Productivity is finally on the agenda… November 15, 2024

33:13As long as the cuts are where there is very poor return on investment for us. And not just the dollar return on investments. You know, the social returns on investment, the environmental returns on investment. and all of that kind of stuff. If we can do stuff better, more effectively, I'm all for it. But I just don't know how it's going to be done in a way which doesn't – I mean, maybe the argument is we just go through this really difficult adjustment and we come out the other side. And I've actually got a bit of sympathy for that, but it's not pretty. And a lot of unfairness will sort of happen in all of that.

33:45So there's that. Here's the other thing, particularly in the Australian context, which is just such a politician thing to do, is to mandate productivity. It's the most, it's like trying to mandate love, right? Like it's dumb. You can't, here's the other thing. Anyone who has ever run a business ever in the history of the world has always striven for increased productivity. Not because they're an economist, not because they think it's going to be good for some national metric, you know, because they want to make more money. That's the incentive. So I was like, wait, I can, you know, let's go with the farm example.

34:21I can grow a crop and I can do it for half the input costs that I used to do it. Nah, nah, the government's not giving me any incentive. I'm not going to do that. Stupidity. Of course they're going to do it. You know, so all of these talk about, oh, we need to lift productivity. Yes, we do. But you don't, all you need to do is, I would say, the biggest, the lowest hanging fruit here is get the heck out of the way where you can. you know i read the other day in france it takes 40 days to start a business right it's four days in the us yeah now does that mean just give anyone a license in abn and off you go no of course again you got to be careful here because people live in this binary black and white world and i don't live there and the world doesn't exist there but but you you cannot as a politician as a treasurer if the most the most senior bureaucrat in the land you can do nothing to make it happen other than foster the conditions that allow it to do its thing and it will do its thing as technology gets better as practices and systems get better as business models refine and improve we will get it will be an inevitable consequence it you can't stop it from happening to get up there and say hey things aren't efficient enough we need more productivity right i just commissioned a report from kpmg that said prices will go down one and a half percent i mean like it's it's it's just stupidity it's a talking point they think it sounds good i'm just i'm just massively skeptical on on throwing almost a billion dollars at the states to lift productivity when when they when the trend of of the last few decades and beyond is just massively increasing efficient decreasing efficiency rather and and increasing waste and size and scope but maybe i'll shut up at one more point is maybe maybe the simplest rule is is you say do what you like but if you can reduce your budgets by one percent each year maintaining services that that's you'll get some kind of reward for that you do it however you like uh and maybe that's as it's as simple as it needs to be it may well be mate i i am gonna i i'm again a little less pessimistic than you a little less cynical um i'm just i'm gonna read from from the afr article that kind of they kind of broke the story um and i'm gonna read largely the whole paragraph because it's useful in terms of the sorts of improvements that actually could i think do some of that getting out of the way to your point right so i quote the new national productivity fund is a slimmed down version of the 5.7 billion dollars in payments to the states by the keating and howard governments i think i said cork and keating my apologies keating and howard governments from 1992 and 2005 for competition reforms such as removing restrictions on retail trading hours establishing the national electricity market privatizing government businesses uniform national food standards and deregulating dairy price controls end quote um and i think that's the sort of stuff you're right you're not going to be able to say you know magic wand be more productive but i do think if you if you incentivize some of that frankly you know the other thing about speaking of incentives politicians will always hoard power if they if they're able to right i mean that individually but i mean that also just institutionally and so if there is something we can kind of go hey guys time to let go of that thing uh let's let's make it you know and and i i struggle with productivity versus effectiveness a little bit so you think about education right we have seven state and territory governments all with their own education rules standards curriculums and everything else and on one level you go there's 27 million people there's probably what's that eight million kids maybe probably less than that um there really is seven different systems with seven different overlapping everything's to make that work and i've had a rant about university education in a similar vein by the way which i won't go into now but um you can well no you don't really except you then kind of go okay but at some level being able to look at and compare the success of those and be able to take the lessons and and learning from one to another is also super useful in other words if we only had one system of one education curriculum one education system you might look at japan you might look at the us you might say i wonder if we can do something and you go well different culture different society different everything else when it's new south wales versus queensland or victoria you see in theory you're able to go they're getting better results what are they doing differently and it does provide a national kind of competition is the wrong word because i don't think state should compete necessarily in that way but it does allow you to identify best practices in a way you can't do if there's a single system you know you talk about fish not knowing you know what is water it's kind of that right if you can't know the difference you don't know the difference So I really do get stuck.

38:54But the idea of being able to nationalize some stuff or as in make it not nationalize private businesses, but make things national that states were doing independently or to remove some of those restrictions. Those are some examples I were given. But that's sort of thing done again. In theory, if it takes some money to get done, would I assume be useful? Oh, yeah. Look, it's the execution, right? I mean, how many ASX presentations have you sat through where the CEO lines out this beautiful vision? And in fact, not a terrible one. Like, yeah, makes sense. I reckon if I'd struggle to come up with something better, I think you've got a great plan.

39:36But that's – it's kind of important, but it's also – okay, now comes the hard part, execute on that. So I hear what you're saying there, And it's sort of like, I agree. It's the execution of it that makes it super hard as well. And the other point I'll pick up on too is just to separate this out. None of what I'm sort of advocating for would necessarily be increasing privatization of government agencies as well. Right. And I know you weren't saying that, by the way. No, no, no. But it's sort of, I think my ideology is that government should do anything where there is a very significant social dimension to it and where it tends to a natural monopoly.

40:23That's where government belongs. you know just in other areas it doesn't work but especially when it's just some crony capitalistic sort of handshake and wink and nod to your connected mates who just extract all the wealth and run the thing into the ground and then you know it's like wait a sec i thought the private sector was better at running things and you look at aged care and you look at i mean telstra like i mean i don't know how many different examples can we point to it was just sort of like well the theory didn't play out there did it you know so i just i didn't make that point because i say with a lot of experience in arguing with my mates it's just like they like to bring up these kinds of things and it's like yeah but that's it's there is there's nuance there i guess there no i think that's exactly right i'm with you that's why i'm not a small government or a big government guy it's like you know if there are rules that aren't required by all means take them out if there are obstacles take them out um whenever you have an outcome that's not purely financial the private sector doesn't do as well because they don't they don't balance those things because that's how it's designed right but yeah private sector maximizes profitability that's what it does yep and if that's not the sole focus of a of a task you know do you want someone to maximize the profitability of the of the water network or do you want to have cheap clean available water to every home in the country okay well the city yeah okay so it's a ladder right well okay then maximizing profits not the task in this one now i i the only time i do disagree not disagree disagree the only wrinkle i would add and this is again i'm living in fairyland but conceptually ideologically i don't even mind if governments don't own those monopolies as long as they're appropriately regulated yeah sure it doesn't actually matter if you say to telstra you may you must do this thing you can have the profits but you must meet these standards then i'm cool with that too the problem is as and the reality is that we say well and this is governments by the way right think about the leasing of the ports on the eastern seaboard what do they do they basically wrote in monopoly conditions to the sale documents so they could maximize the price yep and on one hand you kind of go as a taxpayer do i want the maximum value for the port yes do i want the governments to literally write in anti-competitive rules so that i get just money later exactly screws me longer term that's all it does and what do they do it because they want to maximize the money so they can spend that money on election promises and other things now it is and this is why i'm there need be no we don't need to own those assets to regulate them well but because we tend to regulate them well we probably should default to owning them which which sucks right because we again if you're designing a perfect world if you design the right legislation you don't need to own them it's fine let people go and do those things i suspect sydney water for example i'm not actually not in sydney water you i think uh anyway it's up in would that be would that be more efficiently run with appropriate standards if it was regulated properly and owned by private sector probably yes you know they would find ways of cutting costs as long as they had those standards to deliver you must deliver you know particulates at whatever level and i don't know whatever the standards are i suspect there's a whole lot of waste in those government departments why because there's no real financial benefit to not have them so there's no feedback mechanism right exactly there's no feedback mechanism but it's also where musk is dangerous frankly because he will care a lot about the dollar value and he'll feel like government's to be i should i should reduce this number of jobs how can i do that what jobs can i take out rather than and that's not the wrong question except that when he looks at it i don't have any confidence he's going this is absolutely personal but it's my view um i don't have any confidence i say well actually that means that jenny from the block is you know going to get less services that feels bad to me it's like i don't care about jenny for the block i just want to get rid of and that that's the balance the government departments are responsible for so Why it's so bloody hard to manage them efficiently?

44:01Because how do you measure that stuff? And if you are in charge of outcomes, if you're a government department manager, you're probably thinking, if I had another staff member, I could probably do more of those things I'm supposed to do in the interest of the community. Someone's got to say those outcomes are good, but we're paying too much for them, or we're not. And that's where it's a really, really, really hard conversation. Yeah. Yeah. It's – there's no easy answer for any of this. I'm glad that it's being discussed. We definitely need to sort of course correct on a lot of these things. I just think it's going to be a lot more difficult.

44:38I think that things are going to be announced because the announcement sounds good rather than the practicality of it being good. And I think, yeah, just the execution of it is going to be much more challenging with a lot of second, third order sort of consequences and challenges and unintended consequences and the rest of it. So we'll see. We'll see. it is definitely having an impact though on sentiment, right? Like there's markets are going well. People like what they're saying and sentiment definitely does set the tone in the short term. So, you know, that's nice, I suppose. It's going up. It's going up.

45:16I mean, yeah, I think that's right. The other thing I would say, mate, for all that is you mentioned the unsustainable path. If I had any confidence at all that the savings would be used to put government balance sheets and P &Ls on a safer footing, I'd probably also be pretty in favour of it. If we just cut some costs, keep the debt where it is, cut taxes as a result and still run on this unsustainable path. Again, I'm not anti-tax cuts. I'd like more tax cuts too. But if it's like, well, we're going to save all this money, give it all back to you, and then still run the government into the ground, it's like, yeah, you didn't really achieve anything there, guys, did you?

45:49You just kind of, you know, there's got to be some element of let's fix the unsustainable bit, not just cut because it's unsustainable but keep it every bit as unsustainable because i'm going to use that to fund tax cuts for other people that's just that's where i also think it may be a fool's errand at some level because you've had this chance you've done the things whatever those things are and you still managed to screw it up because you didn't actually take the proceeds and use them to make things better yeah yeah well we'll see what happens motley fool money for more subscribe to the free newsletter at fool.com.au forward slash listener

46:25This is fascinating, mate, because free brokerage is about to land, maybe it has landed, in Australia. Now, free brokerage has been up until now the province of US brokers, largely because, and we need to be careful of how we talk about this, because they don't have a chess system over there, so they don't have to pay per transaction for the effective insurance or title that chess provides. so they can always you know their system is just lower cost of regulation this system is lower cost because it comes with less of that protection but the the charles schwabs the robin hoods famously um who say we will we just want the we want you as a customer and maybe even arguably as a product um we are going to give you free brokerage so you'll use our services and then we'll try and make money out of you some other way or make money off you uh by selling your information in detail we talked about that a little bit last week with um some of the order flow stuff but we're now seeing beta shares who has just bought self-wealth the uh the kind of discount broker i suppose it's the best way to probably describe them um roll into this kind of free or no fee they're kind of not free no fee broking um i do love the fact the regulators say in australia you can't something something's free you can say it's available for zero dollars isn't that the same thing i there is signal in that there is there is signal in that but still but is it i mean we we know because we know the difference i don't know if other people actually see that signal but anyway uh but it's just now saying they will allow people to buy australian shares with no fee which i think is just a really interesting uh approach now obviously they want to grow their user base um better shares happens to run a whole lot of etfs and i suspect They may have a design to get the customers and then sell them some ETFs.

48:19And they, of course, make a fee on those ETFs. The more people buy those ETFs, the more money they make. That might be part of it. But here's the quote. Quote, by removing brokerage on ETFs and now on over 300 Australian shares, we are furthering our goal to become the home of investing for Australians. End quote. It's just a massive step change. And I don't know that guy. I don't know that it's necessarily a good thing for investors. What do you reckon? No, it's totally not a good thing for investors. I mean - That's why. Well, the saying, I said it last week, but if something is free, you're the product, is the old saying, right?

48:57Think about this, just a purely simplistic level. If you've got a thousand customers and they're all paying you$0 per trade and you get 10 ,000 customers and they're also paying you zero, nothing's changed here, right? And yet, obviously, they want more customers. So, who's making money here? Now, that's a very good question. That is an excellent, reasonable question. Did the journalist who wrote this up in the article ask this question, Scott? I have not seen that question answered. There isn't that interesting. Like, you know. Can I say, most of these articles are written by press release just quietly.

49:38So, it would be press release with quotes. I'm not sure. I could be wrong. And I don't want to besmirch the journalist's reputation, but offer these things. I'll besmirch them. Do your bloody job. I'm sorry. I know you've got incredible pressures and you're not. I know. Look, I've got huge sympathy for journos, but it just, it is too important an institution. And just to sort of say, listen, we're too short chain. We're not making enough as an industry. So we're just going to cut and paste press releases. No, no, we need better than that. I'll get angry about that and rant about that all day long.

50:08Do your bloody job and ask questions. that's what you do that's your raison d 'etre and not even to think to ask that i just i i it's it's disgusting is what it is it's it's horrendous but you dear listener don't have to be in they wonder why people are so disillusioned with mainstream media right like you know things go too far on that front but i mean at the same time can you blame people right like ask that question, dear listener, to yourself and ask, and also ask this, ask this, if the difference between you being successful in your long-term wealth creation journey is whether you pay$10 a trade or$0 a trade, you're doing something really wrong, right?

50:52Like it is such a rounding error in the grand scheme of things as to make zero, like virtually zero difference. Like maybe you're some super high frequency day trader where that actually makes a difference. And if you are, you're going to lose all your money anyway, right? So brokerage isn't your problem. Brokerage isn't your problem. You know, it's ego and hubris and just a failure to understand like the reflexive nature of markets. So it'll probably be really successful. It'll probably be really successful, but it'll attract the dumb money. And I say that in the context of the movie, right? It'll attract the dumb money.

51:32It'll attract the people that – They make money because those people will be exploited in some way, shape, or form. Now, I would love beta shares to set the record straight here. You tell me exactly what you're going to do. But maybe there's a good reason or maybe – let me be careful here. There's definitely a legal justification for it, right? I'm not saying anything is doing wrong from a legal perspective. But it is a perfectly legitimate, reasonable question to ask. where's the money being made obviously that needs needs to be asked it's not being made through brokerage so it's obviously being made somewhere somewhere else and you have to ask yourself if that's okay now let me look in the mirror for a second because i do that every day i watch youtube i use google i use gmail i use google drive how much do i pay ask me how much i pay for that scott how much do you pay for that andrew i pay nothing you pay nothing so so here i am the biggest sort of um hypocrite out there but at least i know i'm i know what's is what's it called a faustian bargain what's the term faustian bargain uh that that's i know what's i know it's free because i'm the product i know you are mining my data i know you are monetizing that serving me ads all that kind of stuff serving me ads now now so so i've got so i'll just i'll be a little less extreme if you're happy to to but i know i know what the trade is here i don't think that they're making it as apparent to the potential users of this what the trade-off what are you giving up here and i think it's a worth worthwhile question to ask sorry mate i've ranted a lot no it's good no it's well no i think so i think that's true um i will say i don't think that's necessarily bad or at least yeah you can make your own you know you would make your own happily you have well no it's that you happily watch youtube right so you are you're accepting the deal knowing there's a deal and for you it's worth because you can pay money for youtube premium right yeah you are saying i'd rather watch the ads than pay the money and that's cool because they're giving you the choice and you're making that you're making the choice yep a couple of things for me though firstly um we know humans are overly rational and so just be careful what you you're giving up not you personally uh with with any free brokerage what you're giving up make sure you know what that is and make sure you genuinely value it because it can be easy to blase kind of free is really i wrote the word free in a in an email i sent to just as an article wasn't selling anything it was i think it was free brokerage actually funnily enough way back in the day and the open rates on that email were literally double anything else i ever send right and or and the only thing i put down to was the word free in fact i know it was free because i tested a couple different subject lines right and free was like free was like through the room and i just i wasn't i wasn't offering it i wasn't promising it i wasn't being tricky i just used the word free in a sentence in the in the subject line right yeah so we know free works and people are not necessarily going to consciously, rationally, think about behavioral biases, make those, you know, I know I'm giving something up.

54:30That's okay. Is it really? Do you really know what you're giving up? Are you really sure what you know? Yeah. Do you know what that impact is? Take social media, right? What are we, what is it costing us? Often our time, our attention, our peace of mind a lot of the time to have it free. So I'm not giving up much to Facebook. Facebook for free. That's good. That's a worthwhile deal. And I don't mind being used as a product. It's like, well, what else is happening? So there's that. And I think for me, mate, This is where I want to take a slight tangent from your point, which is absolutely valid, just to add one, which is think about what you will do as an investor when brokerage is free.

55:02I've said for a very long time, I'm pretty sure even discount brokerage, even 10 or 20 bucks a trade has been a net detriment to investors who otherwise would have traded or invested differently if brokerage is more expensive. Now, it's not a net detriment in the sense that it makes it more easy people it makes it easier for people to access the markets and and place their trades and save them money that's all good but think about what happens what do you do when something's free when there are no obstacles i've talked about stamp duty like this by the way in the past i'll use that as an example um for everything that people talk about stamp duty dead white tax and all that kind of stuff they're not wrong i am reasonably sure that stamp duty has saved in part well if not despite australia's current property circumstance the flipping craze that hit the u.s that kind of presides the GFC.

55:48We never really had to the same degree. And why not? Because it costs you 50 grand every time you sell a house and then buy another one. If you want to flip houses, there is a frictional, a really big frictional cost. So some people still do it, sure. But out of your$50 ,000 profit, you got to pay$48 ,000 in stamp duty. You're probably not going to do it. Now, maybe I make 100 grand. Okay, we lose half of that in stamp duty. That still sounds pretty expensive. You know, it just is a handbrake on overactivity. And so when it comes to shares, in the same vein, I think the cheaper brokerage is the less friction there is.

56:20And the less you have to kind of stop and think, if I'm going to buy BHP shares, I'm going to pay a hundred bucks brokerage, I'm going to save more. I'm going to really make sure I've got the right deal. Because if I get it wrong, I'm going to sell and pay another hundred bucks and then buy something else, pay another hundred bucks. So an incorrect decision cost me 300 bucks in trades. Now, that was always high by Warbury. Don't get me wrong. I'm not defending, I'm not saying we should pay that. I am saying though, that as individual investors, the turnover of shares is, I don't know, it's directly proportional.

56:45It's definitely proportional to the cost or inversely proportional to the cost. The lower the cost, the more buying and selling. Is that good? Well, to your point, in what universe is activity a determinant of investing success? In no universe. No. And so I do worry a little bit that the rush to this of, it's free. Why would I do it? I can buy and sell and buy and sell and buy. It's not like any brokerage. See, it's fine. And you think, well, is that really better than saying, oh, it's going to cost me a lot of money. I really better to be sure um i'm going to put some money i've got 100 bucks in line here for a trade i really want to make sure i've saved the money i know what i'm buying i'm happy to stay here because i don't want the frictional cost again of selling it just calms the mind slows the process and i think there's much much more value there than is otherwise apparent when we say cheaper brokerage is better because it's cheaper i just think that misses a lot of that point i just it comes up a lot actually we get it a few times in the mailbag as well look when trying to choose a broker keep it simple.

57:39Australian based is always a good, a good starting point, right? You don't want something that's, that's, you know, run from the Bahamas and they're out there, right? So, so yeah, Australian based, chess sponsored. I also think the features matter. I like, I like ones that give me all the ASX announcements and financial history and things that just information that'll help me make a decision. And yes, reasonable competitive brokerage rates, absolutely look look at all of that kind of stuff and then and then you'll narrow that down to probably 10 any of them are good options like i i just i don't have the bandwidth to argue with one might be like 0.3 of a percent better than the other they're all going to do what you need it they are a means to an end and the end is giving you the capacity to take a small ownership stake in a very high quality good value business that's the game yeah this is my i said it before i'll just underline it again here it's whether you pay ten dollars zero dollars fifty dollars per trade is not going to be the determinant to your investing success so i'm not saying ah it's all complete waste of time it's just like it's number 487 on the list of things that you need to spend your very precious time and effort focusing on as an investor spend if people would only spend as much time worrying about what they're actually buying rather than how much it costs to do the trade you know we would all be we would all be better served so think about this stuff get a good rate if you can the lower the brokerage absolutely that matters as long as it's australian based chess sponsored and some cool features on the site fill your boots but then spend it don't don't waste a second more of effort on it it's not worth it now sit down i uh i pause only to remind you that we haven't got much time left in the podcast because i'm to ask you about the B word.

59:29And listeners, I apologize in advance. I keep Edward Bay most of the time. This time he said he wanted to talk about Bitcoin. Well, I did say, look, are you sure? Are you sure there's something to even talk about? I mean, the price is moving, but it doesn't feel like it's a big deal. There's not much going on. And it's like, no, no, I really want to talk about it. So sometimes because it's in the contract, I have to mention straw man and every now and again, I have to let him talk about Bitcoin. Mate, so I will set it up by saying not much has actually happened in terms of decision-making. But there is a lot of noise and news and potential moves, and people are definitely buying Bitcoin on the expectation of things happening in the future.

1:00:06The price has been rising pretty strongly. You did mention to me off-air that last time we talked, we did a special Bitcoin episode. I'll let you share the details of that, but it was an auspicious time to be doing it. What's going on in the Bitcoin world? What's actually happening? What do listeners need to know? I mean, it's a really interesting lead-in there because you're right. every 10 minutes a batch of transactions get bundled together and added to the blockchain and that's been happening since 2009 and nothing else like what's changed yeah and and so it's a really good point i mean i mean i'd kind of argue that's kind of that isn't that cool but i don't have to worry about who the ceo is or who they're sleeping with or whether they've done anything dodgy with you know like this is it's actually a thing of beauty that there isn't anything like that but i at the same time i would say well actually there it's there's a couple of noteworthy things we don't need to spend an hour on it sadly but but i'll make i'll make some observations uh we just overtook silver in terms of market cap uh say we we it's this is this is satoshi gave this gift to humanity scott this is for everyone right so so bitcoin overtook silver yes keep going We overtook Saudi Aramco.

1:01:18Bitcoin just overtook Saudi Aramco, yeah. So if you list all of the assets in the world, you know, gold, NVIDIA, any asset, right? Cash. It is cash. It's actually, it just overtook Canada in terms of the amount of, if you take every Canadian dollar in existence, including just the ledger entries on banks and like what they call M2 money, Bitcoin just overtook that in value. Yeah. It's the now, I think, eighth or ninth most valuable asset in the world. So that's interesting. The touted Treasury Secretary, head of the SEC, and some insane number of people in Trump's inner circle and lineup of hardcore Bitcoiners.

1:01:59And let me underscore this point. Bitcoiners, not crypto. Bitcoiners. Crypto bros? Yeah. And it's$1.7 trillion,$1.8 trillion now. Now, the ETFs which launched earlier this year are now, I think, the third or fourth biggest ETFs in existence. They have taken in more money and managed more money now than any other ETF that's been launched in the last 10 years. So they've done more in 10 months than every other ETF has done in 10 years. There's some signal in all of that. So I guess that's what's noteworthy. We had this really great question on the mailbag last week, a week before, where someone said, Andrew, put forward the bear case.

1:02:46You always go on and on about how you should be able to present the bear case. And I sort of said, well, one of the bigger ones, although it was changing, was that government's going to fight it. And regardless of what you think of Trump, and for the record, not that my opinion matters that much, but I'm not a fan. I'm really not, even though this is a massive silver lining for me personally. I'm not a fan. I think he's someone who clearly doesn't get it. He launched his own coin. He's just saying what people want to hear. So he's no friend of Bitcoin in a way. However, his administration has adopted an extraordinarily positive posture, more so than I think even the most ardent bulls sort of expected.

1:03:27So this was always going to happen, but it kind of accelerates what's going to happen. So it's noteworthy. and the only other thing I'll say and this is I said to you off air the reason to talk about this is not to not to fan the flames of FOMO not to get everyone excited maybe a little bit to do a victory lap because it was January 6th when we did the Bitcoin special and the price was$30 ,000 so it's almost 5x'd since we were there sort of saying $30 ,000 Australian dollars was it? $30 ,000 Australian dollars wow there you go Yeah, yeah. It was the very bottom. Just when FTX and all that, like we timed it perfectly.

1:04:12Very, very good, Your Honor. Oh, man. The other thing is we would have pre-recorded that once. I don't know if we pick the bottom, we forecast the bottom. We are geniuses. So here's the thing for someone listening to this now is that, and this is the reason, the only reason I really wanted to bring this up was to say, because my phone only goes off when the price is is ripping and yeah and and the usual response is for those who are not familiar with this is that you go oh it's 130 almost 140 000 us australian dollars a bitcoin i'm too late uh you're not too late it's going up forever right so that's the first point to make and and i'll just i'll just put some some meat on those bones we would make you and i that same statement with a perfectly straight face if we were talking about an etf yep nasdaq etf it's going up forever yep australian economy it's going up forever so it's the same what we don't have time to go into why that is but that's why you can say that right so you're not too late i i don't dox myself but i bought it at prices when i bought it at my first lot it was it was at the highest price it had ever been right and i i had i had i paid much more than what i thought i i could have and i was i was way too late if this thing is the the value prop is the same it's either a marginal or it's something it's it's a big deal and that's the same now at 140 000 as it was at 30 000 and so you're not too late right the other thing the other thing to make note of um is that you you can buy a fraction of a bitcoin you can buy one dollars worth of bitcoin right so so don't don't worry about that the third thing to mention is again i won't go into it we'll do another special one of these days but it's a one-time invention there's no there is no second bitcoin v 2.0 so this is the time usually when you see all the alt coins so someone someone created pure digital scarcity and then everyone copied it And it's kind of like, if that kind of messes with your brain, then good, because you need to ponder that mystery.

1:06:24But it's usually at times like this that everyone goes, oh, it's too late. I was slow to Bitcoin. I'll get the next Bitcoin, which is just as dumb as someone trying to sell you electricity 2.0 or radio 2.0 or the internet 2.0. It doesn't make any sense. Steam power 2.0. It's done, right? We've invented it. It exists. It's at a point where it's uncatchable. So if - Can I - I have to interrupt really quickly just to say a lot of that is opinion rather than fact. And I just want to - I can't say that. Sure, sure. Only because that is your strongly held view and I don't necessarily think you're wrong.

1:06:59Yeah. But I don't know that it's, you know, there was DC and then there was AC, right? There are - It is possible to have - In a few - There is a universe in which people take the ideas of Bitcoin and for reasons of government or decision-making or other places adopt a effectively identical system. There's no reason they wouldn't do it. And that's your kind of your broad point, if I'm not mistaken and not misquoting you. But I just, sorry, I don't want to drop your run, but I just think it's, there are some things where it's like, I have a strong conviction this is true, as opposed to this could not possibly happen.

1:07:29And that's where I want to just draw a thin line. That's all. No, you're absolutely right to point that out. And for the love of God, some rando in your ears while you're going for a run telling you that they like it. If you're buying it because of me and I'm like, don't buy it. That's the other thing. That's the final point I wanted to make, actually, which is a nice segue is people are only interested in this thing when it's going up, right? Like, don't be that person. If you're buying it for FOMO, don't buy a single sat unless you know what you're buying and why you're buying. Or share. Or emu farm or art or anything.

1:08:05I'm not trying to bring it back to shares. I just want to make the point that your approach is not just a Bitcoin view. It is an investing view. And this is where it's important to invest in Bitcoin the way you would invest in anything else. This thing, it will crash again. It'll do what it always does. It went from zero to$100 and then crashed to$50. And then it went to$1 ,000 and then crashed to$700. And then it went to$20 ,000 and crashed to$13 ,000. You know, like the news headlines two years from now will be Bitcoin just crashed to$200 ,000, right? Oh, my God, it's gone down. And again, the same as the share market.

1:08:42This is where you've got to think about it exactly the same way. The share market does the same things, right? Even during COVID, it crashed back to 20, whatever it was, 2019 levels, 2018 levels. 30 % gone in a heartbeat. And it didn't go, though, did it? Because the productive capacity of the things that underlined all of those assets continued in the main and on average. The reason they're worth something continue to be true. Correct. So my point is it's not a trade. It's not a speculation. Opinion. This is opinion, right? But if you're treating this as a trade, if you're treating this as a speculation, expect the same result if ever you were going to trade or speculate on anything, which is statistically it's not going to end well.

1:09:21Don't buy anything if you don't understand it. Remember that my humble view, and I think most people have ever looked at it, there is only one. There is no second best, as Michael Saylor likes to say. And you need to understand or at least form a view as to why that is. And remember that, yeah, wouldn't it have been nice to go back to 2012 and buy it at$100? Yeah, it would be nice. But you can't. And so could I go back and buy Berkshire when it was like$10 a share? Yes, please. Well, no, it's$300 ,000, whatever insane number it is now. That ship has sailed. But in the same way that you would argue, oh, Berkshire is well worth buying now.

1:09:59And someone would turn around and go, oh, yeah, but I could have bought it in 1970. This is irrelevant. It's an irrelevant, it's an irrelevant point. And so that's the only reason I want to, well, a little bit, because I want to, you know, you've got to celebrate the good times when they come. So there's a little bit of that. But mainly, please, please, please, please be careful out there. Take everything I say to heart. And if it's not for you, it's not for you. That's fine. I've got no intention of pushing this on anyone. But now that it's increasingly in the news, I did want to make a couple of comments on that kind of stuff.

1:10:29Yeah, nice. Thank you, mate. Go down the rabbit hole and you'll go on your own journey. You'll either see it as something that's interesting or you won't. Until that point, don't do a damn thing though, right? And if ever you do have any good questions, send them into the mailbag. Just so I can rile Scott up. Luckily for me, I get to... Mate, you have no idea how many Bitcoin requests I've deleted. Oh, no! I'm kidding, I'm kidding. I've never... I have probably... I only have a skip... I think almost entirely. The only time I ever skip any question on any topic is if it's really specific and kind of not of interest to a broad audience or we've done it relatively recently.

1:11:08And even then, there's still plenty of those if it's kind of a key topic. But I'm sure I've probably skipped over a Bitcoin question or two, but never other than for the fact that it's already been done or it's just really, really random or really specific that doesn't kind of require covering in a broad scale podcast. That's all. No, it's all good. And look, I'll shut up at this point. There's not a lot to say. But other than it's just, it's always an exciting slash scary time. Bitcoin is actually, it's the same with the market. Same with the S &P 500. Same with the all ordinaries. Most days, nothing happens.

1:11:41When I say nothing, it's up or down 1 % or 2%. You know, nothing much sort of happens. And then everything happens in a very short space of time, either down or up, right? And that's what elicits very emotional decision-making, which is on the up and the down is always, always bad, right? So just keep your head. Don't buy it because your mate is doing something stupid. You know, don't do it because I'm crapping on about it here on the podcast. Keep your head. Think big. This is either the new neutral global reserve asset or it's a curiosity for the internet. It's one of the two. It's one of the two.

1:12:21Right? It's just a question of time. And you need to form a view as to what that is. And if you don't, by the way, if you can't form a view, that's cool too. Right? I don't own any NVIDIA stock. I sleep perfectly well at night. Right? Yes. I sleep perfectly well. Do I regret not owning any? Yes, I do. But so what? Right? Like, it's like all I can do is change the future. And there are a million investments you and I won't make that will go really well. Not a million, but there's thousands. At least a million. yeah and you can't you can't you can't make it as you know every single thing and i guess that's one of the things i mean bitcoin may well end up being worth squillions more than it is today but i do think at some level the the the it's fascinating to me the kind of um the psychological kind of story or the psychological kind of only because me too everyone's everyone's talking about it and it's it kind of it feels like it has a profile that's maybe not justified, and you may even disagree, but you wouldn't hear this much about Fortescue when it was at two cents or, you know, the things that have a CSL or Cochlear, it's Commonwealth Bank, pick your kind of, you know, originally really cheap, now multi - Nvidia, to your point, right?

1:13:30And even now, or even during that process, people talked about it after the fact, kind of in a way that kind of touches on what happened. But the profile of Bitcoin is phenomenal. Like it's really captured people's attention in a really, really impressive way. I mean, think about, again, I'm going to be very ambitious in my language here, but Amazon disrupted retail, Netflix disrupted Blockbuster and videotapes. You know, these are Apple disrupted telephones. You know, like just these were big, big deals and they are now the biggest companies on the planet. We are potentially talking about the disruption of money itself, the total addressable market is 8 billion people and growing, right?

1:14:17Like I know that is extraordinarily hyperbolic. I hear myself, but that's kind of the thing. I often go back at these times because I've got a nice little favorites folder on YouTube, which are all the hot takes from media. It's like in the 90s of the internet. And it's just brilliant, man. It's so brilliant. Like, oh, well, so people can debate whether Kirk or Picard is the better. Oh, yeah, that's going to be useful. Oh, yeah, right. I suppose we're going to do our banking on the internet. Yeah, right. Like all of these hot takes from extraordinarily smart people. Now, that doesn't guarantee anything in regards to Bitcoin, but it is a very good point of whenever these sort of new things, genuinely new things exist, it's always the same kind of result.

1:15:02And, you know, what I have to say here, just be careful, I suppose is what I'm saying. Don't overthink it and know that it's going to be extraordinarily volatile. How else could it be? What's happening here, right, I would imagine, is that you have got the US government announcing to the world that they're going to stockpile this stuff. you have other nation states who have adopted a very small fringe countries bhutan el salvador democratic republic of congo i think had it for a bit there's another one in south america very very very sort of early kind of things we've gone from like a corner of the internet for people who wanted to buy drugs on silk road right that's where it sort of started yeah to a more of a mainstream adoption in the 2017-2020 era where Coinbase and the like sort of took off.

1:16:04We've now got BlackRock and Fidelity in the ETS. So Wall Street's now here. And now we've potentially got the final boss, which is sovereign nation state. And because this is an open blockchain, we can see there is a whale out there accumulating insane amounts. So who knows? But could be the Saudis, could be Russia, could be anyone. I don't know, but it's someone with a lot of money, right? And it's interesting, right? Because it goes to a point where it's sort of like, why would I do that to why aren't you doing that? And maybe this future doesn't arrive, but you've got to prepare yourself for the possibility that if the US does start accruing this, all of a sudden that green lights much of the countries in the West to go, there'll be a point at which the RBI says, you know what?

1:16:53we're going to put a 10 % stack on our balance sheet here as we do gold, as we do US dollars.

1:17:03It's a big deal is what I'm saying. And I think when I speak to people, their mental model is in a 2012, 2015, 2017 era where a lot of the critiques were really valid. But I just think at this point the network has evolved so much is that if you're still looking at this as a Ponzi thing to buy drugs with on the internet, you haven't kept up to date with what's happening. And the final, final, final, final point is, again, do what you like. But I think this is true of BHP and Commonwealth Bank and Vidya, any potential investment that you take the time to sort of try and investigate and research a bit more is you'll come to a conclusion, whatever is appropriate for you, but also write down what would need to change for you to change your mind it might be well i still don't see it as compelling enough but if x or y or z happened i would revisit it and i don't know what that is is it apple putting it on its balance sheet they're voting it on the agm on that at the moment is it is it uncle warren taking some of his 350 billion dollar u.s cash pile and like i don't I think that's going to happen, by the way.

1:18:14But, you know, there is the person who says, I'm not doing it in 2012. It's completely justified. There's a person in 2043 where it's literally global trade is being settled and they're going, la, la, la, la. It goes from reasonable to irrational. And you need to map out the point of transition for you. For me, it's past it, as you can tell. We've gone a fair way in, mate. I'm going to ask you one question. I hope that it's not a super long answer, not because I don't love hearing your answers, just because I want to keep our podcast to at least less than four or five hours. Sure.

1:18:54The story of the gain from 2000 and whatever in the past to effective maturity is the story you're telling. You don't own any gold as far as I know, And yet that is akin to a Bitcoin style of positioning, right? And you've obviously taken the view that gold is not attractive enough, is not necessary enough for your life, nor is it attractive enough in terms of future investment returns or uncertain enough or whatever word, I got to put words in your mouth. The reason I raise it, mate, is because it's a tough thing to raise at the end of the conversation. The 2043 example of it's irrational, I guess my first thought was it's no less irrational, no more irrational, both.

1:19:44In 2043, not only Bitcoin or gold, because the story's played out and we're now at some sort of equilibrium-ish-ness of price or value or whatever. You know, at some point it's reached that kind of fair-ish value or average value. So there is kind of that journey, right? But at some point, you're almost mad at not to own it now than in 2043 or whatever that maturity point is. Because at that point, it's like, am I mad not to own gold or palladium or Nvidia shares? Well, it depends. Some people say, yes, you don't have palladium. Some are saying, what's palladium? That's me. But at that point, it's almost kind of like owning it just to have it for the sake of it is not worth it once it's at fair value.

1:20:24I mean, is that right? That it's the ride. Ride's the wrong word. It sounds like something trivial. I don't intend to be. It's the journey upwards to maturity that you're seeing as the opportunity. Is that right? Yeah. Yeah. So let's play it forward. No, it's such a big question. So I'll do my best. But at a point of, let's just say it's just pure saturation. Like it's just the money of the world that everyone uses. Now that's a long way away. But let's just say that we're there. And full circle to where we started this podcast at, your annual grain in purchasing power probably equals productivity.

1:21:00growth yeah that's the best as you're going to do that over the last 2 000 years has been the story of gold yes exactly it's basically matched productivity growth so once it hits some sort of maturity-ish level yeah and the adoption was maxed out to whatever it was going to be yep um not because it was predefined just because it found its level yeah i mean and and and it'll get if it does get there that's that that'll be the value it's a little bit of a wrinkle in that in the sense that when you see,

1:21:33I'm trying not to use too scary a word, but when you see, which is very significant monetary debasement as may be on the cards. Gold's actually a great investment during, like gold was a pretty good bet in the 30s, right? Like there was, there were, I'll get my dates right here actually. Gold was a really good bet in the 70s during the hyperinflation period. There are periods where gold is fantastic, not because it per se is going up in value, but as more that the purchasing power of the monetary unit is going down in value. It's a relative game, right? Two sides of the same coin. So gold does very well during inflationary periods because the money is going so badly.

1:22:14So there's an exception in that. I actually think I've never been a gold holder because we've actually had a pretty stable fiscal monetary environment for most of my life. That's changing. So if Bitcoin didn't exist, I might actually be starting to get a bit more interested in gold. But the difference why I think it's a different kettle of fish is because gold is 10, 15x the size of Bitcoin. Oh, sure. So as it goes from obscurity to maturity, that's where the value uplift occurs that is beyond what you might expect as a steady state, if that makes sense. So this is a once in a civilization opportunity is what I'm saying.

1:22:54With a dead straight face, it is something that generally you only invent once, as with the other examples I gave, and it's happening. It'll probably play out over a 50 or 100-year period. I don't know. But you might want to look into it. It's analogous to the uptake of gold as a store slash transactional. Yes. asset, which is like, what's this gold thing? Oh, cool. It's kind of shiny. I kind of like it. Wow. I'm going to show my mate. He likes it now too. Now everyone likes it. Everyone's gotten as much gold as they need to have. And so we've hit some sort of relative, you're right about the debasement thing, but in a relative sense, we've hit maturity of ownership and use.

1:23:38It's an attitudinal maturity in the sense that I can give someone literally a piece of shiny yellow metal and they will go, thank you very much. I will exchange something of very significant value for that. Yes. Why? Why would they do that? It's a bit of, well, it's because there's a shared belief. It's all it is. Same with the Aussie dollar, same with the yen, same with the US dollar, same with Bitcoin. Yep. Nice. I think we're going to leave it there, mate. Thank you for sharing a little bit of your Bitcoin passion with our listeners. I hope there's a few more than just two left as we normally have at this time in the podcast, but I'm sure there is.

1:24:13I can't promise you a question on Bitcoin on Sunday, mate, but will you come back just on the off chance there might be one? If there isn't one, I imagine in the coming weeks and months, we'll get a lot more of them. I'm here for it. I'm absolutely here for it. There you go. At least, you know, Andrew will be here, if only so he can take a bit of a picture up about his Bitcoin. Until we speak to you on Sunday morning. Fool on. Cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned. General advice only. Please speak to your financial professional to understand how it may pertain to your situation.

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