Expert Investor: Chris Judd – Micro Caps from a Major Name

Bryce: [00:01:16] Welcome to another episode of Equity Mates, a podcast where we help you learn to invest in 45 minutes or less. We break down the world of investing from beginning to dividend so that you can hopefully make some returns. My name is Bryce and as always, I'm joined by my equity buddy Ren. How's it going, bro? [00:01:30][14.0]

Alec: [00:01:30] I'm very good. Bryce very excited for this episode. [00:01:32][1.8]

Bryce: [00:01:33] Incredibly excited, both of us big football fans, as our Equity Mates community would know. And it is for that reason that we cannot wait to get this episode underway. Long time in the making thought before we do Ren I just reveal the CV of who we're talking to because it is incredibly impressive. Former NFL player and captain of the West Coast Eagles and Carlton dual Brownlow medallist, six time all Australian captain of the squad in 2008, Premiership captain, founder and current director of Jagged, which is an Australian sports apparel company board member of the Carlton Footy Club podcast host, video extraordinaire and investor in micro-cap listed companies. If you haven't figured it out, we have Chris Judd joining us on the show. Thanks for joining us, Chris. [00:02:17][43.9]

Chris Judd: [00:02:18] Gentlemen, very good to finally be on the show after a few technical challenges. [00:02:21][3.5]

Bryce: [00:02:22] Yes, yeah. Third time lucky we finally got on. So as as we just said, we're incredibly pumped to have you on the show and looking forward to exploring probably one of the sides that not many people know about you, which is the microcaps sort of investing in equities side of things. Everyone knows you as the as the football player. So, yeah. Thank you. [00:02:39][17.8]

Chris Judd: [00:02:40] Beautiful. Looking forward to the chat. [00:02:41][1.0]

Alec: [00:02:41] So, Chris, we like to start these conversations with a bit of an icebreaker, a bit of a game, if you will. Yes, it's a game of overrated or underrated. We like to throw out some, you know, indexes and some investing themes. [00:02:52][10.5]

Chris Judd: [00:02:53] There's no neutral weighted options. [00:02:54][1.1]

Alec: [00:02:56] We we've spoken to someone from Vanguard who said everything was fairly rated. So feel free to go down that path. [00:03:03][7.9]

Chris Judd: [00:03:05] Yeah, cool. [00:03:06][0.3]

Alec: [00:03:06] But if you're up for it, we'll keep this up [00:03:08][2.2]

Chris Judd: [00:03:09] with a guy. That's good. [00:03:10][1.0]

Alec: [00:03:10] So to start with overrated or underrated, the ASX 200. [00:03:14][4.3]

Chris Judd: [00:03:17] Well, I don't have a strong view, but I don't own any stocks in it. So I'll have to say that definition. It's overrated to me. [00:03:24][6.5]

Bryce: [00:03:24] I assume this will flow to the next then overrated or underrated large cap stocks. [00:03:28][3.8]

Chris Judd: [00:03:29] Yeah, I'll stick in the same vein. [00:03:30][1.1]

Alec: [00:03:30] Overrated, overrated or underrated ETFs? [00:03:33][2.8]

Chris Judd: [00:03:35] Well, it depends who you are, but I don't know any overrated. [00:03:39][4.2]

Bryce: [00:03:42] Do you own any gold overrated [00:03:43][1.5]

Alec: [00:03:44] or underrated [00:03:44][0.1]

Chris Judd: [00:03:45] gold underrated. [00:03:46][0.4]

Bryce: [00:03:47] OK. Why's that? [00:03:48][0.9]

Chris Judd: [00:03:49] Well, there's a huge amount of issues with fiat currencies around the world. Namely countries are printing them like they're going out of fashion and that tends to not end well whenever that's happened in history. So underrated gold. [00:04:02][13.3]

Alec: [00:04:02] So that answer might flow on to the next one, which is always a bit of a controversial one, overrated or underrated Bitcoin. [00:04:09][6.5]

Chris Judd: [00:04:10] Yeah, like if people understood it better than me, I'm sure many would put it in the annual rated category, the same as gold, but I don't understand it well enough. So to me, it's overrated. [00:04:23][12.8]

Bryce: [00:04:24] Do you own any bitcoin? [00:04:24][0.5]

Chris Judd: [00:04:25] I funnily enough do because I got given some as a gift. Oh, so my brother in law loves his cryptocurrency and I talked him out of buying a considerable amount before they went berserk and which was problematic at family gatherings. And for my birthday he was good enough to give me some crypto. So I do technically on a small amount, but I did pay for it and you don't understand it well enough. [00:04:56][30.9]

Bryce: [00:04:58] So overrated or underrated, the Australian property market? [00:05:01][2.6]

Chris Judd: [00:05:01] Well, look, I mean, it's sort of overrated, but interest rates have never been as low as this before. So I own it. I'm pretty comfortable there. But it's also incredibly expensive when you compare it to property markets around the rest of the world. [00:05:14][13.0]

Alec: [00:05:16] Now, Chris, I am a big Sydney Swans fan, so I've got to ask it overrated or underrated? The Swans [00:05:21][5.2]

Chris Judd: [00:05:22] underrated. [00:05:22][0.0]

Alec: [00:05:23] Oh, right. [00:05:24][0.4]

Bryce: [00:05:24] Well, I'm a massive Essendon Bombers fan. Overrated or underrated? The Mighty Bombers over, right? [00:05:30][5.8]

Alec: [00:05:31] Yeah, that's what I've been telling you, Caroline. And then last one, you're still very heavily involved in the Carlton Footy Club. So overrated or underrated? Paddy Cripps. [00:05:42][11.6]

Chris Judd: [00:05:44] Underrated. Still a lot. Yeah. [00:05:47][3.7]

Alec: [00:05:48] Yeah. You go one percent of your portfolio and him. [00:05:51][3.1]

Chris Judd: [00:05:52] That's right. Yeah. [00:05:52][0.6]

Bryce: [00:05:53] So, Chris, as we said at the start of the show, everyone probably knows you more for all your achievements in in AFL and probably less for what you're doing in the equities market. So are you able to take us back and talk us through your experience with your first ever investment and perhaps what was a major lesson that you learnt from that? [00:06:15][21.5]

Chris Judd: [00:06:16] Yes, my first ever investment, I got 200 bucks from the U.S. Air Force Academy when I was a 16 year old, and that was a huge sum of money for a 16 year old kid. And I remember deciding that in shares. So I went down to the news and with my old man and we bought a share magazine and did some heavy due diligence working through the recommendations, which is an interesting way to pick stocks. And we ended up picking a stock anyway. I think it was it was an electronics manufacturer that I don't think I assume is no longer around. And that is well, which was just pure luck. And then we roll that into Pasminco, which didn't go so well, which was a zinc developer at the time, and whose assets I think, ended up being rolled into Zinifex, which makes up part of those minerals. So that was the earliest exposure to equity investing. [00:07:12][57.0]

Bryce: [00:07:13] And so why was it that you decided to invest in shares when you had 15 boxes of 16 year old? I mean, a lot of others would probably go out and buy I know the PlayStation or Xbox or something, you know. [00:07:24][10.6]

Chris Judd: [00:07:25] Fifteen hundred bucks, not 15 bucks. [00:07:26][1.4]

Bryce: [00:07:27] So how did you have that mindset to invest in stocks? [00:07:33][6.3]

Chris Judd: [00:07:34] Well, it's just great. I assume I wanted it, but when I was 18 and one of the better car than fifteen hundred dollars would buy me and my grandpa was a reasonably savvy investor. So I think watching him and I reckon he bought News Corp shares went about 30 cents, obviously a very long time ago. So you can imagine the price that Rupert Murdoch had in his heart, say, look, I think it was that modelling and I reckon my old man had just so many super funds at the time. So it would have been those influences that led me to think that this was an appropriate course of action. [00:08:05][30.1]

Alec: [00:08:05] And so, Chris, then you started your footy career and I imagine you were extremely interested in investing during that time as well. So how did it go? You know, trying to stock stocks in the change room and being interested in the market while you're applying for it [00:08:20][14.7]

Chris Judd: [00:08:20] was useful, different reasons. I think what really took my interest was over in Western Australia. I really disliked reading about football or about about me or about the clubs I was playing for. And in that way, you know, 80 per cent of the sporting news is about the West Coast Eagles. So I started just by the Fin Review every day because I knew I was going to stumble across any footy stories in it. So it felt like a safe space to reproduce and do that. Have you come across any footy stories so that that was really beneficial? The early stages of investing was a nice distraction from from footy, and I was able to learn some some basic things about business funding. When you first start reading business stuff, you don't understand, you know, a good chunk of what you're reading. But after a while, it starts to sink in and things slowly start to make sense. And then when I was about 20, I mean, I started investing in things like BHP and I did things that I don't know how anyone makes money on any amount. Twenty eight I started I met a guy who's a really savvy investor. He's also ultra private. So not might just refer to him as the chair. And and he really helped me, I guess, formulated the strategies I used today when investing in stocks. [00:09:38][78.1]

Alec: [00:09:39] So, Chris, I've heard a story about you and I'm interested if you can confirm or deny it, but did you used to ban yourself rating the IFR on game days? [00:09:48][9.1]

Chris Judd: [00:09:49] Yes, that's that's true, because I would sometimes I like to be blank on game day when I was playing to not really be thinking about anything. I found that if I was thinking about things, I was incredibly playing bad football. And there a time during the last uranium bull market when uranium was really on my mind, which would have been about maybe 2006, 2007. And I did find that during games I was quite distracted if I'd been writing. Really. So that was banned on on game day and maybe even the day before, too. I thought, well, there were a lot of rules during my football career. Let me tell you, I just [00:10:23][34.2]

Bryce: [00:10:23] want to pick up on that. You know, controlling your emotions in markets is incredibly important and not being able to do so can have pretty devastating effects on performance of your portfolio. And I guess remaining blank is probably not what you want to be doing when it comes to the markets as such. But how did you remain so? I guess Blanken focussed on game day and block everything else out. [00:10:45][21.5]

Chris Judd: [00:10:45] I think I used to have some triggers that would really bring me back into the game when I was drifting away from things around watching the centre bounce when the ball was bouncing, float in the air, really focussing in on the ball and the way it was wobbling in the air and a few other things that were just sort of said to me and bring me back to what I and the team were trying to do at the present moment. But there are similarities. I think there are between playing professional sport and investing in managing emotions is a big part of it and how you respond to a mistake. As if football is a game of mistakes, even when you play the best possible game, you still walk off the field. If you make truckloads of errors during the game, but you haven't held onto them, you've been able to move on to the next and you needed to do. And in my experience, when investing is is much the same, I, I make truckloads of mistakes currently. I make mistakes now than 10 years ago. But even people ten times smarter than me is still making lots of mistakes that I invariably don't hold onto them. And then I have good decisions that they're investing to as well. [00:11:47][61.4]

Alec: [00:11:47] So, Chris, you flagged that before, that you have a particular interest in small and microcaps. And I don't think we've actually spoken to someone who has a particular interest or expertise in microcaps before. So maybe if we start at the beginning, how do you define both of those terms? [00:12:05][17.9]

Chris Judd: [00:12:06] Well, I mean, and microcap stock to me is a sub 50 million dollar market cap company. And then the smallest companies that are listed as shell companies that are the main companies that I think I'm not sort of some people have like to label themselves a value investor or a growth investor or whatever type of group identity they want to assign to their investing. And I try to steer clear that there will be times that I buy companies that have a half a billion dollar market cap if I think they're going to go up. But generally, by and large, my most comfortable area is subject to market cap companies. [00:12:37][31.1]

Bryce: [00:12:38] Why is that the case? What's so attractive about that sector of the market? [00:12:42][4.2]

Chris Judd: [00:12:43] Well, I think it's the biggest opportunity for asymmetric returns. And you can find many to speak about that quite often, that they chase asymmetric returns. And what I mean by that is that a company can't go to less than zero in terms of shell companies. They've usually got an enterprise value of a million bucks. So they've got nothing else in them and no cash. They're still really worth a million bucks they listed. So you could argue that's about as low as companies can go for a period of time anyway, assuming they can raise some capital. And the asymmetry comes from the fact that companies can go up by more than 100 percent. And it's much easier for a two million dollar company to go to a 10 year Dollars than it is the two hundred million dollar company to go to a billion dollars because the two million dollar company to go up five fold, it had to create a value as opposed to eight hundred. And that's a that's a simpler task. So that's one part of it. The other part that I really like is that the counterparty or the people that I'm buying shares of or selling to generally aren't funds in that space. So if you look at investing is a competition between the buyer and seller, which essentially it is, I don't really want to be buying or selling off funds because they're smarter than me. They've got more experience. They're doing this is a full time job. It's much better for me to be buying or selling shares to mums and dads that work full time, don't have the ability to go and make management, don't have the time to do the work properly. And if they're the other counterparty, then I'm more likely to have a better return. [00:14:08][85.6]

Bryce: [00:14:09] And so are these primarily companies that are all listed or do you also do off market investing in this space as well? [00:14:17][7.9]

Chris Judd: [00:14:18] I occasionally do some pre-IPO stuff, but I really don't like investing in private businesses because as you can imagine, companies that are sub 50 million market cap things go wrong all the time. Management aren't able to achieve what they thought they were. Things always take longer and require more money than expected. So when you're in a listed vehicle and things haven't gone the way everyone hoped, you've got the option to to sell out and move on to the next adventure. But obviously, when you're stuck in a private business, particularly in minority shareholder, you're pretty limited in what you can do. So I generally put a really high value on liquidity and as such, they're almost all listed companies. [00:14:54][36.5]

Alec: [00:14:55] So you flagged there the fact that a lot of funds aren't playing in this space and there's definitely not a lot of research analysts closely watching those companies. I guess that makes the information gathering process a little bit more difficult. So what is your process when you're looking at these micro-cap companies? What are the key things you're looking for and where you find that information? [00:15:15][19.4]

Chris Judd: [00:15:16] Well, it's it's twofold, I guess a lot of reading macroeconomic newsletters, because companies in that space, often that I'm investing a really consider stocks. So the importance around the narrative is really important. And then I'll have to cancel sort of 15 different stockbrokers. So they'll be sending through deal flow daily on capital raisings or IPOs. So often I'll come into the company to do a capital raising opportunity. And it's really just sifting through that and going and sitting in all the investor charged with anything representing presenting the company's prospective investors. That's really the crux of the process. And I think working with other investors and listening to what opportunities they are exploring. [00:16:00][44.5]

Bryce: [00:16:01] So how many buy opportunities do you reckon you come across a year through that sort of process? [00:16:06][5.2]

Chris Judd: [00:16:07] Chris, it's really lumpy. So I had a month where I don't buy or sell anything, and then I might have a week where I might bought. Four different things, so it's just depending on what's coming up and what looks attractive and they all at very different stages of investment, like often I might invest it in a gardening stake, if you like, like a really small, reasonably small amount of money just to get a position in the company and start to follow it closely and potentially build some form of relationship with manager and the brokers that are the lead brokers in that stock. And then as you get more comfortable with how the company is going, you might increase your your investment or my or you might just say, no, this one's not for me and move on. [00:16:48][41.5]

Alec: [00:16:49] So, Chris, are you purely Australian focussed when you talk about microcaps or do you look at microcaps across the world now? [00:16:56][6.4]

Chris Judd: [00:16:56] Pretty much just Australian folks that had some things that have been listed in Canada and some of the companies, I mean, a dual listed, but essentially the universe is big enough here for me to look at. And there's there's very few markets where you can list, you know, the sub 50 million dollar market cap company. You know, I'm over in London. You can list as a small company in the Canadian stock exchanges. But, you know, a lot of the companies that I would invest in would be classed as almost venture capital type opportunities overseas as opposed to listed companies. [00:17:28][32.2]

Bryce: [00:17:29] Some of these companies even generating revenue when you're buying into them. I'm just trying to, I guess, get the distinction between perhaps a small cap that, you know, Subba, what is one hundred million or thereabouts? Where is that line drawn? [00:17:40][11.3]

Chris Judd: [00:17:41] You know, some are some generating revenue. Very few are cash flow positive. And there's a good chunk of mining stocks that are either exploring or developing. So obviously they're not generating any revenue. [00:17:52][10.8]

Alec: [00:17:55] But they might. So I think the microcar world probably has packed a lot of people's interest, as you've been talking about it, because for a lot of people, it's probably not something that they often think about. So do you have any examples of companies that you've invested in or didn't invest in over the years, that good examples of what microcaps can do and the opportunity for outsized returns that you were talking about earlier? [00:18:19][23.9]

Chris Judd: [00:18:19] Yeah, well, I might not use any examples that I've done because if they were good, I'll look like a douche. And if they were bad, I'll look like an idiot. Did not like either, but one that sort of makes me look like both. I'll I'll throw up, which is after football. I worked as an analyst at a venture capital company and had a good relationship with the CEO there. And he sent me through an opportunity to invest in Get Swift IPO and it was a pretty good sized ticket. You could invest pretty much as much as any terrorist would have wanted. And it was it it was at 12 cents. And I did a little bit of work on it. I explained to him that I didn't particularly like it for a few reasons and get Swift then listed. It was a 20 cent IPO not long after they raised that money at 12 cents and after that pretty much exploded until it got up to four bucks in almost. I'm going to say it felt like a year or less. So that's a 30 what is it, a 30? Something bigger than the dream? Yes, yes. But amazingly, the relationship is still reasonably good with the they say I'm no longer working in the firm, as is an analyst, but I mean, get 310 Ren into all sorts of problems and ended up then raised, I think, 70 million bucks or so. So I went back to cash backing pretty swiftly and that a few court cases and various issues that they had to and still are dealing with. And that's sort of symptomatic of this space. Like, I think you're really naive if you invest in really small companies, you know, some 50 million and you to all or most or even a lot of them are going to end up being real companies. But it's not naive to think that there will be, you know, x number of milestones in the next six months or the next 12 months that those companies can reach that get them rerated. And that's when you need to look at if there's some liquidity trying to sell out as opposed to holding on for the dream. So, I mean, that's what venture capital investing is. If they become in its series, I and the company will have a set number of milestones that they want to hit before they raise money in a series they ran at a higher valuation. [00:20:48][148.4]

Chris Judd: [00:21:30] at the differences in Vaisse land. People can't sell out along that way as an investor, whereas you can with listed equities. So I like what I do and it's good for me because it's my job and I can spend a lot of time doing it if you don't have the luxury of time to be able to do it properly, I don't think it's a good place for people to invest. If you do and you've really got a heap of time dedicate to it and are prepared to take a huge amount of risk [00:21:52][22.9]

Bryce: [00:21:53] and go for it. So, Chris, one of the words of wisdom that we often hear and read about in I mean, investing more broadly is, you know, let your winners run and cut your losses. Don't hold onto them. Yeah. Let's use get Swiftian as an example. Looking at the stock chart here and you're right, iPod and then jump to three bucks, fell down again a bit towards the end of November and then. Yes, spiked up to four and then absolutely fell off a cliff. If you were holding get swift during that period of, I guess, rapid growth, how do you think about exiting or do you just let it run and then you're off a cliff? [00:22:28][34.7]

Chris Judd: [00:22:30] That's that's what gave me in a company. That is because I didn't love the story, even if I had a twelve hour week on it, twenty or twenty five or. Oh, I would have held on to that long. Not because I don't agree with the sentiment. It's to let you in as Ron, but for me it's like you in Israel if you've got a really clear understanding of where they're going. Yeah. And they can go higher. It's not just an automatic role for me. I recognised. So I lose on 52 percent of the things I invest in, I make good returns, I'm pleased with with the overall outcome because the win is a bigger than the loses. That's a really important concept. And I even Buffett I mean, I think Buffett hits on he's at 57 percent or 60 percent of the time. So, I mean, that's sort of the best investor in the world. But if you get your ticket size right and you cut your losses early, that's incredibly important. But yes, certainly averaging out rather than having Dow makes a lot more sense because you have that budget. Once you get really comfortable with the management, they start to provide a track record of doing what they say they're going to do. So I echo those sentiments. I think that's really important. [00:23:32][62.0]

Alec: [00:23:33] Well, Chris, we did a we did a live show earlier this year, and one of the traders on the panel said they only hit on 30 percent of their trades. So you're you're smashing into the [00:23:42][9.3]

Chris Judd: [00:23:42] market on the outskirts. [00:23:44][1.6]

Alec: [00:23:47] So if we if we turn to the micro-cap world today, what are you saying in the Australian microcap landscape at the moment? [00:23:54][6.8]

Chris Judd: [00:23:54] Well, right now there's a huge amount of cash receipts coming through before Christmas. So I think there's like over a bull market, but it's a really pessimistic bull market. People are really negative generally on the economic outlook. And that's fair enough. But I guess I'm sort of just balancing out that, you know, the broader economy looks pretty weak. You know, leading indicators, whether it's car sales or housing approvals, look really soft and general economic growth in Australia and overseas. But then interest rates are just so incredibly low and you need to balance those two things up and, you know, trillions of dollars of negative gearing, bond yields around the world. I don't think that's going to attract a lot of investors and the money is going to go somewhere. So most people have no idea what's going to happen in the next 12 months or 24 months. I think the economy's going to be soft, but I'm not sure that that's going to be reflected in asset prices just because the cost of money so cheap and small caps are being reasonably soft. The big caps, you know, the index funds are having such a powerful impact on prices. I mean, generally, yeah, the outperformance has been caused by, you know, a few large cap names. So it's some pockets of froth, like probably the biotech industry and health care industry in Australia looks a bit frothy, albeit overpriced. But certainly there's not a lot of love for mining at the minute outside of gold stocks. And the market cap space more broadly is, I think, reasonably soft. I think people are off tech a little bit and that's drifted down into small cap rates. So I think I'm a reasonably comfortable buyer at the minute. [00:25:32][97.4]

Bryce: [00:25:32] You mentioned a few sectors of the market. There were some in the microcap space that you really enjoy sort of digging into. Please don't say mining. [00:25:40][8.0]

Chris Judd: [00:25:42] Yeah, yeah. Well, most of the stocks, like I mentioned, they sort of come under sort of various macroeconomic themes. So things like ageing demographics, which is, you know, huge, a huge trend that's incredibly easy to predict and it's relevant here, but relevant in lots of other places around the world as well. Clean air in China, automation, robotics and sort of problems with fiat currencies as some of the things that are interesting. And then there may be sort of sector views where you might say something like it doesn't appear to be going all that well. And perhaps some of the major providers of those services aren't as innovative as they are in different markets. And that might be a top down thing that you look to attack as well. [00:26:20][38.3]

Alec: [00:26:21] So there are some themes that are interesting and have some good investment ideas under them. Are there any themes that you think are just trash and you reckon the market's got completely wrong? [00:26:30][8.8]

Chris Judd: [00:26:31] No, but I mean, if you look at the narrative of the story around those themes, it either is really hot or it may get hotter. I think demographics is really exploding. It is a theme. Certainly the energy metals theme of 2017 around nickel, cobalt, lithium, graphite, electric cars was a theme that that really exploded. Those narratives caused capital appreciation. I guess the inverse is often true, like when you've got a really bad narrative, you know, the price compresses. And particularly if you're a yield investor, there's opportunities that open up in that space. If you look at, say, retail property now is on the nose. Everyone thinks Amazon is going to take over the world, which they are doing in large part. But sometimes those negative stories can create opportunities for investors as well. I'm not an investor in retail property, by the way. It's just an example. [00:27:20][49.5]

Alec: [00:27:21] Yeah, that's a that's the one that I always go to. And I think the market is just well over hyping a story. I mean, target's up 90 percent this year or something. There's good retail out there if you if you know where to look at it. [00:27:33][11.2]

Chris Judd: [00:27:33] Is that a really good announcement the other day? Citi Field has done really well. It's going well. You know, as a retailer, if I get a little bit of insight there as well. Yeah, the offerings got to be good. And and it needs to be a business that embraces all the technology in many ways is getting rid of a lot of the friction that used to be associated with retail. [00:27:50][16.5]

Bryce: [00:27:51] So, Chris, you recently were. Hosting your own podcast, Masters of Markets, and now you've moved to a more video based conversation with some of Australia's best public and private investors called Talk Your Book. I'm wondering if there are any sort of lessons or characteristics that you've noticed while doing these interviews that carry across the experts that you're chatting to? [00:28:13][22.6]

Chris Judd: [00:28:14] Yeah, there are. I think the better the investor, the more comfortable they are being themselves. And they don't feel like they've got to pretend to be what an investor should be. I also think is a bit of a correlation with the better the investor, the more comfortable speaking about their mistakes. I guess their track record allows them to do that. And the really good ones seem to just think about the world a little bit differently. I mean, every time you make an investment, you're effectively saying the market's wrong and you're right. So that's the Jim Grant line that the key to investing is for the market to agree with you later on. So to do that, you've got to be able to think a little bit differently to everybody else, because if you're dealing with it, it's a lot harder for you to say that the market's wrong and you're right, which is effectively what you're doing every time you buy a stock or an investment [00:28:59][45.1]

Alec: [00:29:00] similar to Bryce. This question there. Are there any key sort of skills or I guess tips that you've picked up from from these interviews with some of Australia's best fund managers that you've then incorporated into your own investing style and process? [00:29:16][16.0]

Chris Judd: [00:29:18] Oh, I think it's really important to pick a style that suits you. So there's not there's not one right way to invest. There's thousands of different ways to successfully that you want to pick a style that suits your particular skill set and your particular risk appetite. I think that's been one of the learnings that's probably been reaffirmed when we speak to different investors. [00:29:37][19.5]

Bryce: [00:29:38] Why do you think small cap investing is the style that suits you as opposed to the big end of town, the boring side? [00:29:44][5.8]

Chris Judd: [00:29:45] I love stories. Yeah. And I think in the book written 21 problems for the 21st century. The answer is really the premise of the book is what's the most powerful thing in the world? And it's stories. And if you look at the Bible or the impact of stories on the world, I think it's hard to argue with that. I like them and I've got a really high appetite to risk, and I like reading macroeconomic research. So I guess most of the stuff on investing, I feel I'm almost like a macro investor, but just using the latest counterparty I can find. [00:30:16][31.2]

Alec: [00:30:17] So on that cross, when people generally think about investing in sort of macro themes, they generally jump to the big end of town, I guess, and they go to broad market ETFs and stuff like that. But you're talking about using macro themes and how the world is changing and investing in the smallest of the small companies. What's the interplay between sort of the big end of town and the broader market cycle and small caps? [00:30:42][24.2]

Chris Judd: [00:30:42] Well, I mean, the big end of town just there's just not enough liquidity in small caps for them to play in it. So if you're the fund manager and you like gold, you can't buyer, you might need to invest 50 million bucks in gold if you're managing, you know, a few billion dollars. So hard to do that in a small cap, gold explorer or developer by the physical asset or future or whatever. But I mean, essentially, you know, if the gold price goes up and appreciates the explorers and developers do well, as do the producers. But generally the risk to the asset, the better it will do when the price appreciates. You know, if the price of gold is going up, you much better off being in a high cost gold producer than a low cost producer, because the impact of the rising price is much greater on the high cost producer than it is on the low cost producer. I'm not sure if that answers your question that there's a sort of a sort of a way I look at it and it does give you a margin of safety, you know, to get something in your portfolio that does go up four or five times. Is the margin of safety across the rest of your decisions in your portfolio anyway? [00:31:45][62.3]

Alec: [00:31:45] So, Chris, I think we just ticked over 40 minutes. So we want to thank you for taking the time and talking about microcaps. I think a lot of people it will have sparked an interest in. We like to wrap up with the same three final questions. But before we get there, I've got one one last one for you. So, as we mentioned, you're still heavily involved in the Carlton Footy Club. And across the world, there are a number of publicly traded sports teams like the Brisbane Broncos in Australia. So is there any appetite to do a similar IPO for Carlton? [00:32:18][32.3]

Chris Judd: [00:32:19] There is zero zero zero down. What I mean, you're essentially an operating unit of the AFL, essentially. So you've got limited control to grow your revenue and your cost base is fixed. So I think it's now that's that's a big task for me. [00:32:41][21.8]

Alec: [00:32:43] Fair enough. [00:32:43][0.3]

Chris Judd: [00:32:45] So obviously into it. [00:32:47][1.9]

Bryce: [00:32:50] So, Chris, the first of our final three questions that we always ask. Is do you have any must read books, investing or otherwise that you would recommend? [00:32:57][6.5]

Chris Judd: [00:32:58] Oh, yes. You know what I'm reading at the minute, which is really good, is The Atomic Hebert's by James Klee, which is about breaking all habits and forming good habits. But it's got a bit of relevance to investing as well. Do you want to join a quick narrative on one of these stories, which I think absolutely this is? Yeah. So he's got an experiment that a university lecturer did at school. So he was a teaching photography and he split his photography class up into two. And he said to half the class, your job is to take as many photos as you can see. I don't care about quality. Just go out there and take truckloads. And then he said to the other half of the group, I just want you to take one photo, but I want it to be the very best you can possibly do. It's all that quality. I don't want quantity. I just want one brilliant photo at the end of the year and at the end of the year, all the best for the vast majority of the best photos came from the group that was just out there taking truckloads of photos because they improve their skills so much more than the other group that was just sitting around hypothesising making my photo. And I think that's got a bit of utility for investing if you want to improve your investing risk. I do. It is to actually invest as opposed to just sitting around talking about it. So it's a little piece that I quite liked from that book. [00:34:27][89.5]

Bryce: [00:34:27] I couldn't agree more. One of the biggest messages we kind of get across the show is that there's no better way to learn than by actually getting in there and doing it. There's only so much paper trading you can do, but you don't understand, you know, your emotional side and all that sort of stuff until you've actually got some skin in the game [00:34:42][15.0]

Chris Judd: [00:34:43] in a paper trail is not the same at all. I just just know that when you start, you should be losing money. And if you're not, you just being lucky rather than it's not likely. That's true. [00:34:53][9.5]

Alec: [00:34:53] That's true. Yeah. So, Chris, the second question that we like to ask is, what is your go to source for investing information? [00:35:00][6.8]

Chris Judd: [00:35:01] Oh, I think real vision is the best content I consume, which is a US based, mostly video content. They got some written content as well, but I spent an all day consuming, I mean macro voices as a podcast out of the States. I like all the newsletters from, I mean, Fred Hickey to Mark five and Howard marks the radio to I could go on forever so that that sort of broad based stuff. I don't take a lot of notice of broker research reports just because this sort of rubbish really they just want to get their keep their clients happy so they can get their corporate advisor fees when that that companies can raise capital next. I don't really consume much of them, but then I use stock doctor, which is a quick way to analyse financials of companies, lots of different things. And then just talking to people as well is is really useful also. [00:35:55][54.5]

Bryce: [00:35:56] Yeah, we're big fans of real vision and I think I'm joining the dots here. You've just ventured into video yourself, fan of real vision. Are you trying to start something here in Australia? [00:36:05][8.4]

Chris Judd: [00:36:06] Well, I think, you know, if was in Scotland, it was just unreal. Are talking about paradigm. Have you seen that? No, I haven't yet. So paradigm, I'm sure you realise it's a stock we featured on Tokyo book only a few weeks ago. So it looks like if anyone's following anyone from Tokyo bookies like that, that's what it looks like to me. Like to let the other viewers make their own money market. [00:36:32][26.2]

Bryce: [00:36:32] Ladies in video content to wrap up. Thinking back to when you received your fifteen hundred bucks and made that first investment, what would be a piece of advice that you perhaps give yourself back then, knowing what you know now? [00:36:47][15.0]

Chris Judd: [00:36:49] Well, if you're investing to make money and you don't know what you're doing, is that with an index fund, potentially, if you've got limited time or then you go to a fund manager, if you've got a little bit more time to research which funds a good fund and what you think, good funds and if you've got a chuckle at a time, you can move down, can do it yourself. But if investing to learn, then there's no better way to actually do it yourself and to not you know, the finance industry can be quite good at making simple things that complex. So do not be put off by the various acronyms or the language people try and use to pretend that it's more complicated than needs. And the industry not with witnesses, but it is filled with people that do this thing day after day. And it's that experience that if you can start to do that yourself, then there's no reason why you can't make some money or [00:37:35][46.1]

Bryce: [00:37:35] some advice, I think sort of certainly applicable to everyone listening to the show. So appreciate those words, Chris, and very much. Thank you for coming on the show today. As we said at the start, third time, lucky, but very much enjoyed hearing your thoughts on small caps. It's something that we haven't been able to go into detail with any really, except. The investor along our journey, so appreciate it, we're kind of fanboy ing over here at the moment. [00:37:57][22.1]

Chris Judd: [00:37:58] I spent a lot of fun I've enjoyed, and [00:38:02][3.5]

Bryce: [00:38:02] if anyone wants to find out more info about yourself or even talk your book, Masters of Markets, what's the best place to do so in a [00:38:09][7.5]

Chris Judd: [00:38:09] Christian invest channel on YouTube or Facebook, where all video content we put up all Christian invest dotcom. [00:38:16][7.1]

Bryce: [00:38:17] Nice. Well, check it out if you're keen to see more of what Chris does. And yeah. Chris, thanks for your time. [00:38:22][5.2]

Chris Judd: [00:38:23] Thanks, guys. Much. Appreciate it.