Latest / The Curve / TCW63: An update on crocs, inflation, and Soph’s love life.

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TCW63: An update on crocs, inflation, and Soph’s love life. · The Curve

• 0:00
  Hi and welcome to the Curve Weekly, the podcast that keeps you up to date with all the money,
• 0:06
  business and stock market tea. Everyone should experience for us at least once in their
• 0:10
  lives and Annie shouldn't miss out just because she can't afford it. Help me, I love your
• 0:15
  plates that you've got on today. I know, I have little pigtails. I don't know, it came over me
• 0:24
  this morning. I'm like really into it. I woke up with like so much energy and yeah, I felt like
• 0:31
  today's gonna be a good day and then we're here too because you figure out what like you did yesterday
• 0:35
  to wake up with energy because that's often what I think. I'm like, what have I been doing the
• 0:39
  last few days that's made me feel so good? I don't know, I don't know, I don't know, I don't know
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  yeah. No, I had a session, I'm seeing this performance and wellbeing coach and she's incredible
• 0:51
  and so maybe it was that, maybe we had a good session yesterday. It's so funny because they
• 0:55
  Fick was like got to work and she was like, now my coach asked me to point at my emotions,
• 0:58
  it was like an emotion wheel and it was like joy, happiness, blah, blah, it was like all the negative
• 1:04
  emotions, like fear, like insecure, worried, I was like that. She was like, you point to the
• 1:13
  corner of the circle that you resonate with and she's like, yeah, all the negative ones.
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  Yes, but you know, at least I am aware of my emotions, conscious, yeah, but I'm sorry,
• 1:27
  this podcast should not start with me in my, my week. I think it should start with you in
• 1:33
  your week. I knew this way because I wanted to brief you on what we're not talking about on
• 1:42
  this podcast. I'm sorry, you don't, you do not brief me on what I can and can't turn this podcast.
• 1:49
  But I want to, I want to firstly just say to anyone out there that, you know, I had a crush on
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  so it's boyfriend or you know, it was maybe going to ask her on a date, girls or boys,
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  I'm sorry, but maybe you should stop the thing now because drum roll. Do you want to,
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  do you want to say the news? No, I think this whole segment needs to come out. Sorry, everyone,
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  but she's very happy and we can't wait. We've named him fanboy because he's a bit of a fan of
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  so fan of fanboy. You've named him fanboy. Sorry, I did. It's quite appropriate though because he
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  does listen to the podcast, which is the cutest thing ever. Also problematic. Also, I haven't even met
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  him. So I'm kind of a bit skeptical. She's a bit fucked off about it. She's like, I don't know if
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  you can be officially in a relationship with somebody if I've not met them. Like what if I don't like
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  you're okay. I was like, well, you're not dating them. So it doesn't really matter. Oh,
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  good. And then I got a group call from Flower Man and Vic and they were like group holiday and I said,
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  oh my god, calm down. No, they're excited. Very happy for you because I can see how happy you are.
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  I am happy. So I'm just spraying my face with a bit of, I'm feeling a bit hot and flustered.
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  Are you feeling quite overwhelmed right now? Yeah, yeah, yeah, feeling a little bit. What emotion would
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  you point to on the emotions chart? I would probably point excited. Yeah, but also happy.
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  Okay, all right. Onto the finance, mate. Onto the finance. Yes, yeah, yeah. Okay, onto the
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  finance. So it's been, it has been a pretty big week in terms of economic news this week, which
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  we haven't really touched on for a while. Yeah, what's been going on? So we had inflation
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  news in the US. We haven't really talked about inflation for so long. I know. I kind of thought it
• 3:44
  was a thing that we that we were done with. Well, you know, we've probably just adjusted to
• 3:49
  higher prices of things, but it still doesn't pack the stock market. It doesn't impact the economy.
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  But just for context, the S&P 500, so the top 500 companies in the US, they're up 30% in the
• 4:01
  last 12 months, but this week has been a pretty tough week and it's all because of this inflation
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  data. So inflation came out in the US and it was stronger than what people expected. So it was
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  stronger as in the inflation was worse. Yeah. Yeah. So it's higher, which means it's worse.
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  Remember, we want to be in that two to three percent range because that is a healthy level
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  inflation that makes people spend, but not want to spend or not spend too much or that. So yeah,
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  it's a healthy range that two to three percent. So US inflation is at three and a half percent. So it's
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  it's not too bad, but it's still out of that range. New Zealand is actually at 4.7 percent. So
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  we're still pretty high. And the UK is at 3.4. So we're all in a similar range. But when you
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  ask that like 10 percent, yeah, I was going to say, well, it was quite high. Like not that long.
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  Yeah. And I'm not saying that now the UK is at 3.4 percent that it's come down.
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  Prices are still high. They're just not increasing as much. Does that make sense? So they've
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  increased 10 percent, for example. And then now they're increasing at a lower rate. So they're
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  increasing at 3 percent, rather than 10 percent on 10 percent on 10 percent. So it's not like prices
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  have come down. They've just adjusted or they're not increasing by as much. So that's why we're
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  still feeling the pinch and that's why everyone I feel like in the UK is talking about how it
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  speaks everything is. Everyone in New Zealand is it's a kind of global phenomenon at the moment.
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  Is that everyone is saying? I am actually got a message from someone the other day who's
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  actually living in New Zealand. Her friends are over here probably around the like 24-age
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  bracket and was just like, how are you surviving? So many of our friends are just like up
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  struggle street. Like can't afford really to enjoy themselves. Like to the point where
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  I'm not sure if they'll be able to stay just because it's so expensive. And I know like London.
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  Yeah, and I know people everywhere are struggling. But I mean being here, I definitely, I bought
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  it like a lion's mane mushroom decaf, oat flat, something or other this morning. And it was like
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  five pounds. That's $10 still, you know? And yeah. So anyway, so just all I have a long back.
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  Yeah, it's two pounds sixty. It's really so cheap. Honestly, it's hotwear and coffee. Yeah.
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  I don't really love them. Maybe I have to get into it anyway. So yes. So I guess how does
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  inflation impact the stock market? Well, it impacts it from this is a number of different ways. But
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  mainly is that people aren't spending or like you said, they're feeling it tough. They're not
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  going to be out and about spending on products. And then that doesn't contribute to revenue for
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  companies in the stock market. But it also means that if inflation's high, remember the way that you
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  bring inflation back down is through. Don't tell me. Interest rates go up. Yes. Yes. So
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  this means that we could probably see interest rates holding steady or going higher to if this
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  inflation is still really pretty. And so when you say interest rates, is that only affecting houses?
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  That doesn't affect anything else, right? It's not anything to do with GST or VAT or any of that.
• 7:09
  The only thing that would be increasing is if you have a mortgage, right? Or if you have savings in
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  the bank or if you have debt. So if you have savings in the bank, you're now getting a greater return
• 7:19
  because interest rates are going up. So it's actually quite a good time to have, if you would have
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  money in the bank or money in term deposits or things that are traditionally more lower returning,
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  you actually can do better from those things at the moment. Yes. So higher interest rates encourages
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  saving. But why would they want people to be not? Oh, yes. Because spending is what brings inflation
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  up, right? Yeah. And if they're spending, it's because these demand for things. And so people are
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  interacting with the economy, which pushes prices up, whereas at the moment, because they're trying to
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  bring prices down, if people are spending less, i.e. keeping the money in the bank and getting better
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  returns, the point is it brings inflation down. Yes. Yeah. Cool. But it's like everything's so connected
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  because yeah, it means that mortgage rates are higher. It means that if you've got debt on your
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  credit card, that might increase as well. The interest that you're paying on that. So it does
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  hurt. So high inflation does really hurt. So does like negative inflation. But we're not in that,
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  we're not in that camp that's holding on the story. But anyway, so yeah, higher interest rates also
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  puts kind of breaks on the stock market because people don't have as much money this means because
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  they're spending on other things. And they're like, hey, you know what, instead of missing the stock
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  market, I can just keep my money in the bank. I don't, you know, I can get a pretty good return on
• 8:37
  the money in the bank. I don't need to put it in the stock market. But if I try and get, yeah,
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  if it's like, if I could earn five to six percent by keeping money in a term deposit, that's really
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  low risk. That's a great risk reward. So do you want to just explain that for anyone that maybe
• 8:51
  doesn't totally understand it could be good to just do a quick 101. So in a normal economic environment,
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  which we're not in at the moment because we've got such high interest rates, but in a normal
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  situation, if you had money in the bank, you'd probably get around two percent return per year,
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  which is pretty, pretty low and not much. And that's because the risk of holding your money in
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  the bank is really low. So therefore, the reward is low. And if you put that in perspective in terms
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  of the stock market, when you invest in the stock market, the risk is pretty high. But therefore,
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  the return can be pretty high. So this is why over the long term, your return is much greater if
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  you invest in the stock market because you're taking that little bit of risk. Anyway, where's what I'm
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  saying now is that if you had money in the bank because interest rates are so high, you're actually
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  getting like five or six percent sometimes, which is pretty good. And therefore if I was sitting there
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  being like, I'm a bit risk averse. I don't really like risk. I'm going to keep my money in the
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  bank and not invest in the stock market because the returns are so good. So that's kind of what I'm
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  meaning. I think what is confusing probably for people is as soon as you say risk, like it's
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  high risk. People are like, oh, you're like, it's really risky. People are like, well, then why would
• 10:03
  I do it? And I think I was actually messaging a friend on Instagram the other day. I actually
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  am going to play you her message. My last boyfriend was investing in Bitcoin. So I found this like
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  forum. I invested $500, which was my only money, like gathered all my money, I invested $500 into
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  Bitcoin. Whatever I had invested to was a scam. And then it actually just put me off of it
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  doing it ever again. You know, and I'm like, so I think the thing is people case stories like that
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  and then they're like, oh God, I'm going to lose all my money because the stock market is risky.
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  And I think I was just like, holy shit, there's so many people that think that. And so every time
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  we say, oh, it's higher risk or it's risky, I'm worried that it means people aren't going to
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  invest in the stock market. Okay. Okay. Firstly, never, ever invest everything you've got.
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  You should have an emergency fund where you don't invest, which you keep in the bank,
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  because you will need that at some point. Secondly, if you're going to invest and $500 is all
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  your money, don't put it all into one thing. Don't invest all in one company or all in one
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  ETF or all in Bitcoin like that. You need to diversify. And this is why I stress so much because I
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  don't want people to be put off from investing because it can be so powerful if you do it right.
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  And I think that is the key thing. The in hindsight, and it's so easy in hindsight is that
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  that $500 should be invested in across like 10 different things, for example. And therefore,
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  she would have only lost maybe $50 to the scam or something like that. So we live in a digital age
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  as well. And there is scams around. And Bitcoin is probably, it frustrates me because, yeah,
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  people hear stories like, oh my gosh, I made so much money and then what makes people want to invest
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  in it. And they don't actually know what they're investing in. And so it has an extra element of risk.
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  But that just means risk is essentially the movement of the price. Like I say, when you look
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  into your bank account, there's very little movement, which means that there's very little risk.
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  If you look at the stock market, it goes up and down every day and sometimes there's big movements,
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  which means that there is an increased risk. But like with anything in life, if you don't take a risk,
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  you can't get rewarded. All the jobs, most of the jobs, sorry, that are high paying,
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  have an element of risk associated with them. You know, if you're starting your own business,
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  that's a huge risk, but it can also be hugely rewarding. And so it's like falling in love.
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  You know, it's like, it's a huge risk. But I think the thing is, but there's ways, sorry,
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  there's ways, or finish that with saying there's ways to mitigate that risk. There's ways to
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  mean is like, when you say, oh, it's the stock market's risky. I think what I'm worried about when
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  I heard from her. And I was like, oh my gosh, there must be so many people who listen to our
• 13:02
  podcast and hear us talk about risk or risk in return and think stock market equals risky. But
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  actually, if you do it cleverly, it's actually not that risky. Do you know what I mean? I think it's
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  almost like that. If you do it with parameters in place and you're you're really strict in that you,
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  you do hold it for a long time. You do put that investment in and with that long-term view.
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  If you do invest in a whole bunch of things rather than just one thing, if you don't put in
• 13:32
  all your money because yes, there is risk there. If you do those key things, then it can be super
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  powerful. But yeah, some people not get desperate, but they just, although here a good story from
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  someone or they'll put it in something that haven't researched or they don't understand. And
• 13:50
  that is essentially gambling because you don't know what you're investing in and that is when
• 13:56
  there is a very high risk that you might lose your money because you haven't invested properly
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  if that makes sense. Okay, anyway, in other news, speaking of things to invest in and like
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  diversifying, it's actually been a huge reduction in the number of companies that are listed on
• 14:13
  stock exchanges. So over the last 25 years, we've seen public companies. So this is companies where
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  you can, you and I can buy shares. The public can invest in them. We've seen, over the last 25
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  years, a 40% reduction in the number of companies that are public. Yeah, so it's gone.
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  Why is there a hug? That's not even a short-term trend. That's like a long-term thing.
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  Companies in the US have fallen from 7,000 companies to 4,000 companies. So that's a huge reduction.
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  And the trend is very similar in the UK and New Zealand as well. We're seeing a lot of companies
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  opting to not IPO, so not become public. And that's a function of things like it's very costly.
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  There's lots of paperwork. There's lots of regulation. It's a function of there's a lot of growth
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  and private equity, which means they can get money from elsewhere. They don't have to go to
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  and public investors and be like, hey, can you give us some money to grow? There's now a lot of
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  other places that they can get money, rather than detrimental to the economy. Just because when
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  we always talk about if the stock market's absolutely going down and down and down forever and
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  ever, which is so rare, the only thing you'll be worried about is the fact that entire world's
• 15:31
  imploding. The last thing you'll be worried about is your stock's situation. So does that then
• 15:36
  mean from a global economic perspective that if we are not seeing more money or businesses?
• 15:44
  Yeah, I don't know. How does that... Sorry, that was a kind of sound like a silly question,
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  but I just... No, no, no. It doesn't. It doesn't bode well for, I guess, a healthy
• 15:53
  capitalist society because it means that there's less opportunities for me and you to invest in,
• 16:00
  but it also means that there is companies are still growing and thriving. They're just getting
• 16:05
  money from elsewhere, but you want a really, really healthy stock exchange because it's a great
• 16:10
  place for people, buyers, and sellers to come. And it's more of an indication of there's also
• 16:17
  a massive move to passive investing, which means people are investing in a lot of ETFs. They're not
• 16:22
  actually investing in direct stocks, even though it effectively funnels through to direct stocks,
• 16:29
  but people are like, you know what, I'll just buy the S&P 500, which is an exchange-traded fund
• 16:34
  investing in the top 500 companies in the US, rather than self-selecting or self-picking,
• 16:40
  teaser and Amazon and all of those. So there's a number, there's a lot of combinations of things,
• 16:46
  but... But it also doesn't mean in terms of what you can buy in the top 500 companies in the US,
• 16:52
  or in an ETF or whatever that you have limited choice as to what you can invest in because there's
• 16:57
  less options. Yeah, and it means that if more people are putting them into ETFs, for example,
• 17:02
  particularly those big ones, it means like a lot of small companies get kind of left behind,
• 17:06
  and more money is funneled into these bigger companies. They become bigger and bigger and bigger,
• 17:10
  and the smaller ones almost get left behind, and because no one wants to look at them and no one
• 17:14
  wants to invest in them. Yeah, so it does kind of... When you say it's like a lens itself to a
• 17:20
  capitalist society, is it almost the idea that there's, you know, because there's all these
• 17:24
  companies that don't need to benefit or bring on shareholders, i.e. everyone can benefit from
• 17:29
  it's success, it means that the really, really wealthy get really, really wealthier.
• 17:35
  Yeah, and the element you need to get to take part in that growth or benefit from...
• 17:40
  Yeah, okay. Yeah, yeah, but then... But then people can be really... Yeah.
• 17:46
  No, it is. It's just if you have a healthy functioning stock exchange in your country,
• 17:51
  that is quite a good barometer or quite a good indicator of the overall economy, if that makes sense.
• 17:58
  So, because more companies will want to list on your stock exchange, because you've got a
• 18:03
  healthy... It all kind of flows into the same ecosystem if that makes sense. So, for example,
• 18:10
  Shell, the big, big petrol company, is potentially going to de-list from the London Stock Exchange.
• 18:19
  Good, that is enough. And listen off. Enough. I knew you'd say that. It's really just
• 18:24
  Shell. Yeah, I got it. But they might list in the US, which is, that's a huge, huge threat to
• 18:33
  the London Stock Exchange, because they're like, oh, Shell's going, because that means that there's
• 18:39
  that's one of the largest companies listed on the London Stock Exchange, leaving, which means that
• 18:43
  there's going to be less shares to buy and sell on the Stock Exchange. There's less money going
• 18:50
  into the London Stock Exchange. There's this people investing on the London Stock Exchange.
• 18:55
  And it also might start a flow of other companies leaving. And that, again, is bad. So BP might
• 19:03
  decide to be like, hey, you know what, I'm actually going to leave too, because there's not
• 19:07
  enough people or enough demand or enough money here in London, on London Stock Exchange, for me,
• 19:14
  to make it viable to stay on the London Stock Exchange. So, I'm going to go to the US as well.
• 19:19
  And then the US just gets bigger and bigger and bigger and then London gets their money. So,
• 19:22
  honestly, there's like so much going on here, but it's quite interesting that, yeah, we've got
• 19:27
  a real lack of choice, an increasing lack of choice in what we invest in, unfortunately, with
• 19:33
  what's going on with Stock Exchange around the world. So, yeah, if you've got a lot of companies
• 19:38
  IPOing as well as really, really good, because it shows that healthy economy, an innovative economy,
• 19:45
  because people are, you know, new companies have been created and they're going public and it's,
• 19:50
  it creates excitement and capital, new capital, people investing in new companies. And so,
• 19:57
  when that doesn't happen and you've got more companies leaving Stock Exchange, that's when you get
• 20:02
  that imbalance and it's really, it's, it's a really bad and unhealthy outcome. So, it'll be
• 20:06
  interesting to see what happens there. Lastly, because we have been talking for a while now,
• 20:12
  is Crocs. So, the issue price is up 40% this year. So, that's in like less than four months.
• 20:20
  Shit, that's big. Yeah. What's going on? Have they brought out some more flat forms for
• 20:25
  me to buy? Yeah. Actually, do you know those giblets, those little things that you put on the Crocs?
• 20:31
  Is that what they call giblets? Yeah, giblets. Yeah, I bought my niece and nephew some and they,
• 20:37
  honestly, the best gift. If you're ever looking for a gift for young kids, those giblet things,
• 20:43
  I just like, also, I just love to choose them. I was like, oh, I mean,
• 20:46
  on a sequel, giblets, that's the stupidest word. Yeah, giblet. Why? Giblets. Do you know how much
• 20:52
  money they made on those giblets last year? Three hundred million dollars on just the giblets.
• 20:59
  The giblets, for God's sake. Wild. Imagine if you were in their team and you were like, hey,
• 21:05
  why don't we create some little plastic things that you can stick on the Crocs and your friends say,
• 21:09
  yeah, genius. And then through to a million dollars later, you're like, wow, I definitely
• 21:14
  earned my job. And I mean, also, the age range, like your nieces is like four and I'm 32 and I love
• 21:20
  them. So yeah, broad market, broad market share. Yeah. Anyway, Crocs has been a public company
• 21:28
  actually since 2006. And is she a price was around 13 dollars. And when I say Sophie, hold for the
• 21:35
  long term, take a long term view. Crocs is a great example of this. So it's sheer price pretty much
• 21:42
  did nothing from 2006 to 2020. So and then it took off from about 13 dollars to $180. So
• 21:51
  you would have had to be waiting for a 14 years before anything really happened with Crocs,
• 21:58
  which was a long time. But yeah, now it's trading about $130. So still still up there,
• 22:02
  which is pretty good. I just think it's absolutely crazy that there's three hundred million dollars
• 22:06
  that's been spent on giblets. That's just nuts. That's that's another fun fact for you on the Crocs
• 22:11
  front. They sell nearly four pairs of shoes every second wild. Sorry. Sorry. It's all right.
• 22:19
  You've been really good on that word. You've hardly used it lately. No. Yeah. You've actually,
• 22:24
  you've you've moved on to different things, which I'm not going to point out because we're not in a
• 22:28
  crazy. Yeah. Yeah. Yeah. Amazing. No, but the thing is wild was one of those things that you just
• 22:34
  said because you couldn't think of anything else. You don't even really like the word that much.
• 22:38
  It was just always coming out. And I think as soon as I pointed it out, you were like, oh, yes,
• 22:42
  yes, I do. So I think the occasional wild is fine. Not that I'm one to speak. I do need to expand
• 22:48
  my own vocabulary. When I hear people who speak with beautiful words, I'm like, oh, yeah,
• 22:53
  when we have guests on and they use big words, I'm like, oh, yeah. And you're like, I need to get
• 22:57
  better. Actually, um, fanboy Loll taught me, um, orthogonal. I think it's something to do with
• 23:04
  straight lines and curved lines. It's something to do with like landscape gardening jargon. But
• 23:10
  anyway, I love it. So now I'm like, oh, orthogonal, orthogonal. That's orthogonal. I'd love to use it
• 23:15
  in the wrong context. I actually, I probably need to get the description of it right before I try and
• 23:20
  drop it into combo. But that's like how fun is it to pick up a new word and then actually start using
• 23:24
  it? I love it. Maybe we do word of the week at the curve. That's a great idea. I feel like
• 23:29
  number of the week is probably more appropriate because we're fine. We get enough of that
• 23:34
  ship. Doesn't really work. Is it? No, no. I reckon we do word and let's alternate. Sorry,
• 23:38
  okay, we can take this offline. Okay. Maybe I'll come up for a word with you for you and you come up.
• 23:43
  Okay. And then we have to insert it in a conversation that week. I love this.
• 23:47
  And maybe you should come up with a loud budgeting thing as well while you're at it because
• 23:50
  we're already to a point I will come up with one for next week. Thank you so much for listening
• 23:56
  to the curve weekly. Make sure you hit the subscribe button to stay up to date with all the
• 23:59
  many business stock market news. And if you like what you heard, we would love a review. Thank you.
• 24:05
  Yes, we would love a review that if you didn't hate it, please don't leave one if you hate it.
• 24:10
  No, but in all seriousness, could you please leave a review because it really helps other people
• 24:14
  find our cute little podcast. And we hope you have a good week and see you next Monday. Bye,
• 24:19
  bye. See you next Tuesday. Well, see you next Tuesday. I mean Monday.