Mailbag: Is the ARKK ETF the best way to play AI? September 14, 2025

24:47By the way, the native experience is great because you can actually then really harshly, and I mean in a fair way, but, you know, really firmly look at it and go, no, that's rubbish, no, that's rubbish, no, that's rubbish. Just maybe keep your mind open enough to say which are the ones that actually do pass that. Amazon during.com, right? Easy example. I own shares, everyone knows. You know, could you have at some point gone, .com's a disaster, but a couple of companies are actually doing okay. Maybe I'll keep an eye on those ones. So, yeah, look for the exceptions, but use the knowledge absolutely because you'd be mad not to as long as you can keep it in some sort of proportion.

25:19Yeah, I just add to that. It's learning the right lesson as well. Such an important phrase. So the right lesson from the.com, I learned this the hard way, right? gosh, it was embarrassing that I lived through that and am not now worth$100 million. Like I'm so, like how, how, right? Like the internet was invented and I stuffed around and a few dodgy Aussie tech companies because they had, you know, I was 20, so forgive me. But, you know, it eternally frustrates me. I'm not missing the next paradigm shift. That's all I'm saying. But the lesson there wasn't tech is bad or the internet is a dud. No, the lesson was speculative mania is dangerous.

26:05Bidding up companies to insane valuations that not only have no revenue but don't even have a fully fledged business model, that was the lesson. And you could have learned that lesson without the internet ever coming around. Like we've had that lesson with bicycles. I don't know, I've written about that before on the blog, if you want to forget the title, but it's just there was a bicycle bubble back in the 19th century. Because, you know, they were invented and everyone decided they had one and all these startups started making bikes. And they were all, almost all of them disasters. Yeah, yeah.

26:38And does that mean that the bike as a technology was a bad thing? No, so that's, my point is learn the right lesson, right? And the right lesson from that particular era was when a new technology comes along, there's a big scramble to try and prosecute it and make most of the opportunity. And there's always a bunch of what I describe as affinity scams. They, and that was the lesson. There were mining companies that were putting.com after their name because they had a website and they knew cynically enough that if they put.com, their market cap would go up 20%. They would literally have a$10 million extra valuation just by putting it.

27:19So they did it. And so all of the grift comes into it, all of the scam comes into it, but that doesn't mean that there's not a nugget of truth to it. So I'm fighting very hard to go to an analogy I want to, but that is the lesson, I think. And the person that goes, all this internet thing is rubbish or all technology is rubbish has missed out in a once-in-a-generational wealth creation opportunity because of the noise and grift that surrounded the early part of that. yeah draw your own parallels with what may or may not be happening today can we go to an anonymous question mate so here's a question from Anon who starts with Anon please I'm going to suggest I hate you Anon not because you're anonymous but because you spell please P-L-Z and I figure that's probably someone younger than me so I hate you by extension and you're anonymous so I can't know whether you're young or not firstly thank you both for this great pod says Anon greatly appreciate your generosity in sharing your knowledge and experience.

28:21Try and stop us, as Ram might say. I'm also a member of Share Advisor and Dividend Investor, both great resources. Thank you. Andrew was the lead advisor on Dividend Investor. Pull one out for Dividend Investor. Way back in the day, exactly. Here's my question, says Anon. I recently listened to a Cathy Wood interview. Given the artificial intelligence invasion that's underway, what do you guys think of her ARK ETF, which gives exposure to 36 highest conviction stocks in, quote, innovation, in, quote, including Tesla, Coinbase, Robinhood, Roku, CRISPR, Palantir, Archer, and you're all Shopify, Roblox.

28:52It's a managed fund, and I'd be keen to hear whether you think its performance is worth the high fee. If not, how would you recommend we get exposure to this rapidly developing yet vast AI space? Thanks again for all your hard work. Cheers, Anon. Ram? So Cathy likes to swing for the fences, right? And like to be fair, since inception, it's done really well, but it's well below the peak. So it's just the nature of that style. When you back very nascent technology's early stage, there's a lot of failure, there's a few big winners, and sometimes those big winners can really make it all worth the while.

29:35And over time, particularly if the thematic is correct and you've got the right exposure to it, you can do incredibly well, but it's also likely to be incredibly volatile. I mean, you know, so if she had this fun back, speaking of the dot-com boom and bust, I'm sure she would have had the, like, the late 90s would have just made her look like a rock star and then for a while she would have looked very terrible, but maybe in the full arc of time it's like, yeah, okay, it actually worked out all right. And I suspect that's probably what's going to happen with art. So it's not for me. I it's just not the style that I do it I don't know how it's going to go for her and the team but I know it's going to be pretty volatile and and if you're a if you if you're happy with that and you think that overall they're directionally right then then by all means do it but But, you know, I don't know.

30:37I'm trying to be fair and balanced because it's just like she may well look in 10 years' time as one of the most incredible investors all the time. And I'm not even saying that just as a pure backside covering exercise so I don't look silly. It could actually happen. When you play high-risk games and you're like someone walks into a casino every day and puts$1 ,000 on a particular number on the rule that will and wins, right? Was it a great strategy? No. Did it work? Yeah, it really worked. And even that's a little bit of an unfair analogy with Cathy. The only other final thing I'll say here is just, and you and I have mentioned it not just in relation to ARC but in terms of all thematic ETFs, is that they, the thematic can be right, the investment can be terrible.

31:22Introduce the analogy of the steam engine, introduce the analogy of the aircraft, introduce, you know, et cetera, et cetera, et cetera. There's all kinds of thematics that have been absolutely true at a broad level, but in which it's just been a black hole of investor capital, which just sucks it in and never spits it back out again. And the lesson there is it tends to be that, you know, two things can be true at once. They can be incredible new technologies and opportunities, but it just might not be very great for investors. I suspect that there's very, the future's unknowable, but I suspect that there is a good part of that with AI right now.

32:01I think that we are probably over, there is a wall of easy capital going towards these companies and they are not, they are spending it. And we may find that in the future that we've really overspent and the returns just aren't there. And at the same time, AI as a science continues apace and all these incredible things happen, but it doesn't mean it was a great idea to build 400 giga data centres in the middle of the Nevada desert, you know, which took 20 years to reach capacity and have since been superseded by better chips. Like just all of that can be true. So I've given this mention before.

32:41It's a shout out to Joe Maga, a former colleague of ours. He put me under this book and it's a game changer for me, honestly. It's called The Gorilla Game. It talks about investing in tech. It was written in the 90s before the internet, Oh, before much of what we saw, how the internet unfolded. In a nutshell, what it's really saying is a lot of these industries tend to be winner-take-all or winner-take-most kind of industries, and that it's also very, very difficult to identify them early on because there's a lot of competing prospects. They all look pretty good. And they basically make the case of wait.

33:15Wait until a dominant player emerges and then go all in. and it's hard to do because at that point it seems obvious that they're the winner and the share price is up 10X and you go, oh, it's too late. You mentioned Amazon before. There was a classic, was it Forbes article? It said Amazon.bomb and they just said what a disaster, bleeding cash, terrible and worst investment ever and it worked out really well. By the time it was obvious that they actually had a real, they had something special. The market recognized it and the shares were up a huge amount. And yet, had you got in at that point, you would have made out like Bannon.

33:57Buffett avoided tech like the plague until I think, I want to say 2012, when he made a massive bet on Apple. And at that point, Apple had, you know, it was no secret. Apple was a great business and he would have, he paid much more than what he would have had he invested five years earlier. But he invested at a point where it's like, no, this is obvious it's going to win and it's obvious it's going to keep winning or very probabilistically so. And he did very well. So that's not for me telling you how to do it, but it's something, it's how I like to do it. And I think that there is sense in it.

34:31So for me, I'm very bullish on AI, generally speaking, but I have no direct AI exposure because I can't, is it Anthropic? Is it OpenAI? Is it Google? I don't know. Is it something that we haven't even heard of yet? When it becomes super obvious, it could be a very different proposition, right? Not even super obvious, but when, because nothing is certain, but when the probabilities radically change, where it's sort of like this has gone from a 50-50 coin toss to maybe there's an 80 % chance here, different story, right? I will make some very aggressive bets and I'll be doing it at a point that feels like it'll be at a record high and it will feel like I'm too late.

35:12but if I'm right, I'll still do very, very, very well out of it. Yeah. Amazon, by the way, Amazon.bond was a Barron's article written in May 1999. Yeah. I've gone back and looked at the share price,$2.97 split adjusted, now$230.33. And the article's worth, just for the fun of it, and hindsight, it's easy, right? It's perfect for the fun of hindsight. It'll be doing our podcast, I'm sure, in 10 years' time.

35:37Here's the quote from the article. Quote, just over a month ago, the stock market was indicating stating that Amazon was worth a remarkable$36 billion. The Bezos' own state was worth$13 billion. But since early May, a lot of investors have been learning that a good story does not always make a good stock. From an April high of$221.25, that's when, by the way, share prices kids used to be in fractions in the US, Amazon shares have been sliced nearly in half to$118.75, cutting the company's worth to about$19 billion and reducing Bezos' fortune to$7 billion. The stock could fall a lot further. Remember, adjusted for stock splits, These shares worth just$3 apiece when they were first issued to the public two years ago.

36:13Dot, dot, dot, end quote. By the way, that fell to$19 billion. It's now worth$2.3 trillion. And with plenty of runway in front of it. And plenty behind it. I mean, the SOC went up tenfold between 1999 and 2015. And your point about I've missed out went up another 10 times after that. And I would say that latter multiple was better on a risk-adjusted basis. Yes, 100%. It's very easy to say I bought into Apple when it was Wozniak and Jobs in a garage. Like, yeah, but that was - And you were going to be the world's richest company in one day. No, you didn't. No, you took an incredible amount of risk and it paid off.

36:55That is, that's, I chalk, those kinds of investment stories, I chalk up to luck in the first instance and credit, in the ability to hold through. That's where I'll give the credit. The far more impressive feat is to go in after it is because you have to get over so many emotional hurdles there as well. Again, there's another analogy I could draw, but I won't. Thank you. Speaking of Apple, right, so I just went back to the numbers. The iPhone was launched in, oh, I've lost it now. 2008? 2007. Yeah. Whatever it was. And let's say you wait until 2009 to see how well it's gone. The shares between – well, so you're right.

37:38If you go back to – this thing listed at$0.07 a share split adjusted, right? So it's now$226. So phenomenal. But if you'd gone 2007, hey, the iPhone might be a thing and you waited for five years. 2012, right, three generations worth, this thing is flying,$20 a share. Apple is now$226 a share. You had a tenfold increase. Even if you go five years, this is going to be massive. I should buy. It's even bigger I should buy. It's even bigger I should buy. I was probably too late now. No, tenfold increase from there. And let me go back to ARK if I can, mate, because I looked up ETF.com. And here's the – I'm pretty anti-managed ETFs because they tend to be thematic and cost you money or whatever.

38:17Here's a direct quote from ETF.com. Quote, ARKK is the code. They use the code. You know my thoughts on that. Is up 321%. This is, by the way, as of – I should date stamp of the article. it is the 22nd of July 2025 so it's a cup two months old ARK is up 321 % since its launch in 2014 beating the S &P's 280 % return over that span but it trails the NASDAQ which has returned 508 % end quote so it's just worth so you asked about the ARK ETF you asked about the theme I don't love I wouldn't do I wouldn't try and chase the AI theme Even those companies you mentioned, do you know if they're going to capitalize on the theme or someone else is going to win?

39:03Don't know. Are they reasonably valued based on the theme? Don't know. What's Tesla worth? Maybe you think I have a view. Okay, what about Coinbase? Do you have a view on that? Okay, maybe. What about Robinhood? No. Roku? No. CRISPR? No. At some point, you're betting on a Cathy Wood's ability to pick stocks and get the themes right herself. I would say thus far, in 11 years, she's trailed the market, NASDAQ. If I wanted to... Now, I'm going to say that. I'm going to talk to the other side of my mouth and on. I think net tech is going to continue to be huge. I think we're in the first innings of the explosion of technology in general.

39:36I'm very happy owning shares or units of the NASDAQ 100 ETF. Why? Because the fees are relatively low compared to ARK. I'm getting the whole lot. I'm not trying to pick winners.

39:48Who's going to win AI? The ones Cathy thinks? Maybe. Something else? Maybe. Might be listed on the Chinese exchange? Maybe. But I would rather have exposure to the NASDAQ 100 than try and pick someone else's ETF. I don't have any issue with Cathy Wood. She's doing her best. Every fund manager is. She's charging three quarters of a percent to underperform the NASDAQ. So far, could change tomorrow, as Ram says. Why pick winners if you don't have to? If you're not going to pick the individual stocks yourself, I would just go with the index. I just make one point that's not really maybe adjacent to what's being discussed here.

40:18But even when you do get the winners, it's just you talked about Apple there, so I had to pull it up to have a look. and isn't it easy to go, wow, wait a sec, let me just fact check Scott here. What did he say? He said that I could have bought it for$28 and now it's$228. Wow, that's incredible. Yeah, it is, but I bet it didn't feel that for a long time because between point A and point B, I'm just eyeballing this on the chart, but there's at least a dozen times where it had a gut-wrenching fall. Yeah. Gut-wrenching. In fact, you could have even bought it at the height of the market in 2021. This is back in the easy days of free money and high valuation, post-COVID stimulus, et cetera, et cetera, et cetera.

41:05$176 you could have bought it for. It's like, well, it's$226 today. I still did really well. Yeah, you did, except along the way it went to$120. Now, how many people, hand on heart, would go, yeah, that wouldn't have bothered me. I'm a long-term investor. Yep. Aren't we all? You know? very few people can stomach that. And that's the thing you've got to wrestle with here is that even if you're right, you're going to have a lot of doubt along the way. And it's not like it just dropped and then next week it had recovered. It's like, no, you bought at the top of the market in 2021. You didn't get back to a consistent sort of free and clear until two years later.

41:48And even then it was really three and a half years before we sort of like definitively sort of beyond that sort of threshold. And that's a lot of sleepless nights. You looking at yourself in the mirror, your partner telling you you're an idiot, the market telling you're an idiot, and you were right, and you were right, right? And so that's why there's not many famous investors out there, frankly. Yeah, correct. I'm going to get a question from Mel. Mel, I'm going to get you to sit down. Mel says, hi guys, congratulations on a brilliant podcast. You cover so many topics, but let's admit, there's a lot to talk about.

42:26I must confess, it's all a bit beyond my understanding, but I'm learning. You're sitting down, aren't you, Mel? Mel says, I recently began CFD slash Forex slash stock trading, and it's going really well. Kind of too good to be true, which makes me question the legitimacy of the platform. It's called Averion, A-V-E-R-I-O-N. and Mel supplies the URL. Do either of you have any knowledge of Averion? How do I know if my money is secure? Thanks so much, Mel. Now I'm going to start with the least, less bad news. Please don't trade CFD and Forex and stocks. Please don't do it with someone else's platform.

43:02It is going to make them money and probably lose you money. Some people might make money day trading, CFD trading, Forex trading. Please don't do it. Please, please, please, please, please, please, please don't do it. I know it sounds attractive. I know someone tells you something they can make you fortune doing and all you've got to do is five minutes a day and all that kind of garbage, they are taking you for a ride, mate, legitimately or otherwise. They're trying to get your business, not trying to make you money. So please stop doing it. Here's the worst news, Mel. I looked up a variant. I looked it up and the Money Smart website, which is run by ASIC, it's moneysmart.gov.au, says, warning, be wary of dealing with this business as it is unlicensed in Australia.

43:43That's enough. I then went to chat GPT and usual disclaimer because AI is AI and I said is a very unlegitimate and chat GPT said no a variant is widely regarded as high risk or potentially a scam key red flags across multiple reviews include lack of regulation misleading claims and fake history very poor trust scores opaque ownership and operation unreliable review quality and common scam patterns. Is it a scam? I have no idea, Mel. If it looks like a duck and quacks like a duck. Get your money out, mate. If you don't know that it's not, you don't have to know that it's a scam. You just have to be confident that it's not.

44:23If you're not sure, they don't deserve your money. You don't want to put your money at risk. Please don't CFD trade. Please don't try and trade Forex. Please don't try and trade stocks. Don't use someone else's automated trading system. They're making the money, selling you the system, not making you money. Hey, I've got a formula that's turned lead into gold. Do you want to buy it? Yeah. Why wouldn't you just use it? No, no, I want to help people. Like, mm-hmm, there's the first tell, right? So I'm sorry, Mel. I hope you're sitting down. I don't want to scare you. Right now you're probably freaking out and your stomach's, you know, just dropped.

44:55I don't know, mate. I don't know what your chance are getting the money back. I don't know what sort of scam it is. Maybe it's not even a scam. If you're not sure, get the hell out of Dodge. Get your money out if you can. Don't put any more money in. Slow and steady investing wins the race, not trading platforms and CFDs and foreign exchange. We all want to make money quickly. We all want to believe that it's true. Why? Because we're human and I don't blame you for it. So I'm sorry to be the tough love guy, but no, please take your money out. Invest for the long term. If you don't do anything else, you don't want to pick stocks, at least buy some ETFs.

45:24Buy them through a licensed Australian broker. I use ComSec. I use Perla. I use Shares. Any of those are fine. There's plenty of other good ones out there. Slow and steady wins the race, mate. The hare falls asleep behind the tree and ends up losing. So don't try and – there's no shortcut to any place worth going, as the quote says. Yeah, even if it's not a scam. Like, you know, you walked into the casino and you won. Walk out. Like, how do you beat the casino? If you go to the casino and lose, still walk out. Yes. Put your money down. But that's how you beat the casino is if you happen to get lucky, you walk out.

45:57What are casinos – the one thing – this is not even a peek behind the curtain because everyone knows this to be true. If someone is winning, keep them playing because sooner or later the maths will ensure that they win. So free drinks, free hotel. Hey, would you like, Mel, would you like to stay an extra night? We're going to put you in the penthouse. By the way, here's some more alcohol for you. Free is all on us. You know, anything to keep you there. And this platform, even if it's legitimate, which highly sounds very dubious and I don't know and I'll throw in a word allegedly or whatever keeps the lawyers off my bag, but it's just like even if it's true, they're just going to keep you there until you don't have any money there.

46:40So walk away. This is, if it's too good to be true, it's too good to be true. Yep. Just one quick extra one. I mentioned the ASIC thing. The ChatGPT, again, usual disclaimer, also cites the Financial Complaints Authority in the UK as noting it had to have any regulation there. So just please be very, very careful. They're the worst kind of people, these operators. Even the legit, there are CFD providers in Australia, and I won't name them again for legal reasons, but they're no better than drug pushers. These instruments are pure gambling instruments, but they're dressed up in the language of prudent investment.

47:20That's what, at least with the, I mean, I hate casinos, but at least they're not, you don't walk into the casino and someone goes, this is a prudent financial decision. No, it's a game and you're going to lose. Like, yeah, that's cool and I'm going to have a bit of fun and that's it. Like, there's no pretense here. It's actually why I'm kind of a little bit okay with things like meme coins. It's like, well, at least you're not pretending that you're anything other than, you know. Just so you know I'm going to rip you off. Buy my coin. Yeah, yeah, yeah. Yeah, like, at least you're not pretending on XRP or some nonsense where you're pretending to be something that you're not.

47:52I was like, yeah, we're an outright skill. There's nothing here except a bit of a cultural meme. It's like, ah, fair enough. Fill your boots. What makes the CFD provide registered Australian-based inclusive? And the big banks will offer it because they like making money, right? But it's the wrapping it up in the language of prudent financial decision-making that is the evil component to it. It makes me sick to the stomach what these people do. Yep, don't do it. Please, please, please don't do it. By the way, if they're going to be offered, they should be offered by bookmakers. Yeah. Yeah, if you're going to make this – let's differentiate it properly.

48:30If you want to try CFDs, that's fine. You can't do it through a stockbroker. You've got to do it through a bookie because, let's be honest, that's a gamble. And at least that way we'd be saying the quiet bit out loud, as you like to say. Yeah, the funny thing is if I want to transfer money to dot, dot, dot, insert Australian-based regulated licensed CFD provider here, the bank would send it across instantly, no problem whatsoever. Try to send it to another kind of exchange and it's just like 24-hour hold and it's all for your own protection and rah, rah, rah. I was like, you know, just look out, look after your own interests because a lot of these big financial predators are certainly not.

49:00So I'm really sorry, Mel. I suspect we've probably just put the frighteners up here and I apologise. No, it's good. It's good. I mean, your spidey sense was tingling and it was right to tingle and it's a good question. Here's the other thing that's going to be really hard, right? Like there's every chance you could continue, not every chance, There's a chance that you continue and actually keep making money. Like it's not mathematically impossible. It's just exceedingly unlikely. That's all. And I've run into people in the past where I've sort of made this point and they go, well, I remember you said that to me last month, look how much money I made.

49:38Oh, okay, well, I still think it's a bad idea. Well, I'm going to keep doing it. And then you stop hearing about it. And there's a reason you stop hearing about it is because, you know, it was all great until it wasn't. And it's great. How do you go broke? Gradually, then suddenly. Exactly. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener. Hey, here's one from Henry. Henry takes us to task a little bit. I think he's got... Well, I'd be interested to hear your thoughts. G'day, guys. Thanks for all your good work. Listening to your commentary on the Productivity Roundtable, I can't help but think you guys miss a big point about why these kinds of things need to happen.

50:19Yes, it's a talk fest. Yes, it's about photo ops. Yes, it's about optics. But that's the point, says Henry. Making actually impactful decisions that have winners and losers, i.e. policy changes, requires change management. Change management are not issuing a policy document saying this is the new way. Change management sometimes looks like warm and fuzzy, unproductive nonsense. I'm not saying it's the best way to do it, but good change management on a national scale probably looks like opening a conversation with stakeholders, building momentum in the media, pushing some new ideas quietly in the background and then yes having a photo op all before the new policy changes are published.

50:55The 1983 economic summit held by Cork and Keating is often put out as a major milestone in building the case for the reforms that followed. I'm not confident this summit will lead to the kind of big changes we need says Henry but I'm open to the idea that the process should look something like it does. So since you are critical of the round table what What does good national scale change management look like to you guys? How would you put forward big changes while shifting the national conversation and bringing the population with you? How would you get the stakeholders on board and move the opinion of the national electorate?

51:29Look forward to hearing your thoughts. Cheers, Henry. It's a fair challenge, mate. What do you reckon? No, it's really fair. I actually, yes. Yeah, you're right, Henry. I mean, how else do you do it, right? You've got to have a good faith conversation. You need to hear different perspectives. You need to weigh it all up. So it is easy to be cynical and cynicism is the easiest way to look smart when you're not. And maybe I won't speak for you, mate, but maybe I do sort of hide behind that at times. So I think it's a really fair criticism. Where the cynicism comes in is if that was the genuine intent, I'd be much more sympathetic to it but I've just been a observer of politics for long enough to know that it is actually entirely, no, no, no, no, no, let me walk, I'm doing it again.

52:21It has all the appearance of theatre and no substance. And it's also, it's kind of like it's absolutely right to engage stakeholders but not, you know, when we're trying to have a roundtable about the best way to design a chicken coop, let's not ask the foxes in as a stakeholder. You know, like that. So it's sort of like when you look around the table there, I mean, I won't name names or anything like that, but a lot of the people that were there was kind of like, I don't care what you think. You are not because of who you are, but because of the vested interests that you represent. These are decisions that need to be made in the public interest, not in the interest of your particular lobby group, not in the particular interests of your business.

53:06Yeah, okay, I mean, give us your feedback. But unfortunately, it's the people least worth listening to sometimes have the biggest platform, right? You know, it's like saying, hey, we're going to regulate the banks. Let's get the banks in and see what they think about that. Well, they're going to be against it. Not that they don't get a say, but they certainly don't get the majority of the say. So, Henry, you're right. And the better question is, well, how would you do it? Because that is such a great challenge because, again, it is super easy to snipe from the sidelines and go, it's all wrong, it's all dumb.

53:45And it's like, okay, well, how else do you do it? Oh, I don't have any answers. Then you're on much shakier ground. So I love that challenge and I haven't thought about it, but, hey, let's shoot from the hip here.

54:01How would I do that? I guess part of it would be let's have a conversation, but I would also probably try and structure it more in a debate format as opposed to just these, you know, debating is such a wonderful art, man, and people are really good at it who focus on that. There are rules that you can put around that in a way to make sure that various rhetorical techniques are not exploited, to make sure that, you know, you minimize and mitigate things like straw man arguments and, you know, all the rest of it, and actually have a really genuine good faith debate. And then I suppose have any conclusions that are reached, be able to be supported by the points and facts and issues that were raised there.

55:07I guess I'm talking out, this is the danger of thinking on the fly, but I guess if you boil it down, Henry's probably going, so do what they're doing but just do it better. And yeah, yeah, probably. Well, I'd be interested in your thoughts, mate. so i

55:29i i'm a big fan of pragmatism so i get where you're coming from henry 100 % get where you're coming from you do what you have to do to get done what you need to get done right and so this there's something to that on the other hand what we're also really saying is the only way you can make meaningful change is to lie to people and have this charade so that they feel like they're part of the process and on a pragmatic level maybe on an ideological level and and you'll put around we don't have to be in that room so we can we can say whatever we want on another level it's like well if you're just gonna if you're just gonna try and snow me and that's what you're gonna do there's this entire optics photo op rubbish so that somehow i feel better about it and that's that's the contempt with which you're going to treat and that's probably a bit harsh but if that's the way you're going to treat the australian electorate lie to us pretend so you and just shepherd this thing through and say, see, I made it all better.

56:19That doesn't speak well of them or speak well of us. So I wouldn't start there. Here's what I would honestly do. I'd go back to RAM. Well, I don't know what needs to be done in public, honestly. You used the Hawke-Keating example, good one. John Howard did the GST by base exam. We're going to do it. I'm going to spend 18 months talking about it and we're going to implement it and ask you to vote for it. I mean, there was no GST roundtable. where we had a debate about whether or not it needed to happen. We had a politician who had a view and prosecuted that view and made it happen. If you want to take the other side of politics, look at Gough Whitlam's changes in 1972, I think it was.

56:58You know, the kitchen cabinet changed where, you know, massive chunks of change were pushed through by a bloke who won the election and said, right, I'm going to do some things. You know, would we have had Medicare, Medibank, if there'd been a national discussion, debate, had to have people in a room, whatever? I don't know. Now, you could argue that maybe Whitlam still keeps his job. It doesn't get thrown out if he was more popular, and maybe that's also true. I think optics are important, Henry, but I think optics should be based in my perfect world, utopian world, in actual real conversations.

57:28If you want to have a round table, have a proper round table. Invite people with different views and express those views as Ram says. If you want to have it just so you can pretend there's some sort of consensus and pretend somehow it's okay and shepherd the Australian public by lying to them, I don't think I can sign up for that. and that's kind of my main issue here is I am a million percent sure the Treasurer and the Prime Minister's minds weren't changed by the roundtable one iota, right? Same as the Royal Commission. You have a Royal Commission. There's 35 findings. The government's committed to implementing the 11 findings we agree with.

57:59So really the Royal Commission was a sham. You were happy to do those 11 things anyway and you didn't do the things you didn't have to do. That doesn't seem like a great way to hold a Royal Commission. Now, normal governments do that, by the way. Some are good and they implement all or most of what gets recommended. Really? Yeah, most of them. Okay. But, yeah, I can't remember them all. Well, the Banking Royal Commission, notable exception, as you probably are alluding to, mate. Shocked. Yeah, I know, right? So, I don't know, Henry. I would like to have conviction politicians who cared about the issues and I would like to have conviction politicians who cared about the issues have a very real conversation with the Australian public about why it's necessary.

58:38There was a great – I'm going back a million years and I won't be able to find it so I'm not going to look for it. National Press Club Addressed by Bob Hawke and John Howard together. And I can't remember the occasion. It was probably 2000s, I think. I can't remember now. And basically they kind of sat there on stage and agreed with each other, which they always do after they finish politics when it starts becoming that ridiculous adversarial rubbish that we put up with. And I think it was Howard. It might have been Hawke. But the other guy agreed. I think it was Howard who said and Hawke agreed with him.

59:03Basically the Australian people will get behind a reform if they understand it and believe it's fundamentally fair. And that's always been my yardstick, whatever level of politics you're on. We need to make this change because. That's the conversation. Put your case forward. Right? Yeah. And if you can't convince people, then you haven't done a good enough job selling it or maybe it's a terrible idea. But that's kind of got to be the starting point. I don't think we can do the whole pretend debate, pretend roundtable, people in a room talking nonsense. And by the way, Chris Rich, I'm a massive fan.

59:37I've said this before. He was there. I don't think the treasurer had stacked it. I mean, he had people from different parts of the world. But the other thing he said, oh, I'm going to make the change we've got a consensus for. So what you've done is - Certainly nothing. Right? Or the things you could have done without the roundtable because there was already a consensus and no one was going to object to it anyway. Yeah. So, Henry, I would - if it was a genuine roundtable and if there were genuine outcomes and disagreeable outcomes but outcomes and the Treasurer took those outcomes and said, great, I'm really glad we had that conversation, my mind has been made up or changed in these important ways, they make a really good case I'm going to go and do it, to Ram's point about the debate.

1:00:10I think that's great. I think that's really, really great. You know the example, Henry, would be we have a one-party state and every year they have a sham election where they put up some people and have the appearance of democracy. There's two parties, Russia or anybody, two parties. It turns out that 104 % of people voted for Vladimir Putin again. How about that? We had an election, though, and so the photo op was done and the pretend competition. We had a roundtable. We decided that Putin should deserve another term. Now, it's not that in any way, shape, or form, and I'm not suggesting that two are analogous other than in style.

1:00:47It's not happening that way here. The impacts aren't as important here as they are in Russia where there's, you know, effective dictatorship. But where do you stop the photo op to do something you've already agreed to do thing? So I kind of get your point, Henry. I get politically why the government wants to do it that way. I'm sure the opposition would want to do it exactly the same way for exactly the same reasons. I just kind of hope we'd hold our politicians to a slightly higher standard. Is that reasonable? Yeah. It's also, it sounds elitist, maybe, I don't know, where we feel as though every opinion is equal and valid and we must hear it all.

1:01:25And it's not to throw shade at any one person, but it's like if I'm going to, I don't know, put an extra story on my house, I'm not going around the corner and asking the baker what their opinion is. It's nothing against bakers. I mean, they're my go-to when I need to know how to make a croissant, you know, or something like that. Yeah, yeah, yeah. But it's just like you see it all the time. It's like, hey, on the news is a classic, right? Here's some really complex, nuanced macroeconomic considerations. Let's see what, you know, Ted, the cafe owner, thinks. It's always a cafe owner, yeah. Who cares what they think?

1:02:02And there's nothing against them, but that's not their expertise. So if we're going to have these big conversations about very complicated things, there have been fields of study where debates have been raging for decades, where there's reams and reams of data and analysis. And reasonable people can reasonably disagree. And there are two sides to a lot of these, often more than two sides to a lot of these things. But it's not like a new, I think it feels new to us sometimes. Yeah, hey, we should talk about this. not realising that in 1642 this debate was had and it's actually not progressed since then because it really just comes back to a certain, you know, worldview as to which way you prefer to go.

1:02:43But let's get the experts involved in this. Like we're talking about tax. Well, I'm sure, in fact, I know for a fact there's a whole bunch of academics in the Western world that have spent their whole careers talking about this. A lot of them I'll fundamentally disagree with, right? But at least they're in the arena and that they've got a view to be had and let's get the other people who have. And a considered view, I should say. And the considered view and then let's have the discussion. Again, let's not invite the fox to the round table on the chicken coop. It's just and let alone or to make a better analogy here, the guinea pig that's got nothing to do with either of them, right?

1:03:23Like it's so like and wouldn't have a clue either way. Going to build a coop, guinea pig. Do you think I should build it? Yeah, exactly. Yeah, we're thinking of some really radical tax reform policy here. George, you used to work in a, you know, you used to work at the local tip. What do you reckon we should do? It's like, he doesn't get a say. He doesn't get, and much in the same way that I don't get a say, if your car's broken down, don't come and knock on my door because I've got no insights to offer you. The mechanics roundtable where they decide how to fix cars and Andrew and Scott get invited along.

1:03:51Let's get Andrew and Scott to see what we do. Oh, I reckon we should do this. You do know how an internal combustion engine, a what? No, I don't. No, but I just don't like. Have we tried replacing the blinker fluid? That might help. Like it's madness, right? Yeah. I mean, I do. I do. Actually, but having said all of that, I do sympathise with Henry's view that it is a noble intention and if it was done a little bit better, I could get a bit more behind it. And it is wrong to be overly cynical, but it's hard not to be, right? It's hard not to be. It sounds silly because the politicians spend their entire lives trying to sell us on things that we don't want and lie to us about things that we think we want.

1:04:31But I don't think... If government can only be able to do consensus in the first place and then has to dress it up as a pretend roundtable so they can get it through, I just can't... I said, if I was the politician, I'd do exactly that. Well, I hope I wouldn't. I can understand the urge to do that. Hey, guys, I've got this really important policy to push through. I actually believe in it. How can we best do it? Let's dress it up. But I get why maybe the ends justify the means. You know, if I was in charge of public health and I had to lie to everybody to get them to wash their hands by saying, well, I've got a roundtable of 25 docs and I'll agree we should wash our hands, would the ends justify the means?

1:05:07Yeah, because everyone would wash their hands. You know, and if I didn't do it, people wouldn't wash their hands, so what should I do? I mean, again, you make the point about theory and practice and if you had those people who were infallible and always perfect and they could be relied on, that's a benevolent dictatorship and you can dress it up however you want. The problem is the benevolent dictatorship ends up with a Russian dictatorship instead of, you know, whatever else and that's the situation you find yourself in. So I'm really conflicted, Henry. I instinctively have every, as a practicantist, every sympathy for your point.

1:05:35As an idealist slash someone who hopes that we kind of better angels or nature type stuff, I think we should hold ourselves and our polies to a higher standard, which is have a real conversation and then have the courage and convictions to go and sell the hand-washing thing rather than just saying, I can't really convince you, but 15 doctors in the room said you should, so hopefully you will. We all agree that it's a good idea. It's a pretty low bar. Also, too, I think that extraordinary claims require extraordinary evidence. You know, you can't just assert your way to dom... Well, actually, you can.

1:06:05Actually, that's exactly... You shouldn't. That's exactly how the political system works, right? But that's your point. You shouldn't, yep. I mean, I think, you know, I don't know, let's pick an easy example. Trickle-down economics, right? Yeah. We need to cut tax for the super rich because that actually makes us all rich. Now, maybe that's true. It's not true. But imagine it is potentially true. I've heard of it if it was, yeah. But okay, wow, that's a big claim. Where's the evidence for it? Now, it's not the burden of proof doesn't rely on me and every average citizen is just trying to get by to become an expert and then go about trying to debunk that.

1:06:37Like the burden of proof relies on you. You're going to make, I mean, I would extend to my favourite topic. It's like, we need a reserve bank to do all of this stuff. It's like, okay, but that's a big claim, all right? Maybe it's true, but you need to sort of, you need to convince me with some really good sound reasoning logic and ideally some empirical evidence. It's not up to me to debunk it. You're the one making the extraordinary claim. Not to get down that rabbit hole, but it's exactly that kind of point. So if you're going, and it happens all the time with economics in particular and tax policy, we need this, and someone says it passionately and they use analogy and they use story and it can be convincing, it's like, okay, but other than you saying that's true, what's the evidence of that being true?

1:07:26Show me the proof. And if you can't, then it's just like, well, then I'm allowed to reserve judgment or at least go, no, I don't believe you because it's such a, these aren't little things that just might impact one or two people marginally. It affects all of us and it impacts all of us significantly. So you better bloody have some good rationale and reason and logic and facts and data behind that proof. Otherwise, it's just who can shout the loudest and who can be the most convincing. I think that's true. The other thing I want to add though, mate, it kind of goes back to my EV rant that I had, I don't know if it was today or Friday, they all merged together.

1:08:04I think that's true. I think we should though require the same evidence for the status quo as for the potential change. Sure. Otherwise it's too easy. No, you're saying otherwise. Otherwise it's too easy to go, I'm not going to make this change unless you prove that it's necessary. I'm like, well, yes. And this goes back to your reserve bank point, right? At the moment no one's saying, you know, someone's like, well, you can't get rid of the reserve bank until you prove to me that your claim is right. And that's a very, very valid view. Sure. Except the same burden should apply to, okay, well, let's explain why the reserve bank is necessary.

1:08:32And whether it's tax, whether it's roundtables, productivity, the change absolutely should be justified and explained. but also so too should the status quo be rather than we won't change unless you convince me I need to change. Like, well, yeah, fair, but also let's put them side by side. Don't just prove the other thing is good or will work. A, prove to me it's better than the current, but also if you want to keep the current, show me this is better than what otherwise might be proposed. I think that's a really important one because status quo affects, I mean, maybe the burden of proof should be slightly higher for the change because we know what happens in the current circumstance because we have it, but it's not to say that, as you said, can you prove that a reserve bank is bad?

1:09:10No. Can you suggest that maybe it's not having the impacts it might be inclined to have? Maybe. And if we've got to change the new thing, I want to move to a, I want to get rid of central banks. Well, that sounds dangerous. Okay, what's it likely to do? Well, okay, what's the currency situation actually doing? We don't know. We can't prove it. Okay, well, then your defence of that is much less valid. Now, as I said, we know where we are now. Change is almost certainly more dangerous than status quo, so maybe the burdens of proof are slightly different, but it should be at least open to having the same questions asked of what we're doing now and what we're changing too.

1:09:43I mean, that's really where it comes down to me too. It's just I really bristle at the idea of trust us, you're too dumb to know, we know what's best for you. In fact, it's not that we know what's best and here's why. We know best and you don't even get to question it. That's what makes me. Now, maybe I or others who have a different view are completely wrong. It's like, okay, why am I wrong? Don't just like the Latins had three forms of argument. One was emotion, one was authority, and one was logos, which was logic, right? And too often these arguments, I'm going to forget the Latin now. Make me sound really smart if I could remember it, but I can't.

1:10:31But the appeal to authority is the worst argumentative thing, as is the appeal to emotion. In other words, it feels like there's an emotional component to it or big brother knows best, that's why. It's like, no, for me, Logos is always the way, right? You need to, if you, if the only thrust of your argument is I'm big and important or it's going to be scary if you don't or I'm going to pull on some greed or fear element of your human nature, then you are standing on extraordinarily shaky ground. And what's more, if you're going to like, if you're in turn are going to bristle because the people who ostensibly you serve and who you serve at their good grace, that's how it works.

1:11:23We elect people to represent us and then those people do things on our behalf. but if those same people who you work for dare to question it, it's like, well, they might be wrong. Why are they wrong? They've got the right to question it. And it's just the, no, you can't question that. But it's kind of important, isn't it? You know? No, yeah, yeah, but, you know, we know best. And that is, liberty dies by inches, not by leaps, is the saying. And it really is just those little things, little things, little things. and it's like I just don't think that things are super important can be left to trust me, bro.

1:12:02Yeah, fair. The appeal to emotion in Latin is argumentum ad passionis. That's it. And the appeal to authority is argumentum ad autoritate. Autoritate. There you go. Yeah. I actually thought there was another slight variation there, but anyway. There's one very cundium you might be thinking of, which is argument from modesty, appeal to modesty. Okay. Anyway, that's what. Okay, interesting. Yeah, yeah, yeah. I'm sure there's other things as well, but that's what I've... Google tells me while you were chatting. Yeah, Logos. All for the Logos. All for the Logos. So on that note, that very serious but important note, I think we probably outstayed our welcome in our listeners' ears, so we will give you four or five days to recover from what was a fun conversation and maybe create a little bit of hopeful anticipation for Friday's episode where we promise to bring you lots of good stuff, Probably some rants, probably some laughs, and hopefully a little bit of education thrown in with a chuckle or two.

1:13:00Mate, enjoy the rest of your weekend. You got anything particularly planned? Depends on the weather, I think. It's pretty miserable out my window at this exact point in time, but hopefully it's a few. Sunday morning. What's that? This Sunday morning. You're saying this point in time. Oh, sorry, yes. Right, right, right. Yes. Not Thursday morning, but Sunday morning. Yes, yes, that's true, I forget. I live in the future and the past and at all points in time. Marty McFly was right. Yep. Until Friday. Full on. Cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned.

1:13:35General advice only. Please speak to your financial professional to understand how it may pertain to your situation. Subscribe to the free newsletter at fool.com.au forward slash listener. The Motley Fool operates under Financial Services License 400691.