Mailbag: incl. A new geopolitical reality? December 1, 2024

25:10Now, the brokers themselves usually have their own internal protections against that in the first place. What would I look for? Honestly, the answer is a reputable and frankly, longstanding broker, one that's been around for a while. You're going to pay more than you're going to pay if you go to the latest app-based, new, cool, exciting thing with fun buttons and confetti when you make a trade, Robin Hood. But yeah, I use Schwab. I have used Schwab for years and years and years and years and years. I had an account with Options Express originally. Not because I want to trade Options, by the way, because they made it available to Australian investors so you could use their platform to invest in the US.

25:47Excuse me, so I did. They were bought out by Schwab. I've got a Schwab account I have forever. They're very good. I believe there is a minimum deposit now these days. You've got to put in to start, so that kind of sucks. The other thing you can do is there are now Australian-based guys that do this sort of stuff. I'm pretty sure Sharesies allows you to. I'm pretty sure Stake allows you to. Comsec itself has an international trading platform. The prices vary all over the place. My general approach with my US investor, I'm a long-term investor anyway, but I buy regularly, I rarely, start again, I buy very rarely in the US.

26:23I mean, I do, I buy in larger chunks, larger to keep the brokerage and make my life easier because the time zone of currency is a pain. So I don't worry too much about the brokerage cost. I have a feeling Schwab broker is actually free now because they've changed their model like most of them have to respond to Robin Hood. So yeah, go with an old one, go with one you know, or go with one with a relationship with an Australian broker, not because they're necessarily going to be great, but if you're a trusted Australian broker, you're as an international partner, they're probably going to have done the due diligence themselves to make sure they're not sending their customers up the river.

26:52And again, no guarantee, but that's probably how I'd go about it. Ram? I can't fault anything there. I mean, the only thing I would emphasize is that it's such a tail risk in the sense that I'm certainly not going to say, don't worry about it, there's a zero chance that anything can go wrong. But of all of the risks you face as an investor, it's got to be like 412 on the list. It's just, as Scott says, go for a well-known name. Interactive Brokers, I know a few people use, they tend to get good reviews. That's true. I don't know. You know, Charles Schwab, yeah, whatever. It's all good and well.

27:26There is no investor in the history of the planet that, you know, looking on their deathbed, look back going, you know, oh, gosh, I wish I'd chosen this other broker instead of this because it was slightly different or, you know. All that matters is what you actually buy, and there's all kinds of legal protections that are around it. Bad things can still happen, but historically, like, rarer than hen's teeth. So it's just a good question, but don't lose any sleep over it. Lose sleep over what you're holding. Exactly. Take Chess because it's there because you're made not to. But don't let the absence of Chess stop you investing if you find a good business at a good price.

28:03Chess is not going to be here for much longer anyway, by the way. Maybe. Going to replace my Bitcoin, isn't it? Blockchain. They tried that. Exactly. I'll write on that one day. Hey, question from G. I'm not sure if G is a Mr. G or a Ms. G or something else, but G has a question. Good morning. Warren G. Warren G. Kenny G. Yeah, Kenny G. The list goes on. G's everywhere. Oh, G. Oh, dear. Okay, let's move on. G says, good morning. Well, I hope it's a good morning and not afternoon because I heard the way you two fumbled through an afternoon session with a big rolling on the floor laughing smiley face.

28:36I'm so, so loose sleep. Speaking of losing sleep, I was like, oh, my. This is the internet and podcasting, right? Like, it's there forever. You know, it's like the George Costanza thing with the air string machine. There's a red light. Come and listen to the idiot because that thought bubbles that escape my mouth. and then I just – this way I can never, ever listen back to these things. I overlay that with AI. Someone's going to be able to find every embarrassing thing we've ever said in about 30 seconds. Hey, can I put myself in the poo just for a second? Please. This is fun. I don't mind having a laugh at my own expense.

29:09Getting towards the end of the year and some regulars taking holidays. So the Today Show called me into a segment in studio at 6.30 in the morning. So I jumped in the car, got in there, did my thing. They mic'd me up, sat down at the desk. And then what tends to happen is the host then kind of does the practice, the first question with the break, and they come back here, right, ready, we're live, okay, three, two, go. And the host will ask the question, you answer the question, and you go from there. I sat down with Carl and Sarah on the desk and had the microphone on. I was just having a chat with them, and Carl looks down the camera, does his practice question, and I go, yep, yep.

29:44And then Sarah asks a follow-up question because we're actually live on TV. So my response literally, he's like, so interest rates, the Reserve Bank, inflation, retail, whatever it was. Scott, what do you think? I go, yeah, yeah.

30:00And then Carl says, you had a breath or something? I go, no, no, I'm right. And then Sarah asks the second question. Would you care to answer? Well, Sarah moves on because she's a professional. She asks the next question. And at that point, I go, oh, my God, we're live. We're live, yeah. And I'm thinking that while she's asking her questions. And so then I'm like, what did Carl ask? What did Sarah ask? What did I suppose? So yeah, I'm in theory some version of a, I'm not a professional, but I'm an experienced amateur. I hashed that. That is the very, very, very worst TV screw up I've had. I didn't do anything stupid.

30:32I didn't swear it in the day. Oh, is that the worst? Oh. Oh, mate, it was not good. I haven't done it for a while, but I have frozen on TV before. Oh, really? Yeah. Oh, gosh, like so long ago. Question was asked. I can't remember what it was. I went blank and then as you go blank you start thinking you're not talking say something so rather than your brain thinking about the answer to the question you're just thinking about the fact that you are currently making a fool of yourself and then it goes and I just blanked and it's like a mullet like just like rabbit in the headlights and then they went okay and I and then I just fell on the floor and curled into the fetal position it must have been like 15 something years ago I still remember no one in the world remembers it I do so last week I literally spent most of that day checking socials and just making sure it wasn't in some highlight package somewhere oh you guys are so fragile it was one of the you know like the BBC dad or the kind of I don't get the bloopers reel anywhere I was like oh god please don't be that anyway G says I've got two questions, one for each of you, so you don't feel left out.

31:42We may ask Ram's question. Scott, I'm a member of ShareAdvisor, and I basically use the service to guide my investments. Thanks, mate. Although I'd like to think I have the skills and time to analyze the stocks, but honestly, I don't. And I just pick one of your recommendations each month after reading the blurb and using my own intuition. I'm happy to remain a member and will sell if you advise. Is this how the service is designed to be used? Jeff, happy to give you some thoughts. I always feel a bit self-conscious because this is not the Share Advisor show or even the Motley Fool show. We're not here to plug our own products and that sort of stuff, but you asked the question, so I will answer it.

32:16We don't have a specific design for the service. We recommend stocks, and yes, we're happy for you to follow along and either follow everything or some that you like or don't like. What I will say is the scorecard that we have assumes an equal investment in each business as we recommend them. And so the best way to get the returns that are on our scorecard is to do exactly that. Now, I'll say you should or anyone should do it, but we do run it. We have a scorecard. We want to beat the market overall on average. So if we've done that, your best chance of matching our returns is to do exactly what we suggest you do every month.

32:49And some people do. It's a bit hard to do that, right? It can be. If you don't have fresh money coming in every week, et cetera, et cetera. You don't do it. Other people just simply use it as an ideas generation tool, which is, hey, here's a monthly recommendation. Here's all the other current buy recommendations. Here's our top five best buys now each month. Here's our US recommendations. And use it kind of as you are. You're kind of in between, I think. You're kind of looking at you buying almost every month, but basically based on one you like rather than the particular one we think you should buy.

33:17Well, not you again personally, but you know what I'm saying. Yeah, that's kind of just the way. So you can use it however you want. We run it as if everyone bought equally. We do our best buys now to help people, if they want to, cherry pick. We give you our best ideas. You can choose from there. But yeah, whichever you feel comfortable. Ram almost half stole my airline quote, so I'm going to half steal his quote about not being able to borrow a conviction, and then I'm going to throw it to him. Yeah, I mean, look, having worked for general advisory services, I'm really passionate about it because none of us, whether it's investing or anything, none of us like to take responsibility for things, right?

33:58And the best thing about a financial advisor is you've got someone to blame if things go wrong. So this is where I go, it's all on you. And I sound like a complete heartless bugger that is trying to abdicate any responsibility. But I really do lean into it and I do it with as forthrightly as I can because it's only when you have that recognition that you will think about things a lot better. And anything that encourages you to think better is good. And I'd say whether it's Scott who's behind the keyboard or me or Warren Buffett, it doesn't matter. They are different people with different perspectives and life experiences and different faults and blind spots and the rest of it.

34:40And as Scott said, these are our hand on heart best ideas, right? But if you're just going to go, okay, well, at some point, those shares will not have a good time. Yeah. And sometimes it'll be just volatility, which is just the normal state of things. And sometimes it'll be, oh, no, it's in a nosedive and it's a structural decline and it's never coming back. But you're not going to know if it was just something that Scott wrote and he's on holidays at the moment. And I'm not saying that you guys don't come up very timely updates and the rest of it. But I really feel as though you must own the idea.

35:22and where you're going with your lead in there is you can borrow an idea, but you can't borrow the conviction. And I think all of the best investments I've ever made were non-original ideas. So I heard them from someone. I go, oh, yeah, that's cool. And then I dug into it and I looked at them and then I built the conviction. And that's when they – because my life, I buy a stock, it drops 30%. The next day it's just God or the universe or whatever higher power loves to just rub my nose in it. It's just how it goes. But, you know, if I know what I own and why I own it, that's not going to scare me as much, right?

36:00So, I can't emphasize it enough. Either that or just do what you said, just buy everything, right? And it's kind of like passive investing and that's kind of cool too. But even if we're around, I should say, we don't have people that cover you for on holidays, so don't worry, you'll hear from us. Bad example. I'm being funny. But even if I'm around, right, you think my idea is a good one and the shares fall and you start to think, that Phillips mightn't be that smart after all. It can't have been that good idea. The share price might be that. Maybe you're wrong after all. Maybe I should sell now.

36:30And maybe I am wrong. Maybe I am an idiot. But if you've done to ram's point the work to at least understand why we like it and you've come to the same conclusion, then when the share price falls, rather than thinking, how much faith should I have had in Scott? Is he really that smart? And you're actually thinking, well, I might have made a mistake too, but I've done the work. So now I don't have to worry about is Scott on the level or not, but rather is Scott on the level? and am I comfortable with what I've done and have I done the research? And as Ram said, then when the share price falls, you'd be comfortable enough to say, I didn't expect the share price to fall necessarily, but I knew that if it did, I would like it for these reasons and these reasons still hold.

37:03And just to maybe preempt a very natural, reasonable pushback from G, which would be, well, then what am I paying you for? Yeah. And it really is, I think it really is that idea. And Scott or I, neither of us are saying that once you get that recommendation that you go spend six hours or six weeks deep diving and learning everything. No, but we are saying at least familiarize yourself with the arguments that are being put forward and see if it resonates with you. You've said you use your intuition, so you're kind of doing that to some degree anyway. But it is whatever the degree of due diligence, and some people have more capacity than others, whether that just be through availability of time or experience or whatever it might be.

37:49You just want to take a bit of ownership of the idea. And that's why, and that's for a lot of people going to be, well, that doesn't sound too appealing. That's cool. And then again, that's cool. And the fool and you would be the first to say, yeah, great, buy an ETF. Yeah, exactly. Or just buy everything that we recommend and you'll get the average, right? Or just buy it. If you want to buy one of the rest, that's okay. Yep. The only thing I do want to say is just be a little bit careful cherry picking and then expecting you're going to be as good or better than our results. You may be because life is life.

38:22You will be better or worse. Right, exactly. We've had members who say, oh, during your service, I bought the stock and the stock is down. You guys are dodgy. Or I picked these three companies out of the last year and they're all down. You're an idiot. I'm like, well, I didn't tell you to just pick three. I didn't tell you to just pick those three. And not that I'm, by the way, being defensive at all. I'm comfortable with what I do and how we do it, right? But my point is if you start with that, you just run the real risk of cherry picking badly. So if you've got to cherry pick, go for it, but own the outcomes or do it in a diversified enough way that you're likely to get a representative sample of our returns as well.

39:00Because otherwise, if you say, I joined the survey, we have losers, right? Of course you do. I'm about six out of 10. Show me someone who doesn't have any losers and I'll show you a con artist. Right. So I'm about 6 out of 10, roughly. Which kind of means if you pick a random number, you'll probably get an average of 6 out of 10. But if you pick one, you're 50-50. You pick three, it might still be 100-0 or 0-100. Just be careful. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

39:34Wasn't there a second part of that question? I thought there was a question for each of us. Oh, there was. All right, fine. Come on. the way you framed it up. That wasn't deliberate, actually. That wasn't deliberate. My apologies, man. I don't know. I want this question. I was getting carried away. Ram, he says. Sorry, G. Ram, I'm extremely intrigued by the money system. Oh, good on you, G. Yes. Can I tell you guys just quickly? We had a very long conversation with the money system on Friday's podcast, which started with Black Friday sales and 25 minutes later finished. When I say finished, I mean pause while we hit the stop button and then Ram and I chatted about an hour after that.

40:04Spoke another hour afterwards. But anyway, G asks. I'm extremely intrigued by the money system and would love to know some more sources to check out and read into. And he kind of adds a second question. Maybe you, maybe you both. I'm not sure. I'll finish it off and we can go with it. Also, although I'm an optimist by nature, I honestly think the world is on track to blow itself up. I don't know how, I don't know when, but I'm certain we'll have a massive collapse. So what can a young person do? Sometimes I feel paralyzed by that dystopian view, but otherwise I feel like I'm just drinking the Kool-Aid like everyone else.

40:38Thoughts? Regards, G. Go on, mate. Money system sources. I know it's a bit of a turtle's all the way down. It's a can of worms type stuff and certain new metaphors here. Is there a source or sources? How did you go from kind of realizing you didn't know what you didn't know and then kind of finding some answers? What's that journey like? Well, this is part of what we talked about when the microphone turned off. Yeah. is that I got to my late 40s as someone in the finance industry with actually never having a clue as to what money is. I'll admit it. I didn't. I mean, I would have said I did. Yeah, that's right.

41:21You know, it's that whole thing of like the more you know, the more you realize you don't know. And as I started to sort of scratch at that, not because I had no idea what I was getting myself into, but it's like, what? How does? Oh, okay. And then, honestly, there's a lot of Googling. There's a lot of podcasts. I couldn't point to any sort of one kind of thing. I think Lynn Olden's book, Broken Money, is excellent. And you'll see the Amazon reviews too. There is a Bitcoin component to it. But don't let that put you off because it's not a Bitcoin book. She just talks about – she's talking about the evolution of money and then there's a component as well.

42:02Maybe this sort of fits into it somewhere. But I have to say that because one, it feels like it's a subtle orange pill that you're trying to sneak people into the cold. I'm not. But even if you just read the first three quarters of the book, it will give you a thoroughly deep under – well, a really good overview of how the monetary system works. There's a really good website called the Library of Mistakes. It's run by a historical economist called Russell Napier, a Scottish economist I just love. I'm a big fanboy. He wrote an excellent article very recently on China's economies. Anyway, I think he's excellent.

42:39And he's got nothing to do with Bitcoin, so just put that out there. But he talks a lot about monetary history and the evolution of that. They've also got a series of podcasts where they have all kinds of sort of professors and notable people who sort of come on and sort of break it down for you. Nice. But I will say this. It's a lot of this stuff you kind of have to read and then reread and then think about. and then like it's not it doesn't well yeah people are probably smarter than me if you're not smart like me it was just like come again that doesn't seem right sorry and then and just it's really i've used the analogy before of explaining water to a fish like it's like all right like what's this thing that you speak of um it's kind of everywhere and everything and yet completely invisible and unnoticed and so so i i commend you on wanting to go down that journey It's very, very rewarding.

43:34It's fascinating. But those two sources are a great place to start. That's awesome, man. Yeah. Hey, by the way, you know that, Gene, you absolutely weren't trying to be subtly slipping of an orange pill. You know how? No. Because Bitcoiners are like vegans. They never try to subtly do anything, mate. They're not going to do this. They're going to say, no one says, oh, do you want to know about that? I didn't realize. Okay. I know. I know. Bitcoiners are subtle like vegans are subtle. Oh, there you go. I've offended the Bitcoiners and the vegans. You're welcome, people. I'm aware of it. The massive collapse thing.

44:04Again, I know it was directed to you or us or designed to be part of that same question. Are you as certain as Gs we're going to have a massive collapse? Because there's a lot of certain – yeah? Yeah. Okay. But I'll preface that. I'll preface it in the way that it doesn't mean go back to the dark ages and it certainly doesn't mean anytime soon. For me, it's always just been a mathematical argument and one based very heavily on history. Whenever – we've got a credit-based system. As you will discover as you go on this journey, we have a credit-based system. I'm not putting a value judgment on that.

44:34No, I know. It's a statement of fact, credit-based system. And you get generally to a point where the debt burden becomes so big as it becomes unserviceable. It's just too much poor investment. Basically, a bunch of people borrowed money and not everyone can pay it back and someone's going to eat it at some point. And just it has happened to the Greeks, to the Romans, to Venice, to the city states, every single sort of historical epoch, it has happened. So when you say to someone, oh, there's going to be an economic reckoning, it just really does make you sound like a crazy person. But it's the same as Bill Gates coming out saying, yeah, we're going to have a massive pandemic.

45:15It turned out that his timing was impeccable, but he just got lucky. And I'll say the same thing now. Humanity will face another massive pandemic. Now, does that make me a doom and gloomer? Does that make me run for the hills and be a prepper? No, it is a statement of fact. Will there be a horrible flood and storm in the city that you live in? Yes, probably at some point. And so that's why I say, yes, we are having a collapse and a catastrophe because it's unavoidable at a certain point and history does repeat. But I do think that the worst thing you can do is then go into the bunker because by the time it plays out, the opportunity cost could be massive.

46:01In other words, you've often made the point, more money has been lost in preparation of a bear market than in the bear market itself. So you go, I mean, let's pick on Jonathan Tepper and John Hempton, the fund. They had this big thesis. That's true. Two incredibly smart people I have immense amount of respect for, right? Incredible investors, I think. I mean, it's debatable. But I've got a lot of respect for them. And they said, and you know, strokes my biases, they said the Australian housing market was overvalued and they shorted the banks. Yep. And they were completely wrong. Yeah. And they lost a lot of money.

46:44And again, not just money, they lost in the opportunity cost. Now, I still think that they were right. Everything that they said was sort of in play. In fact, the arguments that they made then are just stronger than they were then. I think it's really good. But I'm not short in the banks, right? Like, I'm not going to burying bricks of gold in my backyard. So, what does Gandalf say? I love this quote. we can't choose the time given to us. We can only choose what to do with the time or something like that. But it's a great quote, right? And that's what I find that I think that's a useful context for investors because particularly if you are younger, I mean, you've got it handed.

47:22We were the last sort of generation to sort of have any chance of affording a home unless we had the silver spoon, right? Gen X. So for anyone else today, like there is a real sense of hopelessness amongst the young, and I don't blame them. They have to study their butts off. They build up these massive debts. They go into a workforce that we talked about on Friday, how real wages are falling, house prices are going, the environment is, previous generations completely destroyed the environment. You've got some populist in control of the world's biggest economy. You've got a dictator on the other side, an authoritarian.

48:00It's really depressing that it's sort of out there. It's just that these stories might take three, four, five decades to resolve. I don't know. It could be tomorrow. I don't know. So what is you be alert but not alarmed, I think. And that just means you try to – this is also what we discussed off air – is no matter what – again, there is stuff and there is people. And then there's all this fancy accounting that we do sort of around that. But let's basic level here. There is stuff and there is people. And no matter what happens, the good stuff, whatever the nominal attributed value to that might be relative to a shekel or seashell or currency unit that you happen to be measuring in, it will still always have value.

48:45Good property will always be valuable. Good business will always be valuable. A Picasso will always be valuable. Will their market price fluctuate all around the world? Absolutely, they will. but generally speaking when you have these sort of big resets in the economy what really gets washed away is all the nonsense i mean everyone gets caught in it and like we're all interconnected so it's it's a bad time for everyone but for some people it's relatively a much less of a bad time and and then through through the um you know it's actually a benefit if you go through it far enough, right? So don't take on stupid debt.

49:28Don't invest in risky things. Pay attention to what you're paying for. Like as we started the conversation, it might be a great company or a great asset, but it ain't worth 4 ,000 times earnings or something like that, right? And just think very carefully about if I've got something that is only a good investment, if absolutely nothing goes wrong in the world, then you might want to rethink your investments. And so it's the best you can do. Don't take on a bunch of leverage that you can't possibly service. All the old school. The stuff that was true in 17 dickity doo is true today. And it's all you can hope for, I think, is just to be prudent in that manner.

50:11Did you say 17 dickity doo, Grandpa? It was a wonderful year. I love it. No, mate, that's a really nice summary. I think that's it, right? I think not investing is not an option. What are you going to do? You've got to put in cash? Right, exactly. And so you've got to kind of work out the best. This is - Which, by the way, is the worst asset to hold in these kinds of scenarios. Particularly cash-cash. Cash-cash. It's paper. Is it literally or plastic? Yeah, that's right. One of my favorite, for anyone at home, fun trivia question, is asking how much paper is used in American currency every year.

50:50Do you know the answer to that one? No, I don't. Zero. It's hemp. Some sort of cottony, yeah, some sort of organic material. Anyway, yeah. I'll interrupt the train of thought here. Go on. How much does it cost to make a penny? Oh, I'm going to say one and a half cents. Yeah, something like that. Oh, is it? There you go. There's a great CPG gray video on a YouTube I quite like. he's got a video called Death to the Penny. And he just talks about the insanity of the penny and how much of an economic friction it is. Yeah, we're going to be at 5 cent coins here and they're still doing pennies in the US.

51:27They're still doing pennies. And every time they try to get rid of it, because there is no justification for them. They literally cost more to make than what their face value is, which is all you need to know, right? Yeah, right. So anyway, there's another bit of monetary insanity that's fun at parties. There you go. So if you bought them, if you bought pennies and melted them down, you can actually make money. Is that what you're telling me? Yep, yep. And in fact, there are laws in the States to stop you from doing that for that very purpose. You know. Because at scale, that actually, I mean, it's probably marginal, but at scale, you could do it.

51:58That's crazy. So you have to invest anyway, Jay. No, it's good. No, it's good. It was my fault. I threw you the trivia about the dollar. Other note. What do you do? You invest sensibly. That's what I was going to say. Andrew and I are not, surprisingly for anyone listening to this podcast, That's what are typical financial people. Most financial advisors will try it or not. No, not even advisors. There's no stock pickers. Most people who are doing some of the stuff we talk about will tell you to maximise your returns. And you would say, well, of course you would, except you really, really shouldn't, at least shouldn't try too hard to maximise your returns at the expense of minimising your downside at the same time.

52:36Maximise your risk-adjusted returns might be the better way of saying it. I hate risk-adjusted returns, the phrase. I know what you're saying. Yeah, conceptually. It's all about ridiculous algebra stuff, but yes, you're right. You're right. You're right. So maximize your risk. In other words, get as much as you can without taking stupid risks. Are we agreed on that one? Yes. Yep. And so, Jay, for that - Because the best return, just to pull on that, the best return you can possibly get is a lottery ticket. Yeah, that's right. You're going to spend five bucks and you could win$100 million. Like, shop around.

53:01You won't find a better return. Correct. Risk adjusted. It's terrible. Right. That's right. The person who won a lotto will never get a better return in their life. Everybody else couldn't get a worse return if they tried. Yep. Because mine's 100%, right? Yep. Don't tell me there's Division 2 and 3. I know that. Just work with me here. Actually. Yeah. I got picked up using absolute. I replied absolutely, and someone said that meant all of time and space. I hadn't heard that. That's actually not the definition. Maybe it's a definition. Anyway, pedants are wonderful people. I've been known to do that myself.

53:34A little bit of grammar. You filled me up before. I said something about decimate, and you said, well, what was it? That means to reduce by 10th. Get old. Get old. It's true. It's true.

53:49So, yeah. So invest sensibly, Jay. Be diversified. Don't put your eggs in one basket. Make sure you understand what you're buying, all the stuff that Ram's talked about. It doesn't mean everything has to be absolutely risk-free because there's no such thing. But just invest sensibly and cleverly and carefully because I understand you feel like it's a dystopian, you know, kind of fear of massive collapse. if and when it happens. And again, to Ram's point, maybe the mark goes up further anyway. It goes up 100 % over the next 10 years and then falls 40 % on the back of that decline. You're still ahead.

54:23It'll suck, but you're still ahead. So just be careful about checking out of the wealth creation system because you want to, you need to, given the inflation, as Ram's already said, if money under the bed, not a great idea. So try and do that. Let's finish with a question from Davo because I did promise we would because I mentioned him before you took me back reasonably to G's second question. I actually thought it was going to be a Bitcoin question. I was like, no, no, no, no, no. We're not going past that. But it's still a favourite. Well, as I said, now I feel sorry that I didn't, but also kind of happy that I thought you were going to be Bitcoin.

54:55It wasn't a Bitcoin, but then you got to do money supply. I think we'll call it Evan. It wasn't a loss, yeah. Davo says, hello, gents. Davo here, three years on, and I'm still a listener. I'm not sure if he tells us that because he thinks it's impressive or because he's more tolerant or maybe can absorb more punishment than anybody. It's like, you know, despite the best intentions, despite what everyone else would imagine. No one's made it this long, but I managed. Correct. Then he does say, though, so please, in all honesty, don't change a thing. Let's see. Andrew won't talk about Bitcoin. I won't talk about behavior.

55:26No, we're not going to change anything. If you mentioned it for three years, Dave, you know we're not going to change. No chance. You've heard the same podcast about, what's 150 odd times? Anyway, he says, okay, I'll try and keep it short. Here's my worry. Trump is a chaos agent. says davo we all know that demagogues historically aren't great for nations or their economies however i think the proverbial elephant in the room is that china is increasingly positioning to take taiwan global semiconductor supply is reliant on a company called tsmc producing 90 of the world's most advanced chips now china is looking at the u.s becoming isolationist withdrawing from international diplomacy letting russia do what it wants tariffs etc So in my view, says Devo, the Taiwan risk is now far higher.

56:14My question, how do you think a Chinese takedown of Taiwan would play out for the global economy? What should we be doing or watching for as investors, particularly NASDAQ heavy investors? Should we have a plan? I'd love to hear your rambling thoughts on this topic. Much appreciated. Devo. Devo, rambling thoughts for us is kind of a tautology. is all I'm saying. Is there any other kind? That's right, exactly. We can ramble. We can't think without rambling. So, yes, it's a talk. Your rambling thoughts, mate, on Taiwan and China. But also what I like about Devo's question is, firstly, he wants our thoughts.

56:54He is worried about Taiwan, but he doesn't say, what should we do? He says, should we have a plan? And I think that's a really nice kind of little twist to thinking about these sort of potential outcomes. Maybe the plan is to get the hell out of Dodge, or is it if this was to happen, that could happen, or maybe we should be looking for this. What is your plan when it comes to China and Taiwan? I don't have one other than I am definitely not an investor in China. I've made that hopefully abundantly clear in past podcasts. Maybe the world's fastest growing economy, but every investor has not done well as a result of it.

57:31And, yeah, so I don't have any direct investments there. But, of course, absolutely, something like that happens, it's going to impact me. It's very hard. Again, it's like talking about sort of, you know, the doomish outlook from before. It's like this has been threatening to happen for a long time. I agree, Devo, that it's looking like the clock is closer to midnight than it's ever been, right? So I take the point. Like it is, it's always been a possibility, but it's much more of a likely possibility, but it might not happen. And it might, when it does, or if it does happen, it might not play out in the way that we expect.

58:11So fortunately they were very late to the table, but the powers that be have started reshoring, onshoring, French shoring, a lot of that production capacity. you have i mean these foundries are so insanely complex you know and the fact that even the u.s struggles to build them should tell you something but they're doing that um so i think this it's not so much if that happens it's more like if a then b then c then d then e yeah and so maybe the b i can get and maybe the c i can get but by the time we're at h and j it's just like so for example people, China invades Taiwan and Trump goes, you can have it because he's Trump.

58:56Or maybe he goes, we're not having that. And then he sends warships across, in which case, and then nukes start flying potentially or not. It's too hard. It's way, way, way, way, way, way too hard. So I really struggle with the second, third, fourth order effects of something like that. So I definitely want to minimize my exposure to companies that are dependent on China and potential sovereign adversaries that that business could it's existential risk for some businesses so i don't i don't want that so i stay away from businesses that that that aren't directly or significantly exposed to those kinds of things um i actually i mentioned was it this podcast i mentioned russell napier um one of his um things at the moment for a while now has been And this reshoring boom, this change in sort of the geopolitical order is actually going to potentially be quite a boom for the right kinds of industry.

59:59So think about the kinds of industries that are needed to build up manufacturing capacity, to build up a fresh, what they call a capital base, capital equipment base. So forever and a day, every single corporate leader in America has been moving their production overseas to China and related places because it's so much cheaper to do so. Now they can't do it, so they're bringing it back. So I don't know, some companies that might be involved in manufacturing capacity or building capacity. I've got some shares in a company called Stealth where they do MRO, maintenance, repair, operational kind of Bunnings kind of stuff for industry.

1:00:43They'll probably do well in an environment like that because all of this construction and investment has to be done by someone. So that's not the case. By the way, that's not the cornerstone of the thesis. But it is like, hey, if that happens, this is a company that probably go pretty well as a result of that. I think the broader consequences of this kind of stuff is inflation. We talked about a lot on Friday, and there's other reasons that you might want to be worried about inflation. But this is definitely, definitely going to impact inflation. So it's absolutely the fevered, egotistical dreams of aging men who want to have some kind of legacy in the world.

1:01:30We'll do all kinds of stupid stuff and everyone loses. No one wins out of this scenario. And so Xi's got his, like, you know, empire that he wants to build and the Don's trying to do stuff. You know, it's unfortunate that we all have to get caught up in their stupid power games and their decisions, but unfortunately that's the way of the world. And I think we're all net losers. You know, maybe some pockets of opportunity, but we're all net losers. So I'm going to just for the fun of it say but. which is just a reminder to myself and everybody else that, and even to G from earlier, it's rarely the collapse or the disaster you see coming that's the one that causes the damage.

1:02:12Yeah. Either because it doesn't happen or it happens and we go, yeah, no, we knew that was going to happen. It's generally the shocks, the surprises, the uncertain outcomes that cause that sort of drama. Yep. And so just kind of thinking that through, again, back to the original comment you made, it's not my line, it's like it's more houses of more money being lost preparing for a crash than in the crash. How do you prepare for the risk of TSMC being removed from the global supply chain? Well, maybe it happens tomorrow, maybe you're glad you did. Maybe it happens in 10 years and the price goes up 1 ,000 % before dropping by 50%.

1:02:49Maybe it never happens. maybe Trump and Xi presidencies both pass unremarkably in that context and other things happen or I'm sure Trump will make headlines for four years but at the end of that I'm in a better position a worse position and so I kind of think we need to be just really careful about and this is back to diversification my response to Xi's question we're back to what do you do do you really avoid that the other thing I will say we're kind of a bit Western-centric, so we're worried about China and Taiwan, less worried about the US and South America, for example, and choose your preferred Europe and Africa.

1:03:28I mean, choose your preferred lens of looking at the world. I think you're wrong, Davo, by the way, and I definitely think Andrew's wrong. But some of that stuff is kind of, you know, what if our guy, what if their guy does something wrong, but it hurts our guy? And it's often, it's very reasonable. But I don't know. No, the longer I've been around but also been an investor, the more I kind of just make my peace with threats real and imagined and outcomes that happen and don't. And you just kind of go, I don't know, because let's take Taiwan and China. And David, you've said you're worried about Trump, but you're worried about China.

1:04:07You might be right. Or maybe it's not. Maybe Trump is the one to be more worried about. Or maybe it is Argentina. Maybe it is spreading of the war in Ukraine. Maybe it is something else and it's probably none of those because history says that for all the potential it risks. And again, you mentioned the housing thing, Ram. I mean, you know, Steve Keen, I keep mentioning, I like the guy. He's a nice guy. I really don't mean to keep giving him grief. He sold his Surrey Hills apartment for 400 grand X years ago because something was going to happen, right? Now, could it have happened? Yes, absolutely.

1:04:39Did it? No. What's it cost him if he'd hang around? even if he's right now and his surrey little apartment falls from 4 million to 2 million you know so so i i don't know it sounds it sounds really negligent to the point of you know abdication of responsibility but would i do anything differently no i would and and when i say differently that's really important right because remy and i've talked about this before there is the there is the um you have to do something different if you haven't set up properly in the first place, right? So what would I do differently? Nothing. But equally, if 90 % of my portfolio was in TSMC, I'd do a lot differently.

1:05:15And so that's kind of, you know, so what do you do? Well, it depends where you start. What do you do? You make sure that your portfolio represents great investing principles. You make sure you own quality. You make sure you're diversified. You make sure the price you're paying is reasonable. You make sure that the, you know, you're not leveraged. You make sure, et cetera, et cetera, right? Think about what you own. Know why you own what you own. Know the risks that might happen. Have enough companies that none is particularly large and impactful in your poor. All those things, right? That's kind of what you want to be doing.

1:05:45So if I own TSMC, I don't. I would be mindful of how big it is. I own shares in the NASDAQ. I own units anyway, the ETF. I think it might be the second or third largest individual investment on the ASX. Berkshire is number one, and then there might be two or three others in the ASX. And then the NASDAQ ETF. if I felt really worried about it, I might reduce that. But then what else do you buy? And what other exposures do they have, right? I am Berkshire. Maybe Trump crashes the US economy with tariffs. Or maybe he doesn't. Maybe do I sell Berkshire in case tariffs happen? Well, I could. I own Amazon.

1:06:24What if, et cetera, et cetera, right? So you can go around the kitchen. Every company's got its own risks. That's a good exercise to do, by the way, is ask yourself that and compare them. How exposed are you? I'd probably want to own TSMC if I had a portfolio full of other US stocks. Why? Because it gives me diversification. So is it bad? I don't know. Maybe it's good if you want something outside what you already own. So invest well, invest sensibly. Again, it feels irresponsible, but I wouldn't do anything differently. I'd roll with the punches. One of my companies is going to get whacked by some external force that either I just see or don't see coming at some point because that's just what happens.

1:07:01And I don't think trying to dodge specific ones is necessarily... This one might come true, by the way. I'm saying don't do this one, Dave. I'm talking in general terms. If I risk for every single stock and I sold because every single one of those risks might come true, I'd be back to cash. And that's bad news, as we said. Ram? Yeah, look, I come back to my simplistic worldview. There is stuff and there is people. And there is a scenario where the nominal value of what you hold. Let's say that you make a bunch of investments that prove to be sensible investments. We have World War III or whatever happens, and they all drop by 50%.

1:07:35it just so happens that the average reduction in asset value is 80%. You're actually richer. Whatever's left over, you've got a larger share of the pie. And it's very counterintuitive to think that you can have half of your nominal value wiped off but still be richer than you were. Not in dollar terms, but in relative terms. So this is why it's always – it is the thing that I will sit around a campfire with a beer and talk about till 3 a.m. in the morning of what is value. And it's like, what is money? What is value? Like those two questions, I'm here for it. There's a six-hour podcast in that.

1:08:13They are deep questions. Like we use them all the time. What is value? Value, I'm a value investor. I like this. Oh, those shares are good value. And I'm like, okay, what's value? It is hard. But when you start to get your head around, I don't think pretend I've got my head around it, when you sort of start to get a better sense of it, though, you realize that the rest are just accounting games. They're just numbers and scorecards and the rest of it. But it's just whenever you hold something of genuine value, by definition, it will be worth something and probably more than what others. If someone has held something that didn't have value, it's a different story.

1:08:52We're out of time. All right, shut up. No, it's all good, mate. We are probably out of time, though. We've gone, I think, long enough for this Sunday morning. You've got to get back on the handstand. You've done Newcastle to Sydney. Time to get to Wollongong. You should be there by, I reckon, lunchtime if you give it a note. Do a few stretches and we'll get going. There you go. In the meantime, will you come back next Friday? Yeah, looking forward to it. Awesome. Me too. Thank you for joining us for another weekend's worth, if you've been listening to the last couple of podcasts, two and a half hours or so, a little bit more than that, sorry, of your time.

1:09:19We appreciate you spending it with us. And until we chat on Friday, fool on. Cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned. General advice only. Please speak to your financial professional to understand how it may pertain to your situation. Subscribe to the free newsletter at fool.com.au forward slash listener. The Motley Fool operates under Financial Services Licence 400691.