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Behind the sharemarket fall... your next move · The Money Puzzle

0:09
Speaker 1: Hello, and welcome to the Australians Money Puzzle podcast. I'm
0:13
Speaker 1: James Kirby. Welcome aboard everybody. Now, folks, we are in
0:17
Speaker 1: the middle of what looks like a sharp share market
0:22
Speaker 1: shakeout and what I'm going to do in the next
0:25
Speaker 1: two shows is I'm going to split it. And today
0:29
Speaker 1: I'm going to talk to a professional inside sharebrooking right,
0:34
Speaker 1: who's also an expert on investor behavior usefully about what's happening,
0:39
Speaker 1: what's happened so far and why. And later in the
0:42
Speaker 1: week I'm going to talk to doctor Sam Wiley and
0:46
Speaker 1: he's going to take We're going to take a deeper
0:48
Speaker 1: look at what's perhaps evolving in the market now and
0:51
Speaker 1: what are the dangers and opportunities for you the investor
0:55
Speaker 1: going forward and put together, I think this is going
0:57
Speaker 1: to be very useful to you. And just before we start,
1:02
Speaker 1: if you need contexts, you should know the Australian share
1:04
Speaker 1: market as we speak in early April, it's down around
1:08
Speaker 1: ten percent for the year and Wall Street is down
1:10
Speaker 1: around fifteen percent for the year as we talk this morning,
1:14
Speaker 1: after an extraordinary session overnight whereby the Dow ended flat
1:22
Speaker 1: but conceals a lot of drama, and it was actually
1:25
Speaker 1: touching bear market levels. That is, at one point in
1:29
Speaker 1: the Wall Street session on Monday this week, American Monday,
1:34
Speaker 1: they were touching bear market levels twenty percent down from
1:37
Speaker 1: the top. They had a rally at the end based
1:39
Speaker 1: on a report that was later contradicted, if not denied,
1:44
Speaker 1: by the Trump administration that they were going to cool
1:46
Speaker 1: off on tariffs. Another thing to keep in mind, especially
1:50
Speaker 1: if you are interested in property, is that interest rates
1:55
Speaker 1: will now almost certainly Fowell and I've been skeptical about
1:58
Speaker 1: that to date. Not only that, but they will probably
2:00
Speaker 1: accelerate the pace of the cuts that were coming through
2:03
Speaker 1: this year, and it would seem that we could have
2:06
Speaker 1: anything up to we could see your mortgage basically falling
2:08
Speaker 1: from six's to six ish to five ish percent, perhaps
2:11
Speaker 1: official rates falling from four to closer to three percent.
2:15
Speaker 1: Very important change in the market. So all linked, of course,
2:19
Speaker 1: and also I think some renewed focus on the capacity
2:23
Speaker 1: and capabilities inside big super lots to talk about. Okay,
2:27
Speaker 1: my guest today is Jemma Dale, head of investor behavior
2:31
Speaker 1: at NAP Trade. She's been on the show before.
2:33
Speaker 2: How are you, Gemma, I'm well, thanks, how you good.
2:36
Speaker 1: Great to have you on today, Ideal to have you
2:39
Speaker 1: on today. So let's just talk first and for what
2:42
Speaker 1: we were talking before the show, and I think listeners
2:43
Speaker 1: be really interested in this. So what everyone sees so
2:47
Speaker 1: far is the usual thing. By that I mean share
2:50
Speaker 1: market plunge. Now, you see, we all use these words
2:52
Speaker 1: too often, plunge, and we see we get up in
2:55
Speaker 1: the morning, we see a headline share market plunge is
2:57
Speaker 1: one percent, two percent. That's not a plunge, right, that's
2:59
Speaker 1: four if it falls nearly five percent in the single session,
3:06
Speaker 1: the worst session since COVID. Okay, I'll accept the word plunge.
3:11
Speaker 1: This week, on that day, only market's falling. We know why,
3:15
Speaker 1: no mystery is there because of tariffs and the threat
3:18
Speaker 1: of that. This continues and escalates and gets oursel works,
3:21
Speaker 1: and until the market sees that there's an end to
3:24
Speaker 1: it of some sort, we simply cannot make a call
3:28
Speaker 1: as to when it's going to stop. However, you've been
3:32
Speaker 1: looking at now this is only a single brokerage, but
3:35
Speaker 1: it's a big brokerage and ab nap trade. And you
3:39
Speaker 1: tell me that you're seeing people buying more than selling,
3:43
Speaker 1: tell me a little bit more about that and what
3:45
Speaker 1: exactly and who are This.
3:47
Speaker 2: Is the best part of my job and it's so interesting.
3:50
Speaker 2: And we had a clear example of how investors respond
3:55
Speaker 2: to market volatility, but particularly falls. Right, you talk about volatile.
4:00
Speaker 2: No one cares about the up and down. What we
4:01
Speaker 2: care about is the down. Everyone gets a bit bored,
4:04
Speaker 2: particularly because it's slower and unless interesting. Yeah, or out
4:11
Speaker 2: the window, out the window, sorry if it's out the window.
4:16
Speaker 2: So market has plunged, as you say, We saw this
4:21
Speaker 2: in COVID as well. So COVID market peaked to trough
4:24
Speaker 2: in three weeks. That was a plunge, right, that was
4:27
Speaker 2: a very significant collapse, very sharp. Then it turned around
4:31
Speaker 2: and it raced back up again. And what we saw
4:32
Speaker 2: from our investors during that period was just an extraordinary
4:38
Speaker 2: switch from holding cash and very modest trading levels to
4:43
Speaker 2: very aggressive buying through the fall and as the market
4:48
Speaker 2: turned around and started climbing back up again. So we
4:51
Speaker 2: went from a sort of let's say forty five percent sell,
4:55
Speaker 2: fifty five percent buy. There's always a slight buyas toward
4:58
Speaker 2: buying because people are building over time, right, the vast
5:01
Speaker 2: majority of people are not selling shares over time. They're
5:03
Speaker 2: trying to build a portfolio, so there's always a bit
5:05
Speaker 2: more selling on average, s a bit more buying on average.
5:09
Speaker 2: During COVID it went to eighty twenty, so eighty percent
5:12
Speaker 2: buying twenty percent selling, and most of the selling was
5:14
Speaker 2: to get back into something else you were rotating through
5:18
Speaker 2: your portfolio, So huge buying through COVID and also a
5:23
Speaker 2: huge influx of new investors so our customer base. And
5:26
Speaker 2: this was true across most of the retail brokerages during
5:30
Speaker 2: that period.
5:31
Speaker 1: Okay, now, so we don't want to talk about which
5:34
Speaker 1: too much. I'm trying to get a broader picture. But
5:38
Speaker 1: what you're saying is really interesting. Okay, So this week, then,
5:42
Speaker 1: in this downturn, your turnover is lifting again and you
5:46
Speaker 1: are seeing, yet again, you are seeing, let me just
5:48
Speaker 1: clarify this beyond all doubt, you are seeing people doing
5:51
Speaker 1: more buying than selling this week.
5:52
Speaker 2: Yes, So what we saw on Monday, which was when
5:56
Speaker 2: the market sort of bottomed out, down six percent very
5:59
Speaker 2: early in the morning, just after the open, that was
6:02
Speaker 2: our largest trading day ever including the pandemic. It was
6:06
Speaker 2: about ten percent higher than our previous largest volumes, and
6:09
Speaker 2: it was absolutely more buying than selling.
6:13
Speaker 1: So the listener will say, if that's going on in
6:16
Speaker 1: every share Brookridge Fly, is the market.
6:18
Speaker 2: Falling Because retail investors are less than twenty percent of
6:21
Speaker 2: the market, that's the main reason. So the vast majority
6:24
Speaker 2: of the ASX and global markets is institutional money. That
6:28
Speaker 2: is superfunds and algorithmic traders and hedge funds and any
6:33
Speaker 2: number of large institutional investors. They're driving the flows generally,
6:38
Speaker 2: and retail investors are at the margin what we see,
6:43
Speaker 2: so they will know you will very rarely see except
6:45
Speaker 2: in some smaller stocks in particular, which are kind of
6:47
Speaker 2: retail focused. You tend not to see retail investors driving
6:51
Speaker 2: the price, particularly as aggressive of when you see volumes
6:56
Speaker 2: like this, So they're a smaller part of the market.
7:00
Speaker 2: But we have seen so we have seen some of
7:03
Speaker 2: our larger investors selling, so they're trimming positions, they're not
7:08
Speaker 2: selling their whole portfolio. It's always really important to go
7:11
Speaker 2: you know, if I sell five percent of my portfolio,
7:13
Speaker 2: that's not the same as selling one hundred percent of
7:15
Speaker 2: my portfolio. So they're trimming, and some of them will
7:19
Speaker 2: be trimming positions that they just want to kind of
7:21
Speaker 2: settle down. There has been a huge influx of cash
7:24
Speaker 2: to our book over the last twelve months. So cash
7:27
Speaker 2: has been climbing and climbing.
7:29
Speaker 1: Yeah. So these every day investors have built up cash
7:34
Speaker 1: positions in recent times much more than big super funds
7:38
Speaker 1: would have, and now they are bargain hunting faster than
7:42
Speaker 1: big super funds have. Here's the thing. To what extent
7:45
Speaker 1: do you think your experience in that which is a
7:48
Speaker 1: major share roker in the market is mirrored in other houses?
7:53
Speaker 2: It appears to be relatively similar. I will say our
7:58
Speaker 2: database were attached to a bank, they skew slightly older,
8:03
Speaker 2: they skew more experienced. For obvious reasons. You know, younger
8:07
Speaker 2: people might be attracted to a sort of flashy and
8:11
Speaker 2: more techi kana name. We tend to have sort of
8:14
Speaker 2: a lot of self managed super fund retirees. We have
8:17
Speaker 2: lots of younger investors as well, but it's more representative
8:19
Speaker 2: the total population rather than a newer broker that might
8:23
Speaker 2: attract younger people.
8:24
Speaker 1: So the chances are the newer brokers younger people are.
8:28
Speaker 1: The pattern might even be more pronounced.
8:30
Speaker 2: It may be, it absolutely may be so younger investors.
8:33
Speaker 2: I find this really interesting. Younger investors learn to investor
8:37
Speaker 2: in COVID, and what they learned was by the dip,
8:40
Speaker 2: and that's what they do.
8:40
Speaker 1: And they learned in one crash, yes, that you bought
8:43
Speaker 1: the and it went flying back up. Right, So it's
8:45
Speaker 1: a V. COVID is extraordinary. And it was a V
8:48
Speaker 1: shaped recovery.
8:49
Speaker 2: Yeah, there's a Nike swoosh. It kept going past the V.
8:52
Speaker 1: Yes. Yeah. And if they had been around in two
8:55
Speaker 1: or eight, they would have watched the market take two
8:57
Speaker 1: years to fall fifty in the slow mind.
9:01
Speaker 2: Yeah, it didn't make experienced month fIF.
9:04
Speaker 1: Right, eighteen months fifty five percent slow torture, a crumbling
9:09
Speaker 1: share market where you kept thinking it was turned the
9:11
Speaker 1: corner and it hadn't, Which leads to the question, And
9:14
Speaker 1: I can't I wouldn't even ask you this. I wouldn't
9:17
Speaker 1: ask any one person because no one knows. But I
9:18
Speaker 1: could frame it this way. This generation of bargain hunters
9:23
Speaker 1: that we're seeing come out of the woodwork this week,
9:25
Speaker 1: emboldened by COVID. Is there a danger that this is
9:31
Speaker 1: not like COVID as a reversal.
9:35
Speaker 2: I think you're absolutely correct. There is a real risk
9:37
Speaker 2: because this is restructuring the global economy right if the
9:43
Speaker 2: tar stick. And this is the difficulty. No one knows
9:46
Speaker 2: the trump and if you think you do, you're wrong.
9:48
Speaker 2: You know, it's highly volatile. The decision making is it's volatile,
9:52
Speaker 2: let's call it that. So it's very difficult to predict
9:56
Speaker 2: to what extent the twers was stick. There'll be retaliation
10:01
Speaker 2: and so on. But we do assume that there is
10:05
Speaker 2: an intention to restructure the global economy and US dominance.
10:10
Speaker 2: So if we assume that to be correct, inflation will
10:14
Speaker 2: rise under tariffs, absolutely will, particularly in the US. It
10:17
Speaker 2: might be deflationary in Australia if we get lots of
10:19
Speaker 2: cheap goods from China and other people who can't sell
10:21
Speaker 2: them elsewhere, but inflationary in the US. That puts up
10:25
Speaker 2: with pressure on rates, which is interesting. It puts downward
10:28
Speaker 2: pressure on share prices. The US consumer could be absolutely
10:32
Speaker 2: crushed by this, So there's a real risk that we
10:34
Speaker 2: sort of fall dramatically into a recession. That is what
10:37
Speaker 2: has happened in the previous instances of tariff's being implemented
10:41
Speaker 2: like this. But we're going back a century. Don't have
10:44
Speaker 2: great data on this.
10:45
Speaker 1: We're going back to nineteen the thirties, yeah, okay, on
10:48
Speaker 1: what people are doing. So we've established that for listeners
10:53
Speaker 1: that it would seem that people are responding very like COVID,
10:57
Speaker 1: that they are actually looking for bargains, that they are
11:00
Speaker 1: actually buying more than selling. This is active every day
11:05
Speaker 1: investors who sort of people who listen to this show,
11:09
Speaker 1: they are also perhaps if they are selling there, they're maneuvering.
11:12
Speaker 1: Maybe they're selling out of gold for instance, after getting
11:15
Speaker 1: a big run and buying I don't know just about anything, right, yes, so.
11:19
Speaker 2: Northern Star was our biggest sell yesterday. You're absolutely correct,
11:23
Speaker 2: that was the biggest sell.
11:24
Speaker 1: Yeah, okay, and that's a gold gold miner. So just
11:27
Speaker 1: before we go into that sort of deep dive, the
11:29
Speaker 1: patterns of what people are buying. Are they going back
11:32
Speaker 1: into the US? Are they going back, if you like,
11:34
Speaker 1: into the fire? Are they going straight back to the U?
11:37
Speaker 1: Is it the US bias? Are the ATS?
11:40
Speaker 2: We yeah, so not specifically only the US. When we
11:45
Speaker 2: see ETF buying, it is usually the ASX two hundred
11:48
Speaker 2: and the S and P five hundred, but there is
11:50
Speaker 2: also now some world. So misky world is sort of
11:55
Speaker 2: the benchmark that the UTF matches. I should note all
11:58
Speaker 2: of the utfs that we see typically are just basic
12:03
Speaker 2: index ets. They're not managed, they're not leverageda Clain Vanilla, right,
12:09
Speaker 2: very simple stuff. You know exactly what you're getting, very
12:12
Speaker 2: cheap as well, very low mars, and lots of good
12:16
Speaker 2: historical data on the value of investing in that kind
12:19
Speaker 2: of product if you don't want to pick the stops yourself. Right.
12:21
Speaker 2: So we have seen that. We have also seen Nasdaq
12:25
Speaker 2: one hundred and quite a lot of that and World
12:28
Speaker 2: more broadly. But World is sort of seventy percent US
12:32
Speaker 2: at the moment, so one would trust that investors know
12:36
Speaker 2: when you are buying a World ETF, you are getting
12:40
Speaker 2: a lot of US exposure in that and then a
12:42
Speaker 2: smaller amount, much smaller amount of the rest of the world.
12:47
Speaker 1: Okay, really interesting. We got to take a short break
12:49
Speaker 1: and we will be back very quickly because this is enthralling. Okay,
12:53
Speaker 1: back in the moment. Hello, Welcome back to The Australian's
13:04
Speaker 1: Money Puzzle podcast. James Kirby with Jamma Dale from Nabdate,
13:07
Speaker 1: head of Investor Behavior, who is always good to talk to.
13:10
Speaker 1: Ani Date have to mention in the middle of a
13:12
Speaker 1: share market downturn. Okay, so tell us now what your
13:18
Speaker 1: data in channel that is showing about people what they're
13:21
Speaker 1: buying and what they're buying, what they're selling, to the
13:22
Speaker 1: extent that you could.
13:24
Speaker 2: Yeah, absolutely, So one thing I will comment on because
13:26
Speaker 2: you just sort of asked this question before. There are
13:28
Speaker 2: different types of investors obviously in any customer set, and
13:32
Speaker 2: we have hundreds and hundreds of thousands of customers and
13:34
Speaker 2: so they are quite different. Younger people obviously have a
13:37
Speaker 2: different portfolio and different trading slash investing behavior than older people,
13:42
Speaker 2: which is quite typical. One of the main reasons is
13:45
Speaker 2: older people have been doing it longer and they're much
13:48
Speaker 2: less likely to own a lot of ETFs. They started
13:51
Speaker 2: buying direct stocks, so they tend to hold BHP, CBA, CSL, Macquarie.
13:56
Speaker 2: You know, big Australian companies has been around a long time.
13:59
Speaker 2: So what though, those guys are doing it at the moment,
14:01
Speaker 2: and our active trade is they are materials, particularly BHP
14:07
Speaker 2: and Woodside. Woodside has been absolutely smashed because the oil
14:10
Speaker 2: prices come off so hard. Uh, BHP obviously a lot
14:15
Speaker 2: of exposure to China.
14:17
Speaker 1: Sorry, just to clarify, people are with these stocks they're
14:20
Speaker 1: buying or selling them.
14:21
Speaker 2: They're buying them.
14:22
Speaker 1: They're absolutely they're buying them. They're buying Woodside after the
14:25
Speaker 1: sell off of the oils because the oil is down
14:27
Speaker 1: because of a variety of things, including which almost got lost.
14:31
Speaker 1: We'll pick I've allowed it to go off in the
14:33
Speaker 1: middle of all this, which which would normally have been
14:35
Speaker 1: big news, but it didn't get through the crash news. Okay,
14:38
Speaker 1: So commodity old time commodity miners EH, fossil fuel giants.
14:45
Speaker 2: Yes, and banks. Interestingly enough, Westpac, so, CBA, NAB and
14:51
Speaker 2: I and Z are strong by at the moment, less
14:54
Speaker 2: so Westpac. But sometimes that's a normalist. That's just one
14:57
Speaker 2: day and for whatever reason, that just wasn't the So
15:00
Speaker 2: I don't want to say that's a trend. It just
15:01
Speaker 2: is what happened yesterday when McQuary got hit really hard
15:06
Speaker 2: yesterday morning and then bounced quite a lot. So it
15:09
Speaker 2: was obviously brought in the morning when it was under
15:11
Speaker 2: a lot of pressure. And mccrary's one of the companies
15:13
Speaker 2: in Australia with a lot of US earnings and obviously
15:16
Speaker 2: a lot of exposure to the US.
15:18
Speaker 1: Yes, and you sign up people searching in they're doing that.
15:22
Speaker 1: Do you think there's an element of swinging towards defense
15:28
Speaker 1: in the chase for income and dividends from the bank
15:31
Speaker 1: shares particularly.
15:33
Speaker 2: It could be that. I think the real risk with
15:36
Speaker 2: bank shares, and now investors are acutely conscious of this
15:39
Speaker 2: is they've been until quite recently. If you look at
15:43
Speaker 2: three of the big four, they've come off very hard.
15:46
Speaker 2: It looks like CBA has come off hard, but it
15:48
Speaker 2: hasn't really. I mean CBA was at one hundred dollars
15:51
Speaker 2: or eighteen months ago. It's still it, what one hundred
15:54
Speaker 2: and forty ish. Yes, it made it to one hundred
15:57
Speaker 2: and sixty, but it's not exactly a dramatic pullback when
15:59
Speaker 2: you consider it is a bank and it perhaps should
16:02
Speaker 2: not have run sixty percent in eighteen months. It was
16:04
Speaker 2: quite an extraordinary price, and the year was back at
16:06
Speaker 2: around three percent. So for our guys, they know the
16:08
Speaker 2: bank share process is extremely well and they're very reluctant
16:12
Speaker 2: to chase. They were mostly trimming banks through the last
16:15
Speaker 2: eighteen months because they felt they had just run too hard.
16:19
Speaker 2: The rotation back in is interesting. I think it's more
16:23
Speaker 2: of a quality play than a dividend play, mostly because
16:27
Speaker 2: they've got lots of banks already.
16:28
Speaker 1: Yes, okay, and as you say, it's worth hearing this folks.
16:33
Speaker 1: You know the franking are fully frank. Years on the
16:37
Speaker 1: bank shows coming up at seven and eight percent now
16:40
Speaker 1: with the exception interesting the comebob banks. That is the
16:46
Speaker 1: thing is it doesn't fall what was it doesn't fall,
16:49
Speaker 1: but it was the one that was supposed to fall hardest. Yes,
16:52
Speaker 1: the scause it's run the hardness, but it hasn't. So
16:56
Speaker 1: that's an interesting I often find when you get this
16:59
Speaker 1: period of supervolatility in a big sell off there it's
17:01
Speaker 1: always really worth looking the next thing said, well, what
17:04
Speaker 1: did actually happen? Which stocks did forward? And the other
17:08
Speaker 1: themes we could look at? What about the AI and
17:10
Speaker 1: tech gang.
17:13
Speaker 2: In the US. So we'll say that just that difference
17:15
Speaker 2: between more mature investors, the ones who've been doing this
17:17
Speaker 2: a long time and have stock portfolios versus newer investors
17:21
Speaker 2: who tend to have ETF portfolios, because they're quite different cohorts.
17:25
Speaker 2: The ETF portfolio guys are just loading up, absolutely up,
17:28
Speaker 2: and we.
17:29
Speaker 1: Were loading up on ETFs. Sorry, there's no evidence of them.
17:33
Speaker 2: Broadening, and it may happen, but not yet. So what
17:36
Speaker 2: has happened, and we ran this analysis last year. So
17:42
Speaker 2: interesting to me is that yes, people buy ettfs and
17:45
Speaker 2: there's a bit of a just keep buying mentality, and
17:47
Speaker 2: a lot of it is younger people trying to build
17:48
Speaker 2: a portfolio over time. And you can extrapolate to say
17:51
Speaker 2: they're saving up to by home or whatever it is.
17:52
Speaker 2: They're just trying to build up a portfolio over time.
17:54
Speaker 2: They use ETF to do that. What we found through
17:58
Speaker 2: a bit of sort of begging through our data and
18:00
Speaker 2: analysis is they are not just blindly buying. They are
18:05
Speaker 2: far more likely to buy. And I mean by a
18:08
Speaker 2: magnitude of like fifty percent on a day the market
18:12
Speaker 2: falls by more than one percent, So on a day
18:14
Speaker 2: when it falls six percent in the morning, they are
18:16
Speaker 2: going to buy dramatically more and dramatically more people are
18:21
Speaker 2: going to buy. And I kind of love that. I'm like, well,
18:23
Speaker 2: you guys, know what you're doing. This is not just
18:26
Speaker 2: random buying. You're actually trying to time just little winds.
18:31
Speaker 2: They're little accreative wins, right, Like if you just buy
18:34
Speaker 2: it one percent cheaper, but you're doing it consistently, that's
18:37
Speaker 2: quite nice, right, And I think to your question a
18:40
Speaker 2: little bit earlier, like, do we know whether this is
18:42
Speaker 2: a V shape recovery like COVID or a horrendous bleed
18:46
Speaker 2: like two thousand and eight. We don't know. Obviously, we
18:49
Speaker 2: don't know at this point. But for those people who
18:52
Speaker 2: are doing cumulative ETF buying, I don't know if they
18:55
Speaker 2: care an enormous amount. This is just a long term
18:58
Speaker 2: buying strategy and they will try to buy weakness, and
19:01
Speaker 2: that tends to be the newer investors. That's just their strategy.
19:04
Speaker 1: It's okay, sort of an aggressive exactly.
19:06
Speaker 2: Is it quite a sophisticated, simple strategy?
19:10
Speaker 1: Yes? Right, okay, very interesting and no obvious swing back
19:14
Speaker 1: towards the defensive alleged defensive quality of the ASEX with
19:19
Speaker 1: the high dividend yield.
19:20
Speaker 2: Not really. I mean, obviously we sow enormous buying, but
19:23
Speaker 2: we have seen so much cash piling up. We absolutely
19:26
Speaker 2: knew people were waiting for a pullback, and they are
19:28
Speaker 2: absolutely moving on the pullback, which is good to see.
19:31
Speaker 2: They're not just sitting on cash indefinitely. What is always
19:34
Speaker 2: interesting to see is what happens as it continues. You know,
19:37
Speaker 2: it's unlikely you get a sell off. That's three days
19:40
Speaker 2: only and then it's all over and back to the races.
19:42
Speaker 2: So it'll be interesting to see what happens.
19:44
Speaker 1: It will be interesting to see what happens. Well, that's sure,
19:47
Speaker 1: but we ruled off the books this morning. We would
19:50
Speaker 1: all be in trouble, wouldn't we. We'd be all our
19:52
Speaker 1: super funds. If we were in big super they would
19:54
Speaker 1: be down considerably because our big super funds are we
19:59
Speaker 1: know from the statistics, more exposed if you like, to
20:03
Speaker 1: the US share market and have elevated that exposure recent times.
20:07
Speaker 1: And they also have more exposure to on listed assets,
20:09
Speaker 1: which we haven't talked about. Yes, but either they will
20:14
Speaker 1: drop and if they don't mark them down, they become
20:18
Speaker 1: imbalanced if you like, because their shares are down, but
20:20
Speaker 1: their private equity holdings aren't because they haven't marked them down.
20:23
Speaker 1: So I can't see your way out of that. I
20:25
Speaker 1: wonder had you look at all at I noticed myself
20:28
Speaker 1: looking at the listed what I call the listed on list,
20:31
Speaker 1: the listed on listed market, which is all these funds
20:34
Speaker 1: which have emerged which give investors exposure to assets that
20:40
Speaker 1: are private technically, and then they list them on the
20:43
Speaker 1: stock market and they say there's no contradiction in that.
20:46
Speaker 1: But I did notice that the funds, private equity funds
20:50
Speaker 1: and private credit funds that are listed on the ASEX.
20:53
Speaker 1: This is very broad, but they are down perhaps fifty
20:57
Speaker 1: percent more than the market itself. So the market being
21:00
Speaker 1: down ten percent this year so far, some of those
21:02
Speaker 1: big funds down fifteen percent or more. I thought it
21:04
Speaker 1: might didn't be sharper, And I think any observations on
21:08
Speaker 1: that whole scene for our listeners.
21:11
Speaker 2: I think the comment I would make, we do not
21:16
Speaker 2: see a lot of appetite for that kind of product
21:19
Speaker 2: and structure on. Yeah, So if you look at our
21:23
Speaker 2: younger investors, they're just buying plain vanilla retfs and that
21:26
Speaker 2: is their strategy, and they're very consistent about it. So
21:29
Speaker 2: they're quite sophisticated. They try to time it, but they're
21:31
Speaker 2: quite happy to take a small win rather than looking
21:34
Speaker 2: to time it perfectly and hold out in cash for
21:37
Speaker 2: a year and a half waiting for a pullback. You know,
21:39
Speaker 2: they're just happy to buy consistently. When you look at
21:42
Speaker 2: our more mature investors, and again this is a bit
21:44
Speaker 2: of an experienced thing. A lot of them are around
21:47
Speaker 2: during the GFC and they have seen what happens to
21:50
Speaker 2: I liquid assets, regardless of whether or not they're in
21:52
Speaker 2: a liquid structure. They've seen what happens, and it's very
21:56
Speaker 2: clear that they are steering well away from things that
21:58
Speaker 2: they don't understand and when they diversify away from direct
22:04
Speaker 2: equity portfolio. So you know, they have a direct equity
22:07
Speaker 2: portfolio that have some cash. We obviously don't see everything
22:09
Speaker 2: they have off platform. They have lots of other things
22:11
Speaker 2: generally as well. But if they do go into something
22:16
Speaker 2: beyond their ASX listed exposure, they tend to stay with
22:21
Speaker 2: stuff that's pretty vanilla and pretty transparent. You know, they'll
22:25
Speaker 2: go into international equities, you know, they'll go into some
22:28
Speaker 2: rates and so on, but then going into more opaque
22:31
Speaker 2: structures at all.
22:32
Speaker 1: I just want to ask you almost repeat, is that
22:35
Speaker 1: in your It seems as you have come to a
22:37
Speaker 1: conclusion on your own database at NAP trade that the
22:40
Speaker 1: older investor has stocks. They probably started off someone said
22:43
Speaker 1: to them by ten stocks. They went in, they bolt
22:45
Speaker 1: two banks, two minors, they've got a supermarket. They played
22:48
Speaker 1: around the edges, et cetera. Some years younger went in
22:51
Speaker 1: and they started buying ETFs. Then they both then they
22:54
Speaker 1: maybe increased their sophistication of their portfolio. They had the AX,
22:58
Speaker 1: the S and P. Then they bought NASDAK, then they
23:00
Speaker 1: bought Miski, then they bought something US small caps or whatever.
23:04
Speaker 1: All fine, here's the thing. It seems to me, if
23:08
Speaker 1: it keeps going the way it is, that the ETF
23:11
Speaker 1: investors will dominate your platform sooner or later.
23:13
Speaker 2: So I get this question a lot, and it's really interesting,
23:17
Speaker 2: and no, I love it. I think it's such an
23:19
Speaker 2: interesting question. Right, So, pre COVID ETFs were four percent
23:24
Speaker 2: of our holdings. They are now fourteen percent of our holdings.
23:28
Speaker 2: Fourteen percent still pretty small of a yeah, holdings of
23:32
Speaker 2: what people hold overall, so we don't manage it for them.
23:35
Speaker 2: Just sits on the platform. Yeah, fourteen percent. So that's
23:42
Speaker 2: bigger than any individual holding, It's not dramatically bigger. So
23:47
Speaker 2: the sort of top ten Australian stocks, top ten ASX
23:50
Speaker 2: stocks make up about fifty percent of holdings. You know,
23:56
Speaker 2: has that shrunk?
23:57
Speaker 1: Has that shrunk to thet You've.
23:59
Speaker 2: Got to remember our customer base doubled, So the weight
24:03
Speaker 2: of ETF holding sits in the newer investors, the weight
24:06
Speaker 2: not all of them, obviously some of our more mature
24:08
Speaker 2: investors hold ETFs as well, but they tend to add
24:11
Speaker 2: them to their portfolio. They don't go, God, I'm really
24:14
Speaker 2: awful at managing my own portfolio. I'm going to sell
24:16
Speaker 2: it all down and go into an ETF. They go, oh,
24:18
Speaker 2: here's the thing I don't hold. I'll get some S
24:20
Speaker 2: and P five hundred. So yeah, it's I think what
24:25
Speaker 2: is worth noting is, obviously the number of investors has grown.
24:28
Speaker 2: And I'm extrapolating across the industry here because I suspect
24:30
Speaker 2: it's true, particularly for our bigger competitor. There's one competitor
24:34
Speaker 2: that's bigger th enough. And what you see is your
24:37
Speaker 2: newer investors are growing the ETF book, and your existing
24:41
Speaker 2: investors have a lot of direct equities, and then they
24:43
Speaker 2: might can nearbor. Yes.
24:46
Speaker 1: Interesting, so, I think, folks, because we are because the
24:51
Speaker 1: large investors, the institution investors, dominate the market and swing
24:54
Speaker 1: the market one way or another. Just be aware of
24:57
Speaker 1: this that though it looks like the everyone's selling and
25:02
Speaker 1: getting out of the stock market, or at least, you know,
25:05
Speaker 1: unloading lots of shares, it's not everyone. It's largely institutional
25:09
Speaker 1: investors and pension funds, your own pension fund, no doubt,
25:12
Speaker 1: your own super fund. But it's not you the active investor,
25:16
Speaker 1: which is very much our listener. Really interesting. Okay, Gemma,
25:20
Speaker 1: take short break. We'll come back with some questions. Hello,
25:30
Speaker 1: Welcome back to The Australian's Money Puzzle podcast. I'm James
25:34
Speaker 1: Kirby talking to Jemma Dale of KNAB Trade, who's just
25:38
Speaker 1: been telling us some very interesting insights into what's been
25:42
Speaker 1: going on behind the headlines really of this share market downturn.
25:47
Speaker 1: It is very much an mirror image of what happened
25:51
Speaker 1: in the COVID downturn. Except we know how the COVID
25:55
Speaker 1: downturn ended. We don't know how this one ends. We
25:58
Speaker 1: don't know. Sorry, folks, tell you what we don't. I'm
26:01
Speaker 1: not even going to try a quick not so much question.
26:04
Speaker 1: But a couple of quite a few messages came in
26:07
Speaker 1: over the weekend, basically all say the same thing, that
26:09
Speaker 1: I was biased against industry funds. I'm not at all,
26:14
Speaker 1: and I regularly would say that they suit many people,
26:17
Speaker 1: but I would also very quickly say they should never
26:20
Speaker 1: be beyond question. Someone also meant the point that as
26:23
Speaker 1: a journalist day and writer, you should regularly declare that
26:27
Speaker 1: you have an SMSF. I regularly declare I have an SMSF.
26:31
Speaker 1: I have an SMSF. I would have mentioned it on
26:33
Speaker 1: the show many times. And just for the record, my
26:36
Speaker 1: other half is in an industry fund, you see, all
26:39
Speaker 1: her life, and despite my entreaties, is involved. Yes, of
26:43
Speaker 1: course trustee of the Curbly Superinnuation Fund, but has her
26:46
Speaker 1: industry fund going too. So let me tell you there
26:50
Speaker 1: are no biases on that. And look, I would just
26:53
Speaker 1: say it would be silly of me to have them.
26:55
Speaker 1: But there would be times, I suppose on a live
26:57
Speaker 1: show like this where if I'm digging in on a
27:00
Speaker 1: certain theme, it may seem so, but I would strenuously
27:04
Speaker 1: defend that I would have an independent view on, especially
27:08
Speaker 1: on these big themes. But thank you all the same, everybody,
27:11
Speaker 1: and do always give us your impressions or observations on
27:17
Speaker 1: that sort of thing and keep me in line, all right.
27:20
Speaker 1: Question from Danny. Question relates to government health funds. How
27:24
Speaker 1: those listed private health companies go since they were battered
27:29
Speaker 1: from pillar to post, Gemma, the Ramses and co. I
27:32
Speaker 1: mean they've been sought off anyway. I haven't looked but
27:36
Speaker 1: I preserved they couldn't have been sought off much further
27:38
Speaker 1: in this route and health scope. My bi hanging on
27:41
Speaker 1: there and in the middle of it of a takeover
27:43
Speaker 1: place should be interesting anyway, quickly, folks, Delly says, if
27:49
Speaker 1: my question relates to government health fund loading fee cover
27:53
Speaker 1: for over thirty one year olds, you all know about that.
27:55
Speaker 1: If you're over thirty one day, they double get you
27:57
Speaker 1: if you don't get your cover. So he says it's
28:01
Speaker 1: often better. You're often better off paying Medicare levy than
28:04
Speaker 1: the health cover due to expensive loading. So you could
28:08
Speaker 1: easily be persuaded to buy health cover private insurance cover
28:11
Speaker 1: if you are older over thirty one. What are your
28:13
Speaker 1: thoughts on this? Okay? We went to James Gerard, our
28:16
Speaker 1: friend financial advisor. He says the loading is collected by
28:19
Speaker 1: the private health insurer and not forwarded to the government.
28:23
Speaker 1: It's the private health surer keeps the loading correct. There
28:26
Speaker 1: are several instances where the Medicare levy search charge will
28:29
Speaker 1: work out better than the hospital coverage under a private
28:32
Speaker 1: health insurance policy. This signals the actual benefits of the
28:35
Speaker 1: policy and purely focuses on what is less pain financially,
28:40
Speaker 1: what is cheaper? Okay? And then James says, as Daney noted,
28:44
Speaker 1: O the people who are liable for a large surcharge
28:46
Speaker 1: and people whose income is just over the threshold for
28:49
Speaker 1: the surcharge may be better off just paying the surcharge.
28:52
Speaker 1: But if you go down the path of paying the
28:54
Speaker 1: surcharge and sidestepping a hospital insurance policy and make sure
28:57
Speaker 1: you have a good public hospital nearby because you never
28:59
Speaker 1: know when you might need it, what there you are?
29:02
Speaker 1: James Gerard has covered all potential angles there, but it
29:05
Speaker 1: is it's something that has come up, and it's something
29:09
Speaker 1: we're quite acutely aware of. And that's always the answer,
29:13
Speaker 1: to be honest with you, if you if it's strictly speaking,
29:16
Speaker 1: if you want to do with the cheapest way, you
29:17
Speaker 1: know it's quite obvious what to do, but you take
29:19
Speaker 1: a risk, all right? Now? A question from Keaton where
29:22
Speaker 1: Jema can come back in? I hope Keaton first name says,
29:27
Speaker 1: a share I regrettably bought was recently delisted from the
29:31
Speaker 1: ASX and listed on the NSX. I've never heard of
29:37
Speaker 1: this exchange. My understanding is I need to sell my
29:40
Speaker 1: shares to write off the loss against my gains from
29:43
Speaker 1: selling other more successful shares. What is the easiest way
29:47
Speaker 1: to do this? Help would be appreciated. Okay, no advice.
29:50
Speaker 1: We never give you advice. This is information only and
29:53
Speaker 1: you would never just on the phrasing there. I expect
29:57
Speaker 1: all the I'm talking to, all the Keatons in the
29:59
Speaker 1: world need to sell shares to write off the last
30:03
Speaker 1: against capital gains. You may do so if you wish,
30:06
Speaker 1: but that would be the theory behind that would be
30:10
Speaker 1: you do it if you want to do it. All right? Ever,
30:13
Speaker 1: hear of the NSX gemen. Do you deal with them
30:15
Speaker 1: at all?
30:16
Speaker 2: So, yes, I'm aware of it. We do not offer
30:20
Speaker 2: the NSX. We do offer tri X. We don't offer
30:23
Speaker 2: the NX. We offer you off for THEX.
30:25
Speaker 1: We should help keeping first of all by telling him,
30:27
Speaker 1: you know, it's basically it's in an attempt as an
30:30
Speaker 1: alternative exchange to the AX. There's been several of them.
30:33
Speaker 1: There are several of them, very very small and not
30:37
Speaker 1: particularly well known, but.
30:38
Speaker 2: Yeah, yeah, still small. If you go to their website,
30:41
Speaker 2: it'd actually list the brokers that you can use to
30:45
Speaker 2: trade through them. So Keaton, if you want to go
30:48
Speaker 2: to their website, you can find out who will be
30:51
Speaker 2: able to place trades on your behalf through that exchange,
30:53
Speaker 2: and you can potentially get them to act on your behalf.
30:56
Speaker 1: And it's a perfect I mean to make it clear,
30:58
Speaker 1: it's a perfectly legitimate exchange. Have This is just an
31:02
Speaker 1: attempt and there have been several attempts. And there are
31:05
Speaker 1: other exchanges that you mentioned another one X yeah X
31:10
Speaker 1: c hi dah X you see.
31:12
Speaker 2: Now, goodness may I'm out of date now called used
31:16
Speaker 2: to be called t X. Sorry giving away my age already.
31:22
Speaker 1: If you think about the US, you know they've got
31:23
Speaker 1: different markets, right, we don't talk about you know, they
31:26
Speaker 1: got the S and P, they got the Dow Jones,
31:27
Speaker 1: they got the nasdak all in the one country and
31:30
Speaker 1: there wasn't There's been attempts to try and build and
31:33
Speaker 1: not to have the AX have a monopoly, which is
31:36
Speaker 1: not a healthy thing at all. But that's the historical
31:39
Speaker 1: background there. NSX is a perfectly just useful small exchange
31:45
Speaker 1: and as Jemma says, just look at their website to
31:47
Speaker 1: see the brokers they use. And if you then should
31:50
Speaker 1: desire to sell your shares for whatever reason, including the
31:53
Speaker 1: fact that they don't seem to have been going very well.
31:55
Speaker 1: If you say the word regrettably holding them, then you
31:58
Speaker 1: can just pick one of those brokers, all right. Terrific. Well, Gemma,
32:02
Speaker 1: what a great time to have you on. We could
32:05
Speaker 1: talk every day, good market, We could talk every morning
32:09
Speaker 1: for a while and it would all be really interesting
32:12
Speaker 1: for our listeners. I thought today was terrific, a really
32:15
Speaker 1: fresh insight into what's going up, back, going on, back up,
32:18
Speaker 1: statistically and evidence based, which is what we are all
32:22
Speaker 1: about here. Okay, thanks very much, Gemma.
32:25
Speaker 2: Absolute pleasure. Thank you for having me.
32:27
Speaker 1: Great to have you on, as always, great to have
32:29
Speaker 1: Jemma Daye there of trade, head of investor behavior and
32:32
Speaker 1: something of a doyen of market inside trading data, which
32:38
Speaker 1: on days like this or weeks like this, is very
32:40
Speaker 1: interesting to know. So turns out active investors, independent investors
32:45
Speaker 1: are actually in their bargain hunting already, folks. We will
32:49
Speaker 1: see how they get on in the days to come.
32:51
Speaker 1: We will talk to Sam Wiley later in the week.
32:54
Speaker 1: Until then, let's have some more correspondence. Great to have
32:57
Speaker 1: those questions today The Money Puzzle at the Australia dot
33:00
Speaker 1: Com dot AU. Today's show was produced by the Assema Group.
33:04
Speaker 1: Talk to you soon, HM,