Friday 1st May 2020

The DOW closed down 1.17% over night.

ASX closed down 4.2% today.

It was a cracker day on the Gold Coast today. Scored some good waves with great mate PRW.  We got talking about living a great life. It’s simple as stringing enough great days together too end up as a great life. One day at a time! Today was certainly a great one…

xxx told me both the Gold Coast and Logan City Councils have laid off all contractors. They now use the services of staff only.

The Prime Minister Scott Morrison today said the next national cabinet meeting would be bought forward to May 8th (from May 15th) to discuss bringing forward opening up the country. This is great news!

 

Saturday 2nd May 2020

The DOW was down again this time 2.55%.

Some restrictions have been lifted here in Queensland starting today. It was a fine day and beaches were packed, no surprise there.

 

Sunday 3rd May 2020

A friend told me his credit card bill for the month was the lowest he can remember it being. Lets project forward, if this is the case for most people, it’s an enormous slow down in the velocity of money and businesses making less income.

Australian entrepreneur Mark Boris did an Instagram video today about the need for Australian businesses to be self reliant, innovate and the best they can be. We may be beating the curve, we now need to beat the economic challenges business now face he suggested.

As an example, Warren Buffet today reported he’s sold out of all the airline holdings BRK was holding. What makes this interesting is he only recently (March from memory) bought more of one of the airlines. Now, he’s sold out of the all. He said he miss judged the value of them and people travelling in the next few years will be lower in number.

We have 6783 cumulative COVID cases in Australia with 93 cumulative deaths. While globally we’re at 3,272,202 cumulative cases and 230,104 deaths. Interestingly, the stats in using for international number are from this site https://covid19.who.int

Being that it’s the World Health Organisation, I don’t trust them. Not sure if I’ll bother updating numbers moving forward.

Also today Elon Musk tweeted his company Tesla shares are over valued, after last week reporting a profit for the 3rd consecutive quarter. Tesla shares promptly dropped 13%. He also tweeted ‘I’m also selling almost all physical possessions. Will own no house’. Interesting insights and behaviours. Tesla seems like an impressive company and is clearly a paradigm shifter in the automative and software industries.

 

Monday 4th May 2020

Today Westpac (WBC) released its half-year results. It’s profits were down 60%+ and it’s earnings per share was 28 cents. So it’s paying no dividends to shareholders and will review over the coming 12 months.

They still made over $1 billion dollars profit but need to ensure they have funds to the likely challenging economic conditions.

Yesterday Berkshire Hathaway (BRK) streamed its annual meeting online, with 5 hours of Warren Buffett sharing his wisdom. I got a lot of out it, most of it perspective and reinforcing a long-term view. He talks in multi decades, something I value.

The biggest take home points were his review of US history, the great depression and never bet against America economically as its best years are ahead of it.

Also, his fantastic analogy the liquidity of shares using owning a farm and having a neighbour with a farm constantly wanting to buy part of yours or sell you a part of his, 5 days a week. It’s a wonderful option to have and equally you don’t have to listen to it.

He also cleared up why he has $125 billion in cash. His listed and unlisted companies are worth probably 4-6 times that amount (that’s my guess) so $125 billion in case as a retaliative percentage is only small. Probably like me being 10% in cash, however that said there are two huge differences:

1.     He needs some cash on hand in case any of his businesses need it and one of his businesses Geico an insurance company that needs to have a huge ‘float’ to pay out any claims necessary

2.     He never wants to be reliant on the government needing to bail him out or dependent on banks for liquidity if he needs it.

Again, we’re talking about BRK running and managing 100’s and possibly 1000’s of businesses. People like me, really have no idea what that entails until we’ve personally experienced it, so I’ll listen to Warren and take him on face value.

 

Tuesday 5th May 2020

The DOW finished up 0.1%. This morning Qantas announced it has borrowed another $550 million dollars, extended it’s standing down of more than 25,000 staff and cancelling existing domestic flights until end of June this year. The CEO said they’re loosing $40 million/week but could continue to do that until December 2021 because of the balance sheet they’ve build up over the years. They’re down to just 13% of typical domestic and 6% of typical international flights currently.

Australian Treasurer Josh Frydenberg has said the economic hit of COVID19 has cost the nation $4 billon dollars/week for every extra week the country remains in lockdown.

In Australia we’re at 6838 cumulative cases with 97 total deaths attributed to COVID19. Globally we’re at 3,580,247 cases at the time of writing and 251,365 total deaths.

ASX listed company James Hardie Industries, a building materials company, has cut dividend payments until further notice and cut 375 job globally.

My mate xxx called, we talked about his potential participation in the Share Purchase Plans of RHC and NAB. RHC is one he intends to hold on to long term, while the NAB participation is a way to accelerate his sale of NAB, via bringing down his base cost to a lower number ($30k at $14.15) will enable him to sell out of them soon without loosing capital.

Time will tell how this one plays out.

The ASX closed up 1.6%.

I got asked by a business associate in Melbourne to do a health talk on Thursday evening the 21st May on Zoom centred around the USANA products. The company’s Australian entity also asked me to give a talk on Zoom on Thursday morning 14th May.

I’ve said yes to both for three reasons.

1.     Helps improve my online communicating skills

2.     In these times, I feel it’s generally a great idea to say ‘yes’ to opportunities that present themselves.

3.     Ideally I’ll record them both for uploading to my YouTube channel and blog.

I wish I’d have recorded 100’s of the presentations, product and business trainings I’ve done over the past 16 years in USANA. Big opportunity cost, lost. But as the saying goes ‘better late than never…’

 

Wednesday 6th May 2020

The DOW closed up 0.56% over night.

AirBnB just cut 1,900 jobs, apparently equating to 25% of its work force thanks to COVID.

Here in Australia I’m hearing a lot of confusion around the JobKeeper payments for out of work employees of Australian businesses. Apparently it’s not easy to navigate the enrolling and confirming of it all. I’m yet to hear of anyone from the millions of people who’ve applied for it, receive any payment. Lots of people on Twitter are not happy about it, but then again are people on Twitter ever happy?!

 

Friday 8th May 2020

33 million American’s have applied for unemployment since March. Absolutely staggering.

Over night I see ride share company Uber will lay off 3700 full time employees, which is 14% of this global workforce plus the CEO will forgo his salary for the remainder for the year. They’ve lost close to $3 billion dollars in three months!

Also in the USA I see the S&P500 is slowly marching up. Seems surprising, given the amount of unemployment, however having a close look it appears the 5 biggest companies (Apple, Microsoft, Alphabet, etc.) are doing incredibly well while the rest are hurting. This ‘skew’ is one of the reasons to invest in cap weighted index funds.

Here in Australia, the Prime Minister today announced a Three Stage Road To Recovery plan for our economy and country to get back to work, with the goal of our country being fully open (excluding international travel) by July this year.

Starting this w/end we’re in Stage One which is things like cafes and restaurants open but with social distancing, parks, libraries and parks open again, boot camps for training open again, etc.

That said, the Commonwealth Bank (CBA) has temporarily closed 114 branches and redirected the work of over 500 staff as people do basically everything online.

At the time of writing today, the ASX is up probably on the positivity of our country slowly reopening, while over night the DOW was up 0.9%

 

Saturday 9th May 2020

The DOW closed up 1.9% over night despite it being reported overnight that 20.5 million Americans lost their jobs in April.

Through out this pandemic I’m disgusted at the mainstream media, their click bait headlines and low standards. The unnecessary fear they’ve been spewing out is sickening. The labels they’ve been throwing out there are just sad.

One the caught my attention was Rugby League player Bryce Cartwright who’s refusing to have a flu shot. He’s immediately been labelled as an ‘anti-vaccination’, which is bullshit. I quote from this IG account:

“Not once have I said I am anti-vaccination. I’ve never claimed to be a doctor or medical professional and I’ve never told anyone what they should or shouldn’t do in regards to vaccinations. I stand for the freedom to choose what goes into our bodies. I a pro choice, pro informed consent and pro medical freedom. I have nothing against people who choose to vaccinate… so to label me an ‘anti-vaxxer’ is spreading misinformation”

This is no different to labelling people who didn’t complete university ‘anti-education’ as an example. It’s fucking ridiculous.

It’s like sharks in the media. I’m a keen surfer so I don’t say this lightly, but sharks take ‘exploration bites’ of surfers, probably mistaking them for seal or other marine life. They don’t attack us! From what I’ve been told, they don’t even like the taste, which is why there’s typically only one bit and many survive. But ‘shark attack’ sells more ad space in the media.

I encourage everyone to take a holiday from the mainstream media forever. If that’s too scary, take a month off. No nightly news or A Current Affair shows. No news.com.au viewing. No online newspapers. You get the drift.

I’ve done this for years at a time and can share from personal experience you’re life and peace of mind will be better than you can imagine. What you’ll also learn is there are really no new news stories. It’s all the same stuff happening to different people. Plus if something is important enough to know, it’ll get to you one way or another.

Replace the news/media with habits or information that actually serves you and improves your life. Read a great book. Use that time to learn or study something new or that interests you. Meditate or just enjoy silence for a part of the day. It’s insane how many people cannot exist happily in silence. My theory is many people are so mixed up their scared to be alone with their thoughts.

“All of humanity's problems stem from man's inability to sit quietly in a room alone.”
― Blaise Pascal, Pensées

Now extending this media conversation to investing specifically active investing. There’s zero motivation for trading platforms, institutions and accompanying media to recommend passive investing.

None.

Here’s the recent track record of one of the biggest investment bank and financial services businesses:

Dec 31st 2019 – Goldman Declares US Economy Is Recession Proof

March 11th 2020 – Goldman Predicts Bottom of 2450 By Mid 2020

March 15th 2020 – Goldman Predicts Bottom at 2000 By Mid 2020

March 17th 2020 – Goldman Declarers Global Recession Is Under Way

April 13th 2020 – Goldman Says Bear Market Is Over We’re Just Kidding About Those Bottoming 2020 Predictions

References here: https://www.reddit.com/r/wallstreetbets/comments/g0psrf/a_short_timeline_of_goldmans_bullshit/

Safe to say no one knows nuffin’!

 

Sunday 10th May 2020

An investing forum I read had a topic about ‘how your risk mitigation strategy is going during COVID19’, essentially was is it good enough? It’s a fantastic discussion and it’s based on this data https://blog.grattan.edu.au/2020/03/as-the-covid-19-crisis-deepens-few-australians-have-much-cash-in-the-bank/

The part the caught my attention is 25% of all working households have less than one week’s income saved in the bank. Crazy.

The forum chat when into discussion on how Australian’s view wealth. It appears we view wealth as things we can ‘see’, you know nice house, car, clothes, holiday snaps on social media and so on.

One of the more genuinely wealthy people I know, posted about tracking and graphing one’s net asset position quarterly and twice a month he also graphs he cash buffer to know exactly where he’s at.  He also commented his post would most likely fall on deaf ears…

I’ve been doing this since around the year 2000. I’m shocked at lack of basic financial education in society, but it’s no surprise living in a country where there’s a strong welfare ‘safety net’, diminishing the need for people to save and be financially independent.

 

Monday 11th May 2020

A news podcast I listen to from time to time called PM in the AM, gives me all the happenings in 5-8mins most days, made a fantastic point this morning and coincidently one that’s organically happened in this diary. No more dominating with COVID numbers and stats. The curve here in Australia is flat. We’re past the worst of it and managed it incredibly well. There’s zero need for it to be jammed down our throats moving forward.

My guessing is cases will spike a little when restrictions drop for a couple of reasons:

1.     It’ll be winter here in Australia so general illness increases then anyway

2.     People will be mixing with each other more and logically cases will increase compared to self-isolating.

Time will tell.

The only thing annoying in the slightest (first world problems as they say) is SOL paying its dividend on Thursday this week. SOL doesn’t have a DRP set up so I’ve got to do it manually. No problem. I do this one manually, as the power and value of reinvesting profits from investments is well known, but SOL keeps going up in price.

Yes, it’ll be the cheapest I’ll have ever bought it for today, but there’s that part of my brain that wants an even better price. No matter what, I’ll buy more shares with the dividends I receive this week, but it’s funny to observe my mind caring about this.

 

Tuesday 12th May 2020

I got invited to a webinar with a person from a different direct sales company today. I politely declined.

People who jump from company to company and have ‘mentors’ who’ve also done the same, largely end up with little and underachieving. I see this same behaviour with people in investing. People will jump in and out of companies, managed funds and different asset allocations and often end up under performing. Those who stay the course with a great simple, diversified asset allocation reinvest the dividends and let time and compounding do the heavy work seems to work out well. It’s the same with distributors in direct sales. Only a minority will achieve the wealth and lifestyle they are looking for, so I avoid the rest like the plague or COVID19!

Got talking to xxx today about the economy and current happenings. I suggested he and xxx have got absolutely nothing to worry about. There’s no bad news ahead that should worry them. Why? They’ve got zero debt, plenty of cash and some productive assets that produce income. Even if they’re assets stopped producing, they’ve got cash to use, enough to live off for years. If they were to run out of cash, other than being highly unlikely, there’s the aged pension safety net. So it’s a time to enjoy life and not worry or stress about if we go into a recession (we will!) or a depression (I still don’t know the definition of one), it wont matter to them.

Obviously the reverse is true for people with debt, no cash buffer and no income producing assets or who lose their employment. In this case there’s plenty of scope for trouble! But worrying about it is a waste of time. A far better use of time is creating additional streams of income, paying down debt and building a cash buffer.

Australian Treasurer Josh Frydenberg today said unemployment would reach 10% in the June quarter with over 1.4 million people unemployed and that Gross Domestic Product (GDP) will drop 10% in the same quarter. This is the biggest drop on record.

The DOW closed lower by 0.4% over night and the ASX closed down 1% today. I executed the DRP of SOL today for $17.96 and also invested more in xxx for $7.68 bringing down the cost base for both.

 

Thursday 14th May 2020

The DOW finished down again overnight 2.1%, as it did the day before and new came in that Australian Jobless rate has jumped 6.2% in April with 594,300 jobs lost last month.

These are crazy times.

Add this to the definition of a job in Australia is currently ‘at least one hour paid work during a week’ (it’s something like that) it’s not difficult to imagine the real level of under employment and unemployment.

On Tuesday night for our weekly USANA Zoom call; I shared some recent statistics around income here in Australia. 25% of working households have less than one-week income in saving. The top 5th percentile of income earners in Australia has less than four weeks income in savings. Of employees under 35 years old, 63% have been impacted via less hours, job loss, etc. during this COVID19 crisis.

These are crazy numbers. The other thing I’m noticing is how critical many people are of the government and banks. Yet it’s the government and banks that are essentially in the position to cushion the poor financial position many Australians find themselves in.

I’m in no way suggesting the government and banks are faultless and above the law. Not even close. But we are fortunate our government’s balance sheet is strong and we can help some of the country in the ways currently happening. Banks have also been increasing their liquidity and capital essentially since the GFC and especially over the past few years.

Now, lets imagine every Australian household saved more than they spent and had a solid cash buffer (say 3-6 months living expenses at absolute minimum). All of a sudden, there’s not as much panic. There’s less reliance on government and banks. Asset prices wouldn’t have crept so high due to the cheap debt available with interest rates so low, because we’d have been more financially prudent, boringly saved more than we spend, not extended ourselves beyond our means and not be up shit creek without a paddle when closures happened and peoples income dried up.

There’s an incredible freedom one has when living below ones means. When you have no debt. No single income ‘owns’ you or your time. You can be paid while you sleep. You’re a learner instead of learned. Change is automatic, progress is not, as Tony Robbins pointed out to us in one of his workshops a few years back in Salt Lake City, Utah.

The Commonwealth Bank (CBA) also reported house prices could fall by 30% in a worst-case scenario. Of course this is all speculation, however I feel there’s value in looking ‘over the hill’ as my car mechanic Tony says, so to speak and being prepared for such an outcome.

I did a Zoom presentation this morning for USANA Australia on operating a ‘Healthy Business’ for associates, which given these current times was incredibly relevant.

The interim dividend for xxx also showed up today. Dividend and DRP days are always my favourites.

The ASX closed down again 1.7%.

 

Friday 15th May 2020

The DOW closed up 1.6% overnight, despite anther spike in unemployment numbers. I believe it’s now close to 40 million unemployed in the USA.

Something I learnt this morning was in addition to our unemployment numbers there’s also 500,000people who have stopped looking for work. They’ve essentially given up. Add this to the 600,000 currently now unemployed and the 6 million people receiving the Job keeper subsidy from the government and this is the reality our country faces.

The ASX closed today but both xxx and xxx went down and I simply couldn’t resist!

xxx, xxx and xxx purchase’s this week. Got to be happy with that!

 

Saturday 16th May 2020

Firstly, I feel it’s time to provide an update on COVID19 cases here in Australia.

We’re all a total of 100 deaths and 13 active cases in all of Australia. Which to me, basically means COVID19 is over as far as a medical emergency goes.

What’s troubling (other than the economic challenge in front of us) is the misinformation that continues to be spread. For example driving up the highway today, all the overhead digital signs read ‘COVID19 – Get a flu shot’.

Now lets be crystal clear, there is no correlation between receiving the flu shot and COVID19. So why link the two at all? 

Next lets talk cash. A major concern of mine is the potential for a 100% digital currency in Australia and around the world. This would be tragic.

One of my physical prep clients who professionally has a great read on all things fiscal today shared with me that this pandemic has insured physical currency is here to stay.

He relayed that during the recent Australian bushfires earlier this year (then we had floods and now a health pandemic) ATM (cash machines) in parts of Australia didn’t work for up too three days, due to their infrastructure being damaged. This was lesson number one.

Lesson number two came when the share market crashed and lockdowns started, people started taking they’re saving out of the bank and stashing it under their pillows. Apparently a huge number of people did this. One of my friends told me he may do something similar and another friend, who’s wife works as a teller at a bank, told me she served a stack of elderly people who were withdrawing funds to take home.

Imagine a system 100% dependent on electricity and/or the Internet. To me its a scary sole store of wealth and sole means of exchange for a currency.

I’m not for a second suggesting physical cash to be perfect, because it too can be lost and/or stolen easily. However, I solely control my physical cash not a computer, system, program and it has no reliance on electricity and/or the Internet.

Got to say, this conversation made my day. Here’s to physical cash! Along with a fantastic training session, a delicious cake made by my clients wonderful wife for lunch post training! 

 

Sunday 17th May 2020

Today someone who shall remain anonymous  told me about an interesting situation. A local florist was looking for a couple of people to do half a days work delivering flowers Sunday morning for Mothers Day, offering $400 cash for the mornings work to each. Around of five people we’re offered the opportunity and all five I know about decided against it as they’re getting Job Keeper dollars ($750/week) for the next 6 months, despite constantly complaining about not having enough money.

I hope this is not an accurate representation of sentiment in society...

 

Monday 18th May 2020

Listed investment company xxx reported today and maintained their dividend from last year. It’s also the 30th year in a row the company has either maintained and/or increased its annual dividend.

With everything happening currently and the number of businesses that have cut and/or suspended their dividends, a number of which are in the top 25 holdings of xxx, it’s a great result for their shareholders, all things considered. They also commented they plan to maintain their December dividend, excluding any more unforeseen events.

I don’t own xxx, but do own other similar LIC’s and this is the reason many allocate capital to such companies. They come through with cash flow for retirees in challenging times, while perhaps retaining a little in the good times for times like these.

Lets see what the remainder of the year tosses up!

ASX closed up 0.85% today.

 

Tuesday 19th May 2020

The DOW closed up 3.85% basically on the ‘hope’ of some positive news in relation to a COVID vaccine. I fail to see how a COVID vaccine will help, but we live in a world of virtue signalling and quick fixes.

What’s insane is the silence around things the everyday person can do to improve one’s immunity that are available to us all for FREE and in some cases at a small cost. Let’s see… quality sleep is free. Easy to moderate exercise is largely free. Getting out in the sun each day, largely free depending on where you live. Quality nutrition! I found it interesting all the crappy food (sugar, flour, pasta, rice, etc.) ran off the shelves from supermarkets yet there was basically zero shortage of fresh fruit and veggies during peak COVID panic. Interesting…

Take vitamin C and D everyday. It’s great for EVERYONE anyway and particularly useful for anyone with immune challenges.

Why are we not being fed this information? Instead we’re fed a diet of fear, stay home and stay inside. Absolute insanity...

The ASX closed up 1.85% today.

 

Wednesday 20th May 2020

The DOW closed down 1.6% over night.

Had an early morning catch up with a mate I used to coach back in my team sport physical prep coaching days. He runs a sales business and is a forward thinking business owner. He feels we’re in for more pain. He told me in the UK (where he’s from) they’re paying everyone 80% of their wages and no one is working. That’s an enormous hole to fill when people get back to work and a significant up coming lag. It’s likely (though not definitely) what will happen here in Australia once the Job Keeper payments cease end of September.

He feels people are just thinking everything will go back to normal with no repercussions from the extra debt incurred. There’s a huge mismatch going on essentially.

Ride share company Uber has cut 3000 more jobs and shut 45 offices around the world.

A mate took up full participation in the Ramsey health Care (RHC) Share Purchase Plan that closed today. They’re offer was $56 and up to $30,000 worth. At the time of writing they are priced at $67.86.

He’s also a holder of National Australia Bank (NAB) who’s also doing a capital rising that closes tomorrow. It’s the same deal but at $15.14. He’s still on the fence about participating in this one.

The ASX finished up 0.2% today.

 

Thursday 21st May 2020

Gave this health talk on Zoom tonight to a group of people interested in improving their health. 

 

Friday 22nd May 2020

The DOW closed down 0.4% over night.

Westfarmers’s are going to close a stack (75 – 157 I’ve read this morning) of Target stores and convert them to K Mart stores instead. Target has been doing poorly, while K-Mart has been kicking goals.

There’s also been an increase in the number of article online about Australian housing/real estate not being the road to riches, with house prices always rising, it’s been depicted as, for much of the past two decades. Of course pockets are still going strong.

It’s an interesting trend, especially as Australia is insanely bullish about property.

I understand the love of property especially with the leverage available and while house prices are rising and debt is so cheap. But leverage works both ways.

Now add, the hit peoples income has taken, negatively gearing the property costs money and tenants require rent to be dropped or a rent free period and it can start to hurt quickly, unless there’s cash set aside for such occasions.

My mate decided to participate in the NAB SPP. Good decision I reckon. His cost base has dropped significantly and he’ll be able to sell out and place all those funds in the index or where ever he wishes to long term. He’s crazy heavy in the banks, especially with VAS and the LIC’s all having sold bank holdings.

Big news that there’s been a $60 billion dollar miscalculation with the JobKeeper program. Turns out less than half of the estimated 6 million people have taken it up or qualify for it. Big blow-ups in the media as to how the government could miss the mark by this much.

Also there’s been a retrospective legislation bought in for ‘permanent casual’ employees, meaning anyone employed in that capacity is entitled to paid leave like full time employees.

This will be incredibly tough on business owners, especially as casuals are often paid more per hour to make up for the fact they don’t get any paid leave. Now business (and think small business) appear to be out of pocket collectively $8 billion dollar for back pay for annual leave they never got, nor did they expect to get it because it was never part of the deal upon signing up, so to speak.

This is a massive win for unions, but perhaps a deal breaker for many small businesses. It's fantastic to look after the employees and give them more rights/benefits but that can only come when:

1.     Someone takes the risk to start a business

2.     The business is profitable and grows it’s profits

Help me understand how this new ruling encourages the risk taking behaviour of people starting a business and employing people?

There seems to be this group think that all businesses make enormous sums of money. They simply don’t. Something like 80% of businesses are no longer in business after five years. Keep introducing retrospective legislation changes like this and that number will shoot up even higher…

The ASX closed down 0.9% today.

 

Saturday 23rd May 2020

The DOW closed down 0.04% over night.

Talked to xxx today and he commented about the next year or two being tough for Australia. Government tax receipts will be low, meaning the government will need to borrow to fulfil it’s obligations or tax the working more or not fulfil as many of their obligations or a combination.

Whatever way you slice it, it isn’t looking up for a while.

I found an interesting interview of Charles Goode in the Weekend Australian. What below me away was this comment, “60% of the working population works for the government or is supported by the government’.

Followed closed by these comments:

“It will be difficult for governments to withdraw this support. So I think we will have a greater government involvement in our society than previously. That may move the political needle to the left. That may lead to slower growth and a more welfare society".

“I am reminded of that comment by Ronald Reagan, that he said of government: if it moves government taxes it, if it keeps on moving you regulate it. When it doesn’t move you subsidise it".

“There is not a lot of evidence in the history of governments withdrawing from territory once they have captured it".

“I think we will have a much more government-involved society.”

“It (the Reserve Bank of Australia) is no longer talking about inflation-targeting as about assisting to reduce unemployment to stimulate the economy,’’ he said.

“A much wider ambit of comment is coming from the RBA".

“We are in danger of losing some of its independence and it becoming an arm of the political policy of the government.

Keeping in mind Mr Goode is in his late 80’s and has seen a lot, we’re in for an interesting time ahead.

 

Monday 25th May 2020

Heard today the government medical officials pushing back on the National Rugby League (NRL) and Australian Football League (AFL) about them playing with spectators in the stadiums later this year.

There are five active cases in all of Australia, as I type this, out of 25,471,661 people according to this site https://www.worldometers.info/world-population/australia-population/

Let’s not mention our state boarders are still closed… Ridiculous is an understatement.

Talked to xxx tonight who told me about this situation, as his wife has to go to Canberra for a week to look after a hotel, while that hotels’ General Manager goes to Queensland for a week to see his wife and newborn child.

He has to do this because he’s hours have been cut to two days a week. Because of this, he couldn’t afford to continue renting where they were, so his wife/child had to go live with her parents in QLD, while he lives rent free in the hotel full time, while working two days per week.

I can’t imagine how many similar stories’ there are happening at the moment. I know I keep banging on about it, but having multiple streams of income in todays world, is a necessity I reckon. Or at minimum a cash cushion of 6-12 months living expenses. It’s frightening the number of people who go week to week. It’s no wonder so many people walk around close to exploding with stress, anger, rage, etc. I’d imagine it would build up and compound overtime, just being in that survival mode 24/7.

I remember times in my life when I’ve been there and it’s not fun. I look back at my behaviour, attitude, decisions and happiness and can see it was not great. I remember one day, many years ago, I literally had $7 to my name sitting in my car, thinking if something happens now (e.g. car breaks down or anything similar) I have no money to pay for it. No access to credit. Nothing.

It’s a fantastic experience to have had, though I can’t say it was much fun at the time!

ASX closed up a little over 2% today.

 

Tuesday 26th May 2020

Over night the DOW closed flat, well down 0.04%. While today the ASX (at the time of writing around lunch time) is flying! No idea why, though there would be some reason. I shouldn’t note or comment on day-to-day price movements, but my hope is anyone reading this will come to see how irrelevant they are, despite the focus media and uninformed people have. As I heard Thornhill once say, ‘company earnings are the dog and the share price is the tail’. Don’t get them mixed up.

It’s the underlying earnings of the businesses that matter. Now weather the business pays dividends, buys back shares, using the earnings for acquisitions or reinvests into the business or the like is management’s choice. But it’s the earnings that matter and ideally they’re growing earnings year on year. 

The Age reported 1.4 million people who’ve pulled money out of their superannuation funds which I’m pretty certain is being spent now on things like home renovations, TV’s, etc. I’m guessing there’s $10-$12 billion dollars floating around the economy now keeping businesses going and keeping peoples emotional needs met for the moment. They’ll need another addictive dopamine sooner than later.

Around two weeks ago I emailed my accountant (AR) details for my quarterly Business Activity Statement (BAS) to be done. No response, which is incredibly strange. Yesterday I sent a follow up email and still no response. Today I called, to find out she’s no longer there. I talked to one of the firm’s partners (Chris) who told me she’d resigned 7pm Thursday last week, apparently struggling with the whole COVID thing and working from home. AR needed her laptop out of the house and to step away from work immediately. Chris said it was strange as apparently AR had been in great spirits, enjoying working from home.

Goes to show we never know what going on with people and it’s important to be kind as often as possible.

Only thing is BAS’s need to be lodged and paid in two days time and I’m never keen on being on the wrong side of the ATO, ever! I have been in the past, but that’s a story for another day.

The ASX today is up again this time 2.9%. This is 'pretty, pretty good' (Larry David fans of Curb Your Enthusiasm will know what I’m talking about!).

I talked to xxx and xxx today about this jump in asset prices. What’s interesting is I remember people saying ‘I’ll buy xxx when the price gets to [insert some ridiculously low price]’. To date they’ve missed it.

Now, if we have another severe down turn in prices that take us even lower than March, the same people will say ‘I’ll wait till it get to [inset an even lower price than the one they said in March]’ and they still wont buy.

Being in cash long term is not a solution for creating wealth and gaining freedom. Owning a piece of equity is key. 

These are challenging times for indecisive people.

Another point is earnings, generally speaking, are terrible for most companies currently, to the point they’re cutting, suspending and postponing dividends. When end of financial year reporting season is upon us in July/August, I’m guessing we’ll see just how expensive shares are right now based on their current underlying earnings.

But!

We’re acquiring them for their future earnings/profits so what may seem ‘expensive’ now, can turn out to be incredibly valuable in 1-2 decades time and this can end up pretty, pretty good! (See what I did there?!).

 

Wednesday 27th May 2020

The DOW went up 2.17% over night.

Yesterday the Prime Minister announced the next ‘prong’ to getting our economy going called ‘Job Maker’ I think.

The monkeys (mainstream media/journalists) in the cheap seats had a field day with it; like they do everything announced, weather it’s valuable or otherwise.

While in New Zealand, Air New Zealand has cut 4000 jobs and the Police in NZ can enter anyone’s house without a warrant. I don’t have the vocabulary to comment on that piece of legislation without using language too strong for this blog!

Talking to xxx earlier in the week about how poor his accountants’ services have been for a while now. He talked about someone he knows whose accountant is on a monthly retainer of $300/month. When these COVID measures came into play, his friend was on the phone with his accountant for two hours to maximise all business opportunities.

The interesting part to me is the subscription like business model the accountant is offering clients and my good mate is fond of and willing to pay for.

It’s a fantastic idea and wonderful business model. I’ve been connecting customers with the world’s best nutritional products in the same way for close to 16 years now in over 20 different countries.

In the early years I’d have to explain the ins and outs in a bit of detail, where as these days, businesses like Netflix, Stan, mobile phone and internet companies have done all the education for me.

On Friday 22nd I discussed my mate xxx participating in the NAB SPP. Well as of today, bank shares are flying and with the SPP his cost base has been reduced. If they keep going up at this rate he’ll be able to sell them all sooner than later.

The liquidity of shares is incredible. I love it and while I’m someone who accumulates over time, no stop losses, selling or speculation in these parts, I value enormously the availability of accessing cash within T+2 days (transaction plus two business days).

Correction… xxx just called and will probably sell half now and the other half with he receives his allocation. He’s first checking with his accountant if is a ‘Wash Sale’ in anyway. For who knows what reason/s shares in the big four banks are up 6-10% today. CBA for example has gone from around $58 to around $65 in three days.

Interestingly, the underlying earnings are horrible at the moment. ANZ and WBC didn’t pay a half-year dividend and NAB cut theirs to $0.30cents down from $0.80 and down from $0.94cents before that I think. Interestingly, the rest of the ASX is down today and it closed flat.

The big four banks are a huge weighting of the ASX and moved up strongly, so the counter balance to this momentum in financials must have been equally significant.

 

Thursday 28th May 2020

The DOW closed up 2.17% over night and the ASX is on a tear up once again today at the time of writing. It finished up 1.3% at close.

I have no idea why; it’s just the way it is (said in your best Jim Rohn voice).

xxx only received half his allocation of RHC shares, which is a bummer, though way better than nothing and this morning he sold half of this NAB shares for $19. He’ll sell the other half once the NAB shares from their recent SPP are allocated.

All in all he’s done fantastic. RHC is flying and it’s a great business in a growing area of the economy (healthcare), NAB sold at a profit while removing his huge overweight position in banks and he’s cashed up to invest in more shares. Great position to be in mate!

Messaged xxx today to see if anything has been standing out in her observations this past month.

She said in her words talking about withdrawing superannuation, ‘I know a few people who just got it out for the hell of it and have wasted it on material things’.

Crazy!

The ability of the average person to compound their money for decades to self-fund in retirement is poor.

How can I say this?

Four out of every five retirees are fully or partially dependant on the government for the age pension in Australia. Last time I read on the National Commission of Audit website, this was projected to continue for at least the next forty years! That’s not a typo.

Now lets add the fact 1.5 million Australian’s have lost money in super, by talking out, what will be up to $20,000 each when the asset prices of the super accounts is at the lowest prices and most are spending it on material things bringing short term instant gratification at a long term opportunity cost.

Projecting forward, this money taken out of peoples super, at the worst time possible, crystallises a loss and ensures there is less capital being compounded until preservation age for each person.

We’re talking 15, 20, 25, 30, 35 and in some cases 40 years of compounding lost.

Now people who needed it, needed it and it’s wonderful they’ve been able to access it. But the rest, clearly don’t understand ‘opportunity cost’ and will pay for it later, one way or another.

Today I registered a website/blog to finally own some space on the Internet. It’s for KDM Health my physical preparation coaching business, but I’ve been giving thought to publishing this diary publicly. I’m still not sure if I will. May test it out with a few posts here and there to before making a final decision.

 

Friday 29th May 2020

The DOW closed down 0.5% and the ASX also closed down 1.6% today.

Talking to a client today, whom is a partner at an accounting firm, it appears deflation is here. He was telling me there’s far more competition for projects than just a few months ago and the pricing of the offers is way down.

People doing the same work for less money = deflation.

He feels it’s going to hang around for at least the next year possibly two is his guess.

Got invited to dinner at friends place tonight. We got into discussion around social media and the lack of important communication that tends to happen because of it.

My mates wife was telling me, she posts on social media, mainly family bits and pieces and because people see that they’ll rarely ask how she is or what been happening, because the assumption is what posted on social media is what’s been happening.

I recently read a tweet from Naval who said ‘the modern devil is dopamine’. So true! That dopamine hit people get when people ‘like’ and comment on their photos and posts is real and addictive and not helpful in living a great life.

 

Sunday 31st May 2020

The death of George Floyd on Monday 25th May in Minneapolis by a police officer kneeling on his neck for 9mins while he lay face down on the ground hands handcuffed behind his back is hard to watch or comprehend and all over the media.

Parts of the USA are now rioting and luting. Military police are being used to enforce curfews. I’ve seen social media footage and it’s an absolute mess in parts. Change needs to happen and fast. Riots and luting are probably not the answer, but with so much anger and fear circulating it’s no surprise.

We are living through some strange and interesting times in 2020. We’ve had fire that literally ravished and destroyed parts of Australia and peoples lives followed quickly by a flood; then a global health pandemic with partial lock down measures in place and now this.

The ability to be of a calm and peaceful mind and have a healthy body is potentially the greatest asset we can aspire too. Times like these are perhaps a timely reminder of this value but they are not the sole reason to take action and move in this direction.