(upbeat music) - A list, nap, production. - Cheers. - Marker. - The S&P, the ISEX stocks. - This is the Motley for Money, Mailbag. - Welcome to Motley for Money, our very special Sunday morning, Mailbag Edition. And only that. It's the middle of the long weekend, Mailbag Edition, which is just a little bit sweeter, I reckon. If you're a shift working, you're working my apologies. If you're not, and look, the financial markets love a holiday, so tomorrow is a day off. For me, day off for this man. Andrew, rampage. I mean, straw man never sleeps. Money never sleeps. I've been 24-7 people. So maybe he's gonna just keep working right through. I wouldn't be at all surprised. Such is commitment, his conviction, his work ethic. Straw man doesn't just run itself. Doesn't Andrew? - Doesn't, but I am a big believer in working smarter as opposed to working harder. (laughing) - So let's put in that category. - The good thing is you're your own boss, you can tell yourself that and believe it at the same time. So that's great. - That's right. I let him myself go and I was saying, "So look, I'm sorry to work smarter not harder." I think you're working right for 12, but I really, really like the full whack of salary employees. I don't know how that would go. I could try that. - I should try that. - Maybe I'm missing a trick. - I mean, it's kind of crazy, right? Like, you're dead serious like that. From the employers point of view, it's like, I don't really care for stuff, dude. - Or shouldn't. - Just deliver. - I, you, you serve a purpose here. I need you for something, and if you do that, I don't care how you do it, right? - That's the one from home thing, you're all over again, really. - I mean, exactly what we pay for, we pay for input, not output. - Yeah. - Which mad. - I'm not working. - I'm not working. - I won't mention that, a large corporate. And there was plenty of times, this is years ago, where you would just, you'd get your stuff done early, but you'd still hang around for appearances. Because if you left. - Yeah, exactly. - What's the evening early for? I was like, well, it's five. Why wouldn't I leave? As well. - Sometimes we've all got to work a little bit harder. It feels like sometimes is every day. And it also, you do realize, 'cause I can see other people's screens here, most people are just playing solitaire to look busy, rather than actually be. And he's like, just this misalignment of incentives is just crazy, right? I was like, well, it should just be, wow. He or she is so efficient that they get their work done in half the time, right? - Yeah. - How'd you up with fantastic quality? Yeah, I know. - Yeah. - 100% right, mate, oh yeah. - That person arrays, give them a promotion. - Yeah, yeah. - Anyway, crazy stuff. Let's move on though to what we're here for, which is to answer some of our listeners' questions. And to start off, Gordon sent us an email. This is one of those ones we've talked about before. So it'll be interesting to kind of, just really hash a little bit, maybe see if anything's changed. Dear Scott and Rams is Gordon. I tip the hat and bend the proverbial knee. - Thank you. I have another proverbial about it, Gordon. We literally need those things to happen. - Video evidence is a yes. And that's this here. Maybe this year we'll require video evidence. We'll see how we go. I have an ethical investing conundrum to pose to the lords of the pod machine. My question is, you've spoken previously that ethical investing in secondary markets, that is companies that have already listed on the ASX, is generally not a consideration for yourselves. I'm not sure if that's true for you. I just want to stop there. I don't have, I wouldn't, I couldn't remember what it's like. - That's true, man. - She hasn't a weapons maker, but I don't really. Yeah, okay. I mean, look, I just feel that out a little bit. It's just where I rail against. I rail against. There's a lot of things that sort of purport to be ethical, but are anything but, right? So there is a genuine, and the other problem with it is I have is only that it's just subjective. And so it's not that I would, I invest in a way that aligns with my ethics and I have no problem with other people doing it. I've got a massive problem with some consultant telling me what is ethical and what isn't, you know, and forcing me to buy some company that's just basically doing greenwashing or some like performative nonsense to make themselves look ethical, which aren't really, all of that stuff, I'm very much against, but if I do personally invest in a way that helps me sleep at night. - Yeah, nice, nice. I don't really have an ethical lens as such. I said, I probably wouldn't buy a weapons maker, I don't suspect. - So then what do you do? - Yeah, I guess I'm just saying more broadly than that. There's probably, there's probably something that's too tricky to do, but not as a, not as a, I don't have an ethical investing approach that is considered, or that I think I wouldn't imagine companies aren't if, put it a different way. - You don't, you don't do it in the framework as it is handed on from a pie that's got, this is how you must, this is ethical investing and therefore this is how you must do it. - I hate people taking advantage of problem gambles, but I would buy shares and crown results at the right price. I wouldn't do the same for gun makers. So there's that to this. - That's a personal choice. - Correct, yep. - Anyway, I've gone to it since the IPO funding has already been complete, and all we are doing is moving money from one secondary owner to the next. Sure, it might have some indirect impact from a share price perspective, but it does not have a direct impact on the funding or operations of the business regardless of the moral sense standing, such as mining companies or tobacco for instance. And yes, that's the approach. - I'll push back on that a little bit too. - Don't. - Yeah. Well, it does impact it because it impacts the share price and the share price impacts the cost of capital. So, so for example, let's say that for whatever reason the world decided that tobacco companies were totally cool. And I'm not saying that, no, again, I don't want to, this is always, you know, not always, but very largely a personal thing. But let's go with a well-troddened example. And as a result of that, it traded much more in line with companies of similar size and profitability. They don't. They traded a very steep discount because of the ethics that are associated with it, which means that if they want to raise money by issuing shares, they get far less bang for their buck, which means it's harder for them to expand and do more of the things that they do. So it's not. I'm not saying it's a massive factor and it's the only thing that matters. But it is, I'm probably being just technically right, which we all know is the best kind of, right? - Identically right, sometimes. - Identically right. - Which also is a very good way of being right. - Right, and I'm just like, it does have an impact. We can debate all day long the size of the impact, but it does have an impact because it impacts the cost of capital. - Yeah, only if you wanna raise money and whatever whatever. - Make most companies do, or at least want that potential too, right? - I think it's a slight longer bow. Can't have the potential too, I will agree with you. I'll absolutely give you that for sure. Coca-Cola has a huge debt in borrower. - Yeah. - Why? - Yeah, cash cow. - But they haven't raised, they haven't raised equity capital. - Yeah, okay, true, but I bet you they would. I bet you they would if the price, share price made that it a far more attractive source of funding. So when you need capital, you go, well, I've got debt or equity, which is the better deal, right? And at a price, if they shares you're at a P of four million, it's like, I'm gonna, I'm gonna eat you in one share and raise a billion dollars. Like, you know, I'm just making the argument that it does have an impact if you're in that situation, not every company's gonna be in that situation. Again, pedantically and technically, the point is, I think yours, which is also technically correct. - Love it. - This got me thinking, though, says Gordon, would I be comfortable receiving personal financial gain from a business? Knowing it was from an ethical means, regardless of that direct impact. Where do we draw the line between, between, where do we draw the line between harm being inevitable? I'm not sure if the, if not asked that someone else would vote anyway, mentality always works here, from a moral standpoint. Let us play out a thought experiment. Would you be comfortable buying a large-saking on the secondary market? And a company know for operating blood-diamond minds. Knowing that if it ends, you receive come directly from the bloodied hands of slave labor. This is technically a secondary sale, and you could put the blood money to use counteract the negative effects. But does anyone really do that in real life, especially for ASX listed companies? What if we were outside an investing context? During the sake of constant and open in 1204, not my mastermind subject, Gordon, so I'll take your view on it. The view was once the brawls were breached. If I didn't start looting, someone else would do it anyway. Why wouldn't I grab a sack and start looting if someone else was gonna do it regardless? Would I be comfortable being that looter? My answer would be no. So I'd like to hear your thoughts on how you reconcile some of these conundrums and where you might draw that line. Thanks, Gordon. I mean, it is personal. It's not for me, Gordon, to tell you where you should draw the line. And I don't want anyone telling me where I should draw the line. How do you draw the line, though? Maybe rather than telling other people to, how do you think that through? Well, it's hard because you. I think that some of these things, the debate belongs more in the political sphere than the investing sphere. For example, the slave labor one, right? Like, if slavery is legal and there are companies taking advantage of that, I can kind of have my little protest vote by not investing in it. But I just would rather that there would be a political solution to, I would rather, our leaders basically say, "No, you can't have slaves." You know, I tend to think that. Isn't the black diamond thing a legal slave labor, though? Yeah, I'm just trying to. I'm trying to. Here you go, from. Yeah, like. Okay, well, let's go with that as a specific example. For me, no. No, I wouldn't do it. I wouldn't do it because I am indirectly increasing in no matter how small a way that company's capacity to expand its operations by being a sport. And I just, I want them to win subconsciously. I'm investing in them. I'm only going to do well as an investor if you do well and you do well, probably, who involves more exploitation. So it's just sort of like. I just don't want that incentive there for me and I don't want to play a small role in enabling you to do more. But that's just me. But I just feel as though the problem is. If we're at a point in society where these horrible ills, the only remedy is to rely on the good nature of investors like we have lost their way, right? Like, it's not that these are not important discussions, but these are discussions that we're. I think to a large degree require a legal and political answer. I tend to. I've set it a million times in the pot. I like the idea of where government plays a really important role is to set the playing field and then go go for it. Here are the rules. Can't have slaves, can't send kids down the mind. Whatever it is, you can think of a list of whatever. We feel as appropriate as a society. But as long as you operate within that framework, fill your boots. I think that's how I do it. I'll just fit to the fire a little bit. Tobacco is legal. Yeah. So is there. I don't just agree with you in the sense. I was able to look at though. If legality is all it is relied is. If legality is all it is required for morality and ethics to exist. And they're insightful from each other. They're needing legal as moral and as moral as legal. No, I'm not saying that. No, I'm just saying. I want to make a step into the government that's going to ban tobacco. So we're going to make an ethical decision about whether we believe. That's where it comes to the subjectivity and the personal view. So for me, you know, no, it's not. I don't want to. But. Yeah, I just don't want to be. I don't want to be reliant on the morals of investors. Who have incentives in many ways to sort of want these things. It just feels like a poor solution. So, you know, we can have that discussion as a community is like, should we just ban tobacco? We've seen how that's worked out in certain fields. You know, not banning it, but in terms of. Yeah, that's right. Well, we've seen how prohibition works. Yeah. Yeah. You know, I shouldn't. I say too much and you just divide people. But I'm very strongly in favor of vastly reducing drug laws, you know. Not because I want to see a junkie on every corner. And I think I'd be great if my kids could get easy access to drugs. I just. I said you offer in another conversation I feel as though most things should be evidence-based, right? Right. So if we can look at data and, you know, people have been doing, gathering a lot of data and doing a lot of analysis on this and it's like, you know, what's our. What is our. What is the goal here? I forget about the specific. What's the goal? The goal is hum minimization. We want less people dealing in drugs, taking drugs, getting hurt by drugs, family. Okay. We're all on the same page. Great. All right. Oh. It turns out that we've tried all these ways. We've tried prohibition. It just goes underground. It creates this huge black market, promotes organized crime. And people still take drugs. And actually there's more harm than ever. Or we do these things. We have legalized injection rooms. We have. We decriminalize a lot of this stuff. We put support mechanisms in place and the level of harm goes down. Now, one is objectively more worthwhile and effective, right? So it's just like, you know, let's do that. Let's do that. Oh, but it feels wrong. They're like, I know. That's what's. It's so interesting about it. It's very counterintuitive. You made the point off air. It's just like, so is investing, right? Or the intuitive. Yep. If you invest purely in your intuition, you're going to lose all your money. Yes, ma'am. If you're fighting against all your emotional urges, you'll probably do pretty well, right? Do you want to make money? Or do you want to do the thing that feels good? So. I mean, I think it's. God, that's. These are great questions. All I would say is this. My high level view is if you've got a. Some of these problems need to be addressed within a different realm. If they are not addressed to your point, Scott, if they're not addressed there and for whatever reason, there are certain things that are illegal. If it doesn't make you comfortable, don't invest in it. No, I think that's right. I will, I might thoughts to the way I think about it, Gordon. I will give you a very concrete example. I own shares in SOAPATs. We'll. We'll under that. SO SOAPATs owns a pretty short-term majority sake or a large minority sake of new hope corporation. They are a coal miner. I hate the fact that we are still burning coal when other options are available to us to minimise the impact on climate change. Climate change is real. I think the scientists are right. If you don't agree, that's up to you. I wish we would stop burning coal. You're letting me wrong. Is that what you're saying? No, you know, I'm just saying. I have a very clear view based on the available science that. Sure. and the experts that do the things. Experts used to actually be worth listening to these days. Everyone's expert with the coal flakes packet and you have to do your own research. You don't. The scientists get it right. They know what they're doing. So, there you go. There's a bit of. I'm just gonna show her who's not on board with climate science. I would love new hope to not mine anymore coal. I would allow Australia not to mine anymore coal. I'd like the world not to burn new more coal. What have I. So, do I love that so pet's owns it? No, I'd be here. If they sold it, I would be happier, you know? Why? Because it was making a feel better. Am I unhappy enough not to just not own so pets as a result? No. So, it's complicated, right? I don't know. New hope directly. Would I? Probably. Yeah. Despite all that. And sometimes you're going to be able to keep those two things in your head at the same time. I. Even to Ram's point of do I want them. Do I want them to slightly more successful than if I didn't know in the shares? Maybe. Is that making a difference? No. I mean, to my mind, in the real world, my shelling has a zero impact, right? Now, as a group, if we all agree, maybe you start getting somewhere, but, you know. But the other thing, by the way, is that there's enough private capital out there to fund anything worth funding. And frankly, my thinking of investing in part has been, let's say we all say we don't want woodside to drill oil. So I sell my shares in interest of his shares. Who buys them? Who do you don't care? Yeah. By definition, the passage of share ownership goes from those who care to those who don't give a stuff. And does that make it more or less less likely that woodside are getting too more drilling? You know, I don't know. If there's a shortage of capital right around to your point, if they can't raise equity funding, then yeah, we've got to that point. You know, with the banks, for example, with guns, timber and in Tasmania here, speaking of controversial, the banks decide not to do it because of the public pressure from consumers. And I've said forever, I think that consumer power is a million times stronger than our investing power for all those reasons, because someone's going to own the shares, but if I don't buy the company's products, or I pressure the company not to do business with someone else, you do a bad thing. That's where the value comes. And that's why Nike is cutting down on, you know, the switch shops. Why not because the share holds is one or two, not because it wants to be a good corporate citizen. The CEO is desperately keen on the issue, although I'm sure they would say they are. I'm sure they probably are. But it comes down to people saying, don't deal with Nike because they have, I'm not saying they have now. In the past, the pressure was don't do with Nike because they use switch shops. Okay. Well, that changed. We didn't change because investors decided it changed because of Ram's point. The community standards changed, and whether it's legislation or pressure, you know, literally buy a buy cut, boycotts, consumer pressure, whatever it is, that works. Do you have a question about, where did you draw the line? I am not going to say, as I said before, if a new company I had shares and was doing it, I would probably, you know, slave slave labor, blood diamonds, I would sell the shares. Okay. So there is a, there is a line for all of this. And the question is, and this guy thing, I think we probably shouldn't try and be too black and white, even with ourselves, just recognize that we're all, you know, flawed in different ways. You know, Woolies sell cigarettes over the counter. Do you not buy shares and Woolies? Some of the companies that banks lend money to, you know, doing questionable things with payday lending. Do you not do that? You could, you could, every company other than maybe two or three, you could find a spot to the point of, you know, well, hang on. Someone's how overpays this. So you know, and that might go to shareholders, or go to charity or something else. You know, where do you draw that line? And that's Ramsport. You have to draw your own line and, and decide where you are comfortable. So I'm not saying, and if I have made a two broader point in the past and applied that would never matter, then I'll take it back and, and clarify better. But I think logically and rationally, the impact I as an investor have in any ethical sense, despite Rams absolutely correct technical and being the best form of bink ring being right. Thoughts, my shareholder doesn't matter. It just doesn't, right? So even if I, if I sell to avoid that stuff, I'm, and I would otherwise have, have owned the shares, I'm doing it so I can sleep better at night, not because I'm making a difference. And that's, that's the human, that's human fallibility, right? So like, does it, does it actually matter to anybody at all? No. If I sell my shares to John Smith, I know John owns the shares and John doesn't care at the blood diamonds. So we better or worse off as a society. No different. And maybe worse because John doesn't, actively doesn't care. I kind of care. It doesn't change anything, no, at, at scale, around the point, maybe if it's large enough, maybe if it's important enough, maybe it's enough of an issue, then the PE's fall, maybe you can't raise new debt and maybe that's going to impact some company sometimes. So on the edge, but cases, he's absolutely right. I just think the reality of, we feel a certain way, despite the fact that it makes absolutely my opinion 99% of the time, but I got all difference, whether I own shares in wood soil or don't, whether I own shares in new hope, coal, don't, whether I own shares in Altria, the Philip Morris, the business, no, it doesn't make any difference. I just, I just think it's, it makes us feel better and that's completely valid, right? Do what makes you don't, don't, don't tell me you sort of feel better. What's the point of that, right? That's just, that's just a, a sort of a flick of injury. But I, even if I didn't own shares in those companies, it wouldn't be because I thought it was going to make a difference. Just got kind of a, I was at equal level that I'm just not comfortable going there. And that's the different, that's different from, my issue with ethical investing, almost your point about the other people RAM is people who do it because they think they're going to make a difference. And they, they do it, they, I think they're kidding themselves, I think they're being lied to a lot of the time by some fund managers, hey, by the way, sweet, you've, um, contradictions, I own shares in Australia, ethical, ethical fund manager, right? I'm just looking at, I'm, right now I'm looking at the, and the, and why? And why? Because I own it, I own them because I think people want to invest ethically, not because I think it's investing, investing ethically makes a difference. Does that make me cynical and, and hypocritical or whatever? I don't think so, um, maybe I'll take advantage of people's, like I say ignorance or at least, uh, what, something, I don't know, maybe, um, so yeah, I, I hope that helps Gordon. I think it's luck, you know, shares, right? Which do pay day lending, right now, I don't even want to put that out because you sort of, I just try to find an example, in fact, there's many examples on here. Yeah, right. Not, not for me to sort of inject an, an ethical judgment on, but I, but one that I know that there would be a reasonable proportion of the population that would say yes, that is there is an ethical dimension to that. And this is the problem with it is that it does require some subjectivity, what's unethical to some person is, is completely ethical to a another. And I think a lot of, to your point, they're, sorry, they're not, but it's just that you're right. I think a lot of the Australian ethical genius was calling themselves a Australian ethical. That, that's what they, that's what they did. That's what they did. Oh, that's, that's why I own share, I own shares because I suspect over time more people say, I want to invest ethically for reasons that I think honestly, they feel good, they may, what, what, the bit, just got my point, the rid that annoys me is when they, those sort of businesses, I don't know about Australian ethical particularly, but again, I'm speaking against my own, my own, you know, wealth here, if Australian ethical shares go down, they convey, not Australian ethical, ethical investors are investing funds in general, can convey a sense that we are, you are doing a good thing, you are helping, you are making a difference. And I think that is, if it's, if there's a kernel of truth, the RAM's point about the education where it does matter, then okay, the vast bulk of it, I mean, blocks are going to raise in the equity and they're not more ethical than someone else and not having them or having them with a portfolio is not making a difference to their ability to do that with Australian ethical. That's fine. You can do that. I just think when people are sold apart, when they're, when they are allowed to believe or encouraged to believe or led to believe that they are making a difference and they're, that's somehow that's their, the thumb management level justify choosing those funds or charging whatever fees, that's what I have a real issue with. Yeah. Pepper monies in there as well, G8 education, oh man, I could go through the list. Hello to the lawyers of these organisations, purely for illustrative purposes. And page P.A. But it is the point, it is the point, I don't want a legal fight, I don't, but I'm sure if I had the resources and time and I cared enough, I think I could mount an argument that, that would stand up and would be hard, hard to disprove. Let me put this to you, mate, not, not, just because it's, I, I really do hear what you're saying. But I'm going to put your argument to you in a different context, which is very much used. So when the, you talk about climate, when, when climate debate happens in Australia, those against any policy that moves us in the direction that I think you would like to see us going. We'll say, yeah, but Australia is only 2%, so if we don't, if we do it, it won't make any difference, so we shouldn't do anything. Which is kind of the argument you just gave for, for you, you know, whether or not you won't share it. Someone won't share it. Whether or not Australia bands call, China's still going to burn coal, right? So how do you, how do you reconcile that? I mean, we get, we get in a climate policy at some point and away from investing. The answer is to my mind, if me owning shares, if me selling shares could end up with 2% less coal being mined by you hope, I would sell my shares. So the 2%, it is a genuine reduction in total output, which is the 2% equivalent. I agree with you, by the way, people say that a lot of time, it's like, well, you know, everyone's 2%, get it, get 50 2% groups together and it's 100% so this is stupid argument. Same with recycling, whether or not I chuck my plastic bag just in the red bin instead of the yellow bin, that's not going to make any difference, I don't, stuff, I'm not going to do it. But in that case, there's a physical change or, or kind of factual that doesn't happen as a result. Whether I own new hope call shares or not, doesn't change whether Australia chooses to ban or not ban coal and burning coal and contribute a fossil fuel. So it's not so much that I'm, it's not so much that I'm small, if I was making a, I don't believe I'm making any impact at all. If I had a million new hope call shares or no new hope call shares, it's probably a lot. I don't think it would change for a second the company's trajectory, because they don't need to race capital, they're not going to race capital, it's, it's not, it's, it's just not going to, you're right, in those circumstances where they have to race capital, it's absolutely the exception to the real, I'm 100% agree with you. So I'm, I'm not, I'm not disagreeing in the, in the slightest, I just think the reality is for 99% of companies on the ASX, if you take a view of, well, you're at the other race capital anymore, we'll use NCBA and Telstra and Newscorp and CSL and Cochlear and NNNN and say, I'm never going to race capital and it doesn't run to me. Why would I care? And in fact, more to the point, the vagaries of share price movements, I mentioned CSL, they're going to do a spin off now, they're not going to, the share price has been super volatile the last 12 months, that, that, that, that, that just, natural volatility is going to be the any impact they think they're investing has on that, you know, they made the share price 10% higher or lower, but if it's 30% lower, that was this time last year or 40% higher, that the incremental, again, is it incrementally impactful? Yes, they're going to have a capital of slightly higher price, does it change for a second, the operations higher across the capital, like they pay a high interest bill, okay, they can raise, yeah, if they, if they actually can't raise equity to get to that point, again, this is where the edge case matters and you're right, if it's a point of, well, bugger, the equity market to close to us because our share price is too low, then you, then, then absolutely, the ethical investors have one and I have no issue with that, I think if you can do that and achieve that and want to do that, go for it, knock yourself out. I think to believe that any other of the edge cases, that might be, it's going to be a fraction one percent of the ISX, that's in that, in that kind of a kind of raise equity. It was a little bit more expensive to raise equity, well, the bank has win, the shareholder has win, well, something else, even then the company doesn't do less of what it's going to do. It only does less if it's going to do if it can't raise the money. And so that is the edge of edge cases where I just think it's not meaningfully impactful enough to make it worth doing for, it's not, again, obviously don't do it. I'm just saying don't think you're having to make any difference unless you're investing in that one company where your shareholder is, or even collectively, your share holdings are the deciding factor, the kind of tipping point. Yeah, yeah, pretty good, yeah, cool. Should we go through a question from Lisa? Ah, this is great. Hi, it's gotten around. I don't have a question. However, I would like to claim the title of the most avid woman listener. Rather simply bend the knee with gratuitous platitudes, I'd like to show you other 13 regular listeners how it's done with tangible evidence. I just couldn't know we got some extra regular listeners issue because it wouldn't have been that high this time last year. As a novice share investor says, Lisa, I originally started listening to the pod machine in early 2024 whilst renovating a house. Tell you why, if renovating is not bad enough, you threw a podcast and from us on top of that, that's glutton for punishing stuff, Lisa. And I was very quickly hooked on the wealth of information I was learning and the counterbalance to use on many topics. Andrew's enlightening, yet entertaining, rants, help you while away hours of tedious, sanding and painting. I didn't say tedious hours, very soon. The two weekly podcasts and later three when stock of the week is published were simply not enough. So while waiting for new episodes to come out, I started listening in reverse to previous episodes. I don't know how that, that must feel weird going backwards. That's like the world going backwards, like a Superman flyer on the earth and making your time backwards. That's going to come. I love listening to the undertones of the changing economy that seep through your discussions through COVID, market dips, RBA decisions, Andrew never wanting to buy a property and later buying a house, Scott Buying, selling and rebuying Bitcoin. The many timestamp views on stocks and don't atmys. It's a bit of a mind twist. Jumping from the current time, the 2020 one back again, listening in two distinct points in time. It's also fun. Checking in on those timestamp comments, I don't do that. TLDR, says Lisa, this brings me to my empirical evidence of being your most loyal follower. Check this out. According to this year's Spotify wrapped, in 2025, I listened to 18,000 and 25 minutes. That's over 300 hours of Motley Fool, proving the top 0.05% of all listeners, which says as at the twelfth of the twelfth 25, the year wasn't over when this was released. I also love the subtle trolling from Spotify calling you out, and there's a graphic sheet that includes, thankfully, podcasters love to talk. I'm going to share this much less about us, Lisa, but I can't prove it's not. I since sold the house I was renovating in early 2025 and converted much of the profit from the sale to shares, with a small holding of Bitcoin after doing my own research. For any new listeners that have noticed familiar as me, you haven't mentioned what Strowman is for several weeks now. What does it do? Full on Lisa, crowned holder of Motley Fool, most prolific woman listener, back to 2024 25. That's the question then, right? What does Strowman do? Well, thank you, Lisa. That is really humbling and nice. We're an online investment club. As you well know, Lisa? Just well. Just well know. Investment club? It's really his premiere. I would have imagined that to be true. You know, I was thinking about that, I don't need to go through the exercise and I very rarely listen back to any of our episodes. And if I do, it's just to see how much I put my foot in my night. Did I say, was that right? How did that come out? But I'm almost certain that over the time that we've been doing, I'm not going back way back to the beginning. I'm even sure you can only go back a year or two. There'll be things that I've fundamentally changed my view on. But I guess I'd call that out, you know, the, who was it? Is something that the world is way too complex for you not to change your mind very often. So I guess I'm sandbagging here, Lisa, if you're coming across some old episodes where we were saying, so I was like, you didn't say that before, I was like, I'd like to, I'd like to wrap that up into a narrative that says, I've just evolved. And my thinking is deepened and I'm better, but I'll, better versions of ourselves, let's be honest. Better versions of myself. I genuinely hope though that there are not too many things, but I hope there are certain things that I look back on in another 10 years' time of what we're saying right now that I do cringe a bit. Because I don't think you're growing otherwise, right? Or you're learning or, you know, the world itself is changing and your understanding of the world is, hopefully, if you're a lifelong learner is always changing as well. So I think it's, I think one, it's just a better way of living, but two, from the investment lens. I think that, I know I hop on about this a bit, but I think it's just one of those core skills that you need because dog and stubbornness is a killer in investing, you know. You're going to get it wrong and you've got to recognize that you're wrong and you've got to learn from that mistake, learn the right mistakes and then apply it again. And so if I can sort of frame any, any pivots and, you know, what do they call it? Flip flops. I'll put it in that context if possible. And you've got another three or four years later, there'll be more of them to come. So that's all for sure. You're right. That's once maybe. Yeah. That's kind of that. You're absolutely right, though. Not until you best know what to wrap, but the idea of holding somebody, you're right. I've changed my views over that period of time for exactly the same reason. It's madness to, and frankly, that's, you know, when you, when you stop considering alternatives, when you're so sure you're right, that's where danger comes. That's where political teams rather than, rather than contest of ideas and that kind of garbage. So, yeah, I hope I was wrong a lot in the past, based on, hopefully, me changing, if it been more right now, if I was just wrong then or wrong now, I'm not helping anybody. But yeah, I hope I've improved and changed my mind over time as well. I tell you a funny story. I mentioned you off air. I've sort of, I changed my cloud storage provider over the break and I'm sort of uploading a bunch of stuff there. And I came across some old TV crosses like a million years ago that I'd say, oh, that's awesome. I couldn't make it 30 seconds in. Oh, no. No, because it's always a bit cringy to watch yourself, but just the rubbish coming out of my mouth. Like, what, it actually, with a little bit of age and hopefully wisdom, it's reminded me to be a little bit gentler and understanding of people, you know, particularly when you see younger, because everyone's younger now, right? More people are younger, but like, you know, I know here's some journal or some financial, you know, some fund you're saying something, you think, well, they're 32, I mean, cut them some slack. But let he, without sin, you know, cast the first rock or in this case, you know, let, let he who has never said something really stupid, you know, cast the first insult. So, um, yeah, I just, we apologize for bagging the 24-hour RBA researcher who wrote that paper. You've ranted about last year. I'm still happy with that. Actually, no, I mean, actually, actually, and I, I, I, hopefully, I don't think I any mentioned any names or anything there because, you know, they'll, they'll recognize, hopefully themselves they'll recognize. They'll do what I did and they'll look back as an older person and go, yeah, bad take. Tell you what, I'm so glad we grew up without social media. Yeah. And the first 30 years of my life aren't recorded in, not social media, I'm very happy. Thank goodness. Right. Dearity. I feel sorry for kids these days that the, the, the, the yesterday's forever, as they say, and God knows you're not at least old enough and stupid enough that if we've said something dumb on the podcast, we'll have to iron it, but the kids deserve a, a bit of a break. I don't know. So, social media lost a side. I just, I reckon every, every social media account should be deleted at 25 and start again. Just, just for, just for a second, I mean, it's either I have to, you know, carry stupid things around after. I mean, always one point you could at least, at least rely on the sheer volume of data to bury it. Now, you've got AI. I was like, hey, I, I find everything that Scott said that was dumb from 10 years ago, two minutes later, his timestamps, you know, like transcripts. I know. All right. I was good, but I take more than three minutes. It's a lot of dark things to get through. Right. Hey, I, I'm, I'm hesitant to ask you Joel's quote. I thanks Lisa, by the way. It was very, very generous of you. And thanks for listening and spending time with us. Yes. Thank you. Thank you, Joel's question, because it was talked a little bit about this topic of air. And you kind of said, there's so much to say, but I don't know really what it means. So let's do this. Hi, Scott. And Andrew says, Joel, first time bending the knee, long time bending the knee, may the knee always be bent, Joel, much respect to you both for what you do. Thanks, mate. My question is a little bit left field, but I believe your both have some interesting takes. I'm an Australian writing to you from Japan, where I have lived for many years. I would love to hear both your takes on the state of this country, given its fiscal challenges. You both obviously specialize in a pining about all things Australia, but I believe your perspectives on the future of Japan's economy, give it its fairly unique challenges related to demographics, debt, currency evaluation and markets, would be very informative. I own a house with a mortgage, I invest in the Japanese, US and Australian markets, and don't do Bitcoin. I find myself increasingly concerned about what the future holds for my two kids. If they choose to stay here, and would love to hear your expert economic opinions on how to navigate the future in this country. Many thanks. Joel. Wow. So, just this morning, just quickly, Andrew says so and Lin's back in his chair, which means settling. People settle in. Oh, remember. So, just this morning, this is the first time you and I have spoken in the new year after the pre-records and you said, hey, what's been on your radar? Oh, he's wanted to talk about it and I said to you, the Japanese bond market's actually a bit on my radar. However, let's not talk about it because I really struggling to wrap my head around it in a way where I feel confident to I pine on it, other than to observe that it feels significant. So, for those that aren't paying attention and it's a pretty niche kind of, well, it probably shouldn't be, but it's pretty niche. It's not niche. It's a niche. It's kind of dry, but it's kind of, like, really important. So, Japan is the third largest economy in the world. It's massive, right? But it's in this really weird situation where they've been running debts, massive deficits for ever. They've gone this situation where the Japanese central bank has been buying, they've been doing what's called yield curve control. It's called what it is. Money printing. They basically print up money and then they buy their own bonds. Half of all Japanese bonds are owned by their own central bank. Now, just I'll let that hang there for a minute. You just think what does that mean? Well, it just means that the government is printing money to finance. It's a deficit. What's fascinating about Japan is that so, more recently, it's starting to sort of rear its head, but for a longest time, it didn't result in heaps of inflation, which is exactly what you would think it would do. Why is that? I don't know. This is the thing I'm not sure on, but it's not going to stop me from overbinding. You've got a demographic challenge there as well, which is naturally deflationary, older people sort of spend less. You've got a very strong savings culture that's there. You've got a very, for the longest time, a very strong industrial base there as well. These are all deflationary forces, and I'm very much on the record unlike most mainstream economy. I think deflation is a wonderful thing, not fast, extreme deflation as a result of economic collapse. That's a different thing. The natural deflation that results from productivity enhancements and the rest of it, I think, is a good thing. And the journey through a deflationary environment that new economic system would probably be very painful on the way. But the concept of the idea of things becoming cheaper because we're getting better at doing it is, so evidently, a good idea in theory at least, and should we be in practice if we've got there. Refer to a hard money, two-parter episode, we did recently, which sort of talks to all of that kind of stuff. Nevertheless, what Joel's probably noticing here is that you have seen that the Japanese yields just spike really significantly. And the reason is, is that people who own the debt are selling it, and no one's buying it. Why would you? Why would you? I mean, it's always been the most bizarre thing to me, is because any traditional accepted wisdom is that bonds are the lowest risk form of investment, and it's really an IOU from a government that is spending far more than it receives, is functionally bankrupt. But it's okay because I'll just print up the difference, all right? Like, and if you think that fixes it, then you just need to think about it a bit harder. What's so difficult about it all is that this isn't a hot take. People, I mean, it's all about this for 20 years, you know? And so, to me, I don't, where do I go with this? The mass is the mass is the mass, right? Something's got to give at some point, right? It just has to, because if you pull on that thread for long enough, and it just, it gets to the point where it's just sort of like, everything is being paid for with things that were just puffed into existence, right? Like, it breaks the way that we allocate and manage resources, and the whole economy collapses at a point. But the lesson, I think, in this one, it's always to keep in mind, is that the market can remain irrational far longer than you can remain solvent, is the old saying, and that these things can, you can kick the can down the road for a long time. So you can be absolutely right, plenty of people call that, we forget, the big short makes it sound like Michael Burry was the only person on the planet the sort of, the problem. Heaves of people. Heaves of people saw it. But some of them saw it three, four, five years out, and just got dusted in, in, in waiting for the inevitable to happen, and then when the inevitable did happen, and only corrected to a level that were at the first place. So it's just, it didn't have any, any impact. So I think what I'm trying to say here is that Joel, I think Japan is facing some very, very significant challenges, and I think that there will be a come up and said, at some point, that doesn't mean that it's just, it's left as a smoldering, you know, wreck. It just, it's just going to be more difficult for, for, for, for people that are there. But I, I don't know how imminent any of that kind of stuff is. But for the longest time, the JCB, the Japanese Central Bank was able to suppress yields and manage all of this, and it feels as though like that is starting to unwind a little bit. And then you get, what's really interesting is you get the second and third order consequences. So with all of the savings in Japan, and no interest rate to speak on, like the official interest rate is virtually zero, what do you do as a Japanese investor? Invest overseas. In fact, what did Warren Buffet do? He borrowed money in Japan to invest overseas. Why wouldn't you? Why wouldn't you do that, right? Like it's, it's called a carry trade. It's just like I'm, I'm borrowing it next to nothing. I can go put it over here in an index and get nine cents. It's, it's free money. As, as yields rise over there, there's less of a drive to, that, that doesn't make much sense. And it might be one thing if we were talking about South Africa or Spain, but you know, the third world, the world's third largest economy, repatriating literally trillions in, in capital, it has implications far and wide. I'm not smart enough to piece it all together. But it feels like it's a very, it's a, it's a, it's a, it's very much a sign of the times, I feel, right? Because when I said to you off air, we equity guys, we live in our own little bubble. But when you, when you draw a pie chart of global assets, the bond market is the gorilla in the room. It dwarfs property, dwarfs equity, it's like bonds, fixed interest, sovereign debt, corporate debt. These, these things are, this is where most of the world stores their wealth. And these IOU promises. So when you get even things on the fringes that are impacting this, I, you know, there, there are, there are consequences to that. We spent a lot of time on Friday talking about, you know, the, the, the ills of, of market manipulation. And the rest of it was like, well, the world's largest, in fact, not just the world. All of the world's economies have been playing a, a massive game of manipulation at the very base layer of the financial system forever. I'm like, it feels as though it's a big deal. And I'm very conscious of that. And it's fascinates me. But I'm, I, I also hold the view in my head that, yeah, but you don't want to be right. You don't want to wait until 2043 before you're proven right. Because that's right. Exactly. You know, you know, I'm living in a bunker with a bar of gold and, you know, my, my, my hard drive, my, my Bitcoin hard, well, gold wallet, you know, it's a, like, yeah, that, that seems like a real hollow victory to me. So, so there's a lot to unpack there. We could spend weeks talking about the Japanese situation, Joel, other than to say, yes, I think it is very notable. I just, I don't know what to do about it, other than stay the hell away from big interest. There's not touching it with a barge fall. It's, that's just me. It's hard to because, um, I think it's great, great summary, mate. Thank you. And, and really, really. Yeah, scratch the surface. That's always the problem, isn't it? Yeah. Yeah. Yeah. The challenge, Joel, for the kids, and this is where there's, there's different perspectives, right? People tell me all the time. I, I, I don't know about the Australian stock matter. Oh, that's no goodness. Australian US dollars. Like, well, I don't invest in the Australian stock right in the US dollars. Why would I care what the US dollar value of the, the Australian stock might is, it makes a difference to me. Um, I, I raised that as an example because I'm about to say, when your kids are in Japan, saying in Japan, investing in Japan, all that sort of stuff, it's, it's, it's, you don't, you don't have the impact will be different. You're not going to have the direct currency impact if the, if the currency is to move meaning through in either direction, uh, you do have the impact of that in terms of import prices and export prices and stuff. So you're not going to be immune to it, but it's just a different lens. So if you're saying for an Australian investor, how do I think about Japan versus if I was a Japanese salaryman working in Japan, they are different, they're, they're just different things are, not, not divorced, but the impact of different, running different directions and have different severities for those reasons. Yeah. Um, one quick example on that. Did you know I didn't until recent, I, I'd known that the, the, the yen had been devaluing against the USD, but I wasn't aware of the quantum of it. The, the yen, um, buys half as many US dollars as it did 20 years ago. So between 2013 and today it's halved, the currency has halved. And so where does that impact the local work or was like anything that Japan imports? That's very much where it hurts, right? So it's sort of like, but also makes it, there are real, I guess I'm saying it's real world consequences to it. Yeah. Well, it makes you a Japanese exporter job. It's, it goes both ways. And this is where the, this is where it depends on where you are. And it's one of those, I will say outright. There are some things that absolutely whack everybody in an economy, completely entirely and permanently. And that stuff is, you know, there's other things which is like, well, if, if I'm a Japanese exporter, I'm probably not happy about that. If I'm, if I'm living in Japan and own to your point, US dollars on that assets, not only has my, my shares gone up over that 20 period, but they also then doubled again in purchasing power terms. So I've actually done really, really well. So it's, not only is it uncertain, and that's the biggest problem, but the effects depend entirely on where you sit in that chain. Yeah. I just very quickly. It removes any incentive to invest locally on, on that, on that front, which again has got to keep falling. But yes, that's what has, so he's the other problem is you look at the US and say, well, who's, who's in more trouble and by when? Yeah. And because currencies are relative, if, if the US dollars worth less than, do you have any dollars worth? It ends worth less. And they're both worse less together than they're worth the same amount, which is also as a complete mind blowing. You think about that? It's like, well, you know, I'm pretty money. You're pretty money. We're both pretty money together. You know, that's that. So, you know, it's, it's the, it's the, I can't give you an answer, Joe. But I, what would I say? I would say that I am always in favour of the international diversification where you live. And so, with your Japanese person investing in Australia or Australia and investing in Japan, you know, I wouldn't say necessarily either of those two directions or the right directions necessarily, that might be, but just be diversified, holding assets out. So, you know, this is what we've talked about before. We're not Japan and Australia. But I hold US dollar assets, you don't, it's not. US denominated assets, not US dollars specifically. But for partly for diversification, partly because it's great investment ideas and partly because I'm doing that. So, those are things that are well worth doing to my mind because it allows me to, you know, naturally hedge against that risk in a way that actually creates value anyway. So, if the share's gonna be up anyway and I get some diversification on top of that, that's why they call it the free lunch. Right? As long as you're picking well, you're in a good place. So, I would have the kids investing outside Japan, in Japan as well if you want to. But yeah, definitely outside Japan for those reasons. Being diversified internationally, I talked about the US versus the Japanese, you know, at some point, you know, careful where you think you want to get your diversification, if you're only going in one direction, if they're both having the same issues. I also suspect, I want to be really careful because no one knows what the future will bring. I suspect that over their lifetime, the concerns room has probably come to fruition at some point. King of Canada for 20 years, 30 years, 40 years, 50 years, at some point you go, well, 60, 70s, 80s, 90s. The longer the timeframe, the more likely it is that there is some reckoning at some point. That being said, the question really is a relative question of where else would you rather be. And I'm gonna have some home country buyers here and I'm gonna pretend to myself because I think it's true that I'm being as unbiased as I can be, which is, I hate Australia's debt problems, but we got truckload less debt problems than most of the other developed world. But realistically, I feel really, really good about being in Australia, investing in Australia as well as overseas because we've all got problems. I've said a million times, we might be able to leave stick bloke in the hospital, doesn't mean I should be in the hospital or the adult together. But in a relative sense, you know, if there is a reckoning, the size of our reckoning related to most other countries' reckonings is going to be lower, almost by definition, assuming we don't let decade out of control, which we may still. But for now. I feel good to, okay, to good about that. I'm sure that other individual countries are in similar situations, probably some of the Nordic countries or something. So I'm not saying we're the best place just that I'd rather be Australia than, and in Australia, than the US, the UK, Europe, Japan. So I would probably look at that. Do I think someone, I don't know how your kids are mate, let's say they're 10, over the next 100 years in Japan, is life good, probably, I would suspect, doesn't mean they can't be. I mean, look, think about the last 100 years, right? We had a great depression, we had wars, I mean, things will happen over a century. I think trying to prognosticate, it's probably hard, it's as hard to do 100 years as this to six months. It's probably easy to do 10 or 15 years, or easier, right? And so you kind of go, well, I don't know, I wouldn't be, I wouldn't be, I wouldn't be too worried. I think there are worries. There are always in every country and every domain for every reason. And most of the worries don't come to fruition and so is it to some of the worse than we expect and most aren't. And things we don't worry about are things that end up getting us. I don't know, I don't know if it's a negligent or, or polyanna. I suspect live a good life, enjoy what you're doing. Invest and save sensibly. I can't the best I can do for you mate. I don't think me trying to predict what Japan's future might look like is useful. I think I'll probably get it to be wrong and be if it wasn't, if I was right. Would I suggest you change anything? No, I don't think so. Ram, am I too polyanna? No, I mean, no, I mean, that's, that's the most boring advice in the world but it's always the best of worries. I mean, I didn't mean it as an insult, I don't know. You know, live well, spend less than what you earn, invest sensibly, it's like, there should never be rotating into commodities and while hedging again, it's just a little rubbish, so yeah, I can't, I can't argue that, but it is just, it's just an interesting topic to me. The other thing that I always find fascinating in thinking of Japan is that maybe younger people don't know this, but they had a bit of a property bubble in the 90s. Yeah. So you don't have a bubble? Yeah, right. And it got to the point where the Imperial Palace was worth more than California. The state that individually is like one of the top 10 largest economies in the world, like it was, it was insane. You know that the total value of Japanese property to GDP hit 460%, now before you laugh. Yeah. What's Australia going on? 450%. I know you know that. But we're different. We're different. Yeah, we're different. What was it? What was the economic standard playing here? Totally different. By the way, level of household debt to income reached 100%. Oh my gosh. The height of their property bubble. We're only at 197%. These aggregate averages figures, those plenty of people are going, "Oh, I want my debt to income is more than two times." It's sort of like, I just, as I say all the time, I'm just such a big student of history and I just feel as though when you're trying to grapple with economic ideas and that, the world just offers you so many examples of things, you know, and whenever I hear things like this time, it's different. You know, this just makes you cringe a little bit here and the Japan is just, we were talking about it a lot on Friday. It's got so many lessons to teach us. Good and bad. They've done some incredible things over there and they've made mistakes over there as well. They're varying towards more populism as I understand it as well, or any elections being called. Global problem. And get this, right? I mean, this is not surprising at all, right? So because, because of various sort of pressures that are out there, largely with some of the things that they do need to import, they're going to be cutting various taxes. It's like, I'm awful, but again, I put that in the context of you'll have a massive, unfunded deficit that it can only be that the world is no longer funding and that can only be met through money printing and sort of. So it's like, what is fascinating is that you can be in this, you can paint yourself into a corner, or maybe a better analogy, you can dig a hole for yourself and then the deeper you get the faster you start to dig, which is also the US, right? Exactly. And it's just, it's like watching a car crash in real time, you know, in slow and slow motion and you don't think, but very much at the forefront of my mind just to repeat myself is, yeah, but this is a slow motion, car crash. So I don't know if I'm going into the bunker just yet. But I think it's, I think it's, I think it's definitely worth paying attention to. It's interesting. The hardest thing is, let's say you're in the car, you know, the car's going to crash. You're in the car, the car's going to crash. Yeah. That's a kind of one of those parts. And you could leave Japan. Yeah, we're playing a game of chicken, but you're still a kilometre down the road. So I'm just going to stay on it for a little bit longer, a couple hundred metres away. Ah, stay on it for a bit longer. I mean, I mean, the reverse. I mean, that kind of, it's going to happen. So you're going to live through it anyway. And I guess I'm just kind of playing the other side of that, I've kind of like, should just stop happening, yes, for a policy perspective, if you've got the ear of the Japanese PM, you're like, dude, can we just have a quick check because this is not going well? Yeah. If you're living in Japan, you're like, what do I do? And I think that's where I kind of come back to, I don't know how his kids are, they're maybe not investing yet. Joel, you're investing outside the Japan, which I think is really, really smart. Again, the US may have the same issues, right? So I'm not, I'm not silly enough to think that I'm saving myself with the investing. And the US necessarily depends on its currency from here. But yeah, I'm only just to say, if your kids are still in Japan 80 years' time, they will live through whatever comes next. And they'll probably be fine. I tell you, Japan's going back to a, you know, subsistence feudal economy. Could it suck for a while? Yes. Would you avoid it if you could, of course. But if you can't know what's going, if it's going to happen, when it's going to happen, how bad it's going to be? What's going to, the impact's going to be, whether or not you get through it, here's the, Ramyeon, I've said this so many times, and I feel always both guilty and responsible to say it, which is, the best you can do is sit yourself up. You can't change the country's outcome, so sit yourself up. And that means owning assets, it means probably owning foreign dollar, dominant foreign currency, dominant assets, just in case companies that operate outside, Japanese economy, for exactly the same reasons, do the things, own the assets that give you personally as much protection, resilience as you can. Not to the point of baked beans and shotguns, because, you know, there's a limit, I'm not saying, lose money to, it makes sense to some left, but I am saying, just think about how you're setting your financial life up to make yourself as anti-fragile, or at least as invulnerable as you possibly can. And for your kids, that means the same thing, right? And I'm not saying, you decide what you want to do with them, and how you want them to help them invest in all that kind of stuff. But the best thing you can do for them to be sent, you can, is give them the resources to weather the storm. And that's not fixing the Japanese problem, and it's actually Japanese having no assets, I'm not saying it's okay, and it's a very selfish answer, which is, you know, look after yourself and whatever happens, happens, thinking as if it's going to happen anyway, you've got the choice now to either be ready for it, or not ready for it. And I think it's, you know, incumbent on all of us to do what we can to set out financial lives up so that we are not at the mercy of those events, to the extent we can do it. I strongly agree, do you definitely advocate for the world that you want to say, but abs at the same, like, you know, if a captain is still steering towards that, I suppose. It's just staying closer to the life raft, you know, and, and this is why, I'm sorry to bang on about it, but this, this, this is just why you've got to go absolutely 180 from traditional wisdom, which is when things get scary by bonds, don't buy bonds. And I, I don't even have to talk about the future, right? In the last, in the last five years, anyone who had saved their money in Japanese bonds has been wiped, not wiped out, but they have lost huge amounts of money. It's like, whoa, but wait a second, that's a safe haven asset. And I only lose if I sell, you know, if I hold to maturity, it's like nonsense, absolutely nonsense. You bought an asset. And in the last, like, really, since COVID was a sort of maybe about 21, 22 things really started to explode. Now, I've got the chart at the moment. So back in, let's worry, almost exactly four years ago today, it was yielding 0.167, now it's at 2.27. So you have what, that you're more than halved. How much does that, is that, is that COVID impacted though, is it, is it long enough term to be, I might, I could obviously, everything, all upon Yots' fell, COVID times, does it? No, I'm going back over a 25-year chart, so it's flat because of all the intervention and management, and then BUSH, and it's just exploding, so I guess without getting all to overly technical, my point is, I am an ordinary, quote unquote, "mom and dad investor, I'm a little bit nervous about the future, financial advisor is telling me I need to have some fixed interest because that's the lowest form, that's the lowest risk that I can do. It's a prudent, known way to protect myself, and it gives me some, you know, diversity away from equity marks, like, great, but anyone who has followed that advice over the last three years has been, has, has lost huge amounts of money, like you have, if you need to sell your bonds out, you're gone, right? And even if you don't, you're only being paid back and printed money. So it is, it is a, this isn't, this isn't a, a collapsed, you know, Latin American dictatorship that we're talking about. Here's the world's third largest economy, you know, it is a G20 nation, and, and, and their sovereign debt has collapsed right in front of our fight, never gets remarked on, and it's like, whoa, that's the safest investment I can make. No, it's not, and I, and again, see, to your point, look, I don't, I, I, I don't think the political world there is there any change, but just whatever you do, Jehovah, I can't give advice. Yeah. But if I could, I would say, do not buy, do not buy bonds, right? Do not buy them. They are not, they are not, they are not the, they are not the safety that they are purported to be. Yes, diversified portfolio assets. Not even diverse. But, but, but, but, but that's where these, some of these nonsense go, oh, diversity means I, I should have some of this and I should have some of that. So I'm just having it as a, I would just say, don't touch it at all. I mean, I, I, I, I, I was a diverse, I'm, I'm too about shares, property. Right, sure. Sure, sure. Yeah. Yeah. Yeah. You could have that, you think, whatever. It's just having, having assets that are, in theory, growth assets that are not correlated, ideally, to the Japanese economy and currency. Yeah. So that, which is where bonds come out. So I'm not, I'm not saying to be diversified, I have, I love saying, you know, no, we don't need to have everything. So diversified, diversified doesn't mean some of everything that, that's, that's not what you can do. It's usually how it's taken to mean that. Right, right. That's how it's called due to, because I just, the conventional wisdom is I'll have some of everything because then you have protectors like, just nonsense. Dude, the conventional wisdom is 6040. I know. Right. The 6040 portfolio is 60% equities, 40% bond. Right. And it worked for a lot of, again, the, the, these, these are actually really great advice in a world of, of monetary and fiscal restraint and responsibility. So it makes perfect sense. But we don't believe in that, well, we haven't lived in that world for decades now. Anyway, I'm, I'm, I won't, I won't kick off another rat. Okay. Motley full money. For more, subscribe to the free newsletter at full.com.au/listener. Don't worry. Discuss monetary policy. And I do hope some of the people in power pay attention. As you have heard, some awesome ideas and debates on this topic. My idea, says Gab. Now, get your pen, area, it's replaced all current social benefits programs. So unemployment, pension, child support, NDS, with a different program based on GST, dividends. How would work? Is we would double the GST from the current 10 to 20%, but all the extra 10% would go back to the population as dividends? This would apply across all entities of the tax fund number. Gum would collect the 10% and distribute it equally every month to every TFN. What this would do is click GST from those who consume more and give it back to those who consume less. I would also remove all GST exemptions while I'm at it. Can you get your thoughts, Gab? I'm really careful not to do a knee jerk on this because there's a lot in there. I've got to think about that. I do have the idea of the dividend. I was very unsure until Gab said collect 10% and distribute it equally every month to every TFN. So those who consume more pay more and get back to those who consume less, which is kind of the welfare system now, right? Those who earn more pay more in tax and those who get welfare payments effectively consuming less because they're going to do it. It's like the reframing of the execution, I'll make you talk first I can think, but what I like is that reframing of what is effectively tax and welfare just done using the GSC mechanism and letting the spending or lack thereof be the balancing item. Yes. Here's my hesitation is that the implication in the framing that is that all spending is not bad. Now, don't forget that investing for growth is investing, like it is spending. There's a lot of spending that happens in the economy where people who are buying stuff to make other stuff. In other words, they're not directly just consuming. They're not just taking from the pie that we collectively bake together. And I say, I don't know if I would want to disincentivise that. I don't know you with GST. You can write that. So, I'm thinking in real time. I don't know. So, this is complex, right? Yeah. Do you want to jump in? No, I'll say this because I'm not going to, I'm not going to, even if you speak for 10 minutes, I'm not going to have a high conviction view on it. I'm very much in favour of anything that, of a, of a, of a simplest system. Definitely start with that. It is way too unnecessarily complex. I was winging to you off air about I've got to do my taxes. I've left it last minute. I hated it. It's the most painful thing in the world. And it's just like, it just, it just gets in the way of me doing other more productive stuff, right? And I think that's true of all of us. So, anything that makes things simpler and fairer, I think is a good idea. So, yeah, but I'd have to think through it, sorry, Gav, it's a, it's a non-answer. So, what I would like, I said before we should try low universal based income. And those who object to the trial, don't really object to the trial, I object to the idea because the ideology of you don't like it. And so, I don't want to try it just in case it works. We're just kind of you're part of the safe injective rims, right? It's like, yeah. I hate it. So, if it works, then I'd just be unhappy. So, I don't want to do it. It's like, yeah. It works. It works. That's kind of the work by the way. Right. You're just saying, let's find out. Yeah. Well, what's the lose? Like, literally. Why would you not? Beats every other policy we just whack in place to go. Let's just do it. It's like, no, this one. We just try it. Pick a, pick a state. Pick a, Tasmania is great, right? It's in Ireland. I do it in Tessie. It's actually a, well, thank god, we didn't do it more broadly, we waste a little bit of money, at least we know. Well, you go, my god, this is amazing. We should do more of this. So I think the GST payback is kind of a universal basic income effect of what you're saying. Payback equal to each entity. So that kind of does it. I don't think I'll be paying GST back to tax fall numbers generally. I don't hate it, but it kind of does make any sense to me that you kind of pay attempts at dividend to companies or other structures for their own sake. By the way, gave you to look with, maybe you mean personal TFN rather than company, I don't know if you do it. I don't want to assume you do. If we do every tax fall number, I could, I'd roll out 15 brand new companies tomorrow morning and collect 15 lots of the money. So I think it would probably, I assume you mean, I ain't saying to these, I don't know what you mean. I wouldn't do it to TFNs in general because the, you incentivized people screwing on with the tax system. You can have a tax fall number for any company you start up. If the GST dividend was larger than the cost of registering a company, you'd have 84 million companies listed in Australia tomorrow morning. So I think you can do it that way. You might be able to put some sort of operational rules or cash flow rules around it. I don't know. Maybe. It was under personal level. I mean, you're really tired of UBI, which I'm completely fine with. Would I do it with the GST, though? I keep point about consuming more and less. It's kind of a little bit of line with your point around about wealth tax or land taxes of, you know. You can't avoid it. You can't consume it, so you can consume it rather than try to hide income or claim deductions. So is GST a consumption tax the better way to raise it? Probably. Yeah. It also does mean if you are going to increase the GST, giving it, giving the increase back directly means you're not, it's not a regressive tax where those are lower incomes who can't afford the increment, because they're just buying the necessities and haven't got the, the ability to make out the difference. That would kind of work. So I don't, I don't hate it from that perspective. So one thing I would say probably, and it depends on how we structure this stuff, but you mention unemployment, pension, child support, NDIS, even just those four areas have different needs and different things for different people. And I don't really know the overlap between, for example, a pension in the NDIS or unemployment child support or any of those combinations. And so at some level, if you're saying, you know, a single payment, if that payment was less than the payment currently being received by a welfare recipient who needed the money, they may be worse off and that might be, that might mean we need to, to read you get a little bit. I've said before I'd rather go universal based income collected, however I don't really care how it's collected, not that I don't care, but the, the income bit doesn't need to be offset directly by a, it doesn't need to come from the same place as the payment. So I would, I would honestly go UBI trial and largely by myself funding by removing and replacing a lot of those payments, removing and replacing the administration and collection compliance functions. We've got a lot of paperwork and that would be a, it would be an easy way to fix that suspect or at least try and fix it again, I don't work in which case we stop doing it. But I think I, I think I'd start there. But I don't, I don't mind doing the GST, if that's, if that's how we did it, as long as you just, you know, made sure the UBI allowed for that increase, GST might be the, is the best way to do it? And then offset, yeah, I think probably, um, would I do it any other way? How do I fund UBI? No, I think, I mean, I change the text a lot just because it sucks anyway and it needs to be fixed and multiplied to RAM's points. So I, I don't, it'll ever happen because it's, it requires complexity and requires honest conversations and, and long conversations and stuff, um, but you wouldn't do just any of this stuff. You, you always want to be easy to go because it's just simple, like two, two, two changes. Maybe they get through, whereas my idea of tricky 85 things may not work, it's just too complex. Um, so yeah, I, I, I don't hate it. I, I wanted to do the numbers, I wanted to actually meant for those on welfare. I wouldn't do it to all TFNs, I don't think you can, I think it's reasonable to do it. But I think I personal TFNs, individual taxpayers probably make sense. Uh, you mentioned replacing child support, obviously that's kind of a number of kids related. So there is, again, there's some wrinkles there and there'll be winners and losers. We should be okay with that, by the way, but there's political and I'm not sure we are. So I don't hate it. I don't hate it at all. Um, it's such a big topic. It's such a big, here's the thing with all of this, is that there's plenty of people far more focused and specialized and smarter than us who have talked about this forever. And just, you know, talk to Ken Henry, what he thinks about it, right? It's like, not even, not even, they've paid him to give him his opinion and ignore it at all. I took all the selfies. You know, so I just like, when that happens, it's sort of like it feels, it's easy to be cynical on in terms of these things. Um, so yeah, I, I, I see nothing but added complexity for the tech system. Yeah. Yeah. I think about Henry too, as it was done, it was initiated by a Labour government. It was then set on by a Labour government, set on by a Liberal government, set on again by a Labour government. It's not, it's not a political thing of the government didn't like the report they got. It meant they didn't, but it just, it was just too politically difficult to account, to contemplate so they didn't bother trying. Um, so like every time they were the techs, I mean, to be a GST gap, every time they were techs, I, let's review all taxes, but the GST is off the table, and there's no good reason for it. They said, absolutely. All they're doing is political cover. Yeah. Because again, this is where, this is where the, there's a geopolitics sucks because the party in power is worried they're going to get tagged with it. So they don't want to get scared of that. And the reason they're going to get tagged with it is because the opposition of the day's going to absolutely tag them with it, because it just stays the political me. So I was like, you know, it should be, when the government says, uh, a GST is the table, we look at the government and say, are you so-and-so, you should have done it. Why would you do it? Because the answer is, because those a lot over there are going to make merry hell, and if the situation was worse, we would do the same to them. Mm-hmm. And well, that's the reality. It's your point about, you know, proper conversations around. That's exactly what we're not talking about. So will they take it off the table because they had to have the guts to do it, and they know, they're not just worried about the pop, they don't worry about the, the, the electorate. They're worried about the opposition who will happily torch good policy, just to win a couple of extra votes and, you know, screw things in the meantime. I think we're the GST itself. The king was in favor of government and against an opposition, the, you know, the very idea of that sort of stuff is, you know, unfortunately, what's holding us back, as a, as a functioning democracy to be better than we are currently, things are pretty good, but they'd be a heap better. And as large as the inability and willingness to actually do difficult things that makes it harder. Yeah, they can't even do it when they've got very distant and, uh, unpolitically, unconnected organizations. Yeah. Right. Yeah. So I just, I just, this morning, rather than the paper, the, um, OECD sort of said, hey, Australia, you know, I want to, I want to do something about that deficit, you know, it's causing problem. And what's this thing where Charlottes can override RBA decisions, you know, it's just maybe you want to think about that kind of stuff, like, not going to either like, it's like the Japanese conversation, right? Like it's just sort of like, gosh, you know, be vocal in your thoughts, but, but be careful with what you own, know what you own and why you own it, because I mean, these, these self-interested muppets aren't thinking beyond the next election cycle. No. And again, on both sides, they, they, they, they, they'd sell our mothers for a vote. And so they're never going to, they're never going to let, a government's never going to let an opposition have, have good policy on challenge advice for this, because all I can see is the vote rather than rather what's good for the country. Well, I said to you, again, off-air, it's just like the, the, is it, I don't know if it's irony, but it's, it's, I don't think that any of these concepts are beyond the average person to understand, like, you don't need four PhDs in economics to sort of, you know, it's just like, it just takes someone with a bit of guts and probably a bit of charisma. So just sort of say, hey, we're doing this. Don't buy into the nonsense that the other side is talking, whoever the other side happens to be in that particular instance is just because it doesn't, it doesn't make sense. We're doing this because it's going to make you better off. It doesn't feel that. I get it. It's very counter-intuitive. But it's going to make you better off. Do you want to be better off? Yeah. Well, that's why we're doing this. Right? Yep. Yeah, but they're going to do that. Yeah, and it's going to make you worse off. It's going to make you feel like you're better off and it's going to make you worse off than with, you know, that, and turn it around. But they're not that unfortunately, they just preach to the lowest common denominator. They assume that everyone's dumb and incapable of understanding it. So we're just going to pitch to those. It's lazy and it's cynical and it's depressing. It's, it's gutless. So I mean, gutless, actually, in the absolute sense. Yeah. Absolutely gutless. I mean, gutless is in. There's no effort to say how about three years in the virtual cycle, I'll release a range of plot, a plot poem of policies now, and I'll spend three years arguing for them. So they'll vote for me and elect me back in or they'll elect me from opposition because I've got a better set of policies than that person does. Well, they look at this. Oh, hang on. There's a poll in three weeks time. And if I get bad polling for a couple of months and someone's going to roll me inside of my party, which frankly, might also be, oh, it will be true. It's why it's, you know, success as many fathers and fathers as an orphan, no one wants to be responsible for it. And they're so busy trying to avoid the bad stuff. And frankly, not to get political about it, but the major policy, major parties are losing primary votes hand over fist to earth or left and the right at the moment because we're looking at going, well, you guys are just feathering a nest and you're not doing anything to help me. And the least that person over there, whichever your preferred angle or direction is from the middle, they are at least saying a thing. And part of the popular, that's Trump's populism is not because he has solutions or not more than assertions. He's got, you know, Christmas cracker answers to the grievances that people have rightly have or recently have or perceive they rightly have. And so he just says, I'm with you, you're right, this sucks. Vote for me. Yeah. And I'll do a thing you think is good back to tariffs, right? Made in America, bring him back American jobs. They've sold you out. I'll look after you. Well, they have saw me. He'll look after me. And it's how populism rises because the sensible middle does nothing, the science for nothing, says nothing, does nothing. And that's why you end up with the extremes on both sides and in the end of the day, the extreme of both sides can't start looking like each other at some point. That's where we end up. Oh, we're going there. We're going there. I don't want to mention certain names because it just puts people off politically. But there's, you know, and and and and you're asking your candidacy for the next election. I just, oh, I don't care. I'll mention it. I was like, what nation is massively on the rise, right? And and and and only because it's been gifted to them from the major parties. They don't have anything to stand for and don't, don't even recognize the very legitimate problems that people are. People are right that there's something wrong. Like we all, we all see it. We all notice it, right? And and everyone's just jack, but you just naturally gravitate towards the, the easy answer. It's really, really, really scary this kind of stuff. And I know just we woke up this morning to find out that the coalitions dissolved. Yeah. Right? Maybe it doesn't do something now, like what are you waiting for? You have the political, if there was ever a moment to stand up with a grand vision and to plan, even if it was going to be challenging to push through and to convince people, now is the chance to do it. Yeah. They won't. They won't. We're, you know, we're spending all our time on stupid issues that just completely missed the more broader point. And I just make the final point is all of political disunity and ruck, what's the word for it? When the electorate becomes very disenfranchised, there's always an economic underpinning for it. Comfortable, prosperous people with lots of opportunities just don't go towards populism, you know? Hey, where I was in the podcast, but I want to pick and pick that because I mean, I mean, I'm talking about that on Twitter this week. And what I think is faster, you know, you're 100% right. What I think is fascinating as the human condition is that for all of the truth of what you've just said, it's remarkable how well off we can be, but still perceive that as the economic calamity or the whatever in the sense of anyone else in the world would kill to be in our position. Yes. And yet we are slightly less well off than either we were or slightly well off than we thought we would otherwise be. Yes. And we're ready to throw the toys out of the cot. And as just as there's a lot of this and again, back to real politic of this, there's a lot in that because it's not like in any any reasonable perspective, you look around and go, so we're better than all of the six and a half of this world, seven billion people are worse off than we are. And you're telling me, I'll go to absorb a little bit of pain, just kind of make sure that the future is pretty good. No, go to hell. I'm out. Yeah. Or, you know, house prices are too expensive. Yes, they are. Inflation is a bit high. Yes, it is. They are bad. We should fix those things. We would rather have that situation Australia than the situation, the other six and a half million people living within the world. No, I'd rather have that situation. And you're ready to throw the toys out of the cot. And again, it's, you know, I have this conversation a lot and it's keeping both ideas in your head at the same time, recognizing we should fix the things that are broken, but also finding a way to make sure that the, we don't miss the stuff that's actually working. And just that, I find that really fascinating that the, it's everything's relative, right? And particularly economically, it's relative. And you just kind of, it's, you know, it's economy stupid. You have a recession where the Australian economy falls by a fraction of a percentage point. And, you know, governments get, get turfed. It's like, man, it's so little in any relative sense changed. Yeah. And yeah, it's, it's just fascinating. I mean, to me, it just, it, it, it underscores the, the power of, of the free market system. We, I mean, we have, I've rented many a time. We have more of a currently capitalistic system, it's all kinds of, you know, Tom Foulery that goes on there, but underneath at all, it's sort of like we have, we have created an immense wealth in this country, you know, in spite of all of the wrong moves that we have made. Because it's not a binary thing, right? Like it's not just black or white. It's just that we're the wrong shade of grey and we could, we could aspire to more of an ideal. And we can, it's just, I just find it fascinating that that relative sense of, if you're everyone around the, around the world strives problems, they're taking it with the Harpe and where's it they are? Well, the pitch walks in the street then because this is, this is awful. It's like, yeah, just again, a bit of perspective, I think it is really important for anyone to travel. Yes. Yes. Yes. Yes. Yes. Yes. Big, I know as a younger person, I said, did some backpacking around Southeast Asia and other places. Like it just, you know, if you want to be patriotic or you want to at least be patriotic to be patriotic. You should be patriotic. You should be patriotic with that word too. Yeah. But yeah, appreciative and recognizing how good we've got it, it is to travel and to remember that there are, when you look at a lot of the, the lot that people have, people's lot around the world, it's like, it's only, there's only some seemingly small changes at the very top of structures that lead to such massive differences in alcohol, again, back to the Singapore conversation, right, for Friday, you know, and it was, I said 50, it was actually less, it was like 30, 35 years they went from the bottom of the pack to the top of the pops just by making some changes. Like, these things are powerful when you get them right. And you're right, I mean, we shouldn't complain, but I still feel as though it doesn't, things could be better. Oh, I should do something. Especially we shouldn't complain. Yeah. So I want to hold both those ideas, but hold them both really, really, really strongly and loudly, even though they feel like they contradict, because they're both true. Yes. That's both. Yeah. One doesn't say it's this, so that doesn't matter, which that's what this doesn't matter. It's like, they are both 100% true, 100% important, 100% reasonable. And we should absolutely, yeah, hold them both, even though they kind of, you know, hold the North Pole, the magnets together and kind of go, I get it, and the natural tension, but one doesn't invalidate the other, I just think, I think that is just a fascinating observation. Again, well, I'm sorry. It's just my own emotions, fascinating. I find, I find that idea fascinating. Yeah. Yeah, me too. Me too, man. And look for whatever small way we can sort of push the conversation, some of the thoughts out there, because it is, as I say, they're not, they're not that difficult concepts to get your head around, or the very least I think with so many things, just the very active contemplation and thinking through them, you might not change your mind at the end of it, but it's still a very valuable process, right? And I just, I just wish we would, as a nation, you know, spend more time on some of these more fundamental kind of considerations, rather than just fapping at the edges, which, you know, it's just the circus, which is what makes it all so depressing. Anyway. Oh, that's cool, isn't it? Enjoy the rest of your weekend and listen, thank you for spending a bit of time with us. If you're still here,
[email protected] is the email address I go to do at the beginning of the pod next week. Can you write me your own? Yes. Off you go. Off you go. And hit us up at sage_seemian or at strawmanevest on Twitter. You get me on Twitter @tmfscot.p and Scott Phillips, money on Facebook. Have a great weekend. Have a great weekend and have a great weekend and have a great weekend.
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