Ren (tries to) solve the housing crisis, Pimp my Portfolio & the saga of Paramount Global

Bryce: [00:00:31] Welcome back to Equity Mates Investing, a podcast where we explore what's possible in the world of investing. If you've just joined us for the first time, a massive welcome. Because in today's episode, Ren is solving the housing crisis. We've got a Pimp my portfolio, and we've closing out with, this month's book club, so cannot wait. My name is Bryce, and as always, I'm joined by my equity buddy, Ren. How are you going? 

Alec: [00:00:53] I'm very good, Bryce, I should be clear that Ren solves the housing crisis. Is like this, it's always sunny in Philadelphia. You know, like I'm not actually solving the housing crisis. 

Bryce: [00:01:05] Yes, that would be amazing.

Alec: [00:01:06] It would be amazing. It would be surprising. 

Bryce: [00:01:09] It would be. Well, let's crack into it. 

Alec: [00:01:11] Let's do it. So the reason that we want to talk about housing is because it is front of mind for everyone, but I think it's shaping up to be the biggest election issue. So the next federal election will be on or before the 27th of September next year. So we're hurtling towards an election. Labour focussed on supply. They are doing the $10 billion Housing Australia Future Fund to build more homes. They've got a target of 1.2 million new homes over the next five years, from the 1st of July, 2024 to 2029. We haven't even entered the measurement period yet and everyone is pretty confident we're going to miss it. The Liberal Party's budget reply they made housing pretty central. They really. So if Labour is focussed on supply, build more houses. The liberals are focussed on demand. Reduce the amount of people trying to permanently reduce migration numbers was the Big Ten poll from Dutton, from 185 K permanent migrants here to 140 K for the next two years. Senator Andrew Bragg also wants to allow first home buyers to drain their super, which actually would increase demand. 

Bryce: [00:02:16] Yeah, that's not a demand. 

Alec: [00:02:18] Anyway. That's a separate policy. So all of this talk of supply and demand and housing got me thinking about the empty housing data. Do you remember that from the census? 

Bryce: [00:02:32] No really. No.

Alec: [00:02:33] So the 2021 census revealed that 10.1% of Australian homes were unoccupied. So 1.043 million homes were unoccupied on the night of the census. 

Bryce: [00:02:45] Including units? 

Alec: [00:02:47] Yeah, yeah, yeah. Just housing dwellings. Yeah yeah. Which is pretty crazy when you think about it. We're trying to build 1.2 million homes over the next five years, and on census night, there were a million homes unoccupied. And so I was thinking about that. And then I also saw this article about ghost homes. So the ABS released a report, and then the Daily Telegraph jumped on it and created the label Ghost Homes 43,000 in New South Wales, 22,000 in Sydney alone, just unoccupied homes, not because of second homes for holiday houses or people were travelling or anything like that, but actually abandoned homes. And so all this abandoned home stuff got me thinking about the census data. And I actually wanted to just dig into this number and understand it a little bit better. Is there actually something here, or is it something that doesn't actually offer a way for it. So first of all, 10.1% of homes in Australia weren't unoccupied on census night. That number isn't actually out of the ordinary. Here, is it going back to the start of the 1980s from the census. So 10.1% in the 81 census, 10.3% in 86, 10.3% in 91, 9.4%, 9.2%, 10.4%, 10.7%, and then 11.2% in 2016. 

Bryce: [00:04:07] Stay pretty consistent. 

Alec: [00:04:08] So it seems super consistent that Australia has just a heap of empty homes. And so for me, the two questions that come out of that, how many of these, primary residences either owned or rented out that were just not occupied on that day for whatever reason people were travelling or something. So, like, are they actually homes that could help alleviate the housing crisis? And then secondly, where are they located? Because empty houses in beach towns aren't as helpful. So empty houses in capital cities. So to answer the second question first, it's not just holiday homes in regional areas. Taking from the 2021 census data, Sydney 8.3% of homes were unoccupied on census night. Melbourne 10%, Brisbane 6.8%, Adelaide 7%, Perth 8.5%, Hobart 7.3%, Darwin 9.6%, Canberra 6.6%. To start with, there's a lot of empty homes in capital cities. Not least they were on census night. But unfortunately, a lot of housing experts say this isn't actually a pool, a stock of homes that we can draw on. So, they look at some of the numbers and they say the majority of it is people, just not being at home on census nights like more than 40% is just people travelling or not there. So then the remainder is like there's a percentage of houses that are for sale. There's a percentage of houses that are in disrepair. And, you know, some other things. I think that is like a percentage of vacant homes that could be freed up for housing stock. But it's not nearly 10%. Now, towards the end of this segment, I have three policy recommendations. And one relates to whatever that percentage of housing stock is. But my initial excitement was about that 10%. Where it could be. Very quickly. I think there are some policy decisions that could be made because so I then I was like, oh, how do we compare internationally? Like it is just uniform throughout the world. In the US, vacant homes in 2022 will be 10.5%. The UK 6.1% in England, 8.2% in Wales, France 8.2%, New Zealand 5%, Germany 2.5%.

Bryce: [00:06:32] Oh wow. 

Alec: [00:06:32] So I think there's probably some policy tweaks that you could make to get to Germany levels. But really, from everything I could read, there's not like half a million homes. So we could. But when I was writing it, there was something that could be unlocked. Another potential solution to the housing crisis. We shouldn't be looking at abandoned homes. We should be looking at abandoned rooms. How crazy is this? For data from the ABS, Australia has 13 million empty rooms.

Bryce: [00:07:07] As in like a three bedroom house. Only two beds are used. 

Alec: [00:07:10] Two being used. The ABS survey on income and housing revealed that nearly 76.8% of households totalling around 7.4 million houses and apartments have surplus bedrooms. Now, look, I'm going to say that one surplus bedroom seems reasonable. You might want guests to stay. You might have a career that needs to stay. But obviously if the carer is staying there, then then it's not a surplus bedroom. You might have kids returning home, you know, and you coming and going, and you want an extra bedroom for them? Plenty of reasons, but two spare bedrooms, three spare bedrooms, more. That's, now I'm starting to question you. Here are the numbers. So 32.5% of households in Australia. That houses and apartments have one bedroom spare, 31.8 have to spare bedrooms. That's more than 3 million homes. 12.5% have three or more spare bedrooms. That's 12.5% of all homes in Australia. 

Bryce: [00:08:15] So much of this is legacy, though. 

Alec: [00:08:16] That's 1.2 million homes. They're just hoarding bedrooms. 

Bryce: [00:08:21] That was the Australian dream. Still is. 

Alec: [00:08:24] Well the Australian dream for most people now is affordable housing. 

Bryce: [00:08:27] I think you'll find if you cut those numbers to houses built in last six years versus, you know, x decades, you would find it might be a bit different. At least houses, housing they are a lot smaller. 

Alec: [00:08:42] The same with buildings. Smaller. But look, look, that's what could be true. But 13 million bedrooms are not being used. Even if you could have that and you could free up 7 million bedrooms. 

Bryce: [00:08:55] Yeah, but it doesn't match with the one above. Like, you'd either have to force people to sell or live with each other. 

Alec: [00:09:01] You could try and use policy to incentivise both of those things, which I'll get to in my policy prescriptions. Now, the Australian Housing and Urban Research Institute research suggests that the majority of spare bedrooms reside with older homeowners. Not surprising. The age brackets, 55 to 64 and 64 to 74. And not surprising because they probably have had families. Those families moved on and they've kept the house. But we do make policy choices around incentivising people to keep large family homes and then not rent out bedrooms in large family homes. And this is mainly to do with the pension assets test. So the primary residence doesn't count. The primary residence doesn't count for your asset test for your age pension. So there's an incentive to put as much of your wealth as possible in the primary residence. Because then that is excluded from the calculation. But also if you have a spare bedroom, you pay income tax on the rent received from leasing those rooms or Airbnb buying those rooms. And so for pensioners, if they were to lease or rent out short term those rooms, that would then be income that reduces the access to the pension that they get. So we make policy choices around that incentivise people to have a massive primary residence and then not create housing with this bit?So, you know, as much as it is the way it is, it is the way it is because we made it the way it is, and we continue to choose for it to be that way. So, as I said, three recommendations not to solve for the housing crisis, but tweaks we can make. First recommendation, let's start collecting data on why these dwellings are unoccupied on census night. So 10.1% of dwellings were unoccupied. We used to collect data on why that was the case. The last census we collected that data was 1986. So the first policy prescription is pretty simple. It might be hard to get that data, but let's start collecting why. In 1986, a quarter of vacant homes were holiday homes and 35% simply had the resident absent on census night. But let's find out what is going on. How many houses are abandoned? How many are just being sat on for capital gains? Let's actually understand what's going on. Second policy recommendation use tax policy. Let's have a prohibitively high tax on truly underutilised homes. Like if it's not you preparing it for sale, you're fixing it up. It's, you know, a holiday home that you live in part of the year. Like if it is just an empty home that you land banking. Let's tax the shit out of that. I would also say, and this is going to be controversial right now, we allow negative gearing for policy reasons, which is cheaper rent. You know, if we didn't allow negative gearing land, the first thing that would happen is landlords would increase their rent. So all houses were positively gated. So that's a policy decision we made. I would say you could quarantine it for those policy reasons and maybe don't allow negative gearing on AirBnbs. Prioritise long term secure housing. Just something to think about. 

Bryce: [00:12:21] Tough to regulate that. 

Alec: [00:12:22] I mean, every regulation is tough to regulate, but you'd be pretty easy to say like the occupancy rate. I mean, actually it's not tough to regulate. Do you have at least lodged with the state regulators? Just something to think about. But, you know, what we want to do is increase long term secure housing, not short term rentals here. And that would just incentivise landlords to go long term leases over short term rentals. Third policy recommendation. Encourage pensioners to use their spare rooms or to move. People don't like the aged divide. But you could really incentivise pensioners if you offered a 100% tax free rental income on spare rooms, encouraging them to contribute those to the housing market without the financial burden of having the pension age pension reduced. 

Bryce: [00:13:14] I mean, yeah, you can understand why it's reduced because they're getting more income. So like it nets out.

Alec: [00:13:18] Yeah. But like, you know, what we want is to increase housing.

Bryce: [00:13:22] The main thing you're going to have to convince is like your grandma to take on a 21 year old who's at university 

Alec: [00:13:28] Well, to be honest, I think what we really need to do. So the government has already started making moves in 2022. They passed a law encouraging people to sell their homes. So if people in that age pension sell their primary residence, there's like a deeming rate? So your assets, it's deemed to get a certain return. And the money that you make from your sale of your house, rather than being deemed at 2.25%. At the time, it was deemed at 0.25%, which is trying to incentivise people to downsize. But for me, like that's the opportunity. It's like, what else can you do to downsize? That's sort of the carrot that they've passed. But like, is there potentially a stick where it's like if you are sitting on empty rooms, perhaps it does somehow there's some deeming rate that it does contribute to your assets test, like there's an income down from those spare rooms that you're sitting on. And then that does reduce your income. So all of a sudden there is an incentive to downsize. Like for me, it's like there's this stock of housing that isn't being utilised. We're in a housing crisis. What are the things that we can do creatively that don't rely on? Let's build more homes in the next five years when we know we're not gonna reach that target. 

Bryce: [00:14:44] The question for that would be, are those the homes that are needed the most? The poor Betty, that grandma? 

Alec: [00:14:51] Yeah, that's a good question. 

Bryce: [00:14:52] Or is it. There are two Betty that 

Alec: [00:14:54] But to be honest, like we. 

Bryce: [00:14:55] Would downsize into and have the money to afford before, you know, Rebn ana Alice go and bid on it for.

Alec: [00:15:02] Yeah, it's a good question, but think about how tough it is for young people to get rentals these days and like the family home. Like location wise it might be an issue, but we lived in a four bedroom home when we were renting. 

Bryce: [00:15:17] Yeah. Absolutely. Yeah. Yeah. That's still owned by it's not. 

Alec: [00:15:21] About ownership. For me., like it's rent or buy. 

Bryce: [00:15:25] Yeah. Right. 

Alec: [00:15:25] Yeah. Yeah. Like. If you could massively increase the stock of rentals. I think that's a win. Because then the pricing pressure will be all different. Yeah yeah yeah. Yeah yeah. 

Bryce: [00:15:37] Yeah. Nice. 

Alec: [00:15:39] So I didn't solve the housing crisis, but there was a bunch of data that I did a deep dive on and I wanted to talk about. 

Bryce: [00:15:45] I mean, I understand the point about negative gearing, but if you got rid of it, completely grandfathered it so it didn't impact. But from here, like, it would have a significant effect, I reckon. 

Alec: [00:15:54] I'm actually sceptical that it would. 

Bryce: [00:15:57] Because I think a lot of people like I think you just get a 

Alec: [00:16:00] Think it would be you get me wrong, it would be fairer. But in terms of solving the crisis, like what's the mechanism that it would actually be.

Bryce: [00:16:07] Well, you'd probably just, I don't know, at certain levels of the market, just take out pure investors. Like think about those people who have multiple property portfolios. It's all off. 

Alec: [00:16:17] But the thing is investors would still buy the properties, but they just couldn't negatively gear it. So they would positively gear it. So rents would go up. But they would still expect capital growth like investors are buying it. Because housing has been such a good investment asset changing negative gearing doesn't actually change that. 

Bryce: [00:16:35] I reckon there would be a dynamic between like you just couldn't charge the rents that.

Alec: [00:16:39] Yeah. Well then that's.

Bryce: [00:16:41] You didn't positively gear. You'd be looking at, to charge ten grand a week in rent. 

Alec: [00:16:46] Yeah, I know what you're saying. The problem is with the rental market so tight, it's a 

Bryce: [00:16:52] Yeah, but you know what I mean. 

Alec: [00:16:54] Yeah, I think one part of Australian economic history that's often forgotten is we did remove negative gearing. We removed it for like a year in the 80s. And then the government put it back on.

Bryce: [00:17:05] There you go Impossible. 

Alec: [00:17:07] My theory is that if we removed it today, rents would go up before house prices go down. Just a sequencing thing. And that would hurt. 

Bryce: [00:17:17] Yeah, definitely. 

Alec: [00:17:19] So don't get me wrong, I'm not a fan of it. And I think from a tax fairness point of view, there's a really strong argument to remove it. But I think about solving the housing crisis. I don't think it's. I don't think it's to solve the short term problem. We hope it will be. Whereas those spare bedrooms. Get them on the market. 

Bryce: [00:17:38] Yeah. I don't know if I should say it, but, some really interesting numbers that I didn't realise, the extent of which there are open homes or empty homes sitting there. I think when you do compare globally, it's, you know, it's not just our problem, but yeah, empty bedrooms. I just couldn't convince my grandma.

Alec: [00:18:03] No. I know, I know, it's.

Bryce: [00:18:03] Not, I get it, I guess it's not that, you know, like, you should have put in commercial property here. How many empty office spaces are sitting in a CBD. 

Alec: [00:18:14] There's an office building in Melbourne that they converted to residential. 

Bryce: [00:18:19] Perfect.

Alec: [00:18:19] I think it's a good call. Yeah. 

Bryce: [00:18:21] Yeah. Perfect. Anyway, if you have, if you have some comments on. Yeah. 

Alec: [00:18:27] Yeah. Hit me Up.

Alec: [00:18:28] I'm actually going away for three weeks. So that's why we did this episode now. So hit Bryce up. 

Bryce: [00:18:32] Come and join us in the Facebook discussion group. We'll be obviously chatting about all things housing plus all things investing. So, you'll find us on Facebook. It's the Equity Mates podcast discussion group, but we'll leave it there. Let's jump into my portfolio. 

Bryce: [00:18:51] That's it. Pimp my portfolio, where you have the opportunity to submit your portfolio to get our expert Luke Laretive to give his thoughts on how it could be improved. Luke, welcome back to the studio. 

Luke: [00:19:02] Experts. Very loose list. 

Alec: [00:19:06] That's not the introduction we're looking for. 

Bryce: [00:19:07] You're more expert than us. That's that for sure. 

Alec: [00:19:09] Now, this is a first for pimp my portfolio. We've had our first official no show, but Shane, who we couldn't get on the phone, has still submitted his portfolio. He has a lovely voicemail message. As we've heard a few times.

Bryce: [00:19:26] He was very excited to come on.

Alec: [00:19:27] Yeah. Well, sorry. Shane, Luke's a busy man. You gotta take you, take your shot when you can. But we do have Shane's

Luke: [00:19:34] Lunch is for wimp, Shane. Lunch is for wimps. 

Alec: [00:19:37] But we do have Shane's portfolio, so we thought, Shane, when you listen back to this, we thought we could still go over your portfolio and unpack, what you've been doing and how it Luke's thinks about it and some of the general lessons that, you can take from it, and then we can all take from it. So as always, with these segments, we're going to start with a bit of an overview of your portfolio. So Bryce, what are we looking at? 

Bryce: [00:19:59] So Shane's portfolio is a mix of ETFs and individual stocks. About 25 or almost 30% of the portfolio is in two leveraged ETFs Gear and GJust and then the next biggest holding is Pilbara. 

Luke: [00:20:19] Pilbara. Come on bro.

Bryce: [00:20:19] Pilbara. I now just do it. Because it is a thing. 

Alec: [00:20:23] So what stands out to me before we get to the individual stocks is that there are a number of thematic ETFs as well. So you mentioned the two leverage ones. But then there's also a Bitcoin ETF, the global X Bitcoin ETF. There's a silver exchange traded product. Gold 

Bryce: [00:20:41] India. 

Alec: [00:20:42] India and Semi 

Bryce: [00:20:46] And uranium. 

Alec: [00:20:47] Oh okay. So I guess yeah. Core portfolio value in the two leveraged ETFs potentially they're more index tracking. And then there's a number of thematics. And then you mentioned individual stocks. Pilbara, CSL, and Lion are there. 

Luke: [00:21:06] MinRes. Elders 

Alec: [00:21:06] MinRes. Yeah a few miners. all right. That's probably a good enough overview. 

Bryce: [00:21:11] Yeah. So with that in mind, Luke, what is the name for Shane's portfolio. 

Luke: [00:21:14] After the very, very hot chilli? The California Reaper. 

Bryce: [00:21:19] California Reaper. 

Luke: [00:21:20] California Reaper. 

Bryce: [00:21:21] Okay, what's the context of that?

Luke: [00:21:23] Look, just for the leverage and the spiciness of it. So actually, the more I like the leverage, right. To be honest, I think, not enough people use leverage in investing. It works both ways. And, I think the cash call potential of a margin loan, and the stuff out on some of the, you know, warranty derivative type products can be challenging for people. But if you've got the kind eyes for it and, you're and and you've got the right kind of weightings and your portfolio is set up properly, it can be pretty effective for young people. In the same way that, you know, the only reason you make money on a property is because it's geared for five times. So, yeah. Probably more interesting than talking about the general market following stuff like we'll go nitty gritty. I'll ask you guys actually maybe as a point of interest semi. Every ETF, every equity mates person I speak to who seems to hold this ETF. Is this just in Nvidia favour or what's the what's the go here. 

Alec: [00:22:20] Probably there was like you know there was TSMC favour before but that wasn't as contagious. I'm really trying to touch on this metaphor. But yeah, I think like the last couple of years, there's been a big focus. 

Bryce: [00:22:34] But I think it makes sense. Right. If you've got someone who doesn't want to have to pick between Nvidia, TSMC, ASML like this is an ETF that like it, it has performed incredibly well for it's done its purpose.

Luke: [00:22:50] Yeah sure. I would just argue like if you're good enough to name those three stocks, we should be good enough to find yourself. 

Bryce: [00:22:57] Fair. But there's also others in there that can't be named that have equally contributed. We're looking at an episode where it's the, you know, rising tide lifts all boats. And so this ETF is you know, I honestly, I can understand why a lot of our community right now. 

Luke: [00:23:13] Yeah, I think I think like I oh I'm not saying it's good or bad. I'm just trying to have an interesting conversation.

Alec: [00:23:18] Yeah, yeah I think I think the thesis is different. It's like when there's individual stocks that you're picking in a sector that you think is interesting. It's like you're willing to take on the idiosyncratic risk of, like, this is a company that's going to execute. This is a company that has technology that can outperform or in like the supply chain of semiconductors. Like, I'm going to say that Intel's foundries are going to be more popular in the next wave of three micron semiconductors than TSMC's, foundries, like you're making a bet on a company, whereas the thesis around the ETF is I am betting that this thematic is going to, as a whole grow. And I'm not going to try and pick winners.

Luke: [00:23:57] Yeah. And I think that's probably where these thematic ETFs get appeal. I suppose we did some work recently because I've seen so many of these things. And recently in these portfolios, for the first time and they all sort of underperform eventually. Right there, it's better to run longer. It's all better to own the market. So unless you're going to be good enough to buy and sell these things, I think buying them in the first place can be a bit erroneous. And I'm glad that everyone's making money on the Momo trade at the moment. You know, I'm glad that these ETFs allow you to do that in a more diversified way than having to pick 1 or 2 or be able to spend, spend, spend $1,000 and get exposure to a theme. So I don't begrudge people for buying them. And I think they're a good idea for certain things. I do just wonder, though, it's not that these ETFs have proven over time they're not bottom drawer. And this needs to be actively managed like you would pretty much manage a stock. 

Bryce: [00:24:56] And we talk about things like these that shouldn't make up the bottom of the drawer. Forget it for 40 years. Core portfolio etfs. 

Luke: [00:25:01] I mean there's nothing there's nothing in my view that is the bottom drawer. But if you wanted to play that bottom drawer game, this isn't what you play it with.

Alec: [00:25:09] You don't you don't think a broad based index fund is bottom drawer? 

Luke: [00:25:13] I think that is. Like saying, " I don't buy products. 

Alec: [00:25:16] Oh okay. Right. So nothing in your portfolio. No. No. 

Luke: [00:25:19] But I think that, if you're if that's what you're doing and it's perfectly reasonable and sound, as we've talked about a lot, I wouldn't be putting these sect based ETFs in that bucket.

Alec: [00:25:35] I reckon a lot of people think of thematic ETFs as cool. I certainly used to like to think like ETFs are all core. But now yeah I'm very much on the treat them as stocks. 

Luke: [00:25:47] If you want to. I mean my view on these sort of thematics is to find, I prefer to find managers who can gain exposure to these things but in a more measured way. And so whilst the concentration is great and it's worked out well for this particular example, you know, there's lots of other things that haven't worked out so well, in the sector based ETFs. And I would just rather have an active manager who says, okay, yeah, I have been through every single stock in the semi sector. And yeah, I'm going to own Nvidia and ASML. I'm just going in and out of my thumb, but I'm going to also own them with Petrobras and BHP and Louis Vuitton Moet Hennessy and a bunch of other stocks in a diversified portfolio. I just feel like you want to be able to source output from a range of places, and that's really just spicy beta. And that's kind of my that's sort of what I like, what I don't like, I like, you know, if you think about it, my equity market neutral manager, which maybe you guys haven't talked much about before, essentially that's me saying I'm going to short Rio to the same value that I'm going to buy BHP, and I'm going to bet that BHP on a market neutral basis is going to outperform Rio. So I like to think of things in that kind of context as well. And I reckon, yeah, the beta side of it's kind of a bit so, so, so.

Alec: [00:27:06] I want to ask you about another feature in the portfolio we mentioned earlier, the gold ETF and the silver ETF. First time we've seen a silver ETF. How do you think about these commodity plays in a portfolio? 

Luke: [00:27:18] I think gold has its place. It's got pretty low correlation to equity markets. It's a pretty decent diversifier. It's one of the better diversifiers out there. I don't know if that's an ETF that buys physical gold or it buys stocks. The physical gold stuff I like. So the gold stocks particularly if it's an Australian focussed one, they are in my view, more of a warrant or a leveraged play on Western Australian labour costs. And that's and that's and that's and not so much apply on the gold price. But yeah the physical gold stuff actually really like I understand the sort of the macro arguments to it, but I think the idea is just not to get too complicated with it or try and be too clever about it. Just understand that historically, you know, gold's I think it's like point two beta. So it's pretty low correlation. It's going to give you some diversification benefit and give you a hedge against, you know, inflation. But at 2% you've got to start asking yourself how much of a hedge you might actually get. 

Alec: [00:28:11] So that's 2%.

Luke: [00:28:13] And the same with the silver thing. The silver's kind of a play on, you know, the same sort of themes in a lot of ways. There's a lot I don't want to use the word conspiracy theory, but I'll use a conspiracy theory type narrative around why silver is the best investment since sliced bread, and it kind of pops up every few years. I find that 1 or 2 clients will ring me every 2 or 3 years. About. I've read something on some deep dark blog somewhere and someone says, you know, you know, it's silver. It's going to be the, you know, we're going to need it and blah, blah, blah. I think the only argument about silver that I do like is it's used. It's very much required for a lot of renewable energy, particularly solar, a lot of silver. So I don't really understand the supply demand dynamics. So I wouldn't want to comment on whether that's a good investment or not. But certainly, from what I've read, there's a thesis there. Again, though, it's kind of one of those things that's probably not at 2%. It's not going to do what you want it to do for you. 

Bryce: [00:29:12] Just to close out. One thing I've noticed in a lot of submissions of portfolios is the dynamic between VDHG and other ETFs in the portfolio. So VDHG is the vanguard diversified high growth. It's pretty much like major developed markets around the world, 70% of which is the US. And Shane here also then has large weightings directly in both Gjust which is leverage us and gear which is leveraged Aussie. I'd be questioning the role that VDHG is playing in the portfolio. 

Luke: [00:29:45] You just got more pretty much the US a lot developed market equity exposure with, you know, 20% Bloomberg like global aggregate kind of bond exposure. So yeah, I would also argue that this portfolio doesn't make a lot of sense to me if I'm, you know, I want it to be critical. Weights are all kinds of skew. If, some of these sort of satellite individual stock holdings. I'd be asking not necessarily the company per se, but questions about why they're there or, you know, if they're going to be there, you know, make it more sensible. But there's enough encouragement, you know, good, good start. Not not a complete, seven out of ten, seven out of 10. 

Bryce: [00:30:25] 7 Out of ten. Nice.

Luke: [00:30:30] I like the gearing. It's, you know, it's unique. It's it's good.

Alec: [00:30:32] If you think that's unique. Wait until you say Bryce's portfolio. 

Bryce: [00:30:41] This is the Califronian Reaper. I can't get much hotter than nothing. Anyway, well, Shane, I hope you got something out of that. Unfortunately, we couldn't get you on the phone, but thank you for submitting your portfolio. If, if you're listening at home and would like to submit yours, head to equitymates.com/contact. If you would like to chat to Luke in your own time about your portfolio, investment strategies and personal advice, then head to equitymates.com/advice and, we'll make sure that we connect you with Luke. And he'll, he'll actually be able to sit down with you and talk you through it. But Luke, thank you, as always. 

Luke: [00:31:14] A pleasure. Guys. 

Bryce: [00:31:15] If you would like to submit to pimp my portfolio, head to equitymates.com/contact. All we need is a screenshot of your portfolio and your name and email address, and we will be in touch from there. Don't miss your opportunity to talk to Luke or Adam. We're going to take a quick break. And on the other side, we, back with this month's book club where we're looking, this one actually Ren has been winding up for a while now, desperate to talk about it. So we're going to get stuck into it on the other side of the break. We'll be right back. Welcome back to equity mates. We've covered off Ren's solution to the housing crisis or part of. We've had pimp my portfolio with Luke. And now we're closing out with this month's book club. So there's been a lot happening over the last month or so around Paramount Global, and we've withheld from talking about it because A, it hasn't quite panned out. But hey, this month's book club is certainly centred around the story. So let's get stuck into it, Ren. Firstly, what was the book?

Alec: [00:32:18] So the book was, Unscripted, The Epic Battle for a Media Empire and the Redstone Family Legacy by James Bay Stewart and Rachel Abrams. So all about Paramount Global. So what this book covers, it's the story of Sumner Redstone, who, inherited his family's movie cinema chain, National amusements made that a massive global success, but in the process also created Viacom CBS, now Viacom CBS owned Nickelodeon, The Comedy Channel, CBS, which is like a big network over in the US. MTV and then also all of Paramount Global and Paramount's movie studios, so massive. He was like a big media player, in the era of, like the 80s, like Rupert Murdoch, Ron Johnson, Malone, and like all those big cable and media titans. Sumner Redstone was a big name in that space. And so this book doesn't cover that, but it covers Sumner as an old man and the fight for the billionaire's estate between his family, the ladies of his businesses and his girlfriends and, yes, girlfriends. Plural. So Viacom CBS, which is now Paramount Global, owns a number of the big media properties that we're all familiar with today. But importantly for us, it's not their big media properties. It's one of their smaller media properties. They own channel ten. The Australian free to air TV network.

Bryce: [00:33:51] God, what an asset. 

Alec: [00:33:54] And it's newsworthy because Shari Redstone, so Sumner's daughter, is currently negotiating to sell Paramount Global to Skydance, which is a company owned by Larry Ellison's son, Larry Ellison, the fifth richest man in the world, co-founder of Oracle. His son is looking to buy Paramount Global and Channel ten for a price which is far less than $26 billion, which was offered by private equity giant Apollo, which has people up in arms. But Bryce, none of this is included in the book. My overall takeaway of this book, it is interesting, salacious, and I learned nothing about business. 

Bryce: [00:34:44] Really, it's just a story.

Alec: [00:34:46] It was such a good story. That was it. It made me really sad. 

Bryce: [00:34:50] All right. 

Alec: [00:34:51] Well, like, not like crying. Sad, but kind of just like, where's.

Bryce: [00:34:54] The world coming to? 

Alec: [00:34:56] No. Just like this sucks. All right? Everyone in this book sucks. I hate every character involved. So the first half of the book is about Sumner falling out with his family. So Shari and then he has a son as well, falling out with them, losing touch with them. He has a series of girlfriends who he just. He's like, he's a pig. Like he's just a pace, series of girlfriends showering them with, like, literally millions of dollars and Viacom stock and, like, all this stuff, but he's just like. Yeah. You know, like he would have got mated if he was. And then. But then it turns into this story of elder abuse where two of his living girlfriends basically isolate this 80 and 90 year old man from the rest of his family, convince them that his family's all out to get him and don't love him, and then basically convince him to put them, the two girlfriends in their families, in his will. And basically they make a play to try and take over his media empire. But it's just like, it's just depressing. Elder abuse. They just abuse this old man. It's sad. Anyway, so that's the first half of the book. In the end, one of the girlfriends has like a secret relationship on the side, and that comes out, and then she gets booted and the other girlfriend gets booted, and Shari, the daughter, comes in and, like, wins the battle and takes back control. And that's the first half of the book. And I actually at that point I thought, is it book done? Oh no, it's not done. Because it gets even worse because then the book is about Shari taking control of the media empire. So at one stage, the company got split in two. So there's Viacom, which is Paramount, and a lot of the cable channels MTV, Comedy Central, Nickelodeon, and then CBS, the TV network. And so Shari then has a battle with both of the boards, and both of the business leaders want to take control and want, I guess, want to remain in control of these companies. Shari wants to take control. A lot of manoeuvring, like the one thing you learn about business, is how important boards are relative to CEOs and how much a board can be focussed, not on company fundamentals. And like battles of personality. And like clicky. Anyway, 

Bryce: [00:37:18] Schoolyard stuff.

Alec: [00:37:21] But then Shari take wins the battle for the Viacom board. And then it's about the battle for the CBS board. And that's like the last third of the book. Les Moonves is he was one of the most powerful and influential men in Hollywood. He was like the third highest paid person in Hollywood. He was an actor in his own right. Then he became the CEO of CBS, and his share price performance was amazing. Like investors and the board all loved him because he had an incredible business track record. But then in case you didn't hate all those characters enough, then the last third of this book is about Les Moonves getting me to. 

Bryce: [00:37:58] Oh my God.

Alec: [00:37:59] And like all of these sexual assault allegations coming out against him and like, just terrible story after terrible story and how he tried to cover it up and then how Shari was trying to figure it out and how the, like Ronan Farrow and the media were getting a whiff of it. And then the book ends with him, it all coming out about him and him being disgraced and leaving, and you're kind of left with this bitter taste in your mouth, where Shari ends up controlling the Empire. Sumner dies towards the end of the book, but he's kind of been an invalid for most of the book. And you just like, all these people suck. 

Bryce: [00:38:37] Damn. Well, it had good potential. And I think the story surrounding it is certainly interesting currently with what's going on. 

Alec: [00:38:43] I mean, look, it's a really interesting story. Yeah, but don't read it if you want to learn about investing in media business lessons. 

Bryce: [00:38:52] Well, we'll certainly keep you updated with what is going on and how things pan out for the Paramount Global Skydance offer. But what's next month?

Alec: [00:39:00] So next month, Jim Simons, who sadly died last month, the founder of Renaissance Capital, one of the best investors to ever do it, he really sparked this whole quantitative investing resolution revolution. There's a book on his life. It's called The Man Who Solved the Market How Jim Simons Launched the Quant Revolution. It's by Gregory Zuckerman, and that will be the book that we're writing for this month's book club. So jump in read along. And, we'll be back in a month to talk about it. 

Bryce: [00:39:33] Love it. Well, I've heard this is a cracker, and I might actually, I might actually, read the SparkNotes, we'll see. But that brings us to the end of our episode today. If you would like to submit to pick my portfolio, head to equitymates.com/contact if you'd like to submit a book recommendation. Same place as well, equitymates.com/contact and make sure if you get a lot of value out of our show, then we would really appreciate if you could leave us a five star rating and a review on the podcast app. It certainly goes a long way to helping us get in front of new equity mates to help them on their investing journey. But Ren, absolute pleasure to chat as always. You're off. 

Alec: [00:40:12] I am off.

Bryce: [00:40:13] You're off to Turkey for a few weeks so.

Alec: [00:40:15] We'll not to get a hair transplant.

Bryce: [00:40:17] Not to get a transplant. So over the coming weeks we have heaps of content. We've got a series on superannuation with Vanguard. We've also then got eight stocks that we're going to deep dive into as part of our Winter series. Thanks to Superhero plus more Ask an advisor by ourselves and expert interviews coming up so plenty will continue as Ren heads over for his hair transplant in Turkey. Always good to chat. We'll pick it up next episode. 

Alec: [00:40:42] Sounds good.