Who’s winning stock of the year & Andrew Brown discusses what’s coming

Bryce: [00:00:15] Welcome back to another episode of Equity Mates, a podcast that follows our journey of investing, whether you're an absolute beginner or approaching a Warren Buffett status. Our aim is to help break down your barriers from beginning to dividend. Now, if you've just joined us for the first time, a massive welcome. If you're feeling like you want to get up to speed with the basics, go and check out our Get Started Investing podcast. But we have a massive show today, so let's get stuck in. My name is Bryce, and as always, I'm joined by my equity buddy, Ren. How are you? 

Alec: [00:00:43] I'm very good, Bryce. Very excited for this episode. We are halfway through the year. Yeah, we are checking in on the bold predictions we made at the start of the year. How bold we how correct were we then? We're going to be looking at our stocks of the year. Every year we pick a stock plan, a flag in the ground, and every year you thoroughly beat me. So this year we're going to check if history repeats past performance is not an indicator of future performance. And then finally, we're going to be speaking to Andrew Brown, the very first expert that's ever come on the podcast. We've spoken to him a number of times since. We're checking in on how he's saying markets halfway through 2023. So a big episode today. 

Bryce: [00:01:27] Now, just a quick update. We have said it on the show over the last couple of weeks, but a reminder that unfortunately, given market conditions and for more information, you can head to equitymates.com/finfest. But we are pausing FinFest until 2024 and we know that there are a number of community members out there who have emailed through asking for clarification. So head to equitymates.com/finfest, all the information is there and we will be doing it in 2024. Just given the financial investment required and the level of sponsorship and the current economic conditions and a lot of our sponsors pulling back on marketing budgets, we have had to we have had to pause. So we are sorry if it's caused anyone inconveniences, but we are looking forward to getting out and about later in the year. And then FinFest 2024. 

Alec: [00:02:14] Yeah, it is unfortunate, but we are very excited for next year. Bryce, now let's get into our bold predictions and then our Stock of the Year. It's important that we remind everyone that while we are licensed, we're not aware of your personal financial circumstances. Any advice on this podcast is general only. If you have any questions, seek professional advice. And with that price, let's get into our very unprofessional, bold predictions. We're going to try and signpost this because we both made a number of predictions at the start. So the three signposts are: What are you confident about? What do you wish you never predicted and then any that are worth chatting about. So let's start, let's start with the good news.

Bryce: [00:02:57] Just one from me. 

Alec: [00:02:59] As many as you're confident about or have got, right? Spoiler alert. I've got a number. Right. So. Okay. All right. So what are you feeling confident about? Bold predictions at the start of the year? Set the saying. We've just come off a terrible 2022. Tech stocks have been whacked. Interest rates, rates were rising. The Wall Street analysts were out in force saying 2023 was going to be a tough year and stepped Bryce Leske to make some bold predictions for the year ahead. What did you get right? What are you confident about? 

Bryce: [00:03:30] So my first one is around interest rates. I think at the start of the year, people were talking about interest rates being in the threes and fours. And I said that they have to go a lot higher to get inflation under control. And I specifically said Australia will pay. I said 4 to 4.5, so I'll go with 4.5 at the height and the US at six. Australia is currently 4.1 and the US is 5.25. So with expected rates to continue this year, I'm pretty confident the US might be a little bit touch and go, but I'm pretty confident Australia will go past 4.5. So on track with that one. 

Alec: [00:04:08] Nothing Can take the excitement out of a segment and say 2 minutes on interest rates.

Bryce: [00:04:15] Okay. I then had one. Yes. So this one was well and truly on track. But so I had that Meta would outperform Alphabet, Apple, Microsoft and Tesla higher. Meta is up 128% year to date. It had a screamer. Netflix is up 46%, Alphabet's up 38%. Apple is up 47% and Microsoft 44. So in their own right, they've also had very good starts. But Meta has just completely outperformed all of them. However, Tesla is absolutely riding the AI hype at the moment and it is up 137%, so it is just outperforming Meta. 

Alec: [00:04:54] And I assume you didn't have NVIDIA in your

Bryce: [00:04:57] Wasn't even close. In fact, I was looking through all these predictions and this is what I like reviewing the floor. I didn't have any video in any of my predictions.

Alec: [00:05:06] I had AI. 

Bryce: [00:05:07] I had AI threw a microsoft prediction, but that's not playing out either. So will matter. I think we can safely say, well, not say safely. That's wrong. But at this run rate, Mehta is definitely outperforming those large names. Netflix, Alphabet, Apple, Microsoft. Will it beat Tesla? Tesla is one of those stocks that people just obsess over and with what's going on in either moment. People are looking for companies with all the data and ways of integrating AI and people are jumping all over it.

Alec: [00:05:39] Have you considered this Elon Musk and Mark Zuckerberg have a fight. And Zuckerberg wins. Quits medal and takes up UFC. Maybe then. 

Bryce: [00:05:52] Then if Zuckerberg wins, I still think that's a big bump for the meta share price. So that's those two. I'm reasonably confident there's a couple of others in here, and I've said Bitcoin would double by the end of the year. It's up 87%. Where to from here? Who knows? But it's certainly on track as well. So I'm going to keep those three fourths confident. What about you? 

Alec: [00:06:16] Is it up 87%? All right. So a couple that I am feeling confident about because they've already played out. My first prediction was we see $1,000,000,000 NASDAQ company apply for bankruptcy protection. Bed bath and Beyond, $17 billion at its peak. Bankrupt. 

Bryce: [00:06:40] Nice. So when applied should have lifted your base base market cap. Oh, no, I know.

Alec: [00:06:45] Yeah. Yeah. To be fair, I did expect it to be in these high flying, formerly high flying tech names because so many of them had fallen like 90%. But we haven't really seen any bankruptcies. But Bed Bath and Beyond have a website. 

Bryce: [00:06:57] It's a high flying tech. 

Alec: [00:07:00] Another one that has played out so far was we're finally going to see some tech in the ASX 20 in the top 20 Australian companies. For generations we've been a land of banks and miners. And I said there were two likely candidates, wise tech or ARIA group. Why is Tech is currently in the top 20? 

Bryce: [00:07:20] Okay, so.

Alec: [00:07:21] Fallout. 

Bryce: [00:07:22] Four. But what number? 

Alec: [00:07:24] I just looked at the top 20. I didn't get it right. Right. The website I went to was alphabetical. It's one. I'm sorry. Gotcha. Another one that I'm feeling very confident about. You tell me if it's correct. We see a bubble forming in Start-ups. 

Bryce: [00:07:38] I mean, absolutely. Did you say in I that I start up That was four weeks old, that raised €105 million. Yeah. With four former Facebook and Alphabet I engineers. Yeah. No product. 

Alec: [00:07:53] Yeah. It's called. It's called Mistral. Yeah, yeah, yeah. 

Bryce: [00:07:56] And what they said is give us this, give us take some money and we're going to go out and build generative models.

Alec: [00:08:02] We're going to do what Google and Microsoft have already done. But in Europe, yes. 

Bryce: [00:08:06] So they got €105 million. 

Alec: [00:08:08] Yeah. So Sascha and I did an episode about that on the dive. If you want to learn more about the absolute bubble, because it's not just in the it's wild out there. If we said we're an AI enabled Start-Up, we'll probably never have to take advertising dollars every day. But sure, there was another one that I got right. I said, Tesla Self-driving will have a recall in the United States. That happened in February. U.S. regulators force Tesla to recall about 360,000 vehicles because they're fully self-driving features. And then we always finish with an AFL prediction. My AFL prediction was that Geelong don't make the top four and I said premiership hangover is going to hurt because as we all know, hangovers get hotter as you get older. Well, they're not.

Bryce: [00:09:00] They know tell you. Yeah, yeah, yeah. Unless they have a it's probably mathematically a possibility but they'll have to have an undefeated second half of the year.

Alec: [00:09:09] Yeah. Yeah. Yeah. So she be. 

Bryce: [00:09:13] Nice. Nice. 

Alec: [00:09:14] All right. The next segment. 

Bryce: [00:09:18] What we wish we didn't make. Okay. I'm just going to do two because there are a number in here that are still 5050 could play out, but these two are probably unlikely. So I said that Asia outperforms the Western markets. So I said India, Japan and China would obviously outperform Australia. Europe. What about that? That's definitely not playing out. China really the the drag here, the Chinese market down 3% for the year. Japan has actually had a pretty strong year. Yeah. At the time of writing it was up over 15 and India up over ten. But if you look at the Nasdaq, if you look at S&P, Nasdaq's up almost 40%, S&P 15%. So going to have to have a really big back end of the year from China and India if they had it, if they had a catch up. So I was pretty bullish. India at the start, it's actually had a bit of a turnaround. Japan a surprise packet, but China, a lot of worries still there. So the market not performing too well.

Alec: [00:10:17] I mean, you say a lot of worries. The CSI 300 is down one and a half percent here today. 

Bryce: [00:10:22] Oh, it's up since I wrote this thing. Yeah. 

Alec: [00:10:24] Nice. I mean, like if. 

Bryce: [00:10:26] Even percent. 

Alec: [00:10:29] Double check that. Now if that is a bad year in the context of the world. Like all of the predictions about the start of the year, about how bad things were going to pay, all of those experts that were going to cash because they were saying 2023 is going to be worse in 2022. Now the year is only half done. Maybe it'll happen. 

Bryce: [00:10:49] It's going to be interesting to listen to this episode at the end of the year to see if this sentiment has changed. 

Alec: [00:10:55] Over the last six years, the amount of things that we've got wrong. 

Bryce: [00:10:57] Yeah, well, on this China piece, I also had one that was China's big Internet companies will outperform US counterparts because they'd been smashed. Yeah, You know, I was like, surely some of these big ones are going to turn around. 

Alec: [00:11:08] So the companies you're talking about, they're like, Tencent buys Alibaba.

Bryce: [00:11:12] Yeah, yeah. And I just thought surely and and but but so had some of the big tech companies Internet companies in the states and this was measured by the ETF Kraneshares, CSI China Internet ETF the tickers Caleb so it's down about 13% year to date from when I wrote this Eddy cue which is the somewhat equivalent but has probably a little bit more stocks in there than just Internet, but it's up 39%. So big outperformance from the US tech companies versus Chinese. 

Alec: [00:11:40] It's weird when you think about it because like all this A.I. hype in the US, like A.I. works in China as well, and Alibaba have have their generative AI Tencent's working on AI. Baidu, I think will get away now it says. And then they pulled up, but they've probably announced it since. Like there's no reason that the AI hype is a purely Western phenomenon. 

Bryce: [00:12:01] You know, it's maybe, I don't know, maybe what happened with Mao and regulation over there now. Yeah, Mom chatting around scares people from investing in the market. I don't know, but it is weird. Another one. Ren was around this one. We need a big year. I said lithium. We'll have another decent year. But the prediction was that copper was up 40%. It's flat. So we need a massive back end to the year from copper. 

Alec: [00:12:29] I also think lithium has had a bad year. 

Bryce: [00:12:31] It has? Yeah. Yeah. Anyway, so those are a couple that I probably would take back. But as we said, we're only halfway through the year. Do you have any that you wish you hadn't put forward or would like to change? 

Alec: [00:12:43] I mean, I wish I hadn't put forward, no, because it's all it's all about the content. But I said YouTube would have the biggest growth in short term video. Short form video, YouTube shorts, TikTok, Instagram reels. They're going head to head. And I thought YouTube, because you are just so ingrained with young people that I thought they would be able to leverage that viewership into YouTube shorts. I couldn't find good data. I was trying to find it before, but it is purely vibe and vibe alone. Tik Tok is eating their lunch. 

Bryce: [00:13:23] Well, I mean, we'll probably get some data when the guys report in a couple of months. So towards the end of the year.

Alec: [00:13:29] Yeah. YouTube will. Yeah, Instagram. Yeah. Matter should. 

Bryce: [00:13:33] Matter should. Yeah. Products get Tik tok, but okay, so that's a vibe check. Any others? 

Alec: [00:13:39] Oh yeah. I said Twitter will have more users at the end of the year than today. I thought the. The alien effect and the drag that is alien would be outweighed by just the value of the platform. Like just how valuable it is to break news around the world for journalists. All that. No idea what Twitter's numbers are. Since I generally feel that Twitter still works the same, but I just get served a lot more ads. No, just like less valuable content, I would say. 

Bryce: [00:14:12] Does that mean all the valuable people have left? 

Alec: [00:14:15] No. I think they've obviously tweaked the algorithm. Tip for new users on Twitter. They have a for you and then a following. And when they introduced that, they defaulted to the for you flip it back to the following and thank me later. Okay. Got it. Chalk and cheese and another one. Oh, yeah. I predicted that Jeff Bezos pulls a Bob Iger and return to Amazon. He's probably. Amazon was sort of struggling in 2020 to cost overruns. All of that stuff feels like they've really righted the ship. Hmm. Yeah. 

Bryce: [00:14:53] So I have one. Before we move on to Stock of the Year. But I have one that I would like to potentially see if I can change. Otherwise, I'm just going to put it forward and see what happens. This was for my Time's Person of the Year. Last year I said it was going to be a metaverse avatar, but it was Vladimir Zelensky.

Alec: [00:15:13] That's an important clarification. 

Bryce: [00:15:15] Vladimir Zelensky. Sure. This year I said Sam Altman or Satya Nadella because I was thinking I. But I'm going to go one step further and say that it'll be chat shaped. Hey.

Alec: [00:15:26] I reckon you're pretty confident with Sam Altman here. 

Bryce: [00:15:30] Yeah.

Alec: [00:15:30] Too obvious. Have you seen. He's now doing, like his world tour and he's meeting all the world leaders now. Yeah. He's like. I think he went to India. He's been to Japan. Wow. Yeah, he's. I think he's been in Europe. Just meeting all these world leaders, talking to them about AI. There's a cynical version of tech where a tech company forges ahead in a new technology and then really fires up the lobbying engine to stop anyone coming in behind them. And that's just a cynical view that other people have. 

Bryce: [00:16:00] Nice, Nice. 

Alec: [00:16:02] But, you know, he's been very public about how AI needs to be regulated. Yeah, yeah, yeah. 

Bryce: [00:16:08] Interesting. Well, I'm still keeping it. Could we ChatGPT if it's not sound? 

Alec: [00:16:11] What was it for? Prediction. 

Bryce: [00:16:13] Bombers win a final so standard. 

Alec: [00:16:15] Not like you. Probably more bullish than most Bombers fans. 

Bryce: [00:16:19] And yeah we'll say though we'll see. We're starting to slip. 

Alec: [00:16:22] Looking pretty. 

Bryce: [00:16:23] Good. It's starting to slip. All right. Do you have anything that you want to put forward as a change or worth chatting?

Alec: [00:16:28] Nothing major. Disney would try to acquire robots. Mm hmm. I said crypto would trade sideways and finish somewhere between 20 and 25,000 USD. Crypto just doesn't go. 

Bryce: [00:16:40] I know. Well, Bitcoin doesn't. Yeah, a lot of other crypto does. True. 

Alec: [00:16:46] Anyway, let's get to Stock of the Year because I think that's more exciting. 

Bryce: [00:16:50] Yeah. All right. So my Stock of the Year I was backing in an India theme and so I went with Infosys, one of the world's largest providers of like consulting and IT support and, and the like. Ran they are down 15% for the year to date, down 15%. So your stock needs to be down 14% or less to currently be in the lead. 14.99. I will just add some colour to that. They did. They were tracking okay. And then had a pretty significant drop down around May I think it was May or March.

Alec: [00:17:25] What happened? 

Bryce: [00:17:26] They put guidance out that painted a really negative outlook for India's technology sector and then had a late and then that led to a wave of downgrades by a lot of brokers on Infosys. So the market reacted accordingly, smashed the stock 10% in a day, obviously hasn't been able to recover. Interestingly, because of that drop of about 10%, Rishi Sunak's wife, the Prime British Prime Minister's wife, her name's Akshat Murti, she lost $91 million that day because she has a very small but absolutely dollar wise, a large position in Infosys. So Ren I'm down 15%, where are you at? 

Alec: [00:18:08] I'm up. 16%. Wow.

Bryce: [00:18:11] So 30% difference. 

Alec: [00:18:12] Yeah. So the company that I pitched at the start of the year was Axon Enterprise. It has its history in making the Taser. Yeah, but it is real. It's business is becoming more and more about police body cameras. And then it has a software platform where all that footage is uploaded. It also is used by other areas of law enforcement, by prosecutors to upload evidence. You know, if you're a shopkeeper and you've got CCTV of. The police need it. They'll get you to upload it on the platform. It becomes a very powerful and sticky platform for a lot of law enforcement around the world. Actually, after I talked about it on the show at the start of the year, we had someone who works for one of the Australian law enforcement agencies reach out and say, We use it. Couldn't imagine working without it. Which was reassuring. So yeah, I haven't really paid too much attention to announcements or anything throughout the year, but it's yeah, it's absolutely massive.

Bryce: [00:19:19] All right, so this could be the year. This could be the year. 

Alec: [00:19:22] Imagine I story with all of this police body camera data, millions of hours of interactions of police in the public, and then you put some AI on top of that and what it finds. Yeah I don't know.

Bryce: [00:19:35] Probably not some not good stuff. 

Alec: [00:19:38] Maybe some areas for improvement.

Bryce: [00:19:40] Yes. Yes. All right. Well, that's a bit of a recap on our predictions for halfway through this year. Of course, we've got a half a year to go and who knows what's going to happen. But stay tuned. We're going to take a quick break. On the other side, we're going to have a call with one of our community members, Sean. And then we're also going to speak with Andrew Brown and get his view on where the markets go from here. So we'll be right back. Welcome back to equity mates. We've just covered off our Stock of the Year and bold predictions for 2023. Half a year to go. But let's jump straight into a community call with Sean. 

Sean: [00:20:21] Hello, this is Sean. 

Bryce: [00:20:22] Hi Sean, It's Bryce from Equity Mates. How are you? 

Sean: [00:20:25] Oh, hi. Good. How are you?

Bryce: [00:20:26] Good. I've got Ren here as well. 

Alec: [00:20:28] Hassan, thanks for taking the time. 

Sean: [00:20:30] No problem. 

Bryce: [00:20:31] We love talking to the community. And Sascha, our producer, has given us a bit of a rundown. Says that you've jumped in with bought a couple of stocks. La Vista. Love that. That was the jewellery company, wasn't it? Still is. 

Sean: [00:20:46] Yeah. Yeah, it is. I think it was on one of your podcasts. I can't remember the name of the man that mentioned it. 

Bryce: [00:20:53] I can't either, but I remember the conversation. I think it might have been Henry Jennings, but yeah, she still hold it.

Sean: [00:20:59] I do. Yes. 

Bryce: [00:21:00] Nice. Nice. 

Sean: [00:21:01] Yeah, I did get really excited about it, too, at the end of last year. Obviously listening to your podcast and anything that sort of grabbed my attention, I would just buy some started. So I think I've got yeah, I've got a whole bunch of random stuff. It's quite funny but now I've kind of shifted. I've opened up a green dot account. I'm wanting to go into more. I think now that excitement sort of died down of buying my first sort of, you know, shares and things like that. I just want to go a bit more into sort of manage some ETFs or, you know, things like that with Vanguard. 

Alec: [00:21:34] Yeah, I think that makes a lot of sense. I certainly started the same way, that initial excitement of buying individual stocks and then you sort of you, you realise the power of just regularly investing into ETFs. 

Sean: [00:21:49] I am a bit stuck. I just find myself Googling, you know, what's the top, top Vanguard ETFs to invest in and things like that. But I do want to have a bit more knowledge before I jump in. And then I think from that point it would just be, you know, as much as I can put in every week and then just forget about it for the next 20 years. That's essentially where I'm, I think I'm at and keep the elevator in the fun things that I kind of go and just see them ticking over and have a bit of fun with that. 

Alec: [00:22:12] I love that. That's music to areas. I know. I know the most popular Vanguard ETF in terms of particularly in the fire movement, but just like generally for people, sort of younger people who have years ahead of them is the vanguard diversified high growth they do, Yeah, that's particularly popular in the fire movement, the financial independence, retire early movement because they just buy that one ETF and they just keep buying it and they buy as much as they can. And it's it's basically made up of a whole bunch of other Vanguard ETFs that are spread across the world. So, you know, it's not just Australia, it's I think it's all continents. I think it has Asia, Europe, America and Australia. That's one of the ones that I regularly dollar cost averaging too. So if you're looking for a place to start, that's that's generally a good one. 

Sean: [00:23:06] That's perfect. I'm writing it down as we speak. 

Alec: [00:23:08] Not high notes, but, you know, do your own research, all of that, all the appropriate disclaimers. But yeah, I mean, you know, the way that you're thinking is you're certainly on the right track. 

Bryce: [00:23:19] Do you automate any of your processes? Are you with Super Hero? Was it? 

Sean: [00:23:24] I am a superhero. Yeah. And but I am looking to go into a more automated so as I said, so I can just put money in there and not have to worry. Yeah. 

Bryce: [00:23:32] Yeah. That's the way to do it. 

Alec: [00:23:34] Yeah. So then the vanguard is yo you're with the personal investor is at the Vanguard one. Yeah. So they, so they automate it. Don't know.

Sean: [00:23:43] Yes. 

Alec: [00:23:43] Yeah. There's nothing better than just getting that text message that you've invested and you're not even thinking about it. It's just like, oh great. Can, can go on with my life. Yeah. 

Sean: [00:23:54] Yeah. Nice. 

Bryce: [00:23:55] Nice with Sean. We really appreciate it. We love chatting to you and to the to the equity mates community. Thank you so much for coming on. Congrats on getting started and congrats on I guess pursuing with it and and not being put off and nitpick with all of this stuff. 

Sean: [00:24:11] Yeah, I remember that one and ResMed from everyone was talking about. I suppose I got into that.

Alec: [00:24:17] If you want to contact us, head over to our website equitymates.com/contact. Bryce Loving speaking to more and more members of your community. Definitely something we want to keep doing on the podcast, but we also love speaking to experts on the podcast and getting their view on where the world is going and how we can invest accordingly. And we gave Andrew Brown a call to get his view on everything that's happening in markets at the moment.

Bryce: [00:24:50] So we'd love to get your thoughts on given the fact that we're we're now in a bull market, S&P, NASDAQ, inflation coming down. Where do you see markets going from here? What's your feeling? 

Andrew: [00:25:04] Markets from here, there's really been a bit of a nightmare, to be quite frank, because if you if you start from, you know, December 31, there's actually not that much has changed apart from market levels. If you have a look at inflation in the US, the overall rates come down from six and a half to four. But that wasn't surprising. I think if you remember when we did the Bold Predictions podcast, I said inflation will be for, you know, before the end of the half year, and that's where it is, the core rate still at five and a bit and that's not really coming down. Earnings in the US in particular, earnings have been quite resilient. They have come down expectations from. So the 232 on the S&P 500 at the end of last year are 222. So we'll call that 5% between friends. So that's a bit of a move down. But you know, the Fed funds rate, it's up three quarters of a per cent roughly either where it was at the year end and the ten year bond rates barely changed. It's had some movements obviously, but it's barely changed. So when you look at that picture and then you sort of ask, well, you know, was the Nasdaq up 38% and priest? I figure it might be 38% from December 31. But if you remember with the little banking crisis that we had in March, the Nasdaq actually up 29% in three months from the middle of March to where we are now. So it's an extraordinarily steep rise. And so when I look at all that, you know, I thought the market was, you know, probably a little bit on the cheap side and a little bit on the oversold side at the end of the year. And it corrected that in the month of January very quickly. But it's obviously going on with it. I think now we're into mania size, quite frankly, because there is nothing economically fundamental and earnings fundamental or interest rates fundamental that was not reasonably foreseeable over the last few months that would propel markets to the extent that they have been propelled. You know, so 38% year to date on the Nasdaq and about just under 15 on the S&P 500 mark, it's obviously very narrow. It's seven stocks have driven everything. Just to put some perspective on the seven stocks, which are Apple Matter Alphabet, Amazon, Nvidia, Microsoft and Tesla, they have had its $3.9 trillion of market cap between 31 December and a couple of months ago. If you divide 3.9 trillion by sort of 20, which is kind of the market per year at the moment, I know these are premium stocks. Yeah, you're going see selling these companies are going to generate an extra $156 billion of earnings between them. And that basically is one and a half times Apple's full year expected profits for the 2023 fiscal year. So it's really telling you that it's heavily concentrated into a small number of companies. Those companies profits are actually lower. In fiscal 23, an hour and 22 as a group. And, you know, they're not all growing at the same rate. So it's really telling you there's some kind of fad at work here and some kind of mania at work, whether it's people worried about missing out, whether it's I you. Yeah. The benefits of which I think are real. But the benefits tend to come through over a period of time, probably most obviously in the area of cost reduction and margin enhancement, at least for a while before the customer gets hold of it. So to me, guys, I've got to say I don't see the inflation actually has been the real story at all because I think certainly the overall level of inflation in the US has done exactly what you'd have expected it to do and the core level has been sluggish coming down because of rents which are in the core number. And it is why probably the Federal Reserve will be a little bit further than most of us thought. So frankly, with markets where they are at the moment, I do not see great value at the index level. I certainly don't see great value in any of those seven mega-cap stocks. And if you remember, we all eulogised about wanting to buy metal late last year, you know, some of has bought in the nineties they were one to the year end. Yeah they to 82 now you know and a lot of the issues haven't really gone away with matter many have you know costs in particular but you know there's plenty of other things going on there. So yeah my fear is these things are really not quite over corpse. It's a bit of a mania. It's spread across the world a little bit, you know, is into us. And so frankly, from here, I would expect indices to have a period of consolidation and perhaps a fairly significant retracement because we're not going to get anything much happen that's positive for stocks. On the interest rate front, the Fed have a chance to beat inflation. They have a chance to normalise interest rates and they're going to take it well. 

Alec: [00:30:45] So, Andrew, if we're seeing a pretty top heavy rally in the US and that might have a little bit of mania, a little bit of AI induced hype and things will may come back down, Where are you seeing opportunity? Are there any particular companies or sectors that are capturing your interest at the moment? 

Andrew: [00:31:10] That's a tough one, actually. I'm finding it really stoked by stock by stock, you know, because quite clearly, you know, we've got a number of sectors where they might be beaten up, but I really am not inclined to buy, you know, commercial property, for example. I'm being very careful on banks still simply because there's been a structural shift in the banking system. It's not just some of these small regional banks that have come from the whole system shifted across is rates have gone up to money market funds. So yeah, even the big banks are actually losing deposits when you look at it. So everything I'm doing goes to the right. It's really stark by stop by, stop by start, rather than try to your really seriously broad, you know, broad brush sectoral approach to things because in these kind of environments, these kind of economies. Yeah it is you know it really is a you know, a micro market by micro market proposition, for example. I mean, yeah, you might you might dabble in commercial property in one market, but you certainly wouldn't in places like San Francisco, Los Angeles, and perhaps not even New York. So, you know, I think you got to be really careful about all these kind of things. I'm very much focussed on in the Dynasty Trust, which I run. We don't have a big exposure in the Dynasty trust at the moment at all. You know, we've got bits and bobs. It's mainly sort of family investment companies that are trading at, you know, 40% discount to NTA. But you know, we don't have a huge U.S. exposure there. We have a big European exposure. Well, I should add, guys is on paper is negative about Australia has obviously been, you know, rates going up further going up, the consumer just being kicked to pieces. And that obviously is coming through in earnings revisions in retail. The iron ore price, you know, is fluctuating around, but it's still well below where it was at the year end. Interest rates are up, earnings divisions are pretty horrible. So I just don't say the market has been cheap and the look sets is that drives the index, which is obviously big resources and big banks. You know, I you know, I can get excited about either, quite frankly. So, you know, I'm really not that excited about Australia. But again, it's individual stocks. I'm quite happy to play the game and I wish, like many of those in my newsletters, you know, started trading in Magellan, which was obviously one of our bigger calls, which was interesting, and more recently Caterpillar, which was sorry, catapults, which is interesting. 

Bryce: [00:33:49] Yeah, it's an interesting one. I think one of your other bold predictions was around housing in Australia having a bit of a correction. But it's fascinating to see what's going on there with, you know, restriction of supply and still what feels like a buoyant housing market despite everything that's going on. 

Andrew: [00:34:11] Yeah, it's I think the best way to look at it, guys, and I really encourage people to do this. I mean, you see all this rubbish written by vested interests. Just have a look at people's average salaries. Have a look at the reduction in their spending power from mortgage rate increases since, you know, just even the year end. Yeah. And then ask yourself, how on earth can the average person actually afford an average house? Certainly in Sydney and Sydney. Great. Melbourne. Yeah, it's a little bit easier. I was in some of the other cities, but, you know, just ask yourself from a practical point of view, do the arithmetic, run the spreadsheet and you know, you'll see why, you know, the majority of people simply cannot afford to pay these prices. And it's a bit the same with renting as well. I mean, that got to that stage as well. Yeah, there is a point at which people simply can't afford it and in that case, you don't get demand. I'm sorry. And if there is demand, it's, you know, it's temporary. And even the bank of mum and dad seems to be a bit less active these days. So you're absolutely right. It's restrictive supply, people hanging on desperately hanging on for a grim dash because they don't want to go back renting and they don't want to sell. But if we get more rate rises, then I'm sorry, that's going to change. And you know, and the games that games up, I'm sorry to say it's a Ponzi scheme and it's simply unaffordable at this stage despite high employment and wages being pretty damn good. So that's not good. You know, if you get high employment and wages pretty good, what does that mean? Interest rates keep going up. 

Bryce: [00:35:50] So. Yeah, yeah. So yeah, fascinating dynamic. It certainly feels like it's yeah, I mean the housing situation is just incredible at the moment. But Andrew we'll have to leave it there but we do very much appreciate it and we'll get a time in the diary for the end of year so we can actually review these bold predictions when we get to it. 

Andrew: [00:36:13] Absolutely.

Bryce: [00:36:14] But we appreciate it. Have a great day. 

Alec: [00:36:16] Thanks, Andrew. 

Andrew: [00:36:16] Thanks, guys.

Bryce: [00:36:17] All right. Bye bye. Ren, similar sentiment to Julian McCormack last week. A lot of uncertainty on the horizon from Andrew, but, you know, always great to chat to him. Well, we'll leave it there. A reminder, if you'd love to join us on the show and give us a buzz, you can hit us up at Contact at Equity Milescom and make sure you signed up to our AGM as well. We send out a couple of emails a week. The link to sign up will be in our show notes, but we'll leave it there and we'll pick it up next week. 

Alec: [00:36:44] Sounds good.