Mailbag: Drop all taxes, other than the GST? July 13, 2025

24:44And that's not the case now, right? There are some people who enjoy incredible standards of living who pay less tax than an ambulance driver, right? So that's where it's broken. Every superannual. Yep, exactly, right? Proportionally, every superintendent pays less tax than someone who, you know, a paramedic or a nurse or a copper. Yep. Yep. So the bargain has to be, hey, we're all in it together. One team, one dream. We've got teamwork to make the dream work. We're a society here. No I &T. Exactly. We've got to pay for certain things. Like it's got to come from somewhere. So it's not about saying, well, you've got the most money.

25:20We're going to make you suffer or pay. It's just like, no, you want to be the kind of person who goes, So given all of the options, the best option, if I could choose what my station is in society, is to be the person who pays the most tax. Because the only person who, that person is also the wealthiest net after tax. And that's the North Star for me. So again, we could argue this for a thousand years into the nitty gritty. And let's do it one day over a beer. But I know we've got other questions. But that to me is how I would frame it. And directionally, we're in the same boat. Yeah, 100%. We really are.

25:57We're going to split hairs if we go on. Which is a nice problem to have, but I would take yours and you would take mine. Yeah. I've got now, right? Yes, 100%. Hey, Coit sends us an email. It's dear Scott and Andrew. I've been listening to the podcast for a couple of years now. And I think you two are the best example out there of keeping a weather eye on the investor mindset, especially in getting the philosophy down right. Coit, I can only agree with you, to be fair. You said something about you had nothing to declare before. It reminded me of the Oscar Wilde alleged quotes, I have nothing to declare but my genius.

26:29I've never heard that before. Oh, it's great. I'm pretty sure it's apocryphal, but anyway. I hope it's not. Like most of Mark Twain's quotes. Yes, yes. Who did I say? Oh, yeah, it was Oscar Wilde. Not wrong. When he said Twain, I was like, oh, maybe it was Twain. JP Morgan. JP Morgan, yeah. All right. Quotes, I think for many people, is not really the question of what to buy that's important, but what to buy for. I like the way you put that. And in this case, hearing every week that some downturns are expected, et cetera, really helps them run through these times much easier. What I wanted to ask you about is therefore slightly more wide-ranging, speaking of your delight for wide-ranging questions, Ram.

27:09Yeah. I really enjoy reading market or investment histories. And one of my favourite recent titles in this regard has been Trevor Sykes' The Money Miners on the mining boom of the 1970s. But with how good, especially thorough, this title is, it invariably also brings some questions. In this specific case, the grains to which insider trading was still allowed very recently in Australia is mind-boggling. I didn't know that, but there you go. I'm not surprised. How often do you think... This is a question, mate. How often do you think there are similar specific circumstances that make some historic events much less likely to repeat?

27:41And how does this affect reading about such historic market events and investments? All the best, Coit. Oh, wow. Yes. Yeah, right? So another great supposed Mark Twain quote, history doesn't repeat, but it does rhyme. And if you want to study, and I just, it's one of those things you just don't get in an MBA. Don't look at, like for them, long-term is 40 years, right? How has the markets behaved over 40 years? I guess that's history. And you take a longer lens because we do have thousands of years of history here. And yeah, there are definitely things that rhyme. I would point you also towards Ray Dalio.

28:23He's banging the table right now about this exact kind of thing. He's got a book called, oh, what's it called? Principles. And there's another one. Anyway, if you actually just YouTube Ray Dalio, he's got a lot of great content on there as well. He's LinkedIn profile. He's Twitter profile. He does the long form essays. He did one just last week. And he's saying, look, I have studied over 1 ,000 years, 500 different economic collapses, and they're all different in their own unique way, but they all follow this pattern. And it's like I'm not going to lay it out here in detail, but you know what it is?

29:03Well, I'll give you the big brushstroke is we have an incredible period of prosperity. We get fat and lazy. We start gambling with it. We over leverage and the whole thing falls apart and we start again. That's the short version. Never, never. And whether that's the Romans or the Greeks before them or the European kingdoms, the United Kingdom empire more recently and, you know, what was it? It was Portugal, Spain, England, then the US, next dot, dot, dot, China maybe. Who knows, right? Like it's just every, every single time. So often when I'm like blabbering on on this part about things like debasement and debt defaults and for the love of God, we can't give advice, don't buy bonds, don't buy bonds, don't buy bonds, it's for this exact thing, right?

29:56Because in fact, I said to you off air, I just listened to a recent podcast with an economist, actually an economic historian called Russell Napier. YouTube him as well. I promise you it's not a Bitcoin thing. An excellent, excellent economist who just looks at broader patterns of things and it's just like it's going the same way. This is way too much debt. It's not going to be paid off. So here's your choice, collapse or inflate it away. And, again, look at history. It's different circumstances, different things, every single time. Inflate it away. And the only other time where it does crash and burn in a heap is even when that hasn't worked, right?

30:42So it's kind of like, so when I look out at, you know, a US government which has got 120 % debt to GDP whose budget deficit in peacetime and with unemployment below 5 % is like 8%. It's not even a question of anything else other than maths and the long arc of history to show that, yeah, it's not going to end well, right? Like it's just not. So yes, yes, 100 million times, was it Trevor? Oh, Quake. Quake. Yeah. I don't know where I got Trevor from. Oh, the book, Trevor Sykes, yeah, The Money Lighters. Yeah, there are definite things. Now, let me, I'll throw it back to you. Sorry, mate. But I will just say this.

31:26Where you have to be careful is that we live on our plane of existence. The timeframe is very different. So these guys are talking about patterns that have played out over many decades and in some cases even, you know, many, many decades. I was going to say centuries, but not that long. But, yeah, it's a slow, slow burn. So you can be 100 % right on it and in waiting for it to happen, though, the market goes up another 50 % and then crashes 30 % or goes sideways. You know, it's just the timing of it is what's going to get you. So I do, that's where, that's the caution. So I'll summarise this up by saying definitely let history be a teacher, but don't think it's going to give you any edge in terms of timing things.

32:12And things can be like fundamentally broken, irrevocably, structurally deformed and muddle ahead for far longer than you think is even capable. Classic recent example, the Chinese property bubble. I remember back when I was at the floor, we were all talking about it. It's like it's madness. There's ghosts. They are literally building ghost cities. There is nothing. There's no one in these houses and they're building more of them. that is definitely going to collapse. Well, it did. It's amazing how little coverage it got, by the way. But just like in the last 12 months or so, there's been a reckoning there, even with all the financial engineering and everything that they sort of threw at it.

32:50So I was like, we were kind of right, not because we were geniuses, because again, maths, right? But thank goodness we didn't go short on it, right? Exactly. That's the hard thing. And so that's why where I come down to it is avoid the things that you know are going to be always difficult in this situation. You don't want to be holding an IOU from a government that's bankrupt because they will not pay you back. Or if they do, it's going to be in funny money. So that's just the easiest one. And also I would say too, what's the other thing you get is you get a flight of capital when things get really shaky between trade partners and stuff as well.

33:26There's already talk of reshoring, friendshoring, all of that kind of stuff, you know, and you've got an S or a NASDAQ more particularly, you know, with tech valuations that have largely been propped up, I would say a lot of offshore money seeking a home, which is now being repatriated because Trump is crazy and we have no idea what's going to happen tomorrow and it's just super risky. There are things where it's like I come back to focus on quality, focus on value, understand the things that you own, do not be the kind of investor that invests purely on momentum. It's like, you know what, that's always gone well, which is why I'm always so concerned of the property thing at the moment as well.

34:06It's not that anything's imminent, but it's just like I always get nervous when I have conversations with people and the only argument is, yeah, but it's worked really well for the last 20 years. It's like, yeah, give me another reason. Well, there isn't any other reason, but it's worked really well. It's never worked that long. And again, this is people misunderstand. It's not like, oh, so it's all about the credit. Oh, well, you've been saying this for years. I'm like, yeah, in the same way that I would say if you do heroin every day, it's going to end badly for you. I can't name the date that it goes bad, but it's going to go bad, right?

34:39And so you've just got to have something. You've got to have a fundamental underpinning to the rationale as to why you would own something. Anyway, that was a long rant. No, I like it. I like it. Coit, I can't add much more to Ram's comments other than the false, just being careful or aware of the false positives. So do all the collapses have the same features? Yes. Does everything with those features always lead to collapse? I don't know. What will happen against a response in that timeframe? I don't know. It does always lead to collapse, by the way. It's just how painful and how long and how pointed and who takes the medicine more than others.

35:23Fair enough. I mean, again, I know you're smiling and you're looking at me like a crazy person, but I challenge you. Like, find me an example. Well, I think the obligation is on the person who says it every single time to prove it's every single time rather than this is the list of examples I've come up with and therefore excludes any other option. I'm not saying it wrong. I'm just – I'm absolutely not saying it wrong. I'm saying, you know, look, every time there's been a collapse, these things happen. It's like, okay. Well, other times when there was too much debt and it was fixed, yeah. Okay, well, I'm not saying there is.

35:49I don't – no, I'm saying I don't know. My point is – I'm not trying to – No, no, no. I genuinely want to know. It's like, oh, gosh, that would help me reframe things. It's just – And I would not – I don't – Ray Dalio is a smart guy. He's got a lot of research money, frankly, and people. So I'm not going to say he's wrong at all. I don't think he's wrong. I'm just cynical and sceptical enough to kind of go, is that, you know, if you've literally done every society ever for any length of time, is it death got over a certain amount and it's never come back? And maybe the answer is absolutely yes.

36:21We've done Sumeria and we've done ancient Greece and we've done the Mongolian step. And if that's all true, then cool. But if it's like, well, here's the things that are common about a class. We talk about good to great in a past podcast. What's the upcoming one? I think it's the past one. You know, the false positives of every singer sleeps in a bed, therefore a bed is, you know, religious. Every entrepreneur, you know, sleep jobs and jepers both have beds, therefore beds are, you know, going to make you a billionaire. It's like, yeah. I'm not saying it's not. I'm genuinely not saying it's not.

36:52I just, I always want to ask the question of are there false positives here or false negatives or whatever? It's a great question. I don't think it's, I'm not suggesting. I just know that those that have done the work and just multiple people, multiple books, it's just everything I've come across has said that. And again, I don't want to position that as definitive and really throw it out there. Anyone listening is go, actually, there is an exception here. But even that has to be, it has to be more than one exception. It's sort of like, you know, finding the person who smoked a packet of cigarettes their whole life and lived to 100 doesn't prove that smoking's good for you, right?

37:23So it needs to be a statistical relevant exception to the rule. Is there one civilisation throughout the grand arc of history that didn't go that way after hitting certain thresholds? And that's the question I've got. But if it is just one. Of course. So if like 499 times it worked badly and one time it didn't, I'm still not feeling confident, right? I agree with you. And I'm with you. I'm absolutely with you, Matt. That's why I'm saying I don't have a view. I would like to know that the work hasn't been done such that it's not just the times have gone badly, here's what's been in common. that's half the exercise.

37:57Yeah. A bit like the same again. Good, great. Here's the things that happened. All these companies had in common, they went well. If there's others that had those and didn't go well, then that tells you that it's a false positive. That's the only question I would have. Again, not comment, not disagreement, just genuine question, same as you, which I don't know. Well, the answer to that question is I don't think so. But I could be wrong. Yeah, and you're probably right. Again, I don't know. Coit, I... I don't know. Andrew's point about timing. The only thing, and again, this is not random to your point, other studies of history in general, it's the same point really, which is just, you know, will the same,

38:38I'm deliberately trying to talk about things other than your point, mate, just to try to be clear. But it's the same general point, which is just a thing happened once, a thing happened twice. Will that thing always happen? Well, it depends on the circumstances. There are no double blind trials. Can we learn from history? Probably. I mean, you know, excess greed is very rarely a good thing. So probabilistically, and maybe to your point, Rem, even allowing for the possibility there are fault positives, probabilistically has happened enough times to think this combination is something you probably want to avoid.

39:06Yeah. Even if 20 % of the time, 40 % of the time it doesn't happen. Yeah. They're still not great odds. Still not great odds. Right. So you kind of, there are things to avoid. And I think you mentioned some of the philosophy stuff, some of the behavioural stuff. That's exactly it. is like, you know, just do enough of the good stuff and a little enough of the bad stuff to get you through. Yeah. That's the message. I do think just be very careful, and this is, Rem, to your point exactly, but in reverse, which is don't look at a single example and say that happened before, therefore it'll probably happen again.

39:35Yes. If it's one example of it. Yes. I've not read The Money Miners. Trevor Tuck's a great writer. I'm sure it's a great read. Is it going to happen again? I don't know. But to your point, okay, well, the legislation's changed. So, again, you know, there are reasons why things may be different in style or substance or size or anything else. May never happen again. Might happen again for different reasons. We've talked before about being right for the wrong reasons or wrong for the right reasons. So, yeah, history is a very good – Randall, you're a big fan of economic history, so am I. One of my favourite subjects at uni was Australian economic history.

40:03Just loved it. Read a heap of economic history books. I think it's really, really useful. But for investors, to your point, mate, about timeframes, economic history tells you a lot about policy settings. It doesn't tell you as much about investment because the timeframes are different and the opportunities are different and the prices are different, everything. There is so much that's different. You know, the principles are the same, but circumstances are different and you've got to be able to make sure the circumstances match if you're going to try and take too many lessons. That being said, investing is heuristics.

40:32Ram and I have an investing style based on what we think has worked for us, what we've seen work for other people. It's probability. Could stop working tomorrow. Right. So lean on probabilities rather than predictions. It's probably my three-word, four-word answer. I should have said the last five minutes of talking just said that. I tell you one, it is a factoid for you. There's been no 30-year period in the modern era where the leading stocks on the American exchange were the same leading stocks at the end of the period. In other words, pick a random point between now and, you know, the end of the Great Depression.

41:05Yeah. Actually, I think you can go all the way back to the beginning of the 20th century and say what are the top 30 stocks on the American exchange. That's cool, yeah. Not that, well, it's not that they ceased to exist, although actually you'd be surprised how often a lot did cease to exist. Like we are the captains of industry. We are the biggest, the best, the bluest of the blue chip, indestructible companies. 30 years later, you're nowhere near the top of the pops and in many cases you don't even exist. Or if you do exist, you have been morphed and restructured and merged and divested. and it's sort of like, yeah, there is a, you could draw a line somewhere between this entity and the entity that existed 30 years ago, but for all intents and purposes, it's different.

41:52And that's why I think it's interesting when we started this conversation with AI. So let's look at the best businesses in the world today according to modern ideology or modern thinking. Well, it's the Magnificent Seven. It's obviously, it's obviously Apple. It's obviously Google. And I'm very hesitant with, I don't want to draw too many conclusions because I am not saying they aren't great companies. They are incredible companies. But if history holds, in the year 2055, they won't be the major companies. And it's probably something we've never heard of before. And the CEO is probably an AI agent.

42:30I think that's right. And this is the, and by the way, it doesn't also mean the top 30 necessarily go broke or even they have their time in the sun. Something else grows far. What's the top 60 or something? NVIDIA wasn't there and now it is. And so we're in the top 30 now as 50th, but still doing very well, just not as well because, you know, what got it to the top was some breakthrough technology and then it matures and becomes a normal business because that's what happens. And some other breakthrough, social media was one of those at one point. Microsoft was the biggest at one point. Was Google ever?

42:59Probably. You know, it's just, yeah, it's gone. It's gone a lot. Here you go. The top 10 largest companies in 1985, General Electric, Exxon Mobile. GM's got to be there. Yep. No, actually. Really? 1985? Okay. Coca-Cola, Altria, which was then Philip Morris, a cigarette company, Merck, Intel, IBM, Procter & Gamble, Walmart, still around, AT &T. Yep. All good businesses, but just not businesses that have continued to grow at the same rate as others. I say all good businesses, not actually, but most are. Yeah, just been bypassed. They haven't done terribly since necessarily, just, yeah, others have.

43:40Yeah, they're past their heyday in a lot of situations. I just really do think it is something that we should pay more attention to just because it is such a, not just in investing, but politics, anything. Yeah, that's right. There's 8 billion people on the planet and there's something like 40 billion people that have ever existed. That's a lot of experiments. People have figured stuff out the hard way, the painful way. And like, I can learn, you say it to your kids, right? I was like, don't do that. And I know not to do that because I've touched the stove before and I got burnt. But every kid has to touch the stove, right?

44:19And it's just a great tragedy of human existence that we have to touch the stove every single generation to figure out, oh, you've made the point before, stock market collapses tend to happen every 30 years because the old guard has died out. Yes. You know, so all the people, you know, the Gordon Gekos of any particular era, you know, masters of the universe. Oh, we went through the 87 crash. Oh, my gosh, let's never do that. I'm going to be really careful about this. And they don't. They don't make that. They learn. They touch the stove. They go, I'm not doing over-leveraged blah, blah, blahs anymore.

44:53And then the next generation comes out, fresh out of school. Ah, those old dudes. That happened. That was ancient history. We would never be that dumb. We're not going to do that again. That's right. Until, boom, and it happens. It happens again and again and again, right? Hey, can I share this with you, mate? This is the Dow Jones. So a different group. The Dow Jones is not a great index for a couple of different reasons we won't come into now. But just for fun. So there's 30 companies in the list. I probably won't do all 30, but I might. Procter & Gamble, you mentioned, is the oldest constituent of the Dow Jones.

45:22It was constituted in 1896, right? Wow. But the oldest constituent was Procter & Gamble in 1932. In other words, no single company exists in the Dow Jones industrial average that was there at any point during the first 40 years. So that's the first thing to note. So whatever was the first dozen, they're now gone, and there's 30 others. The second one, or second oldest, 3M, 1976 it was added. So only one company exists from the first 90 years of the Dow's existence. IBM, 1979. Merck, 1979. Amex, 82. McDonald's, 85. Boeing, 87. By the way, some really big, impressive companies here. Coke, 87. Caterpillar, 1991.

46:03Disney 1991, JPMorgan Chase 1991, J &J, Johnson & Johnson, 1997. Now, that's probably 10 or 12. So 18 of them were added in the last 30 years, right? So you start to narrow this down really simply. Walmart 97, Home Depot, as they say in the US, 1999, along with Microsoft, Verizon 2004, a telecommunications company. And then you get some of the more recent ones. Visa wasn't added until 2013. Apple 2015, Amgen, biotech company, not 2020, Honeywell 2020, Salesforce 2020, Amazon 2024 with NVIDIA and Sherwin-Williams all in 2014. Amazon was added last year? Yes, right? Does anyone use the Dow? I can't believe journalists do.

46:49It's like, why? It's the most stupid end of it. Anyway. My point was just they try and pick the kind of bellwether companies, the biggest companies and those years tell you was it 1, 2, 3, 4, 5, 6, 7, 7, 8, 9, 10, 11, 12, 13, 14, 14 of the 30 in the last 17 years. Yep. Yep. So the majority weren't, yeah. And by the way, once I added, they also dropped one out and they put one back in. Wow. So, yeah, it's astonishing. Yeah. So even just looking at Procter & Gamble, just while you were talking there, you could have got that for$89. 10 years ago, it's$160. You call it near enough a double over 10 years.

47:33It's okay. That's fine, yeah. It's okay, but it's not the big wealth-winning, you know, big Magnificent Seven kind of returns. Yeah, correct, correct. Anyway, we'll move on, but some interesting stats there to have a think about. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

47:55Hey, mate, back to tax. Graham says, To the pod machine. Thanks so much for the entertainment and the rants and the insights. Possibly not in that order. I've listened to your and other podcasts on tariffs, and I still don't understand why tariffs are judged to be anything other than another tax, as another listener posited. After all, did Milton Friedman not say you tax what you want less of? So if you want less imports, you should tax them. Is that not better than taxing everything, whether VAT or GST? Would not a 20 % tax on imported goods be better for an economy? than a 10 % tax on locally made goods.

48:29GST, that is. We are told death and taxes are certain, so given we have to tax, should we not use that to promote local interests? Look forward to your thoughts, Graeme. Go on, mate. Yeah, I mean, it's come up so often, so I don't want to repeat ourselves too much, other than, yes, you can. Just understand there's a trade-off. There's no free lunch here. Yes, if you want to stimulate local industry, local manufacturing, tariff's a great way to do it. Yep. I mean, no argument. Perfect. Perfect one to do it. Exactly. Yeah. By definition. By definition. I mean, you are making your offshore competitors' products more expensive to local consumers.

49:08So it's great. But it might, I mean, we don't make iPhones. You know, we don't make cars. We don't make, I challenge you to go around your house and try and find the Australian made. There's not many of them there, you know. You might say at this point, well, we should. The problem is we can't do it cost effectively because we don't have the scale or the cost structure or the materials necessarily. We can make it happen. It would take 10 years of heavy investment, in which case we'd be demonstrably poorer in material terms. And there's no guarantee that what we made at the end of the day would be any better or cheaper.

49:48The Aussie smartphone for only 27 million people would cost$10 ,000 a pop. Yeah. Can't do it. But we don't know. And even then, even if we did make it here, we got the chip fabrication factory here as well. Like they don't even make that in America, right? It all comes out of Taiwan. So it's sort of, it's a noble idea, just careful what you wish for. So if you think that, and you've got to ask yourself, I always think take a step back and go, why? Why is it better that we make it here? The only answer that makes any sense is for strategic reasons, because I think that the world is about to go completely pear-shaped and all of our trading partners are going to stop trading with us.

50:31Well, then, yeah, absolutely. Like, you know, okay, now I've got some motivation to want to do it. In every other regard, it's like, wait, there's someone who happens to be across a patch of water. I mean, again, we're all on planet Earth here, right? It's just this bit of water. In many cases, this is Australia is an ocean-locked country. Most countries don't even have that. It's just like, it's just an artificial line in the dirt. And it's like, well, we don't want it made over there. It was like, no, but they're really, really good at making that. What do you mean? Oh, it's 10 times better than anyone else makes in the world.

51:02Oh, and it's 10 times cheaper. Yeah, yeah. No, don't want it. Well, I want it to be made here. Why? And I'm just like, why do you want it to be made here? Jobs. And I was like, well, that's not an answer. No one wants a job. People want a lifestyle, right? Job is a means to an end. And if you think that's different, I'll give you$10 million and you tell me that you're going to rock up to your work tomorrow. You are not, right? Most people are not going to do that kind of stuff. So it's just, to me, it's too often couched in some jingoistic, patriotic, just because, and it's like, all right, great.

51:41I mean, they're finding this out in LA right now, you know. So it's like there's going to be a lot of Americans in LA who are going to have to figure out how to wash their own dishes and cut their own lawn and do all this kind of stuff because immigrants are bad apparently, you know, and it's just, is it? Okay, but fine, but there is a cost to it, you know. I hope Americans like working slave conditions on factory floors and mass production lines because if that's what kind of stuff, if you want to make it all locally, that's kind of what you're signing up for here. So I just don't get it. Now, sorry, man, I'll shut up in a sec.

52:17The one exception is a strategic one. I'll double down on that point. Sometimes you just cop the compromise because it's really important that we're able to make this, you know, because we can't rely on our trade partners or we reasonably can't expect that. Okay, fine. Okay, fine. Because that's a situation that's going to resolve it. So, like, if you don't do something to make it here, you'll be forced to make it here anyway because the person who's supplying you doesn't like you anymore and is just going to cut you off, right? So, okay, we'll do it in that situation. Otherwise, no way. My only issue with that, mate, is I don't think that's actually feasible because to your point, where do you stop?

53:00I want to be able to make the tanks. Well, you don't have the metal. Okay, we've got to make the metal. Okay, we don't have the computers. We've got to make the computers. Okay, we've got to make the tiles. We don't have the rubber. Okay, let's plant the rubber trees. I don't think you're wrong at all conceptually. I do think it fails down the – theoretically I'm 100 % with you and everyone else just says that. It only works for commodities. That's why – nothing for value-added goods. Even then, we don't have all the commodities we would otherwise. Something like – so energy might be an exception.

53:25So Australia is very much blessed with energy. We've got oodles of it. We actually import a bit of it. It might be that things are going so terribly overseas and that we're not going to have enough to keep our lights on and our factories turning or whatever. It's like, okay, let's do it. And they're easy because you don't – because it's just – it's the gas, you know. We don't even need to because we already have those things, but it's not that we have to try hard to do that. Right, right. Between – I don't know if we have battery minerals, but between solar and wind and nuclear if we chose to and coal, I mean, we have – Oh, it's so much energy.

54:00Ironically, the whole – the idea of that is like, you know, we should have – well, we do. Okay, cool, let's solve then. You're not wrong. I just – Yeah, yeah, yeah. At some level, we would have got that. I absolutely get the strategic thing. I just think, let's blame it, right? Let's say we go to war with China, okay? What would we have to actually be able to do here in that circumstance? And that'll add up. And we're going to be 25 % poorer permanently just in case China declares war, which people can decide they want to do. I'm cool with that. If we actually think it's a real risk, we're happy to take that risk, then go for it.

54:27Yeah, absolutely. But just to think about, if we had to replace everything China does just in case possibly maybe one day they do it, and by everything I mean everything. You know, you've talked about the pencil, How many people evolved to make a pencil? There's 4 ,000. That's a Milton Friedman. Right. So what is the – if we're trying to make our own pencils and tanks and guns and shoes and – I don't think anyone's wrong when they suggest it. I just think if you think it through, it requires a very, very big, very incredibly expensive retooling – and then we've got to stop doing other things. So back to the question from – Graham?

54:59Was it Graham? Thank you. It was. You say, should we not use that to promote local interests? Ram's already talked about that. What are local interests? There's local jobs, yes. There's local businesses, yes. There's local standard of living. There's local costs. There's local... And so that's kind of... I think when we think about tariffs, we think about local interests, i.e. jobs and businesses. And the mistake there to my mind, not that it's a mistake to think about those things, but firstly, every importer loses their job, or at least there's fewer of those jobs. So there's a net trade-off on jobs.

55:31Every importing business, think about everyone that imports or sells something that's imported, they then suffer. Oh, you're making up with jobs elsewhere. Yes. So therefore we're still where we started, but we're paying more for stuff. And by the way, there's only 4.1 % unemployment. So let's say half those people can't work or won't work or don't have the skills for the jobs that are required. So at best you increase employment by two percentage points, which is a, even if you could, I think you can, even if you could, that's the net result. Okay, so 2 % of people, great, fixed. What did we pay for that?

55:58Well, now everything's more expensive. Well, that sounds kind of like it sucks. And so the local interest question is, we're talking about second and third order impacts, as Sally already mentioned earlier. It's kind of that, right? Yeah. Could we have more Australian jobs in those industries? Yes. Were there more businesses doing those things that replace imports? Yes. And then what? Yeah. And also, why is that a good thing? Yeah. Like you've got to, you've got, and it's such an, it's the kind of question, 12 year olds ask the best questions to my mind, because they're not afraid of looking dumb and it just really gets to the point.

56:32And just to say that, what are you talking about, you idiot, Andrew? Jobs and businesses are bad? No, they're not bad, but it's not the end in of itself. If that was the end, it's just like we could pay everyone to go out into the Simpson Desert and dig a hole for no pointless reason, but everyone would be employed and there'd be a lot of businesses out there, you know, catering them to lunch and fixing the jeans and all of this kind of stuff. It's just, it's an absolute matter. The only thing, again, come back to the alien land. The only thing that matters, the whole business of economics, the whole business of capitalism is to improve our standard of living and not in some mindless, hedonistic consumerism kind of way, but just in terms of living a fulfilling life where I've got food in my belly, where I've got a comfy bed, I'm out of the weather, where I can pursue the kinds of things that I want to pursue and form meaningful relationships with my fellow people.

57:30That's what matters. But do jobs and businesses matter? Yeah, because that's in service of that. It's not, don't put the cart before the horse. Sometimes, man, when I hear economists talking, I just want to slap them around like, what are you talking about? Like it just, you know, and I can tell you, probably sharing too much here, but I can tell you, You like to joke about Straw Man's multi-billion dollar business. It's the most simple business in the world. And you're finally going to fess up to it being worth more than that. It doesn't make that much money, right? And it could. There's a million things I could do to make it more money, but I don't want to.

58:09And I'm really just sort of saying it because the way I look, I've been through the VC ordeal. I've been through that startup nonsense full of, I can't swear on the pod, but I would if I could. And it's all nonsense. It's all absolute nonsense. And it's just like, I've just reached a stage where I was just like, I've got a life where I spend my time doing the things that I want to do. I'm here at home. I get to go to all of my kids' events. You know, and it's just like, what you're telling me that I need to make more money, why? Tell me why I need to make more money. Oh, because then you'd be richer.

58:47It's like, yeah, but I'd also be older and more stressed and I'd never have any time to actually enjoy it. And also, as you get older, you realise that it's not the Lambo that makes you happy anyway, right? It's really not. They've done surveys in nursing homes. It's like no one says, I wish I worked harder and I got that bigger bone. I was like, I wish I spent more time with the kids. I wish I had more experiences in life. I wish I got out of the house. That is an eternal truth. Let me tell you, no one tuned into this podcast to hear those boring things, but it's so true. and I'm not trying to put myself out there as any kind of anything other than just to sort of say, for me, it's been a very deliberate choice to not grow.

59:26You know, I tried for a while, mind you, you know, because you've so much pressure to do it. And it's like, no, I'm good. I'm good. This makes perfect sense to me. And I think that's also what we need to think of when we think about the economy writ large. I don't give a flying something about what GDP is. I don't care. What I care about is living in a very safe, prosperous society where anyone's got, you know, a pretty decent chance of pursuing their goals as ever they conceive them. That's what I want. Well, I didn't give a... Who cares about GDP or other unemployment? Yes, they will be signals into how effective we achieve those loftier goals, but economists just need to go past them and to realise that they are in service of our lifestyle.

1:00:14Sorry, rant over. Good rant. Good rant. Hopefully, Graham, that makes sense. That's the answer, mate, is it's all about perspective. Even purely economically, cost and price is what's missing from local industry jobs and businesses. So that's the answer, and that gets to Ram's point, which is it's the combination of how much we have to do. It's productivity, but productivity in a quality of life. Yes. There's got to be a better – quality of life is the word, but productivity is we use it to say how much more stuff can we make. Yeah. The other way to think about it, and this is going to make the economists really unhappy, is how little can I work for the living state that I want.

1:00:46Of course. Because it's what it is, right? Right. Of course. Any economist that disagrees with that, just anything else they say is just rubbish, right? Because that's actually the definition of productivity, right? Correct. More for less. Yeah. It's 100%. That's what it is. I'm going to double down on these tariffs with James, a question from James on a very different direction. So we haven't done this one before, but I like it. Hey, Scott and Ram, thank you truly for the podcast, he says. It's been an emotional rollercoaster. Part enlightenment, part rant-induced therapy or therapy-inducing rants, and part it depends.

1:01:17You've managed to combine wisdom, wit and chaos into not one but two glorious audio adventures on my pod machine that I look forward to each week. I have a question that stems from a recent mailbag podcast around tariffs. I had a thought though, and feel free to pick it apart. When carbon taxes are mentioned, I've done this before, one elegant way to get a behavioural response via tax without the downside is to compensate the populace. In the case of a carbon tax, this was placing a tax on carbon-intensive products and services while handing the tax generated back to taxpayers. Net-net, the taxpayers in the same situation while eliciting a behavioural response that results in less carbon emissions.

1:01:55I've made that case many times, a carbon dividend, it's been called. Could this not, though, says James, be applied to tariffs? For example, could you not refund the population at tax time the tariff revenue? Or simply reduce income taxes in line with the increase in tariffs? That's the claim or the plan for Donald Trump, although it hasn't come to pass yet. I get this ignores the fact our budget is structurally cooked and I'm expecting Andrew will suggest it's messing with the money, but surely it elicits that behavioural response without the downside of reducing the standard of living. Thanks again for the pod.

1:02:23Really enjoy it. Cheers, James. I have to think about that one, James. You might correct me here, mate, but my initial reaction is it's self-defeating. Like it makes it more expensive, but then I get a rebate, so then I don't change my behaviour and no one's got the incentive to produce locally or am I missing something? I'm missing a little bit in between on the carbon tax line. So, James, I don't think this is the right answer, but I will talk to what you're saying for RAM's benefit than anyone else's and then I'll come to a thought about it. No, I was speaking specifically in regards to tariffs.

1:02:52Yes. No, no, no. So I meant James' example, the carbon tax. Okay. So the idea was I'll use the carbon tax as the example and I'll apply it back to tariffs because it's easier with the carbon tax. Okay. The idea with the carbon tax, with the carbon dividend is you now have to pay 20 % more for your electricity. Mm-hmm. Okay. But I'm going to give you back the 20%. Can I just go back? Take a step. You have to pay 20 % because the producer has to pay 20 % more and they've passed the cost on to you. Higher carbon tax specifically I'm talking about here. So I'm not taxed. Stay with carbon tax. Yeah, but the tax is levied at the person who generates the carbon, right?

1:03:25It doesn't really matter in this instance. Oh, okay. That doesn't matter where it's collected. It's a price signal. So it just says, hey, carbon intensive energy is more expensive now. Okay. You're going to pay 20 % more on your bill. It doesn't matter who passed it at what point. Just there is a tax that costs you more than 20%. So$120 of electricity, it's about a day's worth these days, you now pay$120 for, right? But I'm going to send you a$20 check. Hang on, that doesn't change anything. And you say, hang on, but what I'm going to do is I'm going to send you a$20 check no matter how much energy you use.

1:03:54That's the deal. So you say, hey, honey, turn those lights off, will you? Because I'm going to reduce my energy use because it costs more now. So I reduced my energy use by 10%. I'm going to call it 90 % because I make my math easy. Now you've only got a bill of$110, but you still get the$20 back in the carbon dividend. So what it's done is elicited, the price increase has elicited a behavioural change from you because you've chosen to use less energy to keep your bill down. But you're also, it's palatable politically because you're getting a carbon dividend so no one feels like they're paying more.

1:04:23The carbon tax doesn't cost you any more to net net. It's like the energy subsidies governments do, right? It takes it off the bill. So in theory, the price signal is there. Use less of this and you save anything you make, which is great. But because you get the carbon dividend back, the populace accepts it's not just an extra impostor's tax. It's revenue neutral to you or sorry, cost neutral to you. I pay$20 more. I get a$20 check from the government, so I'm not worse off. But if I can save money, save electricity, I am worse off. And the benefit of that, of course, is it means less carbon reduction, less carbon emissions, sorry.

1:04:53Isn't my incentive still carbon tax or no? I mean, I've still got the incentive to use less electricity, right? Yes, but the higher the price is, the less you use. Like cigarettes or anything else, you can always substitute stuff. The idea is just the higher the ticket price, the less you get. I would just say Google Laffer curve if you want to understand how woefully terrible the tobacco tax has been. Have you heard that? Anyway, that's the whole – I won't go on that tangent. Anyway, so I'm actually a fan of that approach, James. And James is basically saying, hey, if what we did was say, let's put tariffs – so James, like we've said before, tariffs probably increase prices and makes them a little bit worse because it costs people more for stuff.

1:05:29James is kind of saying if we just use a carbon tax type example or carbon dividend example, you pay more for the imports, but you get the money back at the end of tax year, you know worse off because you pay more for the imports we've got some money back for that tariff cost. So therefore, you're no worse off, but it's changed behaviour, is his argument. James, I disagree. One point on that is it does assume zero administration cost. Oh, yeah, yeah. But you can make it close enough. His point is it would reduce the economic impact of tariffs if you gave the money back. If they only collect it anyway, you might as well give the money back, I suppose.

1:06:01Yeah, I have to think. You go ahead. I'm still on my – the wheels are turning. So James, I love the squeaking sound you can hear. I love the carbon dividend. I think it's exactly the right way to get a carbon tax through and to deal with emissions. I think you're 100 % right on that one. On tariffs, it breaks down a little bit because, well, maybe it doesn't. It depends on your philosophical approach, which we kind of just mentioned with Graham's question. Enlisting to behavioural response, the question is, do you want the behavioural response? Because the behavioural response is, again, we're benefiting local jobs and local businesses.

1:06:36but we're still paying more for stuff and so we're worse off even if you get the money back. The economy is worse off. Why? Because we're now buying things locally that cost more than they would if we bought the imported. So you can import a widget from Japan or China for five bucks. The local widget is$10. Now let's say you make the imported widget$10 as well and you$5 in tariffs and you get the$5 back. That's all true. But now the price of both is$10 and it rewards inefficiency. Let's say, by the way, the local business is$9 instead and the tariff is$10. So now you want to buy for the local business.

1:07:08So not only does that not collect any tariff revenue because you bought the local one, but you're also paying more for it because it's more expensive. Why is it more expensive? Because we're not competitive. And so it goes back to Ram's original question about standard of living. I'll stick with the maths, although he's absolutely 100 % right, 1000 % right about the broader standard of living question. But on a dollar paid basis, I still pay more for that thing. It props up local inefficient businesses. It means capital isn't allocated efficiently. You are messing with the market and producing a suboptimal set of returns on that basis.

1:07:39Either you buy the imported product for more expensive, and yes, you get the money back, but there's no behavioural change. The only behavioural change you get is when people buy local instead, and why would you buy local instead of the imported product? If it was more expensive, you wouldn't, so it's got to be, the imported product is going to be more expensive to make you buy the local one, which is more expensive than the original one was before the tariff. So you're still worse off. The behavioural change you've created is, yes, you bought more Australian, but you paid more for Australian than the previous price of the import and therefore you're worse off.

1:08:06And it goes back to Ram's original point about standard of living and quality of life. Okay. I've got nothing to add. That makes sense. Thank you. I'm glad that you were here to answer that. But I do. I genuinely love the idea. I think it's a really, really important question to ask and I think it's a really, really important one to talk about. How about let's finish up with a question from Jack who self-identifies as a bastard just in advance. G'day, Scott and Ram. Big fan of the pod machine. and he says the bail bag has turned my Monday morning rat race commute into something I look forward to.

1:08:34Thank you. For context, I'm 25, brackets, bastard, and started investing at the bottom of the COVID market. Man, bastard twice. Double bastard. That makes you a lucky bastard, Jack. I managed to build a nice ETF portfolio, and thanks to Ram's encouragement, I've scraped together 10 million sats. Hey. Just remember, it's only worth 10 million sats. My question is in two parts. One, what is your thought about NAB's Equity Builder product? Two, if you just like NAB Equity Builder and we're turning 25 tomorrow, thanks for rubbing it in, what would you do to grow your wealth? Leverage Bitcoin, property, or put it all on black maybe, says Jack.

1:09:14Love the work both of you do to educate the community. Cheers, Jack. Do you know much about Equity Builder, mate? No idea. Never heard of it before. Sounds like a property thing. No, funnily enough, it's not. You knock me out down with a feather. Right, I know. All right, so I'm going to read from NAB's website because it'll be easier than making it up. Here's what you get. They say, quote, a range of quotes here. A principal interest investment loan for managed investments, a flexible loan term from three to 10 years, monthly repayments with early payoff possible, a variable interest rate and no ongoing fees, 2 % special rate discount for the life of the loan.

1:09:50Eligibility, the loans for investment or business purposes only. You need to be 18 plus and a permanent resident. You need to understand there are risks involved when investing in the share market. So they say here, NAB Equity Builder offers a simple way to borrow for investment in financial assets without using your property as security. Instead, we use shares and investments you acquire as security. This means you won't have to worry about borrowing against your house, et cetera, et cetera, et cetera. It sounds exactly like a margin loan. It is, I believe. I've got to be careful. Here you go.

1:10:22With NAB Equity Builder, the loan is set up as principal and interest. It means you have a disciplinary payment plan built in, so you're paying off the principal rather than marginal, which is just interest. It's a lending solution with no margin calls, making things easier on both your budget and your peace of mind. This loan type allows you to stick to your plan without short-term market volatility impacting on your long-term investment goals, end quote. I don't buy it. I don't buy it. And, well, I bet you there's something in the fine print there because maybe it's not a margin call as strictly defined, but I'm NAB.

1:10:54I give you 100 grand, fill your boots, go buy some shares. You buy some shares and those shares drop to 20 grand. They've got no collateral against the loan anymore. So the only way that makes sense economically and rationally, and maybe it does, is that they charge you a very high rate of interest to compensate. And I bet you, I could be wrong, I rarely am. I'm so going to face plan after that. Here you go, drum roll, people. They only let you buy shares that they consider worthwhile. So like 90 % of stocks would be out. So you buy out of Intel's share and AMP and all other rubbish. I will say quickly, it's not even that.

1:11:36It's funds only, so a range of ETFs. Okay. Which is what the investment is. Right. Their ETFs, I'm going to guess? Oh, okay. Sometimes you can be too cynical. Sometimes I surprise you. Yep. James, I don't love Equity Builder for only one reason, which is the cost. The rate is 9.5%, which means the special rate you get is 7.5%. I like it better than a margin loan for the same size because there is no margin call. So this is a – oh, hang on. Yeah, subject to me changing my mind or finding out more, this is a better product than a margin loan because there's no margin loans and you're paying off the principal and the interest.

1:12:15And that, I think, ramped to your point. That's why NAB are doing it because they actually get the principal repaid. It's not just the – if you only get the interest and you're kind of – you're on the hook for everything else. If I was – if I could lend money on a proved range of securities with full recourse, I would offer NAB equity builder if I was NAB

1:12:40because it's ETFs. Everything from the BetaShares Australian 200 ETF to the Dimensional Global Value Trust ETF to BetaShares FTSE 100 ETF through to iShares SP500 through to Vanguard Australian Property Securities ETF through Vanguard Ethically Conscious Australian Shares ETF. It's all these shares. There is, by the way, speaking of which, you know what, I wouldn't do it for the intro. You buy sell pats because I obviously consider them close enough to a fund, which is interesting. So my thoughts. So I like this better than a marginal loan for two reasons. One is you are paying down the principal, which I think is really important.

1:13:15You can do that on a margin loan. Yeah, but you're obliged to. It's a fixed repayment. So they are structuring it so that you pay down the principal. Right. And there's no margin cost. That makes it better than a margin loan. I don't know what margin loan reintrust rates are. I just checked on mine. Yeah, go on. So just to explain this, I do have a number of portfolio. Even the self-managed super fund is under a margin loan account. but I use it in the same way as I use a credit card. In other words, I use credit cards all the time, but I never, unless I've just forgotten to make a repayment, which is frustratingly I have done.

1:13:51But I think in my entire life I've paid 20 bucks in interest on a credit card. Which is not bad given you got a million dollars you'd run on. Well, you know, rich people use credit, you know, that's the case, I'm told. So it's sort of like, is living your life on a credit card and racking up credit card debt smart. No, it's the most stupid thing in the world. Using a credit card because it's a really difficult world to live in without a credit card, but prudently managing or making sure you don't build up a debt and pay it down, it's perfectly sensible. I use my margin loan the same way. So to your point, they don't force me to do it, but I've got enough self-control that I don't just like, oh, they're going to lend me this, I'm going to rise out and buy a bunch of shares with it.

1:14:34No, but it gives me incredible flexibility so I can, And so I was just like, oh, I really want to buy that share. I don't have any, you know, the capital is tied up in this. It's going to take me a little while to sort of sell it down and move it around and blah, blah, blah. But I can just buy it now. I'll wear the interest for a few days and then I'll pay. So it's really flexible and I can even draw down cash on it, not that I ever had, but it's nice to sort of have that option there if some kind of emergency happens or I don't know, whatever. So I hasten to add all of that because I do have a margin loan, but I don't ever have any material sustained debt on it.

1:15:08And so anyway, so I looked it up. On CompSec, it's 9.15 % at the moment. Okay. So I think Nabeca Rebuilder is better than a margin loan. Yeah, sounds better. Except, sorry, sorry. Go on, yeah, please. On my margin loan, I can, well, they still limit what you can buy. Most of the stuff I want to buy, they don't lend against. But I can buy individual shares and I think it's the top 300 or something like that. Fair. Yep. No, I think that's right. so yeah I don't have any issue with it well sorry it's better than a margin loan I think the interest rate is too high so I reckon I mean each to their own but largely if you want to do something with debt and borrowing I would do this rather than a margin loan personally notwithstanding your point mate about not being able to choose your own investments as a product for most people and I dislike the guns don't kill people people kill people thing but also So it's not completely untrue.

1:16:03Margin lines can be used well. They can be used really badly. So Andrew Page wants to use a margin loan to choose his own stocks because he can invest well, ride the volatilities, suitably borrowed, all that kind of stuff. I completely agree. For the average person, I would be much more comfortable with them using NAB equity builder than a margin loan for exactly those reasons. You pay down the principal. You're forced to pay down the principal. The investments are reasonably broad and there's no margin call. for an average person. Our listeners are above average, of course, Ram, but for an average person, I reckon that's probably a good combination.

1:16:34But I wouldn't use it because the rate's too high. I just think the rate is way too high. It's just one of those - Use a home equity line. Well, that would say, therefore you don't put your property on the line. I do love how they say that because I bet you there's another department that says, why would you do that? Use your equity, mate. Equity, it depends on what floor of the glass tower you're on. Something for everyone, mate. Depends on, yeah. Whatever your view, we've got a product for you. Mate, when the ducks quack, feed them, right? Yeah. That is the mantra of the industry. So, yes, all of that's true.

1:17:05Jack, that being said, you say if you dislike Navec, I guess I'd do a net-net because I think the loan rate is too high. I think 7.5%, you're just too close to the line of average returns. If you get a 7 % return, you've spent 10 years paying more money than you've got back, which kind of defeats the purpose. So generally, I wouldn't use now equity, but at this rate. I've said before, if I lock in a 4 % rate on my debt, is it going to? Probably not. But, you know, I'm just saying hypothetically that I would, yes, I'd borrow a million dollars tomorrow and pay it off over 50 years and that'd be sweet.

1:17:37So that's – no one's going to give you a 50-year loan. I'm on the wrong side of that age-wise. Jack, you may not be. I unfortunately am. That bastard. If I dislike it, what would I do? Here's the thing, Jack. I'm going to tell you, I'm going to give you some really conservative, boring advice. You're 25. You've got 42 years until you retire. You'll probably by that point live another 40 years. So you've got 82 years to compound your wealth. You don't need to do, you don't need to take any unreasonable risks or any risks at all. If you can save a reasonable amount of money, I don't know what you're earning and that matters and I don't know what your other costs are and that matters.

1:18:16If a 25-year-old can earn a decent wage and save a decent portion of that, compounding that over 42 years to retirement and then other 40 years after that while you retired, I would tell a 25-year-old to not take, just save and invest. Leverage, it sounds like fun, sure. Bitcoin, maybe. Property, again, you're going to borrow to do that. Do you need to? Put it all on black, probably not. But, you know, you do you. I just think it's the hare and the tortoise. You can take, I always say the least risk. If you have a suitably diversified share portfolio, I think that is lower risk than anything you've mentioned and less risk than cash.

1:18:55Because you've got a diversified portfolio. Over time, we've just talked the other day about market hit an all-time high a month ago and may have since. We're pre-recording this one, so I don't know what happened since. But yeah, should you borrow money? You could. Would it improve your returns? Maybe. Would it make your returns worse? Maybe. you can afford to take off all of the downsides. Whatever the upside is, whatever the risk of the downside, you can eliminate those to effectively zero. Now there's no, could the share market crash and go to zero? Of course. Could aliens land? Yes. Could nuclear war wipe us out?

1:19:25Yes. Is there a world in which equity investing is a bad result? Yeah. Is it likely? No, incredibly, incredibly, incredibly unlikely, but it's possible. So you can't get rid of all risks, but you can afford to minimize your risk of going back to zero and having a very, very, very comfortable retirement. So I know you're impatient. I get it. I don't mean that in a contest anyway. We're all impatient. We all want to have more money if we can. Just my honest view is I don't think you need to take any risk at all at this point. That's not just diversified, dollar-cost averaging, share portfolio, keep doing it, add regularly, and you will be very, very, very, very, very happy in retirement.

1:20:01So I know it's a boring answer. Could you use leverage? Yes. Could it work out well? Yes. Could it work out badly? Yes. Could you buy property? Yes. Could it work out well? Yes. Could it go badly? Yes. Take off the could-go-badlies and you're going to be completely fine with the least possible risk of having to go back to square one. So I would – the boring answer, Jack, hey, welcome to the boring podcast. Save and invest regularly. Every paycheck, save at least 10%, put it aside, add to it. You'll have got super on top of that. You'll be completely fine at retirement without taking any reasonable risk or unnecessary risk.

1:20:31Stay humble and stack sats. Isn't it funny how – I mean, yeah, I don't disagree. And yet, I won't say 100%, but a very high percent of advisors in the property space would be saying, no, borrow as much as you can. And then when you get any equity, because things only ever go up, so it's like the sun, will the sun rise tomorrow? Yeah, of course it will. When that happens, use that equity to borrow against. And it's just sort of like, okay. It's just, right? but but what's what's funny about it is i suppose is that in the asset class that we focus on it is considered really really risky yeah and in that asset class it's considered risky if you it's almost like why would you not it's like that's just normal and i just i just make that as the observation i don't people can read between the lines they know what i think but it's just it is interesting though right like oh and it's exactly why i say that i would say to people this is why i said that's the risk could probably could probably go down yes is it likely i don't think so um but it might and do you want to take the risk of that you don't need to you do you could buy shares and they go down you might probably go down if you leverage and do both those things you're going to have much more downside you may possibly wipe yourself out is that worth having to start again at 35 37 42 48 no you're trying if you if you're 48 you might say I've got nothing.

1:22:01I've got 17 years. Worst case, I've still got nothing. Even then, I'd still say to people, you better have something than nothing. Taking the risk because of you're in a hurry is totally understandable. 100 % understandable. I get it. I get it. I get it. If I could shorten my working life by 10 years, if I take some risk, would it be worth it? Yes. Except if I shorten my working life by 10 years, take the risk, go to zero, and I have to work an extra 10 years longer, and I'm still working at 75 because I took a risk at 25, 35, 45, it's just not It's not worth it. I've said this before. Jeff Bezos, regret minimisation framework.

1:22:34Are you going to regret going to school? I'm not having as much as you otherwise might if you'd taken some risks. You're going to regret going back to school. It's just not even a – I know it's a personal view. It's my view. I just don't see the – I don't see the value of it. I wouldn't do it.

1:22:49He's smiling here, people. I've seen him smile. Which means he wants to say something, but he's trying not to. I'm internally conflicted because I'm doing it. I've got – my mortgage is bigger than it needs to be. Yeah. And it's because I choose to maintain that debt there that gives me capital to invest with. So I could sell some shares and reduce my mortgage significantly, but I don't. So I've gone at it. I mean, it depends on which order you want to do things, but it's like I owned the house outright and then I just chose to borrow some money against the equity and put it in the shares. And I'm happy to do that because, you know, it's a pretty low recourse.

1:23:24the LVR is pretty low and I'm compounding away in an asset class that's incredible relative to what, you know, the interest repayments are, particularly in real terms. And, you know, me, I'm pretty bearish in terms of the inflation outlook over the long term. I just feel like I will borrow in a debasing currency and put it into assets that are growing and purchasing power. It seems like a pretty good deal. And it's really, we've had this discussion before. I don't think we're miles apart. It's just really, where do you want to put the slider? Neither of us are going, like borrow to the eyeballs.

1:23:54Like, no, that is dumb. Do not do that. Borrow 5 %? Well, I kind of think that's in the same way that I think most Australians would go, well, you have to borrow to buy your first home and that's not a stupid thing to do. And I don't either, by the way, right? It's impossible to not do that, right? So if it's true for that asset class, then why isn't it true for this asset class? And, again, the only debate is one over degrees. You know, zero too low? For me, it's too low. For you, it's just right. Is 100 too high? For both of us, it's yes. And then where do you want to put the line, right? Yeah.

1:24:31As I said before, mate, I am absolutely, I always talk about both sides of my mouth, but what I will say is I am taking a view. This is horribly condescending and horribly rude. I would be comfortable, I would be more comfortable doing it than recommending it to other people because I can't control the then what's. And that's not my responsibility. Yeah, why you shoulder that responsibility? Because I'm saying to people, this is a good idea. If you do this, this and this. You're not saying it's a good idea if you throw caution to the wind and, you know. Yeah. Okay, no responsibility. I really believe that.

1:25:10You cannot be responsible for how people interpret or misinterpret you and if you're honest and clear, then I think I sleep very easy at night. So for me, it's not the misinterpretation. Even though I do get emails from time to time. You said, like, did I though? It's not the interpretation question that's an issue for me. It's the they know exactly what I'm saying but can't actually implement it. Right. I've led them down a path which puts them in danger. I don't feel like they don't need to do it and so I kind of feel like I should. But that's just me. It's funny for a guy who makes stock recommendations for a living.

1:25:47Yeah, I know. Like you do know that you're putting it out there whether you like it or not. I know, I know. All right. I reckon that's probably going to do us for this podcast, mate. Will you come back on Friday? I will. I will. Until then, have a wonderful rest of your weekend and full. Cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned. General advice only. Please speak to your financial professional to understand how it may pertain to your situation. Subscribe to the free newsletter at fool.com.au forward slash listener. The Motley Fool operates under Financial Services Licence 400691.