Mailbag, incl: Is government really to blame for inflation? March 1, 2026

24:48And so when we talk about what's driving inflation or what's driving incremental inflation, I don't think we should fall for the... Now, I accept Ram's, you know, don't accept the premise of the question. The flip side of that is we're in the circumstances that we're in. So what makes it better and what makes it worse? And it's just axiomatically true. Deficit spending will make temporal inflation worse. It must, it can do nothing but do that. So... Yeah, but it's... Just to round it off, but it's... This is talking about fantasy, so this is never going to happen. But let's imagine that there was, for whatever, there was a war and the government just spent a massive, massive deficit, right?

25:27And that would mean the price of bullets and steel and all of those kinds of things have gone up. But I would say good. Not because I like more expensive things that we need, you know, but it's because that is exactly what is required to divert resources to coordinate economic activity to get the thing, because it is saying we need more of this. And so you're right, it's inflation, but there's a very big difference between inflation that we are happy with and the bad inflation. I mean, let's look at the NDIS, right? It's like, wow, it turns out that people operating in that space are making more money than they ever did.

26:08There has been incredible services inflation with ancillary services within the NDIS. So this is your point. but but you know um bad yes correct bad because that is that is a demand that's not which just never came from the it's sort of like been it's been i don't want to say manufactured because it makes it sound like there isn't a genuine need there is definitely a genuine need for all this stuff but there's when you start spending other people's money well beyond what you've already got is it any wonder that we've seen this industry just expand rapidly because don't forget the first people who were here was like oh there's a new scheme oh all of a sudden i could only as a physio service these kind of people.

26:43Now my market has just grown tenfold. So everyone else on the outside is like, I am not doing what I want. I am now doing this because the money is to be made there. That's the distortion. That's the inflation. And that's the bad, that's not the good inflation that we want. And it's worse because it's not a market. Yeah, it's not. It's not a market. So there is no, there is no, the pricing would normally create more providers, which is very complicated to bring price down. But new providers join and go, you mean if there's more of us, you still pay us the same rate? Yeah. Okay, well, okay, So we've got rid of the market mechanism.

27:14Right, exactly. Geez, I wonder if that would happen with solar panels. I mean, talk about a great idea, right? Like, we need more. I was like, well, let's just – and all we did was largely enabled rich people – and I say rich, I'm not talking billionaires. I'm just talking the upper 50 % of us. You know, it's sort of like, I was going to do it anyway. EVs, same thing. EVs, batteries, the whole box and dice. Yeah, so there was incredible inflationary impulse there for something that wasn't actually solving a market problem in the first place and was done with borrowed money that ultimately, if can't be rolled over, will be printed.

27:48Yeah, exactly. All right, let's move on. Really great question, Anthony. Thank you. I love that, Anthony. You can write in any day. You don't even have to bend the knee, right? Just keep sending that gold in. Yeah, Anthony, you're black band. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

28:09Philip sent us an email. Dear Mr. Phillips and Mr. Page, which might mean we're in trouble. I'll have to wait and see. Thank you for your podcast. It's interesting and thought-provoking. But I would like to... There was 100 % a but coming. To be fair, I put the but in for theatrical. Okay, okay. I would like to push back on the idea of a big Australia. It's a very easy proposal that a bigger Australia is better for the economy, has greater capacity, a bigger market, economies of scale. But what would you put as a limit? 50 million? 100 million? A billion? Apart from the short-term problem of housing, do you really want extra pressure on the environment?

28:44More people in your favourite quiet place, more congested cities, more pollution? I would suggest happiness and social cohesion would be better with no population growth or even a smaller population. The argument for more young people to look after the elderly is never fulfilling. You deal with that problem as a society instead. I hope you keep the podcast going. Thanks, Philip. I regularly send it to my children and friends. Well, g'day, Philip's children and friends, and thank you, Philip, for the question. Regards, Philip. Big Australia, mate. You're a fan. I'm probably marginally against it, but kind of on the fence-ish based on circumstance and a bit of investigation, or at least some understanding of the implications.

29:25What do you make of Philip's view that Big Australia is bad? I'll walk it back a little. I'm not, when I say I'm not a fan, I'm not advocating for it. I just don't know if it's something that we need to resist for the sake of resisting it. Yeah, yeah. So I'm on the record. Let's walk into a hornet's list. It's all my firing range, so I'm fine. I'm fine. What could go wrong? If I was king of Australia, I would really cut back on our immigration intake right now. Yeah. Why? Not because of ideology, not because of racism, just because we don't have the infrastructure resources to support a larger population now.

30:07Maths, probably. Yep. It's just maths, right? So am I talking out both sides of my mouth? Well, I'm not opposed to a big Australia, but you're talking about limiting growth. Now, let's look at the early Australia or the early US, you know, and let's uncomfortably move past the terra nullius sort of issue there. But there was a land that was wide open and it grew incredibly fast in terms of new settlers, incredibly fast. Now, did people get poorer or did people get richer? People got insanely rich. The country got insanely rich. What was the moderating force on that? You know, the interesting days of the colonies is that there was no welfare, right?

30:51No one went there to like suck on the teat of the state. Yeah, yeah. Why would you go? Because there's opportunity. Speak to any immigrant. Why did you come here? Like, dude, opportunity is why I came here. And who are the hardest working, most fiscally prudent people that you know? People whose family have been here for a generation or two because they recognize the value and the significance of what we have in terms of the opportunity that I think when you've been here for a while or your whole life, you take entirely for granted. and and and and so we attract courageous hard-working intelligent people that just by the very virtue of trying to improve their own lot in life create value for the wider society like it's just it's a beautiful thing like now if it got let's let's laissez-faire this right like there's no rules anyone can come in they want but you know there's no welfare it's just like you just there is there's no way to sort of gain the system you can come but if you don't if you don't find opportunity you'll be living under a bridge and then it's a question of are there better bridges here or in the third world country that you came from right i think when you're under a bridge at that point it's equally equally crappy i would say and so that that it kind of tempers itself right but more people and but let's say it gets to the point where actually everyone wants to come because they do see legitimate opportunity and there is objective opportunity there and so we grow and then we keep going and we grow.

32:19Now the worry is it's this Malthusian argument of we grow to such an extent that we're all living on top of each other and therefore the quality of life is really bad. Well, okay, I reject that, but let's say that that is true. Guess what? It's a problem that corrects itself. I am not moving to Australia in the same reason that potentially I might not want to move to Bangladesh. It's because you can't swing a cat without hitting 50 people. I don't want, like, it moderates itself. So I think that's a really important thing. I'm not saying there's no environmental standards or things like that. And I would ask you this.

32:54I talked about Singapore on the pod recently. You know, I looked it up. Total land area, 740 odd square kilometers. Australia, 7.6 million square kilometers. So it's not a larger? Right. A little bit. Now, the population's not as big. I think it's about seven, eight million. So it's given, you know, one of the size of sort of Sydney, Melbourne-ish kind of area. But it's... 6.037 million, according to Google. There you go, six. Okay. So density per square metre, off the charts compared to Australia. Yeah. Like if we spaced every Australian out equally, you know, you couldn't shoot someone else.

33:34They'd be over the horizon. and I'm making this up. But, you know, you get the point. Do you want the numbers? Yes, go on. So Singapore has population density of about 8 ,200 people per square kilometre, 8 ,200. Okay, so maybe put the guns down. Okay. Australia, three to nine people. I don't know how there's three to nine. This is obviously an AI. You can do the math easier than that, but some ridiculously much, much, much farther. Directionally, right? Correct, right? Double and half of it, same thing. Now, here's the thing. Go to Singapore. It's beautiful. It's beautiful. lots of open park spaces oh you've got to go okay oh you've got to go we were i regretted actually on friday when we we finished the call it's like we were talking about budgets and stuff it's like they have a rule whether they must budget they must balance the budget legally uh over every five-year period interesting and they've got a massive sovereign wealth one is like yeah yeah sign me up man sign me up yeah and guess what when covet is like they can break it by presidential decrease.

34:33So emergencies come. It's like, well, okay, we're not that rigid. They did it. And now they're back to it. And there's like, anyway, they're insanely rich on global standards. And they have incredible life. And I think that their immigration laws are very different. But I would imagine that if they open the gates, that they would see an absolute influx of people. And yet their density is a hundredfold near enough. Or what was it? Tenfold, something like that you know what order of magnitude one or two orders of magnitude more than australia two thousand fold and so so so so it's it's a really like the listener's got a really good point at the surface but once you push it and you go i can find all hong kong it's another good example right i can find all kind of europe is a good example like you think of some of the really rich and developed it's changing fast in europe but they you know rich and developed countries in europe and it's It's just like the density is off the charts.

35:30Have you been to the south of France? Yes. Oh, you must go. How pretentious is that, Sarah? I said it and then I realized, oh, you must come to my chateau. It's absolutely beautiful. But if you go to France, and I use that as an example, it's like the countryside. France. France. France. If we're going to be wanking, let's do it properly.

35:52But it is beautiful. And then you go to these little houses. Like down in the South, it's like regional Australia. Like there's no one there. And it's like, how? How? And again, we assume that by, we assume two things. We assume that it's a fixed pie. So that everyone comes in means if someone new comes in, I get less. So that's the first misnomer. Usually someone can come in, the pie can grow bigger than, we've always talked about it. Whenever GDP comes up on this pod, we go, don't care. Don't care. GDP per capita, care. Still have some reservations, but I care more, right? I care more about that.

36:32It's a far better measure. For other drawbacks, it's a much better measure than just total GDP. 100%. So, again, I'll shut up in a minute. I'll throw it back to you. But I'm just saying I reject the premise. It assumes that we can't be bigger and at the same time have beautiful nature and at the same time be richer on a per-person basis. Doesn't mean that's automatic. I'm not just saying let the floodgates, open the floodgates and then Nirvana will. I'm definitely not saying that. But I am saying that a bigger Australia doesn't automatically beget a lower prosperity. And that's demonstrably true.

37:06Yep, I think that's right. Yeah, and you've come around to kind of the point I was going to make, so there's not much more for me to add, Phil. I am wary slash sceptical of the push for a bigger Australia because I don't know we will do it in a way that Ram says you could do it perfectly well and make sure it worked for everybody. Yeah, doing it for the sake of doing it is the dumbest thing in the world. Right. So I would start with two things, Philip, and I think I'm kind of under your view, but I am probably of a view that the average living standards of the average Australian would be worse with a larger Australia than it is now, measured versus the counterfactual not against right now.

37:41In other words, living standards will improve because hopefully we get more productive, God willing, and we haven't seen any evidence recently, but let's assume it happens. um if we got the 50 billion million people 50 million people it's just you know where are they going to be and what is the impact going to be on them and what's the impact going to be on the existing residents now i live in a polyamorous world as everyone well knows on this podcast by now uh where i think we should say to australians what sort of life would you like and when you say i like this and this this great if i'm the government how do i help australians get more of what they want and listen what they don't want i don't think that's a controversial statement whether you're a fan of Big Australia or not.

38:17It's like, well, what do you want more of? You want more space? Okay, well, it's going to come at this cost. Okay, fine. You want less space? You want more amenity in the cities? Well, you need bigger cities to have more flexibility, more diversity. Okay, cool. And I'm not presupposing the answer. This is why I'm on the fence. As I try to be on a lot of things where there's no clear objective answer, it's a subjective answer. So my question to your point, Philip, is absolutely what are the social, infrastructure, environment, and by definition, economic, implications of more people? and what is the trade-off to achieve that and do we want it ram and i've talked a lot about gdp is not even the quality of life it's not a standard of living standard of living is an economic concept quality of life is a far bigger one so how many hours do i work how much stress do i have how far do i have to travel for work what do i do with my leisure time what's available to me i want to say leisure time i don't mean just having time off there are lots of young people like you know what my town sucks it's small there's nothing going on and i wish i was somewhere bigger and i wish i had the opportunity to do that great the cities people say you know what my downtime is i want nothing i want around me uh you mentioned the happy place or the quiet place philip um that idea of just i'll just go and you know spread my wings and go and find a place in the bush somewhere and have no one within kui and that's cool too but i think once you you've got to start with that what do we actually want because philip to your point i tend to be skeptical of larger australia but i'm also mindful that a larger australia would give a whole lot of scale a whole lot of benefits around a whole lot of things including access to amenities infrastructure infrastructure hospitals and schools probably closer um so i'm i'm i'm really really i'm on the fence i'm i'm kind of in favor broadly of a not growing australia we're not growing seriously australia also got issues with water and electricity and all sorts of like there's lots and lots of pieces here i think the question really is and this is kind of half a cop out because here's the thing doesn't matter what my opinion is because i'm one of 27 million australians right so it doesn't matter what i think what what i think matters is having a conversation saying would you like you know if we had more people and the economy was bigger but you couldn't have your quarter acre block you have to live in a unit would you choose that yes or no the answer is yes great the answer is no great if we had more people we would have more amenity and faster broadband and more access to services but the cost would be you've got to live in a smaller do you want that yeah i do and that's when you start to work out you can't ask everybody everything that's we said before democracy is representative it's not you know absolute but that that's that's the way I would solve the problem.

40:39It's just what do we want and what do we have to give up to get it? Rent talks about opportunity cost all the time, right? We're doing this podcast all the time. For me, that's exactly the question. I suspect that the economies of scale are relatively limited at a national level at some point. Australia wasn't a terrible place with 20 million people. I don't think it'd be a terrible place with 40 million people. Will the incremental living standards, quality of life be better with those extra people? I don't know. For a lot of people, the answer would be no, because they don't want to live another hour from the city and they don't to have another you know a smaller yard or whatever but other people do so i don't know what the average australian would decide i i suspect that more people means a lower quality of life as self-reported um and again to ram's point this is not about skin color or language or creed or sex or i don't care so don't don't at me on that stuff just sheer numbers right whoever comes through the door i don't care what color language whatever i suspect that we have more overcrowding.

41:34I suspect we have less access to green space. I suspect we have longer commutes, but maybe that's wrong. So I would be... Here's the other thing I would say, Philip. But all of that makes it a less attractive place to live. I mean, it's that market self-corrective nature to it. But there's 7 billion people in the world who would rather live in Australia. If our quality of life in Australia was far, far worse than it is now, it's going to be far, far better than most of the rest of the world. I think you're right conceptually, But if we average it all out, we've got a long way to fall before people stop coming.

42:06Yeah, no, that's fair. So anyway, Phil, I think you're right, Philip. I take your broad point. Here's the thing. The status quo effect is really powerful, right? Which is, where are we now? And we kind of say, well, whatever we're doing doesn't need to be justified. But if you want to change it, oh, you've got to justify that. And I would simply reverse the onus of proof. Not for or against my own view, but I would actually just say, Australia is Australia. we're gonna we we have no requirement let anybody through the door unless we wanted to and i don't mean that in a xenophobic fortune australia i just mean the status quo is who's here now so the question for our governments and our national conversation should just be right from the 1st of january next year how many people should we let in and why not last year it was x or it can be this percentage or just just literally what what should we do how many is good i'm a fan of immigration we talked about before around a lot superpower uh It's a great opportunity for us to benefit in existing...

43:00I mean, look, take out the Frank Lowys. Take out the... I don't know, there's plenty of people I can't... off the top of my head, who come and make this country a better place. Immigration is really, really... I mean, all of us, other than the Aboriginal people, are immigrants, right? We're all immigrants, yeah, except for people who are already here. Right, so I'm not anti-immigrant. In fact, here's the other thing, by the way. Our birth rate is so low, if we didn't have immigration, the population would fall, and fall probably precipitously and too quickly. I've told you how South Korea is disappearing from the demographic.

43:24Right, so we need it just to stay still. So start with that and then work backwards. I don't know you're not saying that, Philip, necessarily. I'm just saying I think the conversation should actually be a mature conversation of how many next year. Is it one? Is it 100? Is it 100 ,000? Is it a million? I don't know. Let's work it out. But actually work it out rather than starting with, oh, last year was this or we just think it's this or there's no reason not to do that. We actually should be having a first principles conversation. Yep, I agree. And also, when we're reasoning about these kinds of things, we have to go – we're only thinking forward.

43:55Here we are now. Okay. So we're at this point now and we're going to go forward. So it's the same way in which we worked out the Big Bang. Hubble just noticed that the stars are getting further apart. Yeah, yeah, yeah. Now, he didn't see the Big Bang. That's right. No, you can't look through the telescope. Well, actually, cosmic microwave background radiation. Maybe you can. Okay. But you can't directly see it, but you can infer it. So let's do the same exercise with that. So we're assuming that bigger equals worse. that means smaller must be better okay well let's just I mean just as a thought exercise let's run forward with that where's a really similar country that we could use as a test tube oh New Zealand same culture same language people bristle when I say same culture very similar cultures you know yeah is it a nice place to live have you been to New Zealand I have not been there either that's all the time yeah I know I shouldn't say this as an Australian but it's beautiful like it's I've seen some great videos, by the way.

44:56Oh, if I was ever to emigrate, like New Zealand, maybe Singapore, I'll give it everything I've said about it. Very different countries, but yeah, go on. Very different countries. But here's the interesting thing. Talk to any – don't even talk to a Kiwi, just talk to a demographer or talk to the internet. They're bleeding. They're bleeding population. It's actually a really interesting story because there is a net migration gain, but it's a tale of two halves.

45:26The Kiwis that are already there are all leaving, about 124 ,000 of them per year. That's about 2 % of the total population of this country are leaving. You know where they come, of course. They come here. They come here. They arrive in Bondi Beach, and we love them because they're Kiwis and they're excellent. But – Ebro. Ebro. No, stop right there. Stop right there, Andrew. stop right there um well done yeah thank you thank you the filter the filter does sometimes kick in at the right point um the the net arrivals though it's it's generally so it's it's um people coming from very very impoverished places and doing very very menial jobs that that no one likes right so it's sort of like it's interesting who do you think has the most opportunity in new zealand Is it the single mum that just got off the boat from the Philippines or is it the person who's got their whole family and network and wealth there?

46:26They're in the culture. They understand everything. They've been educated. So all of those people are leaving. But it's smaller. It should be better. They've got natural resources. Okay, not the same as the street. You know what I mean? This is a wonderful, wonderful place to live. And yet 2 % of natural-born Kiwis think, no, I'm out of here. Now, isn't that interesting? So all it says is there's more to it than being able to sit in a park with no one around me here because there's plenty of opportunity to do that in New Zealand, right? Yeah. So what is it? It's opportunity. It's opportunity. Like you ask to any immigrant from the land of the long white cloud, it's better job opportunities, better pay.

47:11That's why I'm leaving. Now, do you think New Zealand as a country is richer with this? They're smartest, they're best, they're brightest. It's a brain. We've got actually a similar problem here to an extent. They've got a massive brain drain. So you've got to be careful what you wish for here, you know. And I'll let people, you know, ruminate on that and what it means. And I don't even want to try and suggest it. I'm not trying to secretly hint at what it means. All I'm trying to say is when you look at, as a scientist, right, you've got to look at the, you have a hypothesis, Nothing wrong with that.

47:47You've got to start there. And then you've got to test the hypothesis. So when you see a bit of data that doesn't fit into your theory, then at the very least the theory needs adjusting. And I think the anti-big Australian, or maybe better put, the pro-small Australian, they need to sort of reconcile with this. Why do we see these issues? And we see them in other places as well. And so anyway, it's complicated. and I just think anti-big for the sake of big is, oh, sorry, anti-big just because of some of these first-level thinking ideas, I just reject them. Yeah, and that's my point. We would have said, Chris had 15 million, let's not go to 20 or 20 or 25 and there's a number.

48:30Now, the flip side is also true. We may look back and go, oh, X, we wish we were smaller. That's okay too. So it's just, we just need to be conscious decisions and I do think, mate, for what it's worth, I suspect reasonably strongly that unfortunately our current immigration intake is largely linked to GDP so that politicians can say the number's going up. It's exactly. No, it's house prices and GDP. 100 % of it. Which is your point back in the beginning, which is stop now. And we don't want to wipe old people bums. Let's be real here. That's what it is. Like, they're taking all our jobs. Oh, here you go, man.

48:58There's a couple of jobs. Oh, I don't want to do that job. You know, it's like the hypocrisy of Australians, some of us are just, it's just ridiculous. By the way, you talked about prices before. That's how that gets solved. Of course it does. Supply and demand 101. Don't have people work in nursing homes. Okay, well, there's only so many people left. We still have any people in nursing homes. Well, pay me more and I'll work in the nursing home. Yeah. Okay, cool. And by the way, that's expressed. It sounds like a market pricing signal that's going to better coordinate. It's exactly what it is.

49:25All right. Sorry, mate. No, no, no, no. I sighed not because of your response. I sighed because I know what I'm going to ask about next. I'm loving this mailbag, by the way. I know you've got to go in half an hour or two or less there. This is like the best. someone set this up to just give me the most awesome questions that I love to talk about and your side tells me that another one's coming I'm going to I'm sure forlornly ask you to not make it only about Bitcoin, can I do that? Okay because Jay at the end does kind of bring us back so just hear the whole question before you start answering help us Obi-Ram Coinobi, your only hope says Jay which I both appreciate and cringe at not because it's not funny, just because he thinks he is good day gents he says thanks again for the weekly these are not the drones you're looking for not the coins you're looking for good day gents I should have said that thanks again for the weekly recitals of economic war and peace fair it's truly made me a better human the last five years wow you must have been a really ordinary human jake we're not that better low baseline maybe sorry to all the other listeners it's a bitcoin related question but i hope one that provides some broader insights can you keep that broader insights in your head i'll try my best All right, here we go.

50:37You guys often talk about getting runs on the board to know how you'll truly behave in the cycles of a market, rather than making plans based on how you think you'll act. Boy, have I learned some lessons, says Jay. I'm with you, Jay. You might know that I caused the Bitcoin meltdown of the last six months or so. Thanks. I invested in Bitcoin last year. Yeah, welcome to my world. I'm actually around$90 ,000. I'm not sure if that's US or Australian. I hope for your sake. US, I suspect. And I've dollar cost averaged all the way up and back down again. I knew what I was getting into was a volatile asymmetric bet.

51:10And I have some peace of mind knowing it's ultimately less than 10 % of what I am overall investing in the markets each month. And I'm putting in a little extra whenever there's a 5 % drop because it's on sale, in quotes. But wow, is the media negativity out there on the orange coin really sharp at the moment. The bears come out of hibernation. I was talking that to you about Au Verde, right? It's sort of like silence, silence. and then like, oh, it's falling. Told you. Weren't you the same dude doing a victory lap when it crashed to$1 ,000 and then crashed to$10 ,000 and then crashed to$50 ,000?

51:44Like, okay, continue. And a little hard to ignore, says Jay Ramsey. Yeah, had that experience too. My question, how do you think about the lessons from this current cycle of Bitcoin for future cycles in your volatile investments? This is where it gets broad. For example, it seems to me the run-up to$126 ,000 showed that market sentiment outstripped adoption of the underlying technology, while$63 ,000 is probably cheap relative to the adoption curve. So how does RAM keep track of the fundamental indicators for an investment like this? I appreciate it becoming maybe a bad example of this, as if it takes off and one holds for 20 years, any price right now might be cheap and greater than the opportunity cost of elsewhere, but open hearing thoughts on, say, technology companies or other early-stage ventures.

52:30Fool on Jay. Great. Okay, let's do it quickly. So again, I'm just going to make my regular point that I've been making recently because people, it is something weird about this as it's a hard thing to label, but let's go with asset is, is that people take such joy in schadenfreude in it falling. Whereas, you know, like, so CSL's down a massive amount, you know, we were talking about on Friday, I genuinely think is one of the top 10 companies on the ISA. I love it. I think it's an incredible success story and a wonderful business. It's down 50%. You know, the media is not out there going, oh, equities.

53:09Yeah, what a joke. You know? For all you people. It's a sort of like, so I would actually be a lot more worried. More? I'm not worried at all. I'd be worried if Bitcoin was tanking and every other asset class was flying. It's like, that's what's going on there. That'd be interesting. The fact that outside of a very small handful of index-heavy stocks, you know, the markets, actually, we've talked about it on Friday. it's taken absolute shellacking. And in the context of what Atlassian's done, is that a speculative meme stock or is that a real, you know, massive business with ungodly amounts of revenue?

53:42It's like, and yet, and yet. And so all it is to say is like, price tells you nothing. And Jay gets this a hundred percent because he's dollar cost averaging. And he said that the thesis hasn't changed and it hasn't. And I think I said to you, some of the stats are going around at the moment. that interesting, not to forecast the future, but to give you comfort as to what's happened before, is that if you had bought Bitcoin after every 50 % drop, within 12 months, I think 90 % of the time, you've like doubled your money or something like that. It's not a law and it doesn't mean that it could happen.

54:13And plenty of the times it dropped 50 % and then end up going down 80%. So it could absolutely drop further from here. But Jay's very excellent question, let's get to that, is how do you, both of us have sort of predicated the thesis on adoption. If more people want it, then it'll be more valuable. The more utility it has, the price will go up. So how do you measure that? Because there's no cash flows or anything like that. Well, there's a gazillion different ways. You can look at the number of addresses. You can look at the number of transactions, although that's becoming a bit harder to do because more transactions are migrating to things like lightning and that, which let's not go down that rabbit hole.

54:55So usage is going up at higher – it's being abstracted, just like most technologies. But you can still look at transactions. You can look at wallet size. You can look at just the number of people that have it. You can look at Google mentions of it. So there's various institutions around the world that do surveys in various parts. What else could you look at? You can look at hash rate. That's the amount of mining power that's on there. You can look at changes to legislation. You can look at the type of adoption. So not just adoption writ large, but what kind of adoption. In the last 24 months, it's been corporate adoption.

55:35It's actually been no retail adoption. Retail is just largely not there. So it's all corporate adoption. And what is interesting, and again, as they say in Bitcoin, don't trust verify. So go off and don't just take my word for it. Go off and see if you can. We've got internet and the AI these days. So, you know, type in some words and you'll get some answers on all of these things if you want to search it for yourself. But what you see is bottom left, top right. It looks eerily like every single adoption curve that you've ever seen, whether it's steam power, radio, bicycles, the internet, smart fighter.

56:13It kind of looks exactly like that. That's kind of what it looks like. So, Jay, the day that that stops or reverses, we're having a very different conversation. Even price is a reasonable proxy. It's just that you've got to separate the noise from the signal here. I like the long-term log chart there because it's just a very clear picture of things and it removes some of the – when something went from$1 to$10, that's a 10x gain. It's much harder to do that. Log scales tend to like smooth out things over different scales. So you got, you know, anyway, so I don't want to get too deep in the maths here, but, but that's what you see.

56:54And it's not like if you squint, you can see it. It's like, it just, it slaps you across the face. And that's always been one of my challenge to the naysayers. It's sort of like, Oh, it's this, it's that, it's the other. It's like, well, maybe, but every year more and more people adopt it. And I've yet to find anyone who seriously adopted it and then change their I'm sure there's probably a handful out there, but you don't really see them, right? And so as long as that is true, happy days. Fair, fair. Can you not buy any more, please? Because just don't. I might. Don't you dare. I'm going to buy someone short a lot.

57:34That way I get both sides of the transaction. Yeah, right. Yeah, sorry about that, everyone. Jay, look, in terms of just broadly, you asked about other technology companies, other stage ventures. I think it comes down to, and you kind of know this already, and to some degree, Joe, I'm suspecting the question is a bit of a, just ask for reassurance. And I think you've, because you kind of got it right, you've pretty much said, look, I know the price is up and down, but the fundamentals are right, right? It's like, yeah. I say, how do you deal with other companies? It's kind of the same thing. The share price only tells you what the market thinks.

58:04The same as the Bitcoin price only tells you what the market thinks in the short term. In the longer term, I'm convinced I'm not as much of a Bitcoin I own a ball as Andrew is, but I own a little bit. I'm convinced that that'll be the same thing. In the long term, the price will tell you how much people value it, which is kind of the point. And the price will tell you when it comes to companies how much value it has created or is creating or is worth based on the fundamentals. In the meantime, and even at each of those points in time, sentiment will still be involved. But directionally, your point about bottom left, top right, Jay, I think you've got to think about the thesis itself.

58:35What am I expecting to happen? And how will I know whether that's happening? and that's kind of even here's the other thing by the way with profitable companies so we had the banks out uh released profits two weeks ago i think i don't know if i talked about the time remember if it didn't stop me i've talked about other places but essentially anz and cba had both had six percent profit growth so okay that's cool right so fundamentally at some level but both growing profit at six percent okay cool that would in theory have the same kind of valuation treatment if it was going to keep going at that sort of rate.

59:08Because you go, okay, well, two companies both grow at 6%. All things being equal, they're not. But if they were, okay, well, roughly the same price earnings ratio, right? Because you've got the same kind of growth profile. The difference is CVA did it by growing customers and growing transactions, growing loan and deposit volumes, even as their costs went up. ANZ did it by an almost entirely flat top line and took a whole lot of costs out. Now, you say to me, Jay, what fundamentals am I using? The first level would be, oh, just look, profit. If profits go up, then I know something. I know you know this, Jay.

59:37I'm not telling you this. But what I would say is the fundamental indicators, which is the phrase you use, which is a great phrase, go below that. So, well, hang on. If they're both growing 6%, that's fine. Which business is in better health? Now, you could make the argument and say, well, CBA's not in very good health because its costs are up. It wasn't managing operations very well. There's even an argument for that. But which one is actually demonstrating that as a company is performing better? It's the one that's attracting and retaining customers. Now, if I was just doing it with discounts and the gross margins were falling like a retailer because it was like, well, no one really likes shopping at me, but my stuff is half the price of everywhere else.

1:00:10Obviously, that's different. I'm losing money doing it. That's not okay either. So it's always a combination. But the thesis might be, I think this business can grow for years because it is better at making loans. It has a better brand and is better managed, a better branch network and better economies of scale. So it's going to grow better. If that's the case. I love how you said that. It's the holistic too. You've not just singled out for a company. Oh, look at that. And then if you... Just about revenue. Just about gross margin. No, it's about it. What do I look at? Always get that question.

1:00:35Look at everything. Look at the business as if you were going to buy it, the damn thing, because that's what you're thinking about. So look at margins, look at sales, look at product, look at it all. Now, if I'm going to own ANZ, I can hope it finds a way to grow because I want to own compounding machines. If I'm a value investor, deep capital V, I might buy something for 80 cents, sell it at a buck. And maybe I buy ANZ, they take out some costs, and the share price goes up and I sell it three months, six months later. That's fine, perfectly fine. That's not my style. I'm trying to find long-term compounders.

1:01:00So what am I looking for? If CBA can keep attracting more customers time after time after time after time and it's showing me it's had the capacity to do that, that's worth something. If A &D is like, well, I can't be any more relevant, so I'm going to cut costs. Okay, well, you do that once. Maybe you can do it twice. Can you do it three times? What about year four? What about year five? And again, you can have a shorter time period. That's fine. But I'm personally looking for compounding machines. I'm looking for, yes, I want operational efficiency. Yes, I don't want bloated costs. Yes, it needs to be profitable at some point.

1:01:28But you mentioned early stage ventures or technology companies. Jay, it would be, are they bringing in customers? What is it costing them to acquire those customers? How is that going to translate to operating profit? You mentioned that before, Ram. Even if you're bottom line profitable, are the customers themselves profitable at a gross margin level? Okay, so when I stop spending on marketing and R &D, that money falls to the bottom line? Yeah, okay, I'm looking at that too. So it depends. It was largely a Bitcoin question. I just want to throw that kind of fundamental stuff on top of it. You're right.

1:01:55But your point, I think you know the answer, Jay, is ignore the price. Maybe in Bitcoin, the price tells you more than most other assets, frankly, because it is a proxy for adoption. But there are those numbers underneath that where sentiment in the short term isn't necessarily reflecting it. So focus on that stuff. Price is one indicator of adoption. Ram's already talked about number of accounts, number of transactions, who's buying it, what are they doing with it. That stuff is super valuable. I mean, Jay nailed it at the beginning. He said, I went into this knowing it was going to be super volatile, asymmetric bet.

1:02:21Yep. That's right. Perfect. You got it. You got it. Perfect. and don't forget when you have those opportunities outside of this particular thing, it's like just grab it, man, like grab it. Even if it doesn't work out, you did the right thing. Someone gives you two to three odds on one in a hundred sort of shot, you're like bloody hell, what are you doing? It's like, oh, it didn't work out. It's like, yeah, but it statistically will far more often. Take that shot every time. Every time someone gives you that shot, you know, and it doesn't mean you put every single percent into it, But you do moderate it relative to your perceived risk and return potential.

1:03:01It's just that we as investors, and this goes well beyond Bitcoin, we want our cake and we eat it too. What do we want? I want really high returns and I want no volatility or risk. Well, me too, bro. Me too. However, in the real world, those things don't exist. So what do you want? Do you want safety? Fine. Put it in the bank. under the mattress and just be bled to death by inflation. But don't whinge at me when it happens, you know, and don't point, oh, these people buying shares, they're richer than ever. It's like, yeah, but they took the risk and they didn't freak out at every single 10 % drop.

1:03:36It is the nature of the beast. Volatility does not equal risk. I'll say that again. Volatility does not equal risk. If you're out there buying Bitcoin and you thought that you weren't going to have a retracement, it's like, what were you thinking? Yeah. Right? And I'm not saying I don't, you know, I'm not trying to make light of it because it's scary. But as I said, I think I said a few weeks ago, all that if you're really scared, whether it's Amazon shares or Bitcoin, if you're really scared when the price falls, all it does is it reveals to you you never had any conviction in the first place.

1:04:11Yep. So do two things. Get out because you don't deserve to hold it if you've got any faith or reason to have confidence in it. Or build the conviction. Like who are the richest, most successful investors in the world? They're the weirdos like Buffett who just have this weird ability to ignore everyone else and just do what is obvious. That's it. Every year for the last 60 years, he's gotten together in Omaha and he said, that's what I'm doing. that's exactly what I'm doing. Don't freak out. It's good business. I'm buying it. Oh, but what if it goes lower? I don't know. What if the US invades Iran?

1:04:49I don't know. Dude, it's a good business. I like it. Oh, you're a bit wrong. Yep. I've been wrong a bunch of times, but usually I'm more often than not, I'm right. And when I'm right, I'm really right. And so, I don't know. What are you trying to, what is the point that these naysayers are trying to make? It's just like, look at the dude's returns or Druckenmiller's or Lynch's. Or, you know, anyone, any of them, they're all the same. Did they never have a bad investment? Did they never have a 50 % drawdown? Like, wake up. And I'm being a bit direct and a bit harsh here, but I'm a little bit touchy and sensitive about it because of all of the ha-has that have come around lately.

1:05:28It's like, give me a break here. And this is what I said to you off air. It's like, I am going to be so insufferable. When this thing recovers. So you're touching our insufferable later. When do I win this bit? Oh, dude. And I just warn all the listeners now, if you're like, if you see the price go back up and it's going to, you think I'm going to like be really obnoxious. Yeah, I am. So don't tune in because, you know, and I think it's one of those things that all, even equity or property or any investors is like, you know, when you're called an idiot and laughed at for a long, long time and then reality says, oh, no, you were right.

1:06:06Yeah, I'm going to do a victory lap, right? Like that's just how it's going to be. Crazy, crazy. Yes, well, yeah, we might cancel the pod to that point. Mate, why don't we finish off with an anonymous question from our listener? We had similar ones before, but it's a really good question. It comes up pretty regularly. It's worth talking about. Hello, lads, says our anonymous listener. Short-time listener, first-time caller. That's why you haven't realised we've answered this question before. Huge appreciation for the pod, says our listener. Over the last few weeks, I've taken a deep dive into this world of investments.

1:06:37Excellent. Your extensive rants with countless pearls of wisdom, thank you, have helped me see through the hype and the BS and to get a handle on the fundamentals, although I've got a long, long way to go. In other words, consider the knee bent and the ring kissed. Okay, fair. I'm in my early 40s. I've got two kids, a wife, a good salaried job. Busy life. Never had the time or inclination to investigate investments. Traditionally being a saver, I paid down my home mortgage as quickly as I could. I've now found myself with a mortgage-free home. Well done, you early 40s, bloody hell. And a decent chunk in the bank.

1:07:11I've dipped my toe in the market with a handful of ETFs, individual shares, and some Bitcoin, all via Sharesies, the broker, as a learning experience, more than anything, just a very small portfolio. My question is, how would you recommend I make a more considerable entry into the market? No specifics, but maybe use 100k as an example. I do understand time in the market versus timing the market, but with a more considerable investment, it seems like something worth thinking about, especially given the current madness, geopolitics, AI, et cetera, et cetera. Maybe a staged entry over a period of time, or do I jump in 100%, close my eyes and ears and check back in 12 months?

1:07:52Easier said than done, says our listener. And do you have an opinion on the best way to achieve this, i.e. which platform would you use? For what it's worth, I'm thinking of investing a very broad base across a range of ETFs, US, Europe, Asia Pacific, and emerging markets. Keep up the good work. Thank you, anonymous listener. We appreciate it. Little portfolio so far, big chunk in coming around, time, diversification. How should our listeners generally, not this particular listener, think about putting a lump sum to work in the market when you haven't got much to start with already well just to start off with i'm really i think getting in there and doing it with a small amount is the best education that you can do like we were talking um i think it was off air it was just like with some of this ai stuff just just roll your slaves up and just drive on in like that's the best way that's the best way to learn how to build an engine or ski or juggle like just i can i can watch a million youtube videos on juggling that's right i've got to do it and so So I think absolutely dipping your toe in and having a bit of a play is good because if you do blow yourself up, it sucks, but it doesn't suck that much.

1:08:59You're absolutely bulletproof. So I think that's a really, really smart thing to do. With the other one, like the very short answer here is you'll only know what you should have done retrospectively. Like you don't know. The lump sum is definitely the best if the market just goes up from here. It is absolutely the worst if it crashes or goes down the day after you do it. And you don't know what's going to happen, right? And no one does. And if anyone tells you they know what's going to happen, they're a liar or a scam artist. So what do you do with that conundrum? I think ETF investors probably get it better than most because ETF investors as a general rule go, well, I don't know how to do this thing.

1:09:35I just want the average. And you know what? The average is really good. It's like, nope, I can't throw any shade at that, right? Perfect, yeah. And so in that frame of mind, I tend to err on the side of dribble it in over the next, you know, whatever timeframe you want, 12 to 18 months. If it was 100 grand, you know, just buy 10 grand a month or something every six weeks, something like that. Again, even then you'll look back and go, oh, I should have waited or I should have put it all in at the start. But you'll get a, by almost definitionally, because of how the math works, you'll get an average price.

1:10:13and an average price in a good asset held for long enough is going to do you really well. And then the final thing I'll say, and I'll throw it back to you, is just like ditch the emerging market and European ETFs are a waste of time. Just go with the US and Australia. That's just my little thing. No offense to those other markets. Sorry, not sorry. Well, Europe is not a dynamo of entrepreneurial spirit and wealth creation. It's quite the opposite. And emerging markets is where capital goes to die. So just maybe that'll change in the future, but history is pretty clear on that. Look at China. I'll make one point because if you're new to the pod, this is the argument that just cinches it, right?

1:10:52The fastest growing economy the world has ever seen. It's gone from a rural backwater to a global superpower. And it's done that in a few generations. And yet if you had invested in the Shanghai market, you didn't do very well. Why is that? There's a much longer explanation. The short answer is grift and corruption and malfeasance and all the rest of it. But it's just like people with merging market funds and exposures, they just, oh, it's small. It's got a lot to grow. It will go well. Yeah, maybe with really strong rule of law and property rights and strong institutions and that maybe. But when that happens, let's go.

1:11:33Until then, my personal humble opinion, stay away from those markets. Yeah, it's hard. I don't have as much. In fact, I invested in some global ETFs. I'm exposed to those indirectly. But I'll come back to that in a second.

1:11:48Yeah, I mean, broad-based ETFs are fine. Here's the challenge. And you say check back in a year, anonymous questioner. I understand that, but it's kind of in that still a really small amount of time, right? Yeah. So here's, and this is going to sound really blasé. And I don't mean it to sound blasé, but bear with me. Let's say you buy today and the market drops 25%. That sucks, unquestionably. 100 grand is worth 75 grand. You're like, oh my God. Now, over the last 30 years, the Vanguard index chart will tell us that 10 grand has become about 130 over that period of time. 13x, nice. Right. Now, if you lose a quarter of your money, that 30x is going to be less.

1:12:30Maybe it's 9 or 10x. So it's not nothing. It's a lot. It's a lot, a lot, a lot. But it's also 10x. so at some point it's kind of like and again it sounds blase to say well three times your money is 100 grand you know put it in now the next 1.3 million dollars or it's a million dollars see the difference is massive it absolutely is but still a million dollars it's the perfect being the enemy of good it's going hey I did extremely well but I could have done even better if I had complete omnipotence and foresight you know like omniscience I should say yeah but yeah it's a stupid observation because it's just like no one can ever do that so don't beat yourself up about it.

1:13:06But not even that much. You're right. And think about the fact the market might go up 20 % over the next 12 months then you invest. You've lost that same 25 % in terms of dollar value over that period of time but you've lost it on the other side by not investing early enough. So you've done yourself out of the opportunity for the same gain. And that's where it's really, really hard. That's impossible. You'll always look back and go, oh, I should have, could have, would have. Missing the gain or avoiding the loss is the same thing. Sorry, copying the loss is the same thing. it's literally the same problem.

1:13:38So I don't have an answer for you. I have done both in the past but I've said before I invested my mother-in-law's superannuation from a lump sum into shares on a single day her entire super fund on a single day. Not because I was timing the market I was like, I don't know so I'm going to invest it. So I just did because I've said before on the pod Matthew, you mightn't have heard it before because you're a short-term listener which is completely cool. Mathematically, the market goes up. You are betting against the market the longer you take to put the money to work. Now, all of that said, I'm going to then talk out the other side of my mouth because there's maths and there is human reality and they're different things.

1:14:14The benefit of maybe saying I'll do a quarter of it every three months over the next 12 months is it's a really nice mental trick you can play on yourself, right? Let's say you do it quarterly for the next, you put the whole money, 25 grand a quarter for the next year. You put 25 grand in today. The market drops 10 % and that's not great, but guess what? In three months from home, you get to buy everything 10 % cheaper. So that sounds pretty good. You put 25 grand in today in a different scenario, the market goes up 10%. Next time you're buying, you're buying 10 % more expensive, but you're like, oh, I've made 10 % profit.

1:14:44I feel pretty good about this investing thing. And so it's entirely a self-conceit, a self-deceit. Because I'm literally saying, hey, fool yourself. The reality of why I mention that is because it does work for some people. They find it easier to do, to be able to say, can I see the good in this? Invest it all today, the market drops 20 % tomorrow. There's no good. It's only bad. objectively only bad you have lost money if you wait you would have made money that sucks if you wait and the mark goes up oh i've missed my chance maybe you do invest maybe you don't invest maybe you keep the money aside wait for the next dip that never comes so it's it's it's self-management ego management it is emotions management it is fear management greed management all those things so i would if i had if you gave me 100 grand i mentioned a ram affair this is a slightly outside of speaking outside of school um my wife had we got an smsf my wife had some money still in an old employer industry fund that she had stopped work for that employer, hadn't rolled the money across, so we did it recently.

1:15:40I got a lump sum, which is not an inconceivably small amount relative to our current superpowers, I don't know what the dollars are, but percentage-wise, it's a lot. Not more than half, but it's a decent minority chunk, right? Now, I'm going to put that to work at some point. I haven't done it yet because I've been lazy. That's only been a week and a half. When I do it, I'll do it in a lump sum. Why? Because I just don't know. I can try and tell the market I'm just going to do it. But if you said, I'm going to do it over 12 months and do a quarter or whatever, I think that's a perfectly fine thing to do.

1:16:06If it helps you sleep at night, if it helps you do it, if it helps you take action rather than be paralyzed by the what-ifs, then do that. Do what you need to do to get the money into the market sooner rather than later. If that's a lump sum, great. If it's not, great. I bought some Bitcoin and RAM's cursed me ever since because of the price of the market fell. If RAM's right and it's a million dollars of Bitcoin at some point, am I going to care? Well, yeah, I might have liked to have bought it cheaper, but I'm not going to complain about the result. So that's kind of the story. It's the same you can imagine this call coming.

1:16:32I know you've got to go on a sex hobby quick, but it's just like you're hearing this argument, you go, yeah, stuff it, I'm going to do it. It's January 2020, what can go wrong? The world seems like it's in pretty good. There's some kind of news coming out of Wuhan, but I don't know. Dude, boom, boom, three months later, your 100 grand is now worth 70K, right? But a year later, you break even, and today you're up 30%. Now, I'm not going to pretend that like 30 % over six years is like wonderful, but you're up 30 % after being the most unlucky bugger in history maybe not in history but you know what I mean so I guess like time heals all wounds on the market let me be careful with that on an ETF IT investors they can wait as long as they want you can wait as long as you want but on average that's the nature of indices is just like perfect is the enemy of the good perfect and perfectly said to sum up finish off our podcast info at fool.com.au if you want more questions comments you want to throw something at us please feel free Ram will you come back next Friday for me?

1:17:37hell yeah alright I'll hold you to that he will because he wants to be kind it's just one of those things if I keep getting questions like today I am definitely coming back at some point this podcast is just community service but not for you for Ram yep sorry listeners until next Friday have a great week 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.

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