The most important reporting season until the next one

Bryce: [00:00:15] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status. Our aim is to help break down your barriers from beginning to dividend. My name is Bryce and as always, I'm joined by my equity buddy Ren. How are you going? 

Alec: [00:00:34] I'm good, Bryce. I as you said, I'm freezing. The reason I am phrasing is because we're in a new studio, in a new office. It's pretty exciting.

Bryce: [00:00:44] It is exciting. We've upgraded Equity Mates HQ. We're out of our WeWork office. We'd outgrown it. We knew we needed a new space for creativity to keep content flowing, to keep everyone updated on what's happening in the amazing world of markets. 

Alec: [00:00:59] They say that creativity is best when you're freezing cold, right? 

Speaker 1: [00:01:03] Well, I hope this is a creative episode thing. 

Alec: [00:01:06] So if people are watching on YouTube, they probably see me sitting in front of a nondescript wall. They probably say Bryce sitting in front of a plant that hasn't made it out of the the plastic pot fruiting body. 

Bryce: [00:01:19] Anyway, interior design isn't our forte. 

Alec: [00:01:22] This is. And they pay. This is. Yeah, this is. We've moved in last Friday. And if people want to watch the move, we've got some. We saved it as a highlight on our Instagram stories. We've also been doing some market updates from the rooftops. So it's all it's all happening, but it's there's a lot of work to go. [00:01:41][19.4]

Bryce: [00:01:42] There is that. It's super exciting. The rooftop will be available at some point. We'll get some community members up, have a bit of a party. It'll be a lot of fun. Stay tuned. Make sure you're switched in and switched on to all of our social channels to keep abreast of that. [00:01:57][15.1]

Alec: [00:01:57] But Bryce enough about us. Let's get into what's going on. And before we do. It's important to remind everyone. [00:02:02][4.9]

Bryce: [00:02:03] We are not experts. We're not financial professionals. We are not licenced. We're here learning just like you. And nothing on this podcast should be taken as advice. Do not take financial advice from a podcast run by Ren and I anyway ran today massive show. [00:02:16][13.5]

Alec: [00:02:17] No, not by run by anyone. [00:02:18][1.1]

Bryce: [00:02:19] I don't care about anyone else but I ran massive show today we've got more earnings rap America is taxing buybacks. Will companies care. We're going to talk about single stock ETFs. Can you believe it? We've hit that point in the ETF market. And are meme stocks back or did they ever disappear? But then let's kick off. You're worried about our future? [00:02:39][19.8]

Alec: [00:02:42] I'm worried about the amount of things we say and how that seems to be coming back to bite people. But this is particularly about Larry Fink from BlackRock. Yes. In 2017. So this is about crypto. [00:02:54][12.7]

Bryce: [00:02:55] So Larry's the CEO and founder of BlackRock is interested. [00:02:58][2.6]

Alec: [00:02:58] Yes, BlackRock is the world's second largest asset manager. They have the iShares ETFs and a bunch of other things. [00:03:06][7.6]

Speaker 1: [00:03:07] There's just a few. [00:03:08][0.9]

Alec: [00:03:09] Other things I like. Not $9 trillion under management sat next to it. Do you know who the biggest asset manager in the world is? Vanguard two. Easy. They're the third. Biggest is. [00:03:17][8.1]

Bryce: [00:03:19] No. [00:03:19][0.0]

Alec: [00:03:20] I think it's State Street. [00:03:21][0.9]

Bryce: [00:03:21] Makes sense. [00:03:22][0.3]

Speaker 1: [00:03:22] Makes sense. Okay. [00:03:23][0.7]

Alec: [00:03:25] So 2017, Larry Fink, quote, Bitcoin is an index of money laundering. Okay, pretty strong. 2021 comes out and explains why BlackRock is bullish on blockchain but not Bitcoin. That was a real refrain for a while there. And then a couple of weeks last week they come out and announce, well, they pick Coinbase to provide clients, BlackRock clients with direct Bitcoin access. What a turnaround in five years. [00:03:54][29.1]

Bryce: [00:03:54] What a turnaround. And so you're you're worried about what we will be looking back on in five years time. [00:04:00][6.4]

Speaker 1: [00:04:01] The way you said you're. [00:04:02][1.4]

Alec: [00:04:02] Coming out and you've picked a fight with the RBA, how is that going to look at five years? [00:04:07][4.6]

Speaker 1: [00:04:08] We see inflation is softening in the U.S. probably really good. [00:04:12][4.0]

Bryce: [00:04:12] But it is a big one. Adi, from from BlackRock, considering what's going on in the crypto market at the moment as well, but. [00:04:18][5.8]

Speaker 1: [00:04:18] What's going on? [00:04:18][0.3]

Bryce: [00:04:19] Not a lot. [00:04:19][0.3]

Alec: [00:04:19] Feels like it's plateaued and yeah, bitcoin's holding around 20,000. [00:04:23][3.6]

Bryce: [00:04:24] Yeah, well, Larry's a bit all over the shop at the moment. [00:04:27][3.6]

Alec: [00:04:28] I do, yeah. I don't think we need to unpack it a lot. I think it's just interesting that people were so strong against it and. [00:04:34][6.5]

Bryce: [00:04:35] Now they're all. [00:04:35][0.3]

Alec: [00:04:36] Flipping. Yeah, maybe. You know what? We're going to talk about single stock ETFs later in this episode. Maybe that's the thing that will slam. And then in five. [00:04:44][8.2]

Speaker 1: [00:04:44] Years we're all investing in equity, right? [00:04:46][1.9]

Alec: [00:04:46] Will only be doing single stock ETFs. [00:04:48][1.6]

Bryce: [00:04:49] Not bad. All right. Let's turn to earnings wrap because we're well and truly in the thick of it at the moment, earnings coming from the states and also now starting to come out of Australia here. So let's start with the high level. The Nasdaq, the tech heavy Nasdaq composite is up more than 20% from its recent June lows. Technically now it is in a bull market. [00:05:08][19.7]

Speaker 1: [00:05:09] What the is that right. Yeah. [00:05:11][2.0]

Bryce: [00:05:12] As of last night. Time of recording, we're through. Just like a bear market is 20% from its highs. A bull market technically is a 20% rip up from a low. So considering where we were probably well what we were saying five weeks ago. [00:05:29][16.7]

Speaker 1: [00:05:29] Yeah, yeah. But it feels, I don't know, maybe I'm just. [00:05:32][3.0]

Alec: [00:05:33] Just way too contrarian. But now like this guy. [00:05:36][2.7]

Speaker 1: [00:05:37] This guy only three weeks ago, we were out of it. Oh, yeah? Yeah. [00:05:40][2.9]

Alec: [00:05:40] Well, I called the bottom a little too early, but I. [00:05:43][2.7]

Speaker 1: [00:05:44] Was like, lucky number one. That never called the bottom. [00:05:46][2.0]

Alec: [00:05:47] But I, you know, I was in the office very like the worst as far as blah, blah, blah as everyone was. Like, the sky is falling, but now it kind of feels like everyone's feeling too good. It's like inflation is 8.7% rather than 9.4%. Everyone's having a party. [00:06:00][13.6]

Speaker 1: [00:06:01] This guy's never happy. Unbelievable. Anyway. [00:06:04][2.3]

Bryce: [00:06:05] If you're up. [00:06:06][0.4]

Speaker 1: [00:06:06] I think the tagline is you. [00:06:07][1.3]

Alec: [00:06:07] Just don't know. [00:06:08][0.4]

Bryce: [00:06:08] You just don't know. And you just. You've just got to stick to your strategy. [00:06:10][2.0]

Alec: [00:06:11] What you imagine if people had sold when the panic set in, in like late May, early June, and everyone was like, this is going to be terrible. This is going to take a long time because they were the headlines that was the media. And like professional investors were coming out, black men probably on a tweet thread saying the same thing. And then out of nowhere, it's it's really rallied. [00:06:32][21.4]

Bryce: [00:06:33] I think this is a classic example of why you need a strategy on how to deploy cash when the markets are going down and not deploy 100% of your cash. [00:06:41][7.9]

Alec: [00:06:42] Or you just have a strategy that's market agnostic. [00:06:44][2.5]

Bryce: [00:06:45] Yeah, dollar cost, average, whatever it may be. I think what you know, everyone. Oh, well, the Nasdaq is in a bull market. Hey, guys, look at the local Aussie tech market index for the Aussie tech is up 30%. [00:06:56][10.8]

Speaker 1: [00:06:58] Since the last American Nasdaq. [00:07:01][2.1]

Bryce: [00:07:01] Up 30% since June lows as well. So it's also ripping if you're unfamiliar with the Aussie Tech Index, it's got companies such as Xero Computershare Seek Wise Tech, which we spoke about last week, ARIA, which we spoke speak about in a minute. Some of Australia's biggest tech companies pulling that market through. So we're back. Stocks are back. [00:07:21][19.5]

Speaker 1: [00:07:21] So back in. [00:07:22][0.7]

Alec: [00:07:23] I think like we've said this a number of times and we keep saying that every bear market, like every market fall except for March 2020, has had a a false breakout, a dead cat bounce, a whatever you want to call it. And so this could be that and we could have another leg down, but we also might not. So with that helpful insight, let's just say that. [00:07:46][22.6]

Bryce: [00:07:46] All right. Let's keep ripping through earnings Ren aria real estate dot com. Here in Australia they just keep on plugging away. [00:07:52][6.6]

Alec: [00:07:53] Revenue up, profit up, earnings per share up, dividend up aria. [00:07:57][4.3]

Bryce: [00:07:58] Aria keeps going. We had actually interviewed their CEO, Owen Wilson, for our summer series. [00:08:03][4.8]

Alec: [00:08:03] Not that Owen. [00:08:04][0.7]

Bryce: [00:08:04] Not that Owen Wilson. It was a fascinating interview, gave great insight into their plans for international expansion as well. So check that out. Yeah. Ren Zillow. [00:08:13][9.0]

Alec: [00:08:14] Yeah. Well, I figured if we're going to talk about Aria Group, a real estate dotcom today, we should talk about the biggest peer over in the states. [00:08:21][7.2]

Speaker 1: [00:08:22] Yeah. [00:08:22][0.0]

Alec: [00:08:22] Who some may say played America's red hot housing market over the last few years as terribly as you could play it. Yeah. And their stock price reflects that. You know, they were trying to flip houses, they were trying to do all this stuff. But a stat that caught my eye from their recent report. So the numbers disappointed the market, we should say. This didn't disappoint me, though. So for context, Twitter, 330 million monthly active users. LinkedIn, 310 million monthly active users, their social media platforms. Zillow, a real estate listing site, 234 million monthly active users. [00:09:01][38.7]

Speaker 1: [00:09:02] Wow. [00:09:02][0.0]

Alec: [00:09:03] Just below Twitter and LinkedIn. I know it is. [00:09:06][3.3]

Speaker 1: [00:09:06] Yeah, it's pretty big numbers. [00:09:07][0.8]

Bryce: [00:09:08] I'm just trying to compare it to Aria because they have something extraordinary as well. I don't think it'd be that many, but. [00:09:12][4.6]

Alec: [00:09:12] Well, I mean Australia's population. Yeah, but. [00:09:15][2.0]

Bryce: [00:09:15] Australians love. [00:09:15][0.4]

Speaker 1: [00:09:15] Housing. But no, these are unique users. Yeah. Yeah. [00:09:19][4.1]

Alec: [00:09:20] So turn 34 million. I mean, I imagine that Zillow isn't just Australia. Oh, sorry, just American, but still. [00:09:27][6.5]

Bryce: [00:09:27] Yeah, pretty impressive. Pretty big numbers. [00:09:29][1.9]

Speaker 1: [00:09:30] Huge numbers. Yeah. [00:09:31][0.7]

Bryce: [00:09:31] And they still they still disappoint. [00:09:33][1.3]

Speaker 1: [00:09:33] Well yeah. Yeah. So there's that. Let's keep referring to the Australian banks. [00:09:39][6.2]

Bryce: [00:09:40] NAB has disappointed. [00:09:42][1.3]

Alec: [00:09:43] First week of earnings season in Australia. There's been a trickle this week and it the spigot opens next week and we'll get a flood. But we got two of the big banks, NAB and CommBank, one disappointed, one didn't have a guess who was a NAB disappoint. [00:09:58][15.7]

Bryce: [00:09:59] CommBank doesn't. [00:09:59][0.5]

Alec: [00:10:00] Know. They both actually disappointed a little bit, but just CommBank disappointed less. They both grew. Though NAB grew about 3%, revenue up about 3%, profit up about 3%, not bad below inflation. But CommBank. Was up about 10%. That's like their numbers. I think the pleasing thing about come back and this is all from memory, we should have written this down, but all of their key business lines were up, so home lending was up about 7%. Home deposits, like deposits from people like us was up about 10%. Business lending was up about 14%. And in business deposits was up about 15%. So some strong numbers there. [00:10:38][37.6]

Bryce: [00:10:38] I saw the mix of their customers has really changed. They used to be the bank of the mom and dad. And now I think the majority of their home lines with customers who have average income of between 200 and $500,000 a year. So servicing. [00:10:53][14.6]

Alec: [00:10:54] Hundred and $500,000 a. [00:10:55][1.5]

Bryce: [00:10:55] Year. So you're going from the family bank to. [00:10:58][2.3]

Alec: [00:10:58] Celebrating Macquarie's launch? [00:10:59][1.0]

Bryce: [00:11:00] Yeah, interesting change in customer mix, but let's keep moving. Ren A2 Milk. Yeah, a stock that has been a darling for some of the community of Equity Mates over the past decade or so. Five years or so it's been rejected by the US. [00:11:15][15.4]

Speaker 1: [00:11:16] Yes. [00:11:16][0.0]

Alec: [00:11:16] So if people haven't been following this story, Bellamy's, which is no longer listed and Bob's the goat milk infant formula player, have benefited from America's infant formula shortage after Abbott Labs had that contamination scare earlier this year at their Michigan factory. America, for some reason, is super protective of the infant formula industry. There's three US companies that just dominate Nestlé, Abbott and one other. Anyway, the market, they realised how little resilience there was in their supply chains after Abbott shut down. And so they gave all these emergency authorisations for foreign infant formula makers to enter the US market. Bubs got in super early and they've been killing it ever since. A2 Milk have been waiting. They've been trying to get this emergency authorisation. Last week they got turned down. [00:12:11][54.2]

Speaker 1: [00:12:12] Not good. Not good. Yeah. [00:12:14][1.7]

Bryce: [00:12:14] And the share price. [00:12:15][0.5]

Speaker 1: [00:12:16] Haven't. [00:12:16][0.0]

Bryce: [00:12:16] Got. Probably got bombed. But speaking of bombing, I select. [00:12:19][3.3]

Speaker 1: [00:12:20] Yeah. [00:12:20][0.0]

Bryce: [00:12:21] Here in the in Australia I select an insurance company. No comparison sites. They've left the ASX after dropping 91% in value. Yes. Since they IPO. [00:12:34][12.6]

Alec: [00:12:35] Yeah. Well I mean they're getting acquired. [00:12:36][1.0]

Bryce: [00:12:36] Since within six months of their listing their rent in 2013. Within six months. Yeah. They missed their all their prospectus forecast. [00:12:45][8.8]

Alec: [00:12:46] Yeah. [00:12:46][0.0]

Bryce: [00:12:46] And we're being investigated by Asik. [00:12:48][2.1]

Alec: [00:12:49] And they say. [00:12:49][0.4]

Bryce: [00:12:50] And they lost their say. [00:12:51][0.7]

Speaker 1: [00:12:51] Or not a great. [00:12:53][1.5]

Bryce: [00:12:53] IPO. [00:12:53][0.0]

Alec: [00:12:54] No. Well I mean great for the shareholders that got out at the IPO. [00:12:58][4.4]

Bryce: [00:12:59] Yes. But not great for the retail investors who got in. Terrible. Yeah. [00:13:03][3.8]

Alec: [00:13:03] So down 91%, the acquisition comes from a competitor. Compare the market with the parent company of compare the market at a premium. I think the stock was up about 70% on the day of the announcement. I think it was trading at about $0.16 and the the takeovers at $0.30. So good for people that bought in right at the bottom. [00:13:25][21.9]

Bryce: [00:13:26] Compare the market. Those two little meerkats. [00:13:27][1.3]

Alec: [00:13:28] Meerkats? Yeah. Yes. [00:13:29][1.0]

Bryce: [00:13:29] Ran BHP trying to buy Oz Minerals. Yeah. They say it's been a merger in waiting. Even the best companies fail is what we've got written here. [00:13:40][11.1]

Speaker 1: [00:13:41] Yeah. So there's. [00:13:43][1.6]

Alec: [00:13:43] You know, bishops say this is about getting more exposure to future metals, copper and nickel I think are the two main ones. But BHP for years have had trouble with the Olympic Dam project in South Australia and Oz Minerals have the have mines like either side of Olympic Dam. And so many people are saying this is squeeze, this is about efficiencies and synergies. You know, you expand Olympic Dam and it's two neighbouring mines into one big one and you can use that, you can use the same infrastructure and all of that stuff. But for me it's just a nice reminder that even the biggest and best companies, they still. [00:14:23][39.2]

Bryce: [00:14:23] Struggle. [00:14:23][0.0]

Alec: [00:14:23] They do and they still fail. [00:14:25][1.1]

Speaker 1: [00:14:25] I do. [00:14:26][0.3]

Bryce: [00:14:27] So that's that's a wrap of what's been happening across the US and here in Australia with earnings wrap. But stay tuned on our social media. We've got a calendar of what's coming up this week. Ren What have we got our eyes on for reporting this week? Some big names. [00:14:41][13.6]

Alec: [00:14:41] Yeah. So this week, as we said, the is it a speaker? Is that the right. [00:14:46][5.1]

Speaker 1: [00:14:46] Terminology that no. [00:14:47][0.6]

Alec: [00:14:48] Floodgates open? Yeah, that works. So today on the day this episode released a few that we're watching JB Hi-Fi, Bendigo and Adelaide Bank, JP Group, then later this week, BHP on Tuesday, Tassal, the Salmon Farming Company, Temple and Webster, the online homewares retail. [00:15:08][20.4]

Bryce: [00:15:09] Furniture. [00:15:09][0.0]

Alec: [00:15:09] Furniture retailer. Wednesday Super Retail Group. All of that CSL and Magellan, that would be an interesting one to see. Thursday we've got Transurban, we've got Blackmores, we've got Origin, the ASX themselves, new CEO has that new chess settlement system going. And then Friday, Cochlear AGL Cleanaway. So a big week this way. [00:15:38][28.7]

Bryce: [00:15:38] Big week. I'm going to be keeping an eye on the sentiment from a number of companies and comparing it to that of the similar sort of sectors over in the states. Will the retailers, will the Walmart sentiment carry across to here in Australia and will. [00:15:52][14.1]

Speaker 1: [00:15:52] These Coles and Woolworths not. [00:15:53][1.2]

Alec: [00:15:54] Next week, the week after? [00:15:55][1.2]

Bryce: [00:15:55] It's so just going to be keeping an eye on what some of these CEOs are forecasting the next six, 12 months to be like. That's worth keeping an eye on. [00:16:04][9.0]

Alec: [00:16:04] But then we'll we just we've set ourselves the challenge of trying to put a whole bunch of this stuff on our SO stories on Instagram. So hopefully you say that otherwise we've failed in our challenge. But yeah, head over to our Instagram to keep up to date with this reporting season. That's it. The most important reporting season until the next one. [00:16:23][18.8]

Bryce: [00:16:23] That's it. [00:16:24][0.3]

Speaker 1: [00:16:26] Oh, you can't. [00:16:26][0.2]

Bryce: [00:16:28] For those that can't see the YouTube video, we have a new road cast system here for the new office. And I just gave a run in applause, which you would have. [00:16:35][7.2]

Speaker 1: [00:16:36] Been wearing headphones so you can hear the tape it anyway. [00:16:40][4.1]

Bryce: [00:16:42] So let's move on. We both have a gripe to bring up and that's what we're here to do. Make the world of investing more accessible. [00:16:49][7.1]

Speaker 1: [00:16:49] And I'm sure, yeah, by complaint. [00:16:51][1.3]

Bryce: [00:16:53] My gripe has actually been brought up in the community, so I'm happy that I align with that. But you kick. [00:16:57][4.4]

Speaker 1: [00:16:57] Off this. [00:16:58][0.9]

Bryce: [00:16:58] Morning and you are hot under the collar. [00:16:59][1.2]

Alec: [00:17:00] I was a bit hot under the collar, even in a freezing cold studio. So I'm not going to name the broker, but I tried to buy a stock that is dual listed in Europe and the US and when I tried to buy the European version of it, I was told this is not suitable for European retail clients. Now to be clear, this is not a safety or an exotic product, an option or anything. This is just straight up the stock. [00:17:25][25.4]

Bryce: [00:17:26] And you're an Australian and Australia. [00:17:27][1.3]

Speaker 1: [00:17:29] Not a European. [00:17:29][0.4]

Alec: [00:17:30] Retail client and it is a massive company like multi-billion dollar market cap, all of that. And so as I was troubleshooting it, I was like, what's going on here? Why can't I buy this stock? I had enough money in there. I've bought European stocks through this broker before, so it's not like I haven't got the authorisation or, you know, there's forms that need to be filled out and then I try and buy the US version of it. They're only accepting closing positions on this stock, not opening positions. And so I've just got to say. [00:18:00][30.1]

Speaker 1: [00:18:01] Why why you just let. [00:18:03][2.5]

Alec: [00:18:03] Me buy the stocks that I want to buy? [00:18:05][1.5]

Bryce: [00:18:06] Wait till Reddit hears about you're not. [00:18:07][1.2]

Alec: [00:18:07] There to block like you know, you're an agent for the investor. You're not the market maker. You're not the exchange itself. Just take our. [00:18:17][9.8]

Speaker 1: [00:18:17] Order. Yeah. [00:18:18][0.6]

Alec: [00:18:19] And I'm sure there is a reason, but it just really annoyed me. I was a bit hot this morning. You were cool down a little bit. [00:18:23][4.7]

Bryce: [00:18:24] Hopefully you can get in at some point. [00:18:25][1.3]

Speaker 1: [00:18:26] Well, yes, thank you. [00:18:27][0.8]

Alec: [00:18:27] This hopefully when I become a European sophisticated investor. [00:18:30][3.2]

Speaker 1: [00:18:31] Right. [00:18:31][0.0]

Bryce: [00:18:31] Try to Ren my gripe a quick one. It doesn't relate back to registries. I've been trying to transfer my employee stocks that I was awarded while a Woolworths out of that plan and just into my brokerage account because it's been sitting in the registry and not actually visible in any of my brokerage accounts. Okay. But the registries have this stupidly old archaic process of confirming your identity and all of this sort of stuff. They only deal in letters if when I transferred to a new SRN, they don't put the SRN online in your two factor authentication portal, they send it via a letter to your home. Now, my registered address is my parent's place in Wagga. Okay. To change the registered address you need to get a letter sent. So my parents are on this massive forwarding thing at the moment because everything goes to Wagga to then come to me, why. [00:19:27][55.5]

Alec: [00:19:27] Wait, why they forwarding it? Why don't I just take a photo of it? [00:19:29][2.3]

Bryce: [00:19:30] Because that's just what they do. [00:19:31][1.2]

Speaker 1: [00:19:33] Okay, well look. [00:19:34][1.4]

Alec: [00:19:34] That could short cut it a little bit. [00:19:35][1.3]

Bryce: [00:19:36] But anyway, it's just such a ridiculous process ripe for disruption. Yeah, I know that there is a registry out there that is disrupting this. I actually can't remember their name, but they've they're getting a lot of traction here in Australia. I'll try and find the name. They're going digital if they can do it. [00:19:52][16.8]

Alec: [00:19:53] Oh, my gosh. So I think. [00:19:54][1.0]

Speaker 1: [00:19:54] So. [00:19:54][0.0]

Bryce: [00:19:54] So can the rest. So I know that there are people in the community also having this struggle who live out in rural areas. They don't live where their property, where they're registered addresses and have massive trouble changing all of their details and actually using the registries as they're supposed to be used. So if you're listening registry sorted out. [00:20:13][18.1]

Alec: [00:20:13] Yeah, I mean, it should it's not even about, you know, like your parents being in Wagga or people having rural addresses or so. It's like every other industry doesn't need this much paperwork. [00:20:23][10.0]

Bryce: [00:20:24] Yeah, it's called digitisation. [00:20:25][0.8]

Speaker 1: [00:20:26] And. [00:20:26][0.0]

Alec: [00:20:27] I'm sure there are like archaic rules from ASC or the ASX that mean that some things have to be recorded in paper form. You guys have the ears of some of the biggest companies in Australia and the ears of the ASX like. [00:20:42][14.9]

Bryce: [00:20:42] Get it going. [00:20:43][0.4]

Alec: [00:20:43] Work cooperatively. [00:20:44][0.4]

Speaker 1: [00:20:45] To change it. [00:20:46][0.9]

Alec: [00:20:47] No one appreciates the amount of paperwork we get. No one, no one. [00:20:50][3.4]

Bryce: [00:20:50] No one. Anyway, there we go. Gripes over back to stocks. After the break. We're going to be chatting about America taxing buybacks, single stock ETFs and meme stocks. Are they back or did they ever leave? But before we do, we're just going to take a quick break to hear from our sponsors. [00:21:03][13.3]

Speaker 4: [00:21:08] Senate Democrats are introducing a new bill today that would impose a special tax on companies that buy back their stock. Now, this. [00:21:15][6.7]

Bryce: [00:21:15] Proposal, when a big bill passed over in the States and America are now taxing buybacks. [00:21:21][5.9]

Alec: [00:21:22] Yes. So 1% tax on buybacks for people unfamiliar with the term. There are two ways that a company can return money to shareholders. The first is by paying a dividend. The second is by buying back stock. So remaining shareholders own a greater percentage of the company. [00:21:37][15.3]

Bryce: [00:21:38] Do I care? [00:21:39][0.4]

Alec: [00:21:40] Do you care? [00:21:40][0.4]

Speaker 1: [00:21:41] No, I don't. It's over in America. [00:21:43][2.0]

Alec: [00:21:44] Well, you own a lot of American company. [00:21:46][1.2]

Bryce: [00:21:46] Here are two stats Ren. To kind of contextualise this. The S&P 500 spent $280 billion on buybacks in the last three months alone and a staggering 1.24 trillion on buybacks. In the past five years. It's been massive over in the states. Companies have been going crazy on the buyback front. [00:22:07][21.3]

Alec: [00:22:08] Yeah, and there are two reasons for that. The first is the textbook reason. It's a more tax efficient way of returning money to shareholders outside of Australia and New Zealand and Malta who have dividend imputation or franking credits. Outside of those three countries, if you get paid a dividend as an investor, you get taxed on that and the company's already been taxed on their profits. So there's, there's a double taxation problem in Australia where you get franking credits. So suck at the rest of the world. [00:22:36][28.2]

Speaker 1: [00:22:37] Nothing. [00:22:37][0.0]

Alec: [00:22:39] So the textbooks would say it's more efficient for companies to just buy back their stock. Instead, there is a cynical reason, which is a lot of company CEOs are incentivised to push up the share price. And they're a way to do that, is to improve the per share metrics. And a way to do that is to have less shares on issue. So that will push up your earnings per share and stuff like that. There is a financial engineering cynical argument about the numbers that you just rattled off there. And there's also a economic textbook way, I think both probably a true in their own right, but yeah, now there will be a 1% tax as part of this big omnibus bill that the Senate just passed. Probably going to pass the House this week, but I don't think it's really going to change anything. [00:23:21][42.5]

Bryce: [00:23:21] No, it might change some behaviour of companies. Maybe they'll pay a little more in dividends, maybe they'll reinvest some of their profits back into the company. But 1% tax? Not a whole lot. Hmm. [00:23:31][9.3]

Alec: [00:23:31] I heard this CNBC anchor just losing it about it. Like who? Who? The government to stick their nose into a company's balance sheet and tell them how to spend their money. [00:23:41][10.3]

Speaker 1: [00:23:42] It's like that's a tough one if they're doing it. [00:23:47][4.6]

Alec: [00:23:47] Sales tax, company tax, income tax, like companies as a government sticking their nose in all the time. [00:23:53][6.5]

Speaker 1: [00:23:54] Like a job. Well, yeah, I mean, which way you look at the role of government. [00:23:58][3.7]

Alec: [00:23:58] But but yeah, it's just I think it's a pretty harmless talk and I think it will really change company behaviour. Yeah, I think yeah. It's still more tax efficient than making an investor pay between ten and 37%. I think that that's the range of income tax brackets over in the US. [00:24:15][16.7]

Bryce: [00:24:15] So Ren single stock ETFs. Now we've seen the transition over the last decade or so. ETFs originally set up by Mr. Bogle Vanguard to just track and index index tracking. That's all they were. Then we started seeing factor driven thematic ETFs come through and we've seen here in Australia particularly more and more ETFs coming to the market that are more and more nation providing different investment options. Now it continues. Have we gone too far with single stock ETF? [00:24:48][32.3]

Speaker 1: [00:24:48] Single stock, yes. All the single stock ETFs. [00:24:51][3.2]

Bryce: [00:24:52] Yes. That is what they are. They're an ETF that comprises one stock. There are three issuers, ASX s holdings is one direction and Granite shares all have single stock ETFs. [00:25:07][15.4]

Speaker 1: [00:25:08] Yeah. [00:25:08][0.0]

Alec: [00:25:09] So looking into this, so those are the three that have launched single stock ETFs in the US. Europe was actually ahead of the US here. They first launched single stock ETFs in 2018, but you hear that and you're like, What is the reason for this? And there is an argument. I don't know how good an argument it is, but some of the first offerings leveraged, Tesla, leveraged, Apple leveraged Coinbase. So you by the ETF and it's like 1.5 times Tesla. So for every dollar, for every 1%, the Tesla rises, your ETF rises 1.5%. Then there's also inverse Tesla, inverse Coinbase and one that I don't think will be too popular. Inverse apple. [00:26:00][51.5]

Bryce: [00:26:01] Shorting Apple. [00:26:02][0.5]

Alec: [00:26:03] But I guess that's the the rationale. The. Use case that you can have a product that's internally leveraged or you can have a product that is short. [00:26:12][9.2]

Bryce: [00:26:12] It's not bad. I say it honestly. [00:26:15][2.8]

Alec: [00:26:16] I say it. Yeah, it's happening. And there's been some big inflows. So have a guess what the most popular single stock ETF to date has been in the US. [00:26:25][9.7]

Bryce: [00:26:26] Leverage Tesla. [00:26:26][0.4]

Alec: [00:26:27] Leverage Tesla. Yeah. Yeah, I'll actually hold on. Inverse Tesla. [00:26:32][4.3]

Bryce: [00:26:32] Oh, inverse Tesla. [00:26:33][0.5]

Alec: [00:26:33] Yeah, yeah. Yeah. [00:26:34][0.6]

Bryce: [00:26:34] Short Tesla. [00:26:34][0.4]

Alec: [00:26:35] $50 Million in inverse Tesla. Average daily amount traded $50 million. [00:26:40][5.3]

Bryce: [00:26:42] Okay. Pretty decent. [00:26:42][0.9]

Alec: [00:26:43] Yeah. [00:26:43][0.0]

Bryce: [00:26:44] Not massive. [00:26:44][0.2]

Alec: [00:26:45] But so here's my question. Price. Mm hmm. Are they going to run out of stock tickers? [00:26:50][5.3]

Bryce: [00:26:52] Because I just put an L in front of the ticker of the company. Well. [00:26:56][3.9]

Alec: [00:26:57] There's a world where it's like so right now, they've also got Nvidia, PayPal, Nike, Pfizer. What's stopping them having every stock? [00:27:04][7.4]

Bryce: [00:27:05] Nothing. You can definitely say that. [00:27:06][1.5]

Alec: [00:27:07] As long as you can find a way to scale your operations as an ETF issuer. But I imagine, like if these get popular, they'll be. [00:27:14][6.7]

Bryce: [00:27:14] 100%. [00:27:14][0.0]

Alec: [00:27:14] Platforms that help them do that. [00:27:16][1.4]

Bryce: [00:27:16] Particularly on the short side. [00:27:17][1.0]

Alec: [00:27:17] So you'd have you'd have the actual stock, then you'd have an inverse and you'd have a like a 1.5 times leverage, but then a two times leverage, three times leverage. So every increment of leverage up and then you start having inverse ones that are leveraged as well. Yeah. So for one stock, you might have X amount of single stock assets, but then you're going to have competing issuers as well. [00:27:38][21.2]

Bryce: [00:27:39] Yeah, but I mean, you have competing issuers with everything in an ETF world. [00:27:43][3.6]

Alec: [00:27:43] So I'm just saying they're going to run. [00:27:45][1.8]

Speaker 1: [00:27:45] Out of stuff to do. [00:27:45][0.6]

Alec: [00:27:46] That's the really annoying thing that I think will really frustrate me is it's going to get more confusing for the retail investor. So there's Tesla, Tesla, and then there's Tesla bull 1.5 times T, l, l, and then there's Tesla bear one times less. And then there's another issuer with an inverse one, t, l Q And you can just say that like, people are going to get lost here, people are going to get confused. [00:28:16][30.2]

Bryce: [00:28:17] They'll be buying things that they shouldn't be buying. Yeah, they'll be unaware. [00:28:20][3.7]

Alec: [00:28:21] They'll just be trying to buy the stock and it's like, you know, so Apple AAPL And then there's a bull 1.5 times pay you there's a bear app day there's a 1.75 times long AP B It's just going to get messy. Is, is my point. [00:28:37][16.2]

Bryce: [00:28:38] Yeah, it is going to get messy again, though. This is why you got to look under the hood before you buy anything. Can't remind you enough of that. [00:28:45][6.6]

Alec: [00:28:45] What about this? We start fund of funds, ETF of ETFs and we do an ETF of single stock ETFs. [00:28:53][7.6]

Bryce: [00:28:54] Just leveraged ETF. Yes. Leverage stocks? [00:28:56][2.0]

Speaker 1: [00:28:57] No, I can see. [00:28:59][1.5]

Bryce: [00:28:59] Myself getting around this in the short term. To be honest. [00:29:01][2.2]

Alec: [00:29:02] You are avoiding a very short term trade off and that leads to the two key watch outs we want to point out here. So if this is something you're interested in, two really important things to keep in mind as well as just the general. Why don't just buy the stock itself? So first of all, watch the phase, because it might be a single stock ETF, but there are still management fees attached to it. Granite shares, they're about a 1.15% management fee. I think that's their average across their ETFs directions are a 0.95% management fee. [00:29:36][33.9]

Bryce: [00:29:37] Pretty expensive. [00:29:37][0.2]

Alec: [00:29:38] Yeah, pretty expensive. Especially like if you're getting a 1.25 times leveraged ETF. So it's not like massively leveraged and then you're paying 1% management fee for the privilege. It doesn't. [00:29:50][12.5]

Bryce: [00:29:50] Know. [00:29:50][0.0]

Alec: [00:29:51] Anyway. So that's one. What's the fees? Because there are fees that's actually going to be a problem with our ETF of ETFs massive face. [00:29:59][7.5]

Bryce: [00:29:59] Yeah and we hate face. [00:30:01][1.3]

Alec: [00:30:01] The second one beta slippage. Yeah. And now people might not be familiar with that term, but that's okay. Watch out with leveraged ETFs and especially leveraged ETFs. The truck daily performance because over the long term, tracking the day to day performance might mean it actually slips from the long term performance. [00:30:21][19.9]

Bryce: [00:30:22] Yeah, particularly with how most of these are set up with the synthetic derivatives and those sorts of things. Yeah, not actually. The long positions could be better than the shorts, but it just depends on how they're set up, particularly in the States. You should be very careful with any leveraged ETF, whether they're actually owning the underlying stocks and leveraging internally or if they're just buying derivatives based on it. Because slippage, essentially what is getting to is that if it says you're going to get 5%, you know, one and a half times the price movement that's based on daily performance, not over a long period of time. And so moves day in day out if it if it's sort of. Slips each day over sort of a year or two. You might find that you're actually not quite near the total return if you're at times about one and a half or thereabouts. [00:31:14][52.1]

Alec: [00:31:14] Yeah. And I guess like the really simple reason is if a stock falls 10% and then rises 10%, it's not back to even. [00:31:22][7.6]

Speaker 1: [00:31:22] No way. [00:31:23][0.3]

Alec: [00:31:23] Let's not get bogged down here. But beta slippage, volatility, decay. The problems with leveraged ETFs. If you are going to get into this world, it's important to understand that concept. So do your. [00:31:35][11.5]

Bryce: [00:31:35] Deal. That's it. Now to close out Ren, we can't miss what's been happening in the world of meme stocks. They are. I don't know if they went any anywhere, but Wall Street bet. [00:31:47][11.8]

Speaker 1: [00:31:48] Definitely. [00:31:48][0.0]

Alec: [00:31:48] Went somewhere. [00:31:48][0.2]

Bryce: [00:31:49] Well, they're still the same. Stocks are still hanging around yet. [00:31:52][3.2]

Alec: [00:31:53] But like they they definitely had a. [00:31:55][2.1]

Bryce: [00:31:56] Hiatus bed Bath Beyond though is up 85% in the last two days at the time at the time of recording Wall Street bets absolutely getting around it bed bath and beyond for those that are unaware homewares retailer selling all things bed, bath and beyond. [00:32:12][16.4]

Alec: [00:32:13] And if you go to Wall Street bets the amount of people making just the amount of posts about Bed, Bath and beyond is pretty crazy. [00:32:20][7.9]

Bryce: [00:32:21] Check it out on Reddit. But here in Australia and we also have a meme stock i v z. Otherwise known as an Invictus Energy. [00:32:30][8.7]

Alec: [00:32:31] Yes. So if Wallstreetbets creates meme stocks over in the US over here in Australia we have ASX bets. I feel like this is a segment where we need spectrum. MC Yes, but unfortunately Spectrum AJ is catching some sun over in Europe. So we we don't have him here. But as on ASX bets and Invictus Energy would have been going off the charts on the Rocket Emoji Indicator. Have you heard of it? [00:32:58][26.9]

Bryce: [00:32:58] I haven't heard of it, no. Looks like it's in a part of the market that I just don't pay attention to. [00:33:02][4.3]

Speaker 1: [00:33:03] Yeah. [00:33:03][0.0]

Bryce: [00:33:03] Small time resources exploration. [00:33:05][1.8]

Alec: [00:33:06] Well, in March 2020, it was trading at $0.01 a share. It's now trading at $0.23 a share. It open the year about 12 or $0.13. So it's run up a bit, but it is an oil and gas company with a licence to explore the Canberra Basin Basin in northern Zimbabwe according to the company, quote one of the largest underexplored interior rift basins in Africa. So I am instantly out of my circle of competence. [00:33:34][27.4]

Bryce: [00:33:34] Is this a meme stock or is this just a stock that's getting a lot of attention because of what it's doing? You know what I mean? [00:33:41][6.1]

Alec: [00:33:41] That is a. Great question, but like, what's the difference? [00:33:44][2.7]

Bryce: [00:33:45] The difference is that the price run here him. It's not like a piss take from. [00:33:50][4.7]

Speaker 1: [00:33:51] Sustainability which people expect. [00:33:52][1.3]

Bryce: [00:33:53] Yeah, but there's a difference between that and like the emcees and the Bed Bath and Beyond where it's just like, let's get around it, a piss, take it. You know what I mean? [00:34:02][8.6]

Speaker 1: [00:34:02] Well, no, but like, the. [00:34:03][1.1]

Alec: [00:34:04] GameStop wasn't a piss take. There was. [00:34:06][2.0]

Speaker 1: [00:34:06] A legitimate. [00:34:06][0.1]

Bryce: [00:34:07] It is now like it's well and truly beyond any sort of company update that it came from true. It's like well and truly now literally just let's just run this thing is when we feel like it. Vibe Paystack do you know what I mean? [00:34:21][14.0]

Speaker 1: [00:34:21] I know you may like. [00:34:22][0.8]

Bryce: [00:34:22] I think any company that just runs on speculation isn't a meme stock. [00:34:26][3.2]

Speaker 1: [00:34:27] Yeah. [00:34:27][0.0]

Alec: [00:34:27] Well, I mean, yeah, most like mining explorers just have an element of speculation. Yeah. So much uncertainty, you know what you're saying. [00:34:34][7.2]

Bryce: [00:34:35] But I think the RSI on this, the rocket emoji indicator is the is the right call. [00:34:40][5.2]

Speaker 1: [00:34:41] It's getting it's getting a. [00:34:42][1.2]

Alec: [00:34:42] Lot of buzz on Reddit. For me, that's a meme stock. [00:34:44][1.8]

Bryce: [00:34:44] So anyway, we're going to keep an eye on the main market. Hopefully we can get spec images on at some point when he returns from getting some sun over in Europe. So he can talk us through what's been happening on the Rocket Emoji Indicator brand that gets us to the end of today's show. There's plenty happening in markets. Will we be back next week with another market wrap to kick things off as more companies continue to report here in Australia and over in the US? Stay tuned. We've got plenty of experts as well. This Thursday we're speaking with Nicki Sharrock from Blackbird, one of Australia's leading venture capital firms here in Australia, to get his thoughts on all things v c what was it? Wild hearts, wild dreams and his process on investing in early stage start ups is fascinating content. [00:35:33][48.7]

Alec: [00:35:33] Yeah. Early investor in Canva, early investor in Zoox. Yeah. Self-driving car Start-Up that Amazon bought. So some great stories. [00:35:42][8.8]

Bryce: [00:35:43] Natalie Brunell on Friday from from the States who is potentially one of the most bullish people I've ever met on Bitcoin. So I just want to put that out there. 

Speaker 1: [00:35:52] She's incredibly bullish. 

Bryce: [00:35:54] You'll understand why when you listen to the episode and I will we will caution it that it is not representative of our views here at Equity Mates.

Alec: [00:36:02] We might have to top the actual episode saying this as well. 

Speaker 1: [00:36:05] Yeah, but. 

Alec: [00:36:06] If you love crypto, you'll love it. If you hate crypto, you'll hater. 

Speaker 1: [00:36:11] Anyway, just give it a little. Just give it a crack. 

Bryce: [00:36:13] That's on Friday and we'll be back next week to chat all things stocks around. 

Alec: [00:36:17] Sounds good.