Switching brokers, terrible financial advice & has Bryce beaten the market?

Bryce: [00:00:31] Welcome to Equity Mates Investing, a podcast where we explore what's possible in the world of investing. If you've just joined us, a huge welcome. My name is Brice, and today we're looking at my portfolio returns over the last two decades. We answer a community question on switching brokers, and in a new segment, we critique some of the worst financial advice that we've heard to chat through it, as always, I'm joined by my equity buddy, Ren. 

Alec: [00:00:55] How are you? I'm very good, Bryce. Looking forward to today's episode. Nothing more than, looking forward to hearing your portfolio returns over the past two decades. 

Bryce: [00:01:05] Yes. Well, the reason I put this at the top of the show, Ren, I only need two minutes, but I did my quarterly portfolio review over the weekend, even though we're not quite in at the end of the quarter, but we're in March, so I had a bit of time, and I use sharesight, and it allows you to obviously plug in everything and it'll give you your total return since the very first trade that you did. So I plugged in everything all the way back until 2003. When I first started investing my total portfolio return per annum was 18%. 

Alec: [00:01:41] Wow. Yeah. Okay.

Bryce: [00:01:43] Super stoked. Super stoked with that. Capital gains on that is 13% and dividends make up the rest. But what is interesting and I think just an awesome reminder for the message that we talk about on this show. If you look at the graph of the return, it is like for the first, for the first like ten years. It's me putting off $500.

Alec: [00:02:08] Yeah yeah yeah.

Bryce: [00:02:09] And then it just starts compounding when we hit the bull market. I think there are a number of positions that aren't included because this is some of my open positions only. So like Afterpay isn't here and those sorts of things. This is just like what is in my portfolio right now. And so it doesn't include. 

Alec: [00:02:26] Is it IRR like it doesn't factor in the money you've been tipping in or it's like an overall portfolio. 

Bryce: [00:02:33] What do you mean? 

Alec: [00:02:34] So like if you had a $100 portfolio and it didn't grow at all, but you put another $100 in, is that counting growth as zero because the investments didn't grow, or is that counting growth? 100 because you doubled the assets in the portfolio? 

Bryce: [00:02:50] No, it's counting the return on your investment. 

Alec: [00:02:53] Not the amount of money. Oh, nice. Oh, then that 18% is real. 

Bryce: [00:02:58] 18% is real. If I chuck it on all positions, which then takes into after, you know, the Afterpay or, factors in some of the losses that I've sold out of over the time it drops down a little bit. 

Alec: [00:03:13] Okay. Well that's the real number underpinning it. What's the real number? Yeah. But what's the total? What's the total number? 

Bryce: [00:03:24] The total number. 10%. 

Alec: [00:03:26] Oh that's still fine. I mean, you could have saved yourself a lot of time and just bought the S&P 500, but yeah. 

Bryce: [00:03:31] Well, I think for me that was just, I was I'm happy that after all of my mistakes and stuffing around and flip flopping and figuring out what's the best strategy, the the bare minimum that I've returned is 10% over per annum over 20 years. 

Alec: [00:03:48] Nice.

Bryce: [00:03:49] Current portfolio I think is in a good spot now where it's really starting to, pay dividends literally. 

Alec: [00:03:58] Nice. So that's good. I haven't used sharesight, but that tempts me to use it. I think we have an offer code, so I might dig it out and use it myself, and we'll talk it in the show notes as well, if people want to do the same thing. But that's enough about you, Bryce. There's heaps going on in market, so let's hit him. 

Bryce: [00:04:18] All right, Ren. Well, we are in record setting territory at the moment. 

Alec: [00:04:22] Yes. Markets around the world are hitting all time highs. It's wild.

Bryce: [00:04:28] It is wild. 

Alec: [00:04:30] Let's start with the last wild of them all, which is here in Australia. The ASX 200 hit a record high. It crossed 7800 for the first time ever. So that's exciting. It's up 1% for the year. Less exciting. But that's just the start of the story. 

Bryce: [00:04:46] That is the start of the story. The S&P 500 has also hit record highs. It's up 8% year to date. The good news is though Ren, it's not just the big tech stocks. As we've heard multiple times at the start of this year, the general consensus is that big tech stocks are actually going to start dispersing. And, I guess not. Well, the Magnificent Seven I should start should say, yeah.

Alec: [00:05:07] People now you hear, oh, magnificent 7 or 6 or 5 it's like, let's just retired. Tesla and Nvidia are not the same. 

Bryce: [00:05:15] No, no. So one fifth of the stocks in the index in the S&P 500 have hit 52 week highs in recent days, which is the largest share of the S&P 500 hitting record highs since 2021. 

Alec: [00:05:28] Let's just pause on that for a second because, only two months ago, the story was the seven big tech stocks, accounting for all the growth in the S&P 500. And outside of those seven big tech stocks. If you just look at the other 493 stocks, the S&P 500 was flat. That was the story two months ago. Fast forward to now. And the story is 20% of the stocks in the S&P 500. So 100 of the 500 stocks hitting 52 week highs. That's not all time highs. That might be you know, they might be unloved tech stocks that fell a lot over the past few years that have come back. But 20% of the S&P 500 is, hitting new 52 week highs. So that's a story of not seven companies driving the index. Now that's a story of a lot more of a broad based rally. 

Bryce: [00:06:22] I actually looked at the equal weighted S&P 500 versus the S&P 500 market cap weighted ETFs to see what impact this was having, and the equal weight over the last over this period, over the last sort of, six weeks or so, has outperformed by 2.5%. 

Alec: [00:06:39] Yeah, it's pretty amazing. And where my mind goes is a lot of people that were calling a bubble at the start of the year was saying, a real sign of the bubble is when the rally gets thinner and thinner. There are less and less companies doing well, and the rally is just being held up by a few, say, big tech stocks. But this is a good sign for all of us that a lot of companies are doing well, and it's a lot more broad based than it was a few months ago. So not to make any predictions about where it goes from here, but a good sign nonetheless.

Bryce: [00:07:13] Love to say it. 

Alec: [00:07:14] Speaking of good signs, there is no better country or market at the moment, than Japan. 

Bryce: [00:07:21] Yes, Japan. The Nikkei 225. Nikkei 225, which is their, their index is up 17% year to date. This is after rising 28% in 2023. And for the first time ever crossed 40,000 points.

Alec: [00:07:37] Now, for people who are familiar with the Japanese stock market. And if you're not, we wrote about it in Don't Stress, Just Invest, our book that is available wherever good books are sold. Japan was the hottest stock market in the 1980s, and then in 1999, it had a massive crash. And for a few decades after that, it just never recovered. It was just a brutal sell off and crash. How is this, though? So in 1999, it reached a level. The index reached a level of 38,900, and it was only in February this year that it reached that level again. So yeah, I mean, that's a massive psychological hurdle for Japan to get over that. And they have just kept running since then. It's a real argument for geographic diversification. And, you know, if you're building a core portfolio, making sure you're doing it worldwide, because Japan's been pretty unloved for a while, no one's really wanted to invest in it. Although Buffett's been investing in it recently, so maybe that was a sign of good things coming. He's still got it. The old man. 

Bryce: [00:08:49] He does. It's just frustrating that a lot of the Asia ETFs we invest in Japan.

Alec: [00:08:54] Yeah. Yeah. The reason for that is people often have their own Japan exposure. But I don't and so I've missed this rally. 

Bryce: [00:09:02] Yeah. Same. 

Alec: [00:09:02] But this is an argument for geographic diversification. 

Bryce: [00:09:05] Yeah I think also before we move on to the final asset class, the ASX hitting record highs, S&P 500 record highs. Stocks within the S&P 52 week highs Japan. If you correlate that with what has gone on in the last 12 months and some of the headlines that are kicking through, then you would likely pull the trigger off actually investing. And this is an example of staying in the market. 

Alec: [00:09:29] That's a very confusing saying. Pull the trigger off. 

Bryce: [00:09:32] Pull your foot off the pedal. Let's listen. You would be less likely to go about investing. It is just a great case study for the importance of staying invested. 

Alec: [00:09:47] You never know when the market is going to turn. It's not when the headlines are all rosy. And it's another reminder that the stock market is not the economy. Oftentimes when news is bad in the economy like it is now, let's call a spade a spade. That can actually turn the stock market. And that's because the stock market is forward looking. It's looking beyond what's happening in the economy at the moment. And, you know, investors in the market generally are saying positive shoots on the horizon. And so they're making those moves now. So yeah, you're right. That's why you got to stay invested because otherwise you miss the rally. And speaking of missing the rally. Here is one that we're stoked we didn't miss, crypto is ripping again.

Bryce: [00:10:34] Which I've just realised is not in my sharesight portfolio, so I should throw that in and see what it adds to the return. 

Alec: [00:10:40] Does sharesight track crypto? 

Bryce: [00:10:41] You can add alternative assets. I'm not actually sure if you can do crypto, but yeah, you can add in cash accounts and other other like, non-listed products if you have it, guess what sorts of things. But yeah. Anyway, crypto Bitcoin is at record highs. You said you'll probably start seeing more and more of it in the news. It's up 63% year to date. That's against the US price or the USD. It's over 70,000 72,000 USD now. And in 2001 it hit its peak of 64,400. 2021 it hit a peak of 64,400. So it is now in its third or fourth halving or whatever it is. 

Alec: [00:11:25] It's had more beyond that. But really. 

Bryce: [00:11:27] The news cycle of Bitcoin. 

Alec: [00:11:30] For most people, the story of Bitcoin is the first bull market of 2017. That's really when it exploded into popular consciousness. But the that bull market in 2017 it peaked at about 20,000 USD. And then it crashed down from there. And then the second peak was in 2021. So four years later that peak was at 64,000. And then when it fell the low after that was close to the peak of the first bull market was around 20,000 USD. But that was still a massive fall. And now it's recovered from there. And now it's 72,000. Who knows where it's going to go on. I mean, if history is a guide. But who knows. 

Bryce: [00:12:19] Well, on Monday we're going to have Tracy from Crypto curious on the show to actually give us a bit more detail on what is happening in the crypto market, because it's not just Bitcoin that is booming. It's all, it's all really starting to come up. So we'll get her on for an update. 

Alec: [00:12:32] My two cents. Whether you're, you know, someone like Tracy who's bullish as all get out or you, someone like Charlie Munger who called it, what do you call it? Rat poison. It feels like your views aren't going to matter. It's going to run a little bit and then it's going to crash hard. And the question is timing it. Right. But the most non-obvious prediction for 2024 is that Bitcoin's going to go higher from here. And the news articles per minute is only going to escalate. And then and then at some point it will fall 90%. 

Bryce: [00:13:08] Yeah. Yes. And then you wait two and a half to three years and do it all again. 

Alec: [00:13:13] Yeah, yeah, yeah.

Bryce: [00:13:15] All right. Well, some more exciting news. We're hitting all time highs here at equity mates. We are getting back into live events. you would have heard the episode on Monday. We are doing equity mates live. Ask an advisor. It's an in-person live. Ask an advisor. With Glenn hair from Fox and hair. He was one of the most downloaded episodes of last year. And we've had great feedback from the equity mates community. So tickets are available, equitymates.com/events. We will be starting our first event here in Sydney. We do hope to get some of the other capital cities, across the rest of the year, but it's a night where you'll get the opportunity to ask Glenn and his team, all of your money and investing questions. You get to meet the equity mates community, as well as have a chat with Ren and I and also, one on one time if you want, with Glenn in the team as well. So plenty of opportunity to ask all of your money and investing questions. We cannot wait. 

Alec: [00:14:12] Yes, it's going to be good. Head to equitymates.com/events. It's going to be a lot of fun. We hope to see you there. Yes. One other piece of housekeeping before we go. We've just come off the episode where I shared my unfiltered thoughts on Morgan House's book. Same as ever. Yeah. If people want to read along for book club, the book that I'm writing this month and that I'll talk about at the end of this month, it's called The Widow Click Show. It was actually recommended by Amy, who emailed in. So massive thank you to Amy for recommending it. I hadn't heard of this book. But yeah, it's about The Verve, Calico Empire, and the woman that made it. I've started writing it. Here's a fascinating stat for you. In the late 18th century, champagne was trash. It was. No one wanted to drink it. Between 1790 and 1830, it saw more than a thousand fold increase in sales. And it became, you know, celebrated around the world, millions of bottles sold, synonymous with luxury and all of that. And a lot of this was driven by this one woman, the widow calico. Oh, wow. Yeah. So that's a little taste for the book. That's what I've learned so far. Right along. And, we'll talk about it on the show. 

Bryce: [00:15:30] To hear about it. Yeah, we'll read your book club list is also growing. Chris has given us a suggestion as well. We'll leave that for next month. But if you do have a suggestion for Apple Club or any other suggestion for the show, head to Equitymates.com/contact. 

Alec: [00:15:52] Just had a question. I've got a question. 

Speaker 2: [00:15:54] Question answered. 

Bryce: [00:15:56] That's right. We are here for a community question, and the questions keep on coming in. This one is from Logan. 

Speaker 5: [00:16:03] Hey, boys, love your work. I've just got a question about investing platforms. I'm currently with CommSec, and I know you've talked a fair bit in the past about shares as a low brokerage or even zero brokerage platform. I've got a bit of, I guess, portfolio already built up on CommSec, and I guess I'm reluctant to change, but the $0 phase compared to even $5 at CommSec can really make a difference. Just wondering what your advice is. Would it be to to transfer it over or to just start, investing in shares from here on out or maybe a bit of both? Right. Thanks, guys. 

Bryce: [00:16:43] Awesome. Thanks, Logan. If you'd like to submit a question, head to agreements.com/contact. But this is a common one that we get sort of, reasonably often. You know, people start their investing journey with one broker, and then as they progress, they find brokers that are more suitable to them. I'll start with my answer then. I think you've got one with a little bit more detail, I think in short there you can transfer between brokers without needing to worry about selling or anything like that. So, some of them do have costs associated with it, but they are getting better and better and making it very easy for you to do so. Don't let this be a hurdle to change brokers. What you need to be doing is just making sure that the brokers that you're going to are right for your investing style. So I think for me, don't worry about whether I have to sell everything and start again? Because broker transfers are very easy to do. Each broker will have a page on their website where you can either do it digitally, or you'll need to download a form and you plug in all of your positions. And then the broker that you're going to will likely take action. So very straightforward from that point of view. 

Alec: [00:17:56] Now there's a key caveat there. You said you can do it digitally. I think most brokers can't do it digitally. 

Bryce: [00:18:03] I only say that because I know steak can do it. 

Alec: [00:18:06] Yeah, yeah, yeah.

Bryce: [00:18:07] So I didn't want to bucket everyone in the same one. 

Alec: [00:18:10] I think the whole selling point on that feature is the one of the only afraid. Yeah, yeah. 

Bryce: [00:18:15] I know that, when I've done it in the past with all of my brokers, it has been paper. 

Alec: [00:18:19] Yeah, yeah. So I think, first of all, whatever, broker you want to move to, the number one thing is don't sell and then rate buy, because if you have made a profit on that investment and you sell it and then you rebuy it, you're going to have a capital gain, that you have, you're taxed on and whatever that taxes is likely going to be more than the benefit of moving the lower cost brokerage. So that's if you've made money on an investment. Then on the other hand, if you've made a capital loss and you sell and then you buy, it may be seen as a wash sale, which is where you sell, you claim the tax benefit of losing money, and then you buy again. The long and the short of it is if you're wanting to consolidate your brokers, the right way to do it is with this track broker transfer. So there's no tax implications. But I think more generally most investors have multiple brokers. And that's just the nature of the new offerings that have come to market over the past few years, but also the different offerings that different brokers have. Well, maybe not much. 

Bryce: [00:19:37] I would argue not. Yeah. It's. Yeah, but. 

Alec: [00:19:39] I think okay, I think more and more investors have multiple brokers. So, let me talk about my setup. For example, I use one broker, superhero for my core portfolio because it has automated investing. And so I just buy, like, automatically buy ETFs every fortnight on superhero. Then I have stake because they were the first to really give access to the US. And so I've got a lot of US investments there. And I've also moved some of my Aussie investments, to them. But then I still have I j because they offer access to Europe, which those other brokers don't. And then I still have some broker accounts just historically like I've still got a CommSec account, you know, like different brokers. So different purposes because of their different functionality. And I'm okay with that. But I just think about my portfolio on a holistic level across brokers. 

Bryce: [00:20:38] You could transfer all of your stake stake into super hero if you wanted to, but I think you have a different purpose for that. It's it's not. Super here. I don't have the function for it. It's that you. 

Alec: [00:20:50] I like the separation of core and satellite. Yeah, into different brokerages. Yeah. Yeah, because then it doesn't tempt you. You know, if you've been automatically buying and there's a bit of money sitting in superhero, it doesn't tempt you to go and buy a speccy because it's like, no, that broker is my call. Yeah. Yeah.

Bryce: [00:21:13] So long story short Wren runs a multi broker system. 

Alec: [00:21:16] And I, I reckon more and more investors.

Bryce: [00:21:19] Are. I don't just based on what we're saying with my portfolio for example. Yeah that's that's like all single brokers. I just think there's an element of 

Alec: [00:21:31] complexity. 

Bryce: [00:21:31] Yeah. Complexity. All right. Wren, we're going to take a quick break. And on the other side, we're launching a new segment called Not Financial Advice. We'll be right back. Welcome back to Equity Mates. We've just covered off, some of the markets that are hitting all time highs. We've taken a community question, and now it's time for a new segment that was originally designed for this sting. 

Alec: [00:22:04] That's right. Bryce, this is our segment, not financial advice. This is not our disclaimer. There is some shocking financial advice out there. And, we celebrate it once a week on our Instagram with our TikTok investors round up. Yeah, but that is not we'll definitely bring some of that to the show at different points. But that is not where we're starting today. We're not starting on TikTok. We're starting at some of the biggest news organisations around the world. We're starting at Fox business in the US and Australia's largest digital news service, News.com. Today you because we came across a whopper of shocking financial advice, well, shocking financial predictions. And this whole segment is just a reminder to take what you say on social media and in more traditional media with a grain of salt because this some shock is out there. So how's this? How's this for a headline? US economists predict 2024 will bring, quote, the biggest crash of our lifetime. Now the reporting on this will include the link to the News.com to your article in the show notes. How's this for an article of sober and clear headed analysis that is going out? Literally millions of Australians. This is, article on a prediction made by the economist Harry dent. His quote, I think 2024 is going to be the biggest single crash we'll see in our lifetimes. His prediction: a 50% crash in the US property market, an 86% crash in the S & P, 592% crash in the Nasdaq, and a 96% fall in crypto. Now, those are big predictions. So you do. You would expect some big reasoning on the back of that, wouldn't you? 

Bryce: [00:24:07] You would expect some what we what. 

Alec: [00:24:08] His reasoning is excessive government stimulus since 2009. 

Bryce: [00:24:14] That's it. 

Alec: [00:24:15] Yeah. And look, look at some I could just. 

Bryce: [00:24:19] Kate rolling that year on year. 

Alec: [00:24:20] But he has kept rolling year on year. We'll get to his history of predictions in a second. But some may say some. I agree that there has been excessive government stimulus since 2009. I think there's a strong argument that there has been, but he doesn't quite tie it to the predictions. He makes, like an 86% fall in the S&P 500. And then finally he's got a prediction on timing. He says we're going to say it starts and be more obvious by May. So Bryce the countdown is on. Wow wow. So what do you reckon? What financial advice or not financial advice. 

Bryce: [00:24:54] Definitely not financial advice. And all you need to do is look this guy up, and he's not even referred to as an economist. He's referred to as an American financial newsletter writer. Okay. So it kind of puts in perspective, I reckon he's good with the quill and trying to get headlines. 

Alec: [00:25:13] Yes. 

Bryce: [00:25:13] Knows how to sell books. 

Alec: [00:25:14] He's written like 11 books or.

Bryce: [00:25:16] Something, knows how to grab attention. Do we have any data or, I guess, any history on how some of his other calls have played out? 

Alec: [00:25:24] Yeah. So this is just in the last decade, I guess. In 2011, he predicted that, alongside consumer spending, the Dow Jones, one of the indexes in America, would begin to plummet in 2012. It would bottom out in 2014. It would rally a little bit after that, but then it would finally bottom out between 2019 and 2023. Ultimately, the Dow Jones doubled in that time Friday. So not a great prediction to begin with. He predicted in 2013 that we would say crash in the summer of 2013 and would take a year and a half to recover. No crash eventuated. In, this is an Australian 1 in 2014, while promoting his book The Demographic Cliff in Australia, he predicted a major Australian housing market correction beginning in 2014 after an even bigger one in China. If you had listened to his prediction and got out of the Australian housing market in 2014, you would have left some money on the table. And I think that that brings us back to his prediction today. Like if you read this article and you acted on it, and if you go back to where we started this episode with, you know, all these markets hitting all time highs, the S&P rally becoming a little bit more broad based. Like you would come across this article, you'd panic, you'd sell and you'd miss out on the the rally. 

Bryce: [00:26:53] Absolutely.

Alec: [00:26:54] It's really easy to sound smart when you're negative. 

Bryce: [00:26:58] Yeah I was just going to say it. This negativity is easy to sell. Yeah. Yeah. And. You don't have to put a lot of. You don't have to put a lot of thinking behind it, if that makes sense. Like the simplicity of saying the reason is because of too much government stimulus since 2009, he could roll this headline out year after year after year until it actually happened. It's like. 

Alec: [00:27:19] Well, I watched an interview with him. The interview was on a private jet. No, it's, just because I was like, I feel like I need to get more of a sense of this guy before we talk about him. And he is the classic example, in my opinion, of a boy that cried wolf. oh, no better analogy. He's a classic example of a broken clock bank, right? Twice a day, because this interview was last year, and he was pointing to the crash of 2022 as proof that all of his predictions were right. It's just a classic. It's like a classic attribution error, almost where it's like this happened. Therefore, my analysis is right. When things happen, that doesn't necessarily mean the underlying analysis is right. And, based on what's happened since then, you know, the market's recovered. It hasn't kept falling. Like he said. Then it doesn't seem like he's right. But since then, since the market's recovered he's doubled down. And he said that that rally that we've seen and that we're living through now is like the last dying gasp and that it will fall down again. And you know he points again. He points to stock market history. He points to the Great Depression where most market crashes, there's an initial fall and then a rally and then a further fall. And so that's what he thinks we're in for. 

Bryce: [00:28:45] Well, time will only tell at some point. He will be right, I imagine. But, is it 2024? My gut says no, but I think you're right. Just, take with the grain of salt. Do a bit of research and news.com. 

Alec: [00:28:59] Do you and Fox Business do better? Yeah. Like don't you don't need the clickbait. 

Bryce: [00:29:05] Just don't go to those publications for financial market news. That's my view. Yeah. Anyway, that brings us to the end of our episode today. If you'd like to, ask us a question, if you'd like to submit to pick my portfolio, if you've got a bad piece of financial advice that you've seen or read that you'd like us to critique, head to equitymates.com/contact. There is a contact page there with everything you need to get in contact with us. Also equitymates.com/events to grab your ticket to our first live event of 2024. Tickets are selling fast. It's here in Sydney on the 10th of April. We cannot wait to see you there. And we'll pick it up on Monday.

Alec: [00:29:43] Sounds good.