Your Questions: Stocks, Super, Slater+Gordon | Ask Us Anything – June

HOSTS Alec Renehan & Bryce Leske|29 June, 2020

Meet your hosts

  • Alec Renehan

    Alec developed an interest in investing after realising he was spending all that he was earning. Investing became his form of 'forced saving'. While his first investment, Slater and Gordon (SGH), was a resounding failure, he learnt a lot from that experience. He hopes to share those lessons amongst others through the podcast and help people realise that if he can make money investing, anyone can.
  • Bryce Leske

    Bryce has had an interest in the stock market since his parents encouraged him to save 50c a fortnight from the age of 5. Once he had saved $500 he bought his first stock - BKI - a Listed Investment Company (LIC), and since then hasn't stopped. He hopes that Equity Mates can help make investing understandable and accessible. He loves the Essendon Football Club, and lives in Sydney.

We’re back for another Ask Us Anything episode. We take some of the questions asked through our website and the Equity Mates Facebook Discussion Group and answer them on the show.

In this episode we answer questions on:

  • Slater + Gordon’s recent performance
  • Thinking about your superannuation during COVID
  • Dividend reinvestment plans
  • Deciding on what broker to use
  • The impact of Reserve Banks printing money and cutting interest rates
  • Investing in your circle of competence
  • Share registries
  • Investing in the US and completing the W8-Ben form
  • The US presidential election and its impact on markets
  • Investing in emerging markets
  • Water as an investable asset
  • Investing on behalf of your children

If you have a question you want answered on the next Ask Us Anything, head over to the Equity Mates Facebook Discussion Group and post your question.


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Bryce: [00:00:57] Welcome to another episode of Equity Mates, a podcast where we help you learn to invest in 45 minutes or less. We break down the world of investing from beginning to dividend so that you can hopefully make some returns. My name is Bryce and as always, I'm joined by my equity buddy Ren. How's it going, bro? [00:01:12][15.7]

Alec: [00:01:13] I'm very good, Bryce. It's been a while since we've done a Monday episode. [00:01:16][2.8]

Bryce: [00:01:16] Yes, we're back. We haven't really gone anywhere. We just had a lot of content to get through, particularly our expert investor episodes. And rather than continuously hang onto them, we thought we'd get them out because it was only fair to everyone involved that we released some of the episodes that we had and we've taken the time off to sort out some great content coming for the second half of the year. So back now every Monday, you and I talking stocks. [00:01:45][28.4]

Alec: [00:01:45] That's it. That's back to what we know. Back to what we're good at. Yes, maybe not good at, but back to back to what we know. [00:01:51][5.9]

Bryce: [00:01:51] Yes, that's right. Ren so very excited for the second half of the year. We've, as I said, taken some time to consider what we can do with these Monday episodes to continue to add value to everyone in our audience, both beginners, intermediate and advanced. And we've got some exciting content. We're going to be reviving the hypothetical portfolio. [00:02:11][19.3]

Speaker 2: [00:02:12] That's which is huge. [00:02:13][1.0]

Alec: [00:02:13] Your plan was to save that until the end of the episode. And you've already gone off script [00:02:17][3.8]

Speaker 2: [00:02:18] really front on that one. [00:02:19][1.1]

Bryce: [00:02:20] But that's OK amongst a bunch of other exciting things. So stay tuned for the Monday episodes coming up. [00:02:27][7.1]

Alec: [00:02:27] Yeah, and the first episode? [00:02:28][0.9]

Bryce: [00:02:29] Absolutely. The first episodes are expert investors and we love talking to them. And we've got some awesome guests coming up as well. So a good second half of the year coming. I'm really excited for Ren, including with our Get Started Investing feed podcast, which if you haven't listened to already and you are at the start of your investing journey, or perhaps would just like to scrub up on a few of the basics, then head across to your podcast platform and search. Get Started Investing feed has been the number one ranked business podcast on the iTunes charts for the last week, which is massive for us Ren. We're really happy about that. But go over there and listen to a twelve part series on everything you need to feel confident about getting into the markets. [00:03:06][37.2]

Alec: [00:03:07] Bryce actually wanted to come back for a Monday episode specifically to crow about the fact that we hit number one. [00:03:13][6.1]

Speaker 2: [00:03:13] So it's every day everybody get around you. [00:03:16][2.6]

Bryce: [00:03:18] So yes, that's enough. From an admin point of view, Ren, we are here to do our Ask US Anything episode for July. We haven't done one since April. And there's just been so many great questions come in over the last two months that we've had to go through and pick and choose a few that we thought would be applicable to the audience given what's going on at the moment. [00:03:37][19.2]

Alec: [00:03:37] So, yeah, and look, we're getting too many questions to answer in one episode. Everyone knows how I love to waffle and Bryce has given me the stern. Don't speak too long in this episode. And even still, we had to call questions. But we do have a Facebook discussion group where it's not just, you know, Bryce and I, it's thousands of like minded Equity Mates some a lot more knowledgeable than us that they're interacting every day answering questions. So Facebook dot com slash groups, slash Equity Mates. If you don't get your questions answered on the show or you want to ask a question to get answered on the show, that's the place to do it. [00:04:12][34.6]

Bryce: [00:04:12] Absolutely. We are as active as we can be on these communities, but there's just so much to keep up with. Apologies if you're looking for a direct response from Ren and I, but Ren if mostly finds himself deep in DM's on Instagram. So if you want [00:04:25][13.3]

Speaker 2: [00:04:25] to touch you, if you want to get in that way, that's the best way to do it. [00:04:29][3.3]

Bryce: [00:04:29] I guess worth touching on Ren that we have had a lot of text questions come through, obviously, given, you know, we're coming to the end of the financial year, that's understandable. But we'd just like to say that we've decided that it's probably not best for us to be answering those questions. [00:04:44][14.8]

Alec: [00:04:45] We've decided and also the government has decided that we shouldn't give personal advice. And that's a great decision by the government because we shouldn't take exceptional advice. We don't know your personal circumstances and we are not giving advice on the show. We're talking in generalities, but we are going to take the themes of the tax questions and try and get a tax expert on as we near the end of the financial year. But, yeah, look, we hear the questions. We say the questions. We're not ignoring them. We're just going to get someone better than us to answer some of them. [00:05:15][29.7]

Bryce: [00:05:15] If you are a tax expert and would like to join us on the show, obviously give your business a bit of a plug or whatever it may be, then reach out to us and we'd love to chat. So shall we kick off Ren ask us anything for the month of July. [00:05:26][11.0]

Alec: [00:05:26] Let's do it. And I'm going to kick it off with a question that got your back up a little bit, maybe. So this question I'm not going to name the listener. I wanted to know why there's a delay between when we record episodes and then when we release episodes. [00:05:40][13.3]

Bryce: [00:05:40] That is because we're recording in the Cayman Islands for tax advantages. [00:05:43][2.8]

Speaker 2: [00:05:44] It takes so long for it. [00:05:45][0.9]

Bryce: [00:05:45] Now, as I said, we had a pretty big content schedule at the start of the year and for once had a bit of a structure about how we went about things. And then covid came and we felt like we needed to do a. Yes, what was going on in the markets at the time, so we had to put a few of our interviews on hold for a while, and that is the reason for the release in DeLay. And, you know, we can turn these things around pretty quickly. But given what was going on in the market, we thought it was more valuable to talk about it than not. So that is our reason for delay. But we're all caught up now, Ren. This one is for you. Knowing your history with Slater and Gordon, Jake would like to hear your thoughts on it now as an investment after losing ninety nine point nine percent of your [00:06:28][42.7]

Speaker 2: [00:06:29] nineteen point five percent, ninety nine point five [00:06:31][2.4]

Bryce: [00:06:31] percent of your trade. So much so that you can't even sell it because you don't have enough in there to cover the brokerage. What are your thoughts on it as an investment going forward? Don't do it, OK? [00:06:41][9.4]

Alec: [00:06:41] Oh, look, I mean, you know, the bank owns most of it, but I mean, it's just better stuff out there. I made the mistake once. I'm not going to make it again. [00:06:48][7.0]

Bryce: [00:06:49] Sounds emotional. [00:06:49][0.3]

Alec: [00:06:50] Yeah, yeah, yeah. Once bitten, twice shy. I mean, obviously, Slater and Gordon isn't in the the ballpark of yoghurts in the J.C. Penney's, which have got a lot of media coverage recently. But what I've taken from this Covid period is there's a lot of stocks that get a lot of headlines that aren't great companies. It's not worth there are better companies out there. So for me, it's like, you know, you think about Warren Buffett, you know, punch card. He talks about only investing in 20 stocks in your lifetime and really waiting for the right pitch, waiting for those, you know, hit him out of the park, 10 bag, 100 bag stocks. Slater and Gordon proved me wrong, but I don't think you're going to be one of them. [00:07:24][34.8]

Bryce: [00:07:25] I'd like to just hear your brief thoughts on this, Jack. Finish the question with Slater. And Gordon even has names like Merrill Lynch in its top holders register. Does that bear any weight? How would you think about that? [00:07:36][11.0]

Alec: [00:07:36] Not really. I mean, investment banks and big institutions on a lot of. [00:07:40][4.0]

Bryce: [00:07:41] Yeah, yeah. [00:07:41][0.4]

Alec: [00:07:42] Nice. All right. Next one. Got a couple of questions on Super. And the main theme is basically what do I do with my super during this Covid period? Obviously, stocks tanked and then risen a lot. You know, should people be switching from bullish to bearish, from aggressive to defensive to cash? How should people be thinking about this? Super? [00:08:01][18.9]

Bryce: [00:08:01] I'll answer this personally, because everyone has different circumstances. But given my age, this for me is I'm going to be doing absolutely nothing with my super. I've put in a fair bit of time and effort just to ensure that the super fund that I am in pretty good phase and is, I guess, balanced in a way that's reflective of how I feel about the market and my age. And I can take a bit more of an aggressive approach, but otherwise no change for me. [00:08:26][25.1]

Alec: [00:08:27] You Ren on the same. I'm in an aggressive super portfolio. I remained aggressive. I don't plan on retiring soon. And for me there's a long period and let it let it ride. [00:08:37][10.3]

Bryce: [00:08:38] Yeah. Trying to position your super to take advantage of month on month changes in markets is completely against, in my opinion, the idea of superannuation being set up as a long term investment vehicle. You can play the short term month on month game with cash outside of that. [00:08:53][15.3]

Alec: [00:08:53] And we don't even recommend doing that. [00:08:55][1.3]

Speaker 2: [00:08:55] No, if you want to. [00:08:57][2.0]

Alec: [00:08:58] Next question came in from Sash, and it's about dividend reinvestment plans for people unfamiliar with the term. It's when the company pays a dividend to its shareholders and you're a shareholder. Rather than taking the cash, the company takes the cash that you would have got and buys more shares for you. So it's a way to increase your holdings in the company. What's your position on dividend reinvestment plans and how do you think about them personally? [00:09:25][27.1]

Bryce: [00:09:26] All stocks that I have the option to do a day, I pay your dividend reinvestment plan. I have that box ticked for me. I don't need the cash coming in from a dividend payment. [00:09:37][10.7]

Alec: [00:09:38] Rodo Moneybag. [00:09:38][0.5]

Speaker 2: [00:09:40] It's because the cash isn't enough. [00:09:41][1.3]

Bryce: [00:09:43] No, I don't need the cash. And this all comes into the whole compound effect. Ren if you can continuously have your dividends reinvested into the company, obviously you're going to be building more and more equity in that company. And over time that's going to grow. And that's where the compound effect comes into play in a big way. So for me, [00:10:01][18.5]

Alec: [00:10:02] keep it as is my approach is a little bit different. If I love the company and I want to keep it forever and accumulate more of it, then I go dividend reinvestment. And that's most of my investments. If I am not, you know, super hot on the company or, you know, I think I'm already overweight it I just take the cash, but I don't ever take it out of my brokerage account. Yeah, it's getting it sits in cash and then it gets reinvested into another stock or an index. I think the most important thing is you're not unless you need the cash to fund your lifestyle, don't take it out of your brokerage account, get it back in the market either through the dividend reinvestment plan or by just keeping it. They're putting more cash in your account and investing in another stock. [00:10:45][42.8]

Bryce: [00:10:45] Yeah, don't go to the pub with it. Know which I have done at university. I must admit, I think I got a dividend and took it to the pub, which was a massive mistake and I've learnt from that. [00:10:53][7.5]

Speaker 2: [00:10:55] All right, Ren, So [00:10:56][0.5]

Bryce: [00:10:56] this one's coming from L.A., Her parents have a broker and she was wondering whether she should use their broker to invest compared to creating an account and doing it on her own. [00:11:08][11.3]

Alec: [00:11:08] Look, I think there's probably a general principle, which is you don't need a full service broker on the most part, at least in my opinion, you can transact at a lot lower cost through online only brokers. That's what we use personally. If you're a really high net worth individual and you want the full service that comes with the broker, you know, the recommendations, the portfolio management, whatever they offer, it may be worth it for your parents. Maybe what for you if you've got heaps of money. But on the whole, I would say it's not worth the extra cost. And even if your parents are paying that cost, it's probably not worth you paying that cost early in your investing journey. [00:11:47][39.1]

Bryce: [00:11:48] I mean, if Eleanor doesn't have to pay anything and her parents are covering it, then go for it. Well, yeah, okay. [00:11:53][5.2]

Alec: [00:11:54] If you if your parents are going to pay for something and you're happy to take money from them, then sure, that principle applies to everything. Should I buy a house? Yeah. If your parents are paying for it, go for it. But yeah. Look, I think assuming that you're going to be paying that cost, probably not worth it. If it's something where your parents pay a flat fee a year and you get unlimited trades on it and you can piggyback on that. So your incremental cost to trade is zero. Well, then, sure, it's it's it's the cheapest option for you. So, yeah, for me, the thing is, what's the lowest cost to try to get those costs to invest? Yes. All right. Question for you now, obviously, we are living through unprecedented times and there's a lot of money printing and interest rates being dropped by reserve banks around the world. So what do you think the potential impacts of this will be and how do you position your portfolio accordingly? [00:12:43][48.9]

Speaker 2: [00:12:43] Huge question. Massive. [00:12:45][1.1]

Bryce: [00:12:46] OK, so generally speaking, so the RBA governor, I think yesterday Philip Lowe, came out and said that he expects interest rates to remain incredibly low for a very long period of time. That's obviously indicating from him that he thinks the economy is going to need stimulation in the form of interest rate policy over the next few years. What impact does this have? Well, it means that cash in your bank account is not going to be generating much return, which is why obviously we've been suggesting trying to get a returns through the stock market. It means, obviously, borrowing money is going to be cheap, but that can lead to asset prices, such as housing going up because investors can access money cheaper. That is one impact, printing money. On the other hand, what we're seeing over in the states at the moment is the huge amount of money that is being printed by the Federal Reserve. And this is increasing the monetary supply. And in short terms, I guess that is going to create some form of inflation where it devalues the value of your currency or what you can purchase over a period of time. How I position my portfolio with this. So for me, I look at, OK, if interest rates are, you know, one and a half percent, I can easily get that pretty risk free sitting that in my bank account. So I'd be looking to generate returns above one and a half percent through my investments in the stock market. That is a very simple way of looking at it. And you also need to include inflation on top of that. But without going into too much detail, you can look at the interest rate as sort of you risk free right in in your bank account at the moment. And if you can get a better return than that in the stocks, then it might be a better investment. [00:14:25][99.4]

Alec: [00:14:26] Yeah, I think the only thing I would add to that is that investments are relative. And if you think about currency as a store of value, as more currency is printed, the value of the currency is diminished. And we're saying that in the US at the moment, as the US dollar weakens against most investments and also things like gold, and even you could say it's weakening against things like stocks, like the fact that stock prices are rising is in some ways the currency weakening against the relative value of stocks. That's a long way of saying I would not be holding cash in a currency where there's a lot of printing going on. I would be holding other assets. So like personally, I put some more money into gold. I've put some money into stocks. You basically want to hold assets that will hold their value if a currency is weakening. So stocks are one. Gold is a big one. People talk about bitcoin, real estate can be one those things will appreciate in value relative to the currency that they're valued in. The worst thing you can do in a low interest rate environment when the Reserve Bank is printing heaps of money, is just hauled heaps of cash because I will lose value. [00:15:31][64.9]

Bryce: [00:15:32] We had an interview recently with Jesse Felda and also Tobias Carlyle that I would recommend going and listening to. We spoke about some pretty big macro themes in those interviews, particularly with Jesse Felda. So if you want a bit more of a Deep Dive into the printing money and interest rate side of things, we spoke about it with him. So check that out. Next question has come in from Rob Duncan, Ren. This is a good one. How? A person focussed on their circle of competence in the share market and choose stocks they know, but then still be diversified enough not to be at risk. [00:16:04][32.7]

Alec: [00:16:05] Yeah, it's a it's a good question. And for people unfamiliar with the term circle of competence, let's start there. It's basically invest in what you know, invest in what you understand, invest in what you can analyse. So I'm not investing in a lot of mining stocks or like mining explorers because I don't know that industry very well. And I couldn't tell you, you know, the results of exploratory mining expeditions and what they're finding in core samples and stuff like that from, you know, anything else. So you want to invest in things, you know, and when when we talk about circle of competence, I often think about you, Bryce, who seems to only invest in retail stocks. You work in retail, you know, retail, your circle of competence is retail. And so that's what you invest in. [00:16:48][43.1]

Speaker 2: [00:16:48] Not entirely true, but yes, you could make that assumption pretty well. [00:16:51][3.4]

Alec: [00:16:52] Between Afterpay baby bunting and city shaki, you're sitting on a pretty small fortune through your retail investments. But that comes to the second part of the question. And I reckon that's a really good observation, that if your circle of competence is small, does that lead to a lack of diversity in your portfolio? Does that you know, in Bryce case, does that lead to being 100 percent retail stocks? And I think the most important thing is that you're constantly trying to expand your circle of competence, that your circle of competence is never static. It's not only an exercise in putting money in the market, but it's also going to be an exercise in learning more about different companies in different industries. And for Bryce, who's very static and isn't really trying to expand its horizons or expand his mind in any meaningful way, [00:17:38][46.2]

Speaker 2: [00:17:38] again, not sure his [00:17:39][0.8]

Alec: [00:17:39] circle of competence is stuck at retail. And so if there was a retail apocalypse, his stocks would go to zero. But what Bryce should be doing is reading and learning and finding out about different companies in different industries. So his circle of competence can expand and his stock portfolio can expand with that. And I think while you're going through that journey, while you're going through that process, the best way to ensure you're well diversified is to also just have your core holdings of indexes and thematic ETFs and potentially managed funds as well. And that gives you some diversity, even if your personal circle of competence isn't very broad. [00:18:22][42.5]

Bryce: [00:18:22] I agree with everything you've just said, Ren. But I would also say that in building a very strong circle of competence, you are reducing your risk in the sense that if you know, let's just take retail as an example. If you just become so well versed and know the ins and outs of retail, you can create a portfolio that in itself could be diversified enough within your circle of competence that you're lowering your risk rather than spraying and praying across a whole bunch of industries. That's just one way to look. [00:18:52][29.1]

Alec: [00:18:52] I actually don't agree with that. [00:18:53][1.0]

Speaker 2: [00:18:53] But that's that's fair. [00:18:54][1.0]

Alec: [00:18:55] I think I think you're right in terms of, like, individual stock risk. If you know the stocks well and if you know the industries well, you're not going to invest in the Slater and Gordon of your industry. You're not going to invest in price. But the flip side of that is there are definitely risks that you cannot avoid if you're just concentrated in one industry. So, for example, you could pick the best retail stocks in the world. But if Australia gets whacked with an extremely deep recession and consumer spending halves, retail is going to hurt and those large macro risks are unavoidable. Or similarly, if Amazon lifts its game in Australia and just smokes every other stock, then great being Amazon. Well, yeah, if you if you circle of competence is retail, you are Amazon. Yeah. Yeah, that's fair. That's fair. But yeah, I think [00:19:43][48.7]

Bryce: [00:19:44] there's two parts to it. I think it's just don't be fearful of having a tight circle of competence. But also to your point, don't let that stop you from exploring other things because there will be a moment where you need to know. [00:19:54][9.8]

Alec: [00:19:55] Yeah, yeah. And I guess a good way to diversify within a circle of competence is to look outside your home country. Yeah. So if your circle of competence is retail, don't just invest in Australian retail, apply the knowledge and the skills that you have to analyse overseas retail as well, because then that that lowers the risk of like [00:20:13][18.3]

Bryce: [00:20:14] individual Australia wipe out. [00:20:15][1.3]

Alec: [00:20:15] Exactly. Yeah, yeah. Yeah. I hope that answers the question. Next question comes in from Lucy and there's two questions I'll ask you one and then I'll ask you the second one. So the first one is, do you have to individually register stocks, ETFs and Elyse's on Computershare? [00:20:29][13.8]

Bryce: [00:20:30] From my personal experience, I've never had to individually register them because that's done through the purchasing process. But if you're unsure what Computershare is or a stock registry, you should go and research it. Essentially, this is where you can make decisions on dividend reinvestment plans and those sorts of things. And there's not just one registry. There are multiple. So depending on which company you own, they go. For a particular registry, you might have a number of different ones, so, yeah, you can definitely go and log in and see which ones apply to you. But in my experience, I haven't had to individually register. Have you, Ren? [00:21:07][37.0]

Alec: [00:21:08] No, I haven't. And can I just say a message to the link market services and Computershare call it on the amount of paper letters. [00:21:15][7.3]

Speaker 2: [00:21:15] I know I'm so [00:21:17][1.9]

Bryce: [00:21:18] link market share, Computershare, the two majors. I think there's a third as well. The name escapes me, but yeah, you shouldn't have to. But definitely be aware that there is a middleman at the moment between your broker and yourself, where your stocks are actually sitting registered and can go in there and make decisions on things like, as I said, the dividend reinvestment plan and those sorts of things. [00:21:36][18.3]

Alec: [00:21:36] And then the second question that comes in from Lusi is around the form you have to fill out if you want to invest in US stocks, the W8 to form. So the question is, when do you have to fill that form out and you have to fill it out, you know, at a regular interval or something like that? [00:21:52][15.9]

Bryce: [00:21:53] Again, personal experience, depending on your broker, they'll either do it on your behalf or you can fill it in when you sign up or purchase the stocks. And I think it's a once you've done it, that's it. [00:22:03][10.3]

Alec: [00:22:04] Yeah. I mean, I've never had to fill it out. So stake fills it out for you. Yeah, they do it all for you. I invest in a lot of US stocks through IJA and you have to fill it out yourself, but you do it through the platform. It's not that difficult. Yeah. Right. And you do it before you start buying beforehand. [00:22:20][16.7]

Bryce: [00:22:21] Yeah. OK, nice. Well that brings us to the end of some of the. Yeah. [00:22:25][3.5]

Alec: [00:22:25] You were getting at me for talking too long and we've actually ripped through these questions. [00:22:29][3.8]

Speaker 2: [00:22:30] Yeah we have [00:22:30][0.4]

Bryce: [00:22:31] but that's good, nice and short and sharp Ren. But to close this episode out, we're going to do a Ren spade round there. A couple of good questions that have come in that Ren reckons he could answer in a centre [00:22:41][10.7]

Alec: [00:22:42] of thirty [00:22:42][0.1]

Speaker 2: [00:22:42] characters or less in the toilet. [00:22:44][1.7]

Bryce: [00:22:45] So I'm going to ask Ren the questions and he's going to hit me and then we'll close out with one before we wrap this up. So here we go. Ren's Spayd Ren. This is from Trevis. What is the worst outcome for the share market, Biden getting elected or Trump getting re-elected? [00:23:00][15.2]

Alec: [00:23:01] Who knows? But you'd have to think Trump getting re-elected. [00:23:04][3.4]

Speaker 2: [00:23:05] Am I allowed a follow up question? [00:23:06][1.0]

Alec: [00:23:06] I like your speed Ren you do what you want. [00:23:09][2.1]

Bryce: [00:23:09] What is your theory behind this? [00:23:11][2.4]

Alec: [00:23:12] I think eight years of Trump is going to be a problem, like the Fed has done a lot to keep the stock market going recently. But there will be long term structural things that come into play, like the big ones being, you know, the global trade environment and stuff like that. [00:23:26][14.3]

Bryce: [00:23:27] Yeah, my sub follow up question to that is, will a new administration make any difference towards the simmering tensions between China and America, or is that well beyond who is in power in America? [00:23:40][13.1]

Alec: [00:23:41] Yeah, 100 percent, I think. I mean, the two big things are the if you have disputes with China, but you're doing it in a you know, like a values based framework, which is, you know, what sort of Obama how Obama interacted with China and then secondly, doing it with your allies rather than unilaterally. It will make a massive difference. It won't solve the problems, obviously. But this, you know, ad hoc, personality based trade war that we seem to be descending into again, is not good for anyone. And the fact that Trump has managed to lose all international support for his war hand virus inspired China bashing. It's not a good situation at all. [00:24:18][37.0]

Bryce: [00:24:18] Yeah, next question. This one is coming from Khush and Ren. How do you think about investing in emerging markets and what are some ways that you can do it? [00:24:27][8.6]

Alec: [00:24:27] ETFs are fine, but market cap weighted may not be the best way to do it, potentially. Look at managed funds. [00:24:33][5.7]

Bryce: [00:24:34] Subquestion. Can you explain what you got to me? [00:24:37][3.0]

Speaker 2: [00:24:37] This is not a market cap weighted ETF [00:24:39][1.6]

Alec: [00:24:39] is most indexes market cap weighted and it's the bigger you buy more of the biggest stocks and less of the smaller stocks. And potentially in emerging markets where, you know, there's big growth companies and as established incumbent players that may not have a lot of growth in the Minnesota government supported in some instances, potentially, you want someone to apply their expertise to picking the right stocks rather than just buying an index of the biggest stocks. And in saying that, I own emerging market ETFs, but obviously local knowledge and expertise is probably more relevant there than in, you know, the S&P 500 or the ASX 200. [00:25:14][35.2]

Bryce: [00:25:15] A great example of the market weighted example, Ren is just before we started the show, you came across the stat that between the Fang stocks and Microsoft, they now make up twenty five percent of the value of the S&P 500. So if you put that into perspective, that is six stocks. I think it is six out of the top 500 stocks in America now make up twenty five percent of the total value, which is absolutely ridiculous. But if you then put that into the market weighted index, if you're buying an S&P 500, which most of them on the market at the moment are market cap weighted your. ATF will be 25 percent weighted in favour of these six stocks. So it's going to take a lot of movement from the remaining four hundred and ninety [00:26:03][47.6]

Speaker 2: [00:26:03] four quick Mac [00:26:04][0.8]

Bryce: [00:26:05] 494 stocks to to move the dial in a direction other than the way that the big four, five or six tech companies are going. So just because you think you've bought all 500 of them, it's pretty much reliant on the performance of those tech stocks, [00:26:17][12.4]

Alec: [00:26:18] although not a [00:26:19][1.2]

Speaker 2: [00:26:19] bad point, which [00:26:21][1.7]

Bryce: [00:26:21] is not a bad thing. But just keep that in mind that you really are buying into those big ones. All right. Next one from Tyler. I'd love to hear about why investing in water and water ETFs might be a good idea as a long term investment option. [00:26:34][13.1]

Alec: [00:26:35] I'm thinking about how to answer this in a short time frame. So let me say this in the same way that people made more money selling picks and shovels to gold miners than mining for gold. Potentially you don't want to invest in water, but you want to invest in companies that will benefit from water scarcity. Nice. [00:26:54][18.9]

Bryce: [00:26:55] Good answer. Next one, Adam, best options for investing on behalf of your children. Is it bonds, ETFs, term deposits? What's your thoughts? [00:27:04][8.8]

Alec: [00:27:04] So I think the principles here apply exactly the same as long term investing. Personally, your kids just get an extra 20 or 30 years on. You definitely not term deposits, probably not bonds. You want to look at what's going on in current environment or almost given any environment unless interest rates go to close to double digits. Again, you want to get things that will appreciate a lot and you can take risk because there's such a long time horizon for your kids. So you'd be looking at ETFs and stocks. [00:27:33][28.5]

Bryce: [00:27:33] These ones come in from Fiona and this is an all time classic, the way you always get your 25 year old Ren not far off and the best option to invest 10k that you've just freshly received. Hot off the press. What would you say? [00:27:46][13.0]

Alec: [00:27:47] Stocks? [00:27:47][0.0]

Speaker 2: [00:27:48] Obviously not, [00:27:50][2.0]

Alec: [00:27:50] although. Oh, yeah, pretty obviously. But in terms of what stock, I mean, you know, we don't give personal advice. And given my recent stock of the performance, you shouldn't listen to my personal advice. But if you're not sure, if you don't have a company that you have a really high conviction over, there's nothing wrong with just putting it in an index or putting it in a managed fund. [00:28:08][17.5]

Bryce: [00:28:08] Well, we can put stress and personal experience to this. Both you and I have put a similar amount to this into the market quite recently through a off market purchase through Magellan. [00:28:17][8.9]

Alec: [00:28:18] We have so but we don't give. [00:28:19][1.4]

Bryce: [00:28:20] No, that's very personal just between you. And I hope the microphones aren't picking this up, but that's what we did. We've gone down the management route just to say what it's like and we really love what the Magellan guys are doing. So next one from Heyden, Ren. Why are you so excited in every episode? [00:28:37][17.6]

Speaker 2: [00:28:39] You got to love what you do. That's right. Yeah. [00:28:41][1.7]

Alec: [00:28:41] Yeah. I mean, it's an exciting time getting to speak to all these experts, so why wouldn't you be excited, right? You should be as excited to listen as I am to talk to them. [00:28:50][9.1]

Bryce: [00:28:51] I apologise if it's Hadyn. But anyway, yes, Ren always excited. I'm always excited because Ren is excited and I'm hoping that carries through. [00:28:57][6.5]

Alec: [00:28:58] I'm just trying to bring Bryce his energy up. It's a little [00:29:00][1.8]

Speaker 2: [00:29:00] bit of light on that. So that brings us [00:29:03][2.8]

Bryce: [00:29:03] to the end of Ren Spayd round and [00:29:05][1.6]

Speaker 2: [00:29:05] that speedy. Not that speedy, but we've got [00:29:07][2.1]

Bryce: [00:29:08] one question to close this out and that's from Andrew. And he says, Seeing as the markets have been turned upside down recently, what is your new stock pick of the year now to refresh to? [00:29:20][12.3]

Speaker 2: [00:29:21] I think you've missed the boat, but [00:29:23][1.5]

Bryce: [00:29:23] to refresh everyone on our two stock picks, did [00:29:26][3.2]

Speaker 2: [00:29:27] she and [00:29:28][0.9]

Bryce: [00:29:29] Alec did atomos? We haven't really checked where they're up to. We'll do a review of we should do a bold prediction review, given that we're getting halfway through the year. So we will mark that down for things to come. But we thought we'd leave. This one is a bit of a cliff-hanger. As I said at the start of the show, we've been thinking about some new things that we can do over the second half of the year. And we absolutely want to revive our hypothetical portfolio as well as start up the Equity Mates people portfolio. So we're going to be doing that over the next six months and very much looking forward to getting some ideas and thoughts and getting some of you guys onto the show to help us create what is going to be an index bating portfolio. Fingers crossed. So that's going to be a lot of fun long [00:30:10][41.4]

Alec: [00:30:10] your stock of the Year short my stock of the year, we [00:30:12][2.0]

Speaker 2: [00:30:13] we should be so rich. So keep your eyes peeled for that. [00:30:17][4.2]

Bryce: [00:30:17] We're going to be reaching out to our Facebook group. So if you're not part of that, then head across to Equity Mates investing discussion group and join the fun and games that are happening over there. It's a lot of fun. So, as we said, keep the questions coming. We certainly do see them all and apologies if we can't get to all of them. There's a lot going on at the moment. So I appreciate everyone's questions and Ren. We'll leave it until next week. [00:30:39][21.5]

Alec: [00:30:39] We finished in pretty good time with Surprising. [00:30:41][1.7]

Speaker 4: [00:30:43] Thanks for listening to Equity Mates investing podcast production of Equity Mates Media. Please remember that everything here in Equity Mates investment podcast was general advice. Only the content has been prepared without knowing the personal objectives. Specific financial circumstances or goals, the host of Equity Mates investment forecast may maintain positions in the companies discussed before considering any investment. Please read the product disclosure statement [00:31:05][22.0]

Unidentified: [00:31:05] and consider speaking to a licenced financial professional. [00:31:07][1.9]

Bryce: [00:31:17] This episode of Equity Mates is brought to you by CASPA, a proven long term outperformer [00:31:21][4.0]

Alec: [00:31:22] Care Super has been a top performing industry super fund for 35 years [00:31:26][4.1]

Bryce: [00:31:26] through proactive investing and a focus on protecting members savings in down markets and maximising gains in markets. Super has a track record of outperformance and delivering strong returns at competitive phase. [00:31:38][11.5]

Alec: [00:31:38] That's why more than two hundred and twenty thousand Australians trust cash super with their future. [00:31:45][6.2]

Bryce: [00:31:45] You work hard, so make sure your super is working hard to [00:31:48][2.9]

Alec: [00:31:49] find out more about what casaba can do for you at casaba dotcom, don't you outperform? [00:31:55][6.7]

Bryce: [00:31:57] This podcast contains general information only. Please refer to the pages on the website for further information to make sure this product is right for you. [00:31:57][0.0]

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