How to be antifragile in an uncertain world. June 14, 2024

36:06And that's why I come back to regret minimization. You and I disagree on debt. We've got some mailbag questions coming up in the next couple of weeks about that. For me, it's like, well, actually - Not a mile. I don't think we're a mile apart, are we? No, no. Well, you're going to leverage back up again on the house. I'm like, you know what? I want to be literally on my entire aim. Yes. To a degree. Sorry. Yes, I shouldn't. To take more debt on to invest in shares. I'm like, you know, at some point in your financial life, it's worth taking a bit of extra risk to try and build up an SDG. At some point, you then, in theory, I would suggest to throttle back a bit, like, you know what?

36:40I've got enough now. You mentioned again, we're kind of pre-announcing the future episodes. And one of the ones coming up, I think I mentioned the Warren Buffett quo, or you mentioned it. We kind of talked about the gambling, what you have and need, what you don't have and don't need. That is literally my personal financial motto, which is when I'm at a point where I can say, actually, I don't take those risks anymore. Is there upside? Yes. Is the upside worth the risk of the downside? Hell to the no. I'm going to be more careful. So being anti-fragile for me, I think you're absolutely right, mate.

37:08This is precisely what people should be doing, regardless of whether your scenario plays out or it doesn't, some other scenario plays out or a third scenario no one can imagine plays out. If you're prepared properly as an investor, you're okay. Yeah, look, I mean, this is, I always despair when you read the, every second day, is it on news.com or something like that? The 30-year-old with the 40 property empire and look how they did it and you can do it too. And it's like, yeah, but it's all debt, right? The moment that they lose a tenant or they lose an income and they can't service that, The bank is a fair weather friend, right?

37:45They will go, pay us the money. Where's the money? It's like the Chopper movie. No money here. There is no money. Great scene, by the way. Great scene. And I did not do it justice at all. No one does Eric Banner justice. Oh, it's just so weird. He's being Chopper. Yeah, go. But when there is no money, they'll sell you a house. Yeah. And it folds very quickly. What we were talking about the other day was the idea of being bulletproof. The person who has paid off their house or a very significant portion of their house is bulletproof. Yeah. There's nothing you can do. You might think, oh, I own my house.

38:27It's like, do you? Do you really own your house? Like if you've got the 90 % leverage on it. Yeah, exactly. You know, you might legally own the owner, but it is held as collateral. Oh, you don't. The title sits at the back safe. There's a reason for that. You know, and it's just – so you've just got to be careful here. And we have got a culture here, particularly in this country, but also in Canada and UK and in many parts of the West, where it's just sort of like the lesson of the last few decades has been gear to the eyeballs, put it in assets, mainly property, and profit. And it works really well.

39:10It works incredibly well when asset prices are going up, but we have dulled our awareness of downside risks. And when things do unwind, they tend to unwind very quickly, sort of up the stairs and down the elevator shaft kind of stuff. So again, there is subtlety here. There's nuance here. And in our discussion, I'm saying, yeah, there's nothing wrong with appropriate debt. Absolutely not. but leveraging yourself to the eyeballs on assets that are not even generating a positive cash flow i mean it is the height of madness and you sort of you shake your fist at the sky and everyone goes yeah but look at that guy he's got five ferraris and you're living in a crappy rental like who's who's laughing you it's like well correct correct yeah it's kind of good until it isn't and and so i i guess with the so what from all of this kind of um skullduggery that's sort of happening at the macro scene is you can't control for the madness that is happening but you can do your best to to make yourself um uh any fragile and be prepared for whatever comes i i sort of say and as i say that i think that's really good advice for people who have early enough on on the um who were early enough on on that arc there are plenty of people today to like like birth rates are declining and like of course they are of course they are it's like you and your partner at 20 cannot afford to raise a kid where one's going to like be out of work for a while so it's like you know and so these these people like two people graduate as doctors and investment bankers they're still waiting 10 years to get their foot in the door for some dog box in the sky out in the middle of nowhere right and and then they will be up to the eyeballs in sort of in in debt so i just sort of feel as though there'll be people listening to this going okay okay, that's great, but how do I make myself anti-fregister?

41:03I'm barely making my rent. And I am not living a great lifestyle here. I am sacrificing. I am trying my best to save. And at this pace, it'll be 10 years before I have a 10 % deposit. And it's just like I actually don't know what you do in that situation. There is no answer in that situation. And usually the answer will be framed as a political one. Well, the government, quote, unquote, should do something. but the government is just going to conjure up money and throw it at people in a very unfair unsophisticated kind of way and probably just exacerbate the problem uh you know and then and then we have the situation where it's like well we can't give the job seekers more money because then that's going to be bad for inflation and around and around and around we go and we get wider rich gets richer the poor get poorer and we end up where pakistan was not that rich get richer The poor get the picture.

41:54It's absolutely true. I mean, again, I just, history, those that don't study history are doomed to repeat it, you know? And it's sort of like, if I was in the top 1%, I think those that are there should take a more sympathetic view for very selfish reasons. Yeah, yeah. Well, they should do it for actually, for moral reasons, but if you're not going to do that, at least do it for selfish reasons. Yeah, forget everyone else, because there will come a time where it's just like you and your mates are living in a compound, right? Where there's just a whole bunch. You don't go out in the streets at night.

42:29And this is, again, it's really difficult to sort of say this from an Australian context, but it's like the majority of people in the world live in that reality. I've been to Port Moresby, I did Kokoda six years ago, and that's exactly the Port Moresby story. Of course it is. Exactly what it is. It's a story in Brazil. It's a story in Argentina. It's a story in Lebanon. It's a story in Egypt. It's the story in, you name it. Like it's, it's, it is real. It's the story in, in middle America in a lot of like in the Midwest, it is, it is something that again, I know, I know how this sounds, right?

43:01I know how it sounds. And for those that are in a reasonable, comfortable situation, it's just, you know, ha ha ha. But it's more the trajectory. And I am really taking a broad lens here. And my point being is like, this isn't going to happen tomorrow. The zombies aren't coming for you, but you know, 2034, 2044, I don't know. I've got kids. They'll be adults at some point. I don't want them living in that situation. My kids will be fine because, you know, I've been really fortunate in life and I'm saving up a lot of money and I've got some good assets and I'm going to pass it on. So they're great.

43:33They're fine, you know. But they're the exception. Or they will be increasingly in the exception and they will be increasingly despised and rightly so by those that don't have. Because it's like, where's this is not fair? And when, you know, look at the French Revolution. Look at any number of revolutions. It always comes back to the guillotines coming out at some point, right? So, again, if you're in that, do you want to be the top 1 % in Zimbabwe or would you rather be middle class in Norway? I know what I would choose, right? Australia, frankly. Yeah, Australia, right? But we're going, what did they say?

44:09The other thing, the food bank line in Melbourne was like around three blocks and the longer it's ever been. Bigger than the 90s. Again, you have to go back to the 90s to have a real recession. Food Bank, I'm pretty sure it's a seven-figure, like millions of people using Food Bank. It's astonishing. People living in cars. And you speak to any of the charities, right? And they're just like, we're – and again, we're not in – like definitionally, using the big macro picture, we're not in recession. Correct. But for a lot of people, you can put a label on it or not. It's like they're doing it bloody tough.

44:42And they're also doing it in a situation where it's not a question of working harder or getting a second job or doing is just like, because the wall is so high and so slippery. It's just like I challenge anyone to sort of climb out of that. Barring the one in a million genius that invents a quantum, you know, or something that just happens to be that, which is just unrealistic to think that most people are going to be able to do that. Again, it's just I feel as though the trajectory is unsustainable. We need to have a long-term plan and discussion of how we do this. It's probably going to require someone somewhere to take some medicine.

45:18And I think most people should agree that it's those that are extraordinarily fortunate that probably bear the brunt more than most. Because the way I frame it is I think after the fact, you're still the richest. Yeah, totally. After the fact, you've still got everything and any desire fulfilled in life, right? after the fact you've still got an incentive to work hard like that's that's the stupidest argument you have against oh if you do that no one will no one will work because there'll be no one i'm not saying we go to communism of course but we it's just it's just a basic fact we can debate who has to carry who has to take the medicine but someone has to take the medicine because if we live in this la la land of no no it's all good and it's all going to be great and we never have to change anything it's like well the iceberg's on the horizon we're we're plowing towards it at a rate of knots and we don't have to turn right now but we want to start thinking about turning at some point is my only point and even if we even if we miss it it still makes sense to turn because you know you you don't want to go you don't want to sail that close to it that maybe you'll be okay you know i say about regulation all the time attacks if you don't know where the line is you're too close to it it's the same same for the economy it's like maybe it'll be okay but maybe it won't and that's not the trade-off you want to make with the national economy right there are some there are some decisions you can make to say actually let's make sure we'll be okay and work backwards from there and that's the same as climate change right exactly the same kind of thing in this without getting into the debate again these aren't necessarily imminent kind of threats but you know we're on a path here and we should probably adjust a little bit you know at the very least it's like you would run the country the way you'd live your own life you know there was no one who sensibly say i'm going to take the decisions we're taking as a country as an individual you just wouldn't do it and somehow we the worst the worst part about government is actually not the government itself it's the concept of government is them and not us and when you say well they should do this thing you you manage to psychologically distance yourself from that right the government over there are taking too much in tax money or the government should make this decision the government should solve this problem the government should once you do that to your point you kind of make australia becomes this thing over there and you somehow feel like you're disconnected from well i'm not the government so i'm okay so well dude this island is is our you know like the government it might it might be the organized like the organizing layer of our society but we're all on the same island dude literally as well as metaphorically um blaming the government the government should do something the government should do something oh crap now i'm in trouble the government should have done something it's like well this i don't i don't mean we're us or they're them in the sense of any other politicians or just like structurally if the government has debt and you don't, you still got debt dude your island is indebted, it is metaphorically, and to invoke the climate change thing, the water is metaphorically rising the government should, I'll be okay no you don't get to make that distinction dude, this is not how this works, we're all in it together better or worse

48:29Let's go to IPO season, mate. Interesting to keep an eye and ear out for what's happening in markets. And by the way, we're recording this on Wednesday, Thursday, the 13th of June. Overnight, the Wall Street, S &P and the Nasdaq both hit all-time highs during trading. Didn't close at all-time highs, but hit all-time highs during the trading day. Markets here aren't that far away either. it is the most hated bull market but it's probably the most ignored bull market for a very long time largely by the way because people haven't got the money to spend or invest which is why we're not getting the retail headlines i suspect but while prices are high while investment appetites are elevated uh we know guzman and gomez or guzman e gomez i'm not sure how it's pronounced um is going to ipo we think that it's likely virgin will ipo and reading the papers the last couple of days there's a lot of speculation that canva the australian so-called unicorn company um may well also ipo the kind of corporate communications are ramping up lots more presentations the story being told a lot around the place including by cliff obrecht the uh the co-founder um it was doing addressing a conference this week uh there was a lot of talk this sort of thing's happening mate and i i guess it's worthy of thinking about ipos in general as well as these ipos in particular because speaking of human psychology greed is ever present and the general view among a lot of people spurred on by the occasional really great day one sort of stag prophet they call it um if i could get it in the ground getting on the ground floor it's such a such a uh it's it's it's just it's a bloody um what do they call it um hyperbolic um no which is the other like yes i just want i I want to do that.

50:18Yeah, I want to do that. I want to do that. It grabs people's attention so incredibly dramatically. And so the idea of getting in on day one or the ground floor, or even on the IPO of some of these companies is going to stir up the animal spirits in due course, almost certainly, because if they don't, these companies aren't going to IPO. They rely on it to try and generate this hype, to try and get the best price they can for their clients. A reminder, by the way, when someone lists a company, an IPO, they want to get the best price. They're not offering you a good deal. So just be mindful of that.

50:46but um so i will i will sound a general caution i have never invested in ipo i think i'd be very very very very unlikely to ever invest in an ipo um i've had some shares that have gone public when companies demutualized telstra and nib i own both those companies still but i had sold i sold them both actually no i didn't held telstra forever i did sell and i bought some again subsequently um um but you know the i just want people to be careful it's so easy to get caught up in the greed the kind of what if what if they make money and i'm not on the train at the time i better i better buy something i want the sag profit as well um there is a there is a lot to be said for the benefits of companies being listed on stock exchanges otherwise we couldn't invest in them and they couldn't raise money and so i'm not against the idea of companies coming to market just be really careful the entire ipo process is designed literally designed to stoke excitement, to stoke greed, to want you to want these shares.

51:42Why? Because it's an auction. They want lots and lots and lots of people interested, so they can sell it for the highest possible price. And if you're the buyer in that scenario, what do you reckon this is about the price you're likely to be paying? Now, some IPOs start high, go even higher. Some start high and never, ever hit those prices again. And plenty are middling in the middle. So I just want to kind of mention to our listeners, not to kind of see this as this game to be played in one. It is really really i said i don't think i've ever bought an ipo i can't imagine ever buying ipo i guess in the right circumstances if i got a good price i thought the business was wonderful i wouldn't rule it out because why rule out you know why why absolutely rule out something that may possibly work in my favor at some point the chances of it though are really really really really small not only that but a company that goes public has been in private hands by definition so you haven't had the chance to look at it as a public company before all you're seeing is a couple of years worth of financial data and a company's been literally dressed up for sale some bold projections right and it's not even necessarily the best it'll ever be but they're not leaving any money on the table right they are literally they know what the shape of the pain needs to look like by the time they get to listing so they're going to run the business so they can maximize that one page and get you to pay the most money and again maybe it's great maybe the business is fine maybe the future is beautiful but just remember what's going on in the background these really really smart people have run this business probably bought into it run this business and are trying to get the best price they can on the way out, trying to find someone to sell to.

53:10It usually says, too, often in the prospectus, like very often in the prospectus, there's a section that'll say, why are you listening? Yeah. And the most common quoted answer is, so the insiders can sell down. Yes. Now, that's not an evil thing. Correct. They've spent 20 years slogging their guts out. They've got 99 % of their wealth there and they want to exit in some shape or form. Yep. You know, there's also, oh, well, we need capital for growth and we need this and the rest of it. But it's overtly stated that they want out. So they don't want, they probably retain a very significant number of shares, but they don't want all of them.

53:48They need you to buy them. And they're not going to say, it's actually not looking that good. Do you want to buy my shares? It's just not going to happen, right? It's almost a rule of mind. I just don't. I'm like you. I don't think I've ever bought into an IBO and I don't ever feel as a way. almost for all of the reasons you've said on that alone, regardless of how good it looks. It's hard to imagine a seller offering me a good enough price at IPO for me to be interested. And good on them. They're entirely at the best price they can. But there used to be the old line back in the Kerry Packer days for the young people, you're too young and I'm not going to explain it to you because you're too young, you don't matter.

54:21No, I'm kidding. Kerry Packer was the richest man in the country at one point. And the old line was you didn't want to be on the other side of a trade from Kerry Packer. Because if you were buying from Kerry or Selina Kerry, he was getting a better deal than you were. The same is almost always true of private equity. Do you really want to be on the other side of a trade? You know, it's the old Warren Buffett line. You are the exit liquidity. Right, exactly. That's what you are. If you're playing poker, you don't know who the patsy is, you're the patsy. It's like, if you're buying off private equity, there's a pretty good chance they're getting a better deal than you are.

54:50Again, not always. Not always. Not always. But often enough where, I mean, there are some, these things are heuristics for a reason they're rules for a reason exactly yes i also stereotypes because it just it's often not always but often true and and you know that i yeah so guzmany gomez um is is going to i think the ipo valuation is a enterprise value to pro proforma proforma proforma ebitda charlie munger calls ebitda bs earnings by the way because it's it's an acronym that stands for earnings before well let's not count the interest cost let's not count tax let's not count depreciation or amortization of any of our assets but after that that's what our profit is there's a there's a use for it but it is a very It is a very favored metric because it is more malleable in a lot of ways.

55:53And a lot of these costs are very real, very significant, very real sort of cost. But anyway, using that more generous version of profit, it's 32 times. Yeah. Now, how do you get to that? Well, it's got 185 stores in Australia. And I said, well, we're going to have 1 ,000 in the next two decades. Oh, and our margins are going to improve. and we're going to go sell Mexican food to the Mexicans. Okay? Now, I shouldn't throw so much shade here. I actually think it's – I love the franchise, right? I love the food too. Burritos are fantastic. They've done a great job, yeah. And they have done a great job and they deserve all of their success.

56:30And I'm not saying they will never do that. And that valuation may make sense. If they do do that, it's actually probably cheap, right? But it's aspirational. It's not fact. and you're kind of paying up for the fact that they will do that. So they might actually get to a stage where, you know, over the next couple of decades they get to 800 stores. A phenomenal success by any measure. And maybe the margins hold steady, right? But it's not what's been baked in or assumed in an effort to sort of sell this. So I could try, I could say, well, hey, Scott, buy straw man off me. It's$10 million. dollars you know well that doesn't make sense relative to the money that you make it's like oh but next year i'm going to launch in the u.s and i'm going to do this and i'm going to go oh okay oh so you're telling me that in in 10 years time your earnings are going to be a billion yeah oh this is a bargain like well yes if and as you like to say if is the biggest little word in the english language so it's it's just something to i always feel as though it's never too late Like if you miss out on the float, it's now listed on the market.

57:37You can buy any trading day of the week. Correct. And more often than not. And by the way, once you've seen it trade for a while, here's the problem, mate. People think, but what if I wait? What if it goes up in the meantime? And is that, honestly, we are, we're not, I've said so many times, I've got to refine this line, but effectively, successful investing is the ability to control your evolutionary urges. That's all it is, right? Because we start with, but what if I miss out? and that fear of missing out, literally FOMO, is far worse psychologically, not financially, terrible financially, worse psychologically than actually waiting and seeing and that is why, that's exactly what they're preying on.

58:14Like that's the point, right? So when you jump in, because well, what if I miss out? What if you don't? What if the price goes down? And we don't, we can't hold those two thoughts in equal measure in our heads. The FOMO just crowds out everything else and that's why this is, It's why it works, why marketing works, frankly. But that's the challenge, right? One of the things I try to console myself with, because, I mean, I fight against these urges. I think everyone, unless you're a complete robot, you know, like all of us face these challenges. But you've got to remind yourself that regardless of where we are in the economic cycle, regardless of what the market is doing or whether it's up or down, every single day there is an opportunity.

58:53Yes. Every single day. Now, I don't know what the best opportunity, You don't know, but they're out there. And you've got to remember that they're out there. And that for every day that goes past, you miss a bunch of opportunities. And that's okay. Make your peace with that. You know, when people go fishing, that hook is dangling past some of the biggest fish that just don't bite, right? You just miss out. But that's not the point. And I feel as though this idea to get now, I must get in now, or I'm going to miss out. And if I don't do it, I'll never have another chance again. There's always opportunity.

59:23There is always at the top of the market, at the bottom of the market. You know, okay, there's different degrees of opportunity. That's absolutely true. But there is always opportunity. And if Guzmini Gomez goes to the moon from the float and this is the best price that you'll ever have the chance to get into, okay, that'll suck. But guess what? You also missed out on NVIDIA. You also missed out on Google. You also missed out on, you know. Even you could have otherwise bought, correct. Make your peace with it. Make your peace with it. But know that tomorrow there will be another opportunity and it's out there.

59:54And that's the fun of direct investing. Go find it, right? Get in there and find it before anyone else does. And even when you're successful and you do find it, it's not like the market the next day is going to go, oh, we realize the error of our ways. It will take time for that particular fruit to ripen. But, yeah, the FOMO is what gets me with these things. And if we, when we're doing this podcast in several years' time, and we've had a few annual reports, we've had some time to sort of assess things, I might be the biggest advocate. It could be the biggest holding in my portfolio at that point in time.

1:00:34And it might even be so at a point where I'm buying in at higher than the current price. But I might be buying in at a time and at a price where I can at least have greater conviction. and for me that's worth a lot rather than the potential of maybe or what if, you know, because, you know, I don't know. Hope is not an investment strategy as I like to say. Yeah, it's a great line. This is the other thing, by the way. I really, really, I love the business. I love the food and I'm hoping, I would like to be a shareholder. I'd absolutely like to be a shareholder. Does anyone have to rush out and be a shareholder now?

1:01:10No. If it goes up from$22 to$40, will I be disappointed? Probably, yeah. but I'm not gonna if it falls to 15 I'll be equally I'll be happy hey let me ask you this what's gonna happen go on when did you buy your Berkshire shares I bought them I bought the first I think you know oh geez oh six or five I think so 35 40 years after it started yeah correct that's right so at a price where it had already gone up 10 20x yes Do you know what I mean? Like, it's just like, would have you liked to have gone back into a time machine when you were 18 and put all your money in it then? Yeah, but let me ask you this.

1:01:53How's your investment gone? Very nicely. Yeah, right? Like it doesn't, you know. Exactly right. The best time to plant an oak tree is 50 years ago. The second best time is today, right? And there's such wisdom in that kind of stuff. So I think we flogged that horse to death, but hopefully the point is well made. we have um speaking of expensive though i i won't be buying guzman gobe's on price although i love the business uh speaking of expensive i'm not i think it's actually probably the cheapest of the three in all likelihood i say cheapest in inverted commas because virgin will probably list a lower pe but it's a far worse business and canva is probably going to astronomical number despite the fact it's probably gonna have a four billion dollar valuation um And again, it's kind of gone.

1:02:38Sorry, man. I was just going to say, I wouldn't go near Canva. I'll tell you why in a minute, but go ahead. No, go on. Do it now. Was it you and I were having a conversation, someone, what businesses are most at risk of disruption from AI? Yeah. Graphic design, yeah. Graphic design, man. Even on, if you go to, everyone listening to this has WhatsApp. I'm pretty confident, 90%. So WhatsApp now has an AI bot integrated into it. You can talk to it. Say, draw me a picture of whatever. Oh, wow. And it'll draw your picture. Oh, yeah, it's cool. I mean, it's not great, but it just came out. But it's like, Canvas dead in my view.

1:03:18And I think they see the writing on the wall. This is pure navel-gazing speculation. Maybe they integrate it and they do it better than anyone. I was going to say, I would suspect, if you're the big dog, you have every chance, like Microsoft's done, taking a stake in ChatGPT or OpenAI that does ChatGPT. Right. I wouldn't want to say Canva is obviously necessarily dead, but you're right that they're going to have to ride this wave well because they're going to ride the wave to the beach and they're going to get dumped. So when - And that's a very big risk to put in front of a$4 billion valuation.

1:03:48Exactly. So when Canva came along, and I think the founder was amazing. They started off, they saw a problem. All the great businesses start with seeing a problem. Yeah, yeah. And they imagine a world that could be better. Gosh, it's really hard to make a yearbook for our high school. Like it's really, really difficult. That's how Canva started. Yes, yes. She's amazing. And hats off. Like I just think I'm so in awe of those kind of people that do it and actually make the dream a reality. And now Canva as a product is fantastic. If you want to like, you know, create a deck, a poster, anything, a scrapbook anything like that it's just it's really really cool but we are very fast moving into a world where it's like hey chat gpt do this for me and it's going to do a really good job now maybe canvas survives in that kind of world maybe they're the best at doing it but i can't imagine the margins are as good or the differences are as vast exactly and i don't know if the growth that they experienced in the early days of going from this little thing in perth to you know nasdaq listed well what you know a massive uh multinational company i just yeah i feel as though i think it's a bold it's a bold bit speaking of burritos though much harder to disrupt like chat gbt ain't making a burrito anytime soon right well until we got replicators uh star trek sure true up until that point i think and that's kind of it mate i think you know the branding is hard and morningstar uh by the way so just for fun Morningstar released, I think you asked me yesterday, it was reported on yesterday or today, their first coverage of this saying they reckon it's worth$15 a share.

1:05:31Now, the shares are going to be, the capital's going to be raised at$22. So you're already looking at, in theory, a 50 % premium to what, now Morningstar could be dead wrong, right? It could be a$50 stock. So let's not pretend. So yeah, but the key point here is that that's the risk of the business is whether they can build and sustain a brand. And, you know, that's, as you say, easier to do with a physical. A, it's a physical product. You're putting it in your mouth. And that requires, firstly, a lot of trust. But secondly, taste is one of those things that's very hard to replicate. Do you care which AI-driven graphic design software you use?

1:06:11Of course you don't. You might be more comfortable with one than the other. But here's the thing. Once you can tell it to do, you need no skills. Who cares, right? And maybe you do try another burrito. Maybe the other burrito is better. Maybe they lose market share. Maybe Goodsman is dead in five years. Time for all I know. By the way, Taco Bell tried to come to Australia and pretty much died in the attempt. Yeah, because it was terrible. Oh, I love my Mexican food. Right, right. No, no one in Mexico is going to look at that. So, Guzman, you know, and they're doing a good job. I love the business.

1:06:40I hope it's cheap enough to buy. I want to buy some shares. Buying what you know, I've had more than my share of Guzman Burritos in my life and I probably am not finished yet. It's really good. Like, I think it's got a great chance of being a successful business, but it does matter what you pay. There is almost no business that you can pay any price for and expect to do well, including Berkshire. If Berkshire was a trillion dollars a share in 2006 when I bought mine, I'd be underwater today. Massively. You know, it absolutely, it must matter. It must matter. But I think, Virgin, of the three, mate, I would buy Guzman before Canva and Canva before Virgin.

1:07:14How would you rank that? Yeah, that's the easiest question you've ever asked me. Yep, 100%. I mean, I wouldn't be happy with particularly any of the holdings, but if you held a gun to my head, I was like, I guess I'm going to go to Burrito. You must do it. Yeah, correct, correct. It's not hard, is it? No. So yeah, be careful of IPOs. Don't get caught up with FOMO. Just cool your jets. Buy the stuff when it makes sense to buy. It's a bit like dividend reinvestment, or not dividend, capital raisings. When I can send you something in the mail, say, hey, can I have$10 ,000, please? You kind of go, oh, maybe I should consider that.

1:07:44Yet there's another 1 ,700 investment opportunities today who aren't sending you a letter in the mail, and which might be better investment ideas. And the same with IPOs, just because everyone's talking about it, you kind of feel, again, this is human psychology. It's stupid. We feel compelled to find, to make a decision, to come to a conclusion, to say, oh, it's a thing. Should I buy it or not? Our brains would explode. If you had someone who sent you a letter every day from the 1 ,800 companies in the ASX that said, we're going to buy some of our shares today, you'd go mad. But it's that, what is it?

1:08:16Recency bias, maybe, or availability bias. It's like, it's in front of you. It's like, I feel like I have to make it. No, you don't. Yeah. And there's an anchoring bias there too, because virtually every single capital raise, 99.99999 % of cases, you get a discount to the most recent trading price or the 30-day average price. Clever. Isn't it clever? So it's like the market's just being the market and buyers and sellers are trying to figure out, and sometimes it's up, sometimes it's down. And in the space of a year, it will fluctuate to an insane degree. But, oh, we need some more money. It's like, well, it's$30 now.

1:08:48We'll give it to you for$28. that's a six seven percent discount oh i'm gonna buy it why do you think they're gonna be use that capital in a sensible way do you think it makes sense relative to the future trajectory of the business no it's cheap no it's but it's cheaper than what i can buy on market you know it's just like it's insanity and it's just like why do they do it because it works it works it works so well right and by the way if we're rational you should be annoyed the company's offering other people shares cheaper than you could have bought them on the market for yesterday i mean the company can use the money well don't get me wrong there's times when it's absolutely worth them doing it because they can have a 30 share price sell them for 28 and create 32 worth of value so of course they should do it right of course they should do it yep but but rather than being oh my goodness this is great i should buy one it should actually be you're doing what you're selling them for what yeah i think they're worth this you're selling for less than that what what's wrong with you people and that's the key one right the number of times i've heard people ostensibly otherwise sensible investors go yeah but i'm just gonna to buy it then i'm going to sell it and it's easy money like like if there's easy like we started the podcast by talking there's no such thing as easy money right and and the fact that everyone else is probably thinking that as well and the fact that there will be a dilutionary impact that that mean that there'll be a pro forma reduction in share price all else being equal just by virtue of the fact that there are more shares that are out there tends to make it a pretty precarious strategy and one that only and just doesn't just doesn't work that well most of the time yeah so it's just like it's the height of it's the height of hubris to kind of think that i can do it no one else has thought of this yes but i've thought of it like and yet by the way that's what every company does i mean the the height of hubris is the hubris that takes apple from steve jobs's garage to to global domination right nvidia some blokes gone what if you had a processing chip that was just for graphics and someone's gone really mate intel would have already thought of that by now what the hell's wrong with you go back to work you know and yet the nvidia is a $3 trillion company.

1:10:42Again, you're not wrong, mate. It's the exception that proves the rule rather than the reverse, right? It's also, by the way, why some of these companies are so dominant and so worthwhile and do so incredibly well. Because if you do strike gold, and by the way, don't invest in people looking for gold. If you find gold, and they're going to let me move out of mining particularly. If you find metaphorical gold and you can keep mining it at a good price and people will pay you a lot of money for it and you've got a low cost, that's exactly what successful businesses are. They are the end result of this.

1:11:09And then you get to look at them on the ASX and go, so you're going to show me all that information about them? And I can then use my judgment to see whether I want to own it? That's a pretty cool system. We should do more of that. It's like, well, it's kind of the share market. That's the beauty of it. Doesn't mean there's not some rubbish there as well, by the way. Yeah. No, well said. Well said. Be careful out there. Be careful out there. Hill Street Blues. Going full circle, by the way, for those, again, young people who don't understand old people stuff, you can turn off now. Do you ever watch Hill Street Blues, mate, when you were a kid?

1:11:38I did, yeah. There you go. so I did my scam so we go back to the beginning my scam kind of you know alter ego I wrote an email just to our members and wrote it put on the website said hey look there's scams out there just please be careful and I did finish it with exactly that with the scientist line of let's be careful out there so you're taking us beautifully full circle with both the podcast and the email and maybe we should call this one done only though if you'll come back on Sunday can we do that deal it's guaranteed I definitely will be here I am very glad to hear it Until Sunday, enjoy your weekend, and we will see you then.

1:12:13Fool on. See you then. 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 License 400691.