Don’t just do something, sit there. March 21, 2025

22:16to sort of say, yeah, we need you to do all of this, but every day you wake up and there's going to be even more uncertainty. It's like I do not envy people who have to make investment, multi-year investment decisions. You know, it's very easy. In fact, probably prudent and perfectly rational to delay some of these things. Yeah. Because uncertainty never goes away. That's the other point to make. But there are, you know, there are different degrees of it. And I imagine that, I mean, this is the great, Probably the best example here is in the renewable energy industry in the sense that not to make it get into that whole debate, but it's sort of like whenever politicians flip-flop on even whether climate change is real or not, it's not like we don't.

23:01I guess what I'm saying is we've got the technology, we've got the know-how. There's a whole bunch of things that could and likely would happen if only the policy agenda was more certain. Even if it was more adversarial towards wind, solar and renewable type of technology, at least it's like, okay, this is the framework in which we're operating. We can deal with that risk. We can make some assumptions around that and we can make investments. When it's going to go, oh, it's this, no, it's not that. We're going to do this. No, we're not going to do that. That's what, that is just, I'm probably not making the point well, but I think that is one of the biggest things, like barriers to sort of generally growing our productivity over time.

23:44Yeah, and that's... Sorry, just one more point. It's everything. The point that government really should, all the things government should do and, you know, one of the best things they can do is just have a consistent and clear long-term framework. Not with that. The details are always going to change. They're always going to be debated. It's when fundamental principles of governance and society are up for grabs, that's when it makes it especially difficult. And I have to say the challenge for that is that's Democracy 101, right? In a benign dictatorship, we could set some rules and say no one's changing it until they carry off in a box.

24:17Right. And you go, cool, that sounds good. And you've got to just hope your dictators are benign and good one rather than an awful and evil one, otherwise you're just kind of screwed. I don't disagree with you, mate, but that's the messiness of democratic capitalism, that combination of, you know, what are the rules? Well, it depends who's in power. And that fundamental, we're going to have an election at some point in the next two months, and that's going to be, at question is, and by the way, I don't want to get political or even necessarily talk about energy policy or environmental policy, but we're going to have an extension of the, I can't remember the name, but one of the coal-fired power stations in Victoria for another four years.

24:49Why? Because three years of policy paralysis because we couldn't get government and opposition in each, no matter who was on the treasury benches, to agree to give energy companies and investors a long-term policy certainty so they can say, I will spend X billion dollars, literally billions of dollars, on this new energy source. More coal, new nuclear, new renewables, more renewables, more battery, whatever those things are. No one can afford to because three years' time, the other mob are in charge, whichever mob are currently in charge, like I don't mean the other mob is in LA, but who is in charge now, in three years' time, there's a chance the other guys are in charge.

25:23I can't do a three-year ROI on a bloody multi-billion dollar power station. So what are we going to do? I'm going to do nothing. And we get to 2025. New South Wales has extended the one in Newcastle, up the Hunter. Victoria has extended the one in Victoria because we just had to have enough to actually keep the lights on for a first world economy. It is just – and that's – again, I've said a million times that it's a bastardised Churchill quote, democratic capitalism is the worst except every other system that's been tried, but it comes with those problems. And you're 100 % right, mate. You people certainly get out of the way.

25:55Doing that democracy, that's kind of messy. and it's better than not, better than dictatorship or autocracy or living under the CCP, but it's messy. Yeah, but there are a whole range of things where there is broad bipartisan support. I mean, look at the US and I'll point to the US because they are by far the biggest spender on military programs. Democrats and Republicans are pretty much a lot. Like no one's getting rid of the military. No one's there to meaningfully touch the budget in that regard. So there can be different sides of the aisles can have very different opinions, but a certain consensus and agreement on things that are agreed to be important.

26:36The details will always be argued about, obviously. Yes, that's true. So yes, I definitely take your point, but it's just the pity of it is the very big things that you would think are as obvious as the nose on your face. We can at least agree on that and then we can move past that. But it feels like the debate we're having in 2025 with energy policy is no further progress than where we were in 2015. It's not. In 1995. Like, it's just not. Can I give a wrap to Chris? I love Chris Richards as an economist. He's really good. He used to work at Deloitte Access Economics. He started Access Economics, merged with Deloitte.

27:06He's now left. He's doing his own thing independently. Great follow on Twitter, at Chris Economist. He wrote a great article on the AFR. And you always know when someone's striking a nerve when he's accused of bias from both sides. And so that's kind of what happened this week with his AFR article. He wrote a fantastic article just about the budget. He's probably the preeminent budget economist, and everyone has their own kind of preferences and ideas. Chris has made a career in a lot of areas, but largely being very, very good at breaking down federal budgets and explaining that to people. I think it's a really – we're going to have a budget before the election.

27:38It'll be a handout budget. I'm sure the opposition will do a handout. Guaranteed to be a handout budget. But Richardson really bells the cat on exactly what's going on. So if you've got a FinReview subscription, I highly recommend. If you don't – I don't know where it is outside the paywall. but really it just hits the note. I threw some excerpts, probably as many screenshots as I could reasonably morally get away with on Twitter. So if you do follow me on Twitter, at TMFScottP, it's not an ad for that, don't follow me unless you want to but use that anyway. I posted I think five or six screenshots from that article.

28:07It's about as far as I go in stretching the IP friendship but just nails it, right, just nails it. So really great article in general but your point about the bipartisanship remind me, Ram, Richardson makes the point that parties only differ on about 1 % of the total budget spend in terms of the policy. If you line up the policy differences. 1%, oh, that's surprising. Right? So 99%. And it makes, I mean, it's a sexier stat than it should be because, of course, everyone's got to pay the pension. Everyone's got to fund health and education. So, I mean, well, Trump may not, so I guess anything's possible.

28:39But in kind of, you know, real mainstream economics or mainstream politics, I should say, 99 % of that spending stuff is agreed. Defence budgets are kind of agreed, as you said. But, yeah, just fascinating that for all of the differences that get highlighted at election time, 99 % of spending is effectively bipartisan, which is interesting. Well, it actually is one of the reasons, just on the big macro picture and talking about the maths of things, why you can be reasonably pessimistic with all of this because when it comes to the partisan discretionary part of US fiscal spending, there's not a lot there to play with.

29:17Like it really would take someone to say we're going to cut the military in half or we're going to cut Medicaid in half or, you know, one of these massive entitlement programs, which is like neither of them, not even Trump, right? And not because he's a nice guy or anything like that, but because like any politician, he wants to stay in power or at least, you know, I guess there's only two terms. Well, so far, let's see if that gets changed. But like politicians will read the room in that very important regard because anyone who comes and says we're getting rid of this is instantly gone. So there is very, very, very little that can actually be done when you sort of, it's easy.

29:54Podcasters are the classic, right? Here we are in our Ugg boots with a microphone. You just need to do this. You should just do this. The reality is it's like unless you are a benign dictator, you can't do that. It's politically impossible to do it, which is why as an investor with your investment hat on, you can go, oh, this is sentence. And there is a certain future which is set in stone to some degree because of this immovability of some of these programs. Yes. You know, I'm more Pollyanna than you, mate. I will never give a politician a free pass because it's like really difficult to do something.

30:31So you're right. The policy hat versus the investment hat are two very different things. I have people say to me all the time, oh. I'm going to give them a free pass, but I know what they'll do though. Well, you know, yeah. Never bet against self-interest. Right, right. People say that. I've criticised the current government. Oh, what do you expect them to do in three years? The other one I've been charged for nine years. I expect them to do things to the national interest. Don't tell me it was hard. Don't tell me I've only had three years. You're on the Treasury benches. You wanted the job. Your job is to do the right thing by the country.

30:56Don't pretend, oh, if I do it, the bad man will be mean to me. It's like, I don't care. That is not an excuse. If you want to be the Prime Minister who takes orders from the opposition and the media, give up the job and let someone else do it. But I take your point otherwise. the reality is they're all too bloody gutless and spineless to actually stand on something and make a positive change because the bad man might be mean to them. And that's a pox on our politics, but you're not wrong. There's a difference between accepting what will likely happen and accepting it or explaining it away or giving it a pass.

31:29And that's kind of where I would just draw that distinction. I'm going to butcher this, but I saw it the other day, which is a cynic is an optimist who the world has crushed their spirit or something. I may be a little bit generous to myself, but I feel as though I'm a very cynical person and the older I get, but I feel as though it stems from a root optimism of the world and the way it should be. The fact that it's not just makes you very bar humbug. Yeah, no, I think that's right. I'm being dragged inexorably in that direction, I've got to say. You know, I for the longest time had assumed that most pollies are there to actually try and do the right thing.

32:07I think that's still the original motivations. I think have just been so beaten and broken by the party system in both parties that whatever they thought they were there for, they've just lost sight of. And there's a survivorship bias there too as well. Like the person who clings to those ideals never gets anywhere, so you don't hear of them. So the ones who survive are the ones who play the game and fold to the incentives. Right, exactly. And it happens in business too, by the way. Incentives is the right word. We've talked about manga a couple of times. Incentives is the right word because the other thing is you then start to justify it to yourself because you start to say, well, the only way I can make positive change is to stay in power.

32:42The only way I can stay in power is to lie, cheat, steal, backstab and, you know, make promises I didn't intend to fulfil. So I'm going to do that because that way I can justify to myself that I'm really doing it for the right reasons. And once you start, I mean, and by the way, that's also partly reality. Like I'm not Pollyanna enough to recognise that, to your point, you've got to be there to make the change. So I get it. But it's a very messy old world, isn't it? It is. It's why when, not always, not even perhaps most of the time, but not uncommonly you get a politician who leaves politics and you go, God, they're brilliant.

33:14Oh, everything they say. Why didn't you say that before? So they're not idiots, right? Like they've gotten to a certain, they've had a certain degree of success in the highest forms of public office. You're not an idiot, right? At least not in one or two important kind of ways. but you also, and that being that you recognise that there is a way that the game is kind of played. Once you're on the outside, you can call it as you see it, right? Because there's no political cost to it. Right, that's right. And it's always easy for us to do. And by the way, I think that's actually okay. I think that's okay to say, look, I don't need to be elected, but here's what I think is absolutely best.

33:48And then other people can say, not that I'm the fountable knowledge, but other people say, well, yes, but we don't, holding people to better account. There's a great article about Matt Keane in the paper today. Let's go on Thursday, as it turns out. And I'll get the quote. And by the way, no, I won't go tangent. Where's my, where is the quote? The reason I say this, he says, this is the article. I quote, I'm probably more pugilistic, end quote, Keane says. Quote, I do stand up for what I believe in, and that doesn't always mean against the other side. I'll call that nonsense on my side, not because I'm trying to hurt the Liberal Party, but because I think we can be better.

34:23And that, to me, is the fundamental problem with most politics. So what I was going to say, everyone's complaining. Like, oh, I hate Matt Keane. You're wrong about Matt Keane because he does this. This on the environment, this on the climate. It's like, people see what they want to see, right? So I tweeted that this morning and 90 % of the responses are like, I hate Matt Keane because I don't believe in climate change or I hate Matt Keane because you're in the net zero. I'm like, that's not what I said. Look at the point I was making. The point was about the, and the tweet was absolutely about, you know, I say on the tweet, we need more Matt Keane's in politics and we need more Matt Keane's in party membership and among the rusted ons of both parties.

34:53Defending bad policy makes your party worse. arguing for better makes your party and our policy and our nation better. That was my tweet, right? Oh, yeah, but Matt Keane's out. That wasn't what I was saying. Matt Keane, oh, he sold it at the Liberal Party. That's not what I was saying. It's just funny that people read what they want to read. They're getting triggered by Matt Keane's name rather than actually reading the point that was made. And that's the fundamental problem with politics, right? They've literally done exactly what I said in the tweet not to do, which is actually talk about the issues.

35:17Don't just jump on the I hate him because I disagree with him. But actually, did he make a point here that was actually worth separately, deliberately, definitively talking about rather than just who Matt Kenney is as a person, that's the issue. Way too much subtlety on that point. Isn't it? Well, obviously. I didn't think it was that complex, but apparently it was. Let's say, oh, sorry, can I do your optimist quote? Yes. So I Googled it while you were talking, and this is probably not the quote, but it's, the first quote is an L.L. Roosevelt quote, which is not what you're talking about. Quote, a stumbling block to the pessimist is a stepping stone to the optimist, which is lovely, right?

35:51Oh, nice. Someone's replied, a cynic is an optimist who stumbled over the stepping stone one too many times. You're right. Okay. I love it. I love that's what you were coming from, but I Google that. I'm sure there's a few. Best I can come up with. Best I can come up with. Mate, let's do tariffs very quickly before we move on. I do want to talk about, it's going to be a bit US-centric actually, but for a different reason. There is a chance if the AFR, I think the Fios might have reported it as well, that there are considerations for a general tariff on all Australian products of between 2 % and 8 % imported into the US.

36:23and this morning, that was yesterday, this morning we see the PBS is a target of the Trump administration because US pharmaceutical companies don't like Australian governments capping the price they get paid for their drugs. They want a free market, which would mean the rest of us pay more for our medications. But obviously if you're Trump or you're a US company, you don't really give us stuff, which seems to be increasingly common about foreigners. They can die if they can't afford the medication, according to the US. By the way, to be fair, it's the way they treat their own citizens. So, yeah.

36:52They want to complain about socialised medicine? I'll take it. Anyway, so those two things are happening, mate. I don't know that there's a so what other than to kind of just run up the flagpole after last week's tariff conversation. A 2 % to 8 % increase. Here's the other thing, by the way. I've said that on radio a couple of times. Someone said in response, oh, it's not too bad then. 2 % to 8 % is okay. Which kind of tells you exactly where we are, right, which is where you've got 25 % on Mexico and Canada, 25 % on steel. People go, 2 % to 8%. Oh, that's pretty good. Okay, yeah. framing is everything right perspective is everything and so that's i i i frankly want to put a stake in the sand and say no two to eight percent is two to eight percent more that americans have to pay and it makes us two to eight percent less competitive that's not it's not nothing um but it's but it's notable and if it's on everything i guess it is what it is um whether the government can can negotiate something out of that something better than maybe was planned uh what trump would want in in return for for giving something on tariffs they're the questions that the current government or potentially a new government or the re-elected government come end of May are going to have to deal with.

37:51Any particular thoughts on that bit of the new tariff news or we just move on? No, not really. It's just a very difficult situation. You can't influence, you know, what's happening at the White House is we just, I think we often overstate or overthink our agency in the world. You know, we are an important ally to the US. We should tell them. It's like, we've got a shirt front. Putin is like, he doesn't care. He literally doesn't. We are the weakling. They are the schoolyard bullies. Oh, I'm going to stand up to the bullies. It's like, no, you're not. You're going to talk tough. He's going to punch you once.

38:24You're going to run into the corner and tell the teacher. We're not that big. We're not that important. We have no sway. California's bigger than our economy. Just one of them. Texas is bigger than our economy, right? Like, it's sort of like we're... Not that we shouldn't be diplomatic and engage and all of that stuff, and not that we don't have some good chips on the table that we can negotiate with, But it is not easy. I don't know what I would do. There is a fine line between playing, trying to win the war and lose the battle. I think it's probably strategic in some sense to give up on some things.

39:04You push too hard, you threaten to make it worse. You don't push at all and you just get walked all over. Now, that's the most obvious statement in the world. I don't, where is the right point? I don't know, other than it's very difficult.

39:22Yeah. The end of the day, I think we, I've got to be careful how I say this because like your tweet, it's going to be misinterpreted. Right, right. I'm not a fan of Trump at all, but I don't think he is wrong to put America first. Yeah. And let me try and explain that a bit. Like, he is elected by the American people. We expect our government to do the same thing. Like, you know, I care for all of the citizens of the world. I really do. But I would hope that Albo has got my and my fellow Australians' best interests at heart before them. And I say that out loud and it feels like, you know, it's all about us and stuff everyone else.

40:01And it's not exactly that, but it's not a million miles away from that. It's like a CEO. Like, you know, their job is to look after the shareholders. Now, that will mean that some decisions are made that for non-shareholders will be seen as not entirely savoury and maybe objectively aren't great, but that's their job. So you've got to, like, it's not the CEO of, I don't know, Woodside Petroleum's job to advocate for wind power. Yeah. You know, like, it's just not, and we shouldn't expect them to. And the same way that I think, the same way that happened recently now, a lot of the US funding for research in Australia with a lot of our universities being rug pulled.

40:42And obviously academics are quite upset about that. Obviously as someone who appreciates research and the technologies that it discovers, I'm concerned by that as well. But I can't fault the rationale there to some extent. It's sort of like, again, this is a country that is in big trouble with its financial, fiscal, monetary situation. They just are. As we talked about before, we don't need to go down that rabbit hole. And they're looking around and they're kind of fiddling while Rome burns to some extent, but they're looking around going, we've got to save some money. Just as you or any of our listeners would if your household budgets were in disarray, you'd sit around the kitchen table with your other half and say, well, you have to make some tough calls here.

41:22Yeah, yeah. And maybe, you know, the kid's piano teacher is going to be a bit aggrieved that they don't get that lesson anymore or the garden. I don't know. I'm trying to think of services that people might have, you know, but that's not your concern as the household. So I guess where I'm going with all of that is that what should Australia do in regard to all of this? Again, it's a fine line, but just think about our interests and put them first and foremost. It feels like it's strange that I would even need to sort of say that, but sometimes you hear what they do in response to some of these actions from overseas and you think, well, you know, what is your agency in terms of the Middle East?

42:03and where does that, how does that relate back to the good of our citizenry? And that's a very complicated question. I don't want anyone to infer, try and second guess what I mean by it. I don't mean there's no hidden meaning or messaging in that at all. Gosh, you've got to be so careful these days. Good people on both sides. No, no, I instantly regret saying that. But what I'm saying is, I hope it's obvious what I'm going to say because I'm going to stop digging at this point. No, so I think you're right. I think that I will absolutely back you up. the job of a national government is to put the interests of that nation's people first.

42:37It's why we have national governments in the first place, right? Why have a national, why not have a world government? Why not have no government? Because we've agreed as a people that we want to collectively as a self-defined group. This is where international issues around, you know, secession and independence really matter because we're like, at one point we said, actually, we think we're Australians, not Brits, and so we want our own country, and we will vote for that in 1901, and thankfully it was bloodless and we were able to have our own country. It's still part of the Commonwealth, but we chose to effectively secede from Great Britain as an autonomous entity.

43:10And we are, you know, so we are us. And that's, I think that's, it's uncomfortable, right? Same with the immigration debate. Speaking of treating on eggshells and sacred cows, it is the government's job to determine how many people from outside the jurisdiction should be able to come into the jurisdiction based on what it does for the living standards of those already here. And also already here as in born. I mean, born and immigrated. That's the job. Insert obligatory, I'm not being racist qualifier. Right. That's where you've got this problem. Beyond that, which I think everyone kind of gets, it's a perfectly sensible, objective, reasonable point.

43:45Of course it is. And by the way, one of the stupid things about the immigration debate is there is this assumption, and probably because there are a lot of knucklehead racists out there, when I say immigration, I don't mean brown people immigration or black people immigration or yellow people immigration or white people immigration. I mean immigration. Yeah. There is no, to your point, there's no undertone. There's no, oh, what I mean by immigration is the stupid Poms or the Yanks or the Indians or the Bangladeshis or the Kiwis. Don't forget the Kiwis. Right, they're the Kiwis. Sorry, got them in the end.

44:11But, like, it's not, it's genuine. You made the point about maths. Like, maths is the maths is the maths. We can argue about who from that number is the appropriate immigrant. We have those conversations, but it's not about that. This is where I get really frustrated by this conversation where you can't say actually population policy is a tool of national government and the national government's job is to act in the national interest. That's what we do. Now, we can then also, by the way, say as part of that, we have a humanitarian responsibility. I think morally we do. We have a moral responsibility for foreign aid.

44:43Absolutely. Yep. Those things aren't incompatible, but it's in the national interest. And what's in the, and by the way, when we say national interest, we mean the interest of the nation, including the people here. If I and enough of us think we should spend expedite of our tax revenues, helping other people who desperately need it, morally outside our jurisdiction, that's in the national interest as well. It's in my interest. Yeah. And that's the key, right, is to put the needs and the desires and the wants and the interests of Australians first. It shouldn't be controversial. Now, by the way, it is to some people.

45:11Some people, I spoke to some guy on Twitter who argued with me for about half an hour and then eventually admitted he was for open borders. I'm like, that's fine. That's your view. That's cool. You can have that view. I don't have that view. Does that make me racist? No. Does that make me, you know, am I happily putting my interests as a middle-class white bloke in a very prosperous country ahead of some poor bastards who were born in poverty overseas? Yes, I am. And you know what? That sits uncomfortable with me, but it also sits fine. I've made that deal with myself. This is going off a massive tangent, mate.

45:38I remember that deal with myself. You know, could we all have half the things we have, get paid half and send more of our money across to poorer people? Yes, we could absolutely tomorrow. As a society, directly or indirectly, consciously or subconsciously, we've chosen to look after ourselves to ascend a living. we want and I will say, frankly, to some degree, to hell with the rest of them. And that's kind of uncomfortable, right? I've got to live with that. I've got to think about that and we should all at least acknowledge it for ourselves. But that's also, that's the choice. That's the reality.

46:05That's the role of government is to represent the interests and the decisions and the preferences and the views of their citizens. Yep. I can't argue against that. That's a much important topic. Go on. Yeah, well, the point I would, I think you touched on it there, which is interesting, is that at a meta level, It's actually things like foreign aid are in our interests, right? Because that's the other thing. Correct. Like there are things that it's sort of like when we can use our agency overseas as we'll get onto brands in a moment in something else. But in terms of brand Australia, that is a massive competitive advantage.

46:39That's actually been the biggest source of advantage I'd say for Australia and the US is in having stable government and a prosperous lifestyle, you attract people from all around the world. and when you use your discretion to sort of say, yeah, send us your best and brightest, that is huge. Think about it from a corporate standpoint. Oh, absolutely. You know, there's two companies. There's Phillips Incorporated, there's Page Incorporated. I'm going to make you come into the office and work 60 hours a week and you get half an hour lunch break and you've got foosball tables and kombucha on tap and, you know, I don't know, all the things that the cool companies are doing.

47:13It's like you're going to attract, and it's better pay, let's put the obvious one in there, you're going to attract a better talent and you're, as a consequence of that, you're going to outperform me and you're going to be better. So in other words, you've done all these kinds of things that have ostensibly cost you more in terms of your cost of doing business, but it's actually strengthened your moat and given you a massive competitive advantage. It's exactly the same with countries. And so I am absolutely like, if there, person from X, wherever around the world who is super talented, super intelligent and like most immigrants prepared to work their butt off because they know the harsh reality of living in some of these other places around the world and we want we're like let's let them in right but because it's good for us right and and it's just like and then that that compounds on itself i i would i'm actually i i think i am a big believer in in a big australia but not at a pace that we can't sustain, right?

48:13So if we get to 50 million people, it takes 100 years and we do it in a very sensible way. I'm all for that. But we're not having enough babies here to replace ourselves. So let's be really picky. It sounds a little bit evil. No, it's not. But the thing is, again, at a meta level, as we do that and as we become more powerful, and I'm just not talking about military power, I'm just talking about, what's the word for it? Social power, perception power. You know, we become this beacon of, you know, attraction and then we can actually have more agency around the world and more resources to push our agenda around the world.

48:56That's how you fix the misery in the world is by being the best that you can be and then using that for a force for good. It sounds very nice to sort of say, you know what, let's just let everyone in and let's give all our money to all these, you know, despots in, I won't mention any parts of the world, but in particular parts of the world. It's like all that does is impoverish all of us and sees a bunch of money sucked up into the hands of corrupt individuals. And so we feel good by doing it, but as a country and as a nation, we haven't helped ourselves. And ironically, we haven't even helped the other people, right?

49:32So I'm with you. No, 100%. And I've said, you know, I agree before. Immigration is a superpower. Oh, yeah. We get to literally say, hey, we've only got a certain number of spots. Send us your resume. I mean, to your point, the company analogy is a great one. I'm hiring for a new sales rep. I'm going to take as many sales reps as I want to work for me. You're going to pay them as much as they want and we'll see where we go. It's like, no one does that. It's like, well, I'm going to pick the best sales rep I can. I'm going to throw it. Now, some people will say, your offer's not as good as someone else's offer.

49:56They'll go to the US. They'll go to London. They'll go to New Zealand. Let's pick up the keywords again. And that, good luck at all. But we get to say, actually, the ones that send us our CVs, here's the top 15. Let's take those people. Yeah. Because they're going to make us better. You're mad not to. Oh, yeah. Why wouldn't you? It's brilliant. I agree. I agree. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

50:20I want to talk about the value of brand value, mate. And this is a comment. I mentioned Motley Fool TV earlier. I don't mean to keep referencing it, other than if people watch that, this will be a bit of an echo. But I want to get your thoughts because Tesla, the lightning rod for fanboys, for critics, for lovers and haters, it has had a terrible 2025. The time of recording shares down 38%. Apparently car sales in Germany for Tesla are falling 79%, 72 % year on year. And it's largely being sheeted home. I don't think this is a stretch to believe. Largely being sheeted home to Elon Musk's role and responsibility inside the new US administration.

51:01And that is the so-called DOGE, the Department of Government Efficiency, and Musk's comments and wandering around stages with chainsaws and that sort of carry on. The reality, and it has been the case for a while, the perception of Donald Trump and the Trump administration inside the US is very different from outside the US. And Musk and Tesla are really, really flailing. And I don't, look, part of it might be, probably is, to be really fair, the catch-up of the S-curve, right? The early adopters that bought their Teslas, the rest of us haven't got one yet. So there's a lull and that's natural.

51:32There's a whole lot more competition coming through right now. Again, unrelated to Musk's antics, BYD is on an absolute tear share price-wise and sales-wise. That's happening. The BYD, of course, sponsored my Mighty Roosters, so I'm a big fan. Maybe I could add to BYD next. Oh, the BYD shark ute looks good, actually. I spoke to a bloke who got one. Anyway, different conversation. Oh, come on. Now you are on a commission. Right? No, no, I'm not. I'm not buying one. I'm not buying one. But it looks really cool. I love it so far. He was driving on the road. He's not driving as a ute. So, you know, do what you want.

52:01Right, right, right. Anyway, not a commission, but if it helps the roosters, that's a win. Buy a bear with it, help the chooks. No, but I think it's interesting, mate, because there is a real question about, you know, the impact, the key man risk, the value that Musk brought to Tesla. I am absolutely sure he single-handedly kept it afloat because he created a story that investors would buy into and pay a squillion times earnings and a squillion dollars when there were no earnings. to buy shares in the story that he painted. And to be fair to Musk, he's largely delivered on much of it. I mean, the models he's got out now, a new one coming, a robo-taxi, which may or may not ever turn up.

52:39You know, he has done what he said he was going to do, almost never on time, but, you know, he's delivered. But his, a bit like Steve Jobs, reality distortion field of getting the people to pay up even when the very existence of the company was at risk. You know, in some version of the future, or the party goes broke. and yet we get to now, those shares are still worth squillions of dollars. I'll check the market cap right now is$739 billion US dollars. P.E. ratio of 116 if you don't mind. I think you mentioned earlier price sales about seven times. Yeah. I don't know the answer to this, mate.

53:16I opined that there's two things going on. I think Musk's antics are hurting sales. It seems reasonably likely if not certain and I think Musk's antics are hurting sentiment which impacts the share price. And I think, you know, you've talked about the short term or the long-term price follows value. In the short term, you add the fundamentals of the business plus sentiment, positive or negative, and you get to a share price. And so people are looking at Tesla going, okay, well, it earns as much. I'm prepared to believe that the future will be this good. Add those together, that's where you get the current share price from.

53:47Hard to believe over the past four months or three months or so, what hasn't happened is just people say, well, actually there's less cars being sold and I'm less excited about Musk as an individual, that the sheen has gone off it, the glow has dimmed somewhat and we see a 40 % fall in the share price. And you think about that as an investor, so I'm sure your view is on Tesla. The bigger one for investors is where is the source of your share price value coming from? The people who kind of said, well, it's not about Musk, it's about the cars, it's about the cars, it's about the cars. I think in hindsight, you might have thought that.

54:20Much of the rest of the market said, actually, no, it's about the cars and it's about Musk. It's about the halo. It's about the reality distortion field. And we're no longer as keen on the cars. We're no longer as keen on Musk. Yep. I mean, we're all peacocks to some extent. I mean, a lot of what we do is social signaling. Oh, yeah, totally. I mean, I overthink it actually too much, but just how much of our day-to-day behavior. You know, we've got smartphones and rockets and everything, but, you know, the brain, the operating system is the same one that we had 10 ,000 years ago. I really just care about what my fellow people in the village really think about me and a lot of what I do and say is just to signal to other people that I am worth having around.

54:58That's the reality of the situation. And there was a huge amount of social signaling in owning a Tesla. And I'm not having a go. The cars are brilliant, right? They're fantastic. I love the cars. They're awesome. But it was also something you know, it said a lot about you as any purchase that you make does, right? Like I'm pro environment. I'm pro future and technology. I'm pro whatever, you know, association you want to build around. There's a bunch of them. And I'm not trying to say that in a negative context, like, oh, you only bought that so you could, you know, signal to everyone about how caring you are.

55:33I'm not. Like the opposite dude in the big Ford pickup truck that's just spewing like carbon. They're signaling something as well. They're just signaling something potentially that's in their pairs. I don't know. I shouldn't go there. But my point being. Oh, come on. Don't pretend Tesla isn't doing the same thing. Well, it is. If you drive a Tesla and take off the lights, you're saying exactly the same thing. But that's my point. And so with what Musk has done and what he is doing, there are those that love what he's doing and those that don't, but obviously it is a consideration for people. I've had it in just anecdotally in conversations, like I really was going to get a Tesla but not anymore.

56:09In fact, I've seen it more than once I've been driving and I'm behind a Tesla and it said the sticker is, I bought this before I knew Musk was crazy or something like that. Something like that. I've seen the same thing. And it's like, so it's a thing. Now, is it right? Is it wrong? Is it fair? Is it not fair? I don't know, but it's a thing, right? And it just is. And this is the point that you're really getting at here is that the brand really matters. Yeah. Look, what do I think? I think ultimately at the end of the day, I think the product itself does matter. You might have very negative feelings towards Musk, But if the Tesla is just vastly superior than anything else that's on the market, and I'm not writing, I'm not saying it is or it isn't, I'm just saying if.

56:55Oh, you know people are going to write in. You can't talk about Tesla without people writing in. Unless you say it's the best car ever. Actually, it's a great car. I love the car. Like, don't at me, right? It's brilliant. I think it's an awesome car. But what I'm saying is if it is objectively awesome and better than everything else, they'll be fine. Right.

57:17However, everything needs to be put in context here. So you said that shares are down 30%. It's actually down 50 % from the very top tick that they hit in mid-December of 2020 because they really had that, in the wake of the election, really almost$500 a share. Yes, I've forgotten that. You're right. So really just ran up. So down 50%. Yeah. That being said, I'm just on Yahoo Finance, you know, five years ago they were closed at$32 a share. Yes. So eight times that. So$235 a share now, right? So I was like, hmm. So there is that. There is also the fact that even if, let's, devil's advocate here.

57:59You think that the cars are the best and that they will continue to have a market-leading position in terms of quality and technology and all the rest and their sales will be just fine in the full span of time. A seven to eight time multiple on your sales for a company of this size assumes so, it's beyond assuming success. Like it's assumed. That's by the way, that's after the shares of half, by the way. So this is clear. You're talking about the December high. You're talking about right now. Now. The shares are 50%. They're seven times sales. Now, like that is, and people will go, yes, but it's not just about the cars.

58:37they're also an energy company, they're also a robotic company, and all of these things are potentially true, but they're not true yet. And so to make that, and again, I'm not even being bearish, there is a world where we will look back and go, my gosh, we had the chance in 2025 to pick up Tesla at$235. Because in the year 2045, it said$1 ,000 a share, right? And we think what an incredible opportunity that was. But for that reality to unfold in that way, we need to see the sale of Tesla cars, the vehicle themselves continue to do extremely well. And we need to see all these adjacent technologies and initiatives run forward and have an amazing success as well.

59:15And that could happen. It could absolutely happen. But the higher the price, the more that that is assumed, you know, the more that even if it happens, it's like, well, I'll just get an average return. Because it's very unlikely that over time it will sustain multiples of that extreme. So you might have a sense where it's like, let's say that sales double next year, but the price to sales goes, I'll use price to sales because just it's easier. The price to sales drops to three and a half. It's like, well, it's a wash, right? The share price has gone nowhere, even in an environment where in one single year, this massive, massive, what is it, trillion dollar company at this point in time or close to it, has doubled its sales.

59:57So for me, it's sort of like just get away from the main point, just from the investor side of it. Yes. I can't get excited about the shares even despite the discount. Normally I see a falling share price and I go, okay, now I'm interested. Maybe there's a bargain to be had here. I don't think it's there yet. I might end up eating those words. And it's not something I'll lose any sleep over if I do because, again, all I can do as an investor is make your best guess about the future. I'm just always uncomfortable when I have to make the guess is, Things not only have to go brilliantly well, but even more so than give an assumption that it's already going to be brilliantly well.

1:00:35That's how good it has to be. And maybe, but it's, you know me, I'm always about asymmetry, right? This is kind of like heads I'm right and I make a little bit of money or tails I'm wrong and I lose half my money. That's not what I'm looking for as an investor. It's more than half, right? If this thing force a PE of 30 times, you'll lose two thirds of your money. Yes. There's plenty of downside risk. I do want to come back to the point I was making though, mate, speaking of taking other points from the point actually being made, which is the value of Musk himself because you're right, even at this price, it's a hard investment to make.

1:01:09Yeah. The challenge was at some other point people would pay double this price and that would have been 15 times sales. And again, the difference seems to me that combination of the value imputed in the individual from a product perspective, i.e. Musk makes great cars, and the value imputed on top of that, and this is the expansion, multiple expansion, or the multiplier effect, or it goes in reverse, the divider effect maybe. So I pay more because Musk makes great cars, and I pay more than that again because Musk is Musk. And I think to your point, even if those sales are true from here, the people who paid double the price either expected car sales to be much, much, much higher or had said, well, Musk is a genius and I love him and therefore I'm going to pay more for his company.

1:01:54And I think I want to just kind of highlight the mask off moment here, which is just that idea of, and same for any CEO at any point, right? How much more are you paying for the CEO and how logical it is? Because, by the way, the CEO's brilliance is already in the production numbers. It's already in the company fundamentals. And so you think about the difference between mid-December and today is what? Is it cars falling off? Yes. Why are the cars falling off? Because people seemingly, some combination of, you know, the lull in post-first adoption, early adoption sales, and the view people have a musk as it obtains to the brand for the purchases, and the shareholders on top of that also seem to be saying, I'm not so sure anymore.

1:02:39And I guess that's one thing about the value of brand value. What is the value of a brand and where is it encompassed? For everyone who said, oh, it's all about Tesla. Well, seemingly it's actually not. I mean, German sales are down more than 70%. Maybe they've sold enough EVs, but probably they're going to go, like, it's not just Tesla, it's Musk slash Tesla. Because when you're buying the shares, I don't know how many people would have said, I'm buying shares because I think Elon Musk will remain popular and that will help people's view of Tesla. And yet that seems to me, at least, based on the share price reaction, to be exactly what happened on the run up, by the way, and the run down, different people taking different decisions at different times, based on their view of Musk.

1:03:13I mean, that was the thing, right? Rather than the vehicles or the company or the metrics themselves. As a more general rule outside of Musk, I've always been annoyed as a shareholder if the CEO of my company gets involved in politics. Yeah, right. Because it's almost by definition just a question of who you're going to annoy. But you're going to annoy half of your potential customers. So just stay out of it. Like if I was selling cars, I would want to sell to the people on the left as much as I want to sell to people. I just want to sell as many cars as I can. And if I come out in support of, you know, the Democrats or Republicans, I just, I mean, pick your poison.

1:03:55Either way, I've halved my potential market or I've certainly not done. I need to make sure that the people that I'm pandering to love me much more. The excess love I get is enough to outweigh the hate I get on the other side because it's just silly. I think it's any CEOs who are listening, it's just like, obviously, you're entitled to your view. but it's just like, again, your job is to represent the interests of the company and for you to get up there, you know, like I won't name names, maybe I will, I don't know. No, I probably won't name names. There's CEOs on our market who love to stick their nose in and it's just sort of like why?

1:04:33And it's not even, usually it's because I just disagree with their opinion, which is why I sort of get angry but more to the point it's like where's the upside, dude? What are you doing? Like shut up, no one cares. and the other point I wanted to make in regard to Musk or the cult of personality is it's not just the brand in terms of how consumers think about it, it's the brand in terms of how those with capital think about it. That's exactly my point. That's exactly it. So two things overlaid. When everyone's excited about the cars and the investment brand, you're off to the racers. That's how you end up with 15 times sales.

1:05:11To put that in really plain terms, it's just like you can have access to money far cheaper and far more readily than your competitors. Why? Because you're Elon Musk and everyone thinks that you see the future and you're playing 4D chess. So Scott comes up with his electric vehicle company. It doesn't matter how good your engineers are. It doesn't matter how good your product is. You're just not, you cannot compete with that personality, right? And people, again, the operating system's hundreds of thousands of years old here. And, you know, the man with the charisma is going to get more support.

1:05:44And support comes in the form of the brand loyalty for the consumers, but also in those who are willing to take their hard-earned cash and put it behind that person because they believe, rightly or wrongly, in the future that they're espousing. And it can be a – I've always found it a bittersweet kind of thing when you have – there's no doubt WiseTech shareholders are learning right now to have a highly charismatic, influential leader at the helm because it can be wonderful, it can be really great, but it does come with a dark side, which is as soon as they do something to annoy people, you know, the fall from grace can be rather, not just disappointing from a citizen standpoint, but from an investor standpoint.

1:06:28Ramifications can be very real. And it's not just, by the way, getting involved in politics. You know, if your favourite CEO gets themselves into some personal dramas that tannishes the brand. I mean, we talked about key man risk a lot lower, key person risk last year. We talked about Richard White. We talked about Chris Ellison at Mineral Resources, Richard White, of course, at WiseTech. And the whole, you know, even when it doesn't actually directly impact on the business's operations, just being in the headlines for non-political, non-business reasons was enough to say, well, actually, hang on, how much value do we put in this person?

1:07:02And it's hard, right, because jobs builds Apple. Yep. And he's not perfect and he ends up dying, unfortunately and tragically, from cancer and leaves the business in really, really good shape. Others have, a bit like Musk, jumped the shark. Think about your thing about, by the way, getting involved, not just in politics, but the irony of Musk, irony maybe not, maybe we'll use that too liberally, he's actually managed to go to the other side of politics to most of his buyers. I mean, not only is it just a relative representative group, you mentioned you're annoying half your customers. Musk's annoying three-quarters of his customers because there aren't many people.

1:07:33you mentioned the big yank trucks before. There's not many people buying yank tanks who are like, oh, Elon's on Team Trump. I'm going to trade in my Ram 1500 for a Tesla S, right? Cybertruck. Yeah, right. Well, some, but not many, right? So you've got people on the left who are like, I might buy a Tesla because I believe in the good stuff or I've got the money or I'd like to show off and that's my version of showing off. The people on MAGA are, I'm going to show off with my American flag and my yank tank. So you've literally, you've only three quarters of your customer base. On one level, so there is some grudging admiration from us, despite what you said, mate.

1:08:07The grudging admiration is, at least he's having the courage and conviction despite standing to lose billions of dollars. I mean, there's something to be said for that, right? Which is like, I care so much. Now, shareholders don't agree, but there is something of, I'm ready to put my money, serious, serious, like nine, 10 figures at risk. Nine figures, nine figures, nine, 10 figures. because I believe so fervently in this cause. So he gets a bit of grudging admiration for me. But then again, I'm not a Tesla shareholder. I haven't just had half my money wiped off. So I imagine plenty of Tesla shareholds.

1:08:40Either I just die in the wall fanboys who can see no wrong. Even if Tesla goes bankrupt, they're still saying, Elon will fix us. Elon's king. He's our man. Or you're like, oh, man, Elon, you've really, you know, you've jumped the shark this time, dude. I'm leaving Team Elon. And that's, again, back to the point. That's the brand issue, right? I get a bit from my mates because actually when we first started doing this podcast way back in the day, we'd go into the Triple M studios. There was more than enough fanboy effusive, like, for me. I was in awe of the guy. I just thought it was so cool what he was doing.

1:09:13So things have changed a little bit. Right. But it's also, I think too, like where I get into debates with friends is like two things can be true at once. Like someone can be like a really disgusting human being but still be impressive in certain regards. The example I often give is that Newton was apparently not a pleasant individual to be around, Isaac Newton. And does that diminish the laws of motion that he came up with or are they separate from that? Right. You know, I really like Michael Jackson's music but dot, dot, dot, I'm not going to fill in the blanks, you know. And it's kind of, it's a heart.

1:09:49There is a cognitive dissonance that's sort of there and I am aware of it. But at the same time, I don't think, I think we force ourselves to a black and white scenario unnecessarily. I just, I'm more than, maybe it's wrong of me, but I'm more than happy to sort of say, yeah, two things can be true at once, you know. Elon Musk can be like a nutter, yet he's very impressive in terms of the companies he has launched and what he has done. And that's the, I think that fundamentally that's the key because when you confuse those two things, that's when the hero worship takes off and that's when the share price goes through the roof because it's Elon can do no wrong, he is the second coming of the Messiah as opposed to rubbish bloke, smart guy, good businessman.

1:10:30Those three things. Like, you know, to assume you have to have it. It's like politics. I just meant the Matt Keane thing. It's like, you know, people say, oh, Matt Keane's a horrible man, so therefore his point can't be valid. It's like that's not how this works. You know, you can be wrong in 99 times out of 100, but the other time you are right whether or not you're wrong the other 99 times. It doesn't invalidate the point, you know. I'm a moron, but I believe gravity's real. No, gravity can't be real because you're an idiot. It's like, no, that's not how it works. Gravity is real. If I say gravity is real, it's real.

1:10:57It doesn't mean everything I say is right. But I'm not wrong because you disagree with me and everything else either. It's the argument. It's the point rather than the hagiography that we end up with and with the likes of Musk and others. Yeah. They say never meet your heroes and it's so true, right, because of the people that you admire because if you, you know, I'm sure we've probably got some diehard listeners, but they came out with us for a beer one night and probably leave going, idiots. We are no one's hero, mate. Let's cut that off. I didn't mean to suggest that, but you know what I mean?

1:11:27I do. The people that you respect for whatever reason and you meet them, it's only a downside because I already think you're great and I respect you and I'm such a fan of what you do and what you represent. And then you meet them and go, well, there's only downsides. Can you be more awesome than I already think you are? That's right. Yes, exactly. Probably, but maybe not. and yeah, so never meet your heroes is wise words. So we won't do any more in-person member events. Just assume we're wonderful listeners. Exactly. Go with that assumption. If you're still here by now, you do think we're wonderful for God knows what reason.

1:12:01Mate, I'm going to very quickly talk. Or you've fallen asleep with the pod machine. That's right. We should check those listening stats. Yeah, most of our listening is between midnight, 1am. Oh, okay, they're falling asleep. We put them to sleep. I'm going to mention something way over time, mate. Very quickly, I want to mention it because it won't really fit next week or I guess it will. We have our first dividend aristocrat on the ASX. Oh, big fan. Yeah. So look, it's a chap me I own, so I'm talking my book a little bit. The dividend, I hate terms like this. It's like correction and all that sort of stuff.

1:12:31It just leaves me cold. But in this case, it's notable not because of the label that it gets, but because of what it actually represents. In the US, where they have, frankly, a longer history of unbroken dividends and increasing dividends, they have this term called dividend aristocrat. And it's a group of companies and some fund manager came up with it to market their shtick because that's what they do. It's a bit like Fang and Wax and bloody Maga. Not Maga, what's the other one? Magnificent Seven, all that kind of rubbish. It's all nonsense, but, you know, it is what it is. Dividend aristocrats in the US are companies that have increased their dividends for 25 straight years.

1:13:04Which if you think about economic cycles and business cycles and business risks and uncertainty, all those things that come with doing anything over 25 years, it's a pretty bloody impressive result, actually. um again i don't care whether you end up being in a group a predefined group it's useless um but you know as if 24 years is somehow not worth talking about but 25 is wonderful right it's just so stupid um but that being said it is notable we like to celebrate round numbers and birthdays and jubilees and stuff uh solpats washington h solpats and i own shares everyone knows that i think by now um they today sorry yesterday in in podcast time but today in recording time on Thursday, announced for they have increased their dividend for the 25th straight year, which I just think is bloody impressive.

1:13:47And yeah, it's not a high dividend. It's not, you know, I'm not saying buy it for that reason. In fact, definitely don't buy it for that reason. Just because they've done that doesn't mean it can't fall over in year 26 or the business is bulletproof or anything else. But it's notable and it's worth thinking about when you consider how you're investing, why you're investing, what you're looking for for investing. Plenty of people don't want dividends. They're happy to go for just pure growth. Some people are happy to get both. By the way, SoftPath's outperformed the market for decades, so it's done both, which is kind of nice.

1:14:11But yeah, I don't know that I have a so what other than it's notable because they are the first one. So, you know, 25 years is a big deal. Not in itself. Is a round number a big deal? No, 9.9 % and 10 % are the same number, let's be honest. But being the first one there and the only one there is notable just because of what you have to have done as a business to get to that point. I think probably some credit to the management, some credit to the culture. We've long liked the business for its long-term success success and track record and culture and the way they go about their business. And yeah, just worth calling out.

1:14:43Does it matter? Should you invest in it because of that? No. The longer they do it, the longer they're likely to do it, but also there's a first time for everything. So the first time they have to cut their dividend or the first time it doesn't go up, I won't be surprised. I won't hate it. It won't matter to me. They'll lose that label. I kind of prefer they not have the label than have it because it just creates a whole lot of drafting and people getting excited just because it's got a label. It's like, who cares? People buy the Magnificent Seven because they're magnificent seven, not because they've looked at each of the seven companies and decided they're worth investing in.

1:15:09So don't do anything because it's something called a dividend aristocrat, but notable and worth mentioning. I mean, look, the fact that it's rare is all you need to know. Right, right. Like, well, why is it rare? And, you know, it's because there are economic cycles and businesses come and go. And so just to be able to achieve that over such a span of time, you're right, it doesn't guarantee anything, but it does give you a lot of information, I think. You know, it says that, and I've heard the team talk about it, every chance they get. They're super proud of it, right? And for them, you know in the boardroom that they are not making an acquisition or making an investment or doing anything if it threatens the dividend.

1:15:50That's a good point. And actually that is one of the best things about dividends and the underappreciated thing about dividends. And we all like dividends because who doesn't like a tax-effective income stream? Right. Like every retiree in the country loves it. I get it, right? And there's nothing better than having the dividend drop in your bank account. When, like, your number goes up in your bank account, it's like, they just gave me money for nothing. I mean, again, we've given them their money to invest, not for nothing, but it's just dropping like, oh, that's good. We got$300 future. That's kind of cool.

1:16:14Oh, look, and, you know, and I'll always make the point that it's like only pay me a dividend if you can't reinvest it at high rates of return because that's what I want and that's a whole other, there's a subtlety that's in that. But one of the best things about dividends is it's, companies are like people, right? Like, when you have a bunch of money in your pocket, it just burns a hole. I have to spend it. I have to spend it. What do I do? What do I do? Oh, you know, boss, there's$100 million of cash there. Oh, maybe we should do so. Yeah, all the fundies and analysts have been telling us we've got a lazy balance sheet.

1:16:44You know, you could juice your profit and we could, a company over here that we could acquire, oh, by the way, your remuneration package, you've got a couple of long-term incentive agreements in there that if you increase EBITDA by this, you might get a big fat bonus. Oh, really? You know, every incentive pushes you towards, like, spending that money. So one of the great things about dividends is, and a company that prioritizes them, is it kind of removes that. It basically says, we will absolutely do all this other stuff, but we do the dividend first. And that can prevent a lot of reckless empire building, which I think is a really wonderful thing.

1:17:17And it also can prevent a lot of unnecessary risk-taking as well because like, well, we could do this and it might work, but if it doesn't, then we're not paying a dividend and then we break this wonderful stream. Like it's a really good touchstone because we all know the saying, money talks and you know what walks. And there is all kinds of financial metrics from here till Sunday, but cash coming out of a business and hitting the bank accounts of the owners of that enterprise is a very hard thing to fake. In fact, you can't fake it. Like you just cannot fake. You cannot fake 25 years of real cash hitting bank accounts.

1:17:50And again, it doesn't count. It doesn't guarantee anything, but it shows you that they are a couple of things. It shows you that the business is very resilient throughout the economic cycle. It shows you that they have prioritized things in such a way to enable that to occur. And it probably suggests that they will continue to operate that way going forward. In fact, there's probably a bit of a Lindy effect at play here. Yes, that's true. In the sense that the more that that goes on, the more it becomes a badge of honor for the board and the less likely they are to change it. So after five years, it's like, like, oh, that's pretty cool.

1:18:24We've never lost a dividend in five years. That's kind of cool. After 25 years, like, if they were to cut a dividend after five years, the market might not be certainly happy with that, but it happens all the time, so it's not unusual. You go 25 years of paying a dividend and then you decide not to, it's like that's getting headlines, right, and not the good ones that you want. So it's a wonderful, it's kind of, but not really, but kind of the same way as they always say, you know, with your paycheck, savings first. So I take a hundred bucks out and put it in the savings account because then you can't touch it.

1:18:56It's kind of like that, but for a business. And rather than saying, well, I'm going to spend what I want to spend and hopefully there's some left over for my savings. Like it's in theory, mathematically, it can potentially be similar, but it's very different in terms of the practicality of it. Yes, I think last thought for me because we're running out of time. We're going late anyway. The other thing, I think it's worth noting and it's worth noting because some people try to be clever about this, but it is clever in its execution, which is they don't pay a high dividend. And so it gives them the flexibility to, firstly, to your point, reinvest some of those profits rather than pay it all out.

1:19:32They don't. They keep something invested in growth and buying businesses and buying more shares. The other thing is they, it gives them the flexibility to increase their dividend regularly for those who want that without having to, if they're paying out all your earnings and your earnings drop, you have no choice. Yeah. You put yourself into a situation and your share is in a situation where it makes their share, their dividends less reliable, less forecastable, or not forecastable. What's the right word? Let's rely. Yeah, rely. That's probably the right word. Because they're going to have to cut it out.

1:19:58Some people say, well, I want the 5 % now. I'll take 4 % next month, next year if I need to, if it comes down. And then you can do that. But it means that you've got to kind of allow for this kind of volatile up and down, up and down. So I'll pass it on, well, we'll increase it from a reasonable conservative rate to another reasonable conservative rate over time because we have more money. And so it's given them the opportunity when their statutory profits have fallen for one-off reasons, they've gone, well, well, we can see through that. We've got the money, we've got the cash, we'll pay a little bit more in dividends.

1:20:23And so it's allowed them to look after their shareholders who are wanting that dividend, certainly a reliability. They get to say, well, this is who, this is, companies, and you've said many times, mate, when you have the flexibility, when you have the autonomy, when you have the reputation to run the business your way, you say, well, this is what I'm going to do. And so I've had to say, we will be reliable stewards of your capital. We will give you a modest rising dividend. we will try and grow value over time. That's what we're here for. And so when you buy those shares, you know exactly what you're getting.

1:20:52They deliver on that promise. And that's kind of what you want. I won't, I'll mention the banks and hope you don't spend 15 minutes ranting. We'll never know. The banks do the opposite. They pay the absolute most they can. They have a dividend, an underwritten dividend reinvestment plan. So they get someone else to chip in to effectively pay some of that dividend. They've got the - They print money is the bottom line. It's a shell game. It's a shell game. They are playing the shell game because they're trying to convince you that you get a higher yield so you'll like the company so you'll bid up the shares.

1:21:20It works. Right? Well, that's what, yeah. More people buy the banks for dividends than sell parts for dividends. And yet, sell parts are the far better option, in my opinion. Yes. And they are going to deliver exactly what they're going to do and they're not going to do it by screwing you. Other companies will effectively take from one hand, give with the other, and pretend they're doing you a favour. And you choose carefully, right? Choose management carefully. Choose companies carefully. I'm a happy sell pet shareholder. I own no banks. and that company culture at Solpats is in no small part the reason for that.

1:21:51You said before that they don't pay a high dividend. I'm going to push back on that. Go on. It's a 3 % yield based on the current share price, right? Now, don't forget, they don't have any say in the yield. They have their say in the amount of the dividend. That's true, yeah. The yield is a function of the share price, which is the market, right? But I'd also say it's 100 % frank. So the way you do the maths is you just divide it by one minus the corporate tax rate. So 0.7. Three divided by 0.7 is 4.3. You also know 1.4 is the cheats way, if you can't remember doing the - That's the other way, 1.41, I think, is it?

1:22:23Yeah, something like that. Yeah, yeah. Anyway. But otherwise, it's 40 - So that's a much better way, actually. It's 40 % better than what the headline number is on a pre-tax basis. Yeah. And that's 4.3%. That's what the 10-year government bond is from the Australian government, right? So it ain't bad. I'm going to say it's not bad. The other thing I would say is this. I'm going to put this on the blog tomorrow, Friday, so it should be there. I wrote about it for members last week. I'll put it on the blog this week, strawman.com forward slash blog, the ligatory plug. But the reason I mention it is because I was talking about the, one of my favourite little valuation hacks for dividend stocks is called the Gordon Growth Model.

1:23:03Yes. And it's really easy to do because I even do it over a podcast, which is if you want to figure out what your average return is, just take the starting yield and add to that the rate of growth you expect in the dividend. So if you expect Solpats to grow its dividend on average over time about 3%, we'll call it 3 % per year, well, I'm getting 4.3 % with franking now, so I can expect a 7.3 % return. So the question is, is that a good enough return for me? And if it's not, and again, this is a harder bit to do on air, you can solve it backwards to say, well, no, I want a 10 % total return. So it basically says, well, if you need dividends to either grow at 5.5 % from where they are now, 5.7%, or you need a lower price.

1:23:45And you can work out what that lower price is, and it's easy. Like you don't need a spreadsheet. You can do this with a pen and paper or a calculator. It's super easy. So if you are a dividend investor and you're trying to figure out what's a good price to pay for a dividend stock, it's a nice little hack that doesn't get talked about enough. I'll put it on the website. Nice. There you go. Awesome. I'm looking forward to reading that. It's a really nice one, one of the simpler ways to do it. Valuation is simple, it's better, right? Yeah, exactly. And it's, as always, directional, indicative, and that's kind of what you want to try and do.

1:24:12Yes, 100%. Yep. Awesome advice. At the end of this podcast, not advice, education, at the end of this podcast, mate, thank you for spending more time with me than you should have had to. Will you come back on Sunday, though, after your feats of strength and endurance? You know I will. You can't stop me. In that case, I will talk to you on Sunday. Let's just enjoy the first half of your weekend and full 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.

1:24:44Subscribe to the free newsletter at fool.com.au forward slash listener. The Motley Fool operates under Financial Services Licence 400691.