TPN Podcasts for February 2020

Tony discusses his portfolio management strategy during a downturn like the Wuhan Black Swan that is currently going on. He also answers some listener questions about having a small portfolio and debt-to-equity ratios. Our stock of the week is Korvest (KOV).

John Pabon from strategic advisory firm Fulcrum22 joins me to give his perspective on China – business, political and social. John’s an American who currently lives in Melbourne, and spent the last ten years living in Shanghai. We talk about the ol’ Communism v Capitalism debate, the treatment of the Uyghurs, working conditions in factories, IP theft, and how most Chinese view their government.

My inaugural guest is Dr Nathan Brooks PhD from CQUniversity. He’s a forensic psychologist with a background in researching psychopaths. He (and a couple of colleagues) have a new book that came out just after mine, called “Corporate Psychopaths”. It’s an academic book looking at many of the same issues as mine. It was great to speak to him last week and find that we agreed on everything, from the size and importance of the problem, to the causes and the cures.

When WWII broke out, the Zionists declared their support for Britain. It’s not like they were going to throw their lot in with the Nazis. For the Arabs, the choice was trickier. The British were seen by the Arabs as the protectors of Zionism while the Nazis were against the Jews – and the enemy of my enemy is my friend. And for the first few years, the Nazis looked like the favourites to win. 

Then Churchill came to power in the UK and threw his lot in with the Zionists. In May 1942 an Extraordinary Zionist Conference in New York voted to support what became known as the Biltmore Program, for the hotel in which they met. It called for “Palestine to be established as a Jewish Commonwealth integrated in the structure of the new democratic world.”

In the aftermath of the Pazzi Conspiracy, Florence found itself excommunicated en masse by Pope Sixtus IV unless they handed over Lorenzo De Medici. When the city refused, Pope Sixtus went to war.

Our portfolio continues to take a hit from COVID-19.  But Tony is as calm as a zen master. He’s the ICEMAN. We talk about the corruption allegations against HZN and changes to CIA’s listing. Our stock of the week is MFD.

In 39 CE, Caligula walked into the Senate and tore them all a new one. The gloves came off. The nice guy act was over. He criticized them for enabling Sejanus’ persecution of his family and for criticizing Tiberius when in fact they urged him on. Then he reinstated majestas. The Senate responded by thanking him and singing his praises.

Talking about the Iowa caucus (Shadow, ACRONYM, Buttgieg, etc) and the new evidence the CIA spying on US allies since the end of WWI

In his later years, Cosimo goes to war with Naples, gets saved by Joan of Arc (kind of) and René of Anjou and Charles VII. Then he joins a Holy League against the Turks and plays “pick the next Pope” a couple of times. Then, in his old age, he retires to his country estate to study philosophy, before finally dying in 1464, at the age of seventy-four.

​Steven Mabb is our guest on the show today. He’s a recent QAV Club subscriber but has been a full time investor for the last couple of years, since exiting a very successful footwear business.He and Tony compare notes about investing in International ETFs, why buying stock #201 is a good strategy, neobanks, shareholder associations, and cheap brokerage versus using a full service broker.

In our Club edition, our stock of the week is BPT (again). And we answer a question from Ange about what qualifies as a ‘recent positive upturn’. We also talk again about the decline of our portfolio in recent weeks due to the COVID-19 panic. Tony reminds us about Warren Buffett’s story about “Mr Market” in his 1987 letter to Berkshire Hathaway shareholders.
Tony (and Warren) has convinced me that one of the secrets of being a successful long-term value investor is to couple good business judgment together with insulating ourselves from the “incurable emotional problems” of Mr Market.

Caligula built a 3-mile long bridge over the Bay of Naples. Why? So he could ride over it to prove someone wrong. Then he marries his third and last wife, Caesonia. Then he fires two consuls for not celebrating his birthday and starts a general purge of governors who are called back to Rome and, in some cases, charged with majestas. There’s conspiracy in the air.

Jack McCullough is the author of “Secrets Of Rock Star CFOs” and President of the CFO Leadership Council. We chatted recently about his experience, and the experience of other CFOs, of working for psychopath CEOs. He came to my attention through this article he wrote for Forbes about psychopaths. You can connect with Jack on Twitter.

It’s commonly thought in the West that the Soviet Union stole all of the secrets for building a bomb from their spies in the West. Not exactly correct. When nuclear fission was discovered in Berlin in December 1938, the Soviets were as quick to react as the West. But their economy wasn’t as strong, and they had many more problems to contend with, so it didn’t get a high priority. And then 4 million Germans invaded. On this episode we tell the story of the Nobel Prize-winning Soviet scientists who lead the work.

Tony talks about the UNV offer and why we sold it last week and CSV’s recent acquisition, which took it out of our portfolio. To answer a question from QAV Club member Nick B, we also talk more about when and why Tony will exit a stock. Our Stock Of The Week is AQG, Alacer Gold. And then, we watch in amusement as the ASX dives while we are recording the episode and Tony explains why, as a value investor, he worries more about his golf swing than he does and ups and downs of “Mr Market”.

Caligula suspects a grand conspiracy against his person and the sword falls on a variety of people – including the commander in Gaul, his two surviving sisters and his best friend / lover, Lepidus.

When Stalin and Molotov heard what Truman had said at Potsdam about the USA having a new bomb ready, they saw it as a direct threat to the Soviet Union and increased their support for Soviet scientists. They might have been further advanced if it hadn’t been for the purge of Soviet military strategists like Mikhail Tukhachevskii, aka “The Red Napoleon”.

As the war with the Pope continues, Lorenzo sacrifices himself to save Florence and surrenders to Naples. He gets on a boat by himself and sails to Naples, putting his own life at great risk. It’s one of the reasons he becomes known as Lorenzo The Magnificent.

TPN Podcasts for January 2020

This week we’re joined by Rudy Filapek-Vandyck from fnarena.com. He explains his “super stocks” or “all-weather performer” investing strategy. In the QAV Club extended episode, Tony discusses the effect the Wuhan virus has had on the ASX and our portfolio this week, the latest results from CCP, and we break down the financials of AMI.

After The Peel Commission recommending moving hundreds of thousands of Palestinians off their land by force, the Arab Revolt re-emerged with hundreds of terrorist attacks during 1937-38 against the British and Jews – and even against Arab collaborators. The British cracked down and deported many of their leaders. Irgun, the Jewish militant group, met this threat with their own terrorism. Hitler used the situation to score propaganda points against the Jews and the British.

When Caligula’s favorite sister, Drusilla, suddenly died in 38 CE, he couldn’t cope. He made her a god, to be worshipped as Panthea, the “All-Goddess,” or “all-embracing deity”, Divae Drusillae Sorori Caius Augusti Germanici. One senator declared under oath that he had witnessed how Drusilla rose to heaven.

And now Caligula needed to find a new successor.

After the Great Arab Revolt of 1936, the British pretended not to understand the causes of Arab anger and held The Peel Commission to get to the bottom of it. Peel recommended partitioning the land, giving one-fifth to the Jews –  forcing 225,000 Arabs to move off their land. 

Early in his rule, Lorenzo de’ Medici cracked down on the town of Volterra, resulting in rampage, murdering, looting and raping. Meanwhile, in Milan, on the day after Christmas 1476, Galeazzo Sforza, Duke of Milan, was stabbed by three noblemen as he entered church. And Larry upsets Pope Sixtus IV over a loan request, which leads to an assassination attempt in 1478 on both Lorenzo and his brother Giuliano, also while attending church. It’s known as The Pazzi Conspiracy.

As we’re into “confession season” and have “reporting season” rapidly approaching, Tony shares some of the details of the filters/alerts he uses in Stock Doctor to find opportunities. He also answers a listener question about the benefits of using free cash flow versus operating cash flow.
Our stock of the week is CIA – Champion Iron.

From his sickbed he named his favorite sister, Drusilla, to inherit the imperial “property and the throne”. But when he recovered, he decided to rid himself of some enemies, real or imagined, including Gemellus, Macro and Silanus, his former father-in-law.

Alan MacLeod joins me again to discuss the latest news about Venezuela and Iran. Alan is a member of the Glasgow University Media Group. He is author of “Bad News From Venezuela: 20 Years of Fake News and Misreporting.” His latest book, Propaganda in the Information Age: Still Manufacturing Consent, was published by Routledge in May 2019.

Lorenzo de’ Medici throws himself a jousting tournament to take Florence’s minds off the fact he’s marrying a Roman girl. The ‘Queen of the Tournament’ was Lucrezia Donati, a Florentine hottie who Lorenzo was writing love poetry about, even thought she was married to someone else. His bride, Clarice Orsini, arrived in Florence a while later, and they were married just before Piero died. The marriage wasn’t altogether happy, but at least they did produce Pope Leo X.

But then the troubles started. Florence’s enemies, many of them exiled by Lorenzo’s father and grandfather, think they can take this 20 year old kid.

They are in for a surprise.

Tony answers some questions from listener Jamie in Perth about balance between property and shares. He also talks about a couple of investing books he’s been reading, and in our Club edition we analyse BSL – Bluescope Steel.

Caligula’s absolute favourite thing in the world, apart from spending money, is screwing. And seriously, who can blame him. It’s good to be the king. And, like Ray, he was happy to be a power bottom. He liked horse racing, and was fond of poisoning other team’s horses and riders. He liked actors, and was fond of beating people up who interrupted performances in the theatre. I wish we could do that to people who write moronic iTunes reviews. And then, a few months after he became Emperor, Caligula fell seriously ill. It would be the turning point of his reign.

The Nemi ships were two pleasure barges, one larger than the other, built under Caligula at Lake Nemi. Although there were several attempts to recover them from the 15th century onwards, it wasn’t until 1929 that Mussolini ordered the whole of Lake Nemi would be drained and they were recovered and housed in a museum. And then the Americans decided to drop bombs on them, and they were destroyed, lost forever.

We talk about Australia’s bushfires and America’s assassination of Soleimani.

We look at our portfolio’s month end report and how it compared to the All Ords Total Return index and answer questions from Club Member Mike L about the accuracy of future predictions. Then we talk about commodities trend lines as a source of comfort when investing in coal, and our analysis this week is GRR.

Two days after the death of Piero de’ Medici in December 1469, his eldest son, Lorenzo de’ Medici, aka Larry The Med, became the new ruler of Florence. He was 20 years old. He was a major patron of the Renaissance and the father of the future Pope Leo X.

While the Jews were trying to get close to Mussolini, the Arabs modelled themselves after Hitler. The Husseinis, led by Amin al-Husseini, aka Hajj Amin, the Grand Mufti of Jerusalem, in 1935 set up the Palestinian Arab Party which had its own youth corp, al-Futuwwa, similar to the Hitler Youth and was even officially called the “Nazi Scouts”.

Another Arab terrorist group in 1935 was run by Syrian-born, Egyptian-educated preacher and cleric, Sheikh ‘Izz al-Din al-Qassam. He had fought against the French in Syria and eventually had to hide out in Palestine. He organized a terrorist network called the Black Hand. After the “cement barrel incident,” al-Qassam lead an attack on the Jews which ended in his martyrdom, paving the way for generations of young Arab men, and which lead to the “Great Arab Rebellion” of 1936.

Our last show of 2019! Our guest this week is listener Andre Bravo, a Canadian who has a Masters in Applied Computational Economics and works in the weed industry. Oh NOW I have your attention! Andre joined us this week to talk about the app he has written to speed up his own QAV analysis, and then we get his help to analyse our first US stock – Hertz (HTZ.N). It’s an interesting one because we couldn’t use our usual tools and had to resort to pulling up numbers manually. The basic lesson is that the checklist can be used to analyse US stocks. Andre also asks a few really great questions about how Tony uses the checklist and gave a refresher course how on to simulate Stock Doctor’s financial strength rating using other sources of data.

Thanks for all of your support this year! We hope you learned a lot and are feeling more confident in your ability to analyse stocks. We’ll be back next week with Season Two!

TPN Podcasts for December 2019

On this episode:

We have our second QAV Club subscriber guest, Paul, a criminal lawyer from Sydney, who calls himself “a disastrous investor”.
Paul asked Tony a bunch of great questions about the checklist, including drilling down on why Tony doesn’t try to understand a business deeply before he invests in it (like Warren Buffett and Peter Lynch), and about understanding how to factor in shorting.

Cameron reads out some quotes from “Winning The Loser’s Game” by Charles D Ellis and gets Tony’s comments on them.

Our stock deep dive of the week is MRC – Mineral Commodities

Killer Clowns & Terror Drones

The oligarchs have worked out the model for getting people to vote for “killer clowns”. The Democrats gave Trump $738 billion to buy weapons. And America is using drones to terrorize the world.

On 15 August 1929, a rowdy group of Jewish Revisionist activists marched to the Western Wall proclaiming “The Wall is ours”. They insulted the Prophet, Islam, and the Muslim community at large. It lead to large scale riots and violence. The British were powerless to stop it.  This lead a band of Haganah officers set up their own group, called “Haganah Bet” or “Haganah B.” It would later be called Irgun and described as a terrorist organization by the United Nations, British, and United States governments.

According to Suetonius, Caligula was quite proud of his “adiatrepsia” – shamelessness. He lived in habitual incest with all his sisters and was especially fond of Drusilla. He made her divorce her first husband and marry his friend and lover Marcus Aemilius Lepidus. In 37 he interrupted the wedding of Livia Orestilla so he could marry her himself – and then kicked her to the curb 24 hours later. Then he made Lollia Paulina divorce her husband and marry him – but he tired of her in six months. Then he married Caesonia, “a woman of reckless extravagance and wantonness”. Six months into his rule, Caligula fell seriously ill. While he was sick in bed, Macro and Silanus apparently prepared for the worst. They started the wheels in motion for Gemellus to be declared the successor.

From 1921 – 29, there was mostly peace in Palestine. But the Zionist immigration continued unabated. And the larger they got, the more politically aggressive they became. In 1925, a new Jewish right-wing political party, Betar, was created, aligning itself with Mussolini – making them fascist Jews. They urged the Palestine Jews to demand full control of the Temple Mount, the site of the old Jewish temple and called by Arabs al-Haram al-Sharif (the noble compound or sanctuary), the third-holiest site in Islam.

Piero de Medici engineers a commercial coup for the Medici family that makes up for all of their recent losses. He takes over the Pope’s alum business. Alum was the mineral salts derived from volcanic deposits that were used to make dyes for cloth. Essential for the Florentine textile business.
Meanwhile Piero continues to extend Medici patronage to Florence’s artists, including Antonio di Jacobo Benci and Fra Filippo Lippi, one of the craziest and ballsiest guys ever to hold a brush.

On this episode:
* We have our first QAV Club subscriber guest – Murray Bruce from Bruce Insurance in Perth, one of our first subscribers. He asks Tony a question about whether or not he is comfortable purchasing any share that rates well, or does he do additional research on the company before making a buy.
* We discuss how much attention you should pay to stockbroker / investment banker ‘buy’ recommendations, based on an email I got this week about Scentre Group.
* We talk about Melbourne investment management firm Six Park and whether or not they should be proud of underperforming the All Ords.
* In our analysis section, we go deep on Tribune Resources (TBR)

In the early 1920s, violence between Muslims and the Jews continued to escalate. Because they didn’t trust the British to defend their interests, the newly formed (and illegal) Jewish self-defense organization, the Haganah, was formed. Churchill came to visit Palestine – and made things worse. Without a doubt, the British military continued to favor the Arabs. General Sir Walter Congreve, commander of British forces in the Middle East, said in October 1921: “In the case of Palestine [the sympathies of the Army] are rather obviously with the Arabs,… the victim[s] of the unjust policy forced upon them by the British Government.”

How does a 24 year old kid, who’s never even been on a battlefield, let alone lead an army to victory, get declared “imperator”?
How would you handle it if you were granted ius arbitriumque omnium rerum (‘power and authority over all things’) and declared princeps legibus solutus (a princeps not bound by the laws)? Would you be able to handle it?
We know we wouldn’t. Who would we have killed? Find out on this episode.

Finally, in 2002, a poor, uneducated farmer and union leader, Evo Morales, ran for the Presidency, coming third, despite the US ambassador warning Bolivians that they would be punished if Morales won. Then, in the general election of December 2005, Morales did win, becoming the first indigenous President in a country where 62% of the population identified as indigenous. The US, of course, were furious and immediately tried to get him thrown out.

The Pitti faction get Soderini elected gonfaloniere and install an anti-Medici signoria but they can’t get the guilds, who remember the troubles of the pre-Cosimo years, to agree to banishing the Medici. So the Pitti party decide to try an armed revolution, calling in support from Venice and Ferrara. In the middle of all this, Francesco Sforza dies in Milan and his house is taken over by his craaaazy son, Galeazzo Sforza, who liked to rape noblemen’s wives and tear his enemies limb from limb.

This week we talk about why our portfolio outperformed the index by 1300%, the wisdom of Peter Lynch, why Howard Marks wants to stay in the middle, and our stock analysis of the week is Universal Coal.

When the British finally captured the Middle East from the Ottomans in October 1918, under the command of General Edmund Allenby, with the support of TE Lawrence and his Sharifians, Hussein and Faisal, the British immediately tried to walk back on the Sykes-Picot agreement. They figured they did all the hard work, so fuck the French. Most British officials believed that the Arabs could be persuaded to live with Zionism. As Lawrence put it: “There would be no difficulty in reconciling Zionists and Arabs in Palestine and Syria, provided that the administration of Palestine remained in British hands.” In April 1918 Allenby established the Occupied Enemy Territory Administration (OETA), headed by Major-General Sir Arthur Money, with Brigadier G. F. Clayton as chief political officer. As you’d expect, they looked down on both Jews and Arabs. Money, for one, said the Jews of Jerusalem were “bringing up the rising generation in their schools to be dirty, idle wasters.… Their men turn out more idle wasters and their women more prostitutes than the rest of the population put together.” And he regarded the Jews “as a class inferior morally and intellectually to the bulk of the Muslim and Christian inhabitants of the country.”

We pick up our series on the political history of Bolivia in 1943 with the government of Major Gualberto Villarroel López, which ended in violence and his assassination a few years later. The country continued to have coup after coup. In 1967, Che Guevara tried to start a revolution in the country, which ended up with his execution by the CIA.
Outrage at Che’s execution lead to a leftist coup in Bolivia under General Juan José Torres – but that was overthrown when Henry Kissinger urged the CIA to “crank up an operation, post-haste.” This resulted a new right-wing military coup, lead by Colonel Hugo Banzer. Torres was arrested, tortured and executed as part of Operation Condor, the U.S.-supported campaign of political repression by South American right-wing dictators, and which ran during the Johnson, Nixon, Ford, Carter, and the Reagan administrations, resulting in the deaths of an estimated 60,000 people.

In 1464, with the death of Cosimo, his only surviving son, Piero di Cosimo de’ Medici – or Piero the Gouty, ‘il Gottoso’, as he came to be called – took over. He was 48 years old. He would survive – and rule – Florence for just five years. Piero was perceived to be so weak and ineffectual that long-standing friends and allies of the Medici turned against him and the family. It was a decision they would live to regret.

Tony talks about rights issues and some of the complexities involved in knowing whether to take them up or not. I know, right? Sounds boring! It wasn’t actually, I learned a lot. We also discussed a few recent news articles about value investing, Tony reveals his wine of the week, and in our analysis section we breakdown the financials of Horizon Oil.

As I’m posting this late in the day on 2019-12-04, our portfolio is out-performing the All Ords by 1300%!

I know that won’t last, but it’s a nice number to see, even if it’s just for a single day. The ASX had a bad couple of days, down 3.5% since Monday, thanks, so I’ve been told, to Trump’s intention to impose a 25% tariff on steel and a 10% tariff on aluminum imports from Brazil and Argentina. Our portfolio hasn’t moved much though. Perhaps because we’re already buying the stock at a discount to their intrinsic value?

Still, of course the ASX will pick back up and we’ll be back on track for our 200% benchmark at some point. I wonder how many companies just went QAV positive today?