Resolutions for 2026… and some reckless predictions!. January 2, 2026

23:46And so that combination, not exactly a habit, but it's a familiar thing. It's a regular thing that he does. Again, I'm not him, he's not me. It's not no humble brag or bloody parent brag. It's just literally an example of when something that becomes normalised, normalised is the best word actually, just becomes a thing. I can just whack you in there for me, Dad. Yeah, no worries. And done. And so it's kind of whatever it takes you to do, that pre-commitment is really, really, really, really valuable. The other thing I'll get you to do, news resolution, you're not going to be surprised by this one, look up the Vanguard index chart for me.

24:20And Rob's already smiling. Just look at it. Just do it. Pause the podcast right now. Well, after I finish the sentence. Go and open, type in Vanguard index chart 2025 and have a look at it. Have a look at what the power of time will do. It's back to Ram's point. Do something regularly. Now, the Vanguard chart, they undersell it massively because one amount of money invested once and never again. Everyone has regularly unless you get an inheritance of something you're investing at all. You're going to save and work and save and work and save and work and save and work and save, work and save, work and save.

24:50You'll invest regularly. So it assumes you never, ever, ever, ever put another dollar in, right? Which is fine because that's what illustrates the market growth, but it really badly misses the ability to add regularly. Either way, look at that and really, just one more time, I hope you've done it before, do it again. If you haven't done it before, Vanguard Index Chart 2025, open it up and look at what 10 grand does over 30 years. And then decide on behalf of the 30-year-older you, you would like to look back and go, look what I did. not by being active not by doing hard things regularly if all you do is put on an etf great i'd love to think you might then say well i'll try stocks and if you do that's great if you don't that's okay too but start with something so firstly pre-commitment secondly maybe it should be that way around frankly the value of that pre-commitment over time see what you are building um you made the point around about seven or eight months for your for your daughter right that that story You're older than 12 if you're listening to this, hopefully.

25:48If you're not, by the way, that's even better. So thank you for listening. Sorry, Mum and Dad, make you listen. I've done what you've done wrong, but here's your punishment. But do it. Look at what you can do. And change the$10 ,000 to your own numbers. If it's a dollar, if it's$100,$1 ,000, whatever the number is, scale it to your own situation and see what can be achieved over time. The best thing I do with my young bloke is say, mate, look how much money you've made. He's got hundreds of dollars, not thousands of dollars, in his little shares, his account. and it's gone up by, I think it's like 30%, right?

26:17So he's made a couple of hundred bucks, right? But my point to him is always, hey, dude, you've done, now you will say, Raym, you've saved, you've foregone consumption. I get that. My point to him, though, is, because ignore that, because yes, you have, but that doesn't matter. It's like, you got this extra money for doing absolutely nothing. You put some money aside and look, you came back and it's bigger. How good is that? The beauty of investing, that compound return is passively generated. generated the return at least, if not the original savings, as Ram says, it's really, really important and really, I think it's very, very useful hopefully to look at and hopefully try and internalise.

26:53Yeah. Where I double down there is when my boy works at Macca's, he's got a regular income now. It's great. And it's just sort of like, you know, the usual talk, some of the in-laws, I mean, oh, I should set up a budget and this and that. I was like, nah, screw that. It's a waste of time. It's an absolute waste of time. I really anti-budget. This is going to be, I know this is antithetical to what most. The trouble with budgets are, again, they're impossible to adhere to because I don't know what I'm going to want or need down the track. I don't know how things are going to change. It's just to your, it's too hyper-specific and you're going to set yourself up for failure.

27:29Where I have done it exactly the way that you've outlined it, it was just like pre-commitment. Like what do you reckon you can say every week? 50, 100, whatever. You can do it like this. Okay, that's it. So the rule is you get your paycheck, you put that amount aside and you spend the rest, whatever you want. And whatever you want, I don't care. It's so easy. Like it's so much easier to do, right? And he'll find that there are some weeks where it's like, I didn't spend all the money or some days I did and various like loan agreements that we sort of have and the rest of it. But, you know, every week that little sum of money gets invested.

28:03Now if he had had a budget where he had sat down at one point, I'm going to spend this much on the movies and this much on the, And like, just like, are you there? How can you possibly? It's just, I find them really silly as a concept. And this is just as true for adults as well. It's just, I mean, you need to have a, you need to do a basic budgeting exercise to work out what you can afford to save. I think that's right. Like there is a certain mortgage or rental and food and medical kind of budget that you must have. But it's like, once you've got a vague idea of what that is, then it's just like, I'm just going to put as much as I can aside or whatever I feel is necessary aside and the rest is up for grabs.

28:41It's so easy. It's just so much more straight. And because it's easy, it's more likely to be adhered to as opposed to some impossibly hyper-specific thing that you're not going to conform to. So, yeah, don't budge it is what I'm saying. So, Javier, I disagree with you only on behalf of some of our listeners who aren't wired the same as you. Right. Which is only to say, firstly, you're tight. Let's be honest. You've said this before. This is not news. I'm super tight, yeah. So there's always going to be money left over. So that helps. Penny saved is the penny earned, my friend. Exactly. But also it's the distance between payday and the next payday and also across multiple paydays where the bills are large, where people will find themselves in trouble if they don't budget.

29:21And that's how we get into credit card debt. That's how we get into payday loans. It's like kind of rubbish as you go. The insurance is due. I'm not going to put money aside every month for that. Now I've got a$1 ,200 insurance bill. I've got no money left over. I guess it goes on the credit card. And that's the bit where I think for many people who aren't wired like you and maybe like I don't, I'm actually doing it your way, but I wouldn't necessarily encourage people not to budget. It's fine if all your expenses are in the current week and you get paid weekly, you can manage that, right? If I'm paying a year's worth of insurance once a year or rego or home insurance or mortgage probably, well, mortgages sometimes aren't exactly the same as payday cycles, but either way, I guess I'm just making the point that there is some need, and you're right, you already mentioned the fact you've got to add some of those things together.

30:01If you don't budget and you're discretionary spending, I 100 % agree with you. That's where I think we're 100 % aligned. I just would say to some people, if it helps you to, frankly, reduce a bit of financial stress, and I mean stress in terms of actually running out of money but also just the mental kind of emotional drain that causes, or if you ask someone who's like, you know, I get at the end of the month and there's not enough for the insurance bill, okay, well, you've probably got to just think about how that works and maybe manage it accordingly. And I don't think I'm miles away either from what you're saying because you're not really saying, you know, figure it out.

30:29Right, exactly. Figure it out roughly. I mean, each month I pay this much in my mortgage and this and that and then I can probably do this. I had a friend who is still a really good friend. He's just really bad with money. The kind of dude that just money just slips through their fingers and no matter how much more their salary grows, they just adapt to that. And probably three or four years ago, it was just sort of like, dude, cut out the credit card. And he did and he did go into the debit card. So for him it was simple. It was like if I've got the money, I can. And so he did the pre-commitment thing.

31:05So I can save this much. And it wasn't a lot, you know, it's a hundred bucks a week or something. This is for a father of two middle-aged men on a decent sale. It wasn't a lot, right? Like you could have done, you could have done, but he did that because he wasn't doing anything. Correct. And then it was like, whatever's left over, I can spend. And he just didn't have the credit card. So it was sort of, he had a debit card. So I was like, oh, I want that thing. Oh, I don't have the money. I'll just have to save up for it. And it's just sort of like, it was just like two easy things. What can you pre-commit to save and get rid of the line of credit, right?

31:36And, yeah, he was actually in a bit of a credit card debt hole. He's out of it. He's got some savings. And I'm not taking all the credit. He did all the hard work, but he recognised the problem. He took some very small and achievable steps to change it. And it didn't change overnight, right? But you can look back with hindsight and go, wow, my life is radically different. He also took his savings and put it in Bitcoin, so that sort of helps as well. But anyway, my point is it didn't have to be some spreadsheet with 400 lines down of here's my entertainment budget, here's my budget for this and that.

32:09It's just sort of like that's where I sort of push back. It's too, especially when you have that entertainment or clothing budget. It's like I don't know whether I'm going to need a shirt on the third week of April so I've got a budget for that. I just, I don't know. Exactly right. Yes, we're pretty aligned with that. It was just more that idea of just if you ask someone who needs to put some money aside for a future bill because the pay periods don't line up with the payment periods, they just think about how you want to get that right. Mate, we're about halfway through, so let's – can we shift the dial?

32:42We promised last week we'd do some reckless predictions. Yeah, this is fun. And I just – so can I say up front, again, if your news resolution was to start listing a lot of your money, I'm sorry, but also, too, thank you and welcome. If you haven't been here for all that long, I will say up front, I am a journalist's worst nightmare, right? I'm the finance guy you get on to give a soundbite quote. And they say, so, Scott, what's the ASX going to do this year? And I go, I don't know. I don't do predictions. Okay, what are which rates going to be? I don't know. Don't do predictions. Well, what about?

33:15So I don't do, I do not do. No, we're going to do them, right? So I'm absolutely talking rubbish. We don't do predictions. We're going to make some reckless predictions just for the hell of it, just for a bit of fun. This is not, A, I'm not doing anything on the basis of this. B, please, for the love of God, don't do anything based on anything we say, I don't know what we're going to say next, right? I'm just saying now, right? That's generally true, not just for this section either. That's true. Yeah, just please, please, please, please, please, don't take anything seriously. Also ignore predictions.

33:41I mean, we'll have some fun with these ones, but realistically, like no one knows. It's a parlour game, right? It's fun to guess at what the future might hold, you know? By all means, guess whatever you want about whatever you want. Just don't be the person who starts to believe their own PR because you guessed right a couple of times in a row because, frankly, there are too many paid knuckleheads in our industry who do that. We don't need more amateur knuckleheads doing exactly the same thing. Not that you're a knucklehead, dear listener, but the other one is. So, yeah, just, I don't know. I'm making the point, overlaying the point just to say, don't do predictions, don't listen to predictions, don't take predictions for granted.

34:19Even those that have been right in the past because trying to separate luck from skill and predictions, unless you've done a few dozen of them, is useless, completely useless. Why? Buffett said before, if everyone in America tossed a coin 20 times in a row, I can't remember the exact number, but there's so many hundred people who would guess correctly statistically tossing a coin. Oh, sorry, who tossed a head 20 times in a row. They'd be like, it's 216. I don't know what the actual number is. Are they clever? Are they skilled? Do they have some sort of magical coin tossing ability? No, just law of averages, law of averages.

34:49So, yes, bear that in mind. All right, Ram. That's the disclaimer slash education slash boring Uncle Scott out of the way. Make me a reckless prediction for 2026, would you? Yeah, absolutely. I'll do one layer on top of what you said. Okay, go on. I think, well, I mean, how do you invest without making a prediction? So things get philosophical. I have someone who says to me on Twitter all the time when I do that. Yeah, go on. I mean, it's a good point though, right? Because you are making a prediction by the, you know, you are betting that, what do you hold? I'll go with the easy one, Berkshire, right?

35:23Yep, yep. that that will continue to be better than the market. That's a prediction. Yes. You don't know. So the way I distinguish it is I like to say you want to be generally right as opposed to specifically wrong. You know, what the Reserve Bank is going to do in its third meeting of the year is just the absolute most irrelevant, nonsensical thing. Where the ISX 200 ends at 2020, absolutely irrelevant. I think Woolies will exist in 10 years' time and probably in real terms grow its revenue somewhere between 3 % and 5 % per annum over that period on average, I think is a very good prediction and that's a prediction I'm sort of happy to hang my hat on.

36:00So it's sort of, you know, I'm being a little bit of a pedant here, but it's sort of like... That's a good one because other people do it too anyway, so you might as well do it and call it out here. You're exactly right. The difference for me is that prediction infers the sort of specificity you're now saying we shouldn't do and you're absolutely right. Yeah, the false specificity, yeah. And so, you know, I'm never predicting Berkshire will go up more than the market, by the way. I'm saying I think probably they will because I know I'm going to be wrong a lot of the time. So, again, under my own baseline, my predictions are wrong a lot if that's okay.

36:31That's kind of the point, right? So I would say, and maybe I'm splitting hairs, we're being penned, why not keep doing it? I would say I try to invest with probabilities, not predictions. It's all you can do. Right. It's all you can do. Which is different from when someone says, what rate's going to be at the end of the year? Oh, 3.85%. Really? I mean, you could say, look, there's a range of possible outcomes. Now, firstly, does it matter? Because to your point, even if you're somewhere between two and a half and four, all right, thanks, Sherlock. You know, don't call me, I'll call you. And the media don't want that and the clients don't want that, so you say what you have to say because you have to say it or at least that's what they believe.

37:07So I kind of get that to some degree, honestly, mate. I think that's, you know. But if it doesn't matter, don't bother. Yeah. And if it does matter, no, you'll probably be wrong. And so I think probabilistically rather than specifically. Talk about price targets. Absolute stupidity. Yeah. Right? Three-year price targets, probably also really stupid. Over five-plus years, do I think the current price gives you a decent chance of beating the market? If that's a prediction, sign me up. Yeah. But that's as specific as it gets to your point. Yeah, yeah. All right, first one. Yes. Interest rates will be lower.

37:40Will be lower than now by the end of the year? Yep. So every talking head out there is saying interest rates are going to go up because we've had a couple of hot inflation rates. Okay. And they're right within the framework they operate in, but they, as I've mentioned many times in the pod, they ignore the political calculus at play here. Interestates are going lower, not materially so, but they'll probably, because there always is, there'll probably be an event which makes it that we have to do it. We, quote, unquote, we have to do it. I think the US will lead the charge. I think they're going to be very aggressive, particularly with the new head of the Federal Reserve.

38:20I can totally see them being rather aggressive in their rate cuts. Fair. I can see a lot of fiscal stimulus and a lot of monetary stimulus. And again, I hear the theory. Oh, but, but, but, but, but the theory says, yeah, well, okay, that's my prediction. And it's an outlandish prediction. We'll see if it comes true. It's certainly not going to be materially high. And within that, probably if the jawbone doesn't work, we might see a quarter of a percent increase here in Australia at some point if inflation doesn't call. But that's probably as much. One, maybe two, but at the end of the year we'll still be lower.

39:00That's my call. So if we have one or two, they'll go back away and then lower again. Yeah, yeah. So not lower than the peak, lower than they are now. So for those keeping score, by December 31, 2026, interest rates will be lower than they are in January 1, 2026. How they get there, I'm not sure, and I'm not ruling out the possibility of a little bit of a blip up, but it will end lower is my take. Fascinating. Love it. I, for the fun of it, am going to take the opposite side of that bet. So let's have a bottle of wine on that one. Okay. I think that rates will be higher. I can just cheat and say at least the same because you've gone lower.

39:43So I can make it much by saying not lower. But I'll say higher that way if it's a stalemate, we'll buy each other a one. Okay. I reckon they'll be higher by the end of the year. And I'm going to say, and again, I'm doing it because Andrew did it. I don't care. I don't know. I'm not making any adjustments on it. Please don't, for the love of God, do any of this. I'm going to say they are at least a quarter of a percent higher at the end of the year than they are now. That's about as much as they'll be there, right? Yeah. I wouldn't rule out half a percent. Yeah. Yeah, again, who knows, right? The other thing is, and we always do this, and you've made the point beautifully even in the way you've described that, is whenever there's the RBA thing, there's always the two things.

40:22What will I do and what should they do? Yeah. And they're always, it's not the same. Dude, every time they have a meeting, you and I and every financial pundit in the country spends hours and hours talking about what they should have done. Correct. And we talk about all the things. And people will have different views as to what they should have done. But, I mean, do you ever, I mean, has there ever been a decision where everybody goes, yep, absolutely perfect decision, well played? Exactly. But they get a, you know, they can't. But when they do, there's no value in that prediction because everyone expected it and they did exactly what everyone expected and so it went home.

40:52It was so obvious that, of course, we had to do it. Yeah, yeah, yeah. All right, that's a good one. I like that. That's a good one. I'm also going to go with the stock market, property market, gold and Bitcoin all higher as well at the end of 2026. All higher? So that's interesting. Yeah, yeah. Tell me why. I can guess. For the same reason as we spoke on Friday. Oh, I forget. Last week, yep. Whenever it was, when it launched. Yep. But I just, people will run towards anything that they feel as though preserves their purchasing power. Because if you're in an environment where you're going to be stimulating, where employment is ostensibly decent, GDP is not terrible you know if all the markets are at record we're already doing it right and it's just sort of like the bond market's already doing it as well right like it's just like the big money in particular is they know what's going on and it's just sort of like I would rather buy it took me a while to make my piece with this but it's just like I've said for forever that things even like Woolies which I think is a great company is overpriced and I think history's actually borne that view out pretty well actually just quietly and the same with the banks right overpriced but again The last five years or so, I think it's actually been pretty, that view has been borne out.

42:08But I still think that even though, again, according to strict theory, that doesn't really make sense, it is better to own an incredibly strong, safe, cash generative asset like Woolies at a higher valuation than it is to have money at the bank earning a negative real rate of interest. Like that's just, right? When I get my franking credits and my dividends on top of that, you know, it's just sort of like I'd rather just keep it there. Thank you very much. And that's, I mean, we can talk about the future, which is what we are, but, I mean, in the past, I think that is the interpretation of it, PE, the cyclically adjusted PE ratio, the CAPE is historically elevated.

42:48I think that will remain the case because the alternative of cash and cash equivalents is just so fundamentally unappealing. So I'm not saying materially higher, but, again, We've also got the midterms in the US. They're going to run it hot. Yeah, so I feel as though it's going to, I think it's not going to make sense in a lot of ways. And, you know, there is something, there is something, what's the word for it, that is required, you know, elevated, irrationally high and elevated asset prices doesn't do anyone any favours in the long term. So I'm not saying it makes sense or it should go that way.

43:28I just think it will go that way because we are in a slow-moving car crash, debt spiral, fiscal dominance scenario where it's just sort of like we, and we're also in a new, we're also in a reality where politicians of all stripes and all colours feel as though it is their duty to make sure the share market doesn't have any major wobbles or in Australia in particular the property market. So they'll do whatever they can to pump that. It doesn't make sense. It shouldn't do it. I'm not saying any of that, but they will, and it will be higher. Interesting, interesting. I was – it's only been my thunder, actually, mate, so I'm going to be – I mean, you're coming home a little bit – not in the direction or the rationale.

44:10David Gardner, the Motley Fool co-founder, whenever he's asked to make a prediction on the market for the year, he says it will be higher. Yeah. And he says, well, it tends to be higher about two years out of three. So I've already given myself a 67 % chance of being right, which is better than a coin toss. So if I say that every year for 10 years, I'm probably going to be right more than wrong, and I'm going to look like I'm a genius because I've put the market to go higher. So I'm going to make that. It's not exactly that landish prediction or reckless one, but I'll predict the market will be higher.

44:35I'm going to – it's entirely reckless. I'm not doing anything on this basis, as you mentioned on Friday. I'm going to predict gold will be lower. Okay. And my reckless prediction is that it'll be lower because we talked on Friday and kind of rehashing a little bit of that ground. I don't think you can justify the move on fundamentals during the year in 2025. Either it was too cheap to start with or too expensive at the end or both too cheap or both too expensive, but there was no fundamental rationale for no matter how, if you're measuring gold in printed dollars, it's gone up more than the printed dollars.

45:07So what does it talk about? It talks to an increase in sentiment, and sentiment tends to be variable slash volatile, not necessarily mean reverting. Over the longest term, it tends to be. There's some great analysis done on sources of return, by the way, Ram, over years between earnings, growth, dividends, and effectively PE changes, and unsurprisingly to anybody, over the long term, the PE changes net out to effectively zero. And so it all comes down to earnings and dividends, right? So I'm going to just recklessly say I think gold will be lower because I think once if, well, even if you're right about all the things you say and I don't think you are wrong about the rationale, whether the timing happens or not, that's the reckless bit.

45:48We don't know. We're just making up for fun. I'm just going to bet that whatever heat is in gold still, even though it's come down a little bit after the people lining up around the block, whatever heat comes out just means that gold just kind of naturally falls back. Not to the beginning of 2025 levels necessarily. I have no – I'm not going to make that reckless prediction. I just think that the heat ever goes, oh, yeah, worry about a thing and nothing actually happened. Now, whether they should keep worrying or not probably is a different question. My reckless prediction is just that people get bored with the trade.

46:16It's like, oh, we're ready for Armageddon and disaster, and, oh, it didn't happen. Oh, back to what we used to do then, like every economic cycle ever. So I'm going to predict gold is going to be lower at the end of 2026. Nice one. We will see. I mean, I'm not a high conviction on any of these. No, it's just fun. Okay. I think that we will see at least five more high-ish profile bailouts of failed businesses. Only five? How is that reckless? That's the par result, surely. We'll do that by the end of, before Australia Day. It might be that much time this podcast goes to air, let's be honest. Yeah, yeah.

46:55I mean, maybe some bigger ones, but, yeah, again, it's just anything and everything to avoid the perception, no matter how incorrectly framed, that not everything is brilliant with the economy. So we'll do it. We'll bail out. You know, maybe not Qantas-level bailout, but we'll see. We'll see.

47:20I can't. Yes, it's going to. I went with five because I thought, you know, and then high profile, what do you mean by that? I'm going to leave it vague, just enough to. No, I can't disagree with you. I think we've seen, I'm trying to mentally do it in my head while I'm talking, it's hard to do. We've had Tommy Go, which, you know what, so we haven't talked about this on the pod. We actually might have, by the time this goes to air, I'm not sure, but so Tommy Go, I mean, he was from New South Wales. Tommy Go said to the government, no, don't talk, because we don't want your money. and that was just the absolutely perfect, I'll go off the track a little bit, just the absolutely perfect way to play it.

47:52Right. Because like, what have they said? You are so desperate to throw money at me that if I look even slightly interested, you'll give me X amount. If I said, no, get stuff, but I'm going to lay people off anyway, you're going to come to me with a much, much, much larger check and they played it beautifully. Absolutely beautiful. It's just too easy. I mean, it's cynical in all the things, but why wouldn't you? Other people are going, okay, please have money. All right, here's a little bit then. Is that enough? I guess so. Thank you. It's like, nope, don't give us your money. We'll just go close.

48:17I don't want your money. You made the point about something else, you know, 10 grand, 20 grand, 30. What's your prize? It's literally, it's like, I don't want your money. I'm going to just go close. Who cares? No, I can't let you do that. Nothing easier in the world than spending someone else's money, my friend, you know, and that's what government does. And so they'll throw it, you know, even if it just like, it might give me a 0.1 extra percent, like, votes in my favour, I'll do it. How many billions do you want? So that'll happen. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

48:53I was going to take a wild stab at the size of the budget deficit just for a laugh. Yeah, that'll be interesting. And I'm going to say the federal budget deficit, when the budget's handed down to April, I'm going to say$53 billion. Where are we at? What was the last one? There's been two positives. I think$20 billion was the most. Actually, it should say, well, I'm not cheating at all. In fact, I'm handicapping myself because we're recording this, just to give it away, 15th of December. The MAIFO, the Mid-Year Economic and Fiscal Outlook, is due out between this recording and when we go live. And there'll actually be an updated number.

49:31So either I'm already on the way there by the time this goes to air or I've got a very, very big mountain decline between now and April. So I think about 20-ish, I think, was the last number I saw but I could be entirely wrong. I mean, it's so hard. The X factor there is commodity prices. Oh, it's all those. It's all those. Like, you know, in a differently structured economy, you could have a bit more of a certainty in the outlook. But, I mean, the nation's prosperity depends so much on what the international price of iron ore and various commodities are, right? Like Banana Republic kind of stuff here.

50:09But, yeah, we'll see. We'll see. I'm going to go with my next one. There'll be at least three CEOs who lose their jobs over inappropriate relationships in 2026. Oh, yes. Well, that's also an easy one, right? Was it two, three? Not enough? I thought three was... Yeah, no, no, no. High profile, I'm saying. Equally vague. I'm saying three high profile CEOs with inappropriate personal relationships or inappropriate personal conduct. Oh, definitely. Definitely. What else could we go with here?

50:41I think that we get a little dark. I think we will see a ratcheting of, an increased ratcheting of tensions between superpowers. I would think Taiwan feels like it's going to happen in the next five years. Oh, which thing? Do you reckon? Well, G's pretty keen on it, right? Yeah. That's a massive call though. I mean, the hardest part is that you said five years. Don't we have to do 2026 predictions? Can we do five-year predictions? Yeah, yeah, yeah. Yeah, so that's why I sort of said ratcheting of tensions. Oh, I saw you. Like not that Taiwan will be invaded in 2026. I guess what I was saying, that was the post-Trump president.

51:18I mean, really, Trump's probably not the key player here, right? It's the next president. In the moment it was exactly five years, but if it's not, I mean, it maybe happens in Trump's presidency, but that's kind of, it feels really like that president has a lot of stuff on his or her plate. Oh, my God, you'll be inheriting a whole mess of things. I mean, I think war has cost Americans so much. Yeah. So much, not just, it just feels like dismissive to say it, not just in the blood spilled, which of which there has been copious amounts on also, on plenty on other sides, but even on the US side, like incredible suffering and loss and heartache and the rest of it.

51:58but also the budgetary capacity for funding war is harder than it's ever been. I think there is a calculus in all of that when it comes to things like Taiwan where it's just sort of like, I don't know if politically the US has as much of a green light to defend an island on the other side of the world when they don't have the funds to do so or the political will to do so. There is this very important strategic dimension to Taiwan given what they make and stuff over there, which might be something that helps with that. But, you know, history is useful, right? It doesn't repeat, but it does rhyme.

52:41And generally when things get a little bit depressing on the economic front, it puts the likelihood of war and conflict higher. And so this is frustratingly vague, but I feel as though we are more likely to see major conflicts than we have been in a while. And as long as the trajectory goes in the direction that it's going, I feel as though that trend is still well in train, right? I was going to try and make a tariff prediction. I think you're right, by the way. And it's the ultimate, at a human level, let alone at an economic level, it's the ultimate stupidity of tariffs. You know, the more interdependence we have, the more likely we are to cooperate.

53:25where we could all withdraw to our own fortresses and throw things across the walls and we don't have anything to do with each other and we don't need each other, we don't want each other. It feels good in the short term. I've got rid of all those potential baddies, right, except the baddies are still there and they're just massing around the moat, right? And maybe it's harder to get in, but they breach the walls, they're pretty mad at you by the time they get there and things go pretty badly from there. I want to do a tariff prediction. I'm not sure how reckless I need to be to be reckless on this one because it is so...

54:00Trumpian? I love that Trumpian is a word because it kind of conveys it. I know some Donald Trump fans listening. I don't know how many of you still are, frankly, but there are probably some. I don't know how it's possible to be reckless in a Trumpian way. It's not just Trump being Trump. And given the year we've had, we talked about last week, the year of tariffs and everything else we've had, I'm going to say that Australia is hit with at least one more large tariff, unfortunately. I don't make it. There's no fun. Or we have to cave on a policy of national interest, and that's probably social media or its local quotas or its PBS.

54:37I think that comes to a head this year. Interesting. I think we will start to see the rollout of beyond flashy media gimmicks, some humanoid robots in practical domains. Nice. Amazon warehouses or something like that. Humanoid robots are somewhere here. Getting pretty close. They're getting pretty close. And I probably, I think we'll see one big company sort of make an announcement. It'll probably be a test. It'll be a pilot. but these things are getting freakishly good. Have you seen any of the movement ones? It almost looks like that. Not for a while. My instinct is always, oh, that's AI. Right.

55:19And then, yeah, a lot of them have been verified. So there's a lot of fake ones out there as well, just to muddy the water. But, gosh, the actuation and the strength and the agility and it's going really, really, it's advancing very fast. It's another example of AI dovetailing with other areas. I was thinking exactly that. And cost becomes kind of the major question mark there because it's kind of like, well, if they're bigger and stronger and faster and more durable and can go 24-7, what's the need for us? And it's come down to, well, what's the ROI? Automation ever has always been that question of, I mean, a bit of a tangent, Metcash, the grocery wholesaler, went to, I'm pretty sure it was Thailand, and this is literally 20 years ago, maybe even longer.

56:02And they kind of said, hey, we're really good at wholesaling in Australia, let's go to Thailand and we'll set this thing up. They lost a fortune. And why they lost a fortune was they decided to do it the Australian way, lots of automation. The entire workers were just cheaper than the machines. Yep. And so it's just like they couldn't get a foothold because they tried to be too automated. But at some point you tip over that line when it becomes the case that the machines are cheaper than the humans. It's always ever been the case when the spinning genie onwards. That's how it happens. I think you, I mean, it's, again, like everything, incredible and exciting and scary as hell.

56:32Yeah. Yep. But I think we'll start to see. It'll be and it'll probably spur the next thing on the market because the market always has to have a thing. It's AI at the moment and that's not going to go away. I think we'll never see. Robotics is next. I like that. I think robotics, yeah, it'll be something in the realm of energy, robotics or synthetic bio. I think of the big three sort of technological frontiers that we'll see some breakthroughs on. You and I spent too much time together, mate. My next one was going to be energy. and this is entirely reckless and it's absolutely Pollyanna and just my own desperate hope.

57:12But I am going to predict that in 2026 there is a major generational breakthrough in battery storage, either capacity or price or both. It's been a very long time since we had the Tesla Powerwall, I know it's not the only battery out there, but the Powerwall 2 and the Powerwall 3 are effectively the same product and the same price, little bits of software change. So we haven't really had a meaningful step change in home slash vehicle battery capacity for it must be seven or eight years, I think, and we're massively overdue for one. And if it happens, here's the reckless bit. If it happens, it changes the maths of energy entirely, right?

57:54Storage, electric vehicles, they all of a sudden go from borderline to no-brainers. And if and when that happens, now you mentioned fusion the other day, maybe it's that. But short of that, maybe it's the bridge to that. If we can, a generational change, a step change, not so much an order of magnitude but a reasonably large change in either storage per... Yeah, capacity per unit of input or cost per dollar of kilowatt hour storage, that will change things. enormous, like stupidly, stupidly, stupidly, it's zero to one. It just flips the switch, it doesn't flip back, at least until we get, you know, generation that outweighs storage on a cost basis.

58:37Oh, I hope so. I mean, everything depends on energy. Everything is downstream of energy. It is the ultimate base layer of society, of the economy. Everything is down. Don't say the phrase put for work. Just don't, just don't, just don't, just don't. Well, speaking of that, let me throw that in there. I think we'll see Bitcoin mining legitimized as an integral part of energy networks. I hope so. The data at this point is just so stupidly in favor. It's like people will do it for nothing. It's not going to be the crypto moon boys. It's just going to be hard-nosed pragmatists going, oh, we can reduce the payback period of these investments.

59:21Oh, we can stabilise grids. Oh, we can do it. And it was always possible from a first principle theoretical perspective. Right, and it's overdue, right? It doesn't even need to be a big... There's no technological breakthrough required. There's just an acceptance. Yeah, and in fact, ideology is very much present because the UK in particular is saying, no, we're not going to do it. They've got a lot... They turn off a lot of their... They get a lot of offshore wind and they overbuilt, right? Yeah. For all the right reasons. Yeah, yeah. For all the right reasons, right? You need to build for peak demand.

59:50But it just, but to your point, the missing piece of the puzzle is the storage. So barring a breakthrough on that, it's just that they turn it off. There's people out there going, you guys could mine Bitcoin on this. You could strengthen the network and make money. It's like, oh, they don't like it. It's like, we'll sell it instantly, in real time. You need to touch it for a picosecond, right? Like, get rid of it. Do it. They're like, no, we're not doing it. And so it's just like it's literally throwing money away at this point. Yeah. And you've got like the Texas grid operator and that's there.

1:00:25It's one of the largest energy markets in the world saying we're doing it and this is why we're doing it. Our grid resilience has gone up. Kilowatt hour pricing has come down. You know, everything just makes sense to do it. Even though a third party do it for a small margin. You talked to me before, I don't know about IROEFA, but there are organisations who will happily take your excess power when you want to sell it to them at whatever price you want. It's not a difficult conversation. One of the providers I spoke to changed their sales pitch to saying, Will, can we do on-site Bitcoin mining too?

1:00:56Can we provide on-site data services? No, it wasn't data services. It was like on-site compute or something. Same thing. It was like, oh, come on through. economic, the pitch was the same, but the B word was... And the risk was exactly the same, Chris. Oh, the risk, the proposition, the maths, everything was exactly the same, but you take away the B word and it worked really well. So, you know what's really fascinating? It comes up a lot because I raise it a lot, but when we're speaking to, we speak to a lot of CEOs, the straw man, we speak to a lot of early stage kind of stuff and it's fascinating that you would imagine, I thought this for the longest time, that once you've got the engineering to validate your case, then you're off to the races.

1:01:39But the number of CEOs, that just gets us to the starting block. We, for the longest time, couldn't get arrested. So here we are, this nothing little tiny ASX nano cap company knocking on BHP Bellatin's door or knocking on CBS saying, hey, we've got this really cool tech, best in breed, we can save you a fortune, we're going to give you a massive competitive edge, can't do it. And then what always happens, not always happens, but what usually happens, well, what always happens if the tech is legitimate is that someone makes the first move and then all of a sudden now you've got a reference site.

1:02:17So when you, hey, Scott at The Motley Fool, would you guys like to use my SaaS software stack? I don't really know if we need it. Oh, ANZ, Westpac, JP Morgan, Wells Fargo are all using it. Oh, okay, tell me more. The old saying is no one got fired for hiring IBM. Yes. And it was not really a joke, but I guess the humoristic part of it was it wasn't about it being good. It was always about covering one's backside because if what you paid for is like you're the purchase decision maker within an organisation and you hire IBM to help build your enterprise software stack or whatever and it goes pear-shaped or it goes over budget or something goes wrong, no one goes, Phillips, you idiot.

1:03:02Why were you doing that? And it's like, no, it's IBM. Like, I don't know. Now, if the exact same thing unfolded and it was a little start-up Aussie company no one had heard of, I was like, what? You're an idiot. Should have bought IBM. Yeah. But then the next time you go around, these reference sites are super, super, super potent. And what it does is it shifts the Overton window and it shifts, it makes it, it provides a degree of social proof. And I feel as though that tip is happening in the electricity markets as well where it's just sort of like you don't have to be the renegade on the fringe hard money enthusiast to sort of advocate for this.

1:03:37It's just sort of like. Energy and money up. Yeah. Hey, guys, I found a way to do this. I don't know. Oh, this place, this place, this place and this place are all doing it. Oh, okay. And they're making money and here's the model and here's the people to talk to all that stuff. And then you hit a turning point where it becomes a competitive, essential requirement because if you don't do it, your competitors are. and now your economics look fundamentally worse. It's like, well, you can die on your ideological hill or you can embrace the reality of what the engineering is telling you. So I think we're pretty close on that.

1:04:11And just to your point, everyone knows you love your Bitcoin and I've now got some and we're in different stages of our journey. But even before I bought a single Bitcoin, that idea, it didn't make business. It doesn't even, as you said, it's data centres, right? I would like to run a data centre. I'd only run it when you get excess electricity. I'll pay you or you can use me for whatever. Is it worth your while having me as part of your system to improve things? Yes, it is. Cool. Okay, what do you do? Oh, it doesn't matter, but I can tell you what. I don't care. There's a magic box. We're going to put a magic box on site.

1:04:45Yep. And then every week, every day, every hour, we're going to transfer your money. Do you like that? Yeah, right, exactly. Yeah, yeah. Nothing illegal, nothing improper. You take no risk because, you know, if I go broke, you don't get paid, but you're no worse off than you were. and maybe you're better off if I don't go broke. And so where's the downside? It was always, always, always crazy to me. Again, pre-my interest in Bitcoin particularly, I mean, we talked about, you know what I mean, financial interest. It just makes no sense. All right. It's actually one of the biggest levers on climate change as well because methane is some ridiculous multiple more damaging and tracking of heat than carbon dioxide.

1:05:18Yeah. And a very, very significant portion comes from landfills. Yeah. And we've got different management stages here, but it'll look Latin America. Most of us do these massive piles and they just leach ungodly amounts of methane out. And there's some people doing some great work. Shout out to Daniel Batten and other people out there just putting miners on. It's like, hey, can we come and set up? We'll burn the methane. We will materially reduce your carbon footprint. Oh, and we'll make you money. Oh, and we'll give you carbon credits on top of those. Like, where's the downside, right? Correct.

1:05:49Madness, madness. Oh, and we'll save the planet while we're doing it. We'll be the first industry to be carbon negative, which is completely opposite of what the mainstream narrative is. Anyway, look into it. It's pretty wild. Yeah, it's very cool. I'm not a triple lever of the Andrew Page mould, but just as an idea, whatever's in the magic box, as you said, that's exactly the right analogy. It's not a Bitcoin thing. It is, but it doesn't have to be. It doesn't have to be. I have a machine that will do these things for you. Would you like me to pay you so I can use the machine to achieve your ends?

1:06:19No, thank you. What? It makes absolutely no sense. Absolutely no sense. Any more predictions, mate? Is it your turn, though? Was it my turn? No, I said the big one. I'm out. I said the robots, didn't I? I'm out. No, you did the yes. I don't think I've got anyone. I did the battery tech. What else have I got? I'll use one. Okay, go on. There will be one major, what's the word for it? I don't want to use the word collapse or tragedy or something, but there will be a major stumble from a major AI company. Oh, interesting. Yeah, I think we've had a lot of, like an open AI or someone of that kind of magnitude.

1:07:01And this isn't to be negative on the field of AI. It's just like, you know, even if open AI ends up being the one that dominates, it's just it's usually when you, it's very hard to have such rapid investment and not to make some malinvestment as a consequence. Because you're deploying capital so fast in such urgency that some of the stuff you throw at the wall is not going to stick and I feel as though there'll be a headline or two written about a big stumble within the AI space. With the usual headlines, is AI over? Yes, Amazon.bomb all over again. I was going to make a reckless prediction about NVIDIA.

1:07:41You know my reckless prediction about NVIDIA is the price won't change this year. Oh, yeah? The price will close. And I say it because I wanted to kind of go one way or the other. I'm like, I don't, I'm just for the fun of picking one or the other. If the investor share price halved or fell by 60 % this year, I would be not even slightly surprised. If it doubled, I would not even be slightly surprised because that's almost your AI point. That's kind of the world we're in, you know, and probably frankly sentiment rather than any fundamentals for all those reasons. If the AI, we went through, was it 2020, I think actually most weeks, 2021 or two, we had the big tech boom.

1:08:20And one year there was tech was all over the joint and the next year it was oil or vice versa. And it was partly a little bit about the industry and what was actually fundamentally happening. It was partly just the, it was the affinity grift, I think you called it. It's not just an affinity grift in this context, but just the affinity idea of just when the bulls run, the bulls run. And when the bears run, the bears run. And I have no idea what happens overall in terms of the market, but I suspect NVIDIA is so much now part of the AI story that almost to your point, mate, if it is a big company that will stumble, maybe the share price crashes because, oh, no, it's going to use AI chips anymore or if it's just we're still selling out, it's like, wow, this is going to be even bigger than it is now.

1:08:58It feels like going nowhere is the least likely and so the most reckless prediction I make on NVIDIA. I mean, that's the thing that worries me about NVIDIA is I can actually look at that and go, yeah, the PE of 45 feels up there but there is such significant demand and so much in capex and investment being thrown at it. I actually can rationalise that price. It's the... Yes, that's right. Black Swan's not the right word for it, but there's a left field potential. I don't know if you're following the news with Google's. Google's really top and the pops at the moment. They've really overtaken a lot of these others in various benchmarks.

1:09:36But they use what's called a Tensor processing unit, a TPU. They don't use the NVIDIA GPUs. Now, whether or not that proves to be a broader trend or something, but you are one headline away from NVIDIA crashing 50%. That's why, exactly, yep. You know, which is just like, oh, it turns out. I mean, remember, I've gone blank on the name, the Aussie tech company started with A, they did all the AI training. Appen. Appen. Yes. Yes, that's a great example. Crushing it because they had all these people, humans, that would provide training data and then we moved to synthetic data and we just don't need it.

1:10:13And this wasn't like, there was definitely hype around it, but they were gushing money. The fundamentals were strong and then the raison d 'etre of the business just went away. It's just like, oh, gone, we don't do that anymore. And they were like, oh, no, there will always be humans in the living room. It's like, yeah, but not to nearly the same extent. And it's just like, well, I didn't want to look at their share price. No, I don't. Why don't you do that? I am not a futurist at all. 70 cents. There you go. I'm not a futurist at all. I saw that. And maybe I would have been wrong. We talked about - $30 to 70 cents.

1:10:44Wow. Yeah. We talked about having those, you know, remembering the wins and forget the losses and all that kind of stuff. Yeah. But this one had lights all over it. To imagine that there was no Rosetta Stone, no virtual Rosetta Stone, to me was always madness. Yeah. And it might have been 50 years and maybe it never happened. There is so much content out there and there's so, like, and there's so many cross-referenced pieces of content out there. To imagine the computers weren't eventually going to work out. But I can reference, sorry, by context and by relationship, I can infer everything I need to know about this stuff.

1:11:22I don't need to use that training data to do it. I can use both the information that exists and the response of users, which is why Google always did their own thing of like, I think from memory, they never released it in public, I don't think, but effectively Bing used app because they didn't have enough data because no one used the Bing search engine. But Google was like, I don't need that. We've got enough ourselves. We can do this and incrementally get better. We needed you for the early stuff, right? Yeah, it was always the most likely outcome at that point. It was like, who assumes that any – and by the way, share price is the discounted cash flows from here to eternity, not just for the next three years until Google catches up.

1:11:58I don't know. I could have been wrong. I could have been entirely – you could have been a$40 stock by now for all I knew. But it was all – you look at it, it's like, nah. The bet that computers never get good enough, that's a crazy bet. Well, it's also just that negative asymmetry. It's like, well, there's so much hype is priced in to happen or even NVIDIA to this day, I was like, I get it. I get it. I can actually make the numbers work. I really can. But my point has always been, well, even if that's true, I kind of get a 10 % or 12 % average annual return on these assumptions. It's not terrible, but it's like that's with everything going incredibly well.

1:12:33Yes, exactly. But if one, I'm not predicting it, but it only takes one of these events And I'm like, I'm down 50%. Like if not 90 % on that is like, oh, we don't need these kinds of chips anymore. Yeah. That's right. Two girls in Thailand in a workshop just figured out a way to do this, like for a fraction of the price for 4 ,000 times better. I was like, really? Yeah. That just happened. But, yeah. Yeah, that's right. And it's just, again, it's not, you said it before, it's probabilistic kind of thinking. And I just, I'm always nervous of an investment where it's like, Everything goes perfectly well.

1:13:09I get an okay return. But if there's any tiny speed bumps, I lose my shirt. It's like that is not, I want summer is just sort of like everyone thinks this is underrating this and if it just goes a little bit okay that I'm going to make a fortune. Sign me up for that. That's going to test you as a person, but it is going to be far more lucrative, I think. Yeah. So I would not be surprised to see, as I said, either a big AI company or an AI adjacent company having a big stumble for something that's just out of left field. This is, I was going to use a very dark example of what happened in Australia recently, but these things are just not on the radar.

1:13:50They're just not on the radar and then they happen and then they seem obvious and they seem inevitable and then the world just changes and that's just how things move. And I think we with our spreadsheets in investing, we really unfairly simplify the world by just putting things that are going to conform to our lovely little models, elegant and sophisticated though they may be. So, yeah, I can tell you one thing. It's going to be wild, man, and I can say that because it always is, right? You know, like as long as I have been investing, there has always been, whoa, no one saw that coming. It's funny though, mate.

1:14:27Can I go one step closer but with the same outcome, which is everyone knew it was possible. Yes. But then it happened. Yeah. And so there's the genuine black swan, which is, my God, swans are black. And if you don't know the story, it's literally white stories come to Australia and go, how can there be black swans? Swans are white. There were no white swans that they were from. You couldn't, you could imagine, I suppose. You didn't conceive of the existence. They weren't even theorised. Right. Why would you? Swans are white. They're all swans are white. They just are because we know that they are.

1:14:57Like, bang. Well, now the swan, I'm tired of seeing on its head. That's the idea of a black swan. This is the grey swan, if you want to call it that, or it tortures the metaphor too far. The one I'm talking about, mate, is the one where people go, oh, there's a chance of that happening, but it's probably not going to. They're the ones that happen, more often than not, right? Because it's like the whole – and they're right. There's only 1 % chance of this thing happening. Okay, well, do it 100 times. Statistically, no, no guarantee because every time it's still a 1 % chance, but the more you do it, the more likely you are to get an outcome which represents the probability.

1:15:26And so, yes, it can be the absolute black swan, you're right, But I would say there's also, and more likely probably, because you can't, if you can guess the black swan, it's no longer a black swan, right? So you can't conceive of it because you can't conceive of it because you can't conceive of it. Yeah. The grey swan or whatever is just the whole, once a century pandemic, great example, right? Did we see it coming? No. Was it always probable at some point? Yes, because that's what pandemics do. So to me, that's the one. We're definitely having another one. Right, exactly. Because it would be anomalous not to.

1:15:58Right, right. And frankly, the way biology works, it's almost impossible not to because that's... It's definitely like we're going to be hit by an asteroid too at some point. Over a long enough time scale, anything that is possible will happen. There's a law about that. I forget what it's called. You don't know all your laws by name. Go on. Yeah, I sure would. I did mention on the previous podcast I was going to do a crazy prediction and you said, hold it. Yes. And I forgot it. So it's not that much a 2026 one, but I'll go out over the next five to ten years. And I think it's actually not going to be the robotics or the AIs that are the best investments.

1:16:37Mm-hmm. I think the best investments are going to be things like commodities and energy. Car company or the assets themselves? The company. Is it copper or are you saying a gold miner? Did I say copper? You said commodities? Commodities, yeah. Do you know what you meant, the commodity itself or the commodity company? Both. Okay, right. because when I think you have to be bullish on AI, but if you are bullish on AI, if all of a sudden, see, one of the great, it's always helpful to think in bottlenecks, right? I think when you're talking about civilization or you're talking about a business, it's just sort of like, there's always one weakest link in the chain that stops everything.

1:17:18I can be selling iPhones that everyone wants, but if I can't get enough silicon, I can't get enough silicon. And it doesn't matter how many workers or how many factories is a limiting kind of factor. That's what you accrued to more often than not for the same reason. Absolutely. This is exactly my point. Sorry, sorry, sorry, I didn't mean to do that. No, no, which is in a world where we are not constrained in terms of expertise or intelligence or in muscle. So if you just push forward the AI thing and the robotic thing, it's actually we've got virtually, not free, but very, very cheap, very, very effective brains and brawn out of a box, the supply constraint is actually the raw material.

1:18:01I need steel. I need aluminium. I need copper. I need rare earths. And I need energy. I mean, there are data centres that have just switched off in the US right now. It's like they spend gazillions, like, woo, we're ready to go. It's like, ah, it turns out we don't have enough power. And if we turn this on, then Chicago doesn't have power tonight, right? And so it's sort of like there is going to be a massive buildout of these things because of the demand that is required from the things that are downstream of it. And I think it'll be the weird little industrial manufacturing companies that makes a really important widget in all of this, the one that extracts the lithium from a salt basin in remote South Australia that has the potential to do it.

1:18:50Now, commodities, any student of business and economics knows that commodities tend to be a very bad investment long term because whenever there is a demand spike, there is a supply-sified response. And so prices always hover around just above the marginal cost of production because if copper triples in value tomorrow, there's no shortage of it. I mean, it's in the ground, but there's a shortage of it above ground. I can always get more. It just takes a little bit of extra time and energy. and the higher price will incentivise me to bring on more supply, there'll be a supply-side response and prices will normalise.

1:19:24And that will still happen. But I think the demand is so great that it will outpace supply. This is where I got data centres wrong. So I go back five, eight years or so. I remember Next DC, I remember very cleverly making the argument that the trouble with data centres was it's commodity. It's just you build or you buy a warehouse, You chuck it full of racks. You put a bunch of servers in there. Where's the moat? Where's your secret sauce? I don't understand. Oh, but demand and computers and SaaS. It's like, yeah, I get that, but I can build more. And it turns out it was an incredible investment, and data centres were an incredible investment, not because anything I said was wrong, but because the demand was so strong and enduring and outstripping the supply-side response.

1:20:13It'll catch up at some point. And I think that's why I'm talking over a sort of a five-ish to ten-year kind of horizon, that we'll be so hungry for electricity and raw materials that even if we started now, it takes a while to stand up the mine, to develop the port infrastructure, to develop all of the refining capacities and all of that kind of stuff. And I'm not saying that these other higher-tech things won't be a thing. They will be. It's just that the value will probably accrue to where there is the bottleneck. That's fascinating. I'm going to take the opposite view, actually, mate. Okay.

1:20:50Only because, and this is, again, stupid, reckless predictions, right?

1:20:59I, you're right at data centers. I made exactly the same mistake, by the way. Right. So let me wallow in that mistake with you. I'll bring up the share price so we can really wallow in it. Don't do that. I won sorry instinctively I disagree not that much I thought well it was already high back to price and business yes yes yes well they're so the share price we didn't do a lot revenue went from 2017$117 million per annum to$430 million it's a staircase going straight up yeah exactly and by the way if it's a far back here the results have been spectacular At a 50 % operating margin, thank you very much.

1:21:40A tenfold increase in share price of 16 years. Anyway, I wonder... So instinctively I disagree with zero conviction. I think your intent directionally is correct. I wonder whether energy... I might even agree with energy potentially. On commodities, I suspect there's not enough economic...

1:22:08growth to allow us to grow that quickly to overwhelm the ability to add supply. In other words, if you said, okay, well, copper's going to work because copper demand is going to grow 50 % in the next five years. And you didn't say that. I'm not putting words in your mouth at all. I'm just, okay, so let's say it's true. Who's buying the copper? And what are they using it for? What are they using it for? And where's the money come from? Where's the money? What does the money leave to make that possible? So in a closed loop kind of way, not we're saying inflation and money printing, but in a closed-loop kind of way, if commodity demand does increase to the rate you're talking about, the money for that's got to come from somewhere.

1:22:46And I don't know, and I suspect if I was a betting man, I think a subset of well-chosen companies beats commodities for that reason. I don't know that demand can grow quickly enough. I'm not restructuring my portfolio in any serious way for this. But even just laying for that, I think the directional thing is right. I just suspect that demand can't grow at a global scale. For a global commodity, iron ore, gold, copper, tin, silver, rare earths, can it grow that quickly to overwhelm? Rare earths, for example, there are more rare earth mines than there is demand for it. There's actually an excess supply already.

1:23:21So even growing demand brings enough online to supply that, which already exists in care and maintenance or whatever. So I don't know, mate. I'm not disagreeing with you other than I would be surprised if we can add enough demand quickly enough, given the money's got to come from somewhere to cause that imbalance. I could be entirely wrong. Look, these are fun predictions, so I'm not hanging my hat on any of them. But lithium's actually a great example because the world went and investors went, oh, we really need this for batteries and the world needs batteries. There's going to be an explosion in demand for lithium.

1:23:56And there was. True, true. There absolutely was. and the price went to the moon and then it crashed. And why did it crash? Did demand evaporate? No, absolute demand is still very strong. It's just that we brought a lot onto market very quickly. So the calculus is, just to use your example, let's say that we'll pick on copper just for fun. Copper is a bad example because it's anyway. But let's say the demand for copper grows 50 % over the next five years, but production only grows at 40%. The price still goes up. Yes, I agree. So that's the dynamic. And then at some point the supply overtakes the demand and then the price comes out.

1:24:33And again, that's what happened with lithium. We're just like, oh, everyone needs it. Every man and his dog opened up a lithium mine and, oh, it turns out we've got tons of it because look at the periodic table. It's a pretty abundant element in the universe. I'm just wondering whether those can grow that quickly. Lithium goes from zero, so it's exploding from nothing to a something. Yes. I think commodities in general are already so well-used, mined, built in. I can't imagine how you would grow the demand for iron. I mean, is it possible? Yes. Is it likely in a five-year period? I don't know you can get that explosion because it might have to come from somewhere.

1:25:05So whether or not spending it here or maybe we're printing it. But I could be entirely wrong, man, entirely wrong. I'm just not sure. I suspect companies that actually have a product at their point of difference with pricing power, with genuine growth in volume terms that is underpinned by that other stuff. But, again, I could be entirely wrong. Well, that's something we'll find out, right? Yeah. I'll give you another good example is with oil. So when was it, in the 60s or 70s, the idea of peak oil? 70s, I think. Yeah, like age of 50-something years ago, the idea was that we'd pass peak oil and the growth and demand is outstripping the supply because here's all the reserves that we've got.

1:25:44There's only this much in the world and one plus one equals two. It's going to go. 1956. Wow. By M. King Hubbard, sorry to interrupt you just saying. No, please, yes. Forecasting US production to peak between 1965 and 1971 and global peak around 2000. Yep. Now, what did he get wrong? Well, he was just basing it off known reserves. Turns out when demand was persistent and prices stayed high, it gave an economic incentive for people to go find more reserves. Here's the other thing that he missed. Technology marches on. So unviable, like coal seam gas, tar sands. So US, get this, predicting the future is hard.

1:26:31The United States is one of the biggest oil exporters in the world. Yeah, yeah, yeah. They might even, they're not the main one, but they're up there. You're like, what? How did, when? Well, we found out a way to economically extract it from previously uneconomic sources. That's what happened. right? And so, and so, um, what's my point? Predicting is hard, but, but let's look at some of the point you were making there with things like, well, we've, we've a lot of this stuff we know about and we've got minds for. Well, the nature of minds is that they deplete. And so, so we actually, one of the more recent interviews we did with Strom was a nano, nano company called Rocket DNA.

1:27:16And they do this drone in a boxing and it's nothing about them, But one of the things the CEO was sort of saying is we're seeing increased demand for our products because mines are being located further and further away. And they're being further and further away because obviously at some point in time we go, hey, it turns out we need iron ore. It's like, oh, there's some iron ore over there. Yeah, yeah. Just scrap it up around. Yeah, that's right. Yeah, yeah, yeah. Oh, it's gone. Well, we still need it. Oh, I'll go a bit further. And it's just like obviously, right? Yeah, it's exactly gone. It's laying around on the ground and then it's kind of in the rivers.

1:27:46Then you've got to dig a little bit deeper. and now you've got industrial machines digging up tons and tons and tons and tons of ore just to try and get a little bit of gold out of it. Well, mine asteroids one day, right? It's like, oh, it turns out that there's loads of this stuff in the universe. And so I guess what I'm saying is that it's not, I am 100 % with you that we will, technology and demand and prices will all push us towards increasing the supply that we need. That's the beautiful thing of what markets will help coordinate and bring about. It's just how those two lines and those curves cross and interact with each other.

1:28:19And I feel over a five to ten-year timeframe, the growth will just exceed the supply-side response to such a degree that we actually see an interesting investment opportunity. And I like it because it's just counterintuitive because you go over the same period of time, AI will get better and better and better. Robotics will get better and better and better. Manufacturing will get better and better. And everyone will look at the shiny end thing for getting the input and the supply chains and all the things that go into it. I mean, you talk about gold. Where was the money made in gold? Money is made in the person selling you the picks and the shovels.

1:28:52That's where the money has always been made. And I do, I'm just doing it for fun for the first episode of the year, but there is a part of me that thinks that that might be the surprise bull run of the next decade in just boring old rocks and electrons. Yeah, yeah.

1:29:13So I'm trying to think of a reckless prediction made by industry in Australia for the next four months just with the fun of it. So reversion of the mean is a thing, generally. Not all the time, not every time. But more often than not, it's a good bet. Probabilistically, it's a good bet, ironically, to assume reversion of the mean.

1:29:36Here's just, you'll like this one, Ram. Okay. The banking sector will fall 10 % over the course of 2026, share price-wise. So you know what you're doing there is you're forecasting a property correction because I can't see that happening in the absence of a material or of at least a noteworthy retracement in prices. Because banks are a levered proxy to, at this point in time, that's what they are. I'm not saying profits. I think the PEs are high enough that I don't know. I'm not going to forecast the profit movement. Okay. I will forecast share. Now, maybe, no, I'm not. Well, if it happens, I'm going to say, yes, I've predicted it.

1:30:09So I'm going to cut the little bit out where you say, Scott, you're predicting a property crash. I did, see? And you said it. I think that – well, we've got to mention the first one actually about rates. I suspect more and more people decide that banks are offering ordinary value and sell, particularly CBA. CBA is the biggest one and it's the most expensive one and so any meaningful sell down there is a sell down across the board. I can be entirely wrong. It could be up 25%, right, for all I know because sentiment is sentiment. That's why it's reckless and stupid. I'm going to say this because I've mentioned it a few times.

1:30:41People always look at me as if I've got two heads or something. I'm going to talk to you about that. It was late June. The Commonwealth Bank was trading at$191 a share and lots of headlines. It's going to be at$200. It's going to be at$200. Lots of forecasts. It's$155 as we speak. So it's near enough a 25 % crash. I'm going to use the word crash because it's evocative and it's emotional. It makes you feel good about talking about banking that way. But, I mean, that's what people... Bitcoin's down 25%. Oh, it's a crash. Oh, it's a Ponzi. You know, everyone piles on in. It's like, well, the bluest of the blue chips, like one of the, if not the biggest, like second biggest company on the market is down 25 % in a market that overall is rather buoyant.

1:31:24It just feels like no one's talking. And in a property market that's done reasonably well. It's just, I mean, back to that earlier point, it's just sort of like, you know, Commonwealth banks are good. As far as banks go, It's a greatly well-run organisation. Stupid price. It's still the most expensive listed bank in the world on a price to book value today after all of that. Can I finish with a prediction that will save me? Go on. I predict that most of the predictions we've made today will be wrong. Yes, yes. And that way if the predictions are right, I'm right. If they're wrong, I'm right. I win.

1:32:00That's how you do it. That's how you do it. Do you have any final thoughts? yeah i i just i think as i said at the at the start to a degree you can't avoid making predictions right you just can't but also i think when when we are proven that most of these predictions are wrong and i agree with you that most most of them will be and the ones that are right will be right for the wrong reasons and not why we saw them as being right. Yeah. I think the real mistake I see in myself and in others is refusing to adapt to a changing reality. So I've got my views. I've put some of them forward here today.

1:32:48If the world changes in such a way that it becomes untenable, then change your mind. Like, change your mind. I don't know why that's such an outlandish thing to sort of say. No, I know. change your mind. Be flexible in your thinking. So it's like, I had a very high conviction that this, this, this and the other, like, oh, yeah, okay, no, it's not going to happen now. And that's fine. It's only a mistake when you double down on it because, no, no, I'm still right. No, no, no, no. And you just you refuse to acknowledge reality as for what it is. And so when these predictions or your own predictions turn out to be wrong, yeah, that's cool.

1:33:25Reformulate them and move forward. And that's nothing wrong with that. That's commendable. I think it's a really good point. By the way, the other thing about changing your mind is make up your mind slowly. Yeah. Despite what you'll see in the ads and despite what the day tradels tell you, take your time. Not sure. Wait. Have a bit more of a think. Work it out. Let me add something to that. Yeah. Make your peace with the too hard basket. Yes, there you go. So take your time. But there's plenty of things I've taken my time on and I was like, I'm still. NVIDIA is a classic example, right? We've mentioned it before.

1:33:56I am, there is, if in a year's time we are talking about NVIDIA and it's tripled or it's halved, I will not be surprised in either circumstance. Yeah, correct, correct. And it's not because I'm trying to have it each way. It's just that I think I don't, I can see very clear things as to what happened that would result in both of those things, but I don't know how to handicap them. And so I can take all the time in the world and maybe I get a firmer view on it, or maybe I just leave it in the too hard basket and that's cool too. You don't have to have an opinion on everything. In fact, anyone who does have a strong opinion on everything is an idiot.

1:34:33Correct. Because the life is too complex for you to have a fully fleshed-out view on very complex technical things. I'll repeat yours and combine them both. The too hard basket is I don't know yet. Yep. And yet is important. So add them together. Why? Because it says nothing needs to stay in the too hard basket. Yep. But nothing needs to be kept out of it. It's okay to say, I don't know yet. Either I will progress to an answer or maybe I'll never come back to it because I'm never going to know. But either way, that combination means, and the good thing about not sure yet is you don't have to be definite because I've had companies like, next year's a great example, right?

1:35:09I put it on my mind. I made a decision. I moved out. Now, I was sure, in quotes, it wasn't going to go well. Why? Because it's just data and anyone can have it. It's a glorified REIT, a real estate investment trust. And I said that was a true, by the way. Because I made that decision, I didn't go back and re-evaluate the, well, hang on, what if, as you said, demand outstripped supply? I said I'm sure. No, I didn't. I was never in the too high basket. I decided I knew the answer. What I should have said was I'm not sure yet or I don't know now, right? And putting some time on it gives you the mental flex.

1:35:44I'm just not very good at this still, Matt, by the way. I'm not telling, I listen to anything I have answers to. I know the answer is not very good at doing it, is I don't know yet. I'm not going to have a formal view. I'm not going to have a final view. I'm not going to decide I know the answer. I'm going to say, I don't know yet. Maybe my view changes rather than I think no. Okay, well, then you've got to walk that back. That's hard, right? To your point, change your mind. The issue is changing your mind is not making it up. And I don't mean being, you know, thoughtless or noncommittal or somehow.

1:36:13That's the other thing, right? It's not a character flaw not to have that firm opinion to your point. You said, here with firm opinion, I'm an idiot. I mean, it's pretty close, right? Our society wants you evolutionarily. Make a call, line or no line, you choose. Healthy to eat, going to kill you, you choose. They're pretty definitive choices. In this world, we don't have to make those choices, thank God. So we kind of go, I don't know yet. I'll wait and see. If I'm not sure, I'll say I don't know. If I don't know, that's not a failing. I don't have the information required to be certain enough in a world of, to use Andrews, trade-offs and opportunity costs.

1:36:46I don't know, and so I'm just not going to make a decision on that one. Yeah. Isn't it such a great feeling though too when you do find, I find strong conviction for me is a very rare state of mind. But when it does come for a particular, and it's happened a handful of times over the years where it's not like, you know, I felt like I was right, but I really felt like I was right. That doesn't happen very often. And as long as you can be honest with yourself and not fool yourself, because you are the easiest person to fool, I think when they come along, and again, you can have various checks and balances in your process to try and say, well, I am right, or at least I know what will point to me being wrong.

1:37:28Yes. I've got failure points here. I understand the thesis very, very well. I understand it really well. And when you've got that and you've got an opportunity and everyone's ignoring it, it's just like it's really exhilarating and exciting, you know? I don't want to name names, but there's been some companies out there I just was super passionate about and everyone hated it and everyone was a laughing stock and it's like, no, no, I'm not going to. And you look like you've got egg on your face for a long period of time. And that's the other thing as well is don't look at the market for validation on your opinions.

1:37:59Look at like what's actually happening under the hood there. Yeah. And relish those opportunities when they come because they are super, super, as I say, very rare and very exciting and treat every day that the market doesn't, where the penny doesn't drop for the market as a gift from heaven because like... Yeah, that's right. You know, it's just like, oh, I get more opportunity to save and put more money in this that everyone is missing. So, yeah. So it's the reverse too, just because the share price is up, don't think you have to buy. Brain chip, we've talked about it a lot and I got flamed on social media all over the joint for just being, I don't know.

1:38:35Never comes up anymore, does it? It was$1.76 in January 2022, almost four years later, 16 cents. Yeah. Falling more than 90%. And, yeah, some people still learn, I'm not trying to make you feel bad or have fun at your expense other than just to remember just because the price was up doesn't mean it's going to stay up. Just a point doesn't mean it's going to stay up either. Just one of those things. By the way, fascinating company. It's very lumpy in terms of its revenues, but they're making revenue. I'm not throwing shade at this. I think we're both of us. It was just sort of like that never made sense, that price.

1:39:08That was just stupid. I mean, could it have worked out? Yes. Probabilistically, was it like to? Was it like you to? No. Yeah. But let's say that we're having this conversation in a year's time. NVIDIA, Google, and Microsoft have all signed massive contracts with BrainChair. And their chips are fast being integrated into every smartphone and laptop. That's it. I will change my mind. Okay. How does that? Okay. Let's go. Yep. You know, you can change your mind to both the upside and the downside. And if you don't know, then just wait because it will come. And there's the other thing. It'll come and then you go, and then you do what I do, which is you go, well, now that I've, the penny's dropped for me, it's imminent that the rest of the world gets it.

1:39:53Exactly. Still with you people. Oh, I have to act now because everyone's going to figure this out. And then, you know, two years later it's like no one's figured it out. Or am I wrong? And then the demons come at night and it's very, very tricky. I've said this before, mate. I'm not a Tesla fan, no other Musk fan. Those shares went nowhere for five years and then 10X'd. Yeah. Nowhere for five. Nowhere. Nowhere, nowhere, nowhere. To the extent the investment cashed out, maybe the share price is still too high or too low. I have no view. And it's been a long time since that 10X happened. But that's a bloody long time.

1:40:27Again, were you right or were you sure the price is up? No, not necessarily. But the reality is waiting is the hardest thing in investing sometimes. Dude, we were doing year in review recently. Yeah, yeah, go on. Tesla started the year at 431. Right. And as we speak, we've still got a couple of weeks left of 2025. It's at 458. So it's gone up this year. There you go. Not terrible, actually. At one point it got to 252. There you go. It's crazy. I will make this point every opportunity I get. Because even the winners are always, pick your favourite stock. I don't care what it is that's gone to the moon and it never goes straight up.

1:41:06It never does. And that's why I always have such immense respect for people who not only got it right but then held on for the journey because it's just like the opportunity to be fake on both sides. It's like this has gone incredibly well. Oh, I would have hung through the 50 % and I would have bought more. It's like you would have you, would have you. Also, it jumped up 30%. Oh, I would have resisted the temptation to quote, unquote, lock in profits. Would you really? You know, it's just like to have that conviction and not be swayed by it for either greed or fear reasons is so exceedingly kind of rare.

1:41:39But anyway, I just pointed out with Tesla, right? It's like, who'd have thunk it? Who'd have thunk it? We could have been having a conversation in April going, ah, all the Tesla fanboys. And they're going, yeah, well, it's doubled since you were laughing at me and now it's ending the year on a record high. And then as they do the victory lap, you know, six months hence, it's back at$100. So everyone's got something to sort of, it's got something for everyone, the haters and the lovers, you know. But the ones who are truly right is just like, and that's all noise. That is, all of it is noise. It's like what really matters is what's happening under the hood.

1:42:11In the frunk. In the frunk. Yeah, in the frunk, you know, and like do you think more of these cars will be sold in the future? Do you think they're battery and energy technology and now they're AI and robotic technology? Yeah. I'm not saying this as a fanboy. I've got no stock in it. I've got no interest in it at this point in time. Too hard basket for me. But it's like if we get to a world in like sometime next year and the Optimus bot is rolling out at its scale and there's a lot of scary echoes as to what happened with Tesla in the early days. I'll tell you what, I'll take a serious bloody look at that thing, right?

1:42:43Like that changes everything. So you're saying predictions are hard, especially about the future? Babe Ruth said, or JP Morgan or Oscar Wilde, one of those. It was Yogi Berra. Oh, Yogi Berra. That's right. If not, it should have been the others. What was wrong with those people? I'm sure Babe Ruth meant to say it. He would have. He would have, you know, he had a bloody push him out of the way. Yes, exactly. I think we're done. We've been a very long time. I hope there's been a fun one. Some reckless predictions for you. If you have any, let us know. No one's listening by now, but if you are at TMFScottP on Twitter or Insta or Scott Phillips Money, hit up Ram at Sage underscore Simeon exclusively on Twitter, also at Strawman Invest at the very same website.

1:43:24Until we speak again, Happy New Year. looking forward to a year of more rants and Bitcoin talk and maybe some good stuff as well. We'll see. More things change, the more they stay the same, my friend. Sweet, your predictions. Until then, fool on. Happy New Year. Cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned. General advice only. Please speak to your financial professional to understand how it may pertain to your situation. Subscribe to the free newsletter at fool.com.au forward slash listener. The Motley Fool operates under Financial Services Licence 400691.