How can I build wealth? Unpacking how compounding will get you rich… slowly but surely | Guest expert Emma Fisher

Maddy Guest: [00:01:16] Hello and welcome to another episode of your company podcast for like minded people who want to make smart investment decisions. I'm Maddy and as always, I'm here with my good friend Sophie. [00:01:26][10.7]

Sophie Dicker: [00:01:27] Hello, Maddie. As always, I'm very excited for today's episode as well. But before we start today's episode, we would like to acknowledge and pay respects to the wonder people of the Kulin nation who are the traditional owners of this land. We pay our deepest respects to elders past and present and to the next generation who we hope to create a different future for. This week is Reconciliation Week, and the theme is more than a word. Reconciliation takes action as every Australian to implement real support, to achieve equality between Aboriginal and not Aboriginal people. To support a cause, it takes real action. Head to Children's Groundhog Day to find out ways to contribute. So. So what is all the excitement about this week? Well, the excitement this week is really about being in plain boring, Jane, to be honest. It sounds exciting. Sounds exciting. I know. But it's really about investing in those big, good companies for the long term, which can sound a bit boring, but really gives you those benefits. Look, I think it's pretty safe to say that that is the strategy that we now both do follow. But I think it kind of bypasses this question of what actually is a good company. Yes. Well, I think that is the question on every investor's lips, especially yours. Many considering you just asked the question, why is it so hard, honestly? But that is why today we are joined by one of our expat investors, Emma Fisher. Now, Emma holds a bachelor of commerce from the University of Sydney and has over 10 years experience in finance. She is an absolute superstar. We have found gold for a while, guilty head of research at the Early Funds Management, as well as portfolio manager responsible for managing the Australian Share Fund, which is listed on the Australian Stock Exchange. Check out the ticker. Asef. We have been big fans of Emma for a little while now and we are so excited that she'll be joining us today. Welcome, Emma. [00:03:20][112.7]

Emma Fischer: [00:03:20] Thank you. Thank you very much for having me. [00:03:22][1.6]

Maddy Guest: [00:03:22] Thank you so much for coming on our show. We start every episode the same way with a couple of quick five questions. So if you will allow it, can I ask what is your morning routine? [00:03:33][10.2]

Emma Fischer: [00:03:33] It's a funny one because I have a 10 month old, so I don't have a morning routine. So I play it by ear. But we get up early because obviously I have to go to work at the moment, sort of everyone's starting to trickle back into the office. So I've got a morning commute. But basically I try to make sure she's fed and watered and happy. We have a little play before I leave, try to get out of the house before I start falling into a state of disrepair and she pulls out my phone. And I guess the way that I like to start my morning on the way to work is I walk to work. It's about an hour. I listen to podcasts on the way. Obviously, this will now be one of my favorite podcasts. Listen to. But generally my sort of rule is, you know, I don't like to think about work before I start work, so I don't actually like, check the news. I try not to think about stocks. I spend my hours walking in, listening to podcasts about anything but finance and investing. Really so so that really you know, I think like a lot of jobs, this job can be quite dense and all consuming, especially with stocks, because you're always thinking about them. So I really try to delineate home and work and not really switch on until I'm in the office. [00:04:46][72.4]

Sophie Dicker: [00:04:46] That's fair enough. It's good to have a bit of perspective about, I guess, other issues that are happening in the world, not just the equity markets. Our second question for the day is, if you were company or stock, who would you be and why? [00:05:00][13.2]

Emma Fischer: [00:05:01] This is such a good question. You know, it's really like I think if you asked my husband, he'd say something like to pay heavily loss making and all the values and I'd be something really boring and old economy like. And I think when I think about investing, I'm not really attracted to these businesses that, you know, early stage. So you the dream blue sky, like, really exciting and glamorous, but like loss making. And you kind of have to believe the story or else these businesses are kind of going to go bust. So I, I definitely would be an old economy stock a. Something really boring and dependable. I'm not really selling myself here, am I? And I respect that business is a great big money year in, year out. So hopefully, maybe that's a good business for me. [00:05:47][46.3]

Maddy Guest: [00:05:48] I was going to say bank that that sounds much better. [00:05:50][1.9]

Emma Fischer: [00:05:51] Yeah, yeah, yeah. Bank at the moment they're doing pretty well, but probably eight out of ten years you would want to be a bank. [00:05:57][6.5]

Maddy Guest: [00:05:59] And I guess the question sort of take you back a little bit when you first started investing. I know for a lot of us, getting into investing in this place can be quite intimidating. So what would you say you were most afraid of? [00:06:13][13.4]

Emma Fischer: [00:06:14] Oh, that's such a good question. What was I most afraid of? I guess I was probably most afraid of not making the many bags that I assumed my initial investments would make. And I probably didn't. I did. I think when I think back to when I started investing, I really didn't know what I was doing. And so when you don't know what you're doing, you almost can't lose. I mean, you can lose all your money. You can buy one of my principles, I guess we can to this a little bit later. But I think in investing, you should never start out putting any money into the market economy would lose. And that's not because you will lose it or that the market is particularly risky or gambling or anything like that. It's just the worst thing is to need that money back and have to sell at an inopportune time. So when I first bought the very first parcel of shares I bought, I think I'd sort of saved up some money working as a checkout ticket woolley's and it was five hundred dollars, I think was the minimum that you have to buy to go back, then you have to buy to invest. So I invested five hundred dollars and it was nothing that I couldn't afford to lose, although it was probably actually my wife's life savings at the time. So I went into it with a huge amount of fear. I don't think when you're young you have a huge amount of fear. I've got much more fear now, I think. And when you invest myself, you buy anything for any reason. You don't have to explain yourself to anyone. So so, yeah, it wasn't it wasn't a huge hill of fear that I had to climb over. It was a huge hill of ignorance. I think that I'm probably still hunting. [00:07:42][88.5]

Sophie Dicker: [00:07:43] And that's very funny that you say that you have more fear now, because when I was speaking to my partner the other day about this, he was saying, surely, like now you're more willing to put some money, random money away into investing because you can, like, lose it because and you already have babies and you have kids. You have to think about all those responsible things. And I'm like, I still am not in that mindset where I'm like, oh yeah, I could just chuck away money. Like, I'm still going to be just as risk averse [00:08:05][22.6]

Emma Fischer: [00:08:07] that oh, look, I think risk aversion, it definitely is a personality thing. I look at the person that got me into investing is my grandfather and he is very much a product of the depression. And he loves dividend paying stocks. He loves this idea that you can invest in businesses and have the investment generate you an income. So he's really at one end of the risk aversion spectrum. When you've got when you're happy to lock up your money for 30 or 40 years, you probably don't think about it too much. But as you move closer to retirement, you definitely move to a more risk averse position because you've built up wealth and you really try to protect that capital rather than necessarily double or triple your money. [00:08:44][37.1]

Sophie Dicker: [00:08:44] Yeah, well, I guess actually that's probably a good way to move into what we want to talk about now, which is our goals and thinking, I guess, for the long term. So if you mentioned something like retirement, we think and when we have discussions about this, we think it's really important to have those money goals so that you can keep working towards them. Do you kind of also believe this? And why is it important to have those goals when when starting out investing? [00:09:07][22.6]

Emma Fischer: [00:09:08] It's always in life important to have goals, because if you know what you're working towards, then you can kind of break it down into much smaller steps to get there. So when you're thinking about investing, there's a few things that I'd recommend. The first one is, as I said, you want to play with surplus cash. The most important thing is you never want to have to need the money back in the short term. And I would call the short term really on a three year horizon. So if you're if you're listening to this podcast and you're thinking, I want to learn about investing, but really what I want to do is say for a house deposit for the next few years, I want to say that I'm probably going to make more money if I invest that in the market and I'll get there quicker, I'll get to my deposit quicker. That wouldn't be my recommendation. I would consider them sort of different buckets or different goals or most. So I would separate the money that I was wanting to invest from the money that I was wanting to save towards, say, a house deposit. And I would only really invest money that I'm happy to tie up for a decade, really, because it may actually take that long in some instances, if you get it wrong for the IG to really work, hopefully across the board, it doesn't. And hopefully you can. You have the opportunity, if you do make an investing mistake, to cut your losses and not take too much a haircut on your original investment. But that may not be the case. [00:10:28][80.5]

Sophie Dicker: [00:10:29] Yeah, so you touched on this sort of that three years, which you. It's sort of considered to be short term and then I guess being prepared because we talk about that surplus capital and in theory, you're prepared to lose whatever you put into the stock market. So we want to be prepared to stay in for that sort of five, 10 year plus mark. So it really is those long term goals that we're working towards when we're investing. Do you have any examples of sort of long term goals that you personally have that you're putting your money towards? [00:10:58][29.2]

Emma Fischer: [00:10:59] My largest position, as you'd expect, is the Aliased Friendship Fund. So shameless plug for the fund. So it's actually really easy to buy and sell it. You can trade it through CommSec trading up. You just enter the ticket. So that's that's my largest holding as you'd expect that it will be. And really, the idea there is that our fund interest in twenty five to thirty of our best ideas in the Australian market. So these as I said, these are really good businesses that have strong balance sheets from by really good management teams and at an attractive valuations. So whenever I get people asking me, as you do in this industry, like friends or family, asking you for stock tips, that's usually the one that I refer them to purely because that's where all our best ideas go. But if I look at maybe before I joined Dalian and sort of how I built my own personal portfolio, I've always just been really drawn to this question of what's a good company and it spills into real life. I'm always kind of looking around and assessing businesses and trying to figure out the answer that I've sort of come to is that a good company is one that can earn a good return on its capital. And basically, if you earn a good return on your capital, it's because you've got something special going on. You've got a barrier to entry or you've got sticky customer base or there's some some reason that means that you're able to generate more of a profit than an average business. I'm a believer in investing in Australian businesses as an individual investor purely because it's sort of easy to make these judgments about what are really good businesses. I remember having a discussion with Niha, my sister. She wanted to get started investing. She wanted some advice about what sort of businesses to own. And I was talking to her and her husband and I said, What businesses are you really passionate about as a customer? Where do you have a really good experience? What businesses do you do you like? And she said came up and he said Bunnings. And I was like, well, do I have a business for you? Because they're actually owned by the same company, which is Wesfarmers, which is listed in stock exchange. So in this one business, you can invest in two of the greatest businesses in Australia, and that's another one that I think is a really good investment over time. So I've always been drawn from a personal perspective to grappling with this question of what's a good business. Now, as I said, like, I haven't always gotten the right in some businesses that I thought local businesses haven't haven't really turned out to be. That's the best thing about investing and personal investing is it's a constant learning journey. The other piece of advice I give is that you probably know more than you think. You know, I think people can focus with investing on I've got to become an expert. I've got to read these books. I've got to understand market cap and enterprise value and price to earnings multiples. I mean, none of that actually really matters. At the end of the day, you're investing the business like you're literally becoming an owner, a pot owner in a business. So all this financial market stuff like it's invisible, it doesn't really exist in the real world. What matters is assessing the business. If you're a gamer and you're spending every month going down to JB Hi-Fi, chatting to the staff, selecting a game, and you really enjoy that experience and you know that you're not buying those games online because you really like the experience of going and picking the game and talking to the staff and that whole in-store experience. Then go out of that hot flashes. You understand the business is a simple business. You can probably understand how the permutations of the economic cycle might affect that business and when you might want to sell it. So, yeah, that's my advice. Like, keep it simple, build on the observations that you as an individual can make. And it doesn't have to be complicated. You just sort of have to find good businesses and then get out of your own way. Like that's that's another part of it is the impetus to check your stocks every day. And that's the thing is that you can't look at the share market as a scorecard, maybe in the very long term like it. Just imagine, buy the shares and just imagine that the market's close to three years and you can actually try them, because if you were by mistake in a private business, that would be the case. So I think you have to think you're buying ownership in this business and you really want to be an owner for the long term. And you can't use the fact that the share price exists as a kind of mark to market on your sense of whether or not it was a good idea, because, as you say, you're probably going to draw their own conclusions for that by. I've shared this story before, but the market had rallied so that this is pre covered, the market had reached a peak and the sign at the top for me was my mom texted me going, oh, my shares are up. I should be a fund manager like you. I'm so great that, you know, that that can be a really you know, it's a kind of a counterintuitive signal that when you think you're God's gift to investing and you need the humility of having a bit of a pullback to to realize that we don't always know everything. [00:16:04][304.7]

Maddy Guest: [00:16:05] Yeah, I think that's a great point. And it really just talks to, I guess, sort of the fact that to an extent, so much of us don't know what we're doing at it. And that's the wrong thing to say in this moment. But, you know, if you're afraid of investing or you feel like you don't know enough information, actually, that the results in the stock market don't really reflect the fact that we are all outperforming because we all know so much more than anyone else. It really does sort of come back to the general volatility, which is why we want to be in it for the long term. I guess what I did want to ask was if you're sort of sitting at home and you're looking at your savings account and wanting to start putting some of that into investing, looking at sort of your goals and getting a really good idea of that, how would you sort of do you have any tips for how to then really translate that into, you know, deciding how much cash I need to keep and how much I can sort of afford to put into the stock market? [00:17:00][55.5]

Emma Fischer: [00:17:02] Look, I think the actual dollar amount at the end of the day is going to come down to your individual circumstances. And I just bring it back to what I said before, which is just make sure that if whatever you're investing is money that you'd be happy to tie up and that you don't need back in the medium term. The you know, the other piece of advice in terms of entering the market is because ultimately, in the long run, your return will be a function of the original price you paid. And at various points in time, the market can be wildly overvalued and undervalued and good opportunities usually present themselves. You know, once every year or two you'll get a small pullback in the market and that can be a really good time to add money rather than sitting out on the sidelines and waiting for that opportunity. Or even worse. And I see this a lot, sitting on the sidelines and waiting for what I call like the big one, where you've read some stuff and you've convinced yourself that the financial systems of House of Cards and it's all going to come crashing down and equity markets are going to be down 90 percent at one point. And that's when you're going to put all your money to work. Just just let go of that idea. You're never going to be out on the market correctly. And just go back to the facts, which are equity markets rise six out of seven years on average. So the most powerful tool in your arsenal is sorry. It's a bit of a hackneyed saying, but the saying of time in the market, rather than trying to time the market, maybe one strategy to combat that and combat is trying to pick the right timing is just to come up with a rule before you start investing. A really common one is dollar cost averaging. So the idea here is and I'm sure you've talked about this on the podcast before, but the idea here is say I decided I want to invest ten thousand dollars, but I don't I don't want to put it all in one share price that reflects that day's market conditions. Maybe I can say, well, I'm going to break that up into twelve monthly amounts. I think a good rule of thumb, when you're investing in good, solid businesses, the very long run return of the equity market is around that seven percent per annum and a big chunk of that comes through dividends as well. But if you use that sort of six to seven percent per annum as your expectation of a return from the equity market, then you can kind of see and compare it to other forms of debt. To be honest, I'd say if you're paying an interest rate on something that's above five percent, I would pay that off before I would invest in the share market. It's a [00:19:22][140.1]

Sophie Dicker: [00:19:22] good rule of rule of thumb that we can follow. [00:19:24][1.7]

Emma Fischer: [00:19:25] recognizing that we're in we're in a pretty low interest rate world. Like I have a personal share portfolio and I have unfortunately a very large mortgage. So I'm paying a very low rate of interest on that mortgage. And I love investing. So I'm going to run those two things concurrently. But if I was in a world in which I was paying a seven percent or eight percent mortgage rate, heaven forbid that that should ever happen again. It's going to make investing in equities more fiscally challenging for me and it will make the hurdle rate that I require from those shares higher. So that's probably how I think about debt. I don't think I think a mortgage at the end of the day, I think that's a very the interest rates that we're paying, a very manageable rate that kind of incentivizes also being invested in the equity markets. If you can afford both. [00:20:12][47.1]

Speaker 2: [00:20:12] I guess we are loving this episode with Emma fischer. [00:20:15][2.9]

Maddy Guest: [00:20:55] Emma, you touched on how I think your grandfather got you into investing in the first instance, but we would love to hear a little bit more sort of a background on your investment journey so far and maybe the benefits that you have experienced from from investing in financial markets. [00:21:13][17.4]

Emma Fischer: [00:21:14] Yeah, sure. Like, I think when I think back on my own journey in investing, I think anyone's journey into investing start has its genesis in your attitude towards money. And when I think back really long term, like I've always been interested in businesses and making my own money since a very young age, potentially embarrassing story when I was like five or one of my earliest memories was a friend and I thought, God, this is so we collected a bunch of rocks and we painted them and then we dipped them in glitter. I mean, those are pretty impressive rocks. And we set up a stall on the side of the road selling these glittery rocks for like 50 cents each. And it was total party money, like I have a daughter now. And if I walked past two little girls selling glittery rocks, I clear out the stall. But it was thrilling. It really vividly. And I remember afterwards, like, I don't know, I would make two dollars each or something, like counting all the money, dividing it by two. And like me going, I'm just bragging about this brilliant business that StumbleUpon and I think even when I think of stories like that, it's pretty clear that my personality the whole way along has been one I'm interested in, I guess, businesses and and then that kind of fit into growing up as a teenager. I grew up in a family where if you wanted something, you have to earn the money to go out and get it. And I was totally OK with that. Like, I always enjoyed having a job. I worked at I worked as checkout chick at Woolworth's like I had just a job the whole way through. I made my own money. So that was always kind of just what life was for me. So I think the step into investing was kind of a natural one for me because I always just enjoyed managing my own finances. And my grandfather, he gave me an annual report one day, like a Commonwealth Bank annual report, and he said, I think you could do something like this. He'd always been investing and no one really in the family had shown any interest or paid any attention to it. So I think when I showed a modicum of interest, like, I'll get my hooks into her and we can chat about this stuff. And we really bonded over it. And he showed me how to open an account and I didn't know what I was doing. I would never I would just refresh the page and just watch my money go up twenty dollars and down twenty dollars. I was just really exciting. It was kind of like I was just telling you to check every day, like you check, you wake up, you check your stocks. It was great. And at the time I was studying commerce law and I really didn't like the law. I found it quite boring and dry. So but I was kind of didn't really know what I wanted to do. Like I was studying philosophy and French and Spanish and I was just looking for something like looking to find something. And I found this. And so I changed to finance. And funnily enough, the first year of finance, I actually really hated it. And in retrospect, that's probably because I didn't do very well. And it's always hard to figure out if you hate something because you doing badly at it or if because it's generally, objectively a boring topic. The corporate finance just wasn't for me. But then I did this course in my maybe my third year of finance, and it was just this one semester on this topic of equity market valuations. And I remember it was basically this semester where all you do is like model companies on Excel, read the annual report, build a model, try to figure out where sales might go, try to figure out what profit margins might be if the cash grows. What assumption do you need to make around the cash needs of the business as it grows? I just loved it. I just thought it was so, so interesting. And that's when I decided I wanted to do it as a career. So I went out and tried desperately to get an internship from anyway that would take me. I ended up actually research internship at a place called Nimura, and that's sort of that was my entry. And this is this is the only sort of proper career job I've ever done, really. Like I started in this industry when I was twenty and I've always loved it. And and I feel really lucky, I guess, that that I've stumbled into an industry that's just so genuinely interesting. You can do it as a hobby. It's it's really interesting as a hobby. But it's it's great when you can sort of make your hobby your day job. So I feel quite lucky about that. But actually, when I reflect upon it, I think it's a shame that I didn't know this job existed when I was in high school. I didn't have I think you know about roles like this in the industry. Maybe when you're younger, if your parents work in the industry and I didn't have that. And that was certainly at my school. I went to an all girls school. And when I think back, all the smart girls, erm I got good marks and they see that go into. Media communications, that was like the glamorous industry, no one wanted to work in finance, myself included, and no idea it was an industry. So I get involved in these conversations around why aren't there more women in finance? And I think it's it's it's a it's not a demand thing. There's plenty of demand for women in finance. It's a supply issue. And I think the supply starts really young. So hopefully this gal's listening to this podcast that are in high school and know about this industry, this Guerreiro a lot earlier than I did. Yeah, definitely get to the age of 19 or 20 to even figure out that this was a career. [00:26:31][316.7]

Maddy Guest: [00:26:31] Yeah, and I love that you said that you sort of had your grandfather with you when you started out your investment journey to do things with, because that's something that Sophina sort of reflected on quite early in the series when we said we both had people to sort of start that journey and we found that it really helped us for bouncing ideas and learning off each other. One thing I did want to ask is, does this buzzword that we always hear when people talk about investing and that is compound interest. And I'm all I guess it's buzz words, isn't it? But I'm hoping that you might be able to explain to us a little bit what what can compound interest actually is. [00:27:06][34.4]

Emma Fischer: [00:27:07] Yeah. So the idea behind compound interest is that the longer you invest earning a certain right of return, that that it just works exponentially. Now you're going to. Absolutely masika this analogy. But it's basically you can Google this. If you folded a piece of paper over on itself, say, 32 times, how thick do you think that it would end up being? And most people will give it answer like, well, you know, I think it be as thick as a telephone book or something like that. It actually basically is the distance from here to the moon. And that's that's the power of exponential growth. And that's really what you're tapping into with with compound investing. So if something grows 10 percent the first year, then the second year, it's growing 10 percent off a higher base. Then the third year, it's growing 10 percent off a much higher base. That's why it's a really powerful concept. And the beauty behind that concept is the younger that you get started in investing early, you hear about this concept, the longer your money is just sitting around, taking over in the background, working for you. There's another again, I'm sort of going to butcher it. I'm probably going to get the figures wrong. But basically, there's another kind of analogy that's doing the rounds at the moment that basically mathematically, if you started investing at the age of 16, you put two thousand dollars a year into the market and you stopped at the age of 20 to start putting the extra two grand and you just let the lump sum compound first. The situation where you start at twenty two and you put two grand away until you're ready to retire. If you compare those to lump sums of money, the person who started earlier and then you put in six years worth of two thousand dollars, they end up with more money because of the power of compound interest of starting earlier. So again, these these are really powerful concepts. [00:28:55][108.6]

Maddy Guest: [00:28:56] I love that compound interest story about the one that when you start early and then you leave it a little bit later. And I think that is an incredible lesson for anyone who is thinking about maybe getting into the stock market, but has kept putting it off because really that just goes to show how much you just got to take the plunge and get into it now and not tomorrow. [00:29:17][21.5]

Emma Fischer: [00:29:19] Exactly. Now, the important thing, though, I guess, about compound interest is it kind of presupposes that you're investing in a certain type of business, a, presupposes that you're investing in a business that generates really good cash flows and pays those out. So I think when we bring it back to investing, one of the things that we look for is business with a really good balance sheet that can withstand I think the last years told us you never know what's around the corner. And a lot of really good businesses in March sold down to dramatically undervalued levels because everyone thought they'd be insolvent. We were suddenly doing all this analysis to assess whether or not these businesses could literally keep the lights on if they had no revenue coming in. And these are businesses that everyone thinks maybe, maybe that's a risk for, say, an airline. But you never think that this is a risk for retailers or any of the other businesses that so their share prices for 60 to 70 percent toll roads, toll roads are meant to be the safest of the safe businesses, the big risk that disrupted their business. So the point being, you never know what's around the corner. So we put a really strong focus on investing in businesses with really strong balance sheets as well as attractive valuations. So I think that's important to access the power of compound interest. You've got to be investing in businesses that have something special about them. Now, the good thing about that is, as I was saying, if you're an Australian consumer, you probably already dealing every day with businesses that have something pretty special about them. I guess you've got to kind of get your head around the idea that all these really big names that we deal with every day. And I guess I'm. In consumer land, but there's a whole bunch of businesses, even the major banks Woolworths calls, it's not just JB Hi-Fi, the new Bunnings, all these businesses that you're dealing with every day, they've if you think of survival of the fittest, they've risen to this exalted level where they've dominated their own local profit pools and become the number one or number two and number three player in the Australian market. And we all know the names and we all use these businesses every day. So there's almost this really powerful kind of survivorship bias. That means that when you're investing in the large companies in the ASX, you're actually by by nature of that investment, kind of hitching your wagon to really good, powerful businesses so they can be an attraction, especially when you are young. And as I said, I did it, too. That can be an attraction to these exciting biotechs. And because you think they're going to be the ones where you can make 10 times your money and maybe on a couple of them, you will. But don't underestimate the power of just buying these really good, seemingly boring businesses and really pitching your wagon to these powerful economic moats. They have now give you an example. So I've talked about Bunnings before. That's a really good business. But when you think about this question of why is it good business, it's because it doesn't really have much competition. There's daylight between Bunnings footprint and position in Australia and the number two, which would I guess be might 10. But Woolworths obviously had a crack. So a number of years ago, Woolworths said, what, Wesfarmers make a lot of money and Bunnings, we've got deep pockets. We know retail property. We're going to start up a competing business called Masters and we're going to go out and we're going to take share that profit pool. And over a couple of years, they spent hundreds of millions of dollars and they basically had to abandon that strategy, sell off the property, closed down the business. And I think that just shows you that if Woolworths can't do it, if Woolworths, with their pockets and their expertize, can't come in and take a piece of that profit pool and Bunnings has got something pretty special going for it. So I just think that a lot of these businesses that you might think of is as boring. And everyday businesses, they've actually survived risen to the top. And it can be a really powerful, albeit sort of get rich slow game when you're investing just to buy these businesses and sort of forget about them and really just ride that over the long term. [00:33:12][233.1]

Maddy Guest: [00:33:12] I think that should be a new motto. Get rich slow. [00:33:15][2.3]

Emma Fischer: [00:33:16] Yeah, exactly. That's a good it's a good one. [00:33:19][3.2]

Sophie Dicker: [00:33:20] Yeah. I was going to say pretty much the same thing. It's it's it's a good mantra to have just to be thinking about long term, thinking about slow. But and we want to move into our own first section of each episode, which is what we call the watch list. So each episode we've been asking our guests to add a company, stock news story, industry trend, anything that's you're curious about at the moment you've been thinking about. And the purpose of this is to get us thinking outside our normal box and broaden our horizons in the investing space. Obviously, this is purely for educational purposes and does not constitute any investment advice. But we would like to know what would you like to add to our watch list? [00:34:04][43.5]

Emma Fischer: [00:34:05] Yeah. So I'm going to give you a stock because I'm a stock picker. And it would be remiss of me to to not leave you with a business that I think is really interesting. And we hear a lot about electric vehicles. And this is a big thematic and I'm not really one for picking the eyes out of the thematic or doing too much the magic investing, because I think the minute a thematic gets hot, there's probably a bunch of overvalued, hyped up companies in the mix there. But one of the things this is saying in the gold rush, you don't want to invest in the gold stocks. You want to invest in the people that are selling shovels to the gold miners. So one of the businesses that I think is is selling shovels to this electric vehicle trend is a is an Aussie listed business called P.W. They are a business based in Queensland and they are a long term, high quality engineering business. And what they do is they make cooling systems and they actually make most of their money selling cooling systems into motorsport. So Formula One, NASCAR Vice, if you know anything about that industry, which I didn't, but some highlight for you. This is show on Netflix called Drive to Survive. That's really I love this show. It's so good. Obsessed with Formula One. And I knew nothing about it. And I thought it was so boring beforehand. Honestly, the drive to really good show. But basically I watched that for due diligence, for this stuff that I do now. It's just got me obsessed with Formula One. But if you watch that show, it's pretty clear that these teams, all they care about is having the fastest race car. So the fact that this ozone business is supplying every single team in Formula One with their cooling systems. So cooling is really important for car because if the car overheats, it goes kaput. So the fact that the Celsi business is supplying all of them tells you how good this Scelzi business is, like they have to be the best in the world to be supplying Formula One. So their core business is a phenomenal business. And what they're investing in right now is the opportunity electric vehicles is if you use your laptop a lot, it gets really hot. When you use electronic products a lot, they get really hot. Electric vehicle actually uses more cooling than an internal combustion engine. So as you see the shift towards electric vehicles, we think that this business will be selling more cooling systems per car. So they make half of their money today out of motor sports and half of it through a range of other selling into high value million dollar high because they sell the cooling systems into those. So as the market goes towards electric vehicles, they'll be selling more cooling systems because so we think it's a really exciting business. It's got a net cash balance sheet. So it's sitting on a very strong cash position. The other thing we like about it, and this is something that we're pretty big on in our fund, is this an automatic business? So what I mean by that is the original founders of the business are still running the show today. And we found that over time we've tested this a lot of different ways. But over time, these owner managed businesses, they tend to be phenomenal results. And it's because they've found, as they understand it, it's their baby. They've got all the family's wealth and fortune and future tied up in these businesses. So they've got really high alignment with you as an individual shareholder. We're always looking for skin in the game. When we look at asset management teams, we want to see management teams that are incentivized to make really good long term decisions, not just decisions that are going to win for business in the short term. So my guess is investing alongside owner managed businesses in general is a really fruitful investing strategy. And this is one example of a business that ticks all those boxes. It's got an exciting future. It's got a great balance sheet. It's a really good owner, managed business. And I think it's really cool that this Ozon business that you've never heard of is supplying all these Formula One racing teams. [00:37:59][234.6]

Maddy Guest: [00:38:00] Yeah, and I think that's such an awesome way to think about investing. When you say this trend or you say this thing that's becoming more and more popular and it's instead of investing in the Tesla, it's thinking about how else can I get sort of exposure to this industry that's growing really rapidly. I think that's an awesome example of that spot on. And I guess to round out our episode, the final question that we love to ask all of our guests is what piece of advice would you give to your younger self when you first started out investing? [00:38:31][30.8]

Emma Fischer: [00:38:32] That is a good question. I would say have fun with it. I think I always did, and I think I still do. But I think that's good advice for anyone that's getting started in investing. It's a great way to feel connected with the world. I think good investors will be intellectually curious by nature, but it's a way to really open your eyes to you start to see the economy is just a bunch of people trying to earn a return on their capital. And I think it makes reading the paper more interesting. It makes conversations with people from different industries more interesting. It's just a way to sort of get get plugged into to all different businesses and economies and and global news. So I've I've always been I think in investing, you have to be like a glass half full person. I think it pays to be optimistic. As I said, markets rise six years out of seven. So I think having that optimistic framework and just seeing it for what it is and going back to my rule about only investing money that you're willing to lose if you follow that rule and you've got essentially play money in the market, it should be something that you enjoy doing. It should be something that you find really interesting. It's one of those things where it's the world of constant learning. Every year you should become a better investor. And so every year should be more fun for you and you learn more things. So it's advice to myself that I think I've been lucky enough to also sort of follow. But, you know, it's been an up and down road. And I think when I was younger, I was a lot harder on myself for my mistakes. And you get things wrong. You invest in businesses that go that don't go well and you spend a lot of time feeling like an idiot and feeling like you've missed something. But the reality is everything that's just going to make mistakes. And in fact, you learn more from your mistakes. You should make mistakes, mistakes. You learn from your mistakes and having an easy run and getting everything right, because that's when you get complacent. So looking back on my time investing, like I should have been kinder to myself and seen it for what it was, which was steps along the journey. And it's a journey that's that's continuing and hopefully will continue for a while yet. [00:40:36][123.7]

Sophie Dicker: [00:40:36] Yeah, I think that's a really good what you've said in terms of just keeping it fun and exciting. Obviously, you do have to think about your longer term goals and thinking into the future. But Mary and I, we know that from setting ourselves, it's just been empowering and exciting. As you said, it's something else to look at. It gives you kind of a broader understanding of. Her trends that are happening, as you said, in the news, so I think that's a really great piece of advice, just to have a bit of fun with it, try it out, learn along the way. Absolutely. Now, Emma, just to finish off tonight, we wanted to say a huge thank you for everything you have said has been so insightful. And we hope that people can really get something out of this before we finish up. Is there anywhere where people can find you on social media, Instagram, Facebook? Is there anything you want to lastminute plug for people? [00:41:21][45.6]

Emma Fischer: [00:41:23] All I could say is the website. It's the boring buma answer. And I am a millennial, but all I could refer you to is our website, the just Google Ailee Australian chef on. And we have a lot of stock stories. We have a lot of videos, all the information on there. [00:41:38][16.0]

Sophie Dicker: [00:41:39] Thanks so much for your time tonight, Emma. We appreciate it. [00:41:41][2.2]

Emma Fischer: [00:41:42] Thanks so much for having me. [00:41:43][0.9]

Sophie Dicker: [00:41:44] Thank you so much for joining us today with the lovely Emma Fischer. We hope that you took some valuable lessons away about getting rich slow. [00:41:51][7.7]

Maddy Guest: [00:41:52] As always, we would love if you could take a photo of where you are listening today and share on your Instagram and tag YIGC podcast. You can also join our Facebook group via YIGC Investing Podcast Discussion Group, where you can ask questions that you have or share ideas that you find interesting or just copy off other people's ideas. At the beginning of today's episode, we spoke about this year's Reconciliation Week. The theme is more than a word Reconciliation Takes Action, a theme urging every Australian to implement real steps to achieve equality between Aboriginal and non Aboriginal people. In doing so, the Tammet equity markets want to highlight a grassroots organization making meaningful long term change. Children's Grant is an organization providing Aboriginal families the best in education, health promotion, employment and community development. The 25 year commitment to each child they work alongside means an entire generation will grow up with hope and opportunity. If you have the capacity this reconciliation way, consider supporting children's ground or head to Children's Groundhog Day. You to find out. One of the many ways that you can support their work [00:41:52][0.0]

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