The Weekly: The midterm market crash, The Curve Fund’s October update & why David Jones collapsed

0:01Vic: Coming up in today's episode, we talk about the wild week that it has been in the stock market. We've had the Democrats win the midterms in the US and markets have just gone absolutely bananas. It's a sad day for anyone that loves David Jones. This is one of the most iconic, biggest department stores that really has ever existed and it's gone into receivership and administration. What do we think is going to be happening to the future of shopping and department stores? It's not looking good. And we have the October fund update. What companies perform the best? What didn't perform so well? And there is some big family drama.

0:42Vic: This is the Curve Weekly where we read the finance news so you don't have to. I'm Vic Harris, a finance professional who's made a career making money for other people. And I'm Sophie Hallwright, ex-television and radio producer who was sick and tired of not understanding the economy, money, how to invest, anything to do with wealth, so it was out of this podcast. But before we dive into it, here's a word from today's sponsor. This episode of The Curve Weekly is made possible by Pathfinder's KiwiSaver Plan, helping you invest alongside your values. If you've got a question about anything to do with investing while trying to be a good person, submit it via the ethical hotline via the link in the podcast show notes.

1:18Pathfinder Asset Limited is the issuer of the Pathfinder KiwiSaver plan. A product disclosure statement is available at pathfinder.kiwi.

1:27Vic: Hey, Soph. How are you? It's been a long day. It's 9.15pm on a Friday evening. This is what I'm doing on my Friday evening. Coming live to our listeners. Well, not live, but it's been a long day. Yeah, we got a message on Slack from Vic saying, guys, we're going to have to move the recording. There's way too much going on with the markets. Like, we'll have to check back in. And then just before we started recording, she had a margarita at lunchtime. And I thought, this is a sign of things are happening. Because Vic is normally never a midweek drinker. No, I'm going to blame it on. We had everyone from the team in town.

2:06Vic: And, you know, I was trying to be like, I'm a fun boss. They'll find out in a few months. I know. No, it was also, I was like, I feel like I have been living in the office at the moment. So you know what? I'm just going to let my hair down. And yeah, I had a nice margarita lunch, which was really good. I find it so hard to make a comeback from a midday drink. Like I need a nap. Yeah, I didn't. I thought it was great. It gave me like zhuzh. But we need to know what's happening because I think it's so fun that we've got like, you know, the whole point of having a fund means that we've got a fund manager that we can know what's going on like the real it's like our version of it's so fun no it is fun I do enjoy it it's just I think this volatility that we've had in the last kind of few weeks I'm just like oh that's right I'm back in this game you know but no it's so what happened I guess for people who haven't been following what's been going on in stock markets around the world is we had the US midterm elections happen.

3:17Vic: And I think that was Wednesday, New Zealand time. So then on Thursday, the markets were like, woohoo, you know, because we had a democratic like sweeping win. Everyone was absolutely euphoric and some incredible historic changes and people in certain seats, et cetera. and so the market was like off to the races and I was sitting there I was like damn it should have bought more should have been more invested you know should have taken my shot when I was gonna buy certain companies and then I went home and I was a bit gutted wait pause pause pause pause for anyone that's wondering what you're talking about you're meaning for the curve fund right you're not many you're in personal money no so you you you had my personal money is in the curve fund so whenever i know i i'm talking about the funds yes sorry but i just want to explain for people who don't understand like when you say damn i should have been more invested just like when we talk about with companies where we're like oh what's the cash on their balance sheet or how much emergency fund do they have if something whatever it's the same thing you know for for like honestly years we've been talking maybe not years but for ages we've been talking about warren buffett having a lot of cash so when vic saying oh i could have invested more you were meaning i i wish I'd put more money in before the election.

4:35Vic: Yes. And you always have a small amount of money in cash if people are redeeming or people have just applied. There's always a little bit of cash that then you can invest when the time is right. But because I've had so many people investing, we've had to be constantly putting that money to work. And so - Oh my god, go the curve community. That's just so amazing though, isn't it? And so I have been constantly buying stuff. But then, yeah, then this midterm result came out and the markets went up and they're up so strongly. And then yesterday I woke up and they were down massively. And I was like, oh, gosh, okay, what's going on?

5:17Vic: So then you're like, you're waking up because we get the, in New Zealand, we get the second half of the US market open. So you kind of wake up and you're like, what's going on? Why is it down? What's driven it? is it temporary is it not should i buy what company should i buy and so i woke up and i was so fun yeah oh fun so fun no no honestly when we were last talking and i can't even remember when it was you were like staring at the tv being like sorry i'm just like keeping an eye on like what's going on i'm like i am in the wolf of ponson b central i am in i have got a front row seat to what is actually happening behind them.

5:53It's so, it's, I find it exhilarating. The one that doesn't have the stress on what we decided. I know.

6:00Vic: And I think that's the thing is every decision you're making, right? It's like, yeah, should we be investing more in this? Or is this a start of something? I mean, look, this podcast could come out and the market could have fallen again or it could have gone back up and we kind of, what we're talking about is like, so I don't know what's going to happen tomorrow, but yeah, now my Saturday mornings are pretty occupied. with watching the stock market. But it is fun and it is what I love doing. It's just when it's big moves. So we lost$3.2 trillion in the US stock market yesterday, which is massive.

6:34Vic: It was down over 4%, which hasn't had that big a move since Liberation Day, which was when Trump introduced tariffs. And remember we were talking about... Oh my God, yes. And I... That was like what? That's eight months ago. Yeah. So when I was like, let's move the podcast, not like it happens every time the market's gone down, you know, and I'm like, oh, we need to move the podcast. No, it was literally like, oh gosh, this is quite major. I'm annoyed I didn't invest in more too. That's really a lot. It's a great shopping opportunity, isn't it? It is. Well, is it? Markets were on sale. Or is it going to be even better tomorrow or the next week or the next month?

7:11Who knows? Is that kind of what you're thinking about? Like, is it going to continue to go down? So you don't want to decide to put all of the cash in because it could continue to go down. You almost need to stagger it.

7:20Vic: Yeah. And it's just being really strict around like, okay, what price? Like before any of this happens, you know, having processes in place of like, okay, well, what price would I buy this stock? Or it's like having a watch list of companies. Okay, these companies are looking quite expensive, but if the issue prices fall by 10%, 15%, then I'll buy them. And so you're, you kind of got the current fund that you're looking at. And do I buy more of the companies in that? And then you've also got watch lists being like, oh, the companies that I wanted to buy, but now they're looking really attractive.

7:53Vic: Cool. I'll buy them now. And this is the beauty of investing, guys. Well, actually it's not because this is more trading. This is like professional investing. This is not what we would be doing. This is not what we would say. If you're listening to this and you're like, should I be doing that? It's like, actually, no. that's well I mean I don't know if you have any thoughts on that Vic but it's more well trading is more like okay you're you'd you'd buy on the same day or the next day you buy and sell you know you would have maybe sold two days ago when the market was high and then you'd buy lower and then you say you know you're you're doing that in today whereas I've got positions in the fund that are solid positions that I want to hold for the long term but you know you're you're being I I guess, opportunistic with when prices fall about adding to your positions.

8:45Vic: Does that make sense? Yeah. And then when a company does really well, like we had an incredible month in the fund and some positions were up 30%, 35%. They start to become like 5%, 6 % sizes in the fund. And so you're like, oh, do I really want, that company's done really well. Do I really want that size of a holding or a position in that stock in the fund? Or do I want something that's like maybe 4 %? Do you know what I mean? Yeah. So you're kind of constantly juggling your positions, your position sizes of your investments within the fund. And also if tech does really well and all of a sudden you've got 30 % of the fund in tech and you actually only want 10 % then you start selling.

9:31Vic: So it's all about like monitoring the different sizes of the companies, sizes in the sectors, and also countries as well. Do I want 50 % in the US? So, yeah, if the U.S. does really, really well, then you start kind of scaling it back a bit. But can you do a very quick explainer on what happened and why the stock market went up with the news of the Democrats getting in? For some reason, I thought that it would be the opposite, because for a really long time we've spoken about how Trump, in a way, is actually quite good for the stock market. I hate to say it, but actually the stock market has done quite well since he's been in power.

10:08I would have assumed then, based on that, that it would have crashed when it was looking as though Republicans weren't in power. Could you just explain what's happened over the last couple of days?

10:20Vic: So the reason the market went up initially when the Democrats got in was because the Democrats are very anti-tariffs. and so everyone thought okay if they get in then tariffs are going to be removed and the companies will be a lot more profitable lower inflation all of that which is really positive for stock markets for the US stock market then the following day when the market fell was because there was news that especially in Texas the Democrats are very anti AI data center investment in Texas so So people were like, oh gosh, this is going to mean that there is less support. It's going to add costs to.

11:06Vic: So yeah, that's why all the tech, it was just, it was the tech names that all sold off, which is, you know, over 50 % of the S &P 500 now. Because Trump was a big supporter of data centers, wasn't he? He wanted more of them. Data centers were being funded quite enormously. And there was one that went under recently, wasn't there? and it was almost like, oh God, is this going to be the start of like a whole lot of data centers like plummeting? Did that have anything to do with it? There was seven data center IPOs in September that got pulled. One of them being one of the largest in Australia, which Firmus, which was supposed to be, I think the size was, the size of the company was supposed to be bigger than Telstra, which is like one of the biggest telco companies in Australia.

11:54Vic: And then that fell over and didn't IPO. So there has been, I guess, what would you call it, like wobbles. There's been things that have started to make investors nervous when that news came out being like, oh, and they're not going to be able to build data centers in Texas. And maybe more Democrats are less encouraging of AI data centers. Then, yeah, what does that mean for tech companies? Personal question before we move on. because this morning when I woke up, I thought, oh, my God, I can't wait to talk to Vic about this. I wonder how she's feeling. And I wonder also if she's having a good time.

12:32I wanted to see, you know, when you're in the middle of stress and it could be good stress. Let's say, for example, you've always wanted to be a mom and you've got this, like, crying baby that's, like, super, super stressful and you're not sleeping. It's really hard in the moment to be like.

12:46Vic: No, I hate it. I know what you're going to ask me, and I hate it. Oh, you hate it. It's not fun. You're losing people's money. It's not fun. Right. Okay. You know, like you're trying to like grow people's money at the end of the day and it's, it's just, yeah, it's. No, I think you've missed the question. Oh. No, I wanted to know, I wanted to know if there's a part of you that's enjoying investing again in that way, even though I know there's a lot of stress involved. Are you like, okay, this is, I'm, this, I'm where I'm meant to be. I'm doing something that I'm really good at and this is high stress, but like I'm in the thick of it and I'm, you know, like, have you had a moment to think this is actually pretty amazing that I'm managing money on behalf of the Curve community.

13:26Vic: Yes and no. Okay. It's not till like friends come up to me or people from the Curve community and they're like, oh my goodness, so amazing. And I'm like, oh yeah, it is. It is amazing. Do you know what I mean? Like it's not till someone else makes you stop and realize. Because when you're so in the thick of it, you kind of don't realize. Does that make sense? It's like stopping and smell the roses kind of. Well, that's kind of what I wanted to say. I've realized that it's incredibly stressful and I know that it's high pressure, but also all of us know that markets go up and down and you're doing your best to make decisions that you think are right and they're not always going to be right.

14:02And also the market's always going to crash. And everyone that's invested in the Curve Fund knows that because we've listened and learned about investing from you for so long. So I think you need to remember as well that there is a part of it where all of us are just like, thank God it's not me making those decisions. Markets are always going to crash just okay

14:20Vic: but you know what I mean like they go up and down yeah yeah it's not like it's just like a part of it I think it's just a good reminder to sometimes remember that six years ago when we were just talking about the stock market it's just like going to the farmer's market and a stock is like cheese you're buying from a store like the fact that people are now giving their money for us to invest and make decisions I guess my point is no one is expecting you to make every perfect decision do you know what I mean it's like you're making the best decision you can with the information you've got and like that's way better than most of us would be doing and people have been listening like the amount of recurring investments that we have set up with people investing in the curve fund is incredible so over 70 percent of people have set up recurring investments mean they're like means that they're depositing regular investments whether it be weekly fortnightly so they are getting these lower prices that the shares and the stock prices are at right now, which is awesome.

15:19Vic: So yeah, it's like everyone's been listening to what we're saying, which has been awesome because markets do go up and down and you never know when it's going to happen. And so if you do set up regular investments and you can do that through Shares Ears or through the Curve Fund directly, then you get to invest at these lower prices anyway, which is awesome. I also think there's an added pressure of like proving we can do it a bit. Do you know what I mean? So it's like, and also in my previous job, I was just a portfolio manager. And then last five years, I've been just co-hosting the podcast.

15:57Vic: Excuse me, sorry, pause. You've got to get rid of the just. I'm getting to a point. You can't say just. No, I'm saying I'm just, I'm getting to the point. When I was in my previous career, I was just a portfolio manager. That was my role. The last five years, I was just a co-host. That was my role. now I am doing both. And I think that's really hard because I, this morning, all I wanted to do was jump on the podcast and explain to people like, don't worry, it's fine. This is what's happening. But then I'm like, oh no, no, I've also got to invest in protect people's money and make a decision. So I was like, yeah, I feel, I feel an added duty, which is, which is such a privilege and so incredible to have.

16:36Vic: That's what I meant with the just, if that makes sense. Yeah. Because I was having flashbacks from when we would be, I know. It may be one of my favorite memories is trotting over the hill in Milos in Greece. And we were both, this was actually before you were full time in the curve. And we were trying to get confidence saying, oh, we have a business that teaches women about money and investing. And we kept saying just or um, or sounding really insecure and not confident. And we were like marching, sweating up this hill with our bags being like, we had a financial edge again. I actually notice, like, I notice people, particularly women, when I'm around and I'm like, so what do you do?

17:21Vic: And they do it too. Business owners, women, female business owners. And it's like, I just, I want to tell them. Don't say just. Even I was on a call the other day and someone we work with was explaining what they do. And they were like, oh, you know, so I'm just that. And I was like, oh, God, I really need to tell her. I know. It's quite a Kiwi thing, actually. The whole tall poppy. like so for those who don't know tall poppy is when you know people just try to bring each other down and it's a really shit thing that New Zealand has culturally you don't want to talk about your achievements and you don't want to talk yourself up and you try to be a bit smaller and then you add the whole female angle onto that and so it's yeah it does compound quite a bit but we're changing that we really are trying but yes we had a really good month in the fund and I am so stoked we were up 2.2 % last month in October.

18:12Vic: And you know what? The S &P 500 was down nearly 1%. So we did really well last month. And it's a combination of a lot of things, but the overarching thing was just having a, just, again, just having, the overarching thing was having a very diversified fund because is it was definitely a month of two halves. Like we were going so well for October and we still did really well for October. We were doing better. And then kind of what happened last night happened on the last day of October. And I remember leaning across to one of the guys on the team and I was like, when is the cutoff for the end of the month?

18:54Vic: Is it the 30th in New Zealand or is it the 30th in the US? I was like, I just wanted to kind of get rid of the last day, which was not that great. But anyway, funny finance gags. Oh, my God. I'm actually going crazy. Yes. But anyway, really good to have a good October. She's like, I'm done now. I'm done. Let it go. Why don't you just give us an overview on some of the decisions that were made in terms of, like, what did we buy? What did we sell? And, like, what actually businesses are doing super well at the moment versus ones that are maybe not? Yeah. Yeah, so it was reporting season in October.

19:34Vic: So there was a lot of companies reporting results. So every quarter in the US, they have to report financial results. And this quarter was, there was a lot of big moves up and a lot of big moves down. And it's interesting because I've never, like these are trillion dollar companies that are moving like 10, 12, 13 % in a day. And it's just, it's crazy because that's what you're supposed to see in like small companies, not these big, really kind of, they call them kind of blue chip companies, but not in these big, big, big companies, you know, losing billions of dollars a day. It's just, I've never seen moves like this.

20:17Vic: And Alphabet actually had a really bad result and it was one of the biggest positions in the fund. And that was all around. They're still growing, still growing phenomenally well, but it lost$500 billion in value in a day. But I just don't get, like, why? What was going on? Like, what are investors expecting to see? And what I find really confusing is when businesses, like this has happened a lot now over the last few weeks where they've come out and they've actually, they're still growing amazingly. But the headlines are it's doing really badly because I saw so much about Alphabet flying around.

20:56And I was like, wait a second, we've, this is just confusing because that, yeah, I don't know. I mean, obviously, I didn't look then deeper into what is actually Alphabet doing, but felt counterintuitive to what I was expecting.

21:12Vic: So we're seeing a lot more bigger moves in companies. If they don't quite hit what the market was expecting in terms of their result, we're seeing some huge moves. And yeah, it's crazy. I mean, the Alphabet$500 billion loss in one day was the company's worst ever day on the stock exchange. and the second worst day like ever across any company ever. Like these moves are wild. Anyway, the reason was because we've talked about at length about how people are getting nervous about AI and like has the demand kind of got ahead of itself and are people just feeling, you know, just getting way too excited and this is natural, right?

21:56Vic: Like this always happens with exciting new things. People buy up businesses, they get really excited, share prices go crazy and then there's a bit of a kind of a digestion phase and with alphabet the key thing was that essentially they had negative cash flow so they had been spending so much on investing in ai that they'd gone into negative cash flow so that just means that you like free cash flow is like it's what you earn each month let's take your own pay for example like say you get five thousand dollars a month and then after you rent your bills say your groceries you fix your car whatever it is that you have to pay you have eight hundred dollars left that is essentially your free cash flow so you can kind of choose what you're free to choose what you want to do with that and you could you know pay down debt you could invest it you could go spend spend it on whatever you want and so essentially once you paid for your your essentials and your needs and stuff, what's left over.

22:57Vic: So Google, what they had left over, their free cash flow was negative. So they had been spending more than they were earning. And this has kind of got people worried because it's like, oh gosh, this is one of the most stable, really, really iconic companies. And they're not even break-even. Well, they are break-even, but they've just like, this quarter, They've now got negative cash flow. So it just limits their flexibility in terms of being able to pay dividends, buy back shares, invest in growth, invest more in AI. And so it's a tighter it's a tighter line between what's coming. Yeah. And it's just like, oh, gosh, OK, you can only have negative free cash flow for a certain period of time.

23:46Vic: So, you know, they're going to have to there's going to have to start being a handbrake. Like there's all these things, there's all these reasons and there's different ways to get out of it. But it's just these companies have been generating so much cash. So to see this from such a big company like Alphabet was what made people very, very nervous. Freak out. Absolutely freak out. So that was the reason for the share price fall. Did it make you want to buy more? Or did it actually, did it freak you out too? It did freak me out a little bit, but we did buy some. We did buy a little bit. we already had a big position going into it which was kind of annoying but that's what happens as in we owned a lot of it so when it went down i was like shit yeah it's actually quite like yeah it was quite hurtful uh on the fund but that's why you know we had other companies that we that went up you know massively in the in the month as well like is the law luxotica nailed it i actually will say i love the name of this company we've been saying it a lot in the offer it's like it's a loss loss i've just fucked it up now it just kind of rolls off the time you know it's a really cool name that was also one of our largest positions and that's up 30 for the month so and they're so different right you've got a tech company and you've got a sunglass lens company so just that's why you have a diversified portfolio of investments is because i don't know if google is going to come out with a negative free cash flow number that was way higher than what people expected and therefore the ship price is going to fall so let's hold a whole bunch of other stuff so that you know in case that does happen if we'd had all of our investments in google we would have been reporting a negative 12 month for october but the thing to remember and just like what i said before is like if that happens it's not i mean it's so hard isn't it because on the one hand i want to be like it's not a reflection on you because it's it's not actually but no I understand how that would be really stressful and it is taking long-term view do I think Google is going to be bigger and better in five years time yes okay cool then I should be buying you know like it's like that's that's the mentality if what caused it to fall and have this massive reaction was something that was going to change my decision making about the long-term ness of Google then that's when I wouldn't be buying does that make sense yeah but I can I give you a funny anecdote about Isolore Luxottica.

26:18Do an overview for anyone that doesn't know that company. Oh, yes. Because there might be people that missed that story. Very quick. Yes, true. If you missed it, shame. It's a real shame, actually. It's a real shame. I'm just not going to tell you what it's about,

26:31Vic: and you're never going to own it. So it is the biggest sunglass and lens company in the world. They make, they've got their own brands, Ray-Ban and Oakley is what they own. They own Sunglass Hut, OPSM, And they also have licenses to make a whole bunch of other luxury brands in terms of Armani, Montclair, Dolce & Gabbana, so many other luxury brands in terms of their sunglasses. The founder unfortunately passed away in 2020. His name was Leonardo. And he handed his kind of right-hand man control of the business. So this guy called Milia, he handed his right-hand man the kind of the running of the business.

27:12Vic: and also the running of kind of, I guess the family trust is kind of what you'd call it. And he has eight years to his fortune. So 32 % of the business is to be split amongst these eight years. But there is kind of, it's kind of in a trust and the kind of the right hand man that the founder gave authority to has kind of control over that. Anyway, one of the sons has kind of revolted. And he has come out and he's like, I think this guy's a dick. And like, I don't think he should be running the business. And anyway, there's just a whole lot of uproar. And this guy, one of the heirs, is like quite outrageous.

27:54What's his name?

27:55Vic: His name is Leonardo Maria del Vecchio. And he tried to buy out two of his siblings and buy their stakes for 10 billion. And they said no. He's been on podcasts. He's like talking about how terribly his father's business has been run, lacking his father's love. It seems really like daddy issues. And he talks about seducing women. He talks about past drug use. He claims he slept with more than 2 ,000 women. And I think he's just, anyway. Sorry, ooze. By the way, ooze not sleeping with 2 ,000 women, just to clarify. It's the approach. Yes. Just want to clarify. But I guess why do investors care?

28:36Vic: Well, it creates uncertainty about what's going to happen to this stake. So there's 32 % of the business there. It's giving insecure, isn't it? It's giving I'm a less loved child. Yes, it's giving very insecure. Yeah. And so I'm going to kind of make everyone's lives difficult. It's a bit Brooklyn Beckham vibes. Yeah. Yeah. So anyway, watch this space. But yeah, investors are like, oh, what does this mean? Is it going to be kind of like a revolt with the heirs versus this right-hand man who's kind of running the business now. But like the poor dad would be rolling in his grave. I would be. You left your eight kids four billion each.

29:14Spoiled little brats. Yeah, I know. God. But more money, more problems, you know.

29:19Vic: More money, more problems. Yeah. It really is. I do. Yeah. What is it? What is my saying? You know, marriage is hard. Divorce is hard. Being broke is hard. Being rich is hard. Exercise is hard. Being unfit is hard. I've really come around to that. I've actually come to that quote I used to hate it I know I used to hate it and now I get it it's like being employed is hard running a business is hard being unemployed is hard being employed is hard everything is hard you've got to choose what your life is hard for me I'm thinking like this is the most depressing quote in the world and now I'm like I think because I said it was such like I was like marriage is hard life is hard it was a bit cringy wasn't it it was a bit like it was pre it was pre being confident on camera probably it was also kind of like join our investing course because life is you we were trying to sell something i don't know what it was but it was something we're trying to sell so funny and i was like i've nailed it i've absolutely nailed it oh my god i just remember the days it used to take like two hours to get you to do a selfie story because you were like i can't i can't do it it's not i'm gonna redo it i was like oh my god it's fine so funny oh how far you've come I'm sick of talking about the fund actually so am I if you want to learn more if you want to invest if you want to sign up to get these fund updates which are much more in detail then we'll put the link in the podcast show notes but the fund had a really great month and I'm really stoked proud of you proud of us good on everyone that invested yes go you good thing go Pathfinder believes you don't have to choose between an ethical investment and a profitable one.

31:03They're about generating returns that you can be proud of, which means working to avoid investing in ways that harm people, our planet, or animals. Sure, there might be some unders and overs, but they believe that ethical investing can deliver positive returns. Pathfinder Asset Management Limited is the issuer of the Pathfinder KiwiSaver plan. A product disclosure statement is available at pathfinder.kiwi. To learn more about how they invest ethically, you can read the Ethical Investment Policy and Exceptions Register, which is available on their website. Okay, let's talk about the one number that every business owner should know off by heart.

31:37And I'm not talking about revenue, I'm talking about cash flow. It's like checking your bank balance before ordering a second bottle at dinner. A business might look really brilliant on paper and could still get caught short if a bill arrives and they haven't been paid on time. Issuing invoices on time, it might not sound like a big deal, especially if you're just small, but getting in the right habits and making sure that your cash flow is never looking scary is so important. Arguably the most important. And it's one number that I used to not understand or pay anywhere near enough attention to.

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32:47Big thank you to Xero for supporting this episode of The Curve Weekly.

32:51Vic: So the fun's going good, but something that isn't going good is David Jones. What's that saying? Never trust a man with two first names? Oh, interesting. Because actually Luke has a, I'm not going to give his last name away, but he has a first name for a last name. I actually think it's quite cool. I like a last name for a first name. What will you be? Will you take his last name? Definitely not. Absolutely not. No, no shade on anyone that's done it. I just, I, no, I just feel like I've built a lot of brand equity in my name. you know like I just I'm like I've been horrible right for 35 years like I mean if I change my name like no you know it's who I am I just I feel attached to it I don't it's not that I like my last name sorry dad love you but I was actually just also the admin of changing it I can't be asked oh I know yeah just too much time here the only thing that is confusing is kids all having the same last name like if we did have kids like how would that work I was thinking it could be kind of funny to have all the girls with my last name and all the boys with his or something or the other way around even yeah but then i just i just i don't know if like if i was a sibling would i want to be this have the same name as everyone i don't know because i guess that's kind of the point right you want them to all feel connected and yeah yeah i actually would love to know if anyone has done this differently or has any insight into like how i'd love to know because i'm definitely i'm just in the camp of like i'm not i'm not gonna i forgot on luke's last name and I'm really fucked off because I want to like.

34:19So all of a sudden he's decided he loves his last name. Loves it. What about combining them, you know?

34:25Vic: No. Like you and me would be Horace.

34:34That's so not it. Sophie Horace. No.

34:38Vic: Would it? Horace. Yeah, Horace. Or. Hairite. Hairite. Hairite. Sounds like. Hairite. Harite Harite Harite yeah no neither sounds good yeah neither sounds good it's not gonna happen anyway so let's but imagine Hallwright Harris you know it's like it's just a mouthful well Hallwright sounds like two last names anyway true and then Hallwright yeah yeah yeah there needs to be a new system I reckon yeah I agree there's gotta be because I'm at the point where I'm like do we just make a last name up you know like do we just do like a co-last name is that a thing yeah do it Yeah, but then also it just feels, I don't know, I genuinely want to stay Sophie Hall, right?

35:22It's who I am. It's my ADC. Yeah, love it. But at the same time, I'm like, but then what about if you do have little mini-me's, you know? It's kind of where it becomes a bit problematic. Anyway, we're talking about David Jones. Sorry, we're talking about David Jones.

35:38Vic: DJs. DJs are not doing that well. No, the nearly 200-year-old Australian department store has... God, that's old. I know. Longest-standing department store predates Harrods. Which is crazy to me. Yeah, I know. Wild. It's gone into voluntary administration and receivership. So I'll get to what that means. But just for the lay of the land, it has 38 stores across Australia and New Zealand and over 6 ,000 staff. And so what happened was they were in talks with their landlord to reduce their stores from 38 to about 17. So we all know retail is not doing that well. And they have these huge, large footprints in cities all over Australia and New Zealand.

36:29Vic: And yeah, so they went to their landlord and said, hey, look, we can't afford this rent anymore. We need, yeah, so we need cheaper rent. We want to reduce the number of stores and we need more time to pay. And the landlord said no. And so that's what's happened when you go into voluntary administration is you go, okay, well, we can't pay. Can we talk about the difference between voluntary administration and receivership and bankruptcy? see okay so administration think of it like kind of like two types of doctors so when a company's in serious trouble then kind of two different people can step in so an administrator is like a business doctor so the company themselves will go get a business administrator and go hey can you come and look at us and see if we can be saved or sold or wound down in a way that gives people the best result so it's kind of like you're on you're on death's door kind of and it's like hey, we don't see a way through this.

37:29Vic: We need your help to come in to either be saved, sold, or figure out a way. And that's administration. That's administration. And then receivership, if you're owing someone money, then it's the person that you owe the money to will go in and be like, their job's much simpler. They're like, how do I get my money back? So they're just looking at stock. Their whole job is to get the money back, what the lender is owed. So banks would send in receivers because they might be owed money. Landlords, anyone that's owed money can send in receivers. If there's a breach of contract and people haven't paid, people isn't, companies.

38:06Vic: And so David Jones has got both of that happening at once. I mean, I want to be optimistic. I think there'll be an outcome. I don't know. It's kind of a forced hand, right? They went to their landlord and said, hey, look, we need to reduce our store footprint, like our size from 38 to 17. And they said no. So they're like, well, okay, we're just going to do it the hard way then. And that's probably going to be the outcome of this whole situation. But there is so many retailers that are in David Jones stores and brands. And like, I've just seen all over social media is so many poor companies that have shipped stock to David Jones and are now trying to get this, you know, stock back or they're owed invoices.

38:49Vic: They're not going to get paid. like it's the reverberations will be quite massive as well and then you know 6 ,000 staff if you're reducing your store footprint you know all those staff have to find jobs so it is pretty sad. What's the legal ramifications or what does David Jones actually legally have to do like if we were a brand who had our clothes in there or we just sent 50 ,000 worth of stock what's worst case scenario for a lot of those brands i think it's probably worst cases you get nothing you get nothing back you know you've kind of stock or money yeah like i mean it depends if they yeah if the new owners came in and i mean they probably wouldn't pay the old bills you know they wouldn't buy the debt so it's kind of the risk you take and yeah unfortunately it would have a significant financial impact for a lot of smaller retailers and a lot of brands but it depends on the contracts you've set up individually.

39:49Vic: Yeah, but it's pretty unlikely. Also, if you have gift cards for David Jones, like go spend them, go spend them ASAP. You know, because it's like, that's also kind of a form of something they have to honour. And if the business gets wound up, then you're kind of left with not being able to spend that money. What's the likelihood of them not paying their brands, the people that they owe money to, having all the stock that they are no longer going to sell or can't sell, and then they find a way around the shops as in they get reduced rent reduced like do they just not owe those brands like I just to me it sounds a little bit like a WeWork where they went so big and then it actually ends up the business makes a comeback but everyone else loses out it just feels a bit unfair yeah I mean if it's got a different owner and it's kind of owned by a different different company you know different structure then it depends how they cut the deal right i would say you'd kind of just write that off as a bad debt if you're owed money from david jones right now i'm getting all of it paid to you probably very unlikely that's so shit for small businesses like 100 grand 200 grand like that that could that could cripple so many brands that are in that department store and that's why again coming back to diversification like brands being in lots of different stores or you know not letting David Jones be so much of their revenue that that's quite interesting you know if it was 90 percent of one brand's revenue but only 10 percent of another you know the 10 percent one's probably going to survive but the 90 percent one that's that's going to have a much bigger impact and you've got to replace that revenue and so yeah it's it's you know I've heard of a lot of friends that you get so excited because you get these big big retailers these big brands that want to stock your stock and then you do massive orders for them and then the you know the 11th hour they don't come through or a situation like this that you do supply it to them and then they don't actually end up paying and you've got to chase them and chase them and chase them god that's so stressful the thing with this is so iconic it's been around forever you think there's this image of because you're so big and you've been around for a long time you're financially stable and and i think that's probably the learning is that you know it can look very shiny like everything's fine on the outside, but you never know what's going on internally.

42:11Vic: And in 2025, so last year, David Jones made$100 million loss. Shit, that's a lot. The year before that was$74 million. So it's getting worse. And, you know, Maya, its other counterpart in Australia, which I thought was going to fall over probably before David Jones did, they lost nearly$300 million last year. So department stores in general are having a really, really tough time. Gosh, I just wonder if it's really weird, though, because I see so many businesses opening stores like in the UK. Tala, for example, which is this like new activewear brand has just launched a huge store. Yeah, I don't know.

42:55I guess.

42:56Vic: But it's direct to consumer, right? You control what the store looks like. You control the customer experience. You control, you know, the brand positioning, all of that. And I think that's what's becoming more important nowadays. Whereas you went to a department store because you couldn't get access to those brands anywhere else. Now you can go online. Now, you know, the luxury names all have their own stores as well as most brands, you know, that can afford to and have that direct customer relationship. They've got their own stores. They can control the experience. So times are changing and, yeah, I think department stores have probably actually, I mean, Selfridges, I don't know the finances there, but gosh, you go there at Christmas time and it's hard to see how they wouldn't be doing well.

43:43But I would have said the same thing about David Jones. Same, same.

43:47Vic: Yeah. So you never really know. But there's high fixed costs, right? If you're an online store, you have much lower. You don't have to pay rent. You don't have, you know, all of that stuff. paying rent for a center for you know cbd store in sydney melbourne super expensive yeah so if you're if you're an online store you know that you've got nerepoli you've got farfetch you've got so many of those luxury kind of quote quote unquote department stores that are online now you know the cost base is much lower which means you don't have to make as much revenue to generate a profit i was in harrods with my dad when he was visiting and we were looking around stalls and it was honestly so funny like firstly oh my gosh things were expensive in there I couldn't believe it I felt like a little rat walking through a castle it was crazy how expensive all the stuff was I'd look at a jacket and I was like oh that's so nice and then I'd look at the price tag and I was like 10 grand or something and yeah do you want to try it on I'm like you'd Let me touch that.

44:55Really? I'm like, no, I don't have time to try that on right now. Thank you so much. But no, like as if I would ever consider. I mean, I can't even imagine how expensive it would be to run something like Harrods. To buy all that stock. It's like the most expensive clothing and sunglasses and accessories in the world. To have it all in one place. Yeah, so sad day for the markets.

45:23Vic: It's a sad day for David Jones. It's a bit depressing out there, isn't it? A little bit depressing. Tune in next week for hopefully some better news. For more uplifting news about the economy, the stock market. Come here to get depressed about money and business. Life is hard.

45:47Shopping is hard. Department stores are hard.

45:50Vic: Being a department store is hard. being online really hard being the NASDAQ right now is hard oh god being the S &P 500 it's like yeah god we're going delusional we're going delusional well specifically you I think you need to get to bed I think you need to get to bed it's been a big week but yeah for anyone that does have community questions we've got quite a few that we're going to get through I almost would say we need to do like a full episode on community questions because we keep skipping them yeah we've run out of time we need to almost do them first do you know what we need to think about the community questions like paying ourselves for our investments.

46:24Vic: Pay them first. Yeah. Pay them first. Do it first. Exactly. Can't keep running out of money. Yeah. Can't keep running out of money to do that. It's got to be the first thing that comes out of our paycheck or our time. Definitely. So we'll do that next week. Promise to do that next week. Sorry, everyone. Thank you for your amazing questions. We will do that next week. Have a great week and we will be back on Wednesday. See you. Bye. Thank you so much for listening to this episode of The Curve. Feel free to leave a comment to let us know what you thought. We always love hearing your feedback. New episodes are out Monday, Wednesday, and Friday, so make sure you're subscribed to be notified whenever a new episode drops.

47:00In the meantime, we're around on socials so you can find all the links in the show notes. Hope you have a great week, and we will see you for the next episode. Okay, quickly, the Curve was created to empower and educate you about investing, but we are not financial advisors. Our platform exists for educational purposes only,

47:15Vic: and it doesn't provide personalized investing advice for your individual needs and should not be relied upon to make an investment or financial decision. And always remember to do your own research before making any investment or financial decision. We're here for any knowledge and support you need, but the final call is always yours. And thanks for being here. You got this. Yeah, we know you got this.