No. Next question. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

35:57One from Burrow. Good morning, fellow fools, says Burrow. Indexing investing is all the rage now amongst retail investors. I think he's pulling your chain there, Ram. But some, like yourself, still actively choose businesses they believe will outperform. A low-cost global share index fund, e.g. Now, Burrow, you've been listening for long enough. Don't put VGS. I don't want to hear VGS. I want to hear the Vanguard All World XUS ETF. And in that case, I'm going to listen to you. Has returned 16 % per annum over the past five years and 13 % per annum over the past 10. How does this compare to your own track record?

36:37I look forward to my Sunday mornings in part because of you. So thank you for your dedication and endurance. Kind regards, Burrow. I like endurance. The endurance might be yours, Burrow, rather than ours, I suspect. But anyway. P.S. Scott has finally stopped asking Andrew about his feats of endurance. Has Andrew gone soft or is Scott now difficult to impress? I think the joke just ran its course. Joke? I think that's the one. All right, okay, yeah. I'm going to let that one. Do people make their own minds up as to whether Andrew's gone soft or I'm difficult to impress? Maybe you're both. Don't encourage him.

37:09Please don't encourage him. What is there if not that? I'm a simple man, Ram. I don't. I know. You're a man with a, you're a dog with a bone when you've got a good dad joke to use again and again. Theatre of the mind. We've just finished the Christmas period. My wife bought, Chris thought it was funny, me and her, which was impressive, and a 12-year-old T-shirts for Christmas. So I want you to, in your mind's eye, picture the T-shirt. There's a Santa hat. Under it has tick boxes. First one's naughty. Second one's nice. The third one, 6 '7". I wore that with pride and my son hated it. Dad, you're so embarrassing.

37:47He sent me a bunnies the other day. I'm glad you worked a bunnies. I wouldn't have gone with you. Dad jokes are always good. Burrow, thank you. I am going to...

38:02I'm tempted to reject the premise of the question but also tempted to answer the question. I think, Burrow, the challenge would be twofold. Well, the first one is what's the right benchmark for any investor? And on one hand, you say you could have chosen, again, the Vanguard All World XUS ETF. No, it was an XAustralia ETF, I think the BGS one is. I should check it out. Is that the right benchmark? I don't know. I will answer the question, mate, but I don't know that it is for me.

38:39Because you could choose any benchmark. The NASDAQ is unbetting the VGS ETF. I assume the VGS ETF is unbetting the ASX over that period. I don't know. I haven't looked at the numbers. Yeah, it has. And it's also weighted accordingly across the world. Now, I could have, you could have asked me to, you could have asked a question about any of those indices, right? The US has done better than Australia. She wouldn't just invest in the US. How have you done against the US market? Or any of those changes. So I don't, if your own benchmark is the world index, knowing that because of its diversification, it'll almost always do worse than the US over time, but because the US is a subset of it, like it's, no, sorry, I shouldn't put it that way.

39:29A subset of any index, sorry, I'll start again. There will be subsets of any index that always outperform on average, by definition. So it's like saying, shouldn't I have bought CSL instead of the ASX over the past 30 years? Yes, of course. Should I have bought Qantas instead of the ASX over the past 30 years? Of course not. But we know both those things in hindsight. I say that about the global ETF because you say, which should you choose? Is it likely that a Vanguard global ETF is the best benchmark for investors over the long term? and I don't know that we should suggest that it always should be or would be.

40:03Normally it's actually it shouldn't or wouldn't, by the way, so I'm holding out the basis of your question. You can say, well, the world's the world and it's as passive as it gets and so that's every asset invested, you know, whatever, whatever. I own shares in this ETF, by the way, for diversification specifically but not because I expect it's going to outperform other indices. So I make that point, Barry. The second one I'd make is currency matters a lot. This is an unhedged ETF. And so if you're asking over the past five and 10 years, did I assess the value of the currency and make strategic decisions to maximize the value of my investments when the currency is going well or going badly?

40:42No, no, I didn't. And I don't intend to. And even over 10 years, currency is going to fluctuate. And if you ask this question at different points in time, I suspect, I don't know, I haven't looked at the numbers, I suspect when the dollar was$1.10 and then it was 45 cents during COVID and then back to, what, 67-odd sense almost when we're recording this in the middle of December 2025. I know it's going out later, but we're recording this as a prerecord. It's the last prerecord, by the way. After this, we're back to live recording, as Andrew likes to say. See, I don't know, Burrow. That's my kind of half answer, mate, is picking the index and then asking how we went compared to it.

41:18You could have said versus the NASDAQ or versus the ASX or versus something else. You're not wrong to ask it, but the choice of the index in itself is some degree an active choice. So I think there's just something kind of worth, as a discussion point, I'm not saying you're wrong. I'm not saying it's the wrong index to choose. I'm just saying any of those decisions bring with them implications and particularly currency, particularly index choice. If you asked about the ASX, if you asked about the US market, the answers may have been different. The indices versus the, why would I choose the, You chose the index in VGS and I've lots of years underperforming against the US market.

41:58Shouldn't you have chosen the US market instead? Yeah, in hindsight, of course. I also should have chosen Fortescue shares 15 years ago and I'd be a squillionaire, right? So I don't know. Am I making sense? I don't mind the question. I think it's important to have it. I think it sounds like you're very much dodging the question, my friend. Okay. No, I'm joking. I'm joking. I'm having a go. No, you're right. I mean, well, I'll give you a better example. Go on. And, yeah, this is going to trigger people. had you put money into bitcoin in 2010 you would have outperformed everything now but i do i do that i do that very deliberately so because because you couldn't have known back then what was going to happen right right right right and it's a spurious and i i call out other bitcoiners who say that they'll go well look if you look at this this is the best performing asset class ever yeah you know when you look at anything beyond i think a three or four year time frame it just crushes everything, right?

42:50And you know me, I'm an advocate, right? But I still think it's a spurious reason. You know what, I really appreciate that about you too, mate. You deserve lots of kudos to that because plenty of people are men with hammers or people prepared to take whatever supports their cause. Yeah, but look over here, therefore I'm right. The past is no guarantee of the future. The future is no guarantee of the past or whatever which way it is. The past is no guarantee of the future, yeah, exactly. That's the one. And so I think the best, and you also need to contrast that with the risk that was taken again back in 2010, right?

43:22That's right. It's like insane. Even back in 2017, like the risk you were taking there was very different to what it is now. So to look for an ETF with incredibly higher returns and then you say, well, that should be the benchmark, I'm with you there. Having said that, I mean, it's a very good question. What do you benchmark yourself against? I think that's why I'm asking that. That's why I'm putting that ahead of the answer to the question because I think that matters. And I think where you choose to invest, I'm not trying to beat that. If I want to benchmark against the VGS, I have to have a view on the UK market and the French market and whatever.

43:58I could have just bought the ETF for sure, but to decide that's the right benchmark, I have to have a basis for making that decision. The preferred benchmark is not right. Why is that a better benchmark? Well, because it's global. Okay, but is it going to do better or worse than the US, for example, as I said before? Well, worse. Then why would I choose that as the benchmark? Or conversely, I think it's going to do better. Or I don't care because it's just about pure diversification, nothing else. These are all active choices, and that's kind of my key point. You can be answering, mate. My benchmark is 10 % per annum.

44:25Right. And I kind of pulled it out of thin air, but not really. Like, it's sort of like it is rounding up slightly what has been the very long-term return of major developed markets. Yeah. the US in particular and Australia, which are the most relevant to me. Because I'm of the very, I've said on the record before, I think we take some of these ETFs and diversification too far. I've got zero interest in investing in India or China or Europe and nothing against the people or anything there. It's just sort of like Australia makes sense because it's a home field advantage. I don't have any currency issues to worry about.

45:05the framework, the legislation, the tax treatment is just easier. And I know the businesses more often than not. And I can speak to the CEOs, you know, these are incredibly advantageous. So I'm going to play, that's a very relevant one for me. And the US, just because it's the largest, most dynamic capital market in the world, it makes a lot of sense. I mean, you talk about benchmarks. If you wanted to go NDQ, which is the NASDAQ ETF, that's even performed the Vanguard one that was mentioned before. Yeah. So I just go with 10%. Yeah. And we can argue the toss, but it's like for me, it's kind of like the way I look at it is, well, I don't know what the future will bring, but it's not an unreasonable expectation for me to think if I just gave up this stock picking caper and just put it all into an Aussie ETF or a US ETF, probably give or take a little bit, that's probably what I'm going to get over a very long period of time.

45:57Caveat being I will never get 10 % in any one given year, you know, up 30%, down 10%. But it'll probably average something like that. So if I was to look back at my investing track record and think it was below that, I would have to have a very, not after a year or two or even three, frankly, you know. But in fact, probably it's hard to get much of a read on until about the five-year mark or so. But, yeah, I'm happy to say that it's well in excess of 10 % And so I'm going to continue to do that. And with humility and knowing that I'm just, I opened up ShareSite then while you were talking because.

46:34Okay, yeah, nice. Let's go, let's do a tour of duty. I bought shares in HastyGrip, remember them? Mm-hmm. 92 % loss. Urbanize, 78%. Oh, this is an annualized money-weighted return loss. So it's pretty bad, right? Austin Engineering lost 50%. Fleetwood lost 41%. Integrated Research, what a dude. I think that was a great company. 44%. Good Drinks Australia. I bought that when I was sitting next to you. Thanks, mate. It's your fault. 44 % down on that. Collection House, remember those guys. You know, just a litany of sort of errors there. And even with, yeah, and I've said, I don't want to say the number because it sounds too good to be true.

47:15Quite frankly. Hashtag Humblebreak. Hashtag Humblebreak. Well, I'm actually very mindful of it because there's no way mathematically that can be sustained. and if that is going to normalise over a longer period of time and probably due for a period of underperformance. But even within that stretch, there are absolutely, if you want to like be selective in your start and end points, oh my gosh, I have had horrendous runs before. I'm looking at my graphs there. The most notable being when we launched Strawman as a paid service, which was right around, it was late 2021 and my Strawman portfolio was riding high and it just crashed 50 % from there, right?

47:54It was just brutal. I'm back in the black now and it's funny. But I will argue, maybe for ego-protecting reasons, that like, yeah, that's what happens, right? You show me something. Like Buffett's underperformed for period. I think anyone who's said, the only investor I know of note that has never underperformed is Stanley Druckenmiller. He's like a very, very weird outlier there and I can't do what he does. But what I'm, I guess, what am I starting to say? I'm trying to say, well, actually, if you go to strawman.com slash strawman, you'll see my strawman portfolio. You won't see the stocks unless you're a member.

48:26We do restrict that. But you'll see the performance and you can't game that, right? You have to do it in real time goes forward. So since November 2017, that's 22.3 % per annum. Nice. I just put it in there. Follow it. And let's just mark the time here because. Exactly. And talk about your own so I can sell it now if you wouldn't mind. Because absolutely now that I have said that. I am going to land flat on my face. But also I make the point that it did have a very long period of underperformance. There is a whole bunch of basket case, like absolute stockpits, that if I was having a beer with you at some point when I bought that, I would have argued stringently as to why this is the best investment ever.

49:08You know? I'm very fond of Envira Suite. I did not work out well in aggregate. Pointero, I was like, oh, I mean, you know, There's all kinds of bad investments over there. But I guess I can look back and go, yeah, I beat the index, right? And so there's – and it's been over an eight-year period. So I take some validity in that and I'm going to not just take that as an individual measure but also ask myself what was the process that allowed me to do that. And as I've said many times on the pod, my process is actually leaning into a little bit of risk knowing that I'm going to blow up a lot of times because when you get it wrong, you might lose 90%, but when you get it right, you get 100 bagger.

49:48I'm like, well, it kind of makes sense. It makes sense. Where am I going with all of this? Choose a benchmark that's appropriate for you. And I don't think the listener wants to use that as their benchmark. I'm like, yeah, perfectly fine. Absolutely fine with that. I won't criticise that whatsoever. And then in looking at your own track record, you think, well, I haven't done as well as that. Maybe I'll just buy that. It's hard to fault the reasoning, you know? Yeah, 100%. But your point is only like, well, I get what your point is, is it's going to be a subjective choice at some point, and that's fine.

50:18It's unavoidable, right? But don't choose something like Bitcoin or, you know, NVIDIA or, you know, something like that as your benchmark because when you retrospectively pick the best performing, you're setting yourself up for failure in two ways. One, thinking that you'll be able to beat that, and two, in thinking that, well, I might as well just stick with that. Because you could look at that argument very myopically and incorrectly and the listener is not doing this, but it would say, well, NVIDIA has been the best performing stock in the last 10 years. I should put all my money in NVIDIA.

50:48Like, no, no, no, no, no, no. Or maybe, or maybe, but it's like one doesn't guarantee the other here. So I keep it simple. And I even think if I look back on my deathbed and go, huh, I got 8 % per annum. I slightly underperformed the benchmark. I'm not going to be happy with it. but do the math. 8 % compounded over a lifetime. I'm doing okay. Especially on the eight-figure portfolio you've got. That's huge. Well, it's not a disaster. Yes, could have, would have, should have, and the rest of it. So it's why you certainly want to benchmark, but you don't want to overthink it, I guess is what I'm saying.

51:32I will share because you did. I haven't done any timeframes other than since inception. So since the first purchase recorded in ShareSite on the 2nd of March 2007 is the first data point I've got here. You're coming up to a 20-year anniversary. I know, right? I must have. I owned shares before that. I'm wondering now. There was zero. Anyway, I don't know. For whatever, I'm not interrogating this data. ShareSite does a very good job. It is money-weighted. There are differences in calculation approaches you can make and take. So I'm not going to, this is not an audited number, and I've got to be a little bit careful because I do represent a company with a financial services licence, but I will tell you simply what ShareSite says, which is my total return per annum since 2007 is 13.92%.

52:14Nice one. That exceeds Vanguard, that exceeds the Australian market. I don't. 3 % over 17 years adds up there, right? Right. I don't suspect it stays that high, to your point, mate, forever. And there have been plenty of losers in that lot as well. I haven't got the percentages here, mate. You must have set up your screen to... There's a toggle on your new dollars. Okay, anyway. Can I just say, just to point out that, obviously I've completely trounced you. Yeah, it's actually... No, no, no. You're right. I say that because it's fun, but also there is a very different world between what Scott has to do running a public-facing newsletter than what I can do as an individual.

52:57So I've gotten a very concentrated, what many people would consider a very high-risk portfolio. You can't do that running ShareSite, right? I'm running ShareAdvisor. I probably could. So you're very kind. I'm not going to make any excuses. I suspect my style of investing underperforms yours. If I was doing this without... But you're much smaller and less severe drawdowns as well. Yes, probably. That's a compromise, right? And that's okay. But to your point, if I get 30.9 % from my entire investing career, You can triple my returns and I'm not going to have a... Here's the other thing. You don't have to win investing.

53:32I'm not just making excuses. I'm coming second here. Like, it's not... Would I like high returns? Of course I would. I like money. It's good. There is no race. Even if you were in the third quartile, to a range point, 8%, the market's averaging 10. That's a great result. If you're the world's 100th best investor, no one will ever write a book about you, but you'll be insanely rich. Oh, stupidly rich. Right? Mate, the world's$10 ,000 per investor is stupidly rich. Yeah. What's meanest best investor is probably stupidly rich. Oh, man. Anyway, so to address your point very quickly, I run ShareAdvisor largely the way I would invest, but there are cutoffs around market cap and liquidity that we have to observe.

54:12And ethically, I'm not bound to do this. Oh, sorry. Legally or from a company policy perspective, I'm not bound to invest in any particular way personally, as long as I follow the trading rules, which are things like I can't sell if I recommend to buy, I can't trade within two days of talking about a company, there's other rules and bits and pieces. But I do feel ethically bound to have the vast bulk of my portfolio in companies I've recommended to our members because it's eating your own cooking, right? And so I would not feel any... Which is really rare, which is like brazierly so, right? So I just think, no, I own Shares and Fortisca I mentioned before, right?

54:52And I did that because I thought it was worth buying, but not with a high enough conviction I wanted members to buy it. So that's a rare example. I reckon 90... I'm going to... I don't want to overdo it. At least 95 % and probably 99 % of my portfolio by dollar weighting are recommendations I've made to our members. I can't do anything other than that. I can't sleep at night otherwise. But no, I suspect you are far more comfortable in small-cap companies than I am. and small caps have a much bigger potential to outperform. And if you do it well and you do, I absolutely am not surprised. I would be shocked if my performance was better than yours, even if I wasn't working for the Motley Fool, unless my investment strategy changed dramatically.

55:35Because I'm not saying you're getting easier. You're doing the work. The upside potential if you do it well is absolutely there. It's not my style. It's yours and you do a spectacularly good job of it. So, yeah, my good idea. Well done. Well, that's kind of the point that I was trying to make before with, I mean, the best benchmark is the one that best aligns with the risk that you would take yourself. Right? That is a really, really, really, really good point. I mean. That's a great point. Well, that's beautiful. I have this conversation. Every now and again I have it with a friend or a family member and, you know, you're having these discussions and you feel there's that one you're just like the ego and the pride wants to put a number out there versus like you're trying to sort of emphasise a point.

56:15It's like, well, leave me some credit, right? Like I'm doing something right. and here's this and all the rest of it. And you sort of, you say a number, right? And again, just look at the straw man portfolio. So really great return. And when you tell someone that, they go, oh, I want that. Do you? Yeah, yeah, I want that. It's like, okay, but the strategy that I take is one where I trade off. I trade safety for excess returns. In other words, the volatility of my portfolio would send most people into, you'd have a heart attack. And I'm not sitting here like, oh, I'm some Zen Buddhist who just completely washes over me.

56:58No, it's hard. But I'm also, I know that if I ran this as a newsletter service, that I would have a huge degree of churn amongst the clientele. That's true. Because while it might look good in aggregate over time, there'll be someone who signed up and then two years later is like, I followed every recommendation, I've lost my shirt. You're a charlatan. And they would be entitled to that view and they would be able to point to periods where that is. And they'd also be able to point to, well, Andrew, I remember when you said, where's another classic hit? Let's have a look. There's so many out there.

57:30I remember, Andrew, when you were talking about cash converters. Oh, my gosh, 21 % compound loss on that, right? I own those too for a while. Right? Yeah. And it's just like, oh, you idiot. And it's like, yeah. And, again, it's easy. This is what's so diabolically tough for people on the outside is because I will in good faith and in heart of hearts say, yes, but I have high returns, but I have high volatility, right? And I have a very low strike rate in aggregate relative to what a more prudent, safer version of investing would be. Okay, great. If you want that, then you can do it this way. but just understand exactly what it is that you're signing up for.

58:19And also, you know, it could all go pear-shaped tomorrow, right? Like it could. It's just sort of like it could absolutely, there is, I won't name names but there is a couple of investments in which there's a lot riding on, you know, and I'm very high conviction and blah, blah, blah, but I don't know the future and it could go very bad and it's just sort of like, you know, Bernie Madoff looked really great for a while. That's kind of a different example that's there. Yeah. But what am I trying to, how can I tie all this together?

58:52Understand what it is you're trying to achieve. Understand that in everything in life and particularly in investing, there are trade-offs. You can have a very, very, very low risk of loss, but you're going to get very, very low returns. Yeah. You can be like David Gardner who like six or seven out of ten picks are terrible. but would you smash the market over a very long period of time? And like me, have very long periods of underperforming. What do you want? And if you say, well, I want the higher returns, I'm totally capable of those. Like, okay, but that's easy to say, dude, and it's very hard.

59:24Oh, sorry, where I was going before is the difficulty with our industry is that you absolutely, it's more likely than not that you have a complete charlatan there. I won't name names because that keeps me out of trouble. But I'm sick to my stomach with the operators in this space. and when you look at their track record, you can go, oh, that's terrible. But they will say it's volatile. Over time it'll be good. You can't make an omelette without cracking some egg. And it's like all of the arguments I just made they can make. So how is it that I can make it in good faith and you should listen to me and don't worry about the bad performers and the periods of underperformance but it's going to be good in the run and then point to them and go, oh, yeah.

1:00:03And it's a really nice bit of coverage for people in our position to sort of say, well, it's the long term that matters. you know? So I don't know where the magic threshold is where you can pass a certain number of years, but I do think there is a certain number of years after which you can, any idiot can buy any stupid stock or stupid investment. There are people out there who bought NFTs and made a fortune. I mean, completely reckless and stupid kind of thing. And they'd all fell flat on their face, but for a period, it looked really, really, really good. So I would just sort of say, choose something over which you've got a decent timeframe in which you can separate the role between skill and luck.

1:00:39To our earlier conversation, luck is always a component. It really is. But like Buffett outperforming a 20 % CAGR over a 60-year period, that could be luck. Probably a degree of skill involved. Very, very hard. Yeah, correct, correct. You know, the person who got a 10-bagger last year and they've never invested before is like, well, that's great, but how much confidence can I put in that going forward? We're really answering this and I hear ourselves talking and just like we're tying ourselves up in knots. So I'll just shut up at this point and hope that people can get some signal from all that noise.

1:01:13Yeah. It's why I want to go back to where I started, and we won't labour this for too long, but it's why I spent a lot of time before saying the number because I could have just said, oh, actually, thanks for asking, Burrow. It's a wonderful question. In fact, I'm very, very, very good at outperforming the market over 18 years, and you're welcome. And that sounds both arrogant and stupid, and for some people that would be impressive, right? It's like, oh, wow. Well, that's right. I'm going to get you to help me with my money. And frankly, you should have fit for scorecards. I mean, it matters.

1:01:39The Motley Fool has every single recommendation ever made for the service you're a member of. You can see from day one all the absolute tripe and the successes and the mediocre also rands all there in black and white. We don't just do here's our top five or our latest 12 or some sort of average you can't check. Every single recommendation from day dot. And I'm bloody proud of that, right? And I didn't do it. I wasn't the person who decided to do that, but it's one of the reasons why, as a member of the Motley Fool Service, before the Motley Fool Service opened in Australia, I was a member of the US services, and we try and do it ethically and appropriately.

1:02:13And we're not perfect. We screw stuff up, and I'm sure we can be better. And if there are ways you think we should be better, let me know, because I'd love to push it back into the team and say, hey, let's get even better at what we do. The point was that we could just, I could have just said, oh, this, so I win. But genuinely, I don't use the Vanguard Global ETF as my benchmark. I never have. In fact, I didn't know what the numbers would be when I pressed the button. I had to change it. I had used by default in ShareSite, you can choose a benchmark, I use the ASX. And at the Motley Fool, we had used the ASX for all of our services until relatively recently because the idea, the starting point, and it wasn't, there's no absolute right or wrong here, was just the average Australian investor tends to invest in Australia.

1:02:54And so if they do that, that's the result, the return they'll get. And so that's the bogey. For an Australian investor, the bogey is the Australian market. and that was kind of my approach and still I think the right one for most people. Some invest overseas, sure, but most don't and if you're going to invest overseas and start because I help you do that, generally your alternative would have been to invest in Australia and so I kind of, that's why we chose the ASX, well it was the All Lords actually, as our preferred benchmark. By the way, why the All Lords or the ASX 200 or 300? Because it's the broadest index available in Australia.

1:03:24It most represents the Australian share market. Not perfectly because outside the ASX or the top 500 aren't counted at all in that index. But by money weight, it was the most representative of the average investor's return. And again, we felt that was the fairest thing to do. People use ASX200. Why? Because it's simple and easy and standard of pause wants you to because they're brands in the name. Is that better than the All Lords? No, not in my opinion at all. It's not massively different, by the way, because Australia is so top heavy that the 200 and the 500 are not that different in market weight.

1:03:52But that's why we chose the All Lords. We could have done whatever everyone else does. When I do my market updates on radio or TV, I'm asked how the market goes. I always give the all odds. I'm the only knucklehead who does it. Everyone else does the 200, right? And why? Partly because I'm a pedantic so-and-so, partly because I think it's the right. Again, I mentioned about being candid before. You used the word candor, which I appreciated. That's why. I think that's a better benchmark to use. Now, on one level, it confuses the people probably who hear the number and go, 8 ,800, I thought the 200 was at 9 ,000-something else.

1:04:21I'm sure that has confused some people, and I've got to take that into account and make sure I don't confuse people in my aim to educate as well as to inform. But that's why I use the All Lords. So should the All Lords be a benchmark? Should it be a Vanguard Global? I don't know. And that's exactly like I'll go back to it. I didn't want to just say here's my number and, yes, I've beat the market and, yes, it's all. Hopefully the education, the lesson there is more about the other stuff than about this in particular. Anything else, Matt? No, I think I've floundered enough. We're both taking turns of flogging that dead horse.

1:04:55That's a really good question. My key take, though, is you are right to measure against a scorecard, particularly over five and ten years. Over a year, don't bother. Over three years, personally, I wouldn't bother. We do it at the Motley Fool because we think it's appropriate at least to provide the information. If I'm up after six months, I'm like, oh, great, Scott. Great stock pick, Scott. Well done. As if somehow I knew it could happen and B just picked it perfectly. If it's down after 12 months, don't criticise me. I mean, you can. I don't care, but I'm not going to take it to heart. Over three years, I'm not going to take it to heart.

1:05:23Not because I want to be down or I don't care that I'm down, I didn't intend to outperform over that period of time. It's like a marathon runner and measuring 100-metre splits. Oh, you won the first 100 metres of the marathon. Well done, Scott. Or no, you're a long way behind in the marathon, Scott. First 100 metres, oh, yeah, midfield. You better pick yourself up. It's genuinely a marathon. It's not a sprint, right? It's an old quote, but it's pretty true. One thing I'll just add is not part of the question, but one thing that always bears repeating because it is counterintuitive is that when we're talking here about portfolio returns, and portfolio returns are all that matter.

1:05:57Yeah. Doesn't it? Every pokey addict will tell you about the night that they took$10 ,000 out of the machine, right? And it's like, yeah, but you've blown up your family's savings over the last six months. You picked a winner on the fifth at the Dapto Dogs. Congratulations, you know. Statistically, anyone who's had an any number of bets, it's statistically unlikely you haven't had a few great wins. So it's obviously the portfolio that matters. But I'll just make the point, I just reminded myself actually just looking at my ShareSite account here, is just sort of like when I was going through the dodgy ones and I could have kept on going.

1:06:29Actually, you know, I'm just eyeballing it. I won't count it, but I think there's probably close to more losers than winners, and I just would tell you that that is probably not unusual. So just don't, it's the aggregate that matters and not the individual. Love it. Great points to end on. Mate, New Year, we've already had one Motley Fool Money, already won Mather. Are you enjoying enough to come back and continue the trend? You know you couldn't keep me away from this, Mike. I absolutely could not. One day he realised we're not even recording. Until then, that's okay. His wife said, can you mind chatting to him for a little while?

1:07:00I'd say I do. All right. Thanks for listening. Until this time on Friday or Tuesday or Thursday evening. 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. Subscribe to the free newsletter at fool.com.au forward slash listener. The Motley Fool operates under Financial Services Licence 400691.