Mailbag: incl. What about Bitcoin for kids? February 9, 2025

24:54It suggested that several prosecutions proceeded from these. Does this suggest there is a place for short selling to enable such research to be undertaken? Alan. I think we differ on this view. We do differ, meaningfully. Let's go with it. You want me to go first? Yeah, go on. What do you want me to go first? Go your boots. Go short. I don't care. Go long, go short. Do what you want. It's... The noble interpretation is that you do have people like John Hampton, and others that sniff out fraud. And, yeah, they profit from it. They're very good at it. They're good at it, right? So it's sort of like it is a market mechanism to sort of say there's something wrong here and it is the arena of ideas that is the market that it is being played out on.

25:41Now, you might say, yeah, but they're making money. That's unfair. It's like, well, people on the long side are making money. Just to preempt your point because it's a good one, you'll say that but what people will so what you can do is you can walk into a crowded theatre put a turnstile on the exit and yell fire and there's no fire everyone runs out the door you make a squillion you walk away a lot of shareholders have been burnt and it causes a lot of chaos and so obviously I'm against that and by the way the fire can be there was never any fire the other can be there's some smoke and I yell fire and it turns out the smoke was from the chicken shop next door sure absolutely so you can do it With absolute sincerity and still be wrong, which is not a comment on their motivations, but the result in terms of your financial benefit is still potentially the same.

26:27Yeah. Now, so there's two points to that. It's like, well, if you took them at face value and panicked, then yeah, you lost. If you didn't, WiseTech had a big short attack. Anyone who, and again, you look at it now, it's actually hard to find on the chart. Like, when was that again? It was like a little big at the time. It was like, oh, it's a blip. It's fine. Nothing. And it's like, so who got hurt? People who were flighty and who panicked. Now, the same thing happens. So, and again, it feels like I'm saying, well, ha ha, if you don't have the right tolerance for it, you deserve the results that you get.

27:00But the trouble is the same argument is on the long side. I can fill my boots with some two cent stock, get on whatever platform I can get on and go, this is the best thing ever. Brilliant. Not fire, yell, I don't know, free ice cream. I want free ice cream. This is fantastic. And then like by the time everyone realized there's no ice cream, it's like, I've sold, I've dumped on you and I've walked away. So that bad behavior happens in both directions. Correct. And people get burnt in that ladder example because they see it, they're sort of late to the grift. It's like, whoa, it's up 20%. I'm buying this.

27:34And they're like, you're just someone to dump on. And then they're profiting. You're the exit liquidity. Yes. Really. So it's all horrible stuff. I'm not saying that it's good, but just because there are some bad actors who operate on the short side, well, there are bad actors that operate on the long side, but there's also some really good people that operate on the short side that help keep markets informed and efficient is my view. So what I will say just by ending it is that unfortunately the world is full of really bad people. And it's why I think when you're going to be an investor in equities in particular is that you have to walk into that arena knowing that this stuff is going to happen.

28:18Yeah, that's right. And if you're long, short, whatever, if you're going to like, you know, freak out every time there's any volatility. I mean, you just constantly be in and out, in and out, in and out, and you walk away losing most of your money, and it'll be everyone else's fault except you. It's like, no, go into it. Knowing that this is going to happen, that you have to form your own view, is that there is always going to be a very significant number of, even without people who have got like short position, there's a very significant number of people out there who are going to think you're an idiot and you're wrong.

28:47In fact, my update last week was, if most people don't think you're an idiot. Yeah, that's right. Right. You're at best going to get mediocre returns. You match the market. Exactly. If you want everyone, I want a 10 bagger. Well, here's the reality of getting a really high return on the market. You have to buy something that almost everyone thinks is a stupid idea. Yeah. To have a massive outsized return, you need a massive mispricing. To have a massive mispricing, you need the majority of people to be wrong. Yeah. And so, no. And then not listen to the market. Once you bought it and think of the markets, I tell you what it's worth because you thought the market was wrong in the first place.

29:26Right. You can't have it by way. No, no, no. I want incredible returns, but I want the emotional security of everyone thinking that I'm a genius at the same time. Well, me too. But back in reality, it doesn't happen. It's not only that you want them to think you're a genius, just you don't want them to keep dunking on you every day. Yes. You're still an idiot. You're still an idiot. You're still an idiot. So it's like, if they don't love me, it's like, they hate me. They think I'm stupid. That's the bit that needs at you, I reckon. Oh, it's awful. And, I mean, I had it served to me. So many examples.

29:55But, you know, I love that scene at the very end of the big short. Who's the dude who played Ken in the Barbie movie? I've gone blank. Right, so Ryan? No, what's it? Yes, right. Yes, yes, yes, yes. And he's holding his check going, yeah, I was right. Yeah, I ate it for a couple of years, but I was right. You know, I love that, right, because he did. He made a fortune. but because he just had his face rubbed in a day after day after day. I've gone a little bit off topic here. I'll finish off and then I'll pass the banner to you. Go for it. It's also a very slippery slope. So once you start saying, no, no, no, no, I don't like it, we should ban it.

30:35The reality is what tends to happen here is that the regulations will come in and they go, well, you can only do it if you're sophisticated, which is the way if you're rich you can do it. So then you start having this regulatory response, which is always done with good intentions, but I won't say in all cases, but in a pretty significant number of cases, it just ends up privileging a small group over others. So I might be an idiot mug punter, quote unquote, retail investor, or I might be a highly sophisticated individual who just doesn't have sophisticated status. And you're telling me I can't do it, but that rich, connected, privileged person over there can?

31:15And that's where it starts to get, you know, again, I said it on Friday, the road to hell is paved with good intention. So we should do this to protect investors. But are you? Are you really protecting them? I'm not convinced. I'm going to start with a tangent. I can't remember who's Matt, somebody who writes a column for Bloomberg. You know him. I can't think of his name. Oh, come to me. Wrote about GameStop. I'm getting there, by the way. Wrote about GameStop, not GameStop, bloody Robinhood. Robinhood is that online brokerage that kind of gamified trading. I'm not going to call it investing.

31:48It's not. You get confetti when you buy staff and all that kind of rubbish that goes. They're trying to use the same psychological tricks that video game designers use. Right, exactly. Yeah. So they are offering event contracts on high-profile sporting contests. So it's not gambling. You're not betting on the outcome. They're offering you event contracts you can buy and sell. And what they're trying to do is financialise betting so they can offer gambling on their app, which tells you everything about Robinhood. By the way, hi Robinhood if you're listening. I think people shouldn't use your platform.

32:18You're welcome.

32:21You're the product, basically. Why do I raise that? I raise that because there is, and frankly, I replied to this on Twitter and said, I don't think Robinhood would do anything different to what other people have already been doing. They're just doing the quiet bit out loud. Yeah. You can jump online. You can trade your little heart out, buying and selling, day trading, buying and selling options and derivatives, to try and make bets, literal bets, on the movement of a thing. right flies crawling up a wall the movement of an index um the result of the super bowl all exactly the same thing in my opinion now why why do i start with that story because i i i get accused of being nanny status all the time uh by the way also also people are wowsers on other stuff um so we can we can go in both directions on this one but uh it's all it's all a question of what do you what do you like what don't you like what do you ban what don't you ban and what's the role for all that stuff um i think the stock market has been turned into a casino by people in sharp suits and glass offices who pretend that because they are in those suits and those offices, somehow this is investing, not gambling.

33:21So the simple reality for me is that I think anything, this is a grandiose and big call, but I'll do it for fun anyway because I actually believe it, but it sounds a bit over the top. I would suggest to you that anything other than ownership interests in real companies and derivatives, that is, future contracts for physical products, i.e. the number of pork bellies or the number of sheaths of wheat that gets delivered to a farmer or from a farmer. Anything other than those two things is gambling. Now, why? Because it's a derivative derived from the actual asset itself. So think about short selling, think about options, think about futures, think about all that kind of stuff.

34:04You're guessing, betting what the price might be at a single point in time in the future. You don't really want to own the business. You're just hoping the price goes up. and that's why that derivative literally derived from is kind of the point so if it was me i would say the stock market does two things it buys and sells ownership interests and it buys and sells derivative contracts for physically delivered products everything else is gambling now whether you ban it outright or say stockbrokers may not provide it you can get it from the tab or sports bed or betfair or whatever that's that's an open question what you would be able to gamble on is different, but let's not pretend it's investing.

34:37So that's kind of my starting point in terms of what is the stock market and what is just an adjacent bet. And gambling is gambling. That's fine. You gamble if you want to. I mean, I've said many times, we use similar concepts for investing. We're trying to work out how much to pay for a range of possible future outcomes. But the difference is I am buying shares in BHP or something else and holding those as ownership interests. So honestly, that's my starting point. I think anything other than that pretending that it's on the stock market, therefore it's investing, or even trading when it's just straight out gambling, is gambling.

35:10In fact, contracts for difference, CFDs you would have heard of, they are awful, awful things. Toxic garbage. You know where they started though? No. They started in the UK with bookmakers offering bets on the movement of the index, which is exactly where they belong because that's what they are, right? It's literally what they are. And it was done per point. It wasn't even the level. It was like dollars per point of movement. And that's, again, I don't love gambling. I don't love gambling promotion, But let's be honest, it's a gamble, right? You're betting on something. So that's what I would do to start with.

35:38In terms of short selling, very quickly, I've talked long enough. I wouldn't allow short selling for those reasons I've just talked about. My issue, but also they're not horrible. The ones who are legitimate, you mentioned John Hempton. He's a really good guy. He's legitimately trying to find frauds that he can profit from. Totally fine. There are other people out there, and we've seen reports from them, who are just trying to create noise to profit from the shouting of fire, right? those people can go to hell um john hampton i tweeted about this and john replied to a tweet once once i said i would ban short selling he wasn't he wasn't best pleased um uh you know do i think it's doing a horrible job no do things do a horrible thing no am i ideologically opposed to people some people say you shouldn't have short selling because they make money when shares go down that's not cool it's like well shares going down anyway it's not you know you can dislike it it can feel a bit dirty and unclean or whatever there's no reason to ban it in and of itself so I'm not against that.

36:31My issue is largely one of the impact on the average investor. Now, you talk about people just need to know that's going to happen. You're absolutely right. So we either say, you should have known you didn't, you lost money, sucks to be you. Or we say, I don't think that's the way that a stock market should work. I don't think it's a case of predator and prey. If I'm unprepared, I deserve some degree of protection from that unpreparedness um as a as a human not a human right but a human kind of kindness right like you know uh we didn't didn't put didn't put stop go signs on the road if you're stupid i've walked out in front of a truck it's your problem right you know there's there's there's there's guide guardrails that we put in place where we think they're appropriate my issue with the up down thing you're absolutely right ram and people say all the time they're a million percent right i give stock recommendations sometimes they're in public um on osbiz or something else uh sometimes I own those shares.

37:21Sometimes I don't. If I own them, the price goes up. People say, you're saying it because you want the price to go up. I mean, I do want it to go up. It's not why I'm saying it. So the short sellers would say the same thing. Dude, I'm not trying to screw anyone. I'm just trying to make money from being right about the direction of the share price. They're 100 % right. So again, I'm not averse to it. The issue I have though for the average investor, a quote unquote retail investor or private investor as you prefer, Andrew, is just that we know if I go out there and say, I love BHP. It's going to be great.

37:44I think it's got a really, really bright future the ship rights probably won't move because no one cares what i think and there's no greed is powerful what's far far far more powerful is fear so when some other no and it is the no names right why did the afr don't write up scott phillips thinks kogan is going to go up by a cent over the next year or you know attempts to the next two years or whatever they don't write those articles what they write is page capital came out today and said they're going short on kogan they think it's going to be with two dollars in a year's time they reckon half the company sales are fraudulent.

38:15And what happens? So both are benefiting from movement. The sheer impact of that is disproportionate. And the chance for people to be meaningfully hurt by that is larger. So that's, for me, why I think short selling is different. There's nothing immoral about it. There's nothing improper about it, as long as it's not done fraudulently. I just think if we want well-operating capital markets, you don't want distortions. And I think the response to a short selling report is a disproportionate response. I think that's the bit I have an issue with. If they could do it and not ever publicize it, maybe that, you know, again, I don't mind the short selling short sale.

38:53It's their right to do it. I have no issue at all. Maybe that would be some kind of halfway house. But, yeah, that's my – by the way, it's not going to happen. So I'm not in charge of the ASX or in charge of ASIC anytime soon. But that's my thought. What have I got wrong, mate? Oh, it's just a matter of being consistent, I would say, in the sense that I need to double check the data, but I'm reasonably certain that any time anyone's tried to measure and survey the success of quote unquote retail investors, they find that like, you know, it's 60-40 kind of thing. In other words, most retail investors lose and most retail investors lose long.

39:33So you could argue under your framework, it's like, well, if most people are losing at this and most people are not investing and are trading, and let's face it, they are. We know what the average holding period. So all these retail investors are trading long and losing. And it's like, well, should we ban that too? Yeah. I don't know. And, you know, the, yeah, I feel as though usually the, I'm just, I guess I'm, I, it's a, it's a, what's your preferred philosophy? Is it the more heavy handed banning or is it, I tend to err on the side of, I just think education is the best defense in all arenas really.

40:18If like, and, and, and let's, let's look at it this way as I, cause I never go short. I've never gone short in my entire life. I just, I can't time any. Even if I'm right that this is a dog's breakfast of a business, it could go on to 10 bag between then and going to zero. So I'm not interested in it. If they banned it, it wouldn't impact me in any way, shape, or form. But I still think that I have to, again, I'm not trying to make it all about me, but when a short seller is only ever going to be effective at yelling fire if it's a credible yellow. So let's say - Oh, I don't know. Let me say this.

40:58Wrong short reports. Wise tech, corporate travel - Yeah, but none of us looked at that and went, oh, it's obviously wrong. It was like, oh, and maybe that, is that? They're a real arcane stuff. So it has to be - So if I wrote a big short report and said, Woolies is a scam, and da-da-da-da-da-da-da, no one's going to pay attention. It's going to have zero impact. So, but if I come out and go, actually, I've got a bunch of research here. Here's the full report. I'm articulating. I might be wrong. Like if I'm going long, I might be wrong, but here's my report. And that's what I'm picking on WiseTech because it's the only one that comes to mind, but they happen all the time.

41:28They had this really reasonable, again, in hindsight, well, actually, maybe it's still true. We don't know, right? I want to get into the arcane details of it. But it was credible in the sense that it was like, if it turned out to be true, it was like, yeah, that could have absolutely been true. So, but if I know the business really well and someone's put out a dumb short report and I've now had the opportunity to buy more of this great business because it's been heavy. Again, back to my original point. Do I want outsized returns? Yes. That means I want a mispricing. Yes. How do I get a mispricing when a majority of people think the wrong thing?

42:05Great. Bring it on. People put out nonsense out there. If everyone wants to turn on, why are we picking on Woolies? I don't know. Woolies, I think it's incredibly overpriced. But if something happened tomorrow and some idiot short seller put something out and Woolies was available at$10, I would liquidate everything in my portfolio and I would back up the truck. And the market would correct itself. The truth always outs in the end. And you just, I get the incentive. I get the urge. I just don't think that the more you try and wrap people in cotton wool, like it just doesn't have the desired benefits.

42:36I don't think. In other words, people will just find. People have been trying to do dumb things in share markets all the time, right? forever. And we regulate, we regulate, we regulate. Guess what? Every day, every day, there's some idiot doing something stupid that they should know better and the regulations don't protect them at all. And if for whatever reason we put some barrier out there to make it a little bit difficult, guess what? They go over to Coinbase and start trading Melania coin, right? Or they start flipping, like, you know, sign up to some course on a yacht in Sydney Harbour and flipping property because of, you know, there's a million and million and one dumb things that you can do.

43:11And we just, we can't change that. I think we can reduce it though. You and I will disagree on that. That's fine. There should be penalties, by the way. I don't want to say you're laissez-faire. Like if someone has done something, if there's libel, there's something like that out there, absolutely, you should face the full weight of the law. There should be penalties to do that. But if you do it in good faith, have at it. Have at it. My only disagreement with, yeah, I might disagree fundamentally, but I understand the logic and absolutely respect your reasoning. They'll find something otherwise dumb to do with the money, I think is conceptually, directionally right.

43:49I also think if we, speaking of other controversial topics, if we ban poker machines tomorrow, there wouldn't be as much money gambled the following year because availability does matter. So will some of them find a way to gamble? Yes. If we reduce the number of pokies, would it save some gamblers some money? Yes. Now, I'm not saying you shouldn't ban poker machines. I'm just making the point that availability, you're right. It's not a one-to-zero thing, but reducing the availability of a thing or accessibility or awareness of or whatever access to does have a directional impact. It won't solve the problem entirely, as you say.

44:23Fair enough. Fair enough. Hey, by the way, WiseTech fell from$30 to$11.80 through 2019 early 2020 and went back up to$128. What's the share price now? $128. 10 baggers. Thank you. Thank you, short seller, for giving me the opportunity. I know that I did, but you know. Except that someone sold, right? Someone sold at 30 because they read the short report. Yeah. And they missed out on a four-bagger from there. That's kind of, this is, we'll move on. It doesn't matter. Hey, let's go to a question from another anonymous question. I'm not sure to be impressed or concerned, but anyway. Thank you both for the entertaining and educational content of the podcast.

44:58Keep the content and rants coming, please, as I value information that challenges existing paradigms and thought processes. I'm going to stop there for a second and give our anonymous questioner a massive wrap. There are too few people. Our listeners are very different, and so I'm complimenting everyone of our listeners who, frankly, if you have stuck with us, you're probably of this, literally, of this mindset. But there are too many people who want their biases confirmed, and we're all subject to it. I'm sure our listener is not perfect. And I are definitely not perfect. You try and tell Andrew Bitcoin's wrong.

45:30But no, the... Oh, sorry, man. You're coming, just kidding. you best not miss. Ross Kittins at Bitcoin. No, but being open to and willing to and actually actively looking to challenge those paradigms and thought processes I think is such a useful process in life in general, but investing in particular because that's, you mentioned Ram about the whole different opinion. You have to find a way to have a different view. Not necessarily than you used to have, but certainly that everyone else has. That independent thinking and readiness to change your mind. Again, that's what makes better sellers of us when we go, I bought it for this reason.

46:03To say that reason no longer holds, that takes a lot of intellectual and emotional energy to be able to go, I thought I was right, bugger. I'm obviously, or no, obviously, I'm now probably wrong. So I did change my view. That takes so much work. So I just want to say, well done and keep that approach up. I'm going to double down on that. And only because you mentioned the B word there, but I was in the car the other day. And to your point, so one of the ABC finance journos was talking about, wow, all this stuff's going on, the tariffs, the Middle East, blah, blah, blah, blah, blah, AI, DeepSea, you know, all these crazy things sort of going on.

46:35He goes, and Bitcoin's at a record high. It's just like, you know, I don't get it. And then he said, but you know what? I don't, I've not looked into it, so I'm not informed, so I don't know. No, he knows. And so he's sort of like on one hand sort of a little bit belittling, a little bit laughing, but then made that. And I actually like, you know, bravo, sir. I fully respect, as opposed to Michelle Bullock, who said in almost verbatim word for word when asked a question about it, said, I don't understand it, but it's stupid. It's like that I have zero respect for. And it's not that you're disagreeing with my standpoint.

47:06It doesn't even have to be about this particular topic. It could be any topic, but if your first words are, I don't understand it, but let me tell you why you're wrong. Anything after that, I cannot take you seriously. Now, if you say, listen, in good faith, I am engaging here. I have done a bit of research. I've got some thoughts here. I'm ready to sort of wrestle with it. And I disagree with you. It's like, brilliant. That is fantastic. Very different. Nice. The anonymous listener then says, I've been listening to the podcast for a few years now, including when Andrew came back to the podcast and I wasn't sure what to expect.

47:42Well, I haven't been disappointed. Thank you, Mr. Page. And two muscle emojis. So I don't know if that's generally just good or the fact that they're acknowledging your feats of endurance and strength. But either way, well, I'm a bit of a wrap for you. I appreciate it. I recall Ram mentioning a company called E-Road. when he first came back to the podcast. Does Ram have an updated prognosis on the company? I noticed the share price has dropped significantly over the past few years. Many thanks in advance, Anon. Hey, when you're right 90 % of the time, you're wrong 10 % of the time. Yeah, no, that did not play out as I expected, which is actually, you know, I said 90-10.

48:24It's probably closer to 64. It's probably 55. If I was to really sort of analyze it. So, yeah, I took a loss on that one. And I just haven't looked at it recently, so maybe I should because there was an opportunity to sort of pick it up at$0.40 and now it's$0.95. So sometimes you get advantage in sort of taking that contrarian view. No current view? No what? No current view on it. I just haven't looked at it for a long time. So what, yeah. Oh, what do I want to say here? Well, actually, it came up in Strongman the other day. One of our really longstanding members was sort of being very humble and really nice.

49:06He said, oh, we had a stock pitch session a few years ago and he pitched this company. It hasn't gone well. And he's like, oh, I'm so embarrassed. And, you know, I didn't say that, but it's like, oh, gosh, really didn't go this way. And it's just like, well, and then I looked at their trades because, you know, everyone's got a public portfolio on Strongman. And I was like, dude, your average purchase price is 24 cents and your average sell price was 20 cents. In other words, you got it wrong, right? Which we're all going to do. But there's two types of wrong. There was the wrong for a set of circumstances that wasn't easily discernible or obvious or even maybe even predictable at all because something came out of left field.

49:47And a person who adjusts course with the new information, the new reasoning, new interpretation and moves on. And then there's a kind of person who goes, no, it's not a loss until you sell. No, now it's cheaper. I'm going to double down. No, I'm going to do it. And just pig-headedly goes ahead. Both are, in a way, technically mistakes. But I would say there's just such a different quality and character. It's just different. When I look at all of the great investors in the world, am I just like trying to court myself as I'm talking here? I'm just trying to like make myself sound like a great investor.

50:20not me but other investors all the great ones one thing you notice is that they not only make lots of mistakes but but when they make the mistake there's that recognition of it and that very direct confrontation of that mistake and let's let's let's let's go to Mr. B himself right so every year in his annual letter it's like I did this and I gosh I got that wrong and here's how I got it was like there's no it's not massaged there's no reinterpretation I thought this this didn't happen it was wrong we're out you know and and for me actually that's one of the that's one of the heuristics i think we were starting off by talking about active managers versus you know passive yeah if i if i ever come across a stock picker who never talks about their mistakes it's just an instant red flag because hey you've made them yeah like everyone has made them yeah and and and it's the person who who really leans into that that i respect because one it shows you that they're much more, what's the word, reason and data sort of driven as opposed to emotionally ego driven, which is always going to lead to a bad idea.

51:27So I'm really not trying to back off a bit here because it just sounds like I made a bad call but I'm actually really a genius because it could have been far away. I'm not saying that at all. But I am saying that when, take this as a bit of comfort to anyone out there who's looking at something that didn't work out in the way that they expect is just like, welcome to the club. This is how the game is played. That's not the mistake. The mistake is ignoring the evidence of the mistake and plowing ahead. So I lost some money on Eero, but I sold out, gosh, two bucks, something like that. Maybe$1.50.

52:04Well, not, you know, again, maybe in three years time it'll be ten dollars right but but i don't know i feel as though i'm i'm just i'm i'm trying to trying to make myself sound better than i am it's not possible well no the intention wasn't to throw you under the under the bus on your road it was more just a question of whether you had a view on the company um but i think you're right why i said well done mate was i'm not suggesting the share price is or is the well eventually is the only arbiter but in the meantime it's not it's just a sense of you know it's a barometer of sentiment as is the case with all companies um but i would suspect that at the time you sold out you sold it because you had questions about either its performance or its future uh and those concerns seem to have been um visited on the share price subsequently uh right there wrongly um but what i said well done was because you had we just i talked about changing your mind um the fact that you know when when that's one of the hardest things to do right the idea of saying hey i have a view on this i feel good so good about this company i'm going to put some my limited cash into it and hope to make some money from it and then you have to kind of eat humble pie and say, actually, I was wrong, publicly or privately, and then sell.

53:07That's hard to do. It's really hard to do. Yeah, it's hard. I mean, speaking of my own mistakes, I'll throw on Good Drinks Australia that was called Gage Rhodes back when I bought it. I owned that thing for stupid years, like five, six, seven, some stupid number. And it was just, it was always like gunner, gunner, gunner, gunner, gunner. And it didn't cost me a squillion dollars, but I lost money on it. And I lost money on it because I let my thesis creep. Oh, what's this? Okay, well, now it's that. Well, okay, that's a problem. but now they're going to do this. The business that was run as well as it reasonably could have been, I suspect, but the external circumstances were too strong and didn't let it grow into the size it wanted to grow.

53:40And that was, you know, that wasn't hidden from anybody. We saw it happen. They were very upfront with the announcements. I was just kind of, oh, well, maybe it's this, maybe it's that, maybe it'll work this time, maybe it'll work that time. One of the hardest things I find with companies of this sort of size is when the opportunity for great execution and reasonable circumstances is so high. No, I don't think the investment is a bad one to make, but kind of handicapping when it's over or when, you know, is a hard one. I've mentioned before, I'm pretty sure I have any on the podcast, Challenger Financial.

54:15They sell a new, I didn't buy this one, but we did buy it before. We recommended members buy it, ShareAdvisor. They sell annuity products, right? Which is where people take, not many of our listeners will be using them because they're investors, but people say, okay, I got my super payout. I'm going to go and buy annuity. and what it does is you take my money and you promise to give me back a certain amount of money every year. And why do people do that? Because they don't like the uncertainty and volatility of the share market or other markets. They don't want to manage it themselves. They're just paying, it's kind of reverse insurance, right?

54:39So here's a lump sum, pay me back an amount every month, either for a fixed term or until I die. That's that. Some people love it. And if you think about the volatility of the share market, and we had the GFC and we've had COVID crashes. If you want to get freaked out by the market, very easy to find reasons to do it. We've got a lot of boomers retiring. A number of retirees going through the roof. I'm not going to get this thing going. It's the only name in annuities. I mean, others provide it, but Challenger is the annuity company in Australia, effectively. You've got a growing market who are really open to financial planners saying, hey, take this thing.

55:11The planning companies, I'm sure, probably get a kickback. Maybe they don't, so I shouldn't be too overt about that. But there's every reason for a financial advisor to say to a worried client, even for completely objective reasons, you seem really freaked out about this. you're not going to sleep well at night grab an annuity i think it'd be perfectly reasonable thing for an advisor to do by the way so i'm not not bagging them at all uh so challenger should have done really really well there's absolutely no reason why challenger shouldn't have taken all those tailwinds and just you know just had not screw up and yet the results didn't come and so that's one i did say you know i bagged myself on gauge roads i got challenger right eventually and maybe maybe too long maybe not but it was all this potential you can't look at it and go you've only just got to get this right guys and the moon is the you know the next next stop And they just didn't.

55:55For reasons of either execution or circumstance or maybe I misunderstood the market, I had to say, if you've got all this potential and you can't show the results from it, either I'm missing the potential or you're missing the execution. But either way, I've got to say, that's it, I'm out. And so that was when I got roughly right. I've got plenty wrong as well, as I said. But I think that's the challenge with any of this is changing your mind. And again, by the way, back as Ram says, you can have a look at E-Road now. Maybe you'll look at it and go, well, I sold it, but the reason I sold it is no longer valid.

56:22or I'm just scrolling through the prezzo now it's like right all the reasons are valid but they've gone away or the reasons are valid but the share price is much cheaper I mean selling at two bucks and buying back at 40 cents I mean if the business is less than one fifth of the the value that Andrew originally saw it's going to be good value at 40 cents oh sorry it's 90 cents now but you know I'm not saying what you will do I don't know the company at all so but just you know try and ignore past prices it's easy advice terribly hard to do but that is where success comes because that way you buy and sell based on the merits not whether you're up or down or sideways.

56:54Yeah, you're not wrong because the market – well, eventually, to your point you asked. But in the short to medium term, you're not wrong because the share price says you're wrong. You're wrong because your reasoning and your facts are wrong. That's why you're wrong. And that will out over time. So I think all of the best investments I've made, I look stupid for a long time, and then they went really well, and then they went really bad, and then they went really – one of my favorite charts in investing is the drawdown chart. Yeah. And what it does is it just, it has, like on the horror, it's hard to do this verbally, but it just shows you how far below the most recent all-time high the current share price is.

57:31Yeah. And then, so pick your mega monster stock. I don't know, Amazon, REA Group, you know, pick the best favorite stock in the world that's gone up a gazillion percent over time. And what that chart shows you is that the vast, not, you know, a majority of the time is in 52 % of the time. like 98 % of the time you were below a high and often very substantially so. And again, this isn't, let me hammer the point. This isn't a company that hasn't gone well or hasn't not even signed it. This is a company that has actually gone to the moon, right? And it's sort of like, that is a, it's so informative because it says that if you are on a rocket ship, it's going to not feel like it.

58:13That's right. Exactly. Exactly, yes. You're always going to be able to look over your shoulder and there's going to be a peak. You're climbing a mountain, change metaphors. You're climbing a mountain and whenever you look backwards, there's a higher peak, right? Now, the one you're trying to get to is even higher. Maybe you won't get there though, but it's going to really sort of knock you around. So, yeah. I don't want to – look, I have missed a lot of tricks

58:41by throwing something in the bin. So E-Road is a good example. There's a bunch of them, actually. So you spend a lot of time researching a company. You get to know it quite well. And okay, it didn't work out. So you sell it. And then what I usually do, probably for subconscious psychological behavioral, you know, ego protection reason, that's it. Never again, you know. It's like a partner that burns you. Never, no second chances. I always want to make the mistake, right? And I think it's such a waste of effort because you put all of that time into it. I'm not saying that you must always then go back to it, but it's sort of like when you throw something, when you go, okay, it didn't work out, don't, you know, it can very often be worth coming back and revisiting that and leveraging all of that deep knowledge and understanding that you've built up over a lot of hard work.

59:29You've got to go, okay, I was wrong. I'm going to dust, I'm going to clear the chalkboard, it's all gone, and now I'm going to start again. And maybe it's like, oh, gosh, no, this was never good and it's certainly not good now. but but interestingly enough a lot of the time it's like oh yeah this is actually the the problem might have been i just think i got the value wrong i got the growth wrong you know i'm looking at e road now and look the number of units out there in the wild of just they they they basically help uh logistics fleets track their their trucks and stuff all that all that kind of stuff and the number of units out in the field has grown like there's a staircase it's beautiful it's like well that doesn't sound to me like a business that's in in in having trouble delivering value for their clients.

1:00:11But as I remember, I think the cost base got a little bit out of whack. I think the valuation got a little bit out of whack. There is wrong and there's wrong. There's Enron wrong, there's Bernie Malfe wrong. And there's just sort of like a little bit of overexuberance wrong. And I guess what I'm trying to say is that absolutely, I'm not saying don't hold back on doing what needs to be done. And often you just need to take old yellow out the back and just do the humane thing. But once you've done that, maybe you can go back and poke the corpse every now and again because... What about that part of the podcast?

1:00:40I don't know. This is just not going to work, is it? Do you know what I'm getting at that? Do you do that as well? Like if you've had a bad experience, do you find that you ever come back to it or do you just like never again? Yes, but rarely. Yeah. It's hard, right? It is hard. I think, yeah, it's really hard. And I think there's a bit of a... And psychological bias is a million times over. there's a bit of once bitten twice shy about some of that stuff for me which is just kind of like you disappoint you know fool me what shame on you type stuff it's like you know i bought it too high the business didn't it depends on why the business well let me take a step back take amp right there was there's been very few times you buy amp and do well um at some point you kind of probabilistically a business that disappoints the first time is probably not going to be the next the next big thing uh depends on what disappoints looks like i don't care about a quarter i don't care about a year in terms of sales and profits.

1:01:36If there's explainable or justifiable reasons for underperformance, that's fine. If there's the same group of people or the same management team or the same strategy or whatever, and you kind of haven't done it, at some point you kind of go, well, why would I give your point about definition of insanity, either today or Friday, doing the same thing, speaking different results. So why are you going to buy those shares? Now, I'm not saying you can't do it, you can't do it well. I'm just saying, I think probabilistically and emotionally and intellectually, I'm less likely to go back just for those reasons.

1:02:06And that's probably a mistake, honestly. I think it is. I'm not speaking myself. I think it is a mistake, right? It's having your actions dictated by a prior emotional, a bad emotional experience, financial experience, frankly. But it was like, well, maybe there's something here. Yep. I think that's right. I think that's right. Hey, let's finish off. Okay, with a Bitcoin question, fine. Not what you're expecting, though, Ram. But it's kind of cool. Someone's going to pitch Ethereum, are they? Trumpcoin, apparently. Have you heard of that one? I have heard of it. You've seen what's happened with it?

1:02:40No. I can assume, right? Can I? It's so pretty. Talk about, this is why I need to be able to go short, right? Would you have shorted Trumpcoin, though? No, I wouldn't have, actually. Right? To make a crowd a pretty full on, I wouldn't have touched it.

1:03:03Arnold says, hello, Scott and Ram. I've got a rewording of an oft-asked question for the podcast machine. Investing for kids, but this time with Bitcoin. Given I have a deep conviction for Bitcoin over the long term, and my kids have a much longer investing horizon than I do, surely it's crazy to not buy them some Bitcoin. Do you have any insight about buying in their own name? Or is there likely to come a time you'll simply be able to transfer Bitcoin to another person without triggering a tax event. Keep up the good work as always. Arnold. Arnold, the chance that you can transfer any asset without triggering a tax event is really, really small.

1:03:40I would not presume, particularly if I was planning for the future and there was consequential tax burden potentially, I wouldn't be banking on a consequence-free transfer. I mean, I guess if your Bitcoin vault's totally anonymous and there's totally anonymous, you can do it without getting caught, that's a different thing. If it still triggered a tax event, you would just choose to not follow the tax law and potentially make yourself a target for the tax man. So I would just don't do that. But that's a different thing. Ram, Bitcoin for kids. Do you think the ATO is listening? I don't know. How do I answer this?

1:04:14Yes, you should assume. Not only are they possibly listening, the internet is forever, as you regularly say. So let's talk hypothetically about other people. Well, I mean, I pay my kids in Bitcoin for jobs. Do you? Well, that's the beauty of it, right? Here, download this app. It's not going to be worth nothing. They are so orange, by the way. They are so on board because they've got that lived experience. It was like when I get this, my purchasing power keeps going up. And I don't need any bank account. There's no holding. It's just like so vastly superior, right? So I do that. Now, at some point in the future when they're adults, maybe there's no capital gains tax then because it's just recognized as money.

1:04:55I don't know. Here's the thing, right? So it's so early that the ASICs, the ATOs, and the other, they just can't wrap their brains around it, right? It is very, very, very difficult. So I tend to say this with shares as well. I think you and I might slightly disagree on this. I think because we get it so often on this part. I'm a really loving, caring parent that is thinking long-term for my children. And equities are a really wonderful wealth creation vehicle. I should buy some shares. It's like, I have no notes. That is perfect. That is, bravo. That is brilliant. The practicalities of that and the costs, and it just makes it, ooh.

1:05:38So what I do is I just, it's all in my end, it's under a trust. And then when they're old enough, I'll transfer it to and I'll take the tax hit, but it's just easier. It's just, you know what I mean? Yeah, totally. Makes perfect sense. There'll be someone out there going, no, no, no, you're doing it wrong because then maybe, maybe I am. I don't know. It's just too hard, basket and I'm lazy. Yep. So I would tend to say this thing in particular, because you go speak to someone in the traditional finance and they just look at you like you've got two heads. I set up my SMSF and told my account what I wanted to do.

1:06:13They were like, are you sure? I can't tell you what to do, but I strongly suggest, et cetera, et cetera. And so it's just a bit of a trick. So I keep stacking and then one day cross that bridge when it comes to it, because I think you're going to find it just a real pain in the backside to do it properly. Look, and just for the ATO's benefit, we're not talking big bucks here, right? It's not like I've paid them like a Bitcoin to wash the car. I wish I had that much that I could afford to do it. But it's just sort of like a few Satoshis here and there for some household chores and whatever, and just giving them that direct experience.

1:06:52It's just a lot of fun and the fact that, you know, open permissionless and all that kind of good stuff, I can do it. It is kind of cool. If the ACO wants to come at me because in 30 years' time they've made a, you know,$400 profit on there, let's have at it. By the way, if you're going to offer your kids a Bitcoin to wash the car, I'll come and do it for you. Yeah, right? Just now. There's some really good memes on the internet of guys going up and saying, hey, I'll pay you a Bitcoin for this. And people who don't know what the price is, I'm not going to do that. I was like, you know how much money they're offering you right now.

1:07:23I don't want Bitcoin yet. Oh, man. What can I do with it? Changing$1 ,000 worth of cash. I don't know. You don't want it. I'll take it. Exactly. So I'm not – I don't own Bitcoin, as everyone knows. I'm not a virtual – You actually do. I realized the other day that you do. One, you've got that old Coinbase account that you – I think you put$100 back in and – No, it's got something in it, but yeah, yeah. So you do. You do. I probably do. I'll find it somewhere. Although not your keys, not your coins. It's not even on my – but the app is – I've got a new phone and the app is not even on my phone.

1:07:54I'm sure I can log in somehow. Anyway, go on. You'd be up a lot. Also, I know that you've got some broad-based ETFs. So within that, you'd have things like Riot Platform. You'd have a bunch of equities. Micro-estranges or something? Yeah, you'd have some micro – not in the NASDAQ yet. Okay. Yet, I say. But there will be miners. There will be – Yeah, yeah, fair enough. You will want everyone listening, if they've got any broad-based US exposure ETFs, you will have some. Some exposure to it. Sorry, that all standing. Just to say, whether you like it or not, you're on this train. Damn it. Sell everything.

1:08:30So you and I are different. I've set up stuff for my young bloke, and it's kind of a combination of quarantines and amounts. And that's not really, it's purely just a psychological difference. I mean, you're right. It could be my name in the total amount or not. Just a bucket. Yeah, right. I got to decide how much at what point I want to give. It's almost, it's a little bit, you know what it's a little bit like? It's a little bit like defined benefit versus defined accumulation. In the sense, I'm putting away some money for him or wherever it gets it gets. Rather than me have to decide at some future point how much of my massive cash full of cash I want to hive off to the unblock.

1:09:01Same conversation because if I put that money in myself, I'd have that much more. But it's just a defined accumulation rather than defined benefit, I suppose, in that sense. There's some wonky references for you. So I've got to say, I'm not so – the reason I said I'm running a Bitcoin investor, I'm going to put a but here, which is, it is probably one asset that if you're going to invest for kids, makes a million percent sense to actually do it in their name because there is no income generated from it. You know, the issue with investing for kids is largely that you, well, there's some trust rules that the brokers imply.

1:09:35You don't have to worry about it. Oh, maybe you do. Actually, yeah. So it would depend on what structure it was. You'd have to work out whether your Bitcoin broker allowed you to have an account in a kid's name. If it was a cold wallet, then, of course, you don't have to do any of that sort of stuff. And again, that's kind of, Ram's a much better answer to that than me. All I would say is from a tax perspective, I wanted to clarify my comments on tax before actually because you mentioned a good point. But on a tax perspective, because there's no income from it, there is no penalty in having it in the kid's name.

1:09:59The real problem with having stuff in kid's names is if they own more than, I think it should be$416, I know what it is now, in income, dividends or interest, you get taxed at 66%, which is stupid. And for the reason we've talked about before. But Bitcoin doesn't generate anything. So it's kind of almost, I'll say it's the perfect asset to own. I'm not saying you should own it. I'm saying the structure of it, i.e. it can, well, it probably can generate income if you use it for income, but it doesn't generate income. So there is no tax implication for miners on something that doesn't have any income from it.

1:10:26So if you did believe in Bitcoin and you wanted to do it, it is something that investing in the kids' names keeps you way clearer of any of those tax implications, which I think is a really useful part of that if you're going to do it. Again, whether the brokers let you set up an account in a miner's name, I don't suppose they would because they probably have similar rules to who can sign a contract. and that's sort of why ComSec, another type of issues with shares is my son can't, you enter a contract with ComSec, he just can't do it. So I have to do it in my name, all that kind of rubbish. Anyway, so yeah, I would, if it was me and I was going to do it, I would do it in my son's name.

1:10:58I would probably do it with a cold wallet unless I'm allowed to, unless a broker lets me do it with them. Andrew prefers cold wallet in general for all the reasons he said before, so that would probably be the superior option anyway. I probably wouldn't care enough and that might be on me, so I'd probably do it with a broker. But either way, I think it's a really – if you can do it and you want to do Bitcoin, I do it. Their name is a really easy and simple way to do it. Again, as Ram says, you can buy it for yourself and just give them some when they get to 18, 21, 25, 30. Let me just quickly talk about my tax thing and I'll let you jump back in, Ram.

1:11:27I was just going to do it. I was just going to do it. I was just going to do it. I was just going to do it. If you've already got a structure set up for kids, for shares, buy the ETF. Yes. Buy the Bitcoin ETF. Then you don't have to worry about it. There you go. You solve everything. There you go. I mean, the purists would say no, but that's one way. Yes, exactly. Yep. Exactly. No, thank you, Matt. The tax thing I was going to say was I said, don't assume there'll be no capital gains, tax, blah, blah, blah. Of course, the ATO is going to do it. And then you made the point about maybe it's true as money.

1:11:50So I'm going to walk back that previous comment. Yes, in that sense, if it's not an asset but it is currency, then, of course, the whole thing changes. I wouldn't bet on that, so I wouldn't invest tax-blind, assuming that you can dispose of it as money at some point rather than an asset. And frankly, the more money people make on this, the more the ATO would be less likely to take Trinidad's money because the accumulated unrealized gains at that point would be enormous. And if the ATO you're like, so I could wipe all those gains or I could collect when they sell. I do love the, what's the word for it?

1:12:27On one hand, it's a scam. It's not real. Oh, we're going to tax you on it. Is it real or is it not? Because you can't, I mean, the mental disconnect, you know. Correct, correct. Anything else on that, mate, in terms of Bitcoin for kids? Yes, but no. Nothing about the kids specifically that we want to add. Well, the thing is with it is you've got – it's the same with shares. I don't want to make it about this. You've got to be careful not to teach the right lesson, teach the wrong lessons here. So, again, a well-meaning parent, go, I think you should have some shares for the long term, rah, rah, rah.

1:13:03And, you know, you can focus on the wrong thing. It's like, well, dad, you told me to put it into E-Road and I'm down 30%. Shares suck. I'm never doing that again. What have you done? So, you know, and it's not even a Bitcoin thing, right? This is so much. It's funny how everyone makes it, oh, yeah, but it's super volatile. It's like, have you seen Nvidia? Have you seen Amazon? Have you seen like any major equity like ever? But yeah, it's volatile, right? So it's like, it's absolutely going to do that. So if you're, I do not go to the kid. Hey, check your balance. Oh, we're up today. Oh, we're down today.

1:13:36Don't even just like, you want something? Here you go. $10 worth. Boom. There's$5 worth. Just for pocket money. Bing. Shows up on their phone. And they don't even really think about it. And then every now and again, they look at it and go, Dad, it says I've got the future. And like, no, it's just doing what it's number go up technology, son. Sorry, you're learning the wrong lessons. Anyway. No, you're right about the really learning lessons. Funnily enough, I've said many times, we're investing some money for our young look off to the side now up in something he doesn't know about and give you a little bit to invest in himself.

1:14:08It's 250 bucks in there at the moment. It's, yeah, it's, I use shares. He's have no relationship with them, but they allow for actual shares. So he puts in, we, we, we match him dollar for dollar, everything, everything he puts in from his pocket money. So he puts money in and we add, add the same. And then, so he thinks he's made money already, which he has. So it's kind of an incentive to do it. And then, but what, but interestingly enough, you put out wrong lessons. He's like, yeah, we'll ask how I'm going. We'll tell him. Oh, Oh, so-and-so's up, so-and-so. And he said the other day, I want to add money to the ones that are going up.

1:14:33And it's one of those teachable moments of like, and look, winners do tend to keep on winning, but it's also that idea of like, if they've gone up, they're going to keep going up. So you mentioned extrapolation the other day, or earlier today, that idea of like, I'm going to invest in the ones that are going up. Of course I would, because they're going to go up, right? And so there's some teachable moments. I have definitely fought against that. Particularly because like the market, Bitcoin is nothing for ages, and then it does everything in the space of a week, you know, and it's sort of like, and that's when it's like, I need more.

1:15:00No, no, no, no, no, no. Just, we're just gonna, you know, so that is the wrong lesson, right? And it's, and, and then actually, I actually make personally, my approach is, oh, it's gone down a little bit. Do you want, do you want to do some jobs in that? And then, and then, and then again, it's, it's a lesson that just takes time to be revealed and I hopefully am giving them the right one. I'm going to be listening to this podcast in the year 2042 and child service is going to be all over me going, did you teach your you degenerate how could you if only you bought shares instead you know like what were you thinking or the kids are listening to us going dad you're a genius that's why I've got three Lambos in the garage if I have three Lambos in the garage then I have failed I failed on many many fronts that was one of them for me I reckon we are pretty much done here Thank you for making it through the podcast with us.

1:15:56Thank you for spending some time with our listeners. And listeners, thank you for spending some time with us. Always lots of fun. Will you come back next Friday? You know it, 100%. I will look forward to it. In the meantime, thanks for listening. Enjoy the rest of your weekend or Tuesday afternoon. And full 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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