Expert Investor: Scott Phillips from the Motley Fool on sensible investing and sensationalist advertising

HOSTS Alec Renehan & Bryce Leske|30 June, 2021

Meet your hosts

  • Alec Renehan

    Alec developed an interest in investing after realising he was spending all that he was earning. Investing became his form of 'forced saving'. While his first investment, Slater and Gordon (SGH), was a resounding failure, he learnt a lot from that experience. He hopes to share those lessons amongst others through the podcast and help people realise that if he can make money investing, anyone can.
  • Bryce Leske

    Bryce has had an interest in the stock market since his parents encouraged him to save 50c a fortnight from the age of 5. Once he had saved $500 he bought his first stock - BKI - a Listed Investment Company (LIC), and since then hasn't stopped. He hopes that Equity Mates can help make investing understandable and accessible. He loves the Essendon Football Club, and lives in Sydney.

Scott is the Chief Investment Officer at Motley Fool Australia and the advisor of the Motley Fool Share Advisor and portfolio manager of Motley Fool Million Dollar Portfolio and Motley Fool Everlasting Income. Scott has been a member of the Motley Fool since 1998 and an employee for the last 10 years. In today’s episode he talks about his own personal investing philosophy, his thoughts on short-sellers, and then Scott answers a whole stack of questions from the Equity Mates community. If you want to let Alec or Bryce know what you think of an episode, contact them here

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Bryce: [00:00:16] Welcome to another episode of Equity Mates podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status, our aim is to help break down your barriers to investing from beginning to dividend. My name is Bryce and as always, I'm joined by my Equity Mates Ren. How are you going? [00:00:31][15.2]

Alec: [00:00:32] I'm very good. Bryce excited for this interview. We've got someone in the studio with us who, if people consume financial media watch financial news, I'm pretty confident they will have heard his voice before. [00:00:41][9.5]

Bryce: [00:00:42] Absolutely. Yes. And we have reached out to our community to get some involvement for this episode. So we will be asking plenty of questions from the Equity Mates community, which is our pleasure to welcome Scott Phillips to the studio. Scott, welcome. [00:00:53][11.1]

Scott: [00:00:53] Thank you, guys. Great to be with you. Love the podcast. You guys are doing a fantastic job. So really pleased to be here. [00:00:57][4.1]

Bryce: [00:00:58] Thank you. Thank you. So Scott is the chief investment officer at the Motley Fool Australia and advisor of the Motley Fool share, advisor and portfolio manager of Motley Fool Million Dollar Portfolio and the Motley Fool Everlasting Income Portfolio. Plenty going on there. Scott Scott has been a member of The Motley Fool since 1998 and an employee for the last 10 years. So we're going to crack into what The Motley Fool is if you haven't heard about it, plus a lot more. But as always, we'll start with our overrated, underrated guy. [00:01:26][28.0]

Speaker 1: [00:01:26] Let's do it. [00:01:27][0.7]

Alec: [00:01:27] So we'll throw a few themes and indexes out there just to get your thoughts on them. We'll start at home. ASX 200, overrated or underrated? [00:01:34][7.2]

Scott: [00:01:35] If you're an ETF investor, it is underrated. You should be in the ASX 200. It is so desperately dominated by the banks and miners, though. If you've got half an idea and you want to be a little bit more detailed, I think it's overrated. [00:01:45][10.0]

Bryce: [00:01:47] Moving away then to America and Nasdaq 100. Overrated, underrated, underrated. [00:01:51][4.8]

Scott: [00:01:52] These guys are the businesses inventing the future. This is going to be a long term growth story. [00:01:55][3.3]

Alec: [00:01:56] Now, we couldn't have you on the show without asking this one are overrated or underrated bitcoin. [00:02:00][4.4]

Speaker 1: [00:02:01] Oh, there we go. [00:02:01][0.5]

Scott: [00:02:03] So I have no idea where Bitcoin goes from here, but as an investment, it is massively overrated. You've got to gamble, speculate, punt, then knock yourself out. [00:02:10][7.2]

Alec: [00:02:10] Fair enough. You've just defended Bryce. [00:02:12][1.2]

Scott: [00:02:15] And I say for full disclosure, I do have 100k with a bitcoin I bought about five years ago just to follow along. It's worth a bit more now, but I [00:02:22][6.7]

Speaker 1: [00:02:22] can give it a miss, [00:02:23][0.4]

Bryce: [00:02:24] right? Yeah. Overrated or underrated. Full service brokers [00:02:28][3.8]

Scott: [00:02:29] overrated. The incentives are conflicted and the costs are way too high. If you're getting good service and I just genuinely value for money. Knock yourself out. But most people are paying more than they do for brokerage. [00:02:39][9.4]

Alec: [00:02:40] So on. And then the last one. And we know. So you have a podcast as well. And we know this is a topic that elicits rants from you. And I don't mind a rant, but we're going to get to ask it here. Overrated or underrated? The Australian residential property [00:02:54][14.7]

Scott: [00:02:55] market as a as an owner occupier, it is underrated. I think if you can get in property, you should because it's going be a lifetime lifestyle asset as an investment, massively overrated. I don't expect it's going to be market beating versus, say, the ASX 200 over the next ten years. [00:03:09][13.9]

Bryce: [00:03:09] Hmm. So, Scott, we always like to start at the beginning with all of our guests, and that is to understand the story of their very first investment. So are you able to share yours and perhaps a lesson or two that you learned from them? [00:03:20][11.0]

Scott: [00:03:21] So here's the story of the everyone's first investment generally starts with ignorants. Right? And so that is my story. This is not a story. They're going to help anyone invest better other than hopefully to learn from my mistakes. I got a CommSec account, which really Tiddy Waterhouse. That's how old I am back in the late nineties. Right. So this is kind of full dotcom boom. This is for those who were around the time, sausage software, Computershare, its very first iteration, all the tech stocks you can think of. So I had a dozen of those probably at different times just because I didn't know what I was doing, but I thought I should be investing. My very first one, though, was I had a boss at the time who told me that all you have to do is you buy shares based on the share price chart and when it falls, you buy it and it goes up, you sell. And so that was the idea, right? Just what looked. Look at the chart. Look at the trend. If it's up, you sell it. When it goes down, you buy it back and it goes up. We sell it. Of course, that works as long as the stuff that is supposed to go back up does eventually go back up. And when it doesn't, you lose your money. And so that [00:04:14][52.8]

Speaker 1: [00:04:14] was the that was the story. That's the salutary [00:04:15][1.4]

Scott: [00:04:16] lesson of my very first investment was a mining stock. I want to say it might have been MIM back in the day. Your Mount Isa Mining knew nothing about the company. They said, hey, buy that. It's great. It's always goes up, then it goes down. You trade the thing. It's great cos the lesson is I didn't make any money from it and and I lots of expensive lessons. The good news about learning early, of course, is that normally with less money, so didn't cost me as much in Dollars, but it was a it was, it was a pride hurting. Listen, put. [00:04:41][25.2]

Alec: [00:04:41] Yeah. I feel like it's a rite of passage for a lot of Australia. It's the first investment in a mining company. Yeah, that's probably right. [00:04:47][5.8]

Speaker 1: [00:04:48] That's probably right. So. [00:04:49][0.6]

Alec: [00:04:49] So you started investing in the late 90s. You have been an employee of The Motley Fool, I should say, for the last ten years. You've had a lot of time in markets. Yes. Over that time, have you developed a personal investing philosophy? [00:05:03][13.9]

Scott: [00:05:04] Yeah, I so look, this is not a company plug, but the reason I joined The Motley Fool as an employee was because I joined the market as a member, as you guys said, for the end of the for the turn of the century. And it really was that the lesson was a long term investor focus on the business, follow the fundamentals. So I'm not a value guy, but our fundamentals based investor and some people won't get too technical, but some people kind of confuse those two as being the same thing. Right? Values just buying low price, earning stocks or trying to find something that's super cheap going to go up fundamentals. Just understand the business first. So I make the guys at the office talk about companies. I don't let them use ticker codes, for example, which is kind of weird and strange and a bit centric. But the reason is because if you start talking about companies have ticker codes, you forget they're real businesses. You start talking about their share price movements or the charts or something else. Better to think about BHP literally as we speak out there digging iron ore out of the ground. Woolies are selling groceries right now. Those things are happening. And so being a fundamental based investor and looking for long term businesses that are going to have long term success has been where I've had successes, those types of businesses. That's why I try and focus on. [00:06:09][64.8]

Alec: [00:06:09] I find it ironic that the first company you chose is an example there, both the company name and the ticker. [00:06:14][4.6]

Speaker 1: [00:06:15] There you go. Screw that up. They're not Fortescue mining. They put it that way. [00:06:19][3.6]

Alec: [00:06:21] So, Scott, as Bryce said in the intro, we've we've reached out to our community to get a bunch of questions. And look, everyone who's involved in finance would know of the Motley Fool. They probably will have seen you on the news or on the radio, but they will have also seen, you know, the ads [00:06:37][16.3]

Speaker 1: [00:06:39] really we do that stuff. [00:06:40][1.2]

Alec: [00:06:40] Yeah, I think I think for people who aren't members, Motley Fool is known for ads and emails. Yes. So, look, we've got to start there. You know, three hot stocks for 20, 21. Is this stock the next Afterpay? [00:06:52][11.4]

Speaker 1: [00:06:53] I say that. What? [00:06:53][0.8]

Alec: [00:06:54] Why that marketing strategy? [00:06:56][1.5]

Scott: [00:06:56] So, look, I'm not in charge of our marketing team, so it's not my call or mine to defend necessarily a couple of things. The first is it's just successful of all of the options. We've tried to be like Winston Churchill said, democracy was the worst system of government except for every other one that's been tried. Right. We find that both in the US and here in Australia, that strategy just works like he just he just works better than anything else. We try and I've tried writing first person emails where I say, hey, here's what we do at The Motley Fool. Here's what I've done as an investor. Here's our track record. Please come and join and we get two members join up. We send out the email like that or down like that, and we get tens of members sign up. And so the numbers kind of just lead the strategy. Quite honestly, it's not great. I don't love the fact that we have to do that sort of advertising to work. And you can argue about means and ends and we can have that conversation. If you guys want to have that conversation, the honest answer is because it works. It's it's a story of trying to my boss says know no one wakes up in the morning wanting to buy an investing newsletter or recommend one investing service. Right. And so what do you get in people's faces? Say, hey, I know you've got to bet your day. Have you thought about this? And that's the best way the market to move with to do it. I wish it was different. I wish we could honestly just say to people, look, long term investing works. We have a much better track record. How about you try us out? The service I run share advisor has a 30 day money back guarantee you literally risk nothing just to come and have a look. You get your money back if you don't like it and that doesn't work. And so the challenge for us is where do you draw the line between being as what's the word clear or as as direct as you want to be, which is just investing works. We're doing a pretty good job so far. Come check us out. And hey, I know you got to make a quick look over here. We've got something you might be interested in. Grabbing that attention is kind of what the strategy is about. [00:08:31][94.6]

Alec: [00:08:32] It's tough, though, because, you know, you listen to you talk your your podcast with Andrew Page, who we've had on the show, is great. And Anirban, who used to host with is great as well. We've met we follow a bunch of Motley Fool people, you know, own Russ Walker. You know, they're like you guys are all very focused on investor education and they're very clear thinking. But your advertising strategy, it doesn't help investors. [00:08:56][23.7]

Scott: [00:08:57] And that's the hard part. Right? So the hour and that means it ends. Our hope is for what it's worth, that if we can convince people, if we can disrupt their day and change their direction to buy an investment product from us, that we can then help them become better investors. And so am I saying just does the ends justify the means? I guess I am to some degree, and we can absolutely argue about that. The question, I guess, is if we don't do that, are people better or worse if they never join The Motley Fool? Now, if they join someone else's service, who also give them great advice and great education, that's fantastic. If any of that they buy Bitcoin instead to the comment before or they start speculating mining stocks, for example, you know, look at people listening who are saying, you know what, I don't care. You guys are doing click bait ads. You know, go go to my news feed. Okay, cool. I get it. And that's that's a charge I can level at us and they can make their own calls. Right. I'm going to defend that. It's pretty clear that's what we do. I think it's just a case of if we can stand behind the services that we deliver once we get people on board that I feel like we've done an OK job. And if the worst we're doing is saying to people, hey, here's a, you know, a headline that might grab your attention, that's a bit OTTF. That's a bit click Baity then. Okay, guilty as charged. If you're delivering a terrible result, by the way, and terrible services, I think people you're be absolutely right to say how you guys are ripping us off. You're taking our money, your business down the wrong path. I would say we've got a lot of. Who've been with us for a very long time now, who are saying, I don't love your marketing either, but I'm glad I joined. I've got great results. You know, is it does it does the end justify the means? Some people yes. Some people know we can't please everybody. And that's just kind of the business that we're in. [00:10:28][90.5]

Alec: [00:10:28] Unfortunately, now that we've met and we're going to build a relationship. Are you going to take it on a personal mission to get your marketing team to ditch the Knights and lead with education and member testimonial [00:10:40][12.1]

Scott: [00:10:41] if it ever works? You know, I would be the happiest bloke in the [00:10:43][2.9]

Speaker 1: [00:10:43] world, quite honestly, [00:10:44][0.4]

Scott: [00:10:45] because I've tried to write exactly those emails. I try to literally say to people, here's what we are. Here's what we do. Here's our track record. Here's why we invest. Here are some of the returns you can get. And we know people like the emails. They just don't give it to us. So if you guys, you know, I'm serious, [00:10:58][12.5]

Speaker 1: [00:10:58] all is [00:10:59][0.2]

Scott: [00:10:59] if we can find a better solution than that. I'm the first person in the line I will have absolute. Okay. You guys through the office on my shoulders personally, if we can solve that problem. [00:11:06][7.2]

Bryce: [00:11:07] So, Scott, there's no doubt that when it comes to paying for newsletters and services, that there's plenty to choose from. It's always hard to know where does the value come. So a question from one of our audience members, Daniel is around. How does the Motley Fool actually differentiate itself from the hundred of hundreds of paid newsletters that are out there? [00:11:29][21.5]

Scott: [00:11:29] Oh, that's cool. Okay, so we actually don't I'm a big believer in not try not functioning in your competition, but focus on your customers. Right. So I would actually say we don't try and differentiate ourselves specifically. We've never looked at another newsletter said, hey, we need to be different from them by doing this or better than them by doing that. What we simply do is provide the best possible investment recommendations, education and advice we can. And if we do that well, then our customers can choose. Many of our members have got, by the way, multiple subscription for multiple companies because they want more ideas. And that's completely cool. Most of our competitors are very reasonable, decent people. There are some out there who frankly aren't. And we talk about doing a name. [00:12:01][32.1]

Speaker 1: [00:12:01] And so, yeah, I love the next five years and it's going to be wonderful for those that down the Equity Mates podcast Bryce. [00:12:08][6.2]

Scott: [00:12:09] Yes, Your Honor. I'm sorry. I'm sorry. I apologize again. So here's the thing, right? You know, there is so there's a marketing angle and there's the there's a performance angle or the results angle. And I am really proud of our investing results. I think I think every service as we speak has been around for more than a couple of years, is beating the market, which is remarkable as a strike rate, as stocks are doing really well. Share wise, which I run is now almost ten years old and soundly beating the market over that period of time. So we give the best possible recommendations we can. I've got to say, one of the things I pride myself in and the team does is making sure we deliver great education. Why people join us for the recommendations which give stock tips and nothing else. They'd get what they signed up for. They'd get what we offered and what we're trying to do desperately through the service. And also things like this podcast, other podcasts and media appearances and stuff is to actually help people become better investors. And for me, that's honestly my passion is I want people to beat the market, otherwise they waste their money paying for. As I've said to people, if we don't beat, the market will go somewhere else that don't pay for something. You're not going you get the market return with index ETF, go fishing. If you wanna try and beat the market, you're signing up for someone. They better bloody do the job because it's not been in the market. Then they're wasting your time and your money. So back to your question. Sorry, how we better how we differentiate that for someone else to call. Am I going to. I'm not going to denigrate our competitors other than to say we did the best job we can have been in the market informing our members, making them better investors. If we do that, they focus on the customer rather than the competitor. That's what we're trying to do. [00:13:29][80.2]

Alec: [00:13:31] So on that beating a market point, and I think this is something that a lot of beginner investors get wrong, thinking that they have to get hit every ball out of the park and nail every pick. And, you know, we're looking at Renaissance technology recently there, medallion fund that's turned a hundred dollars into twenty million in forty in thirty years. They bat at fifty point seventy five per cent strike rate. They just got a little bit more right than I get. Right. Yeah, but Simon from the Equity Mates community has asked, what percentage of Motley Fools by recommendations have been correct? [00:14:02][31.8]

Scott: [00:14:03] That's a good question. It differs by service and differs by style. Right. So I won't this is not for me. I'm not going to mention products. So I'm not going to try to sell to your audience. Right. I will. Also, the service I run, I've mentioned before, but I'm not going to try and sell it. We bought about 60 per cent. We have another service, which is a higher risk service, which that's about 40 to 50 per cent. But the winners there are larger than the winners of my service. The losers are also large, by the way. And so it's a numbers game, right? We know the old line from Peter Lynch in this game. You good? If you're right, six times out of ten is pretty right. Because if you're right more than wrong and if your average winner gains more than your average loser loses, that's how you do it. Right. So to your point, the biggest challenge for new investors is I bought five stocks. One of them's losing money. I'm going to obsess about that one stock and also the people we've got. So six, ten been in the market, I think, from memory. Seven out, ten in positive territory, which means I'm losing three out of ten actual money for members. And we do have some people who join up say I bought those two stocks, they both losing money. You guys suck. I'm kind of like guys. We've said a million times diversify, have fifteen or twenty stocks be in it for the long term, all that stuff. Part of the challenge with running a newsletter is, you know, I can give the advice. It was not followed. Now, that's partly my fault. I've got to do a better job of. Helping our members follow our advice, trying to give the following advice, because if they do it badly, then they lose money. I look like a deal and no one wins. So. So, yeah, if you diversify properly, then the results have been very good, despite the fact that six out, 10 beating the market, about seven out of 10, I think, for my service company in positive territory. [00:15:34][90.6]

Bryce: [00:15:35] Scott, we've always tried to encourage the Equity Mates community to invest in what they know and look for opportunities around them. And one of our community members, Jesse, has taken that. I guess knowing that you send a lot of emails, he says, what company is The Motley Fool used to send emails and are they listed on the ASX? That is [00:15:52][16.8]

Scott: [00:15:52] brilliant. Then it's a US company called MailChimp. So they are they are very good. We like them a lot. I don't know that personally, but know the service works really well for us. No, they're not [00:16:00][8.3]

Speaker 1: [00:16:01] listed on 40, but I love the buy what you know. I do. That's a really good question. That's fantastic. [00:16:05][4.3]

Alec: [00:16:06] So, Scott, we we're going to take a quick break from our sponsors and then we're going to talk about short sellers, because you've got some strong opinions on that. Oh, here we go. But before then, we'll take a quick break to hear from our sponsors. So, Scott are in a 20 19 episode of your podcast, The Motley Fool podcast. You said, I think short selling is awful and I think it should be banned. I look that that pricked up my ears because, look, there's plenty of examples of where frauds have been caught by short sellers that regulators have missed memetics valiante over in the US and I applied in Germany. So two years later, do you still hold that same view and [00:16:45][38.8]

Speaker 1: [00:16:45] the it doesn't forget it. So here's the problem. No, I don't think whenever I talk about [00:16:50][4.8]

Scott: [00:16:50] short selling, I get flamed to buggery in any way because that's what I'm here [00:16:54][4.0]

Speaker 1: [00:16:54] for. And luckily I've got broad shoulders and I've been around a long time. [00:16:57][2.5]

Scott: [00:16:58] Honestly, if you're annoying Bitcoin holders and short sellers is the fastest way to get [00:17:02][3.7]

Speaker 1: [00:17:02] Flamel social media. For the record, you have to let your Twitter have no chance. [00:17:06][4.2]

Scott: [00:17:06] Now, I'll deal with it. So here's the thing. What worries you about short selling? So there are some really smart, thoughtful Caple short sellers who are doing it their way, the right way. And I really have no problem with that action of short selling in itself. Right. My issue with short selling is two things. The first is the activist short sellers. And there's plenty of examples. The Dominos short thesis from twenty nineteen twenty eighteen busted tech busted so we can highlight the successes and say see the necessary. You look at the ones where they had this big activist 40 page color photos, emotive language. This is terrible. Doesn't actually come to pass. My biggest concern is not actually about short selling per say its impact on the average shareholder. Right. So if you're a retail investor, we've got plenty of Motley Fool. You guys have plenty in your community who hear the short thesis go on. They got a better sell. So the shares drop 20, 30 per cent, largely in part because of the shorts thesis. Then all the people rushing to the exits actually create the problem or exacerbate the problem. They don't sell in fear because we know fear drives faster than greed. They sell out in panic. The short thesis, maybe it's true. Maybe it busts. If the short this is busts, they've lost their money. They've sold it at a loss of literally bought high, sold low, and they're scared out of the stock. Now, if you contrast that with a bull case, if I go on TV and say I love Company X, the shares probably don't move at all, maybe go up a fraction of one per cent. It's such an asymmetric outcome that my issue isn't with short selling as a process per say. It's the fact that in the marketplace, the way it's being utilized, if you're an activist, short seller and you have a nefarious intent, let's say you can create a fantastic amount of profit just by the actions of prosecuting the shortcakes. Whether you're right or not, that's the irony. Right. So it's the reverse of a pump and dump as the dump and pump or whatever you want to call it is probably better than capital. [00:18:53][107.0]

Speaker 1: [00:18:54] That that's the thing. [00:18:56][1.8]

Scott: [00:18:57] But that's the idea. Right. So so in that case, I honestly think so. The capital markets are there for the exchange of ownership interest. Right. You want to see shares? I wanna buy mine. That's what it's for. You want to raise money? I've got some money to help you run your business. That's what it's there for. When the capital markets look more like I say, you know, it's a casino with people in nice suits. Right. So it is is is trading naked options any different going to the tab or punting on Sportsbet? I don't know that you can actually make that case right. You're looking at something saying, I think this is a winner, I'm going to punt on it. I mean, it's not you don't own the asset. You're not invested in the asset itself. So the more we get away from the exchange of ownership interests, I think the less served the average retail investor is. And frankly, I don't give a stuff about the guys in the glass towers in Sydney. But what I care about is the average punter is listening to us who are saying, I want to put some money aside regularly. I want to know what's a decent, fair, safe market that I can invest in with risks. There's absolute risk in share investing. We know that that's what the market should bear. That's what it's designed for. The rest of it, I think it's largely a corruption of people who've gone. I know how I can make some money. I'm going to create a product structure product and it took the ASX and because they get some money, the directors get some cash. Great. Everyone's happy. Here is this great big self reinforcing scheme. I won't call it anything else. And so many people make money. But who was that? The knucklehead investor who thinks I just got screwed then because I got scared of the stock, because I'm a producer, really. Someone with an impressive name in a glass office building, a great report and said, here's what I should do. I said, that's my problem is, is the functioning of the market gets distorted by stuff like that. I don't know that if we can remove market distortion now is going to be in short selling. Right. So it's a it's a claim. [00:20:29][92.7]

Alec: [00:20:30] Next question was going to be your prime minister for a day. How would you do it? [00:20:33][3.0]

Scott: [00:20:34] That's easy. That's that's really easy. You can think about the gun ban on house gun bans. You can absolutely say no one involved in the schools industries make sure it's all stock. Now, does it stop you and I meeting behind the public so, you know, you can't stop human behavior. There are still weapons in the community, so you can't stop it. Can you minimize the harm? Yeah, absolutely. And honestly, if I promised, I would actually would do it. I literally would say, thanks, guys. It's been fun. That's not what the stock market's about. Go on. Go to the CEO yourself up as a bookmaker. Knock yourself out. [00:21:04][29.8]

Alec: [00:21:04] Well, there is an election next year, that marketing machine at the Motley Fool. How may [00:21:08][4.2]

Speaker 1: [00:21:10] I like three [00:21:10][0.4]

Alec: [00:21:10] policies for [00:21:11][0.5]

Speaker 1: [00:21:11] twenty twenty two? Could this be the next. Exactly. I like I'll go with that Uribe campaign manager for a walk. I will say also Bryce would give me the time off, which again is after the show. So so Scott, [00:21:26][15.0]

Bryce: [00:21:26] as we said at the start of the show and we've already had plenty already, we've got a bunch of questions from our community wide ranging. We thought we'd do a bit of a speed round. OK, so let's start with one from Joseph. What are your thoughts on the game stop and the rise of the main stock? [00:21:44][17.2]

Scott: [00:21:44] Yeah, I would put this in the market casino category. I think there are a lot of people have moved into investing recently, which is fantastic. Those who stick with it, who deliver long term returns for themselves by putting money aside today for tomorrow, that's what investing is supposed to be about. And more people doing that, that's great. It's also got a whole lot of people in who literally have a couple of extra bucks. I got a stimulus check or job or a job seeker or they've got some money left because they can go overseas this year or last year. And I said, what do I do with it? Right. And so when you get caught up in the idea, it's a perversion of investing, let's be really clear. Right? So it's gambling. It's speculation. It's fine if you want to call it that. It's funny enough, I spent hundred bucks to be someone to call me a problem gambler. If I put a thousand dollars on GameStop. People say I'm investing or just having fun. What's the whole context? The whole structure, the whole the quantum of money just changed. Once you say stock market, it legitimizes everything. Right? That's kind of the short case. So I think it's bad. I think it's terrible. I'd stay well away from it. I think maybe you make money, maybe you lose money, but you're playing a game. You don't know the rules. If you don't know who's going to win, you don't know who's behind it. You are literally you know, Warren Buffett's got a saying. If you're playing poker, you don't know who the party is at the table. You're the patsy, you're playing the game stop game. You're the patsy. You might still win. You might get lucky, but you're not doing it with any sense of investing as we know it, as we define the term. [00:22:59][74.2]

Alec: [00:23:00] So that Saga, GameStop, AMC Cinemas, BlackBerry, it's really been confined to American investors at the moment. And obviously Australians are participating, but we're not seeing the same thing on the ASX. Do you think it's just a matter of time or do you think there's structural things that are different here? I could [00:23:17][17.4]

Scott: [00:23:17] point. So there's one structural to structure elements. The first is that we know that free trading in the US makes this stuff more likely. [00:23:25][7.3]

Alec: [00:23:25] Right. We're getting closer and closer to that, though. [00:23:27][1.6]

Scott: [00:23:27] And look, I'm a big fan of paying less for investing, but next for Morgan Housel really should be a couple of years ago now saying we're trading one hundred bucks each. You had to think really, really carefully about what you're doing right when they're free, are bought now five minutes later, later myself. Who cares? I know there's no cost. Right. And so the psychological bias of having to commit to something is a really big deal. And I'm not sure. And the people hate me saying this. I'm not sure Cheeba broker is actually good for us. I think net say five bucks on brokers will get a thousand dollars. You might lose half of do those math. You know, I'd rather pay a hundred bucks in brokerage if it meant I was making better decisions that were actually better long term. So that's that's kind of that's the structural bit. The other structure a bit probably, thankfully, is that these are Internet forums where most attention is being paid to most of the users who reside in the most populous western country, which has the world's largest stock market. And so, you know, is a thread going to kind of tap? Around an Australian company, maybe, but the actually got to get Australian brokerage account, all that stuff that goes with it. So creating the momentum in Australia is just structurally harder in thankfully in this case, normally badly. Right. We don't get access to capital markets and exchanges and currency stuff. In this case, it may well protect us from some of that to some degree could happen. Absolutely. But there's a couple of structural impediments that hopefully keep us away from it. [00:24:44][77.5]

Alec: [00:24:45] I'm just waiting for the Motley Fool stockpile and we start seeing emails for failing Australian AGL. [00:24:52][7.2]

Speaker 1: [00:24:55] Now, there are long term investors, which I will [00:24:58][2.7]

Scott: [00:24:58] say the one thing we do, too, is we're not we're not short term as not traders, not speculators. Our time horizons are at least three years for my service. It's five years plus. So we can stay well away from that. I won't be doing that one. What are. [00:25:08][10.1]

Bryce: [00:25:09] Well, speaking of five years plus, we have a question from Ash, and it is, if you had to choose one midcap for the next five years with great fundamentals that you've spoken about and of course, management team, what would it be and why? [00:25:22][13.4]

Alec: [00:25:23] And before you answer, with all the appropriate disclaimers, you're not taking investing advice from a podcast and do your own three [00:25:29][6.6]

Bryce: [00:25:30] reasons why you should not buy. [00:25:31][1.2]

Speaker 1: [00:25:33] I'm getting the theme from you. So if I stoltmann, he wasn't going to quite work so visual, but I was uncovering the footsteps on the way. How do you grab the attention? Only for the. I won't. [00:25:47][14.2]

Scott: [00:25:49] Oh man. OK, so I say you're a general advice only I am licensed. Give general advice but it's only general advice and consider how it suits your circumstances. I so the one I own Kogan Dotcom. I think Kogan is a really, really great long term potential stock. So full disclosure, I own the shares. It's had a real bath recently on the back of the Covid vaccine. Chestful a third when the Covid vaccine was announced fairly get a little bit not far because a drawing for display on the recent inventory glut. Yeah, but if you think about a business with three million Australian customers that signing up customers at a rate of knots, more people spending more money, I've got a heuristic, which is more people, so more customers spending more money more frequently. If you can get that triumvirate, well, you're not guaranteed to make money, but you're in a decent position. I think Coggin, for me, is one of those businesses that has the potential to be much, much, much larger. They're going to eat up market share of online. Online is going to be up market share of total retail. Cogan's They're not going to beat Amazon. By the way, this is not an Amazon killer. They will probably be a number two to Amazon, maybe even a decent number two. But that's the market is going to be big enough in my mind for Coggan to do really, really well. So I own the shares, but that's why picked [00:26:54][64.4]

Bryce: [00:26:54] there another one that pump emails [00:26:56][1.4]

Speaker 1: [00:26:56] that this really is a thing that I get. So many think we should maybe [00:27:04][7.4]

Alec: [00:27:04] create a range of companies by email [00:27:06][2.1]

Speaker 1: [00:27:07] distribution, emails per employee or something they want if they work. [00:27:11][4.7]

Scott: [00:27:12] I try to think of other examples. You'd probably get your point. You got something, I reckon? Yeah. [00:27:15][3.0]

Alec: [00:27:15] Yeah. Hey, if you want to hire us to be [00:27:17][2.1]

Speaker 1: [00:27:18] my campaign stop, you want to do something about it. [00:27:20][1.7]

Alec: [00:27:22] It's funny that you said Kogan, because some people commented on that question in our discussion group and said they thought you were going to pick Cobargo people, obviously consistent. The other one that people thought you might was A2 milk. So that's interesting. What are your thoughts? It's obviously struggled a little bit recently. Yes. [00:27:40][17.2]

Scott: [00:27:40] Another stock I own a full disclosure, and you mentioned that one, not me. [00:27:42][2.7]

Speaker 1: [00:27:43] So I'm not putting myself to [00:27:44][1.4]

Scott: [00:27:45] it's really struggling right now. I think so. I also own Blackmore's. And I think my view on that generally is China's really hurt these guys. And what people saw was Blackwater now, too, as China stocks, i.e. in China demand. What we've seen through covid is the drug trade from Australia to China, the suitcase trade, the gray market trade. We never really knew what proportion of Australian retail sales were made up of those people, but we knew how much was being literally sold in China or through distributors. We now know because there's no Chinese there is no Chinese students in Australia. Very, very few obviously trades residents. But a lot of that business has gone away. So we kind of we're in a new base now. And I think the share prices largely reflect that new base, which means if there is any upside, those two businesses are likely to capture it as sales and profits recover. So I think Treasury wants that's another one. Again, I own similar kind of circumstance. I think they're all they're all factoring in. Not nothing gets better from here. And so I think to some degree, if it does get any better, they're probably decent. Prices are probably going to beat the market with decent prices. If things do get better, there's decent upside potential, I think, from those three companies. So I like I to I, I'm not it's not one of my favorite favorite stocks, either one of those dominoes, they Dollars a really good company. I don't own that one. Doing a fantastic job of of just taking what should be a very simple reasonably low gain market, you know, basen cheese in a couple of minutes on top of it [00:29:03][77.9]

Speaker 1: [00:29:03] for a couple of days. It's not a lot. I just I said a couple of they are. [00:29:08][4.2]

Scott: [00:29:08] But that I mean, they've they've dropped prices. They've just matched the tech right through this thing. Their marketing is great. They're in full strategy of basically knowing that the more franchise locations you can have, the faster you get the pizza, the fast get, the more you order. It's a really great virtual. Circle, and they're doing great job here, New Zealand, Japan, they've got the Taiwan business, I wouldn't be surprised to see them expand to maybe the UK or Italy at some point. It's a really was one of those case of doing a really simple thing, really, like retail. Retail is the easiest thing in the world, right? You Bryce Tik-tok, you put it in a shop job. That's not hard, but it's really hard to do well because the barriers to entry are really low. And if you can find a way to do that excellently, you really can do fantastically well. [00:29:44][36.5]

Alec: [00:29:45] I remember early days of uni like early 2010s Bryce and I were looking at dominos and just blown away by it and saying exactly the same things like how are they doing so well? Yeah. And then just kept going. [00:29:57][12.1]

Scott: [00:29:58] I grew up with I was a Pizza Hut fan as a kid. I we all everyone was just little side bran that a few people, like most people, didn't eat the story of that. When I tell that story of the last 25 years of Domino's growth, it is a really, really fascinating story. And it really is a story of when you get that the kind of the flow flywheel spin, the good to great flywheel that makes a huge, huge difference. And you just you don't eat away and all of a [00:30:19][21.9]

Speaker 1: [00:30:19] sudden you white, you [00:30:21][1.7]

Scott: [00:30:22] you wake up one morning like, wow, Domino's. Is it pizza Huts barely hanging on. Yeah. Others are gone broke. [00:30:26][4.4]

Speaker 1: [00:30:26] Eagleboys Right. [00:30:27][0.9]

Scott: [00:30:30] Crust right. Like it's it's a premium pizza. But in this market where Domino's makes it so easy, cheap, simple, it's in your face. Like why wouldn't you kind of it's the false choice. And when you're the default choice the option is massive. Yeah. [00:30:41][11.2]

Bryce: [00:30:42] So another one from Kallara and this is one that's, you know, becoming more and more important in our community. What are your thoughts on ethical investing? [00:30:51][8.3]

Scott: [00:30:52] Okay, I'm going to I'm going to offend some people here. So I think I think we should say on a personal level, climate change is real. We should take action against climate change sweatshops. The approaches are fantastically important. I don't think as investors we have anywhere near as much impact as people like to think or as ethical investment companies want you to think. Now, speaking of my own book, I own my own ethical investments. I own because I think people will invest in their funds. I don't know, because I think it makes a difference. So that's a really important difference in this kind of cognitive dissonance. Right. Of so here's the thing. If you ain't BHP shares and you don't like the fact adventurism on use on me, you feel better. But I still on the shares, the company still exists. And you've had absolutely zero impact on the company. Maybe, maybe, maybe very tiny, slightly. You push the price down zero point zero zero zero one per cent by adding to the selling pressure once once the sales made, that goes away. So what impact do it do ethical investors really have? Honestly, unless you're an activist in the boardroom, unless you're activist shareholder and he's actually making it for not just getting up and shouting, but literally changing policy. If BHP keep mine, if what? Whitehaven Coal Mining, coal, you sell your shares, you don't like them? I buy them because I'm happy to buy on cheap or vice versa. Nothing about the company at all. So I think ethical investing is I won't call it greenwashing, but I think it's people wanting to feel good, wishing they could make a difference. I've said a bit before, you can actually have more more impact by BHP. They do really well. Take the share, take the profits and donate to charity. You do much better doing that. They're actually trying to pretend that by selling BHP and buying shares in a windfarm, you're making any difference whatsoever. [00:32:22][89.9]

Alec: [00:32:23] Let me let me make the counter case. Yeah. And I want to get your thoughts on it, because for me, so I before Bryce know doing this full time, I worked in the sustainability team at a major company we've talked about on the show before, Sokol's, and I saw firsthand the effect that ethical investing has not on the movement of the stock price, but on the incentive structure within companies and BHP, Whitehaven Coal, they're not really the companies that are going to be affected because it's their core business. Exxon Mobil isn't going to pivot to a solid business, but these edge cases, companies that could do more, that aren't incentivized to do more. When money is flowing into ethical funds, there's pressure on the share price. CEO's executives are incentivized by based on share price performance. They get their bonuses and all of that stuff. They keep their jobs. And if investors are wanting to meet, you know, the the sustainability team, if they want to hear about sustainability projects, if they're making big decisions based on that, and that affects share price, executives are then incentivized to care and to make decisions in that way. And in my three years at Coles, we saw it like we got well, not me, but like my boss has got dragged into more meetings. Our CEO learned everything about our part of the business, like they started to care more and more. Yeah, yeah. [00:33:42][78.5]

Scott: [00:33:42] And that's great. I think that's I mean, over the years, I'm not I'm not going to dispute your experience. Right. What I would say is I think as consumers, we have infinitely more power per decision than is investors. Right. Because to your point, you know, the best performing stock in the US was during the back half of twentieth century. [00:33:58][16.0]

Alec: [00:33:58] Yeah. The tobacco company Altria, Philip Morris [00:34:01][2.5]

Scott: [00:34:01] was the single best performer, not not one of the best. Not almost the best. Not literally the single best company was Altria. Why everyone hates cigarets. Ever want to sell the shares. The share price cratered, stayed low. Guess what? They've had a fortune. Dividends, no dividends reinvested, made at the top performing stock on the entire US market. Did they sell us cigarets? No. Investors avoid it? Yes. Now, to your point, maybe they're going to sell cigarets or maybe it is the case that maybe there is some tangential benefit there, but again, who's buying or selling coals on the ground specifically? Probably no one. Right? Maybe they maybe they take over from slightly. Okay. To Moroka or slightly not okay. To slightly. Okay. And maybe that does change whether an ethical fund buys or doesn't buy. I would. And I take no joy in this, by the way, like I'm not being catering for the sake or I'm not not talking it down. I want people to make really great consumer choices. Get out there. Right. Let us go and shop with the businesses that do this stuff, like go shopping. If they're being more sustainable and will do it, please. I'm literally saying please go and do it as investors. I worry that we're all paying a truckload in fees. So ethical funds who are happily saying I won't name them either, you know, please, Facebook ads, you're you're super invested in companies that are harming the environment. [00:35:08][67.3]

Alec: [00:35:09] So I think you need to pay the money [00:35:11][1.5]

Scott: [00:35:13] even if it's not right. Like, it makes no difference to that. They basically don't care. So if your marketing strategy is by our best efforts, we invest in BHP. It's like, you know, what you've done literally nothing for, not helped BHP, not hurt BHP. You've done nothing other than put your money in their pocket, earn them fees. I'm not entirely sure anyone else benefit from it. So I think I don't hate ethical investing. I think it's much, much, much, much less impactful. And people want to believe because we all want to think we can make a difference. Right. We want to believe because the X Files line for those people who are over a certain age, you should know. But trust me, you know, that's the story. So I went back on about it. I've written an article, if I may say it's just titled The Inconvenient Truth of Ethical Investing. It lays out the case. You can Google it. I wish it was true. If it can be true, if you're right, then fantastic. I'd happily, of all things I ought to be wrong about. I'd love to be wrong about that. I just don't think it matters. [00:35:58][45.7]

Bryce: [00:36:00] So moving on, one from a Dave and speaking of companies that get the flywheel going, in my eyes, Fortescue is one of those. But apparently you're not quite a fan of the company. What's what's going on there? [00:36:11][10.4]

Scott: [00:36:11] Yes, that's a mining issue. Mining companies struggle to actually have profitable business models over the long term. If you're selling iron ore, I'm selling all you're saying. I know you're selling iron ore, BHP, Rio, Fortescue Metals, iron ore. It's all the same product largely to quality differences and whatever. But stick with me over time. If you are selling at much more than the cost of production, someone else is going to be incentivized to mine over time. We know the price tends to correlate roughly with the cost of production. It's just it's just the law of the land or it's a commodity product. If I if I make something, you make something with only one buyer, they're going to buy my thinking about yours. We can say, well, I've got a nice brand and a nice corporate office. I don't care. We've got and I see. Oh, I don't care. I'll take the lowest price. Thanks very much. If you're in a price taking industry rather than price making industry, it's tough right now with the iron ore price through the roof. It's even tougher than normal, like the chance that the iron ore price stays this high for a long period. Time is so remote that if you're investing in it right now, you're taking a massive, massive risk. In my view, I'd be happily walking away. [00:37:10][59.3]

Alec: [00:37:11] Now, I for some reason in this interview, I've taken the role as devil's [00:37:16][4.5]

Speaker 1: [00:37:16] advocate, but I feel like [00:37:18][2.1]

Alec: [00:37:18] I've got to because there's obviously a lot of Fortescue fans out there. Absolutely. And full disclosure, I don't own any mining companies for basically that reason. They're cyclical. They're commodity businesses. But in commodity businesses, don't you want to find the lowest cost producer? Because all everything you said is true, but the lowest cost producer can win in that market because they can take the pain for longer as prices go down. [00:37:40][21.4]

Scott: [00:37:40] Yes. And so this is where you want to separate the business from the stock, right? So is it Fortescue remains the lowest cost producer. Is it the most likely to make the most money or the most money per tonne? Yes, absolutely. Is it most likely to survive? Yes, absolutely. Does that give you the mark of any investment return? Potentially not. And that's the challenge. Right. So you can have a great business. I bought shares in Coca-Cola Amatil, one of my big mistakes over the last seven or eight years. Borcher made a little bit money, but lost the market massively. Right. I went great brand, great distribution network. Everyone loves the product. Well run. All this great stuff. You know what I miss? I miss the growth story. So, you know, it's not going to take Coke's business away. Not in a million years. Buffett Munger famously robbed because those firms gave a speech. So if you gave me two billion dollar Goodness's in ninety seven point ninety eight dollars, I couldn't take Coke's market leadership. I couldn't do it. It is a really fantastically wonderful business, but no growth left. It doesn't make it a great investment. And so that's the difference. So, yes, you're absolutely right. Australian mines and the Portuguese Dollars wonderful tree has done a spectacular, great job. We should be celebrating his business success. Does that mean should invest at the current price in iron ore miner? I don't think so. Those two things can be true at the same time. Yeah. [00:38:44][64.4]

Bryce: [00:38:45] So there's no doubt that governments are spending big on infrastructure at the moment. We've just said the New South Wales budget come through or, you know, talk of continued building up, wants to know what are your thoughts on infrastructure and construction sector and particularly local prospects like Boral and Downer and CO? [00:39:02][16.3]

Scott: [00:39:02] So I have similar issues with those guys. [00:39:04][1.5]

Speaker 1: [00:39:05] So I just feel like, well, we'll be nice. This interview with mine finished on a positive note and again. Yeah, that's right. [00:39:12][6.9]

Scott: [00:39:13] So here's the problem. These guys say government used to be really dumb, right? If you look at the old old trends, the first Transurban toll roads, the government program. Massive, right, turns over when I'm going to get these guys really good, you watch this fast forward 10, 15 years, 20 years. Governments now realize the game they're playing and the government are getting much, much smarter. So if you're in the infrastructure business or if you're doing it for a large developer, they know exactly what they're doing. They're going to say, I want it on time to on budget or you're paying the penalty. And by the way, I'm going to put an open tender out to everybody and say I'm going to take the best price. So, again, if that sounds like the iron industry, it probably should, because that's exactly what it is. So, again, it's going to be more of a structure built. Absolutely. Do I think it's great for the taxpayer? For people? Absolutely. If everyone's doing open costing and the lowest cost producer wins, doesn't matter how much volume is going down until a supply constraint, which is there's more projects and people, then they can suddenly in their price. Right. So mining services back 10 years ago got to do exactly that. They said everyone's opening new mines. There's only a half a dozen of us. We're going to set the price and you guys are going to pay Dollars. Your mind doesn't get built. That's great. When you flip it over and into more mining services, business and mine work, all of a sudden they're all doing it for single digit margins. And so construction infrastructure tends to be really low margin and all the risk is yours. Governments don't say, oh, you had some problems with the weather. I'm sorry, that's fine. But what about paying the penalty? You have to do it on time. It's fine. They're like, no, no, no, you're going to take a loss on this project. So I get what I want because I've got an ironclad contract. That's a tough business to be in. So I don't love infrastructure from a structural perspective. [00:40:38][85.2]

Speaker 1: [00:40:39] Yeah, nice. [00:40:39][0.2]

Alec: [00:40:40] And then before we get to our positive question. Thank you. Well, this is this isn't particularly negative. Maybe you'll take it and [00:40:47][6.6]

Speaker 1: [00:40:48] I'll try not to hear about [00:40:49][0.9]

Alec: [00:40:49] that from Sean. Yeah. What do you think commodity prices are going. [00:40:53][3.4]

Speaker 1: [00:40:54] Oh, oh, oh. [00:40:58][4.6]

Scott: [00:40:59] I'll do more than one word down. Is that so? I know they look all different commodities are different, right? Oil price at the highest points in twenty eighteen right now. The iron ore. So here's the thing. Iron ore Majidi says before iron ore margins are software margins, Fortescue's DGSE less than twenty bucks a tonne. They're for two hundred dollars. Microsoft would kill for those margin. Salesforce Altium alive. They would kill for 90 percent, 90 percent margins. It's crazy. So I don't know how you can see it. So I don't do predictions. The first thing in the short term, I've got no idea because the market can be silly. Disrupted oil was negative pricing last year. No one predicted that. Right. So predictions are dumb. But if you asked me, do I think what are the range of outcomes, there's a small possibility that over a couple of year time horizon, the price is higher. There's a very large probability it's lower. And of that is a decently large probability that it's much lower just because the law of supply and demand. So you give me something to go with. But, you know, I just I'm not happy about that. Like, people people often, you know, I get pain. This goes like a negative at minus. I don't want to believe that mining like I'm glad they're there. Whether doing the thing, environmental impact aside, you know, they're doing what they can. But I think if if the business when you want to buy a miner, if you want to, is when the cost, whether the price of the commodity is close to the marginal cost of production, that's a jargony term, effective if it cost you twenty bucks a tonne to get on out of the ground, selling for twenty, twenty five dollars a tonne, selling for the price, then you ought to buy because it was relatively limited. The upside is huge. We've got exactly the opposite scenario right now where there's so much machinery in the price. It's hard to imagine a scenario where they make even more money and make more money. If it's a little bit more. If it's the same, you can get roughly marginal returns. If it's less, you lose money. If it's a bit more, you make a bit of money. That's a really tough set of sort of outcomes. [00:42:40][100.7]

Alec: [00:42:40] And just as the world opens back up and, you know, like more steel mills, open up and stuff like that, everything's going to even out a little bit. Like associated with the price of lumber a couple of days ago was crazy. And obviously it rocketed up. And a lot of that was because a lot of the processing facilities shut down during covid. But this chart, the prices fall right back down again as as these things. [00:43:03][22.4]

Scott: [00:43:03] And and that's the benefit of being older, not having much hair. [00:43:05][1.7]

Speaker 1: [00:43:05] Right, is [00:43:06][0.4]

Scott: [00:43:06] you've seen this cycle so many times and at the time there's always bit of the mining supercycle. 2011 was supposed to be the permanent thing. Right now there's talk of another mining. When people say, oh, maybe it's a supercycle, that's a signal to sell because we've been here that many times. The longer you're here, the more suckers you go through you like. I've seen this movie before. I know how this one ends right now. People don't want to think about it or haven't had the experience. It's like recessions, right? People before Covid, if you're under 40, you've never worked through a recession in your life. It's hard to imagine what might look like. Now we know it takes that experience to to work through. [00:43:37][30.6]

Bryce: [00:43:39] So we will before we jump into our final three, Scott, we will finish on a positive note. It's all been there. It's been. We do appreciate you answering. Thank you. All these questions from our community. What's one thing that's really getting you excited about markets today? [00:43:52][13.3]

Scott: [00:43:54] So I'm going to give a boring answer, but hopefully a positive answer, which is that more people are investing in shares than ever before. More young people are investing in shares than ever before. Now, unfortunately, partly that's because they've kind of chucked out of the housing market, which sucks. So that's a whole different way. I get on that tangent. But a lot of people are investing. The power of investing shows no sign of abating and the sheer power of compounding, honestly, like I wrote in an email the other day about I feel like Sisyphus, you know, rolling the. Rolling the stone up the hill and they come back next day, back down at the bottom, trying to convince people that this is actually worth doing is like the never ending effort because a new people and people have different experiences. I'm just it's a boring answer. It's probably a bit of a, you know, copybook answer. But literally, like the power of compounding doesn't stop. Markets come and go. Trends come and go. The hot topics come and go. But if you look at the history, go to the list, check out the Vanguard index chart, Google Vanguard Index chart 2020. I'll grab it right now, post the podcast. [00:44:49][55.3]

Speaker 1: [00:44:50] Sorry, Google [00:44:51][1.3]

Scott: [00:44:51] Vanguard next chart. Twenty twenty. The sheer compound value of investing is just continues to blow my mind and I'm desperate for more and more people to get involved in it. Even if they don't buy any of our services, they just buy an ETF and forget about it. I generally don't care. My bosses want me to say that he doesn't care, but I'm like, okay, don't bite. Don't buy what they thought I was gonna buy an ETF, add to it every month and retire stupidly, which I quite literally no guarantees, no promises are going to lead to. I don't know of anything more likely than that. If you're twenty five now you've got forty two years till retirement. You guys on the compare math on that, that is just stupidly large. If you listen and you haven't got to play for love of God, just start investing now like right now. Buy an ETF right now and keep adding to it. It's just it's stupidly simple. We, we make it way too complex. Finance the funds thrives on make these complex and opaque because that's how we make our money. Right. So we don't necessarily mean meal, you guys. But the industry, the stupid fees that people get charged for not knowing any better is is unconscionable. But just to keep us simple, invest an ETF and buy stocks, go for it and do something else, go for it, but at least get started. [00:45:54][62.2]

Alec: [00:45:54] Hmm. That's a good note to end it on. And it is something that I appreciate about, about you, Scott. Whenever we hear your podcast or we see on the news, you do you do embody about breaking it down, making it simple. And I'm a simple man trying to help people understand it. So Motley Fool ads and emails, are we? We don't appreciate what you do. Thank you for sharing. Before we get into these final three questions, if people want to follow you online or listen to a podcast or anything like that, where should they go [00:46:20][25.9]

Scott: [00:46:20] for every kind? So social media, TMF, Scott P, T, Scott P, that team of the Motley Fool, Twitter and Instagram, Scott for lots money on Facebook. The Motley Fools accounts out there as well. We've got a website you guys can look up. I'm not going to give it a plug. Motley Fool Money is name of the podcast. Check it out. Listen to Equity Mates investing first, of course. But after [00:46:38][17.9]

Speaker 1: [00:46:38] that, the money that we all [00:46:41][2.8]

Alec: [00:46:41] grow the pie and podcasting. As soon as someone told that radio off and starts listening to podcasts, it's more likely heads into a second and a third and the fourth. [00:46:48][6.8]

Scott: [00:46:49] I've always said, you know, there are enough bad guys in finance that if we can find some like minds with you love our marketing, I'm not a question [00:46:55][6.5]

Speaker 1: [00:46:56] of like [00:46:56][0.1]

Scott: [00:46:56] minded investing. You know, if there's a half a dozen of us that are trying to push the right stories, people will get the right threads from enough of them to put those things together. So, as you say, the more the more the merrier, honestly. [00:47:06][10.0]

Alec: [00:47:07] Yeah. Now, Scott will jump into these. Do it. Three final questions. The first one is, do you have any books that you consider must reads [00:47:14][7.1]

Scott: [00:47:15] so really boringly? The Essays of Warren Buffett by Lawrence Cunningham is a fantastic read. Buffett is a guru, is a genius for all the right reasons. This book actually puts it in topic sections rather than chronological order, which makes it so much easier to read because Buffett's letters, they're great. But if you start in 1965, work your way through it. Kind of we've seen a different topics. This literally puts all the topics I might be competitive advantage puts them all together. And you had all of his writings about that's really, really useful. Good to Great is my favorite business book of all types on investing book at all. If you want to think about what makes a business better than another. And I talk about fundamentals at the beginning, so we book into that nicely. Jim Collins is a great guy, scientifically based. Not just can I say success point my that so that on the [00:47:56][40.9]

Speaker 1: [00:47:56] yes side [00:47:57][0.6]

Scott: [00:47:57] most business books are successful and. Right. Here's what I did. You can do it too. You know what you want. Richard Branson. Neither am I. Richard Branson. Richard Branson. That's also I love his books. Are they really fun reads. I'm not going to start a music shop and become, you know, the next virgin. I'm not going to become the next anybody right near the reunion or our listeners. So it's also it's not like I wish I could do that. So we get excited about it because we think maybe I could be that too. Good to great is academically based, scientifically based. They've done the research. It's a really, really great books. I recommend that. And then I'd recommend one up on Wall Street by Peter Lynch. [00:48:25][27.4]

Alec: [00:48:25] Really good book. Yeah, nice one. Three good recommendations. There are next one in 60 seconds or less. What's the best company you've ever come across? [00:48:35][9.3]

Scott: [00:48:35] I've always wanted to be on sale this year. Your time starts now. Yeah. You're not going to know Solarcentury. What am I doing? [00:48:40][4.9]

Speaker 1: [00:48:41] Whatever the new version know David Revelator myself. Beautiful, haven't I? Let me tell you about horses and carts. [00:48:47][5.6]

Scott: [00:48:47] I've taken out fifteen seconds already. [00:48:48][1.0]

Speaker 1: [00:48:49] True stories to any company. [00:48:52][3.0]

Scott: [00:48:53] Berkshire Hathaway by a long shot for all the reasons you'd expect. But I'll go to Google, Amazon 1997 shareholder letter. Jeff Bezos effectively predicts the future by inventing it. He says This is who we are. This is what we're going to do and hold. This is day one. It's always day one. If you're looking for a company that is set out to be built for the long term, I don't know of a better example on Amazon. I own shares for full disclosure unrooted. Buying back then a really you look at and go man. I did that, and they're still doing it today, great business, great business, [00:49:23][30.1]

Alec: [00:49:24] yeah, unbelievable business. Burke Shire, also an unbelievable business that isn't that. [00:49:28][4.1]

Scott: [00:49:28] Tsuyoshi, again, for full disclosure [00:49:29][0.8]

Alec: [00:49:29] and then final question, if you think back to your younger self, you know, in a high flying of the late 90s, what advice would you give to your younger self [00:49:39][10.1]

Scott: [00:49:40] start? I went to high school. My economics and math teachers both taught about compound interest. And I got I got it like I I'm the world's biggest idiot. I got it at 15, 16, thought I got it. And then I just stayed around for a decade. And if you I won't I probably will try to even go back, do those math. Right. If I could put extra decade on my investing compound returns at the other end. There's probably a 70 figure difference in that. Quite honestly, I cost myself probably a million dollars in retirement by not starting at eighteen. But when I was twenty five, twenty six, that that cost is phenomenal. So start and just stay the course. Volatility will happen. It just does. It's not a feature, not a bug. It's a feature, a feature that would have welcomed the idea of just, just, just start and, and keep going at regularly. Just do it like it's not that hard. Stop. [00:50:28][47.5]

Bryce: [00:50:28] Yeah, love it. Scott will very much appreciate you coming on the show. We covered a lot of ground. I appreciate your honesty and thank you for also answering all the questions from our community. Those were just a select few from the near hundreds that we always like. I think that's great. But I very much appreciate your time and looking forward to catching up and having you back on at some point. [00:50:48][19.8]

Scott: [00:50:48] Look forward to all the e-mails in your inbox when you finish [00:50:50][1.3]

Speaker 1: [00:50:52] on click on the link. Thanks, guys. It's been fun. Thanks, Scott. Thanks, Scott. [00:50:52][0.0]


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