The Future of Equity Mates + Coached

Bryce: [00:00:44] Welcome to another episode as we track our journey of investing. Now, whether you're an absolute beginner or you are approaching Warren Buffett status, our aim is to help break down your barriers from beginning to dividend. Now we are licensed, but we are not aware of your personal circumstances. So any information in this show is for entertainment or education purposes only. Any advice is general advice. My name is Bryce and as always, I'm joined by my equity buddy, Ren.

Alec: [00:01:09] How are you? I'm very good, Bryce. Very excited for this episode. We have your first session with Henry Jennings, your coach, your guru, your mentor. Last week you heard my session with Andrew Page. I'm excited to hear yours. We're actually recording this before you've had your session, so I have zero context for what's to come. He might have stormed out of the room and said, You're a lost cause. 

Bryce: [00:01:33] Yeah, Yeah, I. Who knows what's. 

Alec: [00:01:35] Going to happen. You probably give that a selective edit though, so. Before then. Bryce. We have a lot going on in Equity Mates and we wanted to just take a minute, take a breath and just talk about where Equity Mates is now and what the future of it is, because we know that there's a lot of different podcasts, a lot of different channels. So Bryce, big question for you. What is the future of Equity Mates. 

Bryce: [00:02:01] Ren, the future of Equity Mates is bright. It's very bright. It's exciting.

Alec: [00:02:05] You're about to say the future of Equity Mates is Bryce. 

Bryce: [00:02:08] Should have done that, damn it. It's exciting. And I think if you're just tuning in again for the first time in a while. Welcome back. If you are tuning in, as you do every week, thank you for the continued support. But but we're really excited this year. There's so much coming, as you said, Ren and and and last year you know we we were four years into Equity Mates 2017. We started of five years. We're now into our sixth year and we're doing a lot of content this year that really excites us and we know is really relevant for our community. Trying to change up a few things. 

Alec: [00:02:41] Yeah, I think we should be clear. The last five years has also excited us a lot. I think I say I'm excited almost every episode, but I think what we're really trying to do this year is launch a few segments. Yeah, content types. And so you've come across a few of them already, but we think it's going to be a really great way to structure our content a little bit differently. So first content series is coached, we were calling it mentored, were now calling it coached. Who knows what we'll call it next wave. Yes, that is really us continuing our journey of investing, learning, asking the dumb questions, trying to become better investors and having experts be our coaches. And so you're working with Henry Jennings for the moment. I'm working with Andrew Page, and that's something that we're super excited to do a lot more of.

Bryce: [00:03:30] So the second one is ask an advisor and we know how difficult it is to get access to financial advice. It's incredibly expensive. So our mission is to try and bring some of the best financial advisors from Australia into the studio to get them answering your questions. We're going to be doing it once a month and giving you the opportunity to provide questions that we can ask them. It's not just investing related. It's going to be outside of equities and we're going to discuss everything from property through to retirement. 

Alec: [00:04:03] Honestly, we're going to discuss whatever questions we get. Who set the agenda yourselves? Tell us what questions we should ask the advisor. We want it to be a vehicle for the Equity Mates community to ask advisors questions. But Bryce, another one that we're super excited about, that we have launched already is uncovered, and that is a series where we look at some of the smaller companies out there. We found that as we were doing more and more content every week, we were really just looking at the companies that were already getting coverage in the media, by financial analysts and by brokers. And there is such an exciting world of companies out there that don't get a lot of coverage and we wanted to really dive into them. So we've launched that series and we've spoken about a few of the companies on the podcast, but that's also going to live on our website and on our emails thought starters that goes out every Monday, but are just a really good opportunity to find companies that are off the beaten track.

Bryce: [00:05:04] Yeah, so that'll come into our Monday episodes. And then finally, is there money in? This is a series that we're doing with Ed Kavalee where we take, you know, everyday topics such as YouTube songs, Olympic gold. Medals and understands the economics behind it. Is there money in Olympic gold? Is there money in YouTube? Is there money in a song?

Alec: [00:05:25] You're going to do bodybuilding? I think. 

Bryce: [00:05:27] Yeah, or I am bodybuilding Ren.

Alec: [00:05:29] I really say so about it. 

Bryce: [00:05:33] But yes. We're really this is a really fun one. It's not investing focussed but it does, it does have a money spin to it, so it's incredibly fun. Keep your eye out for it so that those are some of the big content series that will appear throughout 2023 and should help you navigate our fate a little bit more as we continue with what we've been doing for years. Interviews with experts, Monday charts. But keep an eye out for some of those series. But that's not all that's happening for Equity Mates this year. We've got some big things coming. 

Alec: [00:06:01] So we're doing our first overseas tour. We are going to Omaha, Nebraska for Berkshire Hathaway's annual general meeting. Warren Buffett and Charlie Munger are sitting on stage in front of, what, 10,000 people more, 100,000 people less, so somewhere in that range and answering questions for six, 7 hours. So it should be a lot of fun. We're going to be doing so much content while we're over the well, then sticking around in the States and going to try and interview some of America's best investors. Ray Dalio We're still waiting for you to reply to that email. So but yeah, that that's going to be massive. And coming up really quickly, it is less than a month. 

Bryce: [00:06:44] If you're also going hit us up, we'd love to connect with you. Over in Omaha, Ren, FinFest is happening in on the 11th of November. Registrations are now open for Early Bird. We have 850 people on the list already, so you don't want to miss out on early bird tickets. They are limited this year. equitymates.com/finfest, Australia's largest finance event. If you missed it last year, think Food and wine Festival, think stereo Sonic, combine it with epic finance content and that's what FinFest is. And then two big things to close, Ren.

Alec: [00:07:14] Yeah. On top of all of that, we also have a second book coming out on August, 22nd of August. I think it's a Tuesday. Mark it in your calendars, you'll obviously hear a lot more about the book close to the date, but that's something we've been working on quietly behind the scenes and we're really excited to get that out into the world. 

Bryce: [00:07:33] So if you're looking for more awesome finance content, make sure you check out Equity Mates media shows because there's plenty going on. The Dive is our weekly news show. Three times a week, we'll bring you one of the biggest business news stories and go behind sort of go behind the curtain and unpack it in a little bit more detail and get started. Investing gets you up to speed with the basics. We're currently doing a ten part series on analysing ETFs, so make sure you check that out. 

Alec: [00:08:01] I can't believe we almost forgot the most exciting thing that's happening, which is the Equity Mates website becoming a hub for some of the best fund managers in the business and their written content. And also a mecca of gaming. 

Bryce: [00:08:18] Yes, biznerdle 

Alec: [00:08:20] Biznerdle. So the once a day company guessing game is just going from strength to strength. Word on the street is that we're going to see strikes there soon. So make sure you're playing along and you're ready to go when strikes are there. And we also have some other games in the pipeline, but we'll see if they get developed, right? Yes. ChatGPT is doing a lot of the heavy lifting when it comes to the coding side of it. So it's really on GPT for to get us there. Well, there you go. 

Bryce: [00:08:51] The future of Equity Mates is bright, as I said at the top. So much going on that we can't even remember half the things that we're doing to get them into this part of the episode. But if you are joining us for the first time in a while, welcome back and we hope this allows you to navigate some of the content that we're doing a little bit easier. 

Alec: [00:09:07] Well, Bryce at this point, let's take a quick break and then I'm very excited to hear how your very first coaching session with Henry Jennings went. What did you learn? What homework are you taking away? How did he think about your current style of investing? 

Bryce: [00:09:23] And you get an insight into why he thinks Harry Kane, one of UK's most successful soccer players, is an absolute fraud. 

Alec: [00:09:31] That's all coming up. 

Bryce: [00:09:34] All right. We're back. And it is now time to jump straight into my conversation, my first coaching session with Henry Jennings. By the way, I'm going to ask heaps of dumb questions, so

Henry: [00:09:46] Well, I hope I don't have heaps of dumb homes. 

Bryce: [00:09:51] And show you. 

Henry: [00:09:52] It's possible.

Bryce: [00:09:54] Well, that's a great way to kick off the journey with Henry. Brutal honesty from both of us. Appreciate that. We're going to be asking heaps of dumb questions to each other, but I've known Henry for a number of years now, and I figured a great way for us all to get to know him was to actually give us his elevator pitch of how he started in the industry. We all know him as Henry Jennings from Marcus today, but he's actually had an incredibly interesting background and journey in markets and one that has certainly informed him into the investor that he is today. So here's a quick background on who? Henry, my coach is.

Henry: [00:10:28] My background is I started many years ago as an options trader in London. So something that was drilled into me was risk reward, looking at investment opportunities that offer good reward for as little risk as possible. Tilting the game in your favour if you like. So that's where I started in London. Transferred here, was a principal trader for Bain and CO, which became Deutsche Bank, and then Macquarie run their equity trading business, then moved into private clients and institutional broking, trying to find ideas that make people money, that are investable, ideas that give people an edge. Because if you're paying brokerage, you're paying 1%, you're going to get value with the ideas that you're coming up with. So for me, the journey has always been about risk and reward, trying to find opportunities, trying to find investable ideas that will make me money or clients money. 

Bryce: [00:11:27] Yeeah, are you trying to beat the market?

Henry: [00:11:32] You know what? It's really hard to beat the market. It's really hard. You know, the professionals, the professional fund managers, even the Hamish Douglas's of this world. You know, it's not an easy thing to beat the market. Even Warren Buffett, you know, his his record is fantastic. But in recent years, it hasn't been anywhere near as fantastic as it was in earlier years where, you know, I think ultimately you're trying to get an edge. You need an edge because otherwise, you know, you're just the market and it's very hard to get an edge. A lot of a lot of professional fund managers will invest in the market and then they will play around the edges. So they will try and catch a little bit of extra performance by doing various strategies, whether it's an option strategy, whether it's selling futures or buying futures, different times just to try and get that edge because it's really tough. There's many fund managers around that have made careers and millions and millions of dollars themselves running funds who just beat the market by a smidge. I don't know how they do it. I'm not going to tell tales out of school, but it's not difficult. You could just invest in an ETF and then you could write some puts or calls or some do some futures as far as timing goes. 

Bryce: [00:12:51] Okay. So I'm feeling good that Henry's actually acknowledged that it is hard to beat the market. This is something that we've known for a while. Something like 95% of fund managers struggle to beat the market. And we often hear plenty of experts come on the show to talk about how challenging it is. But finding an edge is the common thread that we've heard a lot of active managers talk about. Some try and find an edge in using technical analysis. Some try and find an edge through portfolio construction asset allocation. There are plenty of ways to finding an edge, and this is one of the reasons that I wanted to spend time with Henry to understand what his edge is and B, to find my God's damage. So I do want to get to your investing process in more detail, but I guess a question I have that I often ponder is you're saying you need to find an edge. I guess, do I have to do I need to beat the market? 

Henry: [00:13:46] You know, you don't need to beat the market. You know, there's lots of Absolut funds out there. And let's face it, the market's a terrible benchmark. You know, if the market's down 10% for five years and you're down 5%, you're still down. Yeah. You know, the absolute benchmark is that you're making money and that you're moving towards the goal that you've got beating the market is, you know, what's the market? What are you picking as your benchmark? It's really only useful, I guess, in terms of funds that use it for marketing purposes. You as a private investor or me as a private investor, you want to make absolute money. 

Bryce: [00:14:25] Yeah, that's a good point. I've never actually thought about it in absolute like, well, the benchmark is actually did I make money this year? Quickly, just wanted to duck in here and say, By the way, I never actually check if I make money. Yeah, my portfolio just takes over and it is what it is. 

Henry: [00:14:42] Well, that's the thing, You know, it's an absolute thing. The market benchmarks were basically invented, so funds had something to measure their performance with, and that way they could market themselves. But for private investors, the benchmarks really should be absolute. Did I make money this year? Did I beat what I could have got risk free? I mean, that's the ultimate, you know, if risk free rate in the US, ten year treasuries is 4%. Did I make more than 4%? If the risk free rate in Australia on ten years or in the bank or whatever 90 day deposits, whatever your risk free investment could be. Did I beat that? And is that enough? To give me the lifestyle or the, you know, whatever I want out of that investment. 

Bryce: [00:15:33] All right. Some great ideas already coming from Henry, but I really wanted to get moving and find out the specifics of his investing approach, because we've had a lot of conversations offline about how he uses his experience catalysts, finding thematics. And I really want to understand more about how he does this. 

Henry: [00:15:57] Luck is where opportunity and planning meets. So for me, there's always another bus that comes along. If you miss an opportunity, there's always another bus, there's always another opportunity. So it's good to be patient and it's good to look for investment opportunities. You don't have to make a lot of them. You don't have to be trading every day. 

Bryce: [00:16:19] Yeah, I had that as a question. How often do you make a an investment on average, do you reckon? 

Henry: [00:16:25] Not as often as you would think, because, you know, there's a lot of noise going on, there's a lot of slippage as well. You know, you got to pay brokerage, tax implications, etc.. So you may only do, you know, four or five, maybe big trades a year. Maybe you look at, you know, four or five opportunities that come along and every year there's lots of opportunities that come along. It's a matter of spotting those opportunities. And then when they do present, you go hard with those opportunities. And, you know, I always say in the newsletter that it's a bit like going car racing, that when you're going flat out you want to be going down the straights. When you the corners come, you need to negotiate them carefully to make sure that when you come out of the corners you can go flat out. So you know, you're looking for opportunities that present, whether that's because something has happened or something is about to happen, some catalyst in a particular stock or in a particular theme, you're looking for those those big kind of not not necessarily big moments in the market, but maybe a big moment in stock when it goes from, you know, an explorer to a producer to to whatever that that transition period, those catalysts, those events that can really help rewrite to stop. Because at the end of the day, you know, if the stock market closed today but only opened for a brief period, the interim results, the final results. 

Bryce: [00:17:54] That would be nice. 

Henry: [00:17:55] I might be the annual report. Yeah. After that I only open for a couple of days after each. And then you assess the information. Yeah. And then you revalue the stock. Yeah. A bit like you probably would do with a private company. I talked about what I called the Harry Kane investment approach and. For those that aren't soccer followers, Harry Kane is the captain of England. Now, I always argue with my friends who support Tottenham and Harry Kane that he is a hoax. He is. He is the greatest scorer of goals for England past any of the other players. Gary Lineker. Wayne Rooney. Jemmy Greaves. He is the biggest goal scorer for England and one of the reasons he is the biggest goal scorer for England is he's in the right place at the right time. He takes the tap-ins, the easy goals, and he takes the penalties. So with investing, because it is so hard to beat the market, you've got to look for being in the right place at the right time, to take the champions, to take the penalties, to take the easy goals, because, you know, a goal is a goal. It doesn't matter if it's a spectacular bicycle, you know, bicycle, bicycle kick, it's still a goal. And that's the same with investing. I think, you know, a win is a win is a win. A profit is a profit is profit. It doesn't matter as long as your process. It's not just luck. And you just happened to the ball hit you in the back of the head and fluke it into the net. As long as your process to be in the right place at the right time is correct, then a goal is a goal.

Bryce: [00:19:32] Now, this is why I love Henry and chose him as my coach, mentor, guru for the year. He's. He's got a great knack of being able to to join dots and you get a real insight into how he thinks about creating investment opportunities. And if you've if you tune in to his newsletter each week, you'll be fortunate enough to find many more weird and wonderful ways of him creating portfolios. But there was a bit of dialogue about how he actually came up with that idea on the toilet one day. But for the sake of keeping things moving from here, we start to really unpack how Henry creates his investing universe and really distils it down into investment options. I think for me, and probably for many of you at home, creating a universe is one of the hardest parts. It's like where to start? How do I go about distilling the 3000 stocks that are listed on the ASX, pulling them together into a meaningful thought through universe that then leads to investment options. So that's where we take the conversation from here. And so let's say that you then find that moment or that opportunity or that catalyst and you've identified that, okay, lithium stocks is the trend that I'm interested in. How do you then sift through the many listed lithium opportunities to actually find the one? 

Henry: [00:20:53] I guess to some extent you do the Amway approach to begin with. 

Bryce: [00:20:57] What's the Amway?

Henry: [00:20:58] Well, Amway used to sell products. It was like Tupperware parties. You'd have Amway parties and multilevel marketing. But the thing about Amway was that they didn't sell lots of products, but they sold the best product in that category. So if you wanted to buy a suitcase, you didn't go and look at 50 different brands of suitcases. Amway had already gone. That's the one, right? So I guess when you're looking at themes and you go, okay, well, let's look at lithium. And there's so many lithium companies now, all lots of wannabes. It reminds me of the dotcom boom. I got to say, you just mentioned lithium and you get a bump. You know, it's like being a spy, being a dot.com company. So but you try and stick with the Amway approach and look at the top ones and see where they are in terms of valuation. One, there's a lot more research on them, so you're getting a far greater depth of knowledge about the business. It's certainly a lot safer. Going back to the risk reward thing, It's a lot safer to go with the big ones. And also bear in mind that when the international players discover a theme and like, you know, they'll go, Oh, this lithium looks alright, where do they go? They don't search through the 200 minnows that are announcing that can go up 100% in the day or down 50% the following day. They'll go, Oh, I want to buy a lithium company, therefore I will buy Alcan Mineral Resources or Pilbara. And then I've done the finished. It's a bit like buying a theme ETF. 

Bryce: [00:22:42] Okay, so firstly, Henry is obviously in a massive lithium phase, as you'll hear throughout this. There is a lot of reference to lithium and for good reason. He's done incredibly well on coal, lithium. Not to say past performance is any indication of future, but lithium is no doubt at the forefront of Henry's investing universe at the moment. But more importantly, we've got the first part of the investment process to consider, and that is the Amway approach. So let's keep moving with the next steps. 

Henry: [00:23:10] And when you are buying companies, you know, as Warren Buffett talks about, you know, you're not buying shares, you're buying companies is got to look at it as if you were going to go in there and run the business. You got to look at the people that are actually running it, how old they are, how ambitious they are, where they come from, have they done it before, this sort of thing. So looking at the Amway approach, trying to find the best in the best of breed, best in that theme, if you're going for a theme and then looking at people management and then putting a few stocks on your radar, and then then it may be that you need to wait. You know, you might need to wait for an event, you might need to wait for the company to stuff up. You might need to wait for rain. You know, at the moment we've had a lot of mining companies have experienced extreme weather events. A lot of rain. The gold, the iron or whatever it is, is still in the ground. It has been washed away. You know, the production guidance might be down, but ultimately they will still dig it up. It just will take them a little longer. It might cost them a bit more to get the water out. 

Bryce: [00:24:19] I guess my question on that is, if you have conviction in the stock that it's the right thing, it's the best in the it's best in class, it's got great management. Why wait?

Henry: [00:24:32] Because the price at the end of the day, everything is determined on price. You know, if you said to me, you know, BHP do I buy it or sell it, the question is what price is it? If it's 60 bucks, you might be a seller. It was 20 bucks, you'll be a buyer. So depending on where the prices are and because we do get this noise, you know, there are opportunities along the way to pick up. Stocks are good prices when the market hates itself. 

Bryce: [00:25:07] Do you bring, do you do actual valuation stuff like valuation models and those sorts of things or are you looking at price relative to where it has been and you. 

Henry: [00:25:19] It's more, it's more price I guess relative to where it has been. I'm not going to build a massive model and it's going to spit me out a DCF valuation for, for a company. It will be too time consuming. Apart from that, there are plenty of people out there and research is relative, relative, you know, readily available that will do all that grunt work for you. So more than happy to stand on the shoulders of giants. 

Bryce: [00:25:48] So just to summarise where we're at, Henry's process sort of is broken into a couple of elements. It's first obviously first, it's rating widely and we'll unpack that in a little bit. It's finding catalysts and events and then using the Amway approach to start distilling your universe, looking for the best in the field, those that are at the top of the game, obviously then understanding management, who is running the company and then being patient, having companies on your radar, but actually waiting for the moment to actually get into those. And it might be an event, it might be reporting season, finding a a catalyst that is going to move the share price and being aware of the price of the investment compared to its historical price movements. It was a major relief for me. I must say. That is not pumping out DCF models. He's not being incredibly analytical. This works for some investors. In fact, it works for many investors. And it's worth pointing out that it's not that Henry doesn't consider price or doesn't consider any of that type of analysis, but I did like that. He just said he stands on the shoulders of those that spend far more time than him doing it. And there's nothing wrong with that. There is no points for originality in investing. So it was it was good to hear. And I think for many of us at home, you know, it feels like having to do a DCF is part of the investment process, but it's certainly not. So from here, I start quizzing Henry on his circle of competence. In terms of your circle of competence, like do you find that your rating and find joining dots easier in particular industries or are you really just. Open. Open. I. I'm going to Just read widely.

Henry: [00:27:36] I think. Just read widely. You know, I start my day reading Bloomberg. At six in the morning. Every morning. Okay. And devour as many interests, because that's an amazing resource. And I'm not talking about the 50 grand a year. 

Bryce: [00:27:50] Not the terminal. 

Henry: [00:27:50] No, not the terminal on your wall. 

Bryce: [00:27:54] Good news is, I have a paid subscription, so. 

Henry: [00:27:56] Yeah, but that for me is. Is because, as I say, what the Americans are the international investors, these guys. And they drive the market. Globally What you know, the benchmark is the US ten years. The central bank to the world is the.

Bryce: [00:28:16] Fed currency. 

Henry: [00:28:17] And the Dow is, you know is gold. Yeah. So what these guys are thinking, what they're talking about, you know, Australia hardly ever gets a mention. 

Bryce: [00:28:26] I didn't even know who we were. 

Henry: [00:28:28] No, I'm probably got no idea. So, you know, when they start talking about things, then that has implications for us. And then you can try and draw that long bow. 

Bryce: [00:28:41] Do you have a flow from Bloomberg six Amy, stop. Bloomberg What is it? Scan of the front page. 

Henry: [00:28:47] I read all the articles that I can find that are relevant and interesting, and that's my 6 to 630 routine. Yeah, I'm in the office at seven. Yeah. And I watch CNBC. I see. I should invest in America. 

Bryce: [00:29:04] You should. 

Henry: [00:29:04] Yeah, because I watch CNBC pretty much all day. It's my. It's my company in the office and. You know, you pick up a lot of stuff and it's interesting what they focus on. You know, when they started focusing on lithium, suddenly the Americans woke up one my God, this lithium stuff. And you think, hang on a second. That's it. That's over. You know, when these guys wake up, you think, well, these guys are you know, the Americans are always late and they're like the First World War, like the Second World War and late to most parties. And they were late to the lithium party. Now they're starting to talk about gold a lot, which is slightly worrying. Everyone's getting very, very bullish on gold. You know, it's 2000 U.S. now. They're getting bullish, which is somewhat concerning. 

Bryce: [00:29:56] So this process from Henry is not a major surprise for me or good investors. We've spoken to read widely and they read a lot. One that comes to mind is Andrew Brown. The amount that these guys rate is just phenomenal. And I think one of the challenges that I face and really want to address in this process and find time is actually putting aside time in my day while running Equity Mates and doing all of that podcasts and content to actually sit down and critically think about what I'm writing. We don't have a TV in the office, so I can't be coming out saying they say all day, as Henry does, but I do need to actively build into my week or even into my day. Sitting down and reading through New York Times, Washington Post, Wall Street Journal, Bloomberg, whatever the subscriptions we've got to these publications to to start critically thinking about that. Yeah, I was just going to ask on that. You have mentioned it a couple of times at the start, like, what would you like? What would you say your your you uses your edge Like, how would you. 

Henry: [00:31:04] The best edge in the world by a country mile is inside information. Absolutely. Absolutely 100% no questions asked inside information now. 

Bryce: [00:31:17] Which Is also illegal. 

Henry: [00:31:19] Well isn't yes and no it is illegal. Um, but it depends what you class is inside information. So. And inside information is illegal if it's coming from the company. Mm hmm. Inside information. When you take the time to do your research with your eyeballs and you talk to people, or you walk down pit street. And you count carrier bags. How much people are buying. Well, you're in Christ, not Christ. But there's a school, Meyer, now. But you're in Maya, and the place is absolutely chock a block. That to me, that is inside information. If, if the people are buying stuff that is inside information, there's different inside information to getting the nod from the chairman, what's going on. But inside, information is following directors and directors buying shares. That is the ultimate insider. Surely that's why we all hate it when founders and big shareholders sell down and we look at who they've got inside information we're just following. Yeah, You know, you're still looking for that edge. If you track what big fund managers are doing, substantial shareholdings, what directors are doing. If you open your eyes, as I say and do your own, it can be very basic research and it can still give you some ideas. I remember many, many years ago when I first I worked in Australia, one of the broker dealers had a go at the food analyst in the morning meeting because she was spouting on about some twaddle about almonds. And he said, you know, Helen, have you had a tiny teddy sitting? I said, I have had a tiny teddy and they are going to be an absolute ripper. They are going to be an absolute winner for owners. And they were little tiny biscuits, tiny teddies. They're so good, so good. And he said, you know, I'm families addicted to tiny teddies said I've never heard of them. But if we go back to the equity ratios and he said, no, no, don't buy yourself a packet of tiny teddies and then tell me what you should do with almonds. And he was right. And the next set of numbers came out. Tiny teddies sales have gone through the absolute roof yet. And he you know, the stock went bananas. So all that all this stuff I say it's inside information. It's just. 

Bryce: [00:33:47] It's awareness. 

Henry: [00:33:48] It's awareness. It's it's it's everything you do, everything you see everywhere you go. It's a matter of trying to find how that affects investible the or investable universe. Mm hmm. Well, the great thing about you, as opposed to an Einstein, is they're in their ivory towers with their corporate lunches being wined and dined by brokers, and they don't get out on the street level. The retail analyst for Macquarie probably doesn't even know where Pitt Street is, doesn't even know where the Pitt Street Mall is, whereas, you know, normal people open their eyes. 

Bryce: [00:34:34] So this reminded me of a time where I actually used my experience and awareness for an investment decision or to guide an investment decision. And it was late university rent and I was living together. We were very much interested in the China trade and at the time it was A2 Milk, it was Bellamy's. And then I went and worked in Woolworths in stores as part of my grad program and noticed that Bellamy's the baby powder formula was getting ripped off the shelves. And so for me, this was a chance for me to say, Hey, this is super popular. I wonder what this means from an investment point of view. So I invested in Bellamy's and reaped the rewards for a while there, got in at about four or five points. It jumped up to 15 or so. They then had supply chain issues and it bombed and I ended up selling in fear. And that was another a good lesson for me. But it was a good reminder that if you are aware of your surroundings, use your experience. There is investment opportunities in front of you. And I like this approach as to having an edge as a retail investor. It makes it feel achievable. It makes you feel like you don't need you know, you don't need a degree to start with in finance to get an edge. You don't need the reams of information that institutional investors have to get an edge. There are ways, as a retail investor, to be aware of your surroundings and figure out ways in which you can generate investment opportunities just by what is going on. So it made me think about my edge. And as you're about to hear, no surprises. I think my edge is this podcast. I'll turn to how I currently invest and kind of get your thoughts and then maybe close out with some some actions. I would say my edge, how I define my edge is twofold. A. the podcast we interviewed. 

Henry: [00:36:21] Nice, great. 

Bryce: [00:36:23] Hundreds of people who are all experts, yourself included, spitting out opportunities every week. And there is no points for originality and in investing. So taking those ideas that have already been well researched and investing off the back of it is something that I do. 

Henry: [00:36:42] No easy goals. Harry Kane. 

Bryce: [00:36:43] Easy goals. 

Henry: [00:36:44] Yes, happens.

Bryce: [00:36:46] The challenge with that, I think, is. Then I go. Then I have to do the work once I'm in it to make sure that, yeah, I agree with the thesis that was presented and that I am not blindly staying in it. So I think that that's yeah, that's one. I think the second edge is time. A lot of the managers that we talk about are talking in three or five years because that's what they say on their website and they're going to deliver returns. 

Henry: [00:37:18] And you know, why are they saying that? No, because they have moved on to a new fund manager by then. Yeah. And they don't have to be accountable for it. Somebody else's problem. Yeah. Right. They'll either be promoted so they're in charge, the CIO or whatever. But you know, five years for a fund manager this is. Yeah. They'll move around a lot. Mhm. And that's the trouble. You know, you look at, you look at some of the, you know, the fund manager performance but you don't know who's actually there. 

Bryce: [00:37:45] Yeah. No I, I was in a fund, won't name it but invested in it and then actually went on the fund page within the last sort of 48 hours knowing that we're going to have this conversation and two completely different fund managers now. Never heard. Yeah well I though. 

Henry: [00:38:04] I mean and they they'll say, now we've got this process, we've got all this, you know, whatever. We got a system. 

Bryce: [00:38:11] Repeatable system.

Henry: [00:38:12] A culture, and it's repeatable, which is bollocks. 

Bryce: [00:38:16] And everyone has their everyone opinion. 

Henry: [00:38:19] Everyone has their own opinion, Everyone has their own way of presenting things, persuading people. So yeah, finding the edge is, is hard. And, and the problem for you, I guess is that you are presented with this breakfast buffet. 

Bryce: [00:38:35] You should see my list. 

Henry: [00:38:36] Which is, you know, it's massive. Yeah. And you can't decide whether you're going to have cereal or whether you're going to have the Friday. Yes. Scrambled. 

Bryce: [00:38:45] And that's kind of what's led me to how I genuinely deploy most of my capital at the moment, which is order investing into just a basket of ETFs. And I know that's boring. And but for me, it's just like the time that I think I should devote to stock picking. I, I can't, which is why we've embarked on this series so that we dedicate time to it and putting, you know, hundreds of dollars a fortnight into. One stock that has been on a list of 100. Where's that going to get me? Like if even if that stock doubles, it's not going to be life changing. But if I'm doing it consistently into it and building a large position so I have a core component and then I would say I have a satellite approach, which is the satellite approach is thematic. ETFs in some way like carbon credits, is one. Those sorts of things which I pick up from thematics that we discuss on the show. Yeah. And then throwing, throwing darts at a list of stocks. 

Henry: [00:39:47] Well, I think that's a very, very good way of doing it. Especially, you know, you've got a business to run. Yeah, your biggest investment is in your business. 

Bryce: [00:39:57] So I just want to pause here and really acknowledge that. I'm sure many of you listening might feel the same as I do. Listening to this podcast presents so many ideas, but Jay, it is hard to know which ones to pursue and not only listening to this podcast, but probably being in friendship circles that might be sharing stock opportunities through WhatsApp or, you know, through conversations with parents, wherever it may be. There's a constant flow of investing ideas and figuring out how to, I guess, bring those down into one or two high conviction ideas is always the challenge. And so this is the part that I really want to unpack with Henry over my time with him. We're going to work on ways to refine this universe and think about deploying capital. You can't put money in everything. Putting $100 in every stock that we hear is not really going to make a whole lot of difference. It's about having those one, two, three or four high conviction ideas a year because the pool is so large. It's really about how do I get better at picking the right one? So that is one of my missions over the course of this journey with Henry is to get a lot better at distilling the universe into one or two high conviction ideas. What's your thoughts just generally on the core and said a lot. And and I guess ETFs, like

Henry: [00:41:19] I think that's a fantastic way to go if you're not, if you have the time or the skill or the inclination, I think that's a fantastic way to go and fund managers. I'm no different. You know, fund managers will invest in the index because that's their benchmark. We've discussed the benchmark thing and then they will fiddle around the edges. That's their satellite bet. They'll take the placements. They'll make money on the IPO's. They will, you know, try and take their age. They will alter their cash positions using futures. They may sell options against some of their core holdings doing covered call strategies. Anything to give them just a little bit more. Which is no different. So core in satellites is no different to what professional money managers are doing. Effectively, they're on the right track. And you're right. Putting, you know, the whole power in the universe of compound interest, starting young, starting early and investing regularly is an absolute winner. And a lot of beginner investors say, So what's the best advice you can give when you're starting out? I'll just say start, start. 

Bryce: [00:42:33] Yeah, just do it. 

Henry: [00:42:34] Yeah. 

Bryce: [00:42:35] So firstly, it's great to hear Henry's positive views on core and the core and satellite approach, something that we talk a lot about on the show. But to close out the session, I really wanted his guidance on how to start thinking about all the opportunities on my hit list that I've been building over the last few years as a result of this show and what we've been reading and researching ourselves. So just to close out, I've taken a bunch of notes here. I'll go away and reflect on the process a bit. It was great that we kind of mentioned my massive list because I'm just looking at it now and I've got it's actually a few overseas stocks, but I do have the Fortescue's on their six zero overnight Coinbase, John Deere, Pfizer, Spotify, Shopify, Nvidia video. Like there's stacks and stacks and here the visa is still in there. Probably put that down when we last spoke with you about holdings called Lithium, Chipotle, Mercado, EL Yeah, LVMH, etc. etc. This. 

Henry: [00:43:29] Is, that is a very diverse list.

Bryce: [00:43:33] How would you suggest I go about actually refining this list? Or perhaps like what's one part of your process that I could focus on to start creating a few? Stocks on a radar or universe ideas. 

Henry: [00:43:50] That's the theme that you've got there is they're pretty much household names. They're all big. You know, big with the exception might be Visa. So I would just try and refine that down to two companies that maybe you feel more attuned with, maybe use their products, may be more interested in their products. You know, something like P.W. are the cooling radiators for the Super eight. If you're a Super eight V8 fan, maybe you kind of understand that space. I wouldn't.

Bryce: [00:44:31] As you can tell, there are also companies that experts have spoken about on the show. 

Henry: [00:44:34] Well, that's the trouble is trying to get your universe down to a manageable level.

Bryce: [00:44:41] Yeah. And also knowing how much capital that I have to deploy at a time. 

Henry: [00:44:44] Because you run out of money. 

Bryce: [00:44:45] You run out of money. 

Henry: [00:44:46] You run out of money and you can't invest in everything. No. So you've got to choose. And then you can't. If you're waiting for an opportunity when something happens and you've got an opportunity to strike, you know, it's that's could be a long wait in something like Visa or Pfizer or whatever. You know, it may never happen. You might just have to grit your teeth and go, okay, I'm going to buy it because of something that's happening in the future or whatever. How A.I. is going to change medical research, whatever it is. But I think you need to try and. Distil it down, maybe into themes, looking at what's going on macro, because otherwise your universe is just going to be too big. I think you got to try and distil the universe down because otherwise. You're just going to be running all over the place and you're not you're not going to have an edge. I don't know what your edge is in vs or what your age is going to be. And in Pfizer. There's not going to be an age there, which is why an ETF strategy is fantastic. As long as you make sure that you check what's what's in the ETF, because some of them, you know, they don't actually do what they say on the box. 

Bryce: [00:46:00] We'll have plenty to think about. Thank you so much. Leisure loved it and we'll pick it up at our next session.

Henry: [00:46:07] Cool.

Bryce: [00:46:10] Well, that was such an awesome session with Henry. I really took a lot from that. I got some clear homework of trying to think about, you know, overlaying schematics and catalysts with my current list of stocks. And then secondly, keep a sharper eye on Bloomberg and some of the major publications so that next time we meet, it will be interesting to actually compare notes on what we've read and what has grabbed our attention and how that has led to us thinking about investment ideas. Now we will be coming into reporting season over the next few months. We're going to be over in the States. So there's going to be plenty of information available. Interestingly, Henry doesn't invest over in the States, but I'm still going to bring some ideas, some international ideas to him to apply the same investment approach. So plenty of work to do, and I really hope you did enjoy that episode with Henry. We certainly appreciate the time that he's taken. And same to Andrew Page with Alec. It's great that these guys have dedicated so much time to actually help us continue to refine the craft of investing. That does bring us to the end of today's episode. This Thursday, we are lucky enough to sit down with Jesse Felder from the Felder Report. Over in the U.SWe've had him on the show a couple of times, but we get his thoughts on where the market is going for 2023. And let me tell you, he doesn't think it's going in a very positive direction. We get his thoughts on gold, which he does think is going to be going in a positive direction. And we might be on the cusp of another commodities supercycle. So make sure you tune in for that one. But please, if you could leave a five star review, we would really appreciate it. It goes a long way to helping Equity Mates continue to grow and find new audiences and help retail investors on their investing journey. But that's it for now. We'll be back on Thursday with Jesse Felder.