Looking for value… in growth. April 10, 2026

27:13So I said, Andrew, there's a company and here's the DCF I put together. What do you reckon? And you're going to go, what? What growth rate in what year? I mean, you could, right? Yeah, you could, but... And that's the hard thing. It's not that it didn't happen. I mean, firstly, we need to be a little bit skeptical. or companies that promise to, because they only won Amazon, realistically. I mean, there'll be others, but you know what I mean. And yeah, that natural tendency to go, well, I can't put 20 % every year. So maybe 20, okay, maybe 15, all right, maybe 10, and okay, maybe 5 % by year, by year 10, and maybe, and that's, it would have, you could never have bought Amazon on that basis.

27:45And so it's a really, really difficult one. I'm going to say too, mate, I bought Amazon shares, and this is not about me, and not about me being good, or probably just lucky, frankly. But I bought Amazon shares without doing a DCF on the company. and this is where i've tried a little bit into the david gardner kind of thinking or just the growth kind of thinking and it wasn't i mean plenty of people do this total addressable market thing and everything's everything's investable if you do that right one percent of china type things like imagine if this was this big but i did with amazon to some degree kind of did that i kind of did the whole this is a visionary company incredibly well led with massive price advantages with huge scale economics with massive global potential and i just kind of went there's a range of potential outcomes here but without having to put a percentage each year and compound that which sounds reckless it's like could this company be 10 times its size in some future periods like actually yeah i mean it might not but yeah like i can i can see i can extrapolate the wrong word because it makes it sound mechanical but i can i can absolutely look to the future and imagine a scenario where given its advantages given its scale and this is this is the 20 cent versus 0.2 of a cent you mentioned before mate i didn't buy it at 0.2 of a cent in metaphorical i bought it at metaphorical 20 cents and yes i missed out a huge huge upside uh but i did it because i kind of went what's got to this point and here are all the things i see about it and here's the range of potential futures and in some of those the thing crashes and burns for a million different reasons but in the vast bulk of those i reckon this is a much much much bigger more valuable business in i don't know when i bought them but you know decades worth of time uh i i think this is a is a huge business and i think that's that's kind of how i did that and and it feels on one hand even to myself sometimes a bit reckless of what do you mean you didn't do a dcf you know how much i was actually worth and you didn't you didn't ask what what needed to happen but it kind of didn't need to be and maybe sometimes the the focus on the per year growth can maybe make us risk missing the bigger picture um and again i'm not i'm not saying throw out your dcs especially new term year on year growth yeah right so i don't i don't i guess i'm i'm left wondering what those businesses are today and and again trying to make myself think about not the next Amazon because there's only one Amazon every now and again, but where else that sort of thinking of how big could this be?

29:55How dominant could the company be? How big is it already? You know, how does it go from here to there? I mean, I've mentioned a million times Coke, all the shares that I own, sorry, and that I got the analysis right, but I missed the growth runway or lack thereof because it was everywhere already. But it's the Coke story. I mean, imagine it coaxed. the bloke Pemberton puts some cocaine in a bit of syrup and pushes some bubbles through it wow this is amazing that's the.2 cent answer at some point in the 1900s it becomes the 20 cent answer at some point after that it becomes the$2 answer would you have known on day one everyone drink Coke at some point?

30:39No but at some point during that process you think this could be a thing I mean, this feels like everyone who drinks it loves it and wants more of it. And gee, if that could scale it any size, those are the kind of opportunities I think maybe we, I'll say I need to do a much better job looking for proactively and maybe just harnessing the long-term potential without getting too caught up in the occasionally depressing, as in not mentally depressing, but the depressing impact of trying to put a yearly growth number in a DCF and talking yourself out of it because it feels like it's reckless. Yeah.

31:11I mean, it's particularly hard for the relatively smaller companies. You know, when it comes to like a Woolies or a CBA or whatever, people will have different views, but no one's coming out there and saying, I think Woolies can grow its top line at 30 % for 10 years. Like, no, a mega bull might say 7%, you know, per year for 10 years. Like, really, that's quite bold. You know, let's talk about DroneShield, right, because that's in the news for all the wrong reasons at the moment. Came across our desk 2021. I'm just looking at the figures now. They did$10 million in revenue. It was really great, you know, and a lot of the bulls, oh, it's going to go, you know, it's going to go fantastic here and rah, rah, rah.

31:53And you think, okay, well, how much, how much, what does strong growth look like? You think, wow, maybe they'll double or triple their earnings in the coming years. Well, between 2021 and 2025, they grew their revenue 20x. 20x, not 10x, 20x. Two years after 2021, it was 5X. And it's like, can you imagine? And this is where you give credit to the people who sort of saw that potential and actually stuck it. They weren't. There's a much larger cohort of people who just bought it because it was cool tech and the share price was going up. But I'm talking about the people who actually sort of thought a bit about what they were doing.

32:27Justifiably. Yeah, that's right. Just, you know. And again, I've just really hastened the way out here. I'm not trying to make a quality judgment or trying to infer any sort of investment advice from it. But it's sort of like you almost need to sort of make these insanely reckless forecasts. And it's sort of like, you can imagine if I was chatting to you in 2021 and said, man, I reckon I can 10x, two years time, three years time, I'll have like 10x it. You get that, that is bold. It's like, oh no, 20x, like double what you said, right? And why, how is that possible? Well, it's called the basing effect, right?

33:05You are starting off such a low base that you can do that, whereas actually that's entirely reasonable. And I think with those kinds of companies, you have to look at the addressable amount. How big is it? How much of a market share could you have of that? How long will it take you to get there? What do your net margins look like at that point in time? And it's hard because you feel as though it is reckless to make those forecasts. but therein lies the opportunity there. And then I haven't even talked about operating leverage where the sales do that and the fixed costs don't grow that much. And then the bottom line just explodes, you know?

33:46And it's particularly when you're near that break-even inflection point, loss, loss, loss, loss, loss, loss. Oh, a couple of million in profit. Oh, 30 million in profit. Oh, 480 million in profit. Like in the space of a few years, right? And it's just sort of like anyone sort of junior analyst presenting that to their boss. Tone it down. I am not putting that in a report for our clients to read because you sound like you're taking crazy pills. What are you smoking? But actually, that happens a lot, you know, more than you would imagine. And so for me, part of it is, I think I've said on the pod many times, it's not trying to, I think too many people do this.

34:24They feel as though they have to come up with some valuation. That's it. That's my line in the sand. And I get it because you kind of do need at the end of the day. There is a point, do I buy or do I not buy? Do I hold or do I sell? But, you know, you can play around. You can explore the probability set. And I think it's just a really valuable thing. It's like, well, let's not – I don't have to plant my flag on this hill, but all right, I don't know, what does it look like? Let's assume it grows 10 times in revenue. Let's assume this is what it looks like. Like it's actually less so than made me money, but more so in saved me from losing money.

35:06When you see, I mean, ProMedica's story again, I was pretty embarrassed about that for a long time. Now I'm starting to feel a little bit justified, right? Where it's sort of, well, Afterpay was back in the day. We had these arguments. I'd be on Ausbiz and people was like, oh yeah, but it's a great company. It's like, well, let's, okay, how much? Oh, they could grow their revenue. this okay well let's go you know what let's let's add 50 percent to that you know what are them okay let's do that and you and you once you do then it's not not to say this will happen but to say what if this happens and you and you find with particularly these really sexy hyped up sort of stonky uh meme stocks that it's just sort of like even if it's even if what you say is true i'm still going to be taken to the cleaners here because the market is forecasting in what you've said and then another 5x on top of that, which is not even the most biggest megabull is calling for that.

35:58So even if you are right, you'll get an average return, which is a terrible prophecy. I'd rather let's have a very, very low risk ETF and get the average return. Why am I rolling the dice on this one in a hundred shot that I might get an average return? That is not success, right? Success is when I get double the market return, right? Like that's what I'm kind of looking for here. So I don't know. I think it's worth, where are we going with all of this? I guess it's a question of trying to sort of contextualize things, explore various things, understand what is possible, what is likely, and then adding, what's the three most important words in investing?

36:44Margin of safety. Margin of safety, thank you. Trying to tee you up there. Trying to tee you up there. and uh yeah right and and and and that's like and by the way that that is a that is a setup or a scenario where you can do that and then nothing comes your way for like two years yeah that's right and then in the space of three months you get 12 opportunities so so it's not like if i just do this i'll always be something you know it's like often you can do everything right and just sitting there twiddling it's but it's been buffett's problem for the last however many years He's like, yeah, I've got a mountain of cash, but it's not like I don't want to deploy it.

37:23I want to deploy the capital. It's just like, there's nothing for me to buy that I'm excited about. And that's the other hard part of it as well because when it doesn't sort of line up within your framework, it's like, you know what the right thing to do? Not a damn thing. And that is hard when there's money burning a hole in your pocket. And it's especially hard when the market and every person you know is making a fortune. You're like, but it's too expensive. I will say the difference for Buffett, of course, is he's trying to deploy what was. who's now no longer the CEO, was trying to deploy hundreds of billions of dollars.

37:51Yes. And so the opportunity we've got as individual investors is, this is the cool thing. We've got an advantage on Buffett. Our opportunity set is multiples, orders of magnitude more than Buffett's, which sounds weird, right? Because Buffett said, no, no, the money he's got to deploy and the amount of time he can do, and he can look at the same company as us, but what's he going to do with them? He put 15 grand there or 100 grand in there. He's got to start paying dibs. I suspect dividends follow Buffer's death by less than three years. I mean, it's just a sensible – It's just a sensible – Either buy back a bunch of shares if the stock price tanks or pay a dividend.

38:27Yep. Or at least – You're just sitting there getting – What are you getting, 3%, 4 % at the moment? Things you'll never do, obviously, but even just buy an index ETF. Yeah. Because cash drag itself – Even just keep up with the market in the meantime. That's what you're going to do, right? but just the cash draggers will kill you on the show anyway oh mate can I tell him how to do his job yeah Warren you've got my number what's up I'll tell you how to do it I'll show you how it's done wouldn't it be cool if you listen to the podcast that'd be kind of fun nothing doesn't happen but it'd be great that's it I'm pulling up stunt job I'd die happy well it depends what is is he screaming at the pod machine or is he nodding that's right depends you idiot he's hopeless doing the monthly full money oh sorry misquote me That's totally not how I think.

39:12What would you know? Oh, yeah, okay, fair enough. I hope he's not listening, then I take it all back. He's not. He's really not. I found the meme I was thinking of. So two things. Firstly, look at your... If you're not following Andrew on Twitter, at Sage underscore Simeon, you can go for tweets, replies, posts, replies, or media. Your media game is interesting. I have to look at that. Before you do that, I'm going to get to that point. But most of our listeners will know this because they've been listening for a while and they're smart people. You mentioned stonks or meme stocks, just as a phrase in passing.

39:48And I'm always reminded, no, I'm not always reminded, I do it more often. I'm occasionally reminded, I should be reminded more often, that we use, even us, we try and keep jargon pretty light on this podcast because it's just garbage and nonsense and generally used to exclude rather than include people. It's not something I have to try to do. I just think it's a wank more often than not. The amount of people in our game who hide their ignorance and very low intelligence by using big fancy words is embarrassing. My current least favourite is names. I look at some of those names and they just mean some of those companies, but names sound somehow cooler.

40:21Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

40:31What do you mean by stonks and meme stocks, mate? And if someone's listening going, I don't even know what that means. When you say stonks and meme stocks, what are we talking about? So I think stonks is a bit like HODL. So HODL comes from a very old Bitcoin forum post where a guy was a little bit drunk and he misspelled. You know, he's basically saying it was one of those bear markets where it had dropped 90 % to like 100 bucks or something. That blows the mind to think about. And it just became a thing. I think stonks is like that. I think it might derive, I'd have to look it up. But it's kind of, it's a derogatory term.

41:08It's kind of like, meme stocks comes from essentially GameStop. I believe that's where the phrase was sort of coined. It's sort of like, it's not really a real business or it's a business that is mainly dominated by what you would unfavorably call retail investors. Dumb money is the movie, right? It's dumb money. it so like everyone's buying it but they don't know what they're doing they're buying it because it's going up they're buying it because of some misreprehension as to what the business is is doing you know um a story it's the same thing in your mind is that we're in the same ballpark or we're somewhere different with memestock it's adjacent like so a story stock is something where it's kind of like they're just no fundamentals is what i read it to be and when i say no fundamentals it's like there's always fundamentals but there's no good fundamentals there's very little sales, no earnings.

42:00This thing is going to do a really amazing thing. It's going to go in this many markets, so this many customers, and when it gets there, this is going to be so cool. And by the way, you've seen the technology and the website and they're doing some stuff with blockchain and imagine when this thing hits the highs, that anyone goes, oh yeah, let's do that. They kind of jump into these story stocks and share price rockets and then eventually people get bored and the share price plummets because they'll go, what are we doing here again? And the price isn't going up anymore, so I'm selling. And then of course the other side of the mountain is the horrible fall as you come down, crashing roughly normally back to somewhere where it started before everything got carried away.

42:31Yeah, yeah, yeah, yeah, pretty much. I mean, and the thing is like, it's so easy to sort of be derivative of these things, but you know, there's, I mean, Amazon was a story stock at one stage. I mean, there are exceptions to the rule. You don't want to be so jaded as an investor. And I see this a lot, but the professional quote unquote investing class, they would just put their nose, actually drone shield mentioned that's a great example right the amount of if ever i sort of speak to a fund manager or someone in the space it is it's sort of laughter and i'm look there are things to laugh at i feel like i'm really sort of promoting drone shield and i don't own it all of that all of that kind of stuff but it's sort of like i'm too sophisticated to even look at that because just by virtue of the fact that it seems like at least on twitter and online most of the people looking at it are the the unsophisticated great unwashed who are just there for the for the for the vibes right um so you you you want to be an independent thinker i guess is what i'm saying here is it's like if you're there and there's also a career risk i think with that as well because they don't want to be the person who goes to their boss and says hey listen i think we should buy this um you're going what is that the one that's sort of trending on twitter at the moment his share price has gone up 10x and it's not making any money and it's all about these It's all of those kinds of things, but I don't know.

43:55To my mind, what I like about meme stocks or story stocks is actually the word stocks rather than companies. Right. And that's to me where I separate the two. Story stock refers to the way the stock is being treated by the investors slash traders slash spruikers rather than – it doesn't really describe the company at all, right? Dranger would be a terrible or wonderful company. GameStop could have been a terrible or wonderful company. When the story takes hold about the stock as opposed to a fundamental understanding of the business, I think for me that disconnection is what defines the difference between a story stock or a meme stock or a stonk rather than a business that we've independently and cautiously and reasonably valued or understood and tried to learn about and then bought at a price that we thought was reasonable.

44:41Story stock is everything other than that. It's just the exciting, new, flashy, cool thing. Everyone's going to make you money. And it just becomes that the purchasing becomes about the stock and about the company and about the price and the excitement rather than in five years time, I think the profitability of this thing will be this much higher. To my mind, that's how I would probably separate the two. Yeah. I mean, I love it. I love a bit of ill-informed distortion in the market in both directions. Yeah. Not because I like to see people suffer, but that's how. Yep. I mean, so it's the thing we always want.

45:17I want a great company that's super cheap. It's like, well, guess what? That only happens when people are being irrational. Or I want to sell a moderately good company at a really, really stupidly high price. Yes. Yep. Great. So you need all of these kinds of things that are in there. And it is, again, it is that idea of trying to walk that fine line between being an independent thinker, not so independent that you dismiss any outside perspective, right? Like it's just like everyone else is wrong and not worth listening to, so I have to do it all myself. and that's probably just as reckless. But so is just like, well, someone said this and so I'm going to go with that as well.

45:51Everyone thinks this, so I'll join the crowd. Yeah. And as we often say on the pod, I think more often than not, well, at least for me and I think for you as well, the answer isn't they're right or they're wrong. It's just like, actually, I don't know. And that is a very, I would actually put that in the top five superpowers for great investors. They have that ability to say, I don't know. It's three simple words, right? Put your ego aside for five seconds, right? It's okay not to know. This is complex stuff. And it's like, I don't want to bet on something that I don't know or I don't have a firm conviction in.

46:25It's not like there's plenty of stocks I see that I think are really cool. They've got a lot of potential. But when I start having, as you said at the start, it's a gamble at some point because I've got to have some kind of prediction here as to what will happen in the future. If I can't have a high conviction view on that, it's like, well, the answer is don't do a damn thing. as frustrating as that can be if you look back years ago and I remember looking at that and it's like yeah but you know hope is not an investment strategy as I'm fond of saying right and and it's it's all of those kinds of things together which what makes this an endlessly fascinating endeavor and also a diabolically difficult and yet satisfying sort of endeavor at the same time who'd be an investor well we would because it's fun and it's interesting and it's worth doing Speaking of things that are memes, I found the one I was thinking of before.

47:12Yes, yes, yes. And I couldn't put it in any sort of context and I was horribly wrong. I thought it was left and right, turns out it was top or bottom. It's the Principal Skinner meme where he's saying at the top, the top frame is, was I wrong about Bitcoin? And he was holding his hand to his chin and thinking deeply. Then he looks up and he says, no, the world is wrong. So that was that. That's actually a great meme for a whole bunch of different reasons. Yes. I think originally in the episode, it was like, could I be wrong? He's like, no, the children are all wrong. That's very, very good. Mates, we managed to get most of the way through the podcast without even touching on some of the big macro stuff, which is lovely and a nice change.

47:51I think we both enjoyed it a bit more. A couple of things are worth kind of trying to touch on in a relatively short space of time, which is actually nice for us and probably nice for our listeners. I hesitate to talk about this because it's Thursday morning in the now world, but it's now yesterday morning in the then world. and if you're listening to this even later than that, we might have seen even more wrong and stupid because... It's the year 2048 and you're in a bunker somewhere listening to some archived footage that you're an agent. If you're in a bunker, that's probably all you've got left.

48:18You're like, you're listening to every other podcast, all you've got left is Motley Fool Money. All right, put it on. I say that because this stuff is moving so quickly. Wednesday, one of the best days on the ASX in 12 months, on the back of an announcement from Iran and the US that there will be a ceasefire for at least a fortnight, while in theory things try to get sorted out. There's supposed to be a reopening of the Strait of Hormuz. Things are supposed to get back to normal. The oil price fell 14 % to 15%. The ASX was up 2.74%. That was the All Lords. And everyone got really excited. And we've just finished talking about the fact that I'm never happy being an optimist in room optimist, right?

49:00I'd rather be an optimist in room pessimist for all the reasons you just mentioned about. That's where the opportunities are. And so when the market jumps almost 3%, on the back of an announcement by all people Trump and Iran. And kind of, oh, thank goodness. Yeah, oh, good. This is done now. And I kind of, I mean, I like being richer. Like, I like my portfolio going up. Don't get me wrong. It was a nice day yesterday. I look at the numbers and go, oh, that's nice. But I'm kind of looking at this going, hang on. You people know who you're dealing with. You know that a fortnight is 14 days at best, assuming the ceasefire isn't broken in the meantime.

49:30You know. It's already broken, hasn't it? Right. That's what I was going to get to. So, you know, the oil hasn't started flowing yet. And you go, oh, announcement, good, okay. And I'm kind of like, now, I say it all the time. It's possible the market was too low to start with. And so this is a relief back to some sort of normality. It's possible the market was too expensive and the jump up makes it even more expensive. So I'm not commenting on the absolute value, but the relative change in perspective between 4 p.m. on Tuesday and 10 a.m. on Wednesday, I mean, it's a big deal. Don't get me wrong.

49:59I'm glad there's a ceasefire announced because it's better than no ceasefire announced for all the reasons, right? So I'm not that bad that I want to poo-poo every possible bit of good news or hope things are going to get better. But when your job is to be a rational pricer of assets and you see an announcement for a 14-day ceasefire between a regime that is just awful and – I'm not sure whether I should say Iran or the US next. It might depend on your perspective, I suppose. But, you know, Trump has gone some combination of lying, chickening out, delaying, threatening. Iran is just you know miserable bastards the best of times and and and you kind of go really that that is worth three percent more that the the full value of these companies from here to eternity is worth now three percent higher because of the possibility of maybe a sustained 14-day ceasefire that may or may not lead to either resumption of hostilities or something else and yes everything's going to be priced with a probability and yes there is a higher probability of oil flowing with a ceasefire than without one.

50:58So, yeah, okay, okay. I just, I don't know, mate. I don't know what your thought was, but I kind of looked at that and went, I like being richer, but I feel like we're just putting, setting ourselves up for disappointment. Yeah. I mean, it shows you, yeah. What does it show you? I mean, it shows you the short-term myopic vision of the market. But again, that's not news. I mean, that always happens. I don't really get, I share your frustration, but I don't get it. I've seen it. I mean, we've seen it for so many decades at this point. It's just like, I don't know how it could be any other way that the market does something dumb in both directions all the time.

51:40And as I say, it's like, this is a good thing. Selfishly, it's a good thing. It does, I do wonder that there feels like there's a bit of a coiled spring. like if this thing resolves in a non-disastrous way, and that's probably the best we can sort of hope for. You know, there's a lot of stuff that's been beaten down. There's a lot of money on the sidelines. You know, I could see assets rallying very strongly if this is sort of, if it just, if the market can get a sense of just, you know, Trump moving his finger away from the proverbial button, right? Sort of like, yeah, I could see a very, very strong rally in stocks.

52:18Again, let me hasten to add. This is not Andrew saying you should be bullish now and we're at the bottom. Because the other alternative is like, you know, there was talks of bloody nukes at once. I mean, for God, so anything. I wouldn't even say that with a straight face 10 years ago, right? But it's like these days, it's like, I don't know if I'd be that surprised, right? So, and then markets could go down 90 % from here and life as we know it could be ended. So, it's really wild out there. All I do, though, is the practical so what is you'll never predict that stuff because by the time this goes to air, another truth social post is out there.

52:56And like, how are you going to predict that? You talk before about gambling. Yeah, you can't do it. Predicting the future is always hard, but there's just some things that are easier. As I've said before, it's like, is it a guarantee? Let's go with the Amazon example. Is it a guarantee that Amazon will be around in 10 years? Like, no. It could be found to be a fraud tomorrow, right, and go to zero. But it's a reasonably high probability, I would imagine, at this stage, given their assets, given their balance sheet, given the sticky customer relationships, given the services they offer, given their competitive advantage.

53:32It's not a reckless bet to say that. You know, is a company working on a cure for cancer in the microcap end of the ASX likely to be successful? Well, they could. They absolutely could. Someone's going to do it at some stage and probably come out of a little know nothing company, right? But the odds aren't good. So what is going to happen on the geopolitical front in the next, frankly, three, four years? I've no idea. Is this business that I'm looking at likely? It's always my starting point. Are you around in 10 years? And are you earning more money at that point? If the answer to those questions are no, it's dead in the water.

54:09There's no point proceeding from that point. And again, I'll never know for sure. I'll never know for sure, but it's like some bets are just easier than others. You know, it's like you can go to the casino, right, and pick a number and put your chips on that number on the roulette table. And if you win, what is it, 36 times? I don't know. It's pretty good, pretty nice, right? 36, 38? I don't know, yeah. Something like that. I mean, that's a pretty good return, right? Or I could just go red or black. Now, I'm not going to win as much, but I'm going to win roughly half the time. Don't at me, math nerds.

54:42I know there's a zero. Two zeros on something else. You know what I mean? Yeah. Right. But you are always in the probabilistic domain. Some things are more probable than others, right? So lean into the more probable things. And I think anyone who is investing, this is why just any single cent I put into the market, even if it's a relatively inconsequential amount relative to the overall portfolio, I'm only putting money in that I do not expect to need for at least three years. Now, it might be that tomorrow it goes up 10x and I sell it, but great, I'll take the money and run. But that's not my expectation.

55:25If I'm going to put money here, I have to at least allow for various things to come and go and wash over and for the business to prove itself. And these things just sort of take time. So when I'm looking at the current geopolitical situation, no clue. No clue how it's going to resolve. but history would probably suggest it it will resolve one way or the other and in three years time it might not it'd be a relatively distant memory i i remember the gfc is a distant memory already right and how big a deal was that covid's already starting to very fade from consciousness right um and and and it's hard to imagine bigger things as they are unfolding and i'm not saying that the world's gone great since then i i would you know me mate i would i would probably argue that we're actually we're dealing with consequences where the seeds were sort of set back in back back in those times.

56:15But the ability to look past the immediate, even the medium term there, and just sort of say, like, there is something on the other side of that. And there's probably a world where, you know, I guess short of complete Armageddon, where, you know, people are making things, other people are buying things, and someone's delivering value and receiving reward in return. And you can share in that, right? And it's just sort of, I think all of the best investments I've made. I've made this point many times. It's just sort of been, you buy something and then you just have a year or two of complete and utter frustration and looking like an idiot.

56:50And then all of a sudden things just go incredibly well. And it's not because you could have picked the timing on all of this stuff, but you forced yourself not to have an investment thesis that was predicated on what will happen in the immediate term. And that's what wrong foots so many people. Like they, I come across a lot of investors who buy very well in the sense that it's a great company. It's a good price. I don't need the money for a while. It's a long-term investment. I'm going to buy it. It's like, great. No, no, I have no notes. That is excellent. And then three months later, like, how's it going?

57:21Oh, I sold out. Like, why? Oh, because Trump did this. Like, whoa, whoa, whoa. That was never part of your thesis. Yeah, but now I, the reality, you'll, you'll rationalize it and you'll use a lot of big words, but you got scared. You doubted yourself and you freaked out and you sold. And, you know, again, we all do that at times, but it's sort of like you've got to try and make these bets where you're not beholden to these near-term events and just to continually remind yourself of that when they happen, because it's going to happen. And once this resolves, there'll be something else, right? Who knows who's after Trump, right?

57:52Maybe we've got four more terms of Trump. He changes the rules and, you know, anything could happen. Maybe Barron's running the US at a point in time and things get far, far, far worse. Oh, dear. Excellent positivity. You know, I just I think most of the time, most people are doing sensible things. Most of the time, humanity will struggle forward. Right. We're an innovative species. You know, we there's a lot of creative, hardworking people out there. and you can participate in their success no matter how messy and confusing and scary the world is. It's just not going to be a straight line. Make your peace with that and you just move forward in a better way.

58:42I know I'm rambling at this point. No, I think you're right. I think the – yeah, it's why you kind of made the point earlier that the announcement was made, the market went up, but then overnight before we traded again, it was like, oh actually another straight they're closed again because something else has happened yeah and ironically and again we're doing this at a point in time it doesn't really matter and you're right I know I I don't care about it in the sense that I don't I care about it vicariously on behalf of our listeners and readers and members and viewers and stuff because you and I are like here we go again you know whatever is there an opportunity or do I just ignore it you're absolutely right for most people they are asking me to explain why it happened and whether they should be worried or excited or happy or sad or whatever It's that idea of the market giving you a signal that somehow you have to respond to.

59:29And we will say and have said a gazillion times, welcome to this podcast, ignore the market. Don't let the market tell you what to think or how to think or what to believe or what something's worth. Do it yourself. But there are countless people, mate, and I'm sure you have the same. Well, the market's up. Is that good? The market's up. Oh, should I still live in there? Is that bad? I had a relative of mine asking whether it was a big deal and that oil was being bought in euro. and, you know, should I worry about that? It's like, no, it might happen. It's a thing. No, don't worry about it. It's all the stuff that kind of people worry about because they see prices moving and they assume incorrectly most of the time, maybe not most of the time, but they assume incorrectly that the market has something to tell them.

1:00:09And I say most of the time, because most of the time it does. I mean, most of the time it's roughly right and that's okay. But the shorter the timeframe and the more specific the movement, the less it has to tell you, generally speaking. Again, there are differences, but that's kind of where things are at. So that's kind of my interest in it is just that idea of it's another example to remind people ironically as you said not to pay attention you know here's a big deal okay good so what's the lesson don't ignore it that doesn't seem right i know but ignore it because it's not telling you anything other than what the market's thinking or feeling right now which is not useful to you unless you're trying to take the other side of that trade and god forbid you try and out trade or out think or out sentiment the market because that's just a mad effort to just don't do it so that's kind of my my take is just that um but then And as you said, the ceasefire has already been effectively broken.

1:00:53I don't know that Iran and Lebanon were involved, or Lebanon, sorry, was involved in the original one, but now they're doing stuff.

1:01:01The whole thing is mad. And so it's why I think the market would have reacted on the upside. And so it is why I would caution people when those things happen, don't get too excited. Just so it's on the downside, this is why this is important, because you make the point a lot, mate, that volatility is the fancy way we used to mean losses. You don't use volatility when it's up with volatility. Right, exactly. But that's why it's important that when the market is up, we still say the same thing. It's exactly why we need to, which is it is just volatility. If the market was down 2.75 yesterday or up 2.75 yesterday, this is Wednesday I'm talking about, it doesn't tell you anything other than how people are feeling right now.

1:01:36And so it's really important. If we're going to say when losses happen, yeah, guys, this happens sometimes. Just chill out. Don't worry about it. As long as you own a quality company, as long as you pay good prices, as long as the businesses have a future, don't sweat the price movements. We've got to be consistent for our own sake and for credibility. And because it's just true, that the same is true on the upside when you have these big movements. And the market goes up over time. So you're more likely to have more ups than downs, hopefully. And ups are likely to be bigger than downs over time, hopefully.

1:02:05But the volatility on the upside, as you said, mate, it's every bit as common. And we shouldn't just do the whole, you know, wins are my good management, losses are my bad luck. In the short term, ups and downs are just the market having a different view, getting out of a different side of the bed and going, how do I feel now? Or trying to guess somehow they can out-trade geopolitics. I just think it's nonsense. So it's why I wanted to raise the point, because I think it is important when there are wins, to do the same as you do when there are losses, which is the slave behind the Roman general saying, moment a more, you are mortal.

1:02:37You didn't deserve this, you didn't earn this, you didn't deserve the downs, you don't deserve or earn the ups, in daily chunks or weekly chunks, even monthly chunks. Over time, if you're right about the businesses you own, that value will out. If you own an index ETF and you bought it at a reasonable price, your dollar cost averaging and markets create value, that value will out. Just don't get too caught up in trying to diagnose, understand, respond to these big movements in either direction. I've got to find where I read this originally. There's some research which is going to sound so right when you hear it.

1:03:11I'm sure you've read it before. Or when you're talking about daily movements, so what happened on the market on one particular day, the biggest daily gains are observed in bear markets. And the biggest daily falls are in bull markets. In other words, let's say the market is on its way top to bottom to a 30 % or 40 % correction, a really bad bear market. Along the way, you will have some of the best performing days you will ever see where the market is up 4%, 5%. Like in terms of like indices, that's, they're huge moves, insanely big moves. And it's like, well, it doesn't feel right. It doesn't feel, because it sort of had these death by a thousand cuts with these interspersed, with these big, big short-term, literally like one day kind of rallies and then down we go again.

1:03:58And it, you know, it's the head mess, not square, where, you know, things are going up in a long-term structural bull market. and yet you have all these 3 % down days along the way. And it's just like, it's confusing the weather for the climate. It's probably the best way to sort of understand all of that stuff. And I'll tell you a little story I said to you a few weekends ago, I caught up some old schoolmates. We get together every now and again. I haven't seen them for a while. And obviously when we get together, I talk stocks and other things. And anyway, so the last time I was going on about Catapult, which I've been fond of and I'm disclosure, I own a bunch of shares.

1:04:40And one of my mates was like, oh man, you picked it. Cause it was like, it was a dollar, right? It was like, oh, it was like, what is it now? It's like three something, like 350. It's like, yeah, but it's like, oh, nicely done. That was, that was a great return. My other mate goes, what are you talking about? It was like$6, like six months ago. And it's so, it was so funny because like they're both right. They're both right. And one person's looking at me and going, yeah, that was a really good investment. I wish I'd listened to you. The other person going, oh, I'm so glad I didn't because if I did, I would have seen it go from six to 350.

1:05:12It's like it's that volatility again that's sort of screwing with you there. It's like, yeah, but it was really, really cheap. And like even despite the fall, it's still like a triple and then change. Right. Like and that is it is that I don't want to dox my mate here, but he's that guy. right who who is just sort of like if it's not perfect it's a fail you know when it comes to investing yes yes you buy low and for him it's like it's the bottom tick top pick that's a successful trader what anything about lowest price you've bought pay too much sell anything below the top level you've you've sold out too early yeah which my comment is like have you ever done that he's like he did it once and he like he's just like keep you know dining out on that this is like dude it's just dumb like you'd never do it like who cares do you want to be do you want to make really good risk adjusted returns on average over time or do you want to like sound really clever and just have just have your you know just face plan time after time after time and then occasionally get lucky it's the it's the classic gambler fallacy almost you know it's like that that person who just sits at the slot machine just loses loses loses loses hey one yeah see i know what i'm doing loses loses loses and it's like it's no way to live your life a and it's it's certainly no way to invest.

1:06:30And I think it's the easiest thing in the world to sort of say, eh, don't worry about all this stuff because you sound like a simpleton and you sound like a reckless simpleton. But, you know, it's kind of true. And it's not that nothing matters. It's just like you've got to focus on what actually matters. And a lot of these things, let me also hasten the way, they matter a great deal for a great number of people. But just in the investment realm, these things are not the... What do you think that... You think that you're just going to wait for war and conflict to stop and then you're going to invest?

1:07:07Yeah. And politicians are going to stop doing stupid things and corruption's going to go and all our major problems around the world are going to be solved and then you're going to invest? Like, it's just... There's always something. There's always something. Pick any random point in history. In fact, the only... whenever you get a scenario where things look really good and there's no storm clouds it's probably the time to at least statistically it's like that's usually the most reckless time that's that's when reality just comes out and just slaps you across the face and go oh feeling confident about the future are we how about how about how about a little pandemic whack you know how about a geopolitical conflict between superpowers whack how about this this this this and this and you know it's just despite that the old things have happened and will happen again and and different things have happened and different things will happen next time and and it'll be similar enough and different enough and and that's kind of the point that's that's where you end up with if you do this properly is you've got to invest through that stuff i i you mentioned kind of your mate and the kind of that idea of top and bottom and it's ex-colleges used to joe maggie used to like the line everyone said it but it's just one i associate with him as well which is just, do you want to be right or do you want to make money?

1:08:19Yeah. And it's kind of like, so hang on, if I buy at a reasonably good price but it's not the bottom and sell at a reasonably good price but not the top and do that over and over again, I'm going to make a lot of money. So am I going to obsess over, oh, I left a dollar on the table here or 15 cents on the table there? I mean, I can. And I can obsess about being perfect and being perfectly the enemy of the good and I'm not right on this. Oh, I'll try and do that, try and do that, try and do that. It's like you're, it's Buffett's, and you've made this music example a lot, Ram, it's Buffett's seven-foot bars versus the one-foot bar.

1:08:45The seven-foot bar is, I'm going to make an investing career, or just, I don't know if you're a career professional, it's been with your portfolio, right? I'm going to be a lifetime investor, and I'm going to spend my entire time trying to work out a way to clear seven-foot bars. Meanwhile, the bloke besides you is stepping over one-foot bars going, eh, reasonable value, eh, not great value, buy, sell. Some more decent value, okay, I'll buy there. A bit expensive, I'll sell now. I'll move on. Or I won't sell at all. I'll just step over the one-foot bar and keep walking. that that that is the it's a beautiful analogy because it's just so true that the you're really going to work out what you're trying to achieve here because because if your if your if your aim is as it should be i want to amass sufficient wealth so i can have a comfortable life i mean everyone has their own why knock yourself out but you know for most people i just i hope that resonates okay so how do i get to that point how do i most easily most reliably get to that point How do I get to that point without risking blowing the whole thing up and having too many sleepless nights and too much stress and too much self-loathing?

1:09:46How do I get there in a very simple and repeatable way? And the answer is just kind of be roughly right as often as you can. You know, the precision of I must do the top, I must do the bottom, or I made a mistake because I sold too early. I mean, was it a mistake? Objectively, if you want to look at it that way, you didn't sell the very, very highest price. So were you perfect? Does the Russian judge hold up a 10? No. You don't need a 10 from the Russian judge. You need a six on average from the judges more often than not. That's success if you, you know, and ego is so caught up in this. I need to be smart.

1:10:17I need to be better. I need to, I need to, I need to. So you can do that. Or you can just do the thing that actually helps you amass enough wealth to have a comfortable life. I just, and I, like I get it, Ramon. I really, really get it for some people. I get personality types and I get misunderstandings of the market and I get the drive for perfection and better. And I get the, we've all had the emotional feeling of, oh you've said before some of your companies you've sold too early so the price continue to rise like oh I'm an idiot I can't believe I did that and but you've got that you've got to make your peace for that stuff that is investing right that's what that's what this is there is no there is no version of the future where you always buy at the cheapest price and always sell at the best price you're just you're seeing yourself a failure what if you do it's total luck you know it's that once in a lifetime right exactly exactly unlike my Bitcoin purchase was at a peak and has never been there since I can do the reverse really really well I'm good at that I'm not so good at the other one I'm very good at that me too exactly mate I think we've probably we've probably come to the end of our conversation which has been thoroughly enjoyable and a bit different in recent times which was lovely because we took about stocks almost the entire time and investing and we love doing that so if you enjoyed this then thanks for listening I would like to believe that we won't be talking about macro next week but the world's a funny old place and seven days is a long time a week's a long time in politics right it's an eternity in geopolitics so we will see what happens in the meantime though I reckon we can take a bit of time out and answer some questions on Sunday will you be so good as to come back I always enjoy the mailbag episode because we're actually talking about stuff that people want to hear about rather than our hobby horses so yes I'm looking forward to it which usually for us is rather magnanimous because we'd rather talk about us let's be honest it's far more interesting and important nothing about me what do you think about me Andrew until Sunday hopefully with not too much self-referencing full on cheers The Motley Fool and people appearing in this program may have positions in the companies mentioned.

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