In the wake of the US election… November 8, 2024

26:25I said this before the election. What we know is that Harris would have been a business as usual president. Trump is going to throw the toys out of the cop president. And I mean that both pejoratively and not, which is, you know, the old 52-card pickup, throw the cards out and see where they land. Now work out what goes from here. trying to i would not for a second say this is business as usual right this is going to be weird and bumpy and volatile to your point ram we just got to work out what you want to take off the table in that context versus what you let run and i think to my mind your approach of you know quality is is fair i would say for what it's worth we've said this before that's always been my approach under under other presidents as well because quality tends to add over time uh and so again what do you change i'm less comfortable with a drop trump presidency because you mentioned uncertainty the risk of downside here is bigger than it would have been under harris or by the way one of the other you know i don't know about the current batch but a mit romney or john mccain or this is not democrat versus republican this is absolutely trump compared to anything else um or maybe some of trump's followers you know irfk or vance or someone else in the same cloth but you know is it is it harder to predict yes absolutely as a result should we be more careful probably yeah but more careful than maybe others might be I don't know that any of my companies, if I look at my portfolio, I feel any worse or any better today than I did yesterday.

27:41Well, I'm not changing anything. I'm not changing anything. I should clarify those statements too because it's more about – because, again, if you look at some of the stocks I'm holding, I don't think it fits the typical standard definition of defensive and robust and all of that kind of – they're not. Some of them are very early stage sort of companies. I guess it's more about I want the kind of business that I feel has good momentum and is likely to do well under either sort of situation. We've made the point. I don't think it's going to be a great situation, but there still will be business, right?

28:16So it's more about, I don't want, you often see people positioning themselves ahead of elections like, oh, Trump's going to be much more favorable to fossil fuels so I'm going to buy an oil company. It's what you might call event-driven investing. Definitely not. I want to just be 100 % clear. I'm not saying, oh, now because of this, I'm going to flip and start doing all of that stuff. But just emphasizing that point that the way that I see the world and I don't see volatility as risk is like I just – which your point is basically we're not doing anything differently. But absolutely now waking up today and the world as it is, yeah, I'm really going to make sure that I'm focused on companies that are not dependent on the stroke of a pen in Washington to do well and not do well and likely going to do well anyway.

28:57Oh, sorry. And one other thing I just wanted to mention quickly here, and we should really talk about this one time. I'll give a book recommendation. and I'm only halfway through it, but it's great. It's called Why Nations Fail. And it's by these two - It's very up of you, unusually. It's very on brand of me lately. It's by two Nobel, sorry, three economists, two of them that won Nobel Prizes in this work rather recently. And the TLDR here essentially is, they just tried to answer the age-old question, the massive problem in economics. Why are some countries really rich and why are some countries not?

29:31You know, it was usually, oh, they got better resources. They got better ports and the rest of it. The work that they won the prize for and what the book is based on is it's the strength of the institutions. Yeah. It's having a good legal structure. It's having enforceable property rights. And it makes a lot of sense. You want people in an environment where they feel as though they're motivated to contribute productively and that things aren't going to be stolen away by an autocrat. or something like that. So there are places, I pick on poor old Africa at the moment, which is absolutely brimming with natural wealth, but are poor and impoverished.

30:11Why? Because there's no institutions there. So you get these extractive power systems as opposed to these more inclusive power systems. It's so fascinating. Anyway, the reason I bring it up, and it's a strong recommend here, or just read the Wikipedia article if you can't be bothered, is that these institutional landscapes aren't static. And the US, a big part of its swath, of course, from the founding fathers onwards, it had really great institutions. Not perfect, by far not perfect. But compared to most places around the world, absolutely fantastic. That's right. And that underpinned a lot of their rise to wealth.

30:51They were very blessed in terms of a continent, in terms of their natural resources, but they had the institutional strength. and the respect and buy-in. And here's the key point, the trust of the society in doing that. So why did, look, this is a whole other thing we could talk about, but why did Trump win so decisively? It's the economy, stupid. It's absolutely, everyone is hurting. And my point is, is that the institutions as strong as they have been in the US and a beacon for the world in a lot of ways, they have been eroding. And that is more the worry here too, is that they continue to erode.

31:25Correct. And again, it's not going to just be one day you wake up and it was great. And now it's not. It'll be a slow grinding process. But just a very big arc to kind of say, I guess, here is that I feel that's the worrying trend that we're on. That actually created the conditions that made a populist far more likely to win and gives him the mandate to make the kinds of changes. As insane as they are to do it because they're easy, satisfying and bring back jobs. I'm in. Stop the immigrants. I'm in. You know, put a tariff on this. Yeah, fantastic. I mean, it doesn't make any sense if you think about it for more than three seconds, but it's sort of, I feel, and it's why we rail so much.

32:04I think when, when some of the, the institutional dynamics here at home sort of changing, why are they changing landing buffers? Why are they doing this? Why is, you know, it's, it's, it's the one thing that I don't think anyone is really talking about here in, in, in this election is that, you know, Harris and the Dems went there with basically, hey, we're not that guy. But there was nothing to vote for other than just not being that person. But people rightly or wrongly would just look at this like, you guys have been in power for all this time and things have gotten worse for me. My groceries are up 30 % from where they were when you started.

32:44Again, I'm not saying it's their fault. There are momentums and shifts that are in change here. But there are so many people in that just disillusioned with American institutions and economically sort of hurting. And it's all just – it's given us what we've got. And I feel as though there's still momentum for that all to continue. I think that's right. I think it goes a step before that, which is the trust has already been lost in those institutions. No one believes the media, right, is a good example. Sorry, go on. No, no, you're right. And the work's not being done to fix it. I don't think my views are particularly veiled.

33:22I think Donald Trump is a bad option for America because I don't know that there is a lot of commitment to those things that actually do make democracy worthwhile. And I think I've said many times it's not a political view. I'm not saying it should be any Democrat over any Republican. I'm saying Donald Trump specifically doesn't deserve to be president based on what we know and what he's done and what he's said. But if you're an average American, you're saying, well, maybe, but I'm not better off under these guys, so I guess I'll give him a go. And that's kind of... It's telling that Donald Trump has won twice from opposition.

33:53He couldn't retain the presidency, but he could win it back. And that, to me, says everything about the idea of... In spite of all the indictments and the impeachments and all that. Americans just said, we don't care. I mean, I'm sure they're not happy about it, but I don't care as long as you fix it. Yep, that's exactly what it is. That's exactly what it is. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

34:22The RBA was out this week. Now, we talk a lot about the RBA. We've done a lot of the should they, shouldn't they. But I thought just for the sake of the exercise, we should at least touch on it. And there is now increasing, well, we know rates are on hold for anyone who was under a rock. Rates are on hold. No rate cut. Next meeting in December, the one after that in February. and february was already predicted by most to be the first cut we're seeing some actually push it out to may now and i just wonder for the sake of it mate i'm going to read a little bit of the statement that was released by the reserve because it kind of goes to their thinking and this is not necessarily we do it should they shouldn't they but i'll we'll do with what they're saying and and go from from what they've gone with um i think the so let me try i'm just trying to find the right the right bits to read here.

35:10Let's go with the top. They say, quote, inflation has fallen substantially since the peak in 2022. End quote. They then say headline inflation was 2.8 % over the year to September, down from 3.8 % over the year to June. This was as expected due to declines in fuel and electricity prices in the September quarter. But part of this decline reflects temporary cost of living relief. Here's the kicker. Quote, the forecasts published in today's statement on monetary policy, the document produced by the RBA, do not see inflation returning sustainably to the midpoint of the target until 2026. So what's that?

35:52At least 14 months away and maybe 26 months away. What did we say before about believing in forecasts? Well, again, I think you're right. However, it's notable that they're saying it. Well, they're making their decisions based on their own forecast, right? So it's whether or not they're right, they think they're going to be right. And that is, you know, that's for making a decision. I just had to put a little jab in there. I know, I know. I love the RBA forecast. God bless their little cotton socks. So here's, excuse me, I got a cough today. Here's the scary bit if you're a mortgage holder. Quote, while headline inflation has declined substantially, and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high.

36:34The November S &P, which is a statement of monetary policy, suggests, a forecast suggests it will be sometime yet before inflation is sustainably in the target range and approaching the midpoint. And these are the two worst sentences. Quote, this reinforces the need to remain vigilant to upside risks to inflation and the board is not ruling anything in or out. Policy will need to be sufficiently restrictive until the board is confident that inflation is moving sustainably towards the target range end quote now i've said before uh the reserve bank in new zealand said in may of this year nope not till next year in august they went oh how bad we're making a change so i even even with this rate i'll say to people on radio and tv i'll have a joint is it likely no everyone's saying it won't happen but don't rule out them either changing their minds outright which is just hey we think we're wrong or looking at different data or simply taking a different view on how they should set policy.

37:30They should change their mind. Well, they should change policy if they change their minds. If they look again and go, maybe we're not right here. That's exactly what they should do. To advocate, to say, think about the alternate to that statement. It's like, we're going to make a decision now based on what we know. And no matter what new information comes our way, we're not going to change our mind. It's ludicrous to say otherwise. For all of the grief Philo got, again, to make forecasts, he said rates probably won't rise until 2024, which was dumb. but the worst result would have been to say, well, I said they wouldn't know.

38:01I saw 2024. So I'm going to leave them at zero for 2023 and 2024 and 2024. And then I might increase them despite what inflation would have been 10 % here. If money was that cheap, they have reserve banks around the world increasing rates. If Australia had remained at 0.1%, we would be talking about double digit inflation for an extended period of time. So anyway, I just want to raise that, mate, because I want to inform our listeners who may not have read or heard the statement. if the RBA doesn't change its mind and the data doesn't come in differently to what they expect. And your point about forecasts, it probably will because that's life, right?

38:35Forecasts are always wrong, it's a matter of how wrong they are. You're either lucky or wrong. There's no alternative to that one. They are saying we're going to hang it here and we're going to ride this out. And so some of the major banks are now saying May could be the first rate cut simply because there's not enough time for inflation to come down fast enough between now and February. It doesn't make it can't. Again, it's the bank's forecast compared to the RBA's forecast. It's forecast on forecast, turtles all the way down, as you like to say. But that's their current thinking, if nothing else, is that it could be a while.

39:07Now, the RBA doesn't say when that's going to be, but if it's too high now, it's unlikely the underlying number gets low enough quick enough to see them cut rates in December. There's no meeting in January. So February's probably the first likely opportunity. but now I'm saying it could be further away. Yeah. Look, I'm still very much on the camp of they will cut at some point. No country is an island, even Australia. Given what is happening in much bigger parts of the global economy, their hands will be full. Here's how I read it. I feel as though the fight on inflation, there's always going to be a good game being talked on that while ever we have the luxury to fight it, at least the political permission to fight it.

39:57The second, and maybe this doesn't happen, so I've got to be careful. I'm not making a forecast. But the second that there is a wobble in the economy, and look, history would suggest there will be a wobble at the very least at some stage. Almost by definition, yeah. The fight on inflation is out the window. Hey, prices are too, yeah, we're going to do that, we're going to do that. Oh, people are losing their jobs. House prices are going down. Stuff inflation. In fact, people will be scared of deflation at that point in time and not the nice steady deflation, but fast, difficult, you know, ruining sort of deflation.

40:31That's what will happen. And so, what will happen will depend on what luxuries are afforded the RBA in terms of the landscape. I suspect the bias is definitely going to be for a cut, but I could absolutely see them talking tough and interest rates staying high as long as everything just sort of stays together. But mark my words, this is a public podcast. It's on the internet forever now. You're making forecasts. Maybe it's not a win, but if there is sort of economic sort of, you know, a material sort of economic sort of downturn, that's out the window. Don't you think? Like, what do you want? By the way, we're going to let everyone suffer.

41:15We're not going to do anything in our position that we can do. The politicians are going to be totally happy with all of this. And we're going to continue to fight inflation as people lose their jobs and as house prices go down 20%. Like, I don't think so. It's absolutely not going to happen. I think I kind of mostly agree. I think it's going to depend on the, as you say, the pace and the significance of it. I think the RBA is not going to respond to higher unemployment if it just kind of ticks up slightly, for example, right? Sure. I don't even think they necessarily respond to houses declining slightly.

41:45If you do get those dislocating impacts, as you say, mate, that do cause massive issues. And frankly, speaking of the US election, I mean, if those tariffs are put in place and the RBA is worried about the stability of the Australian economy, if direct exports to US fall and indirectly Chinese exports to the US fall and therefore our exports to China fall, the RBA may be forced in those circumstances to make a response anyway. So there are a range of possible changes. I think that's, you know, as I said, I'm not saying they're right in their decision-making. I think they're probably pretty close.

42:16You want to disagree on that? That's okay. It's not that I think they're making the wrong decision. I just don't think they're ever enabled or able to make the right decision because they're given an impossible mandate, is my position. I suspect they have every intention of seeing their statement strategy policy through I think they will if they can do exactly what they say they're going to do which is we will tolerate some economic weakness in fact we'll create some economic weakness to get inflation down because that's more important and I think again I personally agree with that but I do think at some point as you say when the parameters change they have to really look at it again and say well now what do we do And frankly, by the way, even when the RBA is forced to respond, don't cheer too loudly because they're responding because everything's gone to the toilet.

43:05It's still a bad choice. I really want to be careful here. It is stagflation is what it is. It is an environment where inflation, as I say, takes a back seat so we have much more uncomfortable levels. And again, we've seen these numbers are deceptive. You know, 5%. 5 % doesn't sound like that. It's so corrosive to your savings and your earnings capacity and your purchasing power. It's absolutely massive. But not only, there's one thing to have high inflation when the economy is booming. There's another thing to have high inflation when the economy is suffering. And this is the definition of stagflation, really poor economic growth and high inflation.

43:47And again, who knows? No one knows. But history, I know I go on and on about this. It's just like it's the only test tube we have with economics, right? It's just to say, hey, what? Last time these circumstances, we hear what happened. And the sample set is so small, you know, given the history of modern economies. But nevertheless, at the very least, they say this is a possible outcome. And maybe some could argue a probable outcome. Yes. And I think that's the – I'm always – I'm just – I'm going to mention it for devil's advocate sake. and for the sake of it, we've got to be careful not to look at the actual events and miss the false positives, false negatives along the way.

44:28The thing, you know, it's always happened that when this has happened, sorry, every bad outcome has been presaged by that, but not every occurrence of that particular issue has created a bad outcome. Oh, that's like the hemline indicator and that kind of stuff. Remember, people have found it just for fun, to prove the point that you're trying to make, correct me if I'm wrong, but when you look for correlations, you'll find them. So, for example, my memory is failing me, but there was one that was you could base the level of the stock market on how high or low ladies' skirts were. So, this came from a different time.

45:03Didn't it? But, you know, when the miniskirt was in, stocks were doing really well. When it was down to the ankles, you know, it tended to reflect a more restrained and conservative time. I don't know. But, I mean, it's all nonsense. And again, as a human being, as a narrative weaving animal, we will, oh, well, it's because of this and it's because of that. No, there's just a bunch of stuff that overlap. But correlation is not causation is, I think, the point you're making. But also, I guess the other point I'm making was a little bit more than that, which is every time someone was eaten by a lion, a lion roared before it ate the person.

45:38Therefore, every time a lion roars, someone's going to die. Right. So it's that kind of – there is a distinction between just because – whenever the bad things happened, the other things always happen first. But just because the thing happens first doesn't mean the bad thing is necessarily going to happen. False positives abound. Correct. Yes. Correct. Let's move on from the RBA then and rates. I don't know. I don't know if this is a bad news podcast, but it's kind of feeling like that today. Again, betraying my – Here's the point I'll make before you segue onto that. Go on. And I was reminded of, I was listening to a political commentator who worked for prior presidential campaigns and stuff.

46:16And they're just sort of talking about the mood and the issues and that at the time. And it was just another reminder that, pick a random point in history, there's always really scary, bleak stuff on the horizon. I have to remind myself of this a lot, right? Two things can be true at once. Things can deteriorate and get worse, but also life will go on and the general arc of humanity and civilization will be a positive one. So it is important to sort of stress these things. That's the market in general, right? The market goes down sometimes, but it goes up over time. So it doesn't mean the downtimes are fun, but it doesn't necessarily mean that the direction is now there for forever and ever down from here.

46:51Go read the headlines in 1987 or in 2008 or in 2020. You know, like it's just like it's all it is always bad. and there's never a point where everyone goes, wow, actually, the points where things are, this is brilliant, nothing can possibly change the course we're on is usually the very height of a bubble. So you've got to be careful. Exactly. And that's the challenge. I wrote an article a while ago, mate. I'm desperate. Trying to Google it now, see if I can find it. No, I can't find it easily. I wrote an article years ago saying, I know what happens next. And it was, I think it was, must have been the Fukushima disaster, I think.

47:27Oh, yes. So basically at that point I went, okay, well, there's a nuclear disaster. The economy is doing this. Unemployment is doing that. Whatever other headlines were out. And the point was, I was talking about all those things as if it was the current year and ended up being, I was talking about 1987, which speaking of 87, when the snowball effect happened. It was kind of like, you know, these things are terrible. And yet we've been here before. At least we've been in a similar situation before. I think I wasn't predicting, obviously. I was making the point that, you know, at that point, we could have said the same things about the economy or about the society as we do now.

47:56And you've got to be careful with that stuff too, because sometimes it gets interpreted as, oh, it's a laissez-faire. Don't worry about it. We don't need to worry about it. No, no, no. They're big deals. They're absolutely a big deal. However, it's not world-ending, I suppose, is the point to make. And that was exactly the point I was going to make, which is I don't think a Trump presidency is a good thing for America or for the world. I don't, however, think it's necessarily the end of the world, hopefully. Gosh, I hope not. I think you've crossed. I've had some friends text me in the last 24 hours who have kind of intoned that.

48:25They're like, no, really? I don't know. I'm not, yeah, anyway. Hopefully not. Speaking of bad news though, management. We kind of alluded to in the past, two of the big corporate news stories related to management. WiseTech, Richard White, the CEO there, being caught up in a whole lot of public stuff. And mineral resources, where Chris Ellison is alleged to have not paid the appropriate levels of tax and maybe owned some assets that were sold to mineral resources at prices that may not have appeared to be market prices. Now I'm using lots of allegedly's and maybes there because it's really, really important that we don't presume guilt uh me because i want to go to jail but any of us because justice is important right i mean we're talking about institutions um innocent until proven guilty is a thing that actually has to matter right so kind of matters yeah and i gotta say we have i have people friends colleagues who will throw the proverbial book as if it was reported therefore it's guilty therefore it's all over and i think is it is it probable that i mean i don't know most allegations tend to be proven maybe there is a probabilistic angle to that smoke there's fire I suppose is the same.

49:25Except when there's not. And we just talked about that, right? The lion roaring. I mean, this is... So it's kind of... It's important that we actually let... If we believe in these institutions, they only go away when we stop caring about them, right? And when they stop caring about them, that's when we get caught up by the things that we didn't care about until they impacted us. So I actually think, like, morally, ethically, from a societal perspective, it's really, really important. Yeah. So I raise all that. And then we had this week, Domino's CEO. Dom May has stepped down after 22 years as CEOs and 37 years at the company, which is a heck of a thing and i kind of just wanted to to just amplify the importance of management as an idea because you and i tend to think management's really important more more often than not i think i'm right in saying that absolutely and then but then you kind of think well when how do you how do you handicap that dominoes is easy because there's no allegations of wrongdoing or anything else or no public scandal um don may is living dominoes and he's I've been there for 37 years.

50:20During that time, Don has done extraordinarily well. I own shares for the record. Not so well over the last four or five years, but extraordinarily well in the time leading up to that. There's some data in the press release from the company about the size of the business. I'm pretty sure Don may have listed it. He might have been the CEO when it was IPO'd, I think. In any case, grew it from, you know, big in anyone else's language except on the share market, to enormous. Really has done an amazing job building that business. And so he's leaving. And you say, well, so what? I mean, not so what, but now what?

50:52Is Domino's worth less without Don May? How much less is it worth if it is worth less? How do I think about that from a share price perspective? And we don't have any answers, but I'm going to ask you for one anyway in a minute, Ram. The other thing I'm going to use for a bit of colour is mineral resources. So let's talk about Chris Ellison. He's reported to, and again, not convicted of, not found guilty of, I don't know that he's necessarily made admissions, though it has been reported, of having created a tax structure that wasn't within the bounds of the law. And reportedly, he's repaid the tax that he saved as a result.

51:24He's also reported to have bought and then onsold to his company assets at prices that seem to have been, being the middleman there seems to have maybe cost shareholders some money. Because maybe the company could have bought them for the price he bought them for instead. The profit he pocketed maybe should have been gained by the company, not by Ellison or other people acting with him. Now, on one hand, you say that's taking money out of shareholders' pockets. And it absolutely is, if true, taking money out of shareholders' pockets. If it's true, it is, yes. Now, Chris Ellison resigned as a result of all this, and the shares fell 10%.

52:00The company lost$3 billion in market. 10 % of its value in market, but look at it now. As a result. $300 million or something. I think it's$300 million, yeah. Maybe, I don't know. Which is far, far more than any proceeds he might have made from the asset purchase and resale. So there's a really, really simple ethical, moral view, a legalistic view, which says, bad man, wrong thing, leave company, job done. Right? Again, allegedly. In doing so, shareholders are now worse off than if he actually did what was reported and took the money. Yep. And so you've got this really, I don't have an answer to this, right?

52:39easy to have a view. Plenty of people listening are like, I don't care as long as I make money. Other people, I don't care if I lose money as long as justice is served. I think I tend to be on the latter side. But there's a big, big, big, massive gray area in between, which is, how bad was it really? If the company had said to him, here's a$50 million bonus, rather than making a$50 million profit on the sale and repurchase, he makes exactly the same money and shelves are still better off. Now, again, I'm not saying they should have done anything i'm not saying shouldn't there's no defense to anything that's improper or illegal if indeed anything improper or illegal did happen and yet the maths of that are shareholders are poorer for making him walk the plank and i and again and richard white even harder because this is one where as far as we know there was no impropriety inside the company he may have made some interesting personal choices that you or i mightn't have made or might have made i'm not in his position uh i have for the record never bought a house for a lover uh allegedly or otherwise so you know I couldn't if I wanted to well you didn't say you wouldn't you said you couldn't I haven't been tested in that way let's just put it put it like that and yeah let him without sin or the ability to buy him answers cast the first stone that's right but so and you know so and that one is kind of like one of those there's so much bad press let's just do it now a shell is better or worse off you're out of the press you're out of the you're out of the headlines the board are happy because they're not dealing with this rubbish but is the company better or worse off without richard white at the helm now again you know should personal behavior come into it if it should to what degree and how does shareholders think about the trade-off so i'm just going to simply ask you ram uh in each of those three situations how do you let's use one of your favorite sayings because i know i just want to hear it how would you square that circle um how should investors think about that when we're not the courts we're not the tax man the the justice should i am 100 always going to say i'm never going to say commercial interest should override the legal process but as an investor do i want to get rid of chris ellison am i happy richard white's gone do i pay less for dominoes down don may's gone or do i say it's dominoes it'll be fine who cares well it's funny that you should ask me that because while we're spruiking our oh you're the new ceo of dominoes congratulations i wish um i wrote an article about it last week.

54:59It's on the blog. How do you get to the straw man blog, Andrew? Just go to strawman.com and hit blog at the top there. And there's an article called founders behaving badly. And it's really just talking to this real dilemma that you have in the sense that it's usually, not always, but usually great to have a founder led business, lots of skin in the game, a lot of alignment with shareholders, someone who's scrappy, who's taken the company from its early beginnings, crossed all of the difficult chasms and made this thing, you know, a viable, profitable, growing entity. It's a massive, it's a massive achievement.

55:38Anyone who's tried to do it will know how significantly hard and that is. And they're usually a special kind of person that just has this incredible work ethic and faith in themselves. I don't know what it is, but you get these sort of, they tend to be pretty colorful kind of, And, you know, human characters. You kind of have to be, right? You kind of have to be. And so, and I would never, ever, ever want to get rid of that. But the thing is, you go from a situation, whether it's, you know, Richard White writing the early code base for Cargo Wise way back in the day, or Chris Ellison driving the forklift when the business first got going.

56:13As the business grows, I mean, these are all multi-billion dollar businesses today. And what it does is it, there's a lot of, talk about institutions. There's a lot of sort of things that are out there that you really don't see the benefit and value of until you do. And for me, as a company matures, particularly as it lists on the ASX and particularly as it climbs up the market cap sort of rankings, you must have good systems, processes and governance structures. Do I want a founder CEO that's full of vision and that can inspire the troops and take the unconventional route? And yeah, absolutely.

56:52Don't do not. We've got lightning in a bottle here. Let's not get rid of that person. At the same time, what sometimes happens, maybe this is with Musk too, what happens is that they surround themselves with sycophants. They earn a God complex. Oh, great decision, Elon. Oh, master stroke, Elon. That's brilliant, Elon. And I've said to you before, either one of us copying that for 10 years, you're going to start to believe it, right? And it leads into a more reckless situation for shareholders. Maybe sometimes those plays still work out, but you can have these instances where these masters of the universe who feel as though there's no check on their authority and their decision just do things because they feel as though they can and because they feel as though they can get away with it.

57:40The companies that make that transition from founder, not necessarily to a career mercenary type CEO. In fact, you want to keep that person on there, but you want to say, hey, your skill set is in setting vision, right? You're the big idea person. That's the person that we want you for. Underneath that, though, I want a whole bevy of trusted lieutenants, right? I want a very strong and independent board. You know, I want good systems and processes for staff where I've embedded - I often say one of the core roles of a CEO is to set the culture. I want a good culture that rewards the right people, you know, that drives it.

58:20So, in the event - and this is just purely mitigating for key man risk along with anything else, right? Yeah. Such that when - and Buffett has done this so brilliant - well, we'll see, I suppose, But it appears he's done it so brilliantly well in setting up, again, an institution that is bigger than he is. Is Berkshire, just to go to that, a worse business without Buffett? Yeah, pretty much. I'm a question of it. But none of us think that the day that that happens, it's going to be a disaster for the business. Where it is with mineral resources, and I think the market might have been right too, is that the whole business was Chris's business.

58:59not technically, but he was the largest shareholder and he was the one that everyone listened to. He was the emperor effectively. And by the way, people want him to be because he was the rainmaker as well, right? So it's kind of one of those, you know, you don't want to, this is the harper, you don't want to get rid of those people or sidle on those people too quickly because maybe this is a business that he grows it to a certain size, gets to half a billion dollars and that's where it stays because he hands over to someone else and they just run it conservatively and nicely and fine for the next 15 years.

59:25Yeah, absolutely. But you just need to keep them in check. And I would say it to either one of us if it ever – it's never going to, but if it ever did happen, I think it is – I've mentioned it so many times, the memento mori phrase from the slave of Caesar who walked behind him during parades, you're mortal, remember this. Don't let it all go to your head. Because he had seen past emperors make that fundamental kind of mistake. And while we're not talking about Roman emperors and we're talking about CEOs. They are emperors of their 50s, right? Yeah, yeah. And for me, so this is a long-winded answer as it always is with me, but what do I do about it in particular these situations?

1:00:09It makes me, it reminds me that when, I mean, other situations that are like that, that I want to advocate and hope that some of these structures are being built around it as the company matures and we don't have the one-man show. And we also see we don't see perhaps the red flag of ego being too dominant because you can have too much of that kind of thing as well. In regards to these specific companies, I actually think WiseTech will probably be okay. I think that'll be fine. Mineral Resources, I'm less sure about. Domino's, I'm not sure about as well, which I'll happily proudly put that out there to sort of say, just to remind investors, it's okay not to have an opinion.

1:00:54And I don't on those ones. But WiseTech's in a different camp. Because you say, the allegations aren't business specific and it's just a... It's got so much momentum going for it. The price is another thing. I don't want to get into the valuation of the stock, but the business itself could go on great guns and I don't think that changes. It's really hard, mate. Even with your explanation, right? Steve Jobs was fired the first time because he wouldn't listen and do the right thing and follow along. and that decision almost destroyed Apple. And so it's kind of like in a perfect world, you say the entrepreneur will do everything to get to the point in business where it gets to exactly the right point.

1:01:31And at that point, they'll have the, hopefully the slave walking behind them and a board who says, it's been awesome and you've done such a great job. I wonder if maybe you can just relinquish control, let us put some stuff around. And the board will choose it exactly and the entrepreneur will say, yes, good idea. Thank you very much. I really don't love being all powerful anymore. I'm happy to hand this over. and it's kind of and even with jobs obviously he died in the end so it's a very different exit to the company than most but at what point should or would they I mean Buffett arguably at 94 could have been persuaded to hand over the reins at 65 at retirement age right yeah not that he's again in the same situation from a cultural perspective that being said I don't imagine too many people disagree with him publicly in the company just because they respect him which is fine but equally that can lead to its own God complex or at least not hearing the truth yes It does rely on the – and this is where I struggle because in a perfect world, a Richard Wyatt or a Chris Ellison or a Warren Buffett or a Steve Jobs says, I know myself.

1:02:30I am humble enough to – Yes. But the problem is that those people are not the ones who generally are entrepreneurs because you don't become an entrepreneur because you're humble and you step back and you let other people speak and you hear other people's opinions. You don't trust your own judgment. This is kind of the – this is the challenge. And I think, on one hand... Well, it's one thing to describe the problem. It's another to actually implement the solution. You know, it's just like, oh, you just need better governance structures. Like, okay. When and how and where? Yeah. And at what point do they take over from the entrepreneur doing their thing?

1:03:00If Steve Jobs had said 15 years earlier or a year before the iPhone, actually, guys, I know I'm a genius, but I can also be a bit old. Look, just rein me in a little bit, would you? Tell me you think it's a bad idea. I might make the iPhone go to a committee and the committee goes, what? No keyboard, glass. Are you mad? We're not doing that. Do something like a BlackBerry. And again, I'm being deliberately kind of countered just to kind of illustrate the challenge of this is at a perfect point when the entrepreneurial kind of drive is no longer needed, that's exactly when you would say, hey, dude, it's time.

1:03:35But how many football coaches retire at the top of their game, right? How many politicians, how many prime ministers retire and walk away rather than being either unseated from their own seat or from government. But reading the room is stupidly hard when it's all you know, your ego's wrapped up in it, you want to believe you've had years of success. And so I kind of think at one level, should Chris Ellison or Richard White been tapped on the shoulder earlier? I don't know. I mean, how much value do they create in their last year of being in the business? How many last two years, last five years?

1:04:05I find it really, really difficult. Even as a shareholder, if I knew what was going to happen with Chris Ellison, for example, I might've still said, all right, but let's let it play out. Don't go too early. Wait until we absolutely have to fire him because he's created this much value. Or not that he's stepped down. I should be clear, but be careful because he's not been fired. But, you know, that's a really difficult question. There's no answer, obviously. Well, I referenced it in the article, so I'll quote myself here. I said the sweet spot is when the founder CEO can focus on broader strategic considerations while leaving operational matters to trusted lieutenants.

1:04:39You want a visionary who can set the company's direction, inspire the team and build a healthy culture while relying on a strong management bench to handle the day to day. This requires a shift from being indispensable to becoming replaceable, not in terms of the value. And this is the point I want to get at with you here. Like you do not want to limit that too much. Right. But you want to make sure that you have empowered others, instituted processes, ensure continuity, fostering leadership pipeline. Make sure that, again, the institution is sustained well after that. And as I say, it's hard to implement.

1:05:15I'm not saying anything here is easy. Getting off the booze is hard. Losing weight is hard. Restructuring a company that was founder-led and dominated is very hard. But there is that sweet spot where I really do want the best of both worlds. I want your vision. I want your leadership. I want your inspiration. I want your drive. But I don't want you to be an all-powerful demigod who waves their hand and your orders are questioned without question. Your orders are implemented without question, speaking of the potential with Trump. So, like, that's a scary – that is a scary kind of thing. And it's something that you're, I think what you're getting at, and this is what makes it so hard, it does take that recognition and that self-awareness by the very founder that we're talking about to say.

1:06:09Correct, right? That's it. Put a leash on me. Yes. Right? So that's what makes it so. I would say that some of them have potentially done it. I'm trying to think of some examples. I've gone blank. What's his name? An Objective Corp, potentially. The Brown Brothers at ARB Corporation. By the way, what do you think of that? The flip side is Howard Schultz at Starbucks came back twice from retirement to take over again because he'd left the company not in the state he wanted and he wasn't comfortable with the way the business was being run. He's like, oh, okay, you aren't the right guy. Okay, I'll come back and kind of fix it again.

1:06:47Left, came back the same time. Okay, third time lucky and eventually that was good enough. But yeah, I think you're right about culture, man. I think that's it. And maybe that's what we look for, the Buffetts of the world who can say, actually, let's create a structure that will outlive me. Yeah. I think that's – and ironically – That's the real monument. That is absolutely the real monument. I think for most entrepreneurs, that's kind of – they don't know that they want it, but that's kind of – I assume most of them don't say, you know, this is all just about me. Most of them, I think actually deep down believe this is my baby and my company.

1:07:20I want to see it succeed. Oh, hell yeah. Absolutely. Absolutely. If I was a board member of those companies, I think I'd be doing exactly that same. You've done an amazing job. Let's now set this up so it is a permanent monument to what you've built. I think I'd be leaning on their ego and making that a bit of a, look, you're not going to be around forever. I hope you are, but you're probably not going to be. And if you're not, what are we setting this up for? Wouldn't we like this to be a multi-generational success story? Let's work on doing that and make that your legacy. You get to say, it's now self-sustaining.

1:07:47I've done such a good job that my vision can be fulfilled by others. I think that's – if I was on the board or I was an advisor, that's, I think, how I'd try and get around some of those egos and say, let's turn that ego from look what I built to look what I left. And that, to me, is, I think, how I'd probably try and make it work. Yeah, I'm wondering. I was just thinking John Bogle at Vanguard is a good example, potentially. Yeah. They're not as rare as you think. Again, this is why I always – it's a bit tangential, but as is our one. But I am continually reminded and almost shocked whenever I have the revelation for the thousandth time that these kinds of companies are super rare.

1:08:31Like they are really rare where you've got that visionary founder whose ego isn't out of control. That's running a cash, you know, gushing business with immense reinvestment potential and in huge barrier. All the things that we kind of talk about. But you never find everything that ticks all the boxes. But when you do get something, and some of the biggest boxes to tick are the visionary leader that has a good structure and stuff around them. Gosh, that is a, you know, don't be too fussy with your spreadsheets is what I'm saying. Yeah, absolutely. Look at the growth they've been able to deliver.

1:09:05You're right. Some of those examples you've already given. And the reason I sort of raise that is that it is because when you enact the stuff that we're talking about properly and you have the right systems and processes, by definition, you underpin the endurance. The durability is what gives you the return. There's no point having an amazingly profitable business for five years. It burns bright and hard and hot and then just fades out very quickly. It's the hare and the tortoise all over it again. So as a founder, when you build that and you have this machine that's just going to endure and endure and just year after year just deliver for shareholders, again, very rare.

1:09:45Find them, hang on to them for dear life, and don't anchor on past prices because they can do very well for you because of all the things that make them special. But in particular, my point being that they can be so durable. Nice. I reckon that is a wonderful point at which to leave this podcast. Are you too electioned out to come back on Sunday? No, no. It's a pity because we've got a bit of a backlog with the questions, but I'd love to see what the questions are going to be as a result. Maybe we can pull some forward in the queue. No new post-election questions yet, but you never know. We'll see what comes in.

1:10:22Okay, okay. Either way, man, I'm super in. I'm keen. Awesome. I will look forward to talking to you. I look forward to speaking at least to our listeners on Sunday morning, or as Andrew likes to say, whenever you're listening to this podcast in this 24-7 on-demand world in which we live. Until then, enjoy the first half of your weekend or your Friday evening 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. Subscribe to the free newsletter at fool.com.au forward slash listener.

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