Mailbag: incl. A listener's success story. February 4, 2024

28:14definitely um i tend to avoid dividend reinvestment plans a lot of benefit to them again because it's an automatic thing and just helps things compound away so there's a big benefit to it there but i do like taking that income and using that to allocate to areas that might need a bit of bulking up in my portfolio something's up something's down when the when the dividend check hits it might be that well is it the company that paid it the best value opportunity right now It might not be. So it gives you a wonderful opportunity to diversify. So I definitely like it. As to whether that should be in the US or not, I don't know.

28:54I have an opinion that things are elevated there to some extent, particularly amongst the Magnificent Seven so-called. A lot of expectation priced in there. Maybe justifiable. I don't know. I don't know. I don't want to go down that path, but I definitely encourage you to reinvest it. Here's the other thing, right? When things have gone up, I think, let me start again. I think people are right, and the listener here is definitely right. So they got interested during COVID when things were falling and everyone was scared, they got interested, right? Good instincts, great instincts. Likewise, they're saying, well, now things have rallied quite a bit.

29:41I'm a little bit nervous. Now, again, most people, things go up, now I'm interested. Things go down, I'm getting the hell out of it. So your instincts are 100 % right, 100 % right. However, and I speak from bitter experience, is that when you're wired that way, although it is an advantage in some ways, it can be a disadvantage because even if you say objectively things are overvalued, things can get a lot more overvalued and stay that way for a long time. think about all the people jumping up and down about the imminent collapse of china right by the way look what happened to evergrande over the week you know that's been a slow moving train because i didn't even make that didn't even make the paper right like which is such a lesson by the way mate because the market lost its collective mind for about three weeks was it two years ago i think this time two years ago might have been a bit more actually it was 2020 when they missed their first payment yeah okay it was gonna be the end of everything it kind of now it is the I was one of those people.

30:37I was like, yeah, this is not good. And maybe I'll eventually be – here's the point, though. It doesn't matter who's right or wrong. Let's say that this is the canary in the coal mine. But the point is that things can stay irrational longer than you can remain solvent. So that is the challenging part. And then when the fall finally happens, it may end up falling 30%, but still at a level that was above where you would have bought anyway. So, again, I'm not saying, therefore, just buy without any consideration towards the future or your expectation. I'm definitely not saying that. But I do know that a lot of money has been lost in anticipating the next bear market than in the actual bear market itself.

31:22I'm stealing that shamelessly from a very famous investor. I forget who, though. I think it was Morgan Housel who wrote those words. He thinks Morgan was lost in that process. I think you're 100 % right, mate. I think you're 100 % right. It's very much, yes, a long way from the original question. And I don't want to kind of rehash what you said. I would, as a matter of course, I have about half my money in the US, directly and indirectly, about half in Australia. Roughly, I haven't done the numbers recently. By the way, don't fix that in your portfolio. Like, fix that in the companies you're buying and whether their futures are great.

32:01I've said it before, I couldn't name my top five shareholdings in order. I could name the top two. I could probably get close to the... I might name four of the five. I was lucky. In order for the last two, probably not. Some people think that's horribly horrible. I was talking, well, you're an investor. You're an investor. You're supposed to know these things. Really? You want me to memorize that stuff? Would you rather that than me actually analyze companies and think about implications? Anyway, I don't know. So roughly half, give or take. It might be 10 % either side, quite honestly, right now.

32:28Between movements in share prices and currencies, I just don't know. uh so but i do think that having more invested in the u.s over time is is a better strategy for everybody we can't give you personal advice anonymous and we don't know who you are so that's easy we can't give you personal advice um but yeah i i don't i don't know what happens next uh i'm slightly less worried about the magnificent seven than you are ram um we saw microsoft's cloud i don't own shares in microsoft so it's easy i do own nasaq 100 etf so i indirectly own shares i I suppose. Their cloud business grew at 30%. Microsoft for a while, two weeks ago, was the most valuable company in the US.

33:04I think in the world, although Saudi or Amco may be bigger. In any case, close enough. They're bigger than Apple for a while. And yet they grew their cloud business at 30%. The biggest company in the world. Now, not the whole business by 30%, but I'm reasonably convicted that the tech journey, the cloud journey is just getting started, right? I mean, I say just 20 years in, but I think there's lots more to go. So I'm less worried about the... I'm not saying they can't fall or they won't be volatile. Those things are almost certain to happen at some point. But I'm not too worried about the Magnificent 7 as a group.

33:35I expect in 10, 15, 20 years time that ASAC will do very, very well. The S &P 500 will do very, very well. And even if it's no better than the ASX, at least having that diversification is just smarter than not. If I thought it was going to underperform dramatically, I might choose something different, maybe. But I would do more of that. And here's the second question, which is interesting. Ram mentioned recently, he thinks the index returns will plateau in 2024 and single companies, individual companies could outperform the index. And the question is, maybe I've interpreted it incorrectly in response to a historical mean reversion to a PE of about 15.

34:10Many also consider small caps could have a good year. I have a core and satellite portfolio, Australia is core, US is satellite, but I struggle a lot with finding time with a growing family to do the research Ram suggests. I was wondering if a mid-cap ETF could benefit along with an S &P 500 or some USA stocks added as my satellite. It may sound like I'm asking for a shortcut and not willing to put in the effort. If straw man or motley fool could offer me something or I could invest my dollars, I'd be very happy to pay for it. This is our anonymous questioner. Good to know. We'll put that in the memory banks.

34:43In the meantime, though, mate, what do you reckon? Mid-cap ETF as a way to kind of get exposure to maybe some smaller companies that our questioner doesn't currently own yeah i just first i'll clarify that that that outlook if i have done this in the past i apologize i certainly would haven't intended to aside from a bit of fun uh speculation i i have i i would never put out a forecast for a given year yeah um because i'm just going to like cover my butt because i'm not i'm not a masochist that's right right like i'm not and and also i've i think i've got enough humility to know that it's just a mugs game i can't do it i think the comment was in relation we've had the discussion before that i think over the next decade we might lag the um yeah the historical return so the market has been about 10 per annum over the long term with dividends included some studies will suggest it's nine some will suggest it's 11 depends when you start exactly yeah when you start but it's it's about that and i think it'll be positive And I think it'll probably likely be the best performing asset class.

35:48But I do think whenever you have a period of excess returns, which we really had there for a while, there is a mean reversion quality to it. I'm not a believer in that as a universal law that shall never be broken. But we've had there even over, I don't know, there was a period in the 70s, which was a lost decade. right like i just went sideways for 10 years even though you've still got that very attractive long-term return so it it yeah i i just want to i want to make that remark so please don't at me if if things don't go that way in 2024 and i still think i'm fully invested right so you also got to take that that point as well as sort of like there is the tina um angle here there is no alternative i just want to be in productive assets that are that are very high quality i guess or or good potential for very big outsized returns.

36:42So I'll make that comment. I would steer away personally from the mid-cap, small-cap ETFs. And the reason that I can say that and at the same time at the other side of my mouth say that I like that as a general area is that there is a lot of rubbish in that space. People are right when they say small caps are risky. Statistically speaking, they're right. Yes, that's right. I just make the point that there are dozens and dozens of examples were extraordinarily great companies in there as well. The average small cap is risky. It doesn't mean every small cap is risky. Absolutely. And it doesn't mean there's only a fringe of like, oh, this is the exception that proves the rule.

37:19There's a good number of them, I would argue. But you tend to find in these indices, there's a lot of mining, prospecting companies, a lot of biotech. There's a lot of very risky companies in there. So even if you get the very high quality small cap companies, they are weighted off against that. So it does, I think if you are going to, unless someone can point me to an ETF, which provides some qualitative overlay, and even then you kind of get to the situation where I've got to trust in the analysis of the provider and the fees that are associated with that. I think if you are going to be a small cap investor, sadly, there is no shortcut.

37:57But that's the good thing about it is because there is no shortcut. The only ones who get to sort of really get the benefits of those who are prepared to do the work. Most people can't or aren't prepared to do the work, which means less competition, which is why I like it. But yeah, I don't think that there's any easy answer. Other than don't be intimidated by the size of the mountain. We're dealing with this with our little girl at the moment, right? We've learned that if I say clean your room, it'll never get done. It's too overwhelming. It's like, where do I even start? But if I say to her, pack up the dollhouse, like, okay, that's manageable.

38:39I can do that. And the example here is one of saying, well, no one's saying put aside 15 hours a week and come up with a multivariate Excel function on all of the small caps and how they, you know, what the sharp ratio is on some hypothetical portfolio and blah, blah, blah. Like just say, huh, here's a company I never heard before. I don't know, random. Well, you mentioned PlaySide last week. You know, like the company you might not have heard of, have a look at that. And maybe there's no rush. There's no, no one set a timer on this thing. So you can get to it when you want to get to it. You can put as much time as you want to put to it.

39:12And then you might get to the end where it's like, no, I don't get it. Or it's not interesting to me and I'll move on. And, but if you do find something that's, that is interesting in that space, well then you can allocate 3%, 2%, 1%, whatever you want to it. So you can, you can, it does, it's not an all or nothing kind of phenomena. And you will find that that knowledge compounds. Once you've done the deep dive on a company, things will change as the future unfolds. But you'll understand the business. You'll understand what makes it tick. You'll have a good grasp of a lot of the risks that it faces and stuff.

39:47It's another bow in your quiver. And it will be there to serve you when it needs to be served. It might even be that I like it but not at this price. Chuck it on a watch list and then something may change in the future. So you can edge into it very slowly, but I don't think there's an easy solution that will just give you instant and quality exposure to that part of the market. I think it's a good point, mate. I'd simply just add that I don't think you need smaller mid-caps as a passive investor if you're not going to make the effort, don't want to make the effort. I don't mean that, but anyway, pejoratively, if it's like, I just, I don't want to, can't, can't find the time, that's cool.

40:21I don't think you need to, if you're that sort of investor, then you kind of make, I don't think you need to make active calls. To Ram's point, I don't think, mate, you did say that 2024 was going to be a great year or small caps were the only way to do it or whatever. We have talked about the fact that the ASX 200 is full of miners and banks that maybe don't have the world's best outlook over the long term. And so maybe individual stock picking, if you avoid those, is beneficial to you. That's very possibly true. But that's kind of when you're stuck in the stock picking territory and active investing.

40:49If you're not going to do that, because here's the other thing. Let's say we're right about that. And at some point that equalizes. Well, then, because you've made an investment in small caps because of that reason, at some point where that stops being true, you then have to work out what to do with the small cap ETF. Do I sell it? Do I keep it? Do I buy more? And so you kind of throw yourself back into this really difficult situation. Not that it's difficult to think about, but if you want to be a passive investor, every time you make an active call, you oblige yourself to stay across that, when to sell, when to buy, how to rebalance, all that kind of stuff.

41:18It's kind of not what passive investing is about. So I agree with you, mate. I think if you want to – there is a small ordinaries ETF. I own that one I actually think it's probably a mistake to have done so I haven't added to it in ages I may end up selling it I did it because I wanted to avoid exactly the same things our questioner was asking about and I don't know that I really benefited from it because the component parts of the small hordes are basically the same sorts of companies which is your point Ram about you know the small caps are risky there's a whole lot of small miners and small small financial institutions and you know you're kind of I'm back in the same pond but with smaller businesses so if you want to if you want to broaden out US is one option.

41:56You can look at another Vanguard ETF, which is ASX 300, which is not exactly small cap, but the extra 100 on top of the 200 adds some value or size to it. You can diversify more internationally and go with a global ETF, which gives you more, if you want more exposure outside just the Australian large caps, there's a couple of ways to do it. I personally would probably go more US than Australian small cap. I'd probably go more global than Australian small cap, given the choice but again that's just me and my approach yep there's no wrong moves here in this space i mean you've got it you well no no let me go off like that there really are but there are very wrong moves you can make um but but there's there's there is what might be right for me or for scott or for you will be very different and and that and that it's got to be appropriate to the time you've got the interest you've got the risk tolerance you've got the timeframe you've got, you know, all of these kinds of things.

42:54But this is the beauty of it. This is why some of the eternal truths are eternal truths, is that whether it's small cap, whether it's in this sector or that sector, it just comes back to good businesses at good prices held for a long period of time that can compound, period, full stop, right? That's it. How do you want to go about that? Well, there's different ways, but as long as that's your North Star and you're actually moving in the direction of that North Star, then you can't go too wrong. You start at A, you end up somewhere between P and W. That's fine. If you get to Z because you're Warren Buffett, good luck to you.

43:31P and W are remarkably, remarkably comfortable retirements. You don't need to get the absolute last squeeze of lemon out of it. Enough squeezes gives you more than enough lemon juice. I'll leave the analogies there. Do you know what? I've been thinking more and more about the, I kind of go, I flip and I flop. I go around in circles, but I, I'm. That's just you dancing on the Saturday night. Yeah, exactly. No one needs to see that. I think that you only need to get that one or two investment that just changes everything. and not because it's a moonshot and it goes from one cents to a million dollars but like pro medicus right the great example that or you bought rea group back in the day or car sales or csl or something it is it is a no strike game as buffett says right so you you get to just you don't have to swing it at everything you get and here's the point that i think is very hard for people to understand is that you get to actually make loads of mistakes and still do very well you really do i'm testament to that believe you me yeah like you you can make all kinds of dumb stupid decisions but it you make that one correct decision i'm not again let me emphasize it's not the the biotech speculator that that that cures cancer that no one could have accurately sort of predicted um you just have to have the nows to not lock in profits as they say along the way you want to be part of that journey at every single stage csl has looked expensive at every single point promedicus was crazy you know and i'm i i say i go around in circles because push to its logical extreme you do get to silly points and hey i'm out of promedicus myself now right because i just i love the business i i'm like you mate i can't make sense of the business so if that's not a strong buy signal i don't know what it is exactly um um you heard it so so there are there are there are there are there are exceptions you just don't want to overthink it too much and and that's what's really great about i think with the small caps is because commonwealth bank might be go on a really great run but it's never going to 10x in a decade like it's just it's not possible for it to do it's way too big some of these other companies again they've proven commercial product or service traction, profitable, dividend paying, strong balance sheet, quality aligned management, check, check, check, check, check, check.

46:06They can 10X. Really, you know, I wouldn't say easily, but you'd be surprised how many times that happens. They're the ones that you really want to look for. Challenge one. Challenge two, holding onto the damn thing for long enough to have that effect. And you can, I've used the Motley Fool founder, David Gardner, many times. He's got a horrible strike rate. But is it? You'll tell me. Is it 40 % he gets right? Something like that. I used less than that. Less than that? I don't do actual numbers, but I think it's less than that, yeah. His returns will make you weep. Like they're just insanely good.

46:41And it's like, well, how do you get it? Like, let's make up the numbers. It's like seven out of 10 stocks you touch do not do well. And your returns are insane. And that's why I really want to sort of say, I think you want to be fussy in that space. you want to i guess what i'm saying is it's worth the it can be worth the effort yeah totally you know it can be worth the effort yeah it absolutely can help me start a business right and quit my job to do it and and you know it it i don't expect to pull a rabbit out of the hat all the time yeah but again you know one or two things gosh it makes a difference and and and be it help that motivate you to find some extra time if anything i like it i also mindful just a power through your you did say what might be right for you may not.

47:27And I was hoping you were going to finish with may not be right for some. So we all think. Well, the world don't move to the beat of just one drum. Yeah. But at different strokes, if you don't know different strokes, ask your parents, kids. In my head, that's back. Best theme song ever, by the way. Oh, best ever? Yeah. Better than the A-Team? Ooh. Yes. Yeah. Oh, no. Yeah, yeah. I thought I knew you, Andrew Page. I thought I knew you. All right. Let's move away from TV themes because it's still only early on in Sunday morning. Yeah, retro 80s TV themes. Yeah, let's move on. You know, kids think the old days is like 2000 these days, mate.

48:04Mm-hmm. That makes me feel very depressed. The old thing, we're closer to not 2050 than 1990. It's a thing. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

48:22Damien says, hi, Scott and Ram. I've enjoyed listening to your show, the questions your listeners send in, the answers you provide and the topics you cover each week. Thank you, mate. I've been investing since July 2021 in various ETFs and have found it to be a sound strategy. If you're starting out or don't have the time to look for companies that have a good business model and are likely to grow over time. Investing in ETFs has taught me to ride the waves and stick with regular buys throughout the past few years. I'm going to stop there, Damien. That is excellent. And listeners, if you are thinking about investing, that's how to do it.

48:55Can I add something quickly before you go on though? And I don't disagree with the sentiment at all. I'll start with that. But it's three years. Yeah, that's true too. You're basing that view on three years. There would be another starting point out there where someone did exactly the same thing and has gone, I've done this since 2021 and I've actually underperformed all these assets. It's actually been really bad. Or starting in 2007 and then having the next three years of grinding horrible GFC to invest through. So you've got to be careful to learn the right lesson. Not that the lesson is wrong.

49:28By the way, broad-based, low-cost indexes for a long time is a very sensible strategy for a lot of people. So I don't disagree with it. But I have seen the other side of it where I've had friends, actually, not that long ago, where I sort of said, you know, do this. And they go, well, thanks, Mr. Genius. is i'm down i'm down 10 you know like well you're you're extrapolating a very narrow period of time on that so yeah i'm glad it's been a good three years but but even if it hadn't been i'd still say you would have done the right thing love it that's a very very very very good point thank you uh damien goes on scott i recently purchased a subscription to your share advisor service off the back of a cunningly placed marketing ad for a new year's special price for the service Why did I do this?

50:15Luckily, Damien wasn't asking a rhetorical question. He goes on, because I'm keen to venture into investing in specific companies. Ram, sorry, mate. What is straw man again? Private online investment club. Joking, he says. Australia's premier online investment club is his response. I can't be giving Scott's service all the airtime without also acknowledging yours. Anyway, to my question. What advice would you provide someone in my position if they want to venture into individual companies or stock picking, but their current portfolio is made up of ETFs. I currently hold a number of Vanguard Australian ETFs and the BetaShares NASDAQ ETF.

50:55I can see two approaches. One, sell some of the existing ETFs and reinvest in specific companies. This would come down to risk tolerance and what percentage of my portfolio I prefer in ETFs versus specific companies. It also provides an opportunity to consolidate some of my ETF holdings. or to leave my current ETF positions where they are and buy specific companies going forward. This means I'm starting my individual company investment journey from scratch and would take some time to build up. Keen to hear your thoughts on the above or other approaches and any pros or cons that I should be considering.

51:29Full on, Damien. Great question, Damien. Thank you. What do you reckon, mate? Does he pair back what he's got or does he start from where he is and add moving forward? No wrong answers again. I mean, you nailed it, Damien. Not out of those two, though. Those two are both good answers. They're both good answers. I mean, what are the pros and cons? The con of having to sell is that there'll be tax obligations. The con of buying or just only investing directly going forward is that, you know, you'll kick yourself if you've got 99 % of your money in these ETFs. And the one that you bought - The first one you buy, yeah, exactly.

52:09is the one that goes really, really, really well. You're going to put money in that stock. Yeah, yeah, yeah. And that'll send you mad, so you can't beat yourself up with that kind of stuff. What would I do? There is a middle path to sort of take a leaf out of the Buddhist playbook here. I think you can have a little bit of your cake and eat it too. It might be that it's just like, well, I'll sell down three, four or 5 % and I will commit to only investing with fresh money in new companies. And I'll continue to do that until I hit a balance that's right for me. So you can sort of have it a bit both ways.

52:45I would also, I think my decision personally would be driven very much by the opportunity set as I saw it. So if, for example, we were sitting at a point in time where I just thought, this is shooting fish in a barrel type environment. Like there is just incredible. Market's falling for you for no good long-term reason. Yep. Yeah, yeah. Great, great. Like, you know, wow, I can buy this business for this price. like okay i will sell and i will very heavily go into directly into into that kind of business if it's where i think i kind of want to stay invested because that's the smart thing to do um but i really don't have anything that is compelling me well then i would be more inclined to stay with the etfs and then just dribble stuff in so that that would that would probably drive i think my personal decision can i be uh similarly buddhist sure uh i wasn't thinking this until you talked about a third way and now i've gone very zen as a buddhist center if i just changed religions uh it's a it's a it's all related i think it's a branch yeah okay all right well let me let me be zen buddhist if that's not offending anybody um i was gonna say i was gonna say um that if you're an etf investor you say with individual companies you want to make mistakes with investing when you got small amounts of money not big amounts of money if let me use a hypothetical someone who's 65 has invested etfs all their life got two million dollars say i'm to sell it all by stocks like oh no i don't that's probably not a great idea because you're going to make mistakes and i already still do right uh but equally the ones we made earlier are probably bigger and and frankly with larger amounts of money would have been far more impactful than with small amounts of money when we started so i wouldn't i even someone's desperately wanting to invest in individual companies i'd be really reluctant to say sell the whole lot and go so i my my aim was my point was going to be just buy with with new money because it's just a safer easier way to make the start i'm just going to i'm going to amend that thought i'm going to stick with it and amend it based on your third way around, which is I would absolutely not sell any of your ETFs.

54:38I would start investing in individual companies with money, new money, as we say. It's a weird phrase, but you know what I mean? Just money we're adding to the portfolio over time and start building up that way. But here's where I would, this is the third way bit, which is go forward a year or two. And then when you find yourself more comfortable, you're finding it more enjoyable, maybe hopefully you find you're good at it. By the way, if you be put off, if you realize an individual thing you just suck at, that's cool. Just don't do it. Go back to ETFs. That's great. You've got to check the ego at the door.

55:09Your job is to make money, not to be the master of the universe. So if you suck at investing, that's cool. Go back to ETFs. But if you find in a year or two, it's working for you, you're enjoying it, you feel like you're pretty good at it, you're learning some lessons, you're getting better, then you can slowly sell down some of your ETFs and add that to individual companies as you move forward, and as Ram says, when you see great ideas. So I think that's the third way I would choose. I wouldn't hold ETFs forever and only invest new money in companies, individual companies, nor would I sell everything or sell most of it or sell some of it and invest new companies now because you've hopefully got a decent sized portfolio.

55:44And I just think, you know, it's safer to start with a thousand bucks and work up than if someone gives you a million dollars to use your inheritance, invest it now and hope to get it right off the bat. It's just a, it gets me and you can't get it right. It's just harder and frankly, probably riskier. you know what do they say about you know if you knowing knowing a little bit is dangerous so just just proceed slowly give yourself the option of selling down the ETFs if and when you feel comfortable enough to make that change that's what I would do anyway right now I like it that's good good advice awesome but here's the last question on ETFs and duplication we get this one a little bit it's a really good chance for us to kind of break it up a little bit hi Scott and Andrew I'm Sam says Sam I'd like to start by letting you know it's an absolute pleasure listening to you both rant on the pod machine twice a week i swear to god i'm not making this up i'm one of the three that are still listening after an hour well the good news is we've got in just before the hour break so if you're about to leave then you're still here don't stop ranting says sam that's a dangerous dangerous invitation as a handful of us openly love it whilst the others secretly do rant on says sam i love that my question relates to duplication i have in my portfolio between different ETFs and companies I hold and how to avoid it.

56:59I want broad market exposure and I achieve this through various ETFs and I also buy companies I understand and I think are going to be worth more tomorrow than they are today. Simple, says Sam, but it has led to duplication in my portfolio that may in the future dilute my profits and growth. Plus, it's less time I can spend fishing having to buy so many ETFs. Sound about that. I reckon you probably still go fishing, Sam, but I think I understand your point. For example, for US Exposure, I own Vanguard US Total Market ETF, the BetaShares NASDAQ 100 ETF, Global X FANG ETF, along with individual holdings in Berkshire and Apple itself.

57:41All of them contain a little and even a lot of Apple. Similarly, outside the US, I have the BetaShares A200, which is the ASX 200, the Global X Nifty 50 in India, and the Vanguard All World X US, there's duplication here also. How can one have broad market exposure and avoid duplication without missing opportunities, real or believed, says Sam. I love that self-awareness there. Any general advice, guidance, or suggestions would be greatly appreciated. Much appreciated, Sam. What do you say, mate? Well, I mean, the way to avoid it is just to construct it yourself. Just don't have ETFs and just build up a portfolio of direct positions.

58:28It kind of defeats, I mean, I'm being facetious, right? But when you go with a variety of ETFs as has been done with Sam, it's going to be unavoidable to get some overlap. I don't think it's that big a problem. If the Venn diagrams are massively overlapping, okay, you kind of wonder why bother having all these separate products. But on the main, take Apple as an example. Let's say, I'll make the numbers up, you've got 5 % direct holding and then the rest are in ETFs that have a small proportion of it. Well, it probably takes your overall exposure from 5 % to 7%, I don't know. In other words, it doesn't qualitatively change the exposure.

59:17Yes, it changes it. Does it change it to a degree whereas all of a sudden you have got a huge exposure whereas before you only had a modest one? I don't think so. So I wouldn't lose sleep over it unless, and it doesn't sound like this is the case with the ETFs that I mentioned, unless they are very, very similar. Like I'm not going to have the State Street ASX 200 ETF, the Vanguard Australian ASX ETF. You know, like they're all just like, they're basically the same ETF and any difference is going to be minor and it's just a waste of time. But in the way that you've done it, I don't think I care.

59:56Am I wrong? Am I too? No, I think you're right. I think you're dead right. I'm going to use a pizza example. I'm going to try and get this one right. It's one I've been kind of honing on while you've been talking around. Here's the thing. You and I, Ram, go to Domino's because I don't share in Domino's so everyone should go to Domino's. Let me put that up front. The stars have been tough recently. So please go to Domino's. Good in Australia. The results are great in Australia. Very good. You want a Hawaiian and I want a meat lovers. And so we go to Domino's and I want 100 % Hawaiian pizza, please.

1:00:27You get that. I say 100 % meat lovers pizza, we get that. The other option is we go to the pizza hut. For some reason we say, actually, I'd like a half Domino, a half Hawaiian, half meat lovers, please. And he says, I'd like a half Hawaiian, half meat lovers please now you've got two pizzas there and they're half hawaiian and half meat lovers whatever way you want to mix that up whether it's one full pizza or two half pizzas it's still the same thing and even in your example ram when you said i could have the beta shares asx 200 or the vanguard asx 200 i wouldn't have both because i'd be duplicating it it's kind of true but it's also kind of not true which you know which is if i had a hundred dollars in the vanguard asx 200 or i had 50 in the vanguard 50 in the beta shares i've still got 100 bucks invested in the asx 200 in different forms and the duplicates is actually irrelevant right i mean it's more paperwork i wouldn't do it because you know point and yes one's probably got slightly higher fees than the other so you could probably try and save a tiny tiny bit in fees but so i say that only because to your point which is 100 right the idea of like is apple slightly bigger as a proportion yeah uh does it matter no because you if you're happy enough with that exposure then in fact you know buying apple then buying the etf actually limits your exposure to apple because you're buying the other stuff as well so in the in my pizza example you're buying an apple pizza and you're buying another all sorts pizza which has one of 25 slices is apple so now you got one whole pizza an extra slice is that a big deal not really yeah i don't think i don't think it needs to to worry you particularly and there's no downside to that either right i mean the downside would be if it was too much if you had 50 apple and then 50 other etfs doesn't matter what the other etfs are you've still got more apple than you probably should have if you've got no apple and the other etfs it just it's not going to make a difference because the apple exposure those etfs is not changing the the story yes there's overlap yes there's duplication is that bad no because here's here's the other test right let's say you own all these etfs and let's say apple is now seven percent as it might let's pick a number right seven percent if you only bought one etf and apple happened to be seven percent would you do anything differently would you would you not buy the etf because apple was seven but you'd buy it if it was five i don't i don't talk to you directly sam and it's certainly not a criticism or or i'm not calling you out here i'm asking myself or ram or anyone the answer would be no right i want an sb500 etf apple is x percent of that okay i just happen to get x percent of apple if it was five or seven i'd still do it so if i've got this duplication air quotes duplication where it's five rather than seven do i care no if it's seven rather than five do i care no because i'm not making an active choice i'm just buying it um i actually really really like this sort of approach ram i gotta say it's kind of the same question we had before from uh damien which is just if you like the individual companies buy them and then if you if they get a little bit extra as part of the etf that's great because you'll like them anyway and you get the other stuff as well you know etfs plus some companies i think it's a really really great way to do it and frankly if i had i actually have some of these if i had a vanguard total etf a beta shares nasdaq 100 a global etf and berkshire and apple i'd be very happy that that's a that's a great portfolio right um do i have more berkshire than than the index it probably does you probably deserve it i have more apple in the index i reckon that's probably a i don't own apple other than through berkshire and through the etf you know is that a good business to buy i bet it probably is you know there are worse things to have than extra exposure in apple and berkshire for example um so you know i think those of us who like data and numbers can kind of say well hang on am i overexposed and do the maths and whatever am i roughly right yeah um you know the only thing i would say for example is the the india etf you have um do you want that much exposure to india specifically rather than the rest of the world that might be the question you want to ask if your answer is yes then cool go for it that you've done deliberately that's that's completely fine um same with the nasdaq and the global x fang again i'd probably ask yourself do i need the fang etf and nasdaq etf probably not because you know nasdaq's largely fang anyway given the size of these you mentioned the magnificent seven before ram it's kind of like that anyway so do you need both probably not is it bad having both no because again that duplication is the equivalent if you've got 50 bucks in the nasdaq etf 50 bucks in the fang etf or 100 bucks in the nasdaq it's probably roughly the same uh you might have a little bit on fees you might get a little bit more diversification a little bit less diversification it's it's probably duplication feels bad i've got two ets for the same companies in it but because you're splitting your money you're not really duplicating you're just splitting your money and there's no there's no harm in doing that either yeah not well said well said i mean this is what i love about the mailbag like they're all thoughtful questions but it's kind of like all everyone's already done the big things yeah in other words they've recognized the importance of saving and investing and have done, like the message has been received.

1:05:13So we get to the point with the mailbag where we're kind of like, I was going to say fiddling around the edges. That's too dismissive. It's not that, but they're kind of like, these are small optimizations. Yeah, that's right to put it. Yes. The way to put it, right? Because like, we'll go get together. We optimize by picking stocks. So we're not saying don't do it. It's just keep the context of, you've done most of the hard work already it's like i always i always go to the health example it's like you know you're doing yoga every day i'm doing pilates and we're going to sit here and and talk about which is the more optimal one to do in certain seconds the truth is is that we're both exercising and and improving our health like that's do you know what i mean so it's sort of like i don't know i'm saying is i love it i love it because it's kind of it's always good food for thought and it's, it shows that people are sort of like they're, they're thinking along the right lines, but I kind of think it's like, you know, this is really cool that, that everyone is doing it.

1:06:13If, if the questions were, why would I even bother investing in the share market for, and shouldn't I just take on my third negatively geared property and gear myself to the eyeball? You know, we're not getting the questions that you get in the, in the usual financial columns, which I'm just, I guess in a very bad way, I'm trying, I'm trying to compliment the listenership because they're great questions, but it's just like, it just warms the cockles of my heart that all of the big broad brushstrokes are absolutely correct. And I feel as though if anything we say comes across as critical, it's really not because it's like, you're nailing it.

1:06:46You are nailing it, right? Like it's just like, I've got great confidence in the future of our audience in the sense that no matter what happens, there's some really, really good capital allocation decisions and some great long-term thinking that's occurring out there. So well done, Pat. yourselves on the back we we can take the credit for it can't we it's our podcast we'll take the credit for when it goes up not when it goes down we do work in the finance industry good news are all on us the bad news i'm sorry listeners that's all on you hey uh with that out of the way read the fine print disclaimer disclaimer uh yes maybe we should do a fun disclaimer at the end of a podcast one day but not today because i've just thought about it and we're already more than an hour in thanks for sticking with us we hope you've enjoyed listening to us i would normally say that sunday morning but ram's comment the other week about it possibly being tuesday afternoon sticking with me so uh in this globalized world of time shifting and on-demand listening enjoy whatever you're doing if you are having yourself a bloody mary or a uh an old-fashioned right now enjoy that at whatever time of day or whatever day of the week it is if you are at work just just maybe have half it and put the rest away for later just in case it's probably until next week Bloody Mary or not, full on.

1:07:58I'll toast that. Cheers.