Latest / The Curve / TCW91: Gold shines bright as the S&P500 faces a grim forecast.

Transcript

TCW91: Gold shines bright as the S&P500 faces a grim forecast. · The Curve

• 0:00
  Welcome to the Curve Weekly, the podcast that keeps you up to date with all of the money
• 0:04
  business in stock market too.
• 0:06
  Brought to you by the Curve's research team, it's the latest insights on what's happening
• 0:09
  in the stock market, companies, other money-related news so that you can stay educated and
• 0:14
  ahead of the curve.
• 0:15
  You can thank us later for sounding smarter than those finance bros you need to do in a party.
• 0:19
  We've got so much to get through today, so much!
• 0:22
  Before we get into the first thing we're going to speak about, I just want to mention,
• 0:26
  we are going to be speaking about quite a few interesting investment opportunities in this
• 0:30
  episode.
• 0:31
  Some incredible thoughts around some of the research things done with ETFs and the US stock market
• 0:37
  and what's going on because there's a lot of headlines at the moment.
• 0:39
  There's some interesting stuff happening with Tesla and the luxury companies in Europe.
• 0:43
  Yeah, there's some big things happening.
• 0:45
  So we're going to start with gold and talking about some other stuff happening in the election
• 0:48
  and move on to some bigger picture thoughts around what's happening when it comes to investing.
• 0:53
  Some really interesting data that's come out from Goldman Sachs, one of the biggest investing,
• 0:58
  would we say companies in the world?
• 1:00
  In the world, yep.
• 1:01
  And then moving on to periods and investing, which might sound bizarre,
• 1:04
  but just trust us as an actually quite a fun combo.
• 1:06
  So gold at the moment is at an all-time high.
• 1:09
  And I don't know why I'm interested in this.
• 1:11
  I think it's because gold is such an easy thing for me to understand.
• 1:14
  I get what the, what are you, what?
• 1:17
  Gold.
• 1:17
  Oh my god, you can't, you're saying weird hand movements today.
• 1:20
  I know, I forget this is an audio podcast.
• 1:22
  And it's like, what's she doing?
• 1:23
  Would you like to explain it?
• 1:24
  Because I don't know.
• 1:25
  I've held up my finger with a gold ring on it.
• 1:27
  No, I mean, explain what's happening with gold.
• 1:29
  Oh, wow.
• 1:30
  Jesus, this is a, sorry.
• 1:32
  It's been minimal sleep this week.
• 1:33
  Why have you minimal sleep, Sophie?
• 1:35
  No, trust me.
• 1:36
  There's nothing sexy here at all.
• 1:37
  You came into the opposite of the day.
• 1:39
  She's like, I'm storing last night's clothes.
• 1:41
  I was like, wow.
• 1:42
  Someone had a good night.
• 1:43
  She's like, no, it's nothing to an event.
• 1:44
  And then I couldn't be stuffed figuring out what to wear.
• 1:46
  So I just put on last night's clothes.
• 1:47
  I was like, damn, I got to hear the juicy story.
• 1:49
  You know, when you hear people like Stephen Bartlett
• 1:53
  being like, or, you know, massive tech entrepreneurs
• 1:56
  talking about how they just wear a black t-shirt
• 1:58
  because they get decision fatigue and the other.
• 2:01
  I really honestly.
• 2:02
  Like Steve Jobs.
• 2:03
  Yeah, it was one of those moments where I thought,
• 2:06
  I know this outfit.
• 2:06
  I like this outfit.
• 2:07
  I chose it last night and putting it straight back on.
• 2:10
  And then it's just a non-thought.
• 2:11
  Mm.
• 2:12
  Sometimes I get.
• 2:14
  I love like a shower or like on a walk.
• 2:16
  Being like, what, I'm making a weird today.
• 2:18
  I think it's quite fun.
• 2:19
  God, I can't leave this thing.
• 2:20
  Anyway, gold, gold, gold, gold.
• 2:22
  So yes, like you said, gold is at an all-time high.
• 2:25
  So this is all because of the US election pretty much.
• 2:32
  It's caused a lot of uncertainty.
• 2:34
  It's the closest election that we've ever had pretty much.
• 2:38
  And so that creates a lot of uncertainty for the market,
• 2:41
  which the market hates, which means people are like,
• 2:44
  I don't know what the stock market's going to do.
• 2:45
  I'm going to hold something safe like gold.
• 2:47
  Oh, so they actually interrelated the gold story
• 2:50
  and the election story.
• 2:51
  We've also got a war in the Middle East going on.
• 2:54
  That's freaking people out.
• 2:55
  We are going to have interest rate cuts.
• 2:57
  Like, there's a lot going on in the world right now.
• 2:59
  The people are like, global world fatigue.
• 3:01
  I'm going to have just some decent gold
• 3:02
  because right now, I don't know what's going on in the world.
• 3:04
  It's so interesting because now I'm thinking about that,
• 3:06
  like the way you've explained it.
• 3:08
  And it makes sense for actually quite a few of the stories
• 3:11
  and headlines and news that we're going to speak about today.
• 3:13
  It's a really interesting time in the world.
• 3:18
  To feel secure about anything.
• 3:20
  There's environmental stresses,
• 3:22
  who's going to be the most powerful person in the world.
• 3:25
  If it's not that, it's a war happening.
• 3:28
  You know, there is...
• 3:29
  If it's not that, it's the cost of living crisis.
• 3:31
  Yeah, it feels like just an absolute overwhelm.
• 3:34
  People just need some kind of certainty
• 3:37
  and the idea of gold being something you can put your money in
• 3:40
  that is a tangible, physical thing.
• 3:44
  It doesn't change shape.
• 3:45
  It doesn't change what it's used for.
• 3:49
  You know what I mean?
• 3:50
  It's like it's a really...
• 3:51
  It's the first thing that was pretty much even traded.
• 3:54
  It's also kind of controllable in a way.
• 3:56
  So I understand the sense of relief
• 3:59
  or turning to things like that in a time
• 4:02
  that feels incredibly overwhelming.
• 4:04
  Do you think there's more things happening in the world today
• 4:08
  than there was, say, 10 or 20 years ago?
• 4:10
  Or do you think we've got just information overload?
• 4:15
  See it visually through social media?
• 4:17
  Because I kind of do.
• 4:18
  I think it plays into it.
• 4:20
  I don't just agree.
• 4:20
  I think there is a lot going on in the world,
• 4:22
  but I think it's much more heightened
• 4:23
  than it probably would have been 10 or 20 years ago.
• 4:26
  But it does feel like a lot of things are happening at the same time.
• 4:30
  I think for me, the biggest and scariest part
• 4:34
  is the environmental crisis that we're facing at the moment
• 4:38
  and the extreme diversity of thought,
• 4:42
  the fact that someone is going to be,
• 4:44
  potentially in leadership,
• 4:46
  it has the complete opposite.
• 4:48
  In fact, it's promoting drilling into the earth
• 4:51
  instead of how can we make sure
• 4:53
  that we're protecting the world for generations to come?
• 4:55
  And maybe social media is magnifying the shit out of it.
• 4:58
  I personally sometimes have to completely tune out of a lot of news
• 5:01
  because I find it way too emotional
• 5:04
  and I feel really powerless with knowing what to do.
• 5:07
  It's interesting you say that
• 5:09
  because I feel like the whole environmental focus
• 5:13
  has fallen off a cliff
• 5:14
  because of everything else going on in the world.
• 5:16
  Even people being able to buy organic,
• 5:18
  now they're kind of forward.
• 5:19
  So they're buying non-organic people that want to buy a Tesla,
• 5:23
  but they're like, you know what,
• 5:24
  I can't afford them.
• 5:25
  I'm just going to have to buy a car that I can afford,
• 5:27
  like that kind of stuff.
• 5:28
  When you're in a cost of living crisis
• 5:29
  or inflation super high,
• 5:31
  everything seems super tight.
• 5:33
  It's a privilege to get up there.
• 5:34
  Yeah, it becomes a second thought.
• 5:36
  Yeah, and I know we spoke about it in our election podcast,
• 5:39
  which is raising the curve 139.
• 5:41
  But yeah, it's interesting that that's your concern about the election.
• 5:45
  It's different for everyone.
• 5:46
  Yeah.
• 5:47
  I think what we're going to get into next
• 5:48
  is just a quick overview.
• 5:50
  Should we take a bet?
• 5:51
  Oh, no.
• 5:53
  Who's going to get in?
• 5:53
  Eric and Trump.
• 5:54
  No, but I kind of think Trump is too,
• 5:56
  and that's kind of the issue.
• 5:57
  Yeah.
• 5:58
  That scares me so much.
• 6:00
  I put out the best curve weekly newsletter last week.
• 6:04
  Based on stats and people opening it,
• 6:05
  or is this based on your own?
• 6:06
  No, this is based on my own,
• 6:08
  but also I had a lady come back, one lady come back,
• 6:11
  and she said, I loved the Trump reference.
• 6:13
  So there's been a E-colay outbreak at McDonald's,
• 6:17
  and the share prices fall in and I spoke about that.
• 6:19
  Also, at the same week,
• 6:21
  Trump was at McDonald's serving people.
• 6:24
  You're kidding.
• 6:25
  And there's this photo that's kind of viral.
• 6:26
  He was trying to get votes and like,
• 6:27
  you know, I'll serve at McDonald's as PR thing.
• 6:29
  And McDonald's is like, we do not endorse Trump.
• 6:31
  Anyway, now they've had this E-colay outbreak.
• 6:33
  And he runs like, oh, and so the headline that I put
• 6:38
  in the curve weekly was McDonald Trump.
• 6:42
  Oh, it's good.
• 6:43
  But honestly, you and your pants,
• 6:45
  that you've got to admit,
• 6:47
  that just rolls off the top.
• 6:48
  Wow.
• 6:49
  Yeah, nice work.
• 6:50
  If anyone would like to get Vix E-mails,
• 6:52
  she puts, as you can tell,
• 6:53
  a lot of time energy, love, thought,
• 6:55
  laugh-drable, sense of humour into them.
• 6:58
  I honestly sit there like laughing.
• 7:00
  Oh, God.
• 7:01
  Really?
• 7:02
  You're a joke.
• 7:02
  Yes.
• 7:03
  This doesn't surprise me.
• 7:06
  If you want to join and make sure that you get them
• 7:08
  and just be part of our newsletter,
• 7:09
  then we'll put that in the poll question.
• 7:11
  But we did want to quickly touch on one thing
• 7:14
  in the election.
• 7:15
  Yes.
• 7:16
  Just lastly on the election is Warren Buffett has come out
• 7:18
  and said that he is not going to endorse either candidates.
• 7:22
  Interesting, because his daughter has come out.
• 7:24
  His daughter's called Susan.
• 7:26
  Oh, cute.
• 7:27
  Of course he's got a daughter called Susan.
• 7:29
  She's on the board of Berkshire Hathaway,
• 7:30
  which is his investment company.
• 7:32
  And she has blue dots outside her house
• 7:35
  saying that she is in support of Kamala Harris.
• 7:37
  And so people are like,
• 7:39
  Warren, when are you going to come out
• 7:41
  and support Kamala as well?
• 7:42
  Because he has previously endorsed
• 7:44
  Barack Obama and Hillary Clinton.
• 7:46
  So in terms of the blue party.
• 7:47
  Yes.
• 7:48
  Yeah, so everyone's waiting
• 7:49
  and he hasn't come out and endorsed.
• 7:51
  So not that it matters,
• 7:52
  but people have influenced like that.
• 7:55
  They're big swing factors for a lot of people,
• 7:57
  especially the older demographic.
• 7:58
  What I think is quite interesting
• 8:00
  and this is something I didn't realize
• 8:01
  until we recorded our election episode
• 8:03
  is how intertwined money and the stock market
• 8:06
  and politics are.
• 8:08
  And the reason that this is being brought up
• 8:10
  and why it's so interesting is that
• 8:12
  Warren Buffett obviously invests a lot.
• 8:15
  He's one of the grandfathers of investing
• 8:17
  and whoever's in power the corporate tax cuts
• 8:20
  or how they tax businesses really impacts the economy.
• 8:24
  So that's why a lot of people will be looking to Warren Buffett
• 8:27
  to be like, well, based on how Kamala Harris
• 8:30
  and Donald Trump are approaching
• 8:32
  the tax cuts for businesses.
• 8:34
  People will want to know what he thinks of those,
• 8:36
  but it's quite interesting he's not taking a stance.
• 8:38
  I see it as he's like, you know what?
• 8:42
  History shows that the matter who's in power
• 8:45
  and the stock market always goes up
• 8:47
  doesn't really matter over the long term.
• 8:49
  And he probably also, he's not a political person.
• 8:54
  He's an investor.
• 8:55
  You know, why is everyone coming
• 8:56
  from his political views?
• 8:58
  I would say Warren Buffett has created a name for himself
• 9:01
  is not only an investor, but also a good person.
• 9:03
  And so there's a lot of people probably wanting to know
• 9:06
  because it will help influence their decision
• 9:08
  because they have a lot of respect for him as a person.
• 9:10
  So I think it's yet, anyway, if you want to learn more
• 9:13
  about that, it's a most recent race in the curb episode.
• 9:16
  What's been going on with Tesla?
• 9:18
  This is interesting because Tesla for so long
• 9:20
  and we've been talking about it,
• 9:21
  you've been saying is going down the toilet?
• 9:23
  Yes, down the toilet.
• 9:24
  Has there been some better news?
• 9:26
  So as a lot of you may know,
• 9:29
  by listening to us for a long time now,
• 9:31
  is there is a thing called corporate earnings season
• 9:35
  or financial. Oh, gosh.
• 9:37
  Financial earnings season.
• 9:39
  And it is where it happens four times a year.
• 9:42
  Anyway, we're now in earnings season.
• 9:44
  So a lot of companies are reporting
• 9:46
  that we have a lot of movements and share prices.
• 9:48
  Don't freak out.
• 9:48
  Tesla has come out and said that it has done fantastically well
• 9:53
  for the last three months.
• 9:54
  And it's stock prices up 20%.
• 9:56
  Damn, I knew this would happen.
• 9:58
  Did you take it out?
• 9:58
  Yes, because I had a blower and I invested too much.
• 10:01
  So I know.
• 10:03
  And as the last few times I've been talking about
• 10:05
  this share price being down and not doing well,
• 10:08
  has made me think, why am I not buying the stock
• 10:12
  by it?
• 10:13
  And I've just forgot.
• 10:14
  And I knew something like this would happen.
• 10:15
  You owned the S&P 500, true.
• 10:17
  Yeah, so it's a big, big percentage of the S&P 500.
• 10:20
  Anyway, it's had a blowout quarter, which is great.
• 10:24
  It was up 20% this week, but it's only up 4% for the year.
• 10:28
  So it has gone down, down, down, down, down.
• 10:31
  And then now this 20% is kind of boosted up a bit at the end.
• 10:34
  So it's only up 4% and the stock market's up like 23.
• 10:38
  So it has, you're right, been in the toilet for a while.
• 10:42
  The last four quarters, it's had terrible results.
• 10:44
  So people are almost throwing in the towel,
• 10:47
  but it also gave a really positive outlook
• 10:50
  in terms of its production.
• 10:52
  And it's all around the cybertruck.
• 10:54
  Have you seen the cybertruck?
• 10:56
  It looks like back to the future vibes.
• 10:58
  But what is it, sorry?
• 10:59
  It's a truck version of the Tesla.
• 11:01
  Oh, that is so ugly.
• 11:04
  I know, imagine driving around in that.
• 11:06
  That looks like an origami car.
• 11:07
  It looks like it's out of, wow, that is so hideous.
• 11:11
  But also, they also announced that they plan to roll out
• 11:15
  like ride hailing services for Teslas.
• 11:17
  What do you mean hailing?
• 11:18
  Like Uber.
• 11:20
  Like Uber.
• 11:20
  Like in a ride hailing service.
• 11:22
  So you can order a self-driving Tesla to take you from A to B.
• 11:26
  Wow, yeah.
• 11:27
  I mean, the great thing about that.
• 11:29
  And what do you think happened to Uber and Lyft's share price
• 11:31
  with that announcement?
• 11:32
  Down?
• 11:33
  Yeah, yeah.
• 11:34
  It only fell a little bit, but yeah,
• 11:35
  now they're going to have a competitor in Tesla.
• 11:39
  Okay, let's just discuss, sorry, yeah.
• 11:42
  Exactly what you just said for anyone
• 11:43
  that wasn't immediately thinking,
• 11:45
  what do you think happened to Uber and Lyft's share price?
• 11:48
  And I said it went down for people that are like,
• 11:50
  what, why, let's talk about that.
• 11:53
  So Tesla announcing this, this is a new announcement.
• 11:56
  And so investors in Uber are like, oh gosh,
• 12:00
  here's this giant company, Tesla,
• 12:03
  who is going to now be encroaching
• 12:05
  on Uber and Lyft's market.
• 12:07
  So I'm going to sell my Uber shares or my Lyft shares.
• 12:10
  That's what you'd be thinking.
• 12:11
  Well, that's why, and that's why the price goes down.
• 12:14
  Yeah, it's because people are like, oh gosh,
• 12:16
  people that held their shares would be like,
• 12:17
  well, you know what?
• 12:18
  Uber's killing it and diversifying.
• 12:21
  We spoke about it.
• 12:22
  We spoke about it in terms of how they're becoming more
• 12:23
  logistic, they want to take on Amazon
• 12:25
  and become the super app and all that.
• 12:27
  I don't know what's going to happen.
• 12:28
  I feel like I would still back, Bob.
• 12:30
  I don't think that that's enough of a reason
• 12:34
  to just all of a sudden decide,
• 12:36
  you don't back a company,
• 12:37
  because you should read headlines like this.
• 12:39
  If you do own shares in Uber and Lyft,
• 12:41
  or anything, if you owned like Starbucks
• 12:44
  and then McDonald's was like,
• 12:46
  we're going to do a coffee chain
• 12:49
  and we're going to roll out
• 12:51
  hundreds of thousands of stores around the country.
• 12:53
  It's like there's only a certain amount of money
• 12:55
  that people spend on coffee.
• 12:56
  And if that's now split between two rather than one,
• 12:58
  you've got to think.
• 12:59
  You know, but I don't like it.
• 13:00
  I feel like it's so reactionary to all of a sudden
• 13:04
  and the entirety of the world
• 13:06
  to think that if McDonald's opens like a frozen coffee chain
• 13:10
  that all of a sudden Starbucks is going to absolutely crumble.
• 13:14
  It's like how many people drink coffee?
• 13:16
  What is the brand?
• 13:17
  It's not crumbling though.
• 13:19
  Like this share price falling a little bit
• 13:21
  is just like, oh, now their market's probably gone
• 13:23
  from this to this.
• 13:24
  But that's what I mean.
• 13:24
  Like what is with the weird need to make a decision
• 13:28
  when news comes out?
• 13:29
  That's what I don't get.
• 13:30
  But I think with this is like,
• 13:32
  you're right, you don't need to be reactionary.
• 13:34
  And I think that's definitely the big takeaway from this.
• 13:37
  We're in earnings season.
• 13:38
  Stocks are going to jump around.
• 13:40
  We could have Uber or Lyft coming out
• 13:43
  in the next couple of weeks
• 13:44
  with really, really good results.
• 13:46
  And you'd be like, damn it, I sold.
• 13:47
  But you sort of just said, don't make a decision
• 13:50
  based on what's happening in the market in the short term.
• 13:53
  But also, you might look back
• 13:55
  and you're trying to be forward thinking
• 13:57
  and you might regret not having sold
• 13:59
  based on the news that came out.
• 14:01
  Those are two quite different approaches.
• 14:03
  Yeah.
• 14:04
  So what do you mean?
• 14:05
  I'm like, don't confuse me.
• 14:07
  I need very direct contact.
• 14:08
  I mean to diversify.
• 14:09
  So I'm both.
• 14:10
  Because you don't know what's going to happen
• 14:11
  in the next 10 years.
• 14:12
  But they're two great companies.
• 14:14
  Uber and Tesla.
• 14:15
  Freakin' killing it, in my opinion.
• 14:17
  And in the next 10 years,
• 14:18
  both companies are going to be a lot bigger
• 14:20
  and stronger than they are today.
• 14:21
  That's my, I think I think the same.
• 14:23
  Right.
• 14:24
  Okay, moving on.
• 14:25
  Moving on.
• 14:26
  Goldman Sachs, which is one of the biggest
• 14:28
  investment banks in the world.
• 14:29
  And investment banks is people that are professional investors
• 14:33
  that invest on behalf of everyday people.
• 14:36
  So say I had $10,000 and I wanted to give it to Goldman Sachs.
• 14:39
  Yep, they would manage that money for me.
• 14:40
  Or companies.
• 14:41
  So say the curve ended up making millions
• 14:45
  and billions and billions.
• 14:46
  And we'd be like, cool, we want to give some money
• 14:47
  to Goldman Sachs to manage for us.
• 14:49
  Or say we were a key, we save or a pension provider.
• 14:54
  We took a lot of money in from people.
• 14:55
  We needed to invest only over half.
• 14:57
  We give it to Goldman Sachs.
• 14:58
  I even like the revolutes of the world, you know.
• 15:00
  When you've got money deposited there,
• 15:01
  they need to put it somewhere else and earn a return.
• 15:04
  So they're investing part of that.
• 15:05
  All banks do.
• 15:06
  It's not just money in the bank
• 15:08
  sitting in your little deposit account.
• 15:10
  That might look like it on the screen,
• 15:12
  but they've taken that money and they're investing it
• 15:13
  so that they can...
• 15:14
  The whole not the conversation for another day.
• 15:16
  What?
• 15:17
  What?
• 15:18
  How many are there?
• 15:19
  They just throw it from the banks.
• 15:20
  And then they just totally ignore that.
• 15:21
  Just pretend they never heard it.
• 15:23
  And we'll go into more detail on that another time.
• 15:25
  That's exactly the banks.
• 15:26
  I mean, tell you.
• 15:27
  I know.
• 15:28
  They take money in and they lend it out.
• 15:29
  And they keep a little bit in between
• 15:31
  as a security blanket.
• 15:33
  God.
• 15:34
  It's just too much for my brain right now.
• 15:35
  So if you've got money with ASB at the moment...
• 15:37
  I love it.
• 15:38
  You're just pushing through it.
• 15:39
  No, because I like...
• 15:40
  Oh yeah, tell me.
• 15:41
  If you had money deposited at ANZ in New Zealand,
• 15:43
  I could actually have your money
• 15:44
  because I've got a mortgage.
• 15:46
  So they've lent it to me.
• 15:47
  They could have lent me your dollars
• 15:48
  because you put the money in as savings
• 15:50
  and I have got a mortgage with them.
• 15:52
  So that sounds way risqué
• 15:54
  than everyone talks about the banks, you know?
• 15:56
  It sounds like everyone's like,
• 15:57
  the banks are so secure.
• 15:58
  It's like, are they?
• 15:59
  Well, they have...
• 16:00
  They have strict requirements.
• 16:01
  They can't lend it all out.
• 16:02
  So if you deposited...
• 16:03
  No, you bloody hope, sir.
• 16:05
  If you invested 10...
• 16:06
  If you deposited 10,000 in the bank,
• 16:07
  they're not lending me 10,000.
• 16:09
  And then I don't pay it back
• 16:10
  and they go to Sophie Hore and go, sorry.
• 16:12
  No, it doesn't work like that.
• 16:13
  They'll then 5,000 and keep, yeah.
• 16:15
  But anyway, that is a conversation for another day.
• 16:16
  Yeah, banks work.
• 16:18
  It sounds like a funny person.
• 16:19
  Oh, let's not.
• 16:20
  Anyway, so you...
• 16:21
  Goldman Sachs is like that.
• 16:23
  Because they're one of the biggest banks,
• 16:25
  they have teams in teams of the best economists,
• 16:30
  analysts in the world.
• 16:32
  And they have come out publicly and said,
• 16:34
  over the next decade, the S&P 500,
• 16:37
  which is the top 500 companies in the US,
• 16:39
  will return only 3% per year on average.
• 16:44
  How on earth would they know that?
• 16:46
  They've done all data, data, data, data.
• 16:48
  And analytics.
• 16:49
  And so when you read something like that,
• 16:51
  how would you interpret it?
• 16:52
  If we look at it in perspective of,
• 16:54
  okay, what has the previous 10 years returned
• 16:57
  in terms of the stock market?
• 16:58
  And it's delivered 13% per year.
• 17:01
  So over the last 10 years,
• 17:02
  we've heard average return of 13% per year.
• 17:05
  And now they're expecting 3% going forward.
• 17:08
  So everyone's like, why would I invest in the stock market?
• 17:10
  If all I'm going to get is 3%,
• 17:11
  like that seems stupid.
• 17:12
  Also, how do they even predict that?
• 17:14
  So their analytics and what they've based that on
• 17:16
  is the fact that the stock market still
• 17:19
  have a 13% return per year for the last 10 years.
• 17:22
  And the historic average over the last 30, 40 years
• 17:25
  is 10%.
• 17:27
  So we are well above that average.
• 17:29
  And so they're saying there has to be years
• 17:31
  where it's below average
• 17:33
  in order to get back to that long term average.
• 17:36
  But years is not 10 years.
• 17:38
  Did you just say a whole 10 years
• 17:40
  of them not returning more than 3%?
• 17:41
  It's a 3% per year for 10 years.
• 17:43
  That's nothing though.
• 17:44
  Well, we've done 13% for the last 10 years.
• 17:47
  That's what I mean though.
• 17:48
  So like why?
• 17:49
  So it's what you call mean reversion.
• 17:51
  So you have to come back to a more normal environment
• 17:54
  or more long-term average.
• 17:56
  And the main crux of it is the fact that
• 17:59
  less in P500 is dominated by what we call the magnificent seven.
• 18:03
  The magnificent seven?
• 18:04
  Yes.
• 18:05
  I know that magnificent.
• 18:06
  Which is?
• 18:07
  Apple.
• 18:08
  Tesla.
• 18:08
  Yeah.
• 18:09
  Alphabet.
• 18:10
  Yep.
• 18:10
  Amazon.
• 18:11
  Yeah.
• 18:12
  Nvidia?
• 18:12
  Yeah.
• 18:13
  Oh my fucking god, I've got two to go.
• 18:15
  Like Donald's?
• 18:16
  No, close.
• 18:16
  And Microsoft.
• 18:18
  Yep, that's one.
• 18:19
  Another one?
• 18:19
  Facebook.
• 18:20
  Which is a call meter, yes.
• 18:21
  So that's the magnificent seven.
• 18:23
  And their concern is that they've
• 18:24
  got way too dominant in terms of their percentage
• 18:27
  of the S&P 500.
• 18:29
  Is this rare?
• 18:29
  Is it rare for only a few?
• 18:31
  Never having in history.
• 18:32
  OK.
• 18:32
  These magnificent seven, or any magnificent seven,
• 18:36
  have been 30% of the index, the S&P 500.
• 18:41
  Right.
• 18:42
  And so all of this data, like we spoke last week
• 18:44
  or the week before about Google potentially being broken up.
• 18:47
  Yep.
• 18:48
  This probably is all feeding into it.
• 18:50
  Because if the idea of all those magnificent seven
• 18:52
  get broken up, it's more, if you've
• 18:55
  got these seven companies which have done so well,
• 18:58
  like nobody has done a 150% this year,
• 19:01
  it's more, they've done so well and got so big.
• 19:03
  Goldman's prediction is that if they stop growing
• 19:07
  or grow at a slower rate, which you just have to,
• 19:09
  if you're getting this big, you can't keep growing like that.
• 19:12
  Means that that's going to affect the overall stock market
• 19:15
  performance.
• 19:15
  Even if you have all these little companies doing 100, 200%,
• 19:19
  it's not going to move the needle enough in terms
• 19:21
  of how much these big companies have
• 19:23
  grown over the last 10 years.
• 19:24
  But does that mean though that if you're looking at that
• 19:27
  and thinking, OK, maybe those seven
• 19:30
  can't do as well as they have.
• 19:32
  But I think that AI is going to accelerate so much
• 19:35
  in the next five years.
• 19:37
  Does that mean you could then go and invest in an AI ETF?
• 19:42
  Because it's more heavily leaning towards things
• 19:44
  that I personally think will be growing more.
• 19:46
  Yeah, it just means the S&P 500.
• 19:48
  So that's what we're talking about.
• 19:50
  And it's because those seven are really pulling
• 19:51
  the index so much.
• 19:52
  They pulled it so much of the last 10 years
• 19:55
  that they're like the next 10 years.
• 19:57
  It's almost like you need to create space
• 19:58
  for these other companies to grow.
• 20:00
  But they're not going to grow nearly as much
• 20:01
  as these seven have.
• 20:02
  Which means that over or ever it will be down.
• 20:04
  Yeah, yeah, yeah, much lower.
• 20:07
  It's still growing about 3%, but it's not much.
• 20:09
  It's kind of like a running race.
• 20:11
  If you had someone running really, really fast
• 20:15
  and they had all these other people running
• 20:18
  really slow in their team, then I'm trying
• 20:21
  to think of another analogy of like, I know.
• 20:23
  I know what you're trying to have
• 20:24
  with the running analogy.
• 20:25
  OK, so let's say you're in a running race.
• 20:29
  Not let me start.
• 20:30
  You're in a running race.
• 20:31
  And you know, it's a marathon.
• 20:33
  And you've got these people that have absolutely sprinted
• 20:36
  for 27 kilometers.
• 20:38
  And then all of a sudden they're like, oh, wow,
• 20:40
  I forgot to bring my, what are they called, sugary pouches.
• 20:43
  And I'm starting to lose a bit of power.
• 20:45
  And I'm getting a bit tired.
• 20:46
  And the other ones will slowly catch up.
• 20:49
  Then maybe not as fast as the other ones.
• 20:50
  So it's kind of like the whole race
• 20:52
  is just going to be a little bit slower.
• 20:53
  And it's like, say every kilometer was a year.
• 20:56
  So the first kilometer.
• 20:58
  Woo, we got, we got there really quick.
• 21:00
  Yeah, second kilometer, woo, woo, woo, yeah, really.
• 21:02
  And so quick, so quick is like high return.
• 21:04
  And then as you get later on, you're like, oh gosh,
• 21:07
  now we're falling behind.
• 21:09
  Oh, we're not getting there as quick.
• 21:10
  Well, we're not generating as high return.
• 21:12
  My immediate reaction is, why would I invest in the S&P 500?
• 21:16
  Why would I go and want to get an average of 3% over 10 years
• 21:19
  when I could just keep it in the bank and get the same?
• 21:21
  Yeah.
• 21:22
  So what would you say to people that are feeling like, oh, God,
• 21:25
  that's really demotivating.
• 21:26
  I don't want to go and put my money somewhere
• 21:28
  that could be having such a boringly slow return.
• 21:33
  We go on and on about the idea that the S&P 500
• 21:35
  has returned over 10% for the last 30 years.
• 21:39
  And then all of a sudden, you hear this news that, yeah,
• 21:41
  it's going to be 3% for the next decade.
• 21:43
  It's super disempowering.
• 21:45
  So I tried to find the prediction from 2014.
• 21:49
  Oh, I love that.
• 21:50
  That's it.
• 21:51
  And I couldn't.
• 21:52
  But what I started thinking about was like,
• 21:54
  what has happened in the last 10 years?
• 21:58
  We've had 13% return on average per year.
• 22:01
  And we have had a pandemic.
• 22:04
  The stock market was down 30%.
• 22:06
  We've had 40 year high inflation.
• 22:09
  We've had interest rates that have gone from 0% to 6%
• 22:13
  within like even four years.
• 22:15
  We've had a cost of living crisis.
• 22:16
  We have an AI boom.
• 22:17
  We've had cryptocurrency become more normalised.
• 22:20
  There is so many things there that Goldman's
• 22:23
  could not have predicted at all.
• 22:25
  And so yes, they've come out and they've said this.
• 22:28
  But that's not to say they're correct.
• 22:31
  There's so many economists and analysts
• 22:33
  that have to prove their worth
• 22:36
  and come out with statements like that.
• 22:37
  And, you know, like, gosh, I was an analyst once.
• 22:41
  You know, you come out and you're like, no, he's there,
• 22:43
  but like the world changes.
• 22:44
  I honestly feel like this is just a bit of a headline, grabber.
• 22:48
  I get the whole point about the rationale
• 22:50
  in terms of the index and how concentrated it is
• 22:54
  and how there may be a bit more of a slowdown
• 22:56
  in terms of those seven companies can't grow as much.
• 22:59
  But I just think that nobody knows
• 23:02
  what's going to happen in the world in the next 10 years.
• 23:04
  And if you diversify it, then it doesn't really matter.
• 23:09
  I'm still not convinced on your own motivation.
• 23:11
  Because diversification is the SME 300.
• 23:13
  It's like the epitome of diversification
• 23:15
  because there's 500 companies.
• 23:17
  It is actually, you can invest in an ETF
• 23:21
  that is equal weighted.
• 23:23
  What does that mean?
• 23:24
  So instead of market cap weighted,
• 23:25
  which is what the SME 500 is,
• 23:27
  so it's weighted based on the market cap of the company.
• 23:29
  So if you're Apple and you're $3 trillion company,
• 23:32
  you're a bigger percent of the index,
• 23:34
  whereas there's an equal weighted index,
• 23:36
  which is no matter what your size,
• 23:39
  you're going to be one percent or two percent.
• 23:41
  Oh, that's interesting.
• 23:42
  So that would do better.
• 23:44
  What would we, how would we find that?
• 23:46
  You just Google equal weighted SME 500 ETF.
• 23:50
  Oh, that's a good hat.
• 23:52
  Yeah, love that.
• 23:53
  Yeah.
• 23:54
  Cool.
• 23:55
  Thank you, that's my idea.
• 23:56
  No worries.
• 23:57
  And lastly, luxury.
• 24:00
  It's been a bit of toiletness, maybe.
• 24:02
  Don't know if that's what you're looking for.
• 24:04
  Like poor performance from the luxury.
• 24:06
  So luxury brands, essentially, recently,
• 24:09
  have not been doing super well.
• 24:11
  No, they have a heavy reliance on China
• 24:15
  and Chinese people buying their products.
• 24:17
  But like I said, we're in earning season at the moment
• 24:21
  and curing, who owns Gucci,
• 24:23
  as well as Balenciaga,
• 24:26
  Eve Saint Laurent,
• 24:27
  Bhatega, Alexander McQueen.
• 24:29
  Oh, it's a lot of brands,
• 24:29
  but Gucci is over 50% of sales still.
• 24:32
  They have come out with a bad result,
• 24:35
  but the sheer price has gone up.
• 24:37
  What?
• 24:38
  Remember, markets are always forward looking.
• 24:40
  So you're always looking to the future.
• 24:42
  Yes, a financial result,
• 24:44
  or a company reporting a financial result,
• 24:46
  is relevant because it's the most relevant financial result
• 24:51
  that you have,
• 24:52
  but it's the outlook,
• 24:54
  or the guidance,
• 24:54
  or the commentary that management makes about
• 24:57
  the future of the business,
• 24:57
  that's the most important thing out of any financial result.
• 25:00
  And so because all these luxury names
• 25:02
  have been doing so badly,
• 25:05
  people are like,
• 25:06
  this must be the final bad result.
• 25:08
  So they're looking forward and going,
• 25:10
  this is the bottom.
• 25:11
  I'm going to buy these stocks now.
• 25:12
  But what makes them think that people will change
• 25:15
  the way they spend and all of a sudden
• 25:16
  be able to buy expensive luxury brands?
• 25:18
  Remember, we spoke about the fact that China announced
• 25:24
  that it had pumped billions and billions of dollars
• 25:27
  into its economy to help stimulate its economy.
• 25:30
  So that's not been reflected yet in these luxury brands,
• 25:34
  because only just happened.
• 25:36
  So that will eventually flow into people spending,
• 25:39
  Chinese people spending on luxury products.
• 25:41
  I reckon that's a stretch.
• 25:43
  You reckon?
• 25:44
  Yeah.
• 25:45
  If we were in New Zealand
• 25:46
  and the government announced billions and billions of dollars
• 25:48
  to help relieve,
• 25:49
  to make sure that everyone had jobs,
• 25:50
  make sure they got pay rises,
• 25:51
  make sure that the property prices were propped up,
• 25:54
  that's eventually going to reverberate into,
• 25:57
  I actually feel okay.
• 25:58
  I'm going to buy a luxury handbag.
• 25:59
  But I think it's more of a case of things can't get any worse.
• 26:03
  Kearing's profit is back to where it was in 2016.
• 26:06
  Wow.
• 26:07
  Yeah.
• 26:08
  So it's fallen to its lowest level since 2016.
• 26:11
  It might be one more bad result.
• 26:13
  It might be two.
• 26:14
  But people are like,
• 26:15
  it's fallen so far, I'm going to nibble.
• 26:16
  I'm going to have a little nibble.
• 26:17
  So people are trying to time the market
• 26:19
  when it comes to luxury goods.
• 26:20
  Yeah, they're going,
• 26:21
  okay, it's fallen a lot.
• 26:22
  These companies are,
• 26:25
  hmm, interstable quality companies,
• 26:28
  they're just having a bit of a bad run.
• 26:30
  I'm going to buy.
• 26:31
  I'm feeling quite inspired to buy.
• 26:33
  I don't know if I'm in like a buying mode
• 26:34
  or if buying has anything to do with my cycle,
• 26:37
  but I'm ovulating at the moment
• 26:38
  when I'm thinking,
• 26:39
  I want to buy.
• 26:40
  I want to buy luxury brands.
• 26:42
  I think I want to buy Uber.
• 26:44
  I think I want to buy two years later.
• 26:46
  Do you know that's actually a thing?
• 26:47
  And I think I want to buy
• 26:49
  that equal weighted ETF.
• 26:51
  I think I'm going to go shopping.
• 26:52
  Nice.
• 26:53
  What's the thing, sorry?
• 26:54
  Feeling risky while you're ovulating.
• 26:56
  Really?
• 26:57
  That's a whole lot of conversation.
• 26:58
  Oh, my God, really?
• 27:00
  Women, if you're listening,
• 27:02
  so high shares when you're ovulating.
• 27:03
  But is that a good thing though?
• 27:05
  Are we wanting people to buy
• 27:06
  when they're feeling risky?
• 27:07
  The majority of women don't take enough for us.
• 27:09
  An agent, if we created a product
• 27:10
  that encouraged people to invest while they were ovulating
• 27:13
  where we're like, invest when you're feeling
• 27:15
  frisky and risky.
• 27:17
  Or we did like a two-screw, we had like,
• 27:20
  women that invested on their periods
• 27:21
  and women that invested when they're ovulating
• 27:23
  and see the performance.
• 27:24
  Oh, my God.
• 27:25
  Oh, brainwaves, we've got to go.
• 27:26
  We've got to go, we've got to go.
• 27:27
  Thanks to the people to see you.
• 27:29
  Thanks everyone for listening.
• 27:31
  Love that. Thanks so much, mate.
• 27:33
  Thank you so much for listening to The Curve Weekly.
• 27:36
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• 27:37
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• 27:40
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• 27:57
  Bye, bye.
• 27:59
  So yeah, see you next Tuesday.
• 28:01
  Well, see you next Tuesday.
• 28:05
  I mean Monday.
• 28:06
  No, actually though, new episodes out every Tuesday.
• 28:13
  Okay, quickly the curve was created to empower
• 28:15
  and educate you about investing,
• 28:16
  but we are not financial advisors.
• 28:18
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• 28:21
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• 28:23
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• 28:24
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• 28:26
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• 28:28
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• 28:30
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• 28:33
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• 28:35
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• 28:37
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• 28:38
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• 28:39
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